we are here in london. i'm guy johnson. >> i'm francine lacqua. happy new year to everyone. what are angela merkel's contingency plans for grace? that is a question that is dominating the currency markets this morning and is sending the euro lower. driving the news is a report over the weekend that says merkel could look at a greek exit. let's go to hans nichols with the very latest. what are we to believe? >> we basically have three different lines from the german government officials in germany on the report. the first is that saturday night line. that was a nondenial and i'll saying they don't comment on speculative reports. then, last night, we had the economy minister and junior coalition partner. he would know about internal planning inside the finance ministry. he said there were no contingency plans. this morning, we have a member of angela merkel's party, the party chairman essentially, saying he can't imagine there being contingency planning. what we don't have is a firm denial that the government is planning for a contingency if greece leads the eurozone and if they think that exit could be manageable. that was the thrust of the report. one note of caution, just because a government doesn't deny something, we can't take that to mean confirmation. the german government may be playing the long game, where they think we will have a lot of these speculative reports and they don't want to be in the position to deny all them. at 11:30 local, we will see whether or not they have cleaned up their line, whether they have a digestible line on what their plan is for grace if syriza wins and we'll see whether or not markets except that line. >> wouldn't it be remiss of a government not to plan for most eventualities? it seems slightly crazy that a government has to deny that it is planning for an eventuality, even if that is right of the far fringe of outcomes. of course they are going to plan for everything. they can't deny they are not planning for it. >> the question is, if you are planning for it, then you telegraph it. you telegraph it through "der sp iegel." in general, their reporting is excellent and spot on. the question is, was it intentional from inside the government to put this out there? or did "der speiegel" get this on their own merit? it is significant that it is out there. the thrust of that report is that a greek exit is manageable not that it is an outcome they could plan for. before, the line was always, a greek exit is unthinkable. that transition from unthinkable to manageable, that marks a change inside the government. maybe before, they thought it was manageable and never publicly telegraphed it, but to me, it is a fundamental shift. that is why we see the currency markets reacting so drastically. >> thank you so much, hans nichols from berlin. >> let's get the other side of this story and figure out what the greeks think about all this. the election campaign now in full swing. i'm curious to know how all this german input is playing as well. >> it is kind of a repeat of the situation we saw in june 2012. we've been here before in a sense. there were similar lines with people saying both inside the greek government and officials saying the greece's member sit of the euro is in stake. this has been a bit of a bluff in the past. the question is whether greeks will believe it as a real threat or whether they think it will be a bluff. there might be a bit of a boy who cried wolf syndrome. some people that i'm speaking to are more concerned. by and large, i think most greeks don't believe that greece is going to be kick out of the euro. >> give us a sense of what impact the new parties may have. >> we had said at the beginning of the presidential campaign that he is going to sound a new party. he finally went through with that and carried it out on saturday. we don't yet have holes to suggest what kind of electoral impact it will have. the polls have been holding back before asking him. there was one that was conducted before that suggested he might get about 6%. that isn't a huge amount, but if the race is a tight one, it will make a difference at the margins. the bigger impact will be on his party. he might get some of that vote but this is a party that dominates greek politics. they've already collapsed. the former voters are still around. there is a scramble for those voters. you might draw some voters from the cities. he is not a hugely popular person here. this is the guy that took greece into the bailout. on the other hand, just the name alone might attract some. if he pulls 6%, which one poll did suggest, about 6%, that could make a difference at the margin. >> marcus, thank you very much indeed. we will be back with you soon. >> looming possibility that greece might check out of the eu is impacting the markets. let's bring in eric nielsen chief economist at union credit bank. great to have you on the program. why is nobody panicking? >> your colleague put it very well. is it conceivable that somebody leaves because the market drives you out but you can't keep somebody in? if the greek population decides to leave, then you can leave. that means that the contagion effect would be a lot less. >> is that true? is that going to be the way that it happens? i want to see you start opening the door for a country