Transcripts For BLOOMBERG The Pulse 20141107

Focus today, the biggest names in Monetary Policy in paris for the International Symposium. Speakers include janet yellen, mark carney and kuroda. Lets bring in our chief economics correspondent on the ground. Simon, we talk a lot about divergence. How much our people worried about this on the ground . They are very much worried. Former elerian, the chief executive of pimco, talking to the conference moments ago and talking about this divergence. It is a big issue for the Financial Markets next year. We are seeing signs of that divergence within the last 24 hours. Just last week, the fed pulling back and ending quantitative easing. Divergence, a big theme of today. Who should be the most worried in all of this . Europe is a big factor. Also, kuroda is here. The bank of japan surprising markets last week. Have beenntral banks pointed in the same direction and now they are starting to move away. This is going to be a real challenge for investors next year to work out where the money is coming from. I am looking through where we are expecting today. We have mark carney at the moment, we have the boj governor speaking, what have we heard so far . What has been the main line . A real theme of the first panel with the bank of france governor and Mohamed Elerian both making this point, Central Banks cant do this on their own. For a long time, Central Banks were relied upon for the stimulus. Economies arent getting traction and the argument is that Structural Reforms and Government Support are as necessary as the centralbank action. Thattian noyer a saying Central Banks dont live in a vacuum, that others have to take steps to boost their economies. Before we let you go, it seems that we always talk about Structural Reforms. Central bankers have always said, we cant do this alone. In terms of timeframe, reforms take five to 10 years. Have we made progress . There have been progress. Italyconomies, spain and have made steps toward reform. Ll, the views are Christine Lagarde speaks later, she has been making a big push on infrastructure. With such low Interest Rates, why arent countries improving their roads . There will be talk about the european labor markets. Why arent they more flexible . Central banks argue that they set this pace and for the last few years the government havent taken on enough. Simon, thank you so much for that. Now, the spotlight is on stimulus. The bank of japan governor will be at the center of attention after his announcement of surprise stimulus last week. Ar more, we are joined by director at mizuho. Also with us is mark gilbert. We seem to have a divergent view on what the bank of japan has done. Half say it was shock and awe and the other saying it just points to the fact that abenomics hasnt been working. I think the latter is a little too harsh. Japan has a lot of vested interest in their society. Obviously, transition takes years and years. For people to ask for results right away is farfetched. The important thing is, they have not delivered yet. What we have to see now is Capital Expenditure come back. Decide if he is going to raise taxes again, which has been the main culprit so far. Complaints are a little bit out of focus. In youre points question. What is your take, mark . It is Structural Reforms that we need and not only in japan. Everywhere is under that same pressure. It has been a consistent message. Hollandes comment this morning is fantastic. Be able to face the french people if i havent got unemployment down. Thernments are recognizing Central Banks will do as much as they can do. They start to realize it is their own job they are trying to save by introducing structural reform. Hollande, it is a great statement, but with 12 approval rate, you wonder if he has a choice but to Say Something like that. This last generation we are seeing in europe, these youngsters with no future, no jobs, politicians hopefully go into politics to make the world better. In europe, theyve made the world worse. Thejobless rate among youngsters is going to kill the european economy for decades if they dont tackle it. Does the bank of japan have any more firepower . I think what they are waiting for is next year. The fact of the matter is they are trying to reflate the economy. I can see the japanese government is so keen to make sure the market is intact. I can see that they are very cautious but again, they have to deliver. Capital expenditure has to come back in japan. People are cutting a lot of corners in japan. What we need to see is Capital Expenditure. A source of other factors in the economy reactivating. Japan is interesting in terms of what is happening in the country and also the repercussions. In europe, we are also concerned that we may become the next japan. Is that a real danger or just media speak . If you look at all the indicators of potential deflation is coming. Bank is now targeting negative Interest Rates. It is charging them for the privilege of having money on account. That is not a good indication. Expenditure is a very good point. Infrastructure spending in a n era of low Interest Rates. As draghi keep saying, there is room in the fiscal rules for governance and more. Wouldnt you agree with what we have in europe . Heideggers advice is to act boldly and act quickly. Biggest advice is to act boldly and act quickly. That is the biggest advice i give to the europeans. For the ecb . They have tried their best. How much more can draghi do without the support of National Governments . The ecb has gone very slowly. Mostly it seems because of resistance from germany. There is not quite shock and awe but enough surprises to make investors more confident about the outlook. The ecb has done what it can. The ecb should have done more earlier as well. There is a feeling that mario draghi has done more. Is that a fair comment . Hard to say. He is probably more authoritarian. The other was much more of a consensus builder. Draghi realized that wasnt working. He has been more dictatorial and i think that is a good tactic. That has helped bring some Members Around to his way. Thank you so much for now. Mark gilbert and Seijiro Takeshita stay with us for a lot more conversation. Next, juncker in the hot seat. The commissioner is under pressure about luxembourgs crafty tax arrangements while he was Prime Minister. The russian risk, we speak to a ceo in an exclusive interview about the risk of the ukrainerussia crisis. Welcome back. We are live on bloomberg tv and radio. Banks take center stage today as the biggest names in Monetary Policy gather in paris for the International Symposium. We are joined by seijiro newsita and bloomberg market gilbert. We talked a little bit about divergence and the broad picture problems with different parts of the world. K to me a little bit about we talked about what cu roda has been trying to