>> good morning. welcome. you are watching "the pulse." i am guy johnson. what else have we got for you? accounting offers a list all. will gobranson said it to space before the end of the year. -- counting off the lift off. air france pilots say they will stay on strike indefinitely. we will sow the troubled carrier can get off of the ground. data coming through at the moment. i.e. euros september services data was weaker than anticipated. numbersust getting the at the moment. the manufacturing numbers at 50.5. that is pretty much in line. the services looks a little weaker. earlier on we had a french manufacturing data better than expected but germany was worst. that is a positive spin we will put on. our top story. israel's army said it has shut -- shot down a syrian warplane near the border as the united states and arab allies launch their first airstrikes against militants inside of syria. for more, let's bring in elliott dokken. let's start with a is really an story. a little bit of confusion where the at craft was and why it was downed. what are the details from the israelis? as far as it israelis are concerned, a syrian warplane and they said it was a russian made a fighter inside of airspace. the defense minister said it was acting in a threatening manner and that is why it was shot down. so far onlytate has confirmed that a syrian warplane was downed. perhaps this series will say over syrian territory. occupiesarea, israel the area from 1967. certainly, no law -- and no love lost between the countries. there is a policy from the syrian perspective to bring israel into the civil war. it has enough troubles on his hands dealing with rebels. it is the first time in there has been such an incident in a three years. there is the occasional mortar .hells that landed in israel but nothing like a warplane being shutdown, guy. >> turkey. on the turkish border. let's talk about the airstrikes. u.s. and arab allies hitting targets inside of syria. a significant escalation and a little bit of confusion about who and when. from a regional point of view, not a massive surprise. >> not a surprise in the sense that barack obama a couple of weeks ago in his address said they were not hesitate to strike islamic state militants inside of syria whether the government liked it or not. in that sense, the u.s. is simply keeping its word. it has targets inside of syria. the associated press is reporting that more than 20 militants were killed in the strikes. and if the u.s. was not doing it alone. it has support, military support from its allies, saudi arabia, and jordan, and qataris chipped in on their territory to launch some of the strikes. that will get some measure of comfort to the u.s. that the strikes inside of syria will not be misconstrued or misinterpreted as an aggressive war that perhaps might be seen as the iraqi conflicts in 2003. >> elliott gotkine joining us. exciting subject but it has become sexy. the u.s. is struck down trying to make it boring again. they are tackling tax inversion. the obama administration has announced regulations to make a more difficult for american companies to move their headquarters overseas. it has had a massive impact on the m&a singer. what to do we know about the rules and how far do they go? >> let's make an exciting and have a real life example. we will suppose i have a horse form in kentucky. let's say it is owned by francine. her horse farm is making massive amounts of money and we want to buy your less expensive horse farm in england and we want to use the money from caroline -- francine's base. i purchase your farm and we own it and we re-domicile in england. long.cut a hopscotch it is one of the few things treasury has the power to do administratively without legislation. they want to stop the hopscotch loans. it could affect eight pending deals. deals that have been announced but not been closed. it is important to know that whatever jack lew announces is not retroactive. if you got in under the wire enclosed your deal, you are safe. mayou are still out there be burger king, it is unclear whether burger king's purges of tim hortons will be affected. it depends on how they structure the finance. yes, it is complicated. for the obama administration, it is a half measure that they could do before the midterm elections. measure.f many say basically what needs to happen is. tax reform. the reason why we are doing this is because of attack -- tax in the united states sucks. that is the biggest story here, isn't it? some ways, yes. until that uncertainty into the midterm elections which happens in six weeks, a you may have a brief window before the presidential campaign, the first half of 2015 for comprehensive tax reform. very difficult to do, entrenched interests. 35% is the tax rate. in reality, most companies pay lower. 20%-20 5% but because they have many deductions. -- 25% because they have many deductions. you have to take away the exhibits -- exemptions and that is difficult. it takes a real big push. it will be challenging. you have a half measure that will stop short term inversion. you are saying that the markets react. and we will see if it is enforceable. can the company's challenge the loss simply because they were in -- laws simply because they were not passed by congress? seend news for the m&a appetite -- scene and potentially good news for the lawyers. somebody has to win. hans nichols. a big deal further down. lawyers will watch carefully. now from m&a to ipo's. after the biggest ipo in history, alibaba, another is lined up in the united states. this time it is a bank. citizens group. it is the american a unit of rbs. caroline hyde. how much is going out of the door in terms of the business that they will be putting on to the market? >> 25%. that is how much of they want to sell. the pricing will be between $23 and $25. that means citizens financial is worth $14 billion. a big player. the 11th biggest publicly traded bank. bank ipo since 1999, goldman sachs. 5 million customers and more than 1000 branches. it was history all the way back to 1828. almost 2 centuries old. sincens has been around 1988. >> it will become a separate company. they could take a regulatory assets off of the rbs balance sheet which improves the ratio. >> say have said it will be a real boon in terms of capital. they tried to sell the unit as a whole. not so many takers. b tohave had to go to plan sell shares publicly. it is all about the british government. getting a more a safety net and get the money back of 5.5 billion pounds used to rescue rbs during the financial crisis. they want rbs to switch their focus. come focus at home. corporate. there were concerns coming because the u.s., regulation, they were making a foreign owners subsidiaries having to look at what was going on in the united states. back in march, citizens failed the fed's stress test because they were not ready. the first time they had been looked at by the federal reserve. and if the capital plan was not up to scratch. the fed said the practice under the stresses were not good enough. the u.k.e at home in can focus on what they do and she isds of the u.s., taking over citizens financial antique and make sure things run smoothly and of the u.s. of things to do. caroline, thank you very much. let's stay in scotland. right. caroline