Europe. Good evening to those in asia. Good morning to those just waking up in the u. S. We begin with a bloomberg exclusive. Have strucksneft oil. It has been complicated by sanctions against russia. Ryan chilcote spoke to the ceo, igor sechin. This guy rarely talks. Im fascinated that the time he isides to talk his when he in the arctic. Give us a sense of the journey you had to get through to talk to this man. It was a fourhour flight to the north. Then we flew out to the sea, we got on a icebreaker, a ship that can break ice. That,led two nights on got another helicopter. Thatannot actually drive ship right up to the platform. An extraordinary adventure but one that was really important for igor sechin. A symbolic message. Igor sechin believes they have found a massive amount of oil, as many as one billion barrels. It could be more than what the u. S. Has in the gulf of mexico. He has a problem, that is u. S. Sanctions. They bar exxon from drilling in 10thrctic beyond the of october. This was a way for igor sechin highlight this prize he has in front of exxon and the Obama Administration. We understand you do not like our politics, but maybe this is something you dont want turn your back on. Have a listen. Production is going to start here in seven years. That is the mid range of my forecast. If the markets are faster, we can speed up. Can you tell me what the price of oil we will need for a return on our investment . I think it will be enough to provide our company with a standard return. The mature fields in use around the world are declining. This oil is highquality. So, the market should definitely give us the kind of price that justifies our investment. I think in five years to seven years, we will be talking 140 to 150 a barrel, but time will tell. Where do you go from here . Project withint exxon. Exxon is now barred by the u. S. Government from drilling in the arctic. Exxon has to leave here. What happens next . Do it on our own and we will attract the Necessary Technology and different partners who do not have any limitations on cooperation. We are not stopping our work with exxon. The project operator is our joint denture with exxon. Were not planning on changing the ventures ownership structure. You plan to continue drilling in the arctic as soon as next year . Yes, of course. Without exxon . We will continue drilling here next year and every year after that. Really listen to what the russians are saying, you know what, we can do this on our own, we are prepared to do this on our own. We think that this find is such an incentive for the Obama Administration or the next administration to relax the sanctions that they will do that in a couple years time. That exxon will come back. That russia will get the goahead to go with this exploding and developing the arctic. It is in everyones interest. That ife a trump card they have to, if people do not want to join them, they can do it on their own. Great work. Thank you very much indeed. Ryan chilcote from moscow. Speaking exclusively with russias Foreign Ministers theei lavrov about how russian economy is coping with sanctions. The economy is not in very. Ood shape the recession happens in other countries as well. I am not nervous about this. Im certain we will survive. Ways tofind the substitute for the loss, which would be a loss for those with sanctions. Hear more from russias foreign minister later on the program. Let me take you back. The Conference Ahead of next years general election is underway. George osborne expected to speak later on. In the meantime, let me hand you over to anna edwards. Thank you. U. K. Hreat of ukip, independence party. Another highprofile defection from the tories to ukip. One of the topics of conversation. Lets talk about this with an mp at a conservative party process. How do conservatives plan to fight back against these defections to ukip . Lets be honest, we do not expect there are going to be very many. There have been a lot of dissections from within the rankandfile of the party. Maybe the leadership should have seen the writing on the wall that this was likely to happen. The answer is to be clearer about what we mean. When the Prime Minister says we relationship with our European Partners based on Trading Corporation and he wants the u. K. To be independent, how is that going to be expressed in the negotiations . Lets set that out. Lets say what treaty changes we want. If we dont get them, we will have to forge a new relationship with the eu. Are we going to hear this week at the conference something new on your . I doubt it. The Prime Minister will not want to be seen to be running before the wind. He will want to set a pace. They have time before we need to publish our manifesto. And lay the ground to roll the pitch before the publication of manifesto. I doubt that this week we will see a big departure and what hes already said. However conservatives going to stop how are the conservatives going to stop the by elections from falling into the hands of ukip . Lets see which seats fall into the hands of ukip as a result of the bielections. The people have a right to be heard. The point is that these defections will be very few in number and they will reflect other issues in the minds of those who are defecting. Hasody who is voting ukip written off any difference and Ed David Cameron miliband. Does not matter if ed miliband becomes Prime Minister. Most people voting in the general election will mind about whether David Cameron or ed miliband is Prime Minister. They will be thinking about how much taxpayer going to pay, the direction of the economy and a longterm. Can i talk about positional change . Following the scottish referendum, changes about how. Uch control england has youve talked about some sort of federal u. K. That