leaving. it changes the dynamic completely. >> you see already now, with the qe backstop, it looks very nice across the southern flank. i think it is important to appreciate that the greeks want to leave. it is different from the market forcing you out. the other point that has not been pointed out enough is that the greeks will not necessarily say they want to leave. they may say, we will not have the policies you advocate. then you can push them out. the exit would come if the greeks start to run on the banks and the ecb will not support them. it would be the ecb's decision. >> i understand the point that this is internal politics, not about debt sustainability. this is also the test for what future countries are going to vote. you have the emergence of extreme parties in spain. if they want to leave the euro, what are the chances of other countries doing the same? >> that is a good point. i think that if greece leaves it will be a complete disaster for grace. that might take the wind out of the sails of the other extreme parties. the extreme party i worry about is in france. if france starts to pull off, there is no euro. >> so greece is important? >> greece is important for sure. it is the first test case where you see if it can hold together through this transformation to become northern european. >> if syriza wins and forms a government, do you start pricing that -- the breakup of the euro goes from being a right-hand side tail risk to start moving into the center. how do you factor that in to your thinking about pricing of all assets across the eurozone? >> i wouldn't be too worry, in a sense. i worry very much for the greeks. but greece in the euro continues. as i said, if they leave, for me, it probably reduces the risk that any other country is about to leave. if greece suddenly prospers on its own, but i can't see this happening. >> let's say, what are the chances of greece leaving at this point? and when greece leaves, what happens? >> i don't think greece will leave. let's assume they leave. i think there will be chaos in greece and the ecb will be buying bonds. therefore there will be no chaos in other places. the question to ask yourself is, what is the implications in other countries of this happening to greece? will spain move closer or further away from exiting? my guess is that if anything you move them away from the exit. people will see what disaster it brings in people. >> is there credit risk in eurozone government bonds right now? >> not really. >> even in greek bonds? >> in greek bonds, yes. but it is a very small share of the market. it is not like the effect that you have from ukraine or russia where some funds have such a big chunk of it that they have to sell other things and you have the ripple effect. >> can the ecb by something with credit risk attached to it? >> i think they should, but they won't. it is also the greek central bank. it is difficult for me to understand that you have a currency union and say, i don't quite like you. that is not monetary policy. it is what the bundesbank said. >> if they don't buy greek debt is greece a member of the eurozone? >> they are because that is their currency. >> as you say, it is meant to be a common currency. it is not common if the central bank is buying one thing but refusing to buy another. the premise doesn't exist. >> i don't think that is necessarily the definition. it is a massive blow across the project. but at the end of the day they have bought it italian bonds before, greek bonds before, the fact that you buy some but not others is not unprecedented. >> but it is an active decision on a credit basis. >> erik give us a sense of where you see the euro headed. is 2015 the year where the euro will weaken significantly, and does it mean that a lot of forecasters have their predictions wrong? >> we had it wrong. we didn't see this weakening euro, but we do now. i think it will move lower a lot. >> how much? >> to the 110, 115 range, maybe. when you start moving through this space we are not talking about small moves. the only thing that is important is this it is predominantly a dollar story. you are having maybe 4% 5% with depreciation so far. it is a wonderful situation. you have the central bank threatening to pound money into the system. oil is low. you have a lot of stimulus from this side. >> stay with us. in the meantime -- >> our twitter question today. let's ask you. how low does the euro go this year? we are talking about against the dollar. tweet us your thoughts, join the conversation. it will be interesting to get your take. >> still to come, which retailers are winners and losers later in the hour. >> loss, what impact will low oil prices have on the future of alternative energy in the you play -- in the u.k.? ♪ >> welcome back. you are watching "the pulse." live on bloomberg tv. we are on your tablet, on your phone, and we are very much on what is happening in the currency markets. the single currency floating with a nine-year low, the risk for deflation mounts. the ecb maybe just a few steps away from full-scale qe. what that looks like, let's discuss that now. we are back with erik nielsen. before christmas, you put out the note saying, 50-50. did the article from draghi move it down for you? >> it looks that way. for me, the question has always