hyde. let's move on. deadlocked on the runway. air france pilots said they will stay off indefinitely as a result of the story. , deadlocked on the runway. what they have to do to get off of the ground. ♪ >> 14 minutes past the hour. you are watching "the pulse." no end in sight for the strike of air france. [indiscernible] the strike is costing 20 million euros a day air war aiming just a warning -- euros a day and warning the travel plans of thousands a day. join me on the phone is chris. has been covering this sector even longer. he knows the score. chris, can in her friends really ifair france really compete it does not set up a low cost carrier? >> your point is absolutely right. whether competing in short because after the end of the daycare france has a demand aggregation. it is on medium and long-haul services. of thethe cost short-haul feed down and secondly, if it is going to grow, it is not going to grow with the short operations. we concede elsewhere. special can see it elsewhere. >> -- can see it elsewhere. -- >> what should management do? it is not going to grow a great deal. kyle it's who say they will not tolerate some -- pilots who say they will not tolerate. how do we get a meeting of minds? >> it is exceptionally difficult. this question about how do you affect change. how does management exercise the rights to manage? we know the cost associated with it. those at the meeting saying there needs to be an event. any europe, we do not have that. recognition, the they have to make the changes this way or there is no future of the business and that will take a long time and friends. -- in france. the reality is that the world has changed. growth in europe is coming only from low-cost carriers whether standalones like ryanair or jetblue. or another that has a growth strategy. in terms of having a fleet of probably 200 aircraft. >> are you suggesting if chapter 11 was available, it will be the best route to go down? ati am not suggesting that all. that is something u.s. carriers have been able to use. in europe, we have seen whether fsa guessing an agreement to make the change. to enable the finance and to be put in place. it is a fundamental issue. a lot of airline management despite everything and the balance of power. external supplies as well as internal supplies. in this case here, exactly the point to be made. where air france will grow in the short-haul and the other point is long-haul. fundamental changes in long-haul traffic and that is what carriers are doing in north america, increasing presence. it does not connect in european cities to fly over to the indian continent -- country and beyond. also long-haul. >> we may be talking about low-cost as well. >> we are beginning to see it. we are are ready seeing with norwegian. the majority of growth from what i would call the emerging or economies in europe. what ever you want, it will come from decisions taken by airlines in a the region. furthermore, with seeing the benefit whether the 787 or 330 now. whether norwegian outbound from europe or in a bound, [indiscernible] not only looking at low-cost short-haul platform but also a long-haul one where it in these that for later to keep up with the gulf carriers. >> thank you very much. chris tarry, aviation analyst. it is going to be interesting. a fascinating winter. i was talking to a ceo and he was telling me he's is a bloodbath this winter. ryan air, watch very closely. a lot of work cut out still to do. we will stay in roughly the same a place. we are going to look at jimmy choo's plans to go public later in "the pulse." ♪ >> welcome back. you are watching "the pulse." richard branson said aversion galactic -- virgin galactic will go into the air before the end of the year. >> i am confident we will go to space before the end of the year. that is not very long to go. what held us up was of the rockets. it took us a lot longer to build rockets. rockets have tested the -- and we have now tested the rockets and they have passed all of the tests. over the next few months, we will be doing has and by the end of the year, we would have gone into space. it will move to new mexico where the space port is. upelf and my son should go in the early spring of next year. i think about 700 people have paid deposits. have you had any pushback from them? >> almost anonymous so as a. we are up to nearly 800. almost none whatsoever. they have been patient and realize it is rocket science and want to make sure we do not hurry them up there. they want to come back. that is what the team is doing and they have done a fantastic job. i'm confident we are as good as there are now. we have more test flights to go. you will start seeing virgin going into space a by the end of the year and starting the whole space program in the spring of next year. >> for someone who actually talk etc. agreement -- and green talk etc., how do you make them more carbon mutual, the whole space program? >> we dramatically made it almost completely carbon neutral. wicca puts people into space for less than -- we can put people into space for less than a ticket from london to l.a. a dramatic reduction in cost. one day, we will transport people around the world by space . almost no carbon output whatsoever. big, big a breakthrough as far as carbon outputs are concerned. yes, a lot of very, very exciting things ahead of virgin galactic. >> richard branson, back on earth. what else is happening in the markets? >> equities are punished as well. the ftse is down by 1%. dax it down by 0.8%. taking --we is talking about is tate & lyle. down by 24.1%. has brutal treatment. the outlook of prices. this today the warning of outlook of profits. guess what the stock is doing? the inevitable. is betterrom chatham -- china is better than expected. strata down the line. services, manufacturing, all contraction. 0.9% on the 10 year. look at spain. spanish bonds. the challenge for the program [indiscernible] heark -- a top court will the challenge. >> special treatment, harnessing the power of personalization. the ceo. dynamic yield is coming up after the break. ♪ >> good morning. welcome back. you are watching "the pulse." i am guy johnson. israel has shut it down a syrian warplane in a israeli airspace. that is according to is army as the u.s. carried out airstrikes against islamic state militants inside of syria. jordan. is working with and the you a deal. turkey said airstrikes are not enough. uaed.rdan and >> if you only consider that yous, this means are not fully involved in this struggle because airstrikes is only one dimension. there would be things that need to be done from the air, on the ground, from animate -- intelligence perspective. they all have to be taken into consideration and we have to look at this as a whole. if we do not have this kind of comprehensive of approach, the job will be have done. >> you can watch it therefore interview tonight on "charlie rose" right here on bloomberg television. you can see the times on the television in front of you. ecb president mario draghi said he will not wait for stimulus to reach england. he said he would take an active role in fighting stagnation. >> we are star a tradition from monetary policy framework predominately on passive bank credit to a more active and controlled management of our balance sheet. >> mario draghi