achieve. The pension fund, it was pretty much expected, but the timing was so crucial. That thisow a danger is seen as losing too much independence . That is very true. Boj is now seen as almost a policy maker. Do not raisement consumption tax in december, the world would think, japan is now stepping back. That would have a lot of consequences. Hasthe actions the boj made would be seen as negative. That would have a profound negative effect. That is why the government have a lot of tricks up their sleeve. Quite a lot of defensive spending coming through. That questione is will remain forever. You have to take one of the two. I think the japanese government will take proactive action. We are waiting to see the delivery of the private sector. Are you surprised we dont talk about currency wars . Everyone is too busy looking after other things to continue fighting that battle. Draghi would have been delighted yesterday with the euro against the dollar. I think they all have so much on their plate. The fed still owns all those bonds. If you think back to the speech about how to revive an economy, there is nothing in that speech about how you land the helicopter. The fed still has to get rid of all those bonds. They have a lot on their plate to worry about. Aboutuld we Start Talking that for the rest of the world . For japan and europe . We talk about the new normal. There is no plan in 5, 10 years. Used toets now too cheap money around the world . Are we going to go back to a place where it is more fair . I would not want to be the person trying to unhook that life support system and worrying about the consequences. It is going to be difficult. You need almost perfection to achieve that. Remember the taper tantrum. That could look like a drop in the ocean. All the Central Banks are going to find themselves in the same position at one point. Fed first, maybe the bank of england not long afterwards. When you first raise rates and you unload that bond portfolio what happens if we get it wrong . Concretely, can we look at a financial meltdown . Naturally. The hypothesis of these arguments is that we get the economy reflate it. Peoplehat, basically took the latter. If we dont see evidence of that happening, the worries would start to happen. As mark was saying, we are far too busy in preparing for the plateau for the economic revival trend, which would eventually solve the problem. A very quick comment on the u. S. We have some big ears out later. ,s the economy really ready especially as japan is going the other way . The japanese figures are strong. U. S. Unemployment figures are also strong. The fact of the matter is, a lot of easing policies by the japanese government. A weakening yen is putting less pressure to the japanese exporters. As you pointed out, that is one step that the japanese authorities are looking at. Thank you very much. Seijiro takeshita and mark gilbert. Jeanclaude juncker is coming under fire after reports of secret tax deals during his tenure in luxembourg. Lets bring in tim from bloomberg news. Will juncker survive this politically . Pretty much the entire european establishment has stake in juncker surviving and avoiding a political mess in brussels. Lets start with european parliament. In 1999, 8 ousted a previous commission. This time, the parliament turn its elections in may as well. The parliament is not going to turn against its creation. It has too much of a stake in the juncker position. Who is defending him and who isnt defending him . Lets listen to the german finance minister yesterday. His staff reaction in the morning after these reports came out was to criticize luxembourg for shady tax arrangements. Later, he had a remarkable rethink. He acknowledged that every country is up to similar tricks. He said juncker had done nothing wrong. Thank you so much. The story that will be continuing. Coming up, french president Francois Hollande says he might not run for reelection. We will tell you why after the break. I think we have prepared for all possible outcomes. Leave, wedecided to were very quickly with a new team up. Ourpeople we hired firstclass fix income managers. They all know that pimco is a household name and will always have a big market position in the u. S. That was ally and ceo wemmer. Ceo dieter richemont has missed profit estimates in the first half. Operating profit dropped 4 . Luxury companies have faced mounting headwinds in asia due to protests in hong kong as well as the Chinese Government crackdown on bribery. British airways Parent Company iag says it will result in resume dividend payments. Put its operating profit target in the range of 650 Million Euros for 2014. Estate owners of londons canary wharf reject a bid from Brookfield Property partners. Low. Said the bid was too that is some of the company news. Now lets go straight to the markets. Jon . Across the eurozone, a next picture. Gains on the dax in frankfurt. Slight losses, down by about an inch on the ftse. Pretty much unchanged on the ibex. Here in london, gains of 0. 1 . It is the Food Retailers leading the charge. Am strong gains from sainsburys. It is the macro data that comes to the forefront of every investors mind. How many u. S. Jobs were added to the economy . 235 k is the median estimates. Unemployment is expected to stay at 5. 9 . The interesting part of this is what happens to the dollar. Big move in the dollar. This is what is happening in fx right now. Eurodollar up 0. 2 . That has not been seen for two years. Look at the twoday shargh. The draghi aftermath. That pretty much implies expansion on the balance sheet. Can he do it . Some people doubt that. Mario draghi really firm yesterday. That is the story. You look at the major cross here, cable, sterling, it is lower. Strong dollar. Dollaryen going through 1. 15. Where are we now . A strong dollar. The question is, as the job report comes in, if we get another pop in the dollar, these currencies keep going lower, how long and how much can the fed tolerate that strong dollar . Thank you so much, Jonathan Ferro with the latest on the markets. Up next, french president Francois Hollande faces a record low Approval Rating by betting his own job on the Unemployment Rate. As we had to break, the biggest names in Monetary Policy are in paris for the International Symposium. Speakers include janet yellen, mark carney and harry he go corona. Kuroda. Iko crossroads about what Central Banks can do in terms of what we have seen from the bank of japan the European Central bank. We heard from one of the Council Members of the ecb. He was saying low rates facilitate high public debt. The crux of the matter, he put that very well, central banking cannot replace decisive Structural Reforms. We have been speaking about this for five years. When do those Structural Reforms start having enough impact that we see growth . If those two dont match, it is going to be difficult to get the Unemployment Rate down and growth to get kick started. We are back in a couple of minutes. You can follow me on twitter. I will see you shortly. Welcome back to the pulse live from bloombergs headquarters in london. Here are bloombergs top headlines. In ukraine, the key of government and prorussian rebels are each accusing the other of starting new offenses in the region. Pressrainian military office wrote on its Facebook Page that three of its soldiers were killed by mortar fire near donetsk square. Bank of america is the latest big bank to have its thirdquarter numbers impacted by investigations into Foreign Exchange manipulations. Announced it is setting aside 4 million to cover possible fines. The bank posted a loss of 232 million. French president Francois Hollande says he wont put himself over to reelection have unemployment doesnt fall in the remaining 2. 