seems to be Different Things to different people. What are you looking for . I stopped using the word federal because of that reason. What we have argued would be necessary is equal treatment for england. We have this absurd situation of mps can voteish on matters in my constituency which they cannot even affect in constituency. If tax powers are going to be into that, you have another chancellor who is laying down budget rates for my constituency but not his own, that is untenable. English votes for english laws. Thelving to the english mps same responsibilities over legislation and laws as are to the Scottish Parliament and eight Northern Irish assembly. At theard jenkin, Mp Conservative Party conference in birmingham. Company news. Beatty is the biggest loser on on stock 600, shares doewn the news that its interim chairman is calling it quits. Caroline hyde has the story. Another difficult day. The third profit warning in five months and the second ceo to go. Is acting as who the interim ceo, steve marshall. He has had to give too much bad news. The picture is bleak when it comes to balfour beatty. This company did not ride out well. Nancial crisis projects started to fall over in australia. They got delayed in the u. K. They are continuing to have problems in their Construction Services unit. Thats what lies behind the profit warning. It will fall on 75 million pounds. Million pounds this year less than last year. The thorn in their side. The chairman has had to say it is cost inflation. He says it is so unacceptable that he feels he has to go as well. Come the new ceo, they say they are close to signing up a new ceo, Andrew Mcnaughton left in may. Once they have a new ceo, hes going to leave. Thing is that carillionny shareholders must be breathing a sigh of relief. Is the opposite. Had they combined with carillion it would have been a 3 billion pound per year sales company. They said no because they had a u. S. Unit they want to get rid of. They wanted to give that money back to shareholders, 200 million pounds. It via buybacks. He keeps on saying alone we can deliver value. You will have to wait, not in the medium term. The short term looks bleak. Down by 25 . This Company Trading at the lowest since 2003. A bleak day for balfour beatty. A rosier one for carillion. Bullets dodged springs to mind. Caroline hyde, thank you. s reforms. Italys Prime Minister prepares to lay out his plans to kickstart the economy. He needs his party on board first. The pulse. You are watching the pulse, here in london. I will take you to birmingham for the conservative party. The last Party Conference before the general election in may. Let me hand you back over to anna edwards. Thank you were joined by anthony browne, the ceo of the british bankers association. Thank you very much for coming. Beforealk about banking we talk about the other issues dominant here, youre being one of them. Roles businesses want to see banks play in the economy, we spoke to the confederation of british industry. Businesses are telling them that the availability of loans are Getting Better but they still want to see more. Whats your response . Good to hear they think it is going in the right direction. Its been a tough few years for business lending since the crisis but things are going in the right direction. Small businesses has increased. Gross lending is up 30 year on year. There are signs it is going in the right direction but there is we are doing a lot to try to improve access to finance. If you do not get the loan you want from a bank, you have the right to appeal that. We have figures published yesterday showing that banks are getting more decisions right the first time as a result of the work they are putting in. You are working with governments, is that true . George osborne put in place some plans that mean if you are turned down for a loan, you have be referred to another lender. Is that trying to force you . That is one of the things i was referring to. The Banking Industry has a referral service. If they turn you down, they cant refer you to other forms can refer they you to other forms of finance. The government is introducing a referral scheme and we are working with them. We fully supported. It is important that we work with the government to make sure that works. Another example is improving access to the credit data of smes. Trying to find out how creditworthy an sme is. Important for new lenders trying to enter the market. Working with the government to improve that information and help smes get to a wider range of finance providers. Businesses looking for funding, where should they be turning . Should they be going to banks or do we need to see Small Businesses using alternative sources of funding. Crowd funding is one. Stock markets, bond markets . They should go to banks. They should not depend solely on banks. If they go to one bank and do not get the answer, try other banks. They should think about other forms of financing. Are dependentmes on bank lending as a source of finance. In germany and italy and the u. S. , Small Businesses go to a wider range of people. Crowd funding is growing, venture capital, private equity, business angels, supply chain finance. Lots of different ways of getting your Small Business finance. Finance depends on what situation youre in. If you are a startup, you are looking for equity. If you have a track record and an income, you might want loans. Do go to a bank. Do not rely solely on banks. How does the business of banking respond to the new start ups . The new peer to peer lenders and the like. Is that something the Banking Sector is trying to embrace . Some are trying to invest in that themselves. Should they feel threatened by it . We embrace it. As the leader of the British Bank Association