speaking yesterday in front of the european parliament. two technology. we all alike to feel special. i do anyway. when reading our shopping online, many websites treat you like everybody. one is really startup wants to change that. elliott gotkine has more. -- israeli startup was to change that. >> i am joined by the cofounder. great to have you with us. tell us how do you make hundreds of millions of people online visiting websites feel special and be treated differently? personalization. we are very different personas. we are looking for different things when we go online. we are not in a position where we want to tell websites what we are looking for and we want it to adopt and learn. wintermple, i am into sports and i'm searching for my gear and i will like the website to cater especially to me and bring me the special offers. chris instead of you going on a retailer's website issuing you webpage, it will show you winter sports? website, go to any they are met with a lot of products that are not interesting for you in the context right now. the website is a we learned that could predict your behavior, narrow down the choices that are really interesting for you. >> track even when not on the particular internet page? we track your behavior on the actual sites. when you are browsing like reading "the new york times," you are sending a lot of information based off of what you are reading. bothering you.t we at just the experience to be one of the best. >> you also track me when i am not on the "new york times." could you get my interest elsewhere? information share between customers above which ran our engines in the background to perform better. a sportsknow you are fan. i would not share this information out with a different sites. we know to send you more sports related articles even if you visit a website. >> you mentioned "the new york times," are they an investor in you? tell me how it came about. and anynew york times" other publisher, the quest to improve user engagement and have better service for the user. if you think about traditional news, you have a printed paper and to scan through the pages you are interested in. [indiscernible] to show the of what user is more critical than in the previous version. there's a lot of experience worldwide to optimize to be more relevant to the person reading the newspaper right now. >> and ever raise over $50 million from "the new york times." you said eventually you will be acquired. the aihat the -- is that m? aim but theot the animal of every startup is to become a phenomenon. it is the hyper competitive market. facebook, aol, yahoo!, they acquire such startups because startups like ourselves are strategic to the future of marketing. offeredthe startups get along the way. too tempting to say no to. >> we look forward to having you back. liad agmon, ceo and cofounder of dynamic yield. i think you are very special. >> ditto, elliott. joining us from tel aviv. siemens is expanding is virtual offerings. hans nichols trying on a new software to respond to water emergencies. necessary toigs, extract oil but dangerous to get to. developed a 3-d game to train workers before they arrive. are often fars away, they are remote. >> i will visit one but virtually. my task is simple enough. find a leaky pump, turned the myve, and shut it awful stop instructor threw me a surprise. -- and shut it off. -- my instructor threw me a surprise. i cannot do it. a man is down. do i save him. and awkward.m slow then, i did the hang of it. it is by design. >> the idea is to be game like. the users have to be the experts in terms of application. they can use as a simple game. chris offerings like this is an example of siemens, europe's largest engineering company, trying to go digital. it employs 17,000 software engineers, more than sap. after i put out the fire, i tried to run and jump off a soon to be exploited rig. my avatar is quite poised. hans nichols, bloomberg, berlin. >> at first, i am slow and awkward. those words will come back to haunt hans nichols. up the plans to break company. to focus on health core equipment and consumer goods. it will become a satellite company. they will reject what is cap -- rejig what is happening. it is time for the pulse number. how much of the penthouse apartment in one of the buildings will cost. it is under construction. most expensive apartment. we will give you a sneak peek when we come back. ♪ >> good morning. welcome back. park now, london one hyde with the most expensive penthouse in the world. it was sold earlier this year for nearly $240 million. but monaco is looking to take a record away. carolina takes us on an exclusive tour of the newly built tower. >> dominating the skyline, the odeon will be home to the most expensive penthouse. for now, it is still under construction. when finished, a kobe worth more than $400 million. >> the uniqueness, we have a double volume. high ceiling. cinema. yoga room. [indiscernible] >> as part of the dream, it will connect directly to the pool. and 35,000 square feet, it will be doubled the size of the one hyde park in london. but, they're also more than 70's slightly smaller luxury apartments on sale in the building starting at around $25 million. >> we are in monaco so we are between the sea and the sky so that is why we use of the main materials. like this glass, reflection of the sky. access tortments was the five star hotel. 26 of them have already been sold to international buyers french,g swiss, italians, and russia. monica has been attracting more height net worth -- high net worth individuals following a crackdown. >> [indiscernible] think it is a chancel step >> five years into the project, the construction is facing the delays. the finished product is expected to be delivered by next summer. now, monaco looking to take london is taking headlines when a cons to luxury properties. apparently, a penthouse in buckingham palace has sold for 25 million pounds. -- is taking headlines when it comes to luxury properties. that is per square foot basis. monaco probably has a slightly better way. from expensive homes and that is certainly one of them there too expensive shoes. the owner of jimmy choo has announced it will start planning to sell shares in london. here with more on this brand's intentions is caroline hyde. of return good rate for current owners. many think they have missed the boat for site jimmy choo had its day. may be potentially argued considering jimmy choo, who it is named after, left in the company. that continue to grow. maybe it has not had its day. 25% ofe selling more, the business. it could be worth up to one billion pounds. in 2011.ught in a three years, they doubled their money. they got it for half a billion pounds. in terms of private equity, all on its.y and cody sales are the first half of this year. 16% last year. -- all privately held equity. when you look at -- >> how much? peep0 pounds of four black toes. i could get you cow motif or tiger striped shoes for 550 pounds. they are flying off the shelves. where it is hot? andy choo's with the males china. they are selling like hotcakes. everyone knows of the brand. it was made famous by "sex and the city," carrie bradshaw that in the day. >> i will look into those shoes. said.has to be >> i am not going to go down that road. >> of course, it is a