been, can you actually threaten it, get the effect, and get away with not doing it? >> he has done pretty good so far. >> exactly. we have been more optimistic than most people on the recovery. if that comes, maybe he can get away with it. also with oil prices dropping and inflation lower, we have to pull the trigger to keep his credibility. you can sort of see that they have done the groundwork. >> will he pulled the trigger at his next meeting? >> no. i find that hard to believe. there are more things he can do. he can expand the private purchases, and if you wait till march, you have the new forecast. i would be surprised if they do sovereign qe in january. >> when you look at how he's going to pull this together, you talk about the considerations is it possible that we can end up in a situation where the cpi data is screaming that it needs to happen but the politics is going to keep him from not doing it? you talk about the fact that the germans are on board but do you think the germans really are on board in the way that you can have aggressive qe? >> this is the big thing, if you don't do 500, there is a risk that people say, that is all price. think about what happened in the america and the u.k. the more you i knows it, the more you have somebody buying the rumor and selling the fact. he must say that there is much more. he must be very clever the way he says it. >> the more he waits, the more he has to do. if he was to do it in january, he could get away with less. >> unless the economy starts to pick up. the italians have disappointed but european pmi has start to look better. >> france has disappointed. >> exactly. you need better numbers in the big countries. as i said before, the die has probably moved. the germans don't like it. but i think -- if you see all the statements from the german politicians, they are saying nothing. the central bankers are saying, we don't think we are there yet. >> ok. in my mind, the argument is beyond whether they do or don't do it, it is just a question of scale. >> and timing. >> timing to a certain extent. if they come through and go large, if we go one billion, that tells you that everybody is on board. if we get 250 500, that tells you that not everybody is on board. they have to pull the horns in a little bit. that shows the ecb could be quite weak. >> i think less than 500 is impossible. draghi will make a blunder beyond. i think if you came out with a couple hundred and said -- it would be -- >> catastrophe. >> it could be complete chaos. if you pull that trigger, you have to do whatever it takes. >> what does that look like? >> minimum 500 with clear statements that this is just the first one. we will do whatever it takes until we see the deflation risk having disappeared. my guess, given the fact -- maybe there is in january some private sector stuff to extend sovereign qe at 500 with a clear indication that there could be qe 2, 3 4. >> when we had news they were going to publish, the ecb, in order to be transparent, you were on set with us. what does it mean for the markets? here, we have a very clear indication of where the ecb stands. >> we will see how much they actually published. i remember some years ago, a governing council member said to me, you would be very disappointed. you never really know what it is. you never really know how much they will tell. the other side of it, sometimes you see this list of the members, i don't think it is quite like that. my gut feeling is that there are people who probably -- he always sees himself between the germans and french. i don't think it is quite right to think it is black and white between people. nobody -- everybody will have hoped the economy will do better, but at the end, it has to be do or don't do it. >> erik nielsen, global chief economist at unicredit bank. >> how realistic is a split between greece and the eurozone? what happens if the greeks decide to go their own way? we will discuss the implications and possible contingency plans, next. ♪ >> welcome back. quick look at the equity markets. first real day back in terms of trading. the ftse, one of the few exceptions. the ftse now down by 0.5%. most of the continental markets, reasonably well bid. you can follow me on twitter. see you in a couple of minutes. ♪ >> welcome back to "the pulse" live from bloomberg's european headquarters in london. >> these are the bloomberg top headlines. >> iran's president has said that his country can't achieve sustainable economic growth while living "in isolation." rouhani told a conference on sustainable growth and job creation that iran would not suffer from becoming more transparent about its nuclear program. progress in negotiations have won the country some relief from damaging western sanctions. >> indonesian whether officers report on the path of the crashed air asia jet. the plane appears to have flown into a storm cloud and ice may have formed around the engine. rough weather has continued to hamper the search for the black box flight recorders. search teams recovered four more bodies earlier today. >> in an interview with the bbc david cameron has said that his proposed measures to reduce new immigration into the u.k. will require proper full on treaty change. >> the referendum must take place before the end of 2017. if we could do that earlier, i would be delighted. the sooner i can deliver on a renegotiation, the better. >> now, the holidays are over time for retailers to take stock. here with more is european business correspondent caroline hyde and charles allen. thank you for joining us. caroline, we have some figures from john lewis. >> building on a trend that we saw from next is online is where its at. we saw john lewis performing very well, like for like sales up almost 5%. 