5 years of his term. Hollande said there would be no new taxes and promised new measures to help young people find jobs and training. The berlin wall property group. As the german Capital Marks the 25th anniversary of the fall of the wall, it is no longer a bargain city when it comes to real estate. Hans nichols looks at the luxury apartment along the line where the wall once stood. 25 years after the fall of the berlin wall, the city is moving beyond its image. The opulence has exploded in an unlikely spot. This used to be no mans land between east and west berlin. For many property developers, it has become Fertile Ground to build highend apartments. Berlin is increasingly hosting the actual rich. Also northern americans, scandinavians, german to haveires, they want a footprint in the global city. They buy something in berlin. Part of berlins longawaited postreunification growth is happening. Fivestar living at three or four star prices. This row of townhouses follows the walls oldline. You get an open ceiling living room and privacy on demand. Eat in kitchen, four stories, i guest room on its own floor, private bath and a nice little , a master bedroom, a massive bathroom and a tub with a view. A personal jim in the penthouse. Apartment isn the record for berlin but the prices are cheaper than london or paris. With the housing shift, longterm residents are being priced out. We have 10 or 20 even actions today. 10 years before, we had only one or two a day. 50,000 people moved to berlin last year alone and rents are up 43 in the past five years but wages have lagged, rising just 4 in the last three years. Saydisciples of the locks the buildings spurred growth and they still see open road ahead. The luxury market has increased over the last 10 years. I believe this trend will continue at 5 at least per year. Which could mean a ribbon of luxury where the wall once ran. More on hot property in the german capital, hans nichols joins us with the very latest from berlin. In terms of prices, there is still a lot cheaper than the rest of europe, but actually they are going up. They are going up. 43 up over the last five years, but you look at what you get per euro, it is remarkable here. Saying,ryone here keeps admittedly some of these guys are trying to sell property. You have to filter it through that. It is going to go up 5 per year. I will give you one number. If you want to spend north of one Million Euros on a property, two years you had about 100 properties to choose from. Now you have 150. How Many Properties in london are north of one Million Euros . I would say in the hundreds of thousands. Think you can even get a garage for that price in london. They go for 600,000 pounds in certain parts of london. On to some corporate news. You have an update on our lands on allianz. Their Asset Management unit is down. They still came in at 694 Million Euros. There are other problems, property insurance, health and life insurance. They outperformed expectations. Overall profits were up. They are going to increase their dividends to 50 of net profit up from 40 . We do have a total price tag on what bill gross cost. That is close to 50 billion euros. Total returns, 25 billion of outflows. That is what it cost them. And a look at the quote what they are saying that outflows of elements cap for the resignation of bill gross. Within expectations. Saying is basically they have confidence in newport beach. They get to live in california. They have to get up very early though, kind of like being on television. Decent job but you get up very early. We should do property in newport beach. Does that mean we get to go to the beach every day . You wake up at 3 00 in the morning but then you have the beach. I guess. 3 00 in the morning is tough. The question is, do you go to bed before the l. A. Sunset . Looks really nice in the smog. Youngsters like us are up all night. Thanks very much. French president Francois Hollande says he wont put himself forward for reelection if the job market doesnt pick up. Greg joins us from paris. This is basically the first european politician to admit that he is not doing a great job and his own job is on the line. He is not the first in the sense that he has said it before. This is the third or fourth time he has said he wont run unless unemployment goes down. Before, it was toward the beginning of his tenure. He does have to make the decision whether to run again. It becomes more timely. In a way, he is just accepting reality. The guy is at 13 popularity and unemployment is about 10 . Elections previous basically by criticizing sarkozy for the rising Unemployment Rate and it continues to go up. He is facing reality that he would not be able to run for reelection. However, there is 2. 5 years to go. All the predictions have been that at some point the Unemployment Rate is going to turn around. In 2013. Pected people said this year. That didnt happen. We will have to see how it goes. If he doesnt run, who would run . That is the question. Everyone in the socialist party is aware of this issue. Basically, two main candidates. One is manuel valls, the Prime Minister. He represents the wing of the party pushing for a more probusiness image. Valls has even said he wants to get rid of the word socialist because it is too oldfashioned. You have the labor minister introduced at 35 hours. She represents the more traditional side of the socialist party, more concerned about maintaining the welfare state. It is kind of a battle for the soul of the party. It will continue to be played out. Talk to me about manuel valls. I caught up with him in london and he is definitely very statesmanlike. I thought after six months, the speech will give a the speech came a month ago and Francois Hollande told manuel valls, forget the presidency, you shouldnt have any more ambitions. Is that right . He had a little snipe at him. He meant send mentioned one heroes who never went on to be president but is