trend setter by cuccinelli and ferragamo, selling shares. >> some going down the ipo road like this one and others going on the door and saying please, by us. caroline, 10 -- caroline, thank you very much. reducingcome, emissions one business at a time. we will speak to a company finding solutions. that is up, next. ♪ >> welcome back. global leaders gather today at u.n. headquarters to discuss climate.educe global that is according to the world bank's president. he sat down with trish regan. >> the chinese delegation came to me and sad -- said we are going to move aggressively. from coalave died burning plants. the cost is very real. of the membersme of the world bank group, the costs are real. they will lose their country over the next decade and a half or so. there is something costing in the world a lot and will not put a price on it. we have 73 countries represented 53% of gdp now committed along with a 1000 companies, major companies, to move toward putting a price on carbon. look around the world right now and a look that the united states even and california, can you point to a specific example of places that have gotten it right? >> california is doing really, really well. the philippines is doing well. hurricanejust hit by yolande. i was just a they're meeting with the president. what he told me is it is very real to us. climate change is very real to us. we cannot believe it is not real to everyone else. countriesting enough to realize it is a threat and getting everyone to respond. you said china is making headway? >> china is making headway. china, russia, and the european union all signed on. we were hoping they would. we were a little bit surprised that they want to go on record saying that there shall be a price on carbon. christie was the prize on russia, china? big emitters. -- >> you were surprised on russia, china? theme noway with this that new energy. clean energy works for local developers and green energy storage. joining us is scott mcgregor, the company's ceo. good morning. are something with and talk about for quite some time. you get a sense, listening to the leaders gathering in new york. we are getting to the point where we are starting to get to a stage where we can control the price of carbon. how big a different is it to your business with the big changes made? happenings of what is in new york today, it is interesting. you have more than 1000 companies signing up to support initiatives. we have seen big business wanting to take part. the reason is because carbon regulation under the last 10 years develop under policy initiatives that are affecting big business as well as renewables and other legislation. big business understands it and needs to get to their and so, andbusiness need to engage start driving policy along with the government. ceos and it is driving them bonkers. they think they have their arms around what will happen and the politicians change the rules again. cleare see more kind of policies coming out of that will not change businesses are working and investing into? >> i think what you need to see is a devolution of targets. some -- california set targets management. outside of political influence. qualify find has a $.15 per kilowatt hour for power. it is much cheaper than europe's powerful step you cannot have success [indiscernible] the problem is if the policy keeps changing every 4 years and how conflicting policy, it does not work. >> you think issue aromatase central-bank? >> -- you think it should run like a central-bank? >> may be part to package food that we do not have central banks. we need to keep energy prices low. and we need to increase renewables. you need an authority that manages the objectives. building infrastructure in 20-30 cointreau yeart decisions. you cannot have short-term fluctuations. >> tell me how it affects your business. you want clarity, long-term plan in place. would you are running your company, how does the fed what you do on the ground to provide -- how does it affect you on the ground when you provide? >> you see a long change. solar prices have come down to almost power grid. short-term gains. business, wet our have energy storage. and is special long-term large-scale service. not a battery for your phone or computer. a battery to couple with renewables and allow the grade to receive power. >> manage the process? at $.15n produce power per kilowatt hour versus germany's price of $.30 per to light our. a lot of islands in the world particular way. if you look at renewables, you can reduce the long-term cost which is significant for short -- short-term gain. what we do in africa is bring renewables to a lot of africa that does not have energy. >> we have to leave it there. scott mcgregor. clean energy for style we will take a break. bloomberg radio, "the first word," is next. we will see you in a moment. ♪ >> escalating air strikes. the u.s. and its arab allies hit islamic state targets inside syria for the first time. shutting the door. the u.s. cracking down on companies heading overseas to avoid american taxes. oo steps up. the maker of high-end high heels will list on the london stock exchange. rbs moves aside from its u.s. unit. citizens ipos. 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. johnson, this is "the pulse." we are live from bloomberg's european headquarters in london. what have we got? countdown to lift off. richard branson says virgin galactic will go into space before the end of the year. we will hear from him later this hour. in sight, air france pilots say they will stay on strike. how the troubled carrier can get back off the ground. our top story. the israeli army says it has shot down syrian warplanes near its border. as the u.s. and arab allies launched their first airstrikes against islamic state militants inside syria. let's get the details on all this. elliott gotkine is in tel aviv. let's talk about this. shot down near the syrian border . the israelis say it was acting strangely. what more details do we know? itthe defense minister says was acting in a threatening manner. the facts, according to the israelis, are that the titer jet piloted by the syrians flew into israeli airspace. it was shot down trying to make its way back to syria. it eventually crashed inside syrian controlled territory. lays claim to the golan heights, which israel continues to occupy. it is controversial. thates seem very unlikely this represents some kind of big escalation of tensions, which .re always simmering not since 1985, almost 30 years ago, has israel shot down a syrian warplane. it shows you how ran or something like this is. the otheralk about news that is coming out. significant news. notuninspected -- unexpected. the u.s. striking a target itsde syria and using allies to back it up. not surprising but significant. >> a major development in terms islamic state, it has carved out territory the size of great britain in syria and iraq. the iraqi army had invited them to help out in iraq. it was more complicated. bashar al-assad is still the president there. president obama said a couple weeks ago that they would not hesitate to strike islamic state militants, wherever they are, including syria. tos morning it has been good its word. backed up by allies in the region. emirates, arab jordan, and saudi arabia. r, bothhrain and qata