777 million pounds. one million pounds spent per hour in the five weeks up to december 27. we had a slight downtrend, then a pickup in the panic buying before christmas, then the sales after boxing day. online growth, up 19%. one third of all john lewis sales are going online now. that is where the growth is click and collect. more than half of all purchases being done online but then picked up in the store. many people felt that doing online would mean people wouldn't buy in stores at all. john lewis had flat sales in-store then a big pickup online. it was all about the new espresso machine. interestingly, one other area was discounters. little, it was reported, had 20% growth in like for like sales. more champagne sold than milk. i love that. >> and the nutribullet. >> you have the champagne before -- >> and then you detox. >> charles, in terms of the way the retailers have set themselves up, were they in the right position with stocking with delivery times, to cope with what appears to be a changing dynamic? >> they definitely changed. john lewis there week week used to be just before christmas. black friday week was easily a beat. implicitly, they've may be not done as well as they thought they would. there are higher costs. particularly online. if you want everyone to be delivered on the same day, you have to employ more people. you are also selling things on promotion. there is a suggestion they may step back a little bit from black friday. the whole point of christmas is you sell at full price as next did. thweir best week, the week before christmas. i think we have seen a big change with the sales brought forward to the end of november but maybe the bill -- maybe people stepped back from this. >> what about tesco's? >> we now get more unveilings from the high street players. this is of course grocers. they have been having price wars abound. sainsbury's comes out on wednesday. we will likely see like for like sales decline. anywhere up to about 3%. and an s does well on the food front. we trade up for a bit of luxury. general merchandise, they did not set themselves up for online. they had disruptions. they couldn't deliver the next day as planned. they are going to have problems in general merchandise. tesco was all going to be about the recession. >> the trading has been quite difficult. it is really about how they can set themselves up to have the right price in their merchandise and the right cost structure for what is going to be a slimmer operation. that means things like researching in head offices that they told us about in the u.k. they told us in october, that number is going to come down the number of people in head offices. the way they buy merchandise has to become a lot less complicated. it has to be simpler, like the discounters. so you are dealing on a more volume-based thing on customers want -- on things customers want to buy. that is a trap loads of retailers have fallen into. >> thank you for a great conversation, caroline hyde and charles allen. >> coming up, contemplating a breakup. the possibility of greece and the eurozone going their separate ways. what happens if greece decides to go it alone? is there a contingency plan in place? we are going to find out what the story is, next. ♪ >> welcome back. you are watching "the pulse." we are going to look at the euro and show you what is happening here. we came in throughout midmorning as low as 118.64. we've been popping up a little bit since then. that chart doesn't show you the gap down which takes us from the position of being down around 0.4%. we are trading 1.1957 as we speak. >> lithuania's adoption of the euro has triggered a new voting rotation at the european central bank. it is diluting the power of the eurozone's biggest economies. >> when lit the winning adjoined, it marked a big change, not just for the people. the entire power balance of the eurozone shifted. that is because lithuania's central bank will become a member of the ecb. there are only so many seats on the bank's governing council. lithuania's arrival has triggered a rotation system. the five biggest economies now must share four seats. the bottom 14 countries will divide the remaining 11 voting rights among themselves. the six members of the executive board as well as mario draghi have permanent votes. that means that jens weidmann the president of the bundesbank, will be able to say nein to any qe votes in may and again in october of 2015. lithuania's top bankers will only have a say in march, april, and may. lithuania, whose economy is 2% the size of germany's, will have a vote. the german bundesbank want. >> we've been talking a lot about euro and the weakness of the euro after greece rejected the prime minister's presidential nominee three times last month. the stages now set first not elections. now, with the nation's