said, businesses should not rely solely on bank finance. It is important that we have a diversified form of finance. Important for the smes that if they do not get the right response from a bank, they can go elsewhere. The more forms of finance they can get access to, the better for them. It is better for financial resilience. They have a sector that depends on one type of finance, if there is a shock to the system like the financial crisis, it could affect the economy far more. Businesses, the good has summary different forms of finance. The fact that the Banking Sector went through a shock did not affect them so much. They could carry on with other forms of finance. We worked on a lot of initiatives. One is getting mediumsized and Small Companies direct access to capital markets. They can go out and raise money directly themselves. Which is what they do in the u. S. And in germany. We need to work out why it is not happening in the u. K. And try. It might be changes to regulation we need and it is partly a cultural thing. Economy is athe topic of conversation. The relationship between u. K. And europe is being talked about. Weve seen the highprofile move towards ukip by voters and even some tory mps. Where do you see the relationship between u. K. And europe going . You like europe. Access to the Single Market is very important for the banks. A lot of banks their whole toiness model is being able operate across the whole market from london to different countries. Supplying Companies Across the infrom one headquarters london. That is very important. It is very important that the u. K. Retains influence. The u. K. Government has a knowledge of financial services. It is important that they are at the heart of europe in terms of writing rules. Do wet kinds of reforms need to see in europe to make sense for u. K. Business . Were having a conversation about whether europe is a bad thing and we dont know what the third way might look like. Reforms that key being suggested by David Cameron. A lot of the wider in termsional issues, of banks, we are interested in growth across the eu. We published a report couple months back with a proposal of how we think the European Commission and the parliaments and the council could promote growth, promoting secure donation and access to finance. John paul juncker has been talking about capital. There are a lot of reforms that would help promote economic growth. More concern about Global Competitiveness with europe. We need to think about how competitive are we compared to america and asia. Anthony brown, the ceo of the british bankers association. Guy . Well take a break. Back in a couple minutes. You are watching the pulse. At quick look at the kiwi. What is happening. Under a little pressure. The reason for that, the reserve bank of new zealand is aggressively selling. The Prime Minister, former head of fx at merrill lynch, saying we have further to go. Pushing the currency down. We will take a break. See you in a minute. Welcome back. Youre watching the pulse. Live from london. Im guy johnson. These are the top headlines. Russia has indicated it is more thano borrow at 9 for the first time in more than five years. A nation has shown the bond market for nine weeks and then the worst quarter for the ruble since 2011. The ministry accepted last week a 9. 31 yield. Russias foreign Minister Congress on the struggling economy and an exclusive interview. In veryconomy is not good shape. Recessions happen. Not only in russia but in other countries as well. Im not nervous. We will certainly survive. Substituted a way to s, which would be a loss for those with sanctions. Facefthansa passengers more strikes. The pilots union says it has backed strike action after a talk produced no results. This will affect frankfurt, longhaul flights. Stocks sink after prodemocracy protests sweep the city. Demonstrations are enforcing fears about what china wants to do in the 20 17th leadership elections. Police used tear gas. Protesters will have more demonstrations unless top officials step down. Live in hong kong in a couple minutes time. The version jonathan ferro. For equityeat start markets. Big losses yesterday on the ftse 100. Down the most since march. Look at it on a weekly basis. Down another 1 3 of a percent. The dax down by 0. 25 . Thees across europe, exception in switzerland. The ftse, toth three movers higher and lower. Tesco getting crushed. Gain inorting a 76 annual profit. Every time that rises, they are eating away at this ones market share. Fx, the kiwi getting crushed. 1. 4 against the dollar. The central bank in new zealand have released data about their millionrvention, 521 new zealand dollars. That pushed down the kiwi. The Prime Minister coming out and saying the goldilocks level for this one is 65 cents, 77 cents now. Why does it matter when a politician speaks . Usually we do not pay much weight when they speak about the fx market. When that man was the global head of fx, he has more gravi tas. Turkeyin greece and higher. In spain, up 5 basis points. Referendument november 9. It is not sanctioned by the government. Some big things for spanish assets. Thank you very much indeed. 25 minutes into surveillance in new york. Whats on the agenda . A lot going on. Protests in hong kong. I loved jonathan ferros discussion of the new zealand kiwi. This morning against the australian dollar. We stay in asia and go to hong kong. Our correspondents will join us with the store protests. President of the council on foreign relations, will join us. We could spend the entire surveillance on syria. We scan the world. Mr. Modi traveling to the white house today. Joining us, executive manual emanuel, one of the crafters of the Affordable Care act. His thoughts on ebola. Dr. Emanuel about ebola. Dollar on the move. It is. Looking forward to it. Richard be talking to later on. Lets get a look at what is happening. As we watch the story develop, whats the story right now . Is it getting tense . The situation is actually excavating actually escalating. Most people here, i will show crowds hade cloud gathered. 