host u.s. air bases. more than 20 militants from islamic state or killed in those attacks. this could be the first of many andhe u.s. seeks to degrade destroy islamic state. and stop it from threatening the iraqi central government. when it comes to the syrian government things get more complicated. bashar al-assad has been happy to let militant groups bludgeoned out among themselves. , the other weakened groups could turn their attention more firmly towards toppling mr. assad. >> thank you very much indeed. elliott gotkine joining us from tel aviv. is tackling tax inversions. the obama administration has announced regulations to make it difficult for u.s. companies to move their headquarters overseas in order to lower their corporate tax bill. hans nichols joins us now. is this a sticking plaster or a decent fix for the problem? >> you can say plaster is a band-aid. this is a band-aid, they are papering over a problem that i cannot solve legislatively. here is what legislation does, it is not retroactive. any deals that got in as of yesterday will not be affected. there are about some 8 pending deals that could be affected. you seem stock movement as a result. propose.at they the hopscotch loans, where a foreign subsidiary takes a loan and gives it back to the new parent company so they can buy an additional company. look at the health care industry. a lot of action there. medtronic, abvi. unclear whether this will apply to burger king. take a look at the tronic's -- t ake a look at medtronic's purchase of another company. it would be penalized by treasury. this year there has been a remarkable and out of m&a in the pharmaceutical industry, $178 billion in acquisitions. some of those deals will be put on ice. some are already underneath the wire. they call them plasters in germany. we will not get caught up in the semantics. let's talk a little bit about what is going to happen at a larger scale. many people in the usa the reason we're doing this is because the corporate tax system in the u.s. does not work. that is where you should be putting your attention. fix that and you fix this problem. that both thes is obama administration and many members of congress, including republicans and democrats agree with that. there's a broad agreement that the u.s. tax situation needs to be remedied. the top rate is 35%. in reality, companies pay much less. you cannot compete when other countries, ireland is at 12.5%. they cannot get from a to b. this is a political challenge. maybe after the midterm elections there will be a brief window for the first six months of 2015. then, the presidential cycle will start. it is going to be difficult to get something done in the back half of 2015. there is a desire to do this. i don't know if there is the will to do it from all parties and from all of the entrenched interests. there is any knowledge meant that the situation of the current structure is pretty flawed. >> thank you. you can take the boy out of washington but you cannot take the washington out of the boy. hans nichols getting excited about the political cycles in the u.s. former white house correspondent, now international correspondent joining us from berlin. after the biggest ipo in history from alibaba, another big share sale is lined up in the u.s.. citizens financial group, the american unit of rbs. here with more is caroline hyde. how much are they selling? >> $3.5 billion is how much they can raise if they get to the higher end. salee moment, they are on for $23 to $25. if they go to $25, $3.5 billion. 25% of rbs's stake. >> that is your money and my money. >> taxpayer money. it might be drifting back as well. they try to sell the entire unit, but not quite do it, so they selling it in parts. it makes a big player in the u.s.. now the 11th biggest publicly traded bank. more than 5 million customers. be more than 25%, they could sell up to 29% with the overallotment. >> why are you selling this at a discount? the question from rbs's point of view is how big a bang for our buck are we going to get when it comes to our tier one ratios. that is what this is about. >> they want to boost their own capital. that is what the chief executive has been saying. it could help to the tune of ab out 2%, we consider capital ratio improved by the sale of the u.s. unit. e got good reason to price at less than competitors. it is about 1 times the book value compared to competitors, the u.s. times in return on equity is about 5%. they're not profitable. sales have not been doing that well. competition is tough. down 4% last year. in march, it was one of the banks that failed the federal reserve's stress tests. foreignot the only subsidiary that did. the first time we saw foreign subsidiaries tested by the federal reserve. failed.- hsbc also it looks as though this is a company that is expected to grow. ,he new head of it, was the cfo is trying to hire more and expand out of the northeast and the midwest. he wants to push this in the u.s. they want to leave it alone, rbs does not want to be distracted by the u.s. unit. neither does the british government. they want to concentrate on u.k. business. >> thank you very much indeed. caroline hyde. we continue the discussion on this ipo. we will be joined by managing r capital,f iu talking about what is next for citizens. ♪ >> you are watching "the pulse." here in london. we will talk about the currency markets. let me show you the pound. a second day, having a ripple effect through the cable. cable trading at 1.63 64. the pound is down earlier, a getting to recover. but they are fairly next -- the data are fairly mixed. other parents moving the cable rate around. let me show you what has been happening with the yen rate. a little bit of risk aversion creeping back in. that has been boosting the yen. you've seen it against the dollar but it has ripple through and into the pound crosses. you can see it across the board this morning. let's move on and talk about another transatlantic story. the ipo of citizens financial could raise up to three $.5 billion for the royal bank of scotland later today. set to be the biggest ipo since goldman sachs went public back in 1999. joining us now is the managing director of iur capital. why is rbs doing this? >> it is about the balance sheet. five years after the crisis, here we are. rbs is still trying to shore up its balance sheet. the situation with this ipo is that it is only a 25% disposal of the key asset in the bank. rbs, and, the ipo, u.k. taxpayers, will still have a significant interest in the operations of citizen in the u.s.. >> what it does is start to free up the amounts of risk with a capital that is tied up in the u.s. that relates back to the balance sheets of rbs. it is going to lift the capital ratio significantly. rbs needs to do this. it frees it up to invest in other spaces. to use that capital allowance. a the disposal here is only partial disposal. caroline mentioned that if rbs had its way, they would have ald the entire business as whole but they could not find a buyer. this is the second best option. as i mentioned, it is all about the balance sheet. here we are, more than five years after the crisis, still in a scenario where the balance sheet is a key focus for rbs overhaul. >> how much management bandwidth do you think has been devoted to the business