anti-austerity party ahead in the polls the result of the elections could mean greece walking away from the eurozone. joining us now is andrea's. thank you for joining us today. what is the sense on the ground? are people talking about a possible exit from the euro? are people getting cold feet? >> i think everybody knows that leaving the euro is not a real option. even syriza the radical left party, knows that. it is a bit like a mel brooks film. as if he's actually putting the pistol on his head and saying, give the money or i'll commit suicide. they have to keep the rhetoric up. if they don't do that now, they will lose votes. what this means is they would have to make a huge u-turn if they come to power on the 25th. they would lose a lot of the hard left votes from the party. what this means is they would have to make a coalition government with other forces from the sender or the right. this would give the perfect alibi to do the u-turn. even though there is a lot of scaremongering in athens, people say they are going to lose their euros i think that rationale will prevail in the end. from the point of view of democracy, i think they do fight a real battle. they have not taken the initiative in these elections. the basic argument is, vote for us, otherwise you risk getting out of the euro. the salaries a party, the radical left, say, vote for us and we will change the whole of europe. >> andreas let's assume that syriza do win and the polling holds as it is now. they take up the extra votes and form the new government. if they pull the u-turn you're talking about, how long does that government hold together? >> that's a good question. depends when they are going to do the u-turn. they don't have much time. they need to do it swiftly because the extension that greece god was for two months till the end of february. they may give another extension of another month, but they have to do a u-turn before the summer. otherwise, we would be talking about the nightmare scenario. there are enough parties in the center and the right -- let's put it this way. if new democracy loses, and the chances are that new democracy is going to lose, chances are that the current prime minister is not going to be the leader of the party anymore. the new leader might decide to move the party towards the centerleft and form a breakaway coalition government. anything goes. we do know there is a lot of rhetoric, which is basically battles. at the end of the day, greece has to be governed. greece has to move forward. if he wants to stay as the prime minister, he needs to get the dollar had from the creditors. -- the go-ahead from the creditors. >> i was going to talk to you and ask you about angela merkel. there were reports that the german government is planning a possible greek exit. are people in athens talking about this? does that sway national sentiment? >> they are indeed. the problem is, usually when foreign entities mess with greek elections, it has the opposite effect that was intended. we do know that greece does not have the bargaining power of 2010 or 2012, when a possible default on the greek bonds would have effected the core financial system. right now, the situation is different. we do have something which is a bit worrying. a lot of countries and a lot of market forces would stand to gain from a crisis in greece. this is not a conspiracy theory. it just happens to be the case. for example, if the crisis in greece takes away the heat from the italian or spanish political elite then crisis is in their favor. ecb, you mentioned earlier the quantitative easing. a crisis in greece might persuade mr. weidman that quantitative easing is the answer. >> possibly. we will get the answer to that one fairly quickly. one final question for you. if syriza changes and pulls the u-turn you're talking about, and people who voted for sir reza are we not setting up greece for a even bigger crisis further down the road? this would effectively maintain the policy of extending the current debt story surrounding the country, which many say is unsustainable and continuing high levels of unemployment. is there a danger that if so reza does what it does, that we end up with a bigger political problem further down the road maybe in six months, 12 months time? >> i think both troika and the political leaders here do know certain things need to happen. greece does have a huge social problem right now. they need to actually make some amends with that. greece cannot compete under the current 27% unemployment for a lot longer. they do have to put some leeway on how they deal with greece. on the other hand, there are a lot of analysts who say the debt levels are unsustainable at 170%. when one looks at the net present value of this debt, it is lower than italy's or spain. the maturities of the greek debt are very long. a restructuring of the greek debt is not going to happen -- is not going to be a very radical restructuring to the point of haircutting the nominal values. it may do a lot of good for greece. in other words, if they gave another 10 years of nonpayment of interest recapitalizing the interest but not paying it right now, that would give a lot of breathing space for the economy. if so reza comes into power, i think they would have to deal with all these problems. if they