24 hours ago, it was a different scene. We have pepper spray, tear gas at some of the protesters. They are dressed in black. This is one part of the protest. Behind us there is another tens of thousands of people. Running about two or three kilometers, there is another demonstration taking place. Arehe other side, there demonstrators gathering. What they are calling for is the resignation of the chief. Xecutive of hong kong they were promised universal suffrage, something the beijing authorities have said would be the case. They would not be allowed to have freedom of choice of which candidate they would have. That is why people are sitting down on one of the main thoroughfares of hong kong. Stopping axes into the financial district. Were near admiralty. Thats what we have going on. This is really coming about as we see these crowds swell up. Riot police have moved out. Protesters moved in. [indiscernible] to get a clearer shot and have a look at that shot of the protesters. That was spitting out that was thinning out earlier. Tensions are running high. To not say that much of a police presence. On the way here, there are hundreds of thousands of them waiting in the wings. That is what the situation is. Tension is high. Back to london. Thank you very much, joining us from hong kong. Lets bring the story closer to home. Renzi isnzi matteo presenting his job reform plan today. He says he will not give up on the policy. Lets talk about what the options are in italy. Managing director at teneo intelligence. Renzi is talking to his party. Party prepared to back him on labor market reform . We willajority party, have a full during the Party Meeting and he will win the vote. There is a minority dissenting and complaining about a few issues. The main outstanding one is the fact that we dont have much details about the reform. Renzi has presented the ideas but the content is missing. Winning the vote today, then it will go to parliament and take six months. This is just the beginning of a very long battle for renzi. Already, he is getting threats from the unions. Hes only back in the country a few hours. Unionsions the big are saying do not be so aggressive and farreaching when it comes to the labor market reforms. Is he going to listen to the unions . I think he is going to look at the opinion polls, the public is supporting his idea. It was created in 1970 it is old and we need to change it. Unions threaten to do a strike. That threat is hardly credible at this point. Italy isg issue for that allows a guarantee for rehire if you have been fired for inappropriate reasons. Is that going to be something that is going to fall by the wayside . The way the plan is side is to get rid of article 18. A status inved italy for the trade unions. It is unclear how significant article 18 is. There are only 2000 workers who have used it to get their job back. Symbolically it is important. Renzi will push ahead. He has there and he will use a decree and put a motion of confidence on this if the parties not behind that. The unions will keep screaming about this but they will have realized that they are on the defeating side. Thef he does not get fringes of the party to back in, is he going to lie on forza ital ia to make this happen . Maybe this would be a nice bellazona. Esent for renzi is a pragmatic guide. It would be good to get it done without the support. Is there a sense he should have done this earlier . Hes very much focused on the politics. Trying to get the senate power reduced. Has he got sequencing wrong . Its a bit unfair. At the end of the day, hes been in the job for seven months. The team was not really ready for it. The institutional changes are as theed as the changes in labor code. He had to prioritize. I may complain about what renzi has been doing so far, the question that the program is up in the air. There is a new Initiative Every day. It would be better off if we focus on a couple initiatives and get them done and then move on. Now, we have lots of chapters open a it might make him weaker within his own party and the opposition. Is the pace of this to slow yeah cap business can say we need this done. Thats not renzis fall. The fault is how the italian parliamentary sheen works. They started working last thursday and are starting again tomorrow. There are plenty of regulations that need to be passed. The machine is very slow, that is not renzi possible renzis fault. How the bureaucratic Machine Works in italy. Teneonks, joining us from intelligence. Lufthansa pilots on strike. Find out where that will take us. Why is it dragging on . We find out when we come back. Welcome back youre watching the pulse on bloomberg tv. Strike this were entry starting to wind down. No agreement has been reached with pilots and management. In germany, will size up is pricing lufthansa is bracing for another walk out. We are joined by kari lundgren. Strike. Ce, a horrible they needed to get back to work. Last week was very interesting. We saw the government pushing management to change their proposals. We saw management responding to that and then we saw the government pushing the pilots. The Prime Minister saying i will not stop in and help negotiate. You guys need to get it sorted on your own. We saw the pilot saying we need a calmer environment to discuss this and we will go back to work. The issues are still out there. We do not know what happens with transavia, does it have a future in europe or france . All these are on the table. The