in the u.s.? it was not ready for the stress test. a kind of felt like it was left out in the cold little bit. the u.k. government would like rbs to focus on the u.k. my sense is they have not been focusing on the business in the u.s. for some time. >> it is a bank operating outside of rbs's interests. the u.k. has an indirect interest. the banking industry is tough. especially in the u.s. has struggled somewhat over the last few years. let's see if the new ceo can really build the business in the core areas of the northeast and midwest. >> how does it compare with other operations in the state? the book value is just north of 1. >> pretty standard. >> not all european banks managed to achieve that. how does it compare and what needs to be done? important in is many ways. the key area here is building outside its key market, which is the northeast and midwest. building assets and making sure he can deliver on revenues. we have new jobs coming in for citizens over the last two weeks. it is really about making sure they can improve their business. really a regional bank. not able to compete with larger banks in many areas. it has an opportunity. >> is it better as a stand-alone opportunity? say they fail to find a trade buyer for it. in a few years' time, once they have it down and have fixed a few things, spend a bit of management time with a little tlc on this business, do you think it could be right to consolidate with the rest of the sector? >> you have a former rbs guy running citizens financial. toerest rates are going indirectly benefit citizens. when rates go up, which they will in the next few months, that should be an area they should focus on. zero rates does not really help any bank make money. >> would you be happy to put money into this business? >> we will take a look at it. the value is something to look at. i would prefer to see what happens over the next few months. in terms of the share price. >> that's the important thing to watch out for. an interesting few months. nice to see you. iur capital.rom stepping up for jimmy choo's ipo. the heighigh end high-heeled mar has plans to list on the london stock exchange. will you be buying this as well? ♪ >> welcome back. you're watching "the pulse." live on bloomberg tv. streaming on your tablet and on bloomberg.com. some company news. unicredit is selling a stake in geithner global assets management. -- higher near global asset management. raise 3 billion euros for unicredit and boost the letter's capital ratios. the second-largest bank in eastern europe after unicredit is protecting its first annual loss this year after conflicts in ukraine causing bad debt rise faster than expected. the second time this year raiff eisen has raised its forecast for this. the biggest loser on the stoxx its outlook lowered facing & lyle says it is competition from splenda. let's get to another company story. the owners of luxury shoemaker jimmy choo have announced they are buying -- they are planning to sell shares in europe. -- they are planning to sell shares in london. join me at caroline hyde. with the current leaders, the rate of return could be quite good. double their money. november 2011 is when they picked up this asset. we understand it pitches up for half a billion pounds. now they are seeking a valuation of an billion pounds. they will be selling a quarter of jimmy choo. it could come as soon as next month that they will list on the london stock exchange. rumors have been right about this and they have been testing the waters and seeing what appetite will be like. now is the time. they are trying to dine out. the reason they are doing this is to grow. they want to open more stores. they have more than 100 but want to increase and penetrate asia. still selling very well compared to the likes of gucci and louis vuitton and china. perhaps they had too much of a good thing. they felt they lost the exclusivity. the brand is well-known in china. it is quite hard to come by. therefore, they want to penetrate china and get into male shoes. we have not got enough male shoes. i've got my eye on a tiger print or a cow print loafer shoe. 550 pounds. pretty pricey. 995 poundses go for for a black crystal high-heeled. perfumes as and well. this is the art burglary has of getting people in at a lower price point and then lowering them up -- this is the art berry has as well, getting people in at a lower price point and luring them up. >> this is as good as it is going to get. flow is slowing down, is there any credible he to that? >> sales growth is slowing. in 2012, it grew 17% on a constant currency basis. 16% last year. only about 9% and the first half of this year. they say the reason sales are slowing is because they are investing. investing a lot in terms of renovating the stores. they want more cash to be able to do that. whatwant to be able to do sounds for a fair, -- they want to do what salvatore ferragamo has done. these are private equity owners. they want to do what is best for the company. clever aboutbeing what to cash into. >> thank you very much indeed. caroline hyde on the hsu story. looking forward to the tiger print shoes. time for today's pulse number, $400 million. that is how much this penthouse in monaco will set you back. some pictures when we come back. ♪ >> good morning. welcome back. you're watching "the pulse." live from london. i am guy johnson. these are the top headlines. israel has shot down a syrian warplane in israeli airspace, this comes as the u.s. carries out airstrikes against islamic state militants in syria. the u.s. is working with bahrain, jordan, saudi arabia, uae you.d the turkey's president says airstrikes are not enough. erdogan spoke about the islamic state with charlie rose. >> airstrikes, if you only consider airstrikes, this means that you are not fully involved in the struggle. because airstrikes is only one dimension. there will be things that will need to be done from the air, on the ground, from intelligence perspective, from a humanitarian perspective. taken intoave to be consideration and we have to look at this as a whole. if we do not have this kind of a conference of approach, the job will be half done. the fulln watch interview on charlie rose tonight right here on bloomberg. you can see the times in front of you. ecb president mario draghi says he will not said that and -- will not sit back and wait for stimulus to reach europe's economy. the central bank by play a more active role in fighting stagnation and low inflation. >> we've started a transition from a monetary policy framework donnelly found -- criminally found in provision -- we have started a transition from a monetary policy framework predominately found with provision of credit. >> mario draghi has a few more cards to play. i wasn't speaking to the proletarians yesterday. let's speak to jonathan -- that was him speaking to parliamentarians yesterday. let's speak to jonathan ferro. thee will be looking at euro numbers. eurozone pmi, services and manufacturing, the weakest this year. the trend is lower out of france. i will play game with you called spot the green. selloff across europe. ftse down by 1%. what does that weak data mean for this market? you look at the pickup of that new cheap round of funding from the ecb. that was not great either, 82 .6 billion euros. mario draghi says that was in the range of expectations. no one in this market expected it to be that low. what does it mean for the bond market? german bund yields lower. the yield in germany down one basis point and blow 1% on the tenure for the first time in two weeks. money going into spanish debt as well. 2.18% is the yield on the 10 year. in the u.k., everybody is tesco. about one company 3.8ng another slam, down by 2%. they've had to bring their new cfo on board earlier than anticipated. 