do lose a lot of the mp's from the left flank, there would be others from the center or the right that might actually fill in the gap. there is a new party, which is going to -- one is from the former prime minister, mr. papandreou who has decided to split from his father's party and form his own. we are not going to analyze the reasons. he may draw a lot of voters from syriza. there is another party, which basically may hold the balance of power. this is the centerleft or center-right depending on how you want to call it. it is a pro-european party that once greece to stay within the euro. we have now new forces coming into play that may take -- >> we are running out of time. we have run out of time but thank you very much indeed for the analysis. andreas koutras. >> coming up, luxury electric carmaker tesla is bidding on china. we will look into its push into the world's biggest car market after the break. ♪ >> welcome back. time for today's new energy. intel is a is helping carmakers trade in their old cars if they want to buy a new model s. it is part of tesla's effort to crack the world's biggest auto market. angie lau and steve mann took the model s out for a spin. here is how 2015 is going to look for automakers in china. >> red is my color, don't you think? red is also a very lucky color for the chinese. tesla they want to get into china. >> it is the biggest market in the world. there is over 1.3 billion people. china is spending a lot of money , spending a lot to get people to buy an electric vehicles. a lot of cities are very polluted right now. >> let's go for a ride. i want to see how this baby drives. steve, if you think china is such an important market, what are they doing to promote ev's since they have such a massive pollution problem? >> they are not only subsidizing purchases, they are spending on r&d to standardize the charging infrastructure, the battery technology all sorts of technology. >> are there any competing technologies to ev right now? >> definitely. fuel cell has been catching on very quickly. we believe fuel-cell still is going to take a little bit longer to be adopted. there's always a concern with safety. fuel-cell uses hydrogen as a main source of fuel. it is very volatile. so there is a lot of work that needs to be done to get the consumer comfortable with having hydrogen in their vehicle. >> so, drive us into the future. tell us what 2015 is going to look like for automakers. >> i think china is still going to be a major market. there's a lot of moving parts in the china market. we had two years of strong growth. i think consensus believes that there is going to be a lot of risk going forward. there is going to be limits to new car registration, especially in cities that are highly polluted, very congested. the economy is actually slowing down. the growth in the economy is slowing down. consensus is forecasting gdp to only grow 7% and there's been downward revisions in the past months to that number. >> red is my color as well. just fyi. for those listening on bloomberg radio, the first word is up next. for our viewers, a second hour of "the pulse." >> the euro near a nine-year low. join the conversation on twitter. how loader you think the euro will go in 2015? join the conversation. ♪ >> the euro falls as the ecb gets closer to qe and greece's prime minister says his country could be getting closer to an exit. >> the global gust continues after a collapse last year. oil continues to drop. >> bigger than vegas, how the consumer electronics show is stretching sin city to its limits. >> good morning to our viewers in europe. good evening to those in asia. a warm welcome to those waking up in the united states. >> this is "the pulse" live from bloomberg's european headquarters in london. >> let's talk about what spin happening between greece and germany. what are chancellor angela merkel's contingency plans for greece if syriza wins this month's elections? that is the question dominating the currency markets. the euro is down on that trade. driving the news, the report from "der spiegel" saying that merkel could live with a greek exit. let's go to berlin and join our international correspondent, hans nichols. who should we believe? let's try and get some clarity into this. >> we will get clarity in 30 minutes. we get the daily official government briefing. at this point, these denials saying they are not going to comment, it is going to be untenable to hold this position. we basically have three different kinds of denial. i will recap the "der spiegel" story. they said not only was angela merkel's government not only were they planning for contingency, but they thought a greek exit would be manageable. before, you remember this from being down in athens in 2010, the idea that greece would leave was never officially acknowledged. it wasn't even contemplated. that is the big shift. they've said they are not going to comment on speculative scenarios. a junior member of the coalition says he is not aware of any contingency planning. the head of merkel's party said he couldn't see a scenario where they would be doing contingency planning. all that is not a firm denial of the "der spiegel" story. that is that they are planning and can live with a greek exit. >> in the last hour, we spoke to an analyst in