issues that are outstanding. The contract issues, questions about whether the pilots of transavia will be on a different contract. Willssues of how transavia grow. The management has said they will push forward with speedy france nowransavia that they have given up the euro project. Backing them. Is saying you need a competitive, lowcost discount unit to compete with the likes of easyjet and ryanair. Does not seem like they are closer to figuring out how that has not worked. Another one starts, in frankfurt, lufthansa on strike. The last time they threaten to strike, they pulled a strike at 8 00 p. M. Management had run around all day trying to get passengers where they needed to go. Frankfurt is their main hub, the heart of their operation, the a380 and 747 jumbos. These are operations you do not want to cancel, long trips people have paid a lot for. Any sense we are starting to get passengers going forget these guys. Air france and lufthansa, we will book with others. It is still early. Well be hearing from air day. E, 20 Million Euros a theyve not given a sense of how it has affected booking. Carriers, definitely. Is analysts have said iag benefiting from this in terms of publicity. Easyjet has done very well and ryanair. One of those things, in terms of you have credits you might continue flying with air france and lufthansa. If you are not a regular, you might be looking for different ways. Thank you very much, kari lundgren, our aviation reporter. We will take a break. Yvonne king abdicates the bond king abdicates. Whats next for pimco . The companys next move, when we come back. Good morning. You are watching the pulse. We are live on bloomberg tv, streaming on your tablet, and bloomberg. Com. The kiwi is being crushed. Lets show you what is going on. Down pretty aggressively versus the dollar. The reason for this, the central bank has been selling the currency during august. Heres the kicker. The Prime Minister, former head of fx at merrill lynch, is indicating he sees the currency falling significantly from here. That is the move we have seen this morning. According to the Prime Minister, more to come. What else are we watching . We are joined by hans nichols in berlin. Anna edwards in birmingham. Lets start with you. What next . How big a day is it after the king leftg it bond friday. Watching to see if there are public announcement saying they are pulling their accounts with pimcos total and bringing them elsewhere. We have analysts saying from 10 150 billiontion, coming out of the total return fund. These are estimates. Im looking for hard data from either pimco saying they are losing a certain amount of the actualif institutional investors. The total return fund has been under pressure and has lost 65 billion over the last 16 months. His performance in 2013, 62nd percentile, down 1. 9 . If youre going to make a switch out of that fund, this is your excuse. Or if you like build gross, this is your excuse to follow him to janus. Who would be the beneficiaries of this . Unconstrained funds. Theyve seen a remarkable amount of growth. If youve seen the total return fund redemption, unconstrained funds that have a 25 Strategic Investment Fund are up 10 billion. Morgan stanley, blackrock. These firms are offering unconstrained bond funds. Billion, weut 21 will see how high that creeps up ivascyn. Whether or not there is cannibalization inside pimco from the total return fund to the unconstrained bond fund. The chancellor of the executor has been looking at range rovers. He will be at the conservative party event where the conservative party is meeting. The conference. Anna edwards is there. What are we expecting from George Osborne . We are expecting George Osborne to be speaking later on. What is he going to be talking about pensions. Tax imposed ona Pension Funds when somebody dies. Looks as if were going to see some reform. We could see an abolition of that 55 tax. Criticism of ed miliband of the labour party forgetting to mention the deficit. Something George Osborne will pick up, saying the idea you could increased living standards, hes likely to say that that is nonsense. Weve heard about plans to revamp the benefits system. On benefits,cap perhaps. We might not get more detail on europe. Given that we have seen over the weekend the second highprofile defection from the tories to the u. K. Independence party. We spoke to one mp, who said he does not expect new policy on europe. Therell be a vote for u. K. Independence on the next moment. The chancellor today. Tomorrow, london mayor Boris Johnson will be speaking. He wants to get back into the houses of parliament. David cameron will speak on wednesday. Great work. Thank you very much indeed. Surveillance is next, live from new york. Tom keene the rest of the team. If youre watching in the u. K. , im sure youre interested to hear what the chancellor has to say. Will bring you the speech. George osbornes party speech later on today. Timing is a bit vague. Right here on bloomberg television. See you later. A fierce process protest in hong kong. The world asks how will beijing respond. Ascendant,llar is and it is a new india. Modi visits the white house. From our World Headquarters in new york, it is monday, september 29. I am tom keene. Joining me, scarlet fu and adam johnson. Lets get you to a monday morning brief with adam. The protests are pretty powerful images. We will go there and see what is driving that. Findss 10 year yield above 10 for the First Time Since april. 10 . I agree, a big deal with the Huge International back and forth. A bunch of the Economic Data in the u. S. Personal income and spending, and the pce deflator. Really beginning to shape up at the end of the third quarter. It has crept up on
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