250 million pounds is how much they think -- think -- they overstated profits. how far back does the state? they took another punch today. it was from -- not an internal problem -- from a market problem. let me show you the other retailers. tesco down 3.5%, morrison is down 2%. sar research says the growth in the u.k. grocery market is 0.3% in the last 12 weeks. that is the lowest since 1993. a little bit of a trend here. little growth, audi has a growth of 29%. tesco, -4.5%. have dealt with the internal financial problems, the new guys at tesco have got to think about how you will reposition the company. in a word, it is a mess. >> it is. looking at the short interest and tesco. it jumped at the beginning of september and is beginning to roll off. maybe that is the lead indicator as to what happens next with the share price. jonathan ferro joining us on the market action from this morning. 25 minutes to go until "surveillance." tom keene at the helm. syria is front and center. presidentth the traveling to new york city. he'll be here for a good number of days with the first lady. attending the u.n. and then the clinton global initiative summit. he will have a conversation with president clinton. we will focus on syria. david gordon from eurasia group. a conversation with ian bremmer in our next hour. this on syria and the combined allied action. one of youro, frequent guests in london. we talk about the disinflation. some would say the chronic recession. us on china asn well. a very loaded our. syria >> front and center. looking forward to it. tom keene joining us from new york. "surveillance" shortly. air france shares lower. after the company offered a ray to its pilots union, which has been striking since sunday. let's bring in terry lundgren. u.s. -- it is different. it is hard to see how we resolve this. >> it has been a tough couple weeks. -- two sides seemed to lock the two sides seemed deadlocked, even with a small concession by air france yesterday. they say how about we will delay the expansion of our low cost franceia unit outside and holland. they said we want to accelerate growth within france. that was very much rejected by the unions. they are going to be protesting outside the french parliament today in uniform. ad not, they called it smokescreen and generally it does not seem like the two sides are on the same page. >> how long does this go on? how much is this costing the company and passengers? >> an operating loss of 20 million euros a day. it is supposed to extend through friday. it could be longer. the pilot said indefinitely if the issues continue to be, if they do not get any resolution. 000 passengers have had their journeys to trip to buy what has been going on. every day that goes on,, they are getting more and more frantic. any evidence that forward bookings are being changed? are companies like ryanair and easyjet? >> i saw an analyst saying we should be expecting good numbers for easyjet. they have built up -- >> they operate strongly out of paris. a little less so. you might see buses and trains benefiting. >> this is indefinite. there is no sense of two weeks or three days time. it is ongoing. >> at this point, it ends friday. monday you sought extended for another week. if you are seeing the pilot union, they one of the government to start getting involved. the government, you might start seeing a little bit. the french government has seen it as and verisign. you might start seeing more involvement. -- terry lundgren -- kair air travelen, our reporter. richard branson says version galactic will go to space. he has announced a partnership with grey goose, which will venture.he space bloomberg caught up with the virgin group founder in an interview. that we willfident go to space before the end of this year. obviously, that is not very long to go. rockets. us up was the it took us a lot longer to build rockets that we felt completely comfortable with. we have tested those rockets. they have passed all the tests. branson out of this world. coming up, cracking down. the u.s. gets tough on companies setting up shop abroad. we are talking about tax inversion. we will have more when we come back. ♪ the hour.tes past you're watching "the pulse," live from london on bloomberg tv. the u.s. clamping down on american companies that list their headquarters outside of the u.s. to try to reduce their tax burden. this type of tax avoidance is known as an inversion. as a heard a lot about it market.e in the m&a a lot of lawyers are scratching their heads. accountants are scratching their heads. trying to figure out what the story will be. let's get some answers. simon joins us. good morning. the assumption i was working with is that this will put an end to this in the short term. it is interesting, you said it could do the opposite. we have got a sort of semi-deadline in place. it has been driving the m&a story aggressively. companies like to do this because of his big financial gain. they're going to try to find a way to carry on doing this. they could get in front of the deadline. >> some pretty hefty legal fees that will come out of this. the president and the treasury secretary have indicated they want congress to pass a law. some of these prospective inversions brought forward. trying to get in before the deadline. it is long-term story, going to get harder to do this kind of transaction. and i correct in that assumption? the u.s. clearly feels it is missing out here. some way or another, it is going to find a way to put a stop to this. >> seems to be a lot of momentum in the u.s. to signify the tax code. it is just whether congress can agree. in the long term, it should slow down. there's such disparities across the world in corporation tax rates. in ireland, 12.5%. in the u.s., 40%. arbitrage opportunities, lawyers and accountants will look for opportunities to stay one step ahead. >> is this going to be one of the cases where you end up closing one loophole? the financial system will find another way of doing it. >> it is an unbelievable survivor. it will find a way. across the complexity all the developed world in their tax codes. there are big opportunities. you only need to see the share in the chair -- you only need to see the change in the share price to see that this is the big honey. share prices, people are making the assumption that these deals are dead. they may not be. that looks like an opportunity. >> they've been sold off this morning. let's let the lawyers work through this and see what the implications are. you might see some of these get through the door before something more jacksonian comes on -- more draconian comes on from congress. >> this is an issue not just for the u.s. government, but for european governments as well. nowerms of where we are versus a few years back, how much harder is it to get things