athens. he was saying, people on the street are talking about this and it may influence the way they vote. he was saying, it would be insane not to think of a plan b. i'm talking about the german government. >> governments always have contingency plan. the question is, when do they leak out? when they do, is it a mistake loose lips, or a telegraph? or telegram in this case? if it is, who are they sending it to? is the german market -- german government telling markets don't worry? or are they sending a warning to greek murder voters? a lot of unanswered questions some great reporting by "der spiegel," and some answers in about 20 minutes from the german government. >> hans nichols, thank you so much. >> we look forward to that event and the other updates throughout the day. for more on the greek elections, let's bring in marcus in athens. marcus, let's talk about the german angle on all this. the election campaign now in full swing. how are people reading what merkel has or hasn't been saying? >> well, we are seeing a little bit of a rerun of the election we had in june 2012. then there was the prospect of finishing first. you have a similar kind of situation. [inaudible] you had a lot of that domestically in terms of the campaign from santarus. -- from samaras. you also had noise from officials supporting that line. so it is a bit of a blast from the past, if you like. the battle lines are forming in a similar way to then. there is a bit of a boy who cried wolf syndrome. there is a little more concern about it than there was a few months ago. anecdotally, i don't get a huge sense that most greeks are really worried, really think greece is going to be kicked out of the euro. i guess polls will confirm that soon or not. >> marcus what impact will george andreas koutras -- george papandreou's new party have? how much impact will he have? >> a lot of this is about the scramble for the vote, looking for a home after the collapse of his old party which he was prime minister of. syriza has been a big beneficiary of the collapse. a lot of former voters have gone to surveys up. -- to syriza. papandreou is not a hugely popular figure in greece. this is the guy that took greece into the bailout. it is a matter of how many voters go over. it is a big blow for his former party. the foreign minister and the junior coalition partner are going with him. at the margins, we haven't really had any major polls over the weekend. pollsters have been holding out to see how many votes he gets. one told it come out at maybe about 6%. it is not a huge impact, but it could make a difference at the margins. >> marcus, thank you very much indeed. let's talk about the twitter question. the euro is already down. how much further does it go? >> tweet us your thoughts and join the conversation. so far, we've had some great responses. a lot of the ones i've had point to a lower euro. that goes against a lot of forecasters. last year, a lot of people were on the fence. it is interesting to see that the weakening today is prompting a lot of chatter about weather forecasters will have gotten it wrong one more time. >> i would say the spread is probably parity to 1.15. significant downside from here. this is a dollar story. we get a lot of dollar data this week. we get the fed minutes on wednesday and unemployment data on friday. that is probably a bigger factor than what is going on in europe. that can still change. >> still ahead, we talk the top trends in tech. stay tuned. ♪ >> welcome to "the pulse" live from london. >> tech is going to vegas this week. the titans of the industry are heading to the casino capital for the trade show. it is c.e.s. and caroline hyde has a preview. it is getting pretty big. >> it is, and they don't want it to get any bigger. 160,000 people are going to do send upon las vegas. that is more than they have hotel rooms. there's going to be more than 3000 companies trying to show off their wares. from the eu, it is france with the biggest presence. they are sending out about 120 companies. you have german and u.k. companies flying over as well. c.e.s. is going to have asian offspring. it is going to launch in shanghai. they don't have that many chinese presence. still 160,000, two miles of floor space, drone, robot, tv you name it. >> virtual, augmented reality was sort of gadgets can we expect to be shown off this year? >> v.r. is going to be a strong one. i think there is going to be a war over connected television. you have sony, sharp, phillips all launching new connected tvs which use the android operating system. then you've got samsung coming in. this is the reinvention of samsung. this is samsung pushing the internet of things. they are launching connected tv's. samsung already tried this with smart watches and a phone. the phones were about a year delayed, and already you've got google and apple owning the algorithm -- the operating system space. in tv, samsung is the number one player. they are looking to start having connected tvs that can talk to your samsung referred to ritter your vacuum cleaner -- samsung refrigerator, your vacuum cleaner. so this is samsung not only wanting to get in on the internet of things but also get in on the connected tv and its own operating system act as well. back to you. >> caroline, thank you. >> let's