still considered one of the great french leaders. Elan gave a little jibe about how you dont have to become president to succeed in life. Was never hollandes first choice to be Prime Minister. They do not come from the same background. They do not come from the same sensibilities about the socialist party. There is an element of competition between them. Valls is extremely ambitious. He is compared to renzi in italy quite a bit. Moving, wantstop to stir things up. There has always been a level of competition as there is in france between the Prime Minister and the president. He is more popular outside the socialist party than within. His first challenge will be to win over socialists who are very much wedded to oldfashioned socialist parties and are not wild about this way. Nomination, get the if hollande doesnt run, if valls runs, then he is very popular outside the party. He is the socialist that can win over a lot of centrist voters. Very he left his party in very bad shape in the sense that there was no clear path for a successor. There has been a lot of nasty infighting. It is really in flux. It would beat impossible to protect what everything will look like in 2. 5 years. Greg, thanks so much. Manuel valls, some say he may be president one day but he has to convince his own party. Coming up, we take a look at the moves in the russian currency and the escalation of the crisis in ukraine. Welcome back. Lets turn to ukraine. Fighting in the east has escalated, threatening total disintegration of the fragile ceasefire. There are some huge moves in the ruble today. Lets get more with Ryan Chilcote. It looks like the battle for the ruble is underway. We have been waiting for it for a couple days. We have seen the ruble really decline. Yesterday we saw the single biggest daily loss for the ruble in nearly four years. It continued to decline today. Then we saw the biggest move in the other direction that we have seen all week. That appears to now be over as well. We are still north of 48 to the dollar. We started the week at 43 to the dollar. A year ago, the ruble was 32 to the dollar. Most of this is pretty shocking for russians. They think of their own personal wealth through the rubledollar exchange rate. We had the central bank say earlier that they would do what is necessary to defend russias Financial Security and the stability of the Banking System after some anecdotal evidence that russians are pulling their rubles out of banks and turning that into dollars. This is a trend that is very worrisome for russians and also for inflation given the amount of imported products in russia. Something to keep your eye on this week. We to alloutre war in the east of ukraine . We are moving in that direction it would appear. That gas deal,ot everything we have seen has been escalated or a, including escalatory, including comments accusing one another of starting offenses. We cant confirm any major offensives in the east of the country but it does sound like they are laying the groundwork to setting up the pretext for further military action. We heard the president say the civil war as he put it has not subsided. Again worrying people that russia may be prepared to intervene again. Sanctions still on the table. Thank you so much, Ryan Chilcote with the latest on ukraine. Is just one of the european challenge is that my next guest warns could impact his business. Ceo andestalpines chairman. He joins us in bloombergs exclusive interview. Thank you for coming in. Saidf the things that you was that because of the russiaukraine situation, the forecast for visibility is foggy. How much does it impact how you are able to predict the markets in this part of the world and, when do you think things will stabilize to appoint where it will make it easier for you . I think the most important point is that our company is not being really affected by these things. The general european situation is effected. While we have not seen a further installation escalation in the last weeks, i do hope we will see some the escalation some deescalation. It doesnt help russia or ukraine or europe. I think it would be for the benefit of all parties involved if we saw deescalation. Give me a sense of what you are most worried about. China is a big part of your world of demand in general. The other part is Central Banks. When stimulus comes out, the economy could potentially crash. Then there is all the geopolitics. What are you most worried about . We do have,hat especially in europe, one problem. We have lost the belief in the future. Think, should create more optimism. Somenk what we need is psychological support in order to create a new future for europe. Of course, there are a lot of negative impacts, but in the long run, i think we can believe in europe because there is clearly the big advantage that we have the brain, we have smart people, we do have a lack of raw complimentut we can that by the smart population we have. But you need growth. If people feel like they have a purpose to get up in the morning, that is what motivates them. How do you change the psychology if you have nothing to hold onto . Important the most the mostd on is important support would be, if politics would come up with real targets for europe. Is the visionwhat of europe, where is europe going , and i think this should be the key task in the next months. Have a positive impact on europe. I think then we will also see some upturn. In general, we have seen progress. Look at ireland, look at spain. It is not the situation where we future,ose trust in the but we should see more positive things and not so much focus on the negative things. It ireland, is it spain, that you see some growth . If you look at the world, and you are someone that is trying to be positive, where do you see the biggest hope . In the long run, the growth will happen in the big emerging markets, china, Southeast Asia in general. This is also india. The new government is more enthusiastic on the future. This is also the u. S. It is also europe. We have a very solid base in europe. As i said, what we are missing is the belief in the future. But there are countries performing still very strongly. It is not just germany. Scandinavia, countries like austria, there are a lot of well performing Companies Like our company. We are doing Good Business not just in the u. S. And china but also in europe. Supportif there is more from politics, meaning new investments in infrastructure there is a lack of modern infrastructure in many areas of europe and there hasnt been much maintenance because of the deficit problems, but the Companies Start to recover, budgets are in a better order now. So all that, i think, could create some stimulus for europe. Yup. Im optimistic for the next year. Seeink next year we will some positive trend. We should not have this exaggerated view. Everything will be rosie. I