done? governments are becoming more attuned to the arbitrage story. >> yes. another look forward five years, it is going to become harder and harder. there are still going to be loopholes but it is going to become harder. >> you only have to look at the deficits and the debts some of these countries are holding. they've got to do something different on tax. they've built up post-2008, huge debt burdens. those need to be repaid. they're going after tax evasion and tax schemes like this. it is going to be something that continues going for. look back to when the story was about jobs three or four years ago in the u.s. the outsourcing debate. that has gone away as the jobs market has recovered. interesting to see how fiscal positions improve, whether this becomes a sideshow. >> what i am fascinated about is that companies are prepared to ofthis, risk the ire politicians and be necessarily as being great citizens. simply because the gaps are so massive. the pr story will become harder for them to manage? if it is only a few cents on the dollar, being seen as being a bad corporate citizen might not be something you want to do. curious to know at what point that starts to become a story. >> is a partial narrative that the president is coming out with. the patriotic, what do you do for your country. such is the importance of pr for a lot of these companies. be getting to the edge and looking at the financial benefits of some of these inversions and saying i do not want to be held up as a poster child for tax avoidance. company likeent, a burger king, the financial gap is still so big that they have a fiduciary duty to the shareholders as well. buckscan make another few doing this, the logic dictates that i work for you. i do not work for the u.s. taxpayer. the board of on burger king and you have looked to where the corporation tax has fallen away in their rates in canada. you have a responsibility to the shareholders. a balance to be struck. it will be really interesting as we approach the midterms and get to the presidential cycle, whether the rhetoric on patriotism gets ramped up further. >> thank you very much indeed. this will be a conversation we will watch. the politics are going to be fascinating. mix that in with the corporate story in the bottom line, you will want to pay attention. simon french joining us. we will take a break. preventing the next deepwater disaster. why siemens is hoping this workerse will help rig respond to emergencies a little bit better. hans nichols has been out to try it. we will see how he does when we come back. after this very short break. ♪ >> welcome back, you are watching "the pulse" on bloomberg tv. streaming on your tablet and bloomberg.com. let's check out the currency markets. the pound has had a significant change of fortune. an interesting day on the cable crosses. up .2%.d is now rising, earlier on, risk aversion was the story. you solve that translating through the yen process. we will show you the pound versus the yen. this is what happened. a similar story or the pound is extending the game. this is the pound versus the yen, that is where the initial drop came through. seen thetly, we have story started turnaround. the pound is now popping. let's go away from what is happening in the foreign exchange markets to something harder. siemens has announced a more than $7.5 billion deal. it gives the company access to energy equipment in the u.s. besides that, siemens is expanding its digital and virtual offerings. y? our international correspondent hans nichols went to find out. he has been training on new software designed to help respond torigs deepwater emergencies. are necessarygs to extract oil and hard to get to. and dangerous. siemens has developed a 3-d game to train workers before they arrive. oil derricks are often far away, they are remote. i will visit one virtually. my task is simple enough, find a leaky pump, turn the valve, shut it off. my instructor threw me a surprise. >> i will turn my head, oh, i see the fire. i see a valve leaking. a man is down. do i save him? do i stop the process and save more lives? at first, i am slow. then i get the hang of it. that is by design. >> it is made with the idea to be game like. do not have to be the expert. they can use it as a simple game. >> offerings like this are an example of siemens trying to go digital. the company already employs some 17,000 software engineers. more than sap. after i put out the fire, i tried to run. then jump off a soon to be exploding rig. my avatar is quite poised and does not know how cold north sea waters can be. hans nichols, bloomberg, berlin. looks a bit chilly. hans nichols joins us now. was that the ideal outcome? that you jump off the side. >> that is one outcome. the trend for different protocols. one thing that is interesting about the software, most of the major oil companies use it. everyone has different amounts of training that they want their people to use. is an oil rig blows up, i'm going to jump off it. regardless of where i work. i'm sure you would stay and put out the fire and be a hero. train one.now the you are the one who remains behind. you have received this training. in the event of a fire, hans nichols is now our man. our international correspondent and now firewarden. the germans and the french are watching google carefully. development on that story as well. >> decomposition minister speaking -- the competition minister speaking in brussels. it is clear that google is not going to get this four-year investigation into the antitrust practices starting in 2010 result. -- resolved. to a going to be a closer fine. it might get done in the next commission. the longer this drags on, the harder it is going to be for google. in some ways, the current , his critics would say he was sympathetic to google. unclear whether or not his predecessor will have the same sympathy. >> thank you very much indeed. hans nichols come our international correspondent and fire warden. a more serious story. i will bring you pictures from the turkish-syrian border. live pictures. what is happening here is that syria is allowing refugees from to cross into turkey. this is unofficial and temporary. turkey is leading more refugees into the country. beenll monitor what has happening within syria. we will continue to do so on bloomberg television. "surveillance." we are wrapping up "the pulse" for now. continues.s tom keene and his team are next. see you tomorrow. ♪ . >> the united states and arabella's strike the islamic state. the president speaks today at the united nations services. china's growth, the ramifications for america, and hire appliances on china. can they put the maytag repairman out of business? good morning, this is "bloomberg surveillance." we're live from our world headquarters in new york. it is tuesday, september 23. i am tom keene with scarlet fu and adam johnson. >> overnight, china's manufacturing teetering on contraction, same story in europe. ath of those pmi numbers 50.5. when you go below 50, you're contracting. we will get our own read on you as many fracturing at 9:45. the richmond fed gives a read on manufacturing at 10:00. earnings, really only two of note, carnival which is at 9:00 15, bed bath & beyond after the close. >> very good.

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