will take that. Better than nothing. Thank you so much for coming on today. Ceo and chairman of voestalpine. Coming up, storage system for clean energy are popular on islands where electricity is expensive. We focus on that, next. Welcome back to the pulse. Live on Bloomberg Television and radio. Lets get you some new energy. We are talking of course about island solar plants. Kuoat images coming out of a energy. The french developer is receiving 94 Million Euros to finance four of the Worlds Largest solar projects. To become a goto company for energy generation. That may have to wait. Property at its Energy Division plunged more than 25 . Canadian solar, the worlds thirdbiggest Solar Panel Maker will boost capacity next year on expectations of growth in emerging markets. The company said china isnt the only source of growth, also naming india, brazil and mexico. Developing markets are installing Renewable Energy projects at almost twice the rates of developed nations. Bloomberg the first word is up next. For our viewers it is a second hour of the pulse. We will be talking Central Banks. Mark carney is about to speak in paris. Debate. Ivergence da, the big names and central banking are in paris. The french president says he will not run again is unemployment continues to rise. Asiance confirms its targets income struggles with the founder. Of its good morning to our viewers in europe, good evening those in asia, and a very warm welcome to those ust waking up in the u. S. Im francine lacqua. This is the pulse. Begin with our main focus. The biggest names in Monetary Policy are in paris for the International Symposium. Speakers include market speakers include mark carney, kuroda, and janet yellen. Is getting ready to report its latest job numbers. It off with simon. What is the outlook for centralbank snacks year . One of divergence. 2 themes coming from the first panel that kuroda chaired. Diversions you speak of with the fed looking to raise Interest Rates at the same time the bank of japan and possibly the European Central bank are wrapping up their own stimulus. That is a big theme, according to Mohamed Elerian. He said the currency markets are out what isfiguring changing. Centralr thing is that banks cannot be expected to change this alone. Central banks do the heavy lifting. Saying you are going to have to governments. Om making labor and services more flexible. We heard from government kuroda. Mark carney speaks. Talk about mario draghi, he never showed up. s busy yesterday he was not here although the ecb is not underrepresented. There are several ecb officials are government councilmembers walking around. Allstar cast of Monetary Policy. It takesson hole, place behind closed doors. Here, the allstars are all present. If not mario draghi, a good number from the ecb. The allstar cast including our own correspondent Simon Kennedy. Thank you. We will check back for updates. A snapshot of the health of the american economy. The latest jobs data is released at 1 30 u. K. Time. 230 5000 people joined the u. S. Workforce last month, unemployment expected to hold steady at 5. 9 percent. This is still a little backward looking. Indication of what the fed will do. It is always coming down to o the same thing every month. The headline numbers are strong. 235,000 today. Er unemployment is that i post crisis low. Go back to 2008 for a number 5. 9 . When you look at details like be participation rate, 62. 7 . As a load not seen since the 1970s. Four and a lot of people, that flattens the state of the economy. Headline versus detail. Headline good, detailed not so good. What will this mean for the Federal Reserve . And what does it mean for janet yellen . Shes been looking at the participation rate. Cyclical versus structural factors. She thinks the cyclical factor is in play. People are discouraged, not for structural reasons. They want a pickup in wages. Another concern is the longterm unemployment. The amount of those out of work for more than 27 weeks, that makes at a third of the Unemployment Rate. Got us twice the historical average. They will be a debate as well. What happens in the markets . What we have seen last month is a stronger dollar. What we see this week is a stronger dollar against the yen, the euro, sterling. They tolerate that strengthening dollar . In the minutes last month, there was concern about the strength of the dollar. You could get a little bit of theater around the currency markets. Jonathan ferro with the latest on the data out of the u. S. Joining us is ings chief economist. He has just published a new report called the new abnormal. The shocks can also be positive. We prepared for a data shock, we will be able to face it. There is been an lot of assets expanded since the to build crisis began up the safety of the financial system. We are only halfway through. The regulations do not kick in for a number of years. , we had Simon Kennedy at the bank symposium. Im worried that the market has not caught onto the fact that when you take this money off the table, the boj is doing their is getting into that. Money,so used to this will markets ever be able to cope without the free money . That is the point im trying to make. There is a lot of talk about the new normal. Abnormal. Stinctly this is nowhere near normal. Everyone is talking about the fed raising Interest Rates to a new normal, whatever that is. The bank of england, likewise. On the other side you have the bank of japan abnormalizing. How do those things fit together . It is not obvious. This is a recipe for more volatility. The fed, we talk about unwinding and the fact that we may be looking at Interest Rate rises. They hold so much wants at the moment, we have not figured out what it means when they start selling it. You think we are prepared . How do we prepare . Structural reforms will take five or 10 years. Aboutre is discussion what quantitative easing has done. Among policymakers and market players. This isessentially going to create problems for the exit strategy. I think it will be a case of one step forward and one step back. I think we are going to see a lot of changes in terms of how views this process. When you look at the world, you have japan with all guns blazing. You have the fed trying to tighten. Cboe is not far behind the fed. The ecb is stuck in the middle. , phil is thece biggest loser . They are playing against each other, almost. There is a sort of beggar thy aspect. One of the ways quantitative easing works is through the Foreign Exchange markets. Have been a number of policy maker meetings over the last few years where the japanese have really stepped of the line and have been explicit about the fact that they want to see a weaker yen. They have said it is purely domestic, which is not the case. Yen is ones of the of the main levers the bank of japan has to produce the japanese economy. Weve seen mario draghi moving very much in the same direction. You can imagine german exports, thinking hang on, the yendollar is heading towards 1. 20. As well. Moving they are not happy about that. It currency market is one of the connecting factors between the divergent monetary policies. We will talk more about that next. Staying with us for the whole hour. Pay out. Taxing time for the u. K. The battle over a 2. 1 billion euro bill. We discuss the dispute. Steam trains . We give you the details of the express that hopes to give passengers the height of luxury at a slower speed. Welcome back to the pulse. Live from bloombergs European Headquarters in london. Live pictures out of the symposium in paris. Of the bankk carney of england catching up with some colleagues. Starting inate is 15 minutes. We will bring you that live and cover any breaking news. Reconciling international flows and Monetary Policy. Keeping a close eye on the symposium. Lets check the currency markets. A take in terms of payrolls in the u. S. The dollar, set for the biggest weekly decline in 16 months. Before that, payroll figures were expected to show that employers added more jobs in october then this years average. Dollarruble, 47. 11. Its worst weekor in 15 years. We understand essential central bank abstained from supporting the currency, that, coupled with the slump in oil prices means we have to dollarruble 47. 07. Euro area finance ministers are meeting in brussels. A dispute over the 2. 1 billion the tax bill from the eu is focus. What are the chances of the u. K. Getting wehat it wants . Quite low. The u. K. Is holding its line, the 2. 1 billion euro bill is unacceptable. We have heard that from David Cameron and george osborne. The European Commission has made an offer that says how about if you pay this in installments and we did not charge you interest. Going to fly in london. David cameron is six months out from a general election. He cannotpoll lead, afford to give a single concession to brussels on this. It seems that the u. K. Has one ally, but not more. Basically, the countries that are receiving bills would all like to see those go down. Said they could live with pain in installments live with paying it in installments. Other countries that are getting rebates industry calculation that was dropped on us a couple weeks ago, including germany and france, who get large rebates. They like the rebates. It is not clear. No one has come out and said they are fully on David Camerons side. He says behind the scenes the italians are with him. Cameron is out in front. Britain has a bigger bill than everybody else. We spoke about this. Everyone is fascinated by this because it is not a numbers story. It is a politics story. It is difficult for David Cameron when there is an son about immigration. Eusays by the way, the slapped a massive bill on me. What is the talk in westminster and brussels . Struggling to understand how this happened without him preempt in it. Somehow it happened in westminster, too. You get completely different stories. And brussels there is a well, look, this is the bill. Sometimes you get money back and that is how it works. What is the big deal . Bafflementthere is that this has been allowed to happen. There is a sense of dont you understand what is happening in britain . , hed cameron is fighting looks on course to lose to the u. K. Independence party, who want to get britain out of europe. The you think this helps . It to David Cameron two weeks ago. Do you think there are people in brussels who want britain to leave. He said this is baffling. Italiand his counterpart as saying this bill is like a legal weapon. A lethal weapon. In london, they cannot imagine get it. Eron will not in london, they cannot see that this will not be solved somehow. Lets hope. The latest on the euu. K. Spat. We talked about the divergence of Central Banks. Maybe we have not figured out how this is going to pan out. There is geopolitics and then there is policy. T are the chances the u. K. Are you factoring that into your Economic Forecast . We are not. We are scenario that beginning to consider because of ,ourse they are politicians sometimes they do not things that seem to be economically rational. This is politics. The moment the markets are relatively relaxed. There is still some way to go in this process. In economic terms, Macro Economic terms, the numbers involved are not huge. We work on the assumption that a deal will be threshed out over the next few months. In the eu there is always horsetrading. The migration issue might be a side deal that could be cut to repayment issue. So knows what kind of compromises could be struck. It is very disturbing in the we had in thist direction. Chancellor merkel is setting out bread lines is setting out red lines. If the u. K. Is not fitting in, she is implying you may have to leave. This is part of the game, the germans do not want the u. K. To leave. At some point you have to assume a compromise will be struck. Is Governor Carney looking at this . Policy andsetting you have a stronger economy compared to the rest of europe does thatar rumors, factor into your thinking . I would imagine you with the market. On the exit fromout a the eu. That could have a negative effect on the bank of englands policy. Thank you. We will get back on a couple things. Up, a ride on the Orient Express to show you how it is staying relevant. Welcome back to the pulse. Life on Bloomberg Television and streaming on bloomberg. Com. In the age of the electric car and 3d printing, who needs steam trains . Anna edwards met with a company that offers the golden age of steam. Modern travel is getting from as possible. Ckly lets see what traveling for fun is about. You might recognize the name, the Orient Express has a reputation for Luxury Travel. The belmont luxury groups venice. O to the Company Wants to build on the trains reputation for service. The train is moving. Round ice cubes so they do not make so much noise. Guests climb aboard to travel back in time. s blending. Splendid. Belmont used to because Orient Express group until it rebranded. Why drop the name . We are not just trains. We have safaris, river cruises. We are much more in breadth and realize. N people the Orient Express brand is owned by a French Railway ownany, due to launch its service. It seems the golden years of Luxury Travel have a place in the 21st century. At banks, bloomberg. Inup next, are the problems asia over . Isrop in the Chinese Market moderating gains. We talked luxury. Names in Monetary Policy are in paris for the International Symposium of the bank of france. Speakers include janet yellen, kuroda, and mark carney. We are speaking to a professor at princeton. We are talking about what the problems are in europe. Mario draghi is meant to be there. The man in the middle is the governor of the bundesbank. May be giving mario draghi stick over the last couple months. flacqua. On twitter, welcome to the pulse. Bloombergs European Headquarters in london. Im francine lacqua. Andine government prorussian rebels are accusing each other of starting new offenses in the region. Threatening the two month old ceasefire. Ukraines military says three soldiers were killed by mortar near donetsk airport. Russian press is reporting ukraine began an offensive against separatists. Bank of america the latest to have thirdquarter numbers impacted by the investigation into Foreign Exchange manipulation. The bank posted a loss of 232 months ending september 30. Francois hollande says he will not run for reelection if unemployment does not fall in the remaining 2. 5 years of his term. Would be nod there new taxes. He promised new measures to help young people find jobs. John farrell has the latest. The ibex down by. 4. Keeping itsrankfurt head above water, up. 3. The ftse in london up. 7. U. K. Retailers pushing higher. A picture of the equity markets. The focus is three hours away, u. S. Payrolls, 230 5000 is the estimate for the amount of jobs added to the u. S. Economy last month. 244,000 is your threemonth average. Headline numbers from the u. S. Employment report have been punchy. 2 . Dollar 1. 24, up just off a low we have not seen since 2012. The bears are out. 1. 10. Ribas looking for the euro could have a substantial fall. And you look at the euro sterling, one thing is dollar strength. Just to give you a real sense for the push higher in the dollar, up 10 on the year. Number, weong jobs need another push higher for the dollar. Yes, the u. S. Is a little bit more of a closed economy compared to the eurozone. The Federal Reserve has voiced concerns about the strength of the dollar. As the question is central bankers meet in paris, how long will they tolerate that . In 25 minutes, it is surveillance with tom keene. It is all about jobs and you have the ceo of wpp. Ive lost my glasses. I cannot find my glasses. And i any help from london . A truly Global Organization if i can find your glasses while you are in new york. It is jobs day. We will have some Martin Sorrell with us to talk about the international look. Sir Martin Sorrell about the view into the new mediocre of 2015. He will parse the glue we have heard. Kate will talk about the equity markets. By, fromger starts princeton university. We talk about any quality we and theut inequality midterm elections. President obamas former chairman of economic advisory. Day. The currency markets really on the move. The news out of the ukraine and some restlessness in Eastern Ukraine are front and center. Thank you so much, tom keene with the latest on what we are watching out for. Lets get back to our top stories. Central bankers gather at the bank of frances symposium. Joining us is chris, hes been on a panel with the bank of japans kuroda. A lot of focus is on japan ing there is chock and shock and awe. Central banks cannot do this on arer own was the message, governments listening . Is an issue in japan. The governor argued that there is good coordination of fiscal and Monetary Policy in japan. My view is that good coordination would have postlude the increase in the consumption tax. If they go ahead with the planned further increase next year and have not made their inflation target, i think that will be a real problem. Does it mean the jury is out on whether this will work . I speak to investors that say this is better than the first time and it will work. Others are saying this may be another flop. I am worried it could be another flop. Central banks cannot do it on their own. Clearer casemake a that fiscal policy is ready to hold off further tightening until the inflation target is met. To meet about why we are in this situation. We were talking for years ago about the fact that central have gone itot alone. At the time, people were answering we cannot but the are the backstop. Reform will take five or 10 years. Have we done any progress in japan and europe . When people talk about reform, they are talking about microeconomic markets, improving the labor markets, reforms of that type. Those are longrun growth issues. That is not what the problem is. When we say that Central Banks tonot do it alone, they need have cooperation from a Fiscal Authority that promises not to undo their attempt at stimulus. Inducing austerity at the same time. Quickly getting back to japan. You were on the same panel as governor corona. Does he realize this financial experiment, is this how he sees himself . What is the behind the scenes you can tell us . Position . E view the i just listened to what he said on the panel. Im sure hes very aware of the potential conflict between fiscal austerity and attempts at monetary stimulus. Cannot really say much more than that. Do you worry about becoming the next japan . Im very worried. In the u. S. , it was difficult enough to get some fiscal stimulus in a country where there is a central Fiscal Authority with responsibility for macro policy. In the European Union there is policy. Getting coordination has proven to be very difficult. It could be that europe ends up in the same kind of difficulty that japan has been in four decades. To act advice would the more aggressively and act sooner . I think the European Central bank should be aggressive. Aggression byat the European Central bank could fiscal intervention to back them up. Know where that would come from in the European Union at the current time. Thank you so much. Princeton University Professor and winner of the nobel prize for economics in 2011. Coming up, no pimco, no problem. Alliance beats estimates despite pimco founderof bill gross. More on that coming next. Welcome back to the pulse. Live from london. The tough environment for europes luxury giant is continuing as the Worlds Largest Jewelry Company shows results. It is not aswn but bad as expected. The stock trading up 3. 5 . Still was in asia, hong kong, and china. Richemont is the owner of cartier, montblanc. 38 of sales come from asiapacific. Assailants remained relatively resilient and client about climbed about 2 . The u. S. And the middle east helping offset that. Europe is slowing. Not as many tourists. 2 . A, pacific off japan off by 13 profitability was down 4 . They managed to limit the damage with falling prices in precious metals. Perhaps this is knows a prize. September they warned us we are off to the worst start in the year. And burberry struggled in asia. Goldman sachs cut the outlook. A sigh of relief they were not as brutal as it could have been. The trent that asian sales will continue falling. They said it is not Getting Better in the near term the environment is going to remain difficult. Particularly ahead of the holiday trading season. The honge effects of , golden week, when all the chinese mainlanders splurged on luxury goods, that did not happen. Nothe shortterm, that will reappear, they hope. Inmight not be great christmas, we are going to start to see in the longer term better results. Chineseing for sales fell. In the longer term, the middle class is going to want jewelry. We are going to weather the storm. In the near term i would not expect a huge turnaround. Caroline hyde on the troubles in the luxury market and richemont. Monday, interviewed with the burberry ceo. And the importance of digital. We are looking at digital and luxury and how that conversation can continue. Watch out for that on monday. Bill gross departure from pimco led to outflows. Allianz, the Parent Company, led have they weathered the departure . The departure of bill gross. Allianz saw profits beat estimates. They were down some 5 yearoveryear. At 694 Million Euros. Company ina healthy life insurance. Sector by sector, in there asset 690 4 million. Property and insurance, 1. 4 2 billion. Life and health insurance, 790 million. Here is the figure they put on bill gross departing, 60 billion. The total return fund, the flagship fund, saw outflows for 25 billion euros. We need a similar metric. I suspect it might have been more damaging for bloomberg. If 50 Million Viewers just went. And we cannot get them back. With your great reporting. Thank you so much. Hans nichols from berlin. After the break, u. S. Jobs day. Will the labor market stay on course for its work its best performance since 1989 . We area look at what watching. We are joined in new york by michael mckee. In. Job numbers for october a couple hours. This is the best year for job creation since 1999. Expectingt more jobs. In the most recent u. S. Midterm elections, exit polls showed 70 of americans do not think the economy is Getting Better. They are worried about their own employment prospects. It is funny that we are doing well and people are not feeling it. Look at the distribution of forecasts, they lean towards a downside surprise. Given the strength in the jobless claims numbers and some of the other employment figures that cannot this week. That suggests that maybe we are going to get some volatility in the markets if we even come in as expected today. What is likely to be the most important number for investors . We are in the considerable andod between the end of qe when they start raising rates. Everyone is watching this. The prison of the fed and what they will think. Unemployment has already come down through a couple targets. Ben bernanke said they would 7 . Qe at 6. 5 was supposed to be the threshold for raising rates. How far down to we have to go . That may depend on wages. That is Janet Yellens metric. Whether or not people are getting a raise. Last month, flat. No change. This month we are expecting a point to gain. If we get a bigger surprise, we will get the wall street lean towards higher Interest Rates in the bond market. Overall, it is interesting. You have just pinpointed the better question about what the fed is looking at and what jim e. On is looking at. She is looking at this in terms of metrics. See anifficult to that will givea us an indication about what the fed is thinking. To watch the Unemployment Rate. Inflation is there other metric. If we see that take up, it will race. Owards and eventual michael mckee, our economics editor in the u. S. Figuresbreak down those for you. Berlin marks the 25th anniversary of the fall of the berlin wall this sunday. City no longer a bargain when it comes to real estate. Hans nichols looks at luxury apartments along the line where the wall once stood. Tight five years after the fall of the berlin wall, the pooris moving beyond its image. Opulence has exploded at an unlikely spot. This used to be no mans land three east berlin and west berlin. For property builders, it has hasme further could it become Fertile Ground for highend apartments. Rich. Is hosting the apartments for russian buyers , americans, scandinavians, german billionaires want to have their footprint in berlin. Part of berlins postreunification growth that is finally happening. Five start losing at three or four star prices. This robust townhouses follows the walls old line. For 2. 5 million dollars, you get an opened ceiling living room and privacy on demand. Eat in kitchen, four stories, a guest room on its own floor, private bath, and a study. A master bedroom, a massive bathroom, and a bathtub with a view. Ym, a sauna to relax. A 7. 5 million apartment is the record for berlin. The prices are cheaper than london or paris. With the housing shift, longterm residents are being cries out. A we had 10 or 20 sections day at the moment. 10 years before we had 10 or 20 evictions a day at the moment. 43 , wages have raise 4 in the last three years. Date dollar buildings spur growth. They still see open road ahead. Looking at the luxury market in berlin, it has increased between 50 and 70 . I believe the strength will continue at 5 per year. Which could mean a luxury where the wall ran. Hans nichols joins us live from berlin. An incredible anniversary on sunday. It is going to be a remarkable moment. Lights,e a wall of little balloons that will be released into the air. I will be the memorial on sunday. Getting back to the eastwest split, there is a fair and not of anger among longtime residents about what the Luxury Property market is doing to average rents. That is not going away. Around the corner from where i live, 15 minutes from brandenburg gate, there are routine vandalisms of high end properties, even when they are building them. There is real tension. Hans, thank you so much. Hans nichols from berlin with the latest on the property prices and the story coming from allianz. That is it for the pulse, bloomberg surveillance is up next. Live from new york with tom keene and his team. Follow us on twitter. I am flacqua. Jobs day in the u. S. , we will break that down. And then we have a great conversation with the ceo of wpp. It will be interesting to see what tom asks 10 in terms of growth worldwide. Have a great weekend, everyone. This is bloomberg surveillance. It is jobs day. A solid and sour america speaks on tuesday. Exactly when do paychex increasee . Stocks surge ever higher. An excess of 200 died at the berlin wall. Years torn down to revive ago today. Good morning, everyone. It is bloomberg surveillance. Were live from our World Headquarters in new york city. It is friday, november 7. I tom keene. Joining me scarlet fu and rendon greatly. Labor market on par for its best performance in 15 years. We will see if it kept pace last month. The october jobs report is due out at 8 30 a. M. Eastern time. Workerss added 235,000 and the Unemployment Rate at 5. 9 ,o hold steady which would match a sixyear low. Congressional leaders meeting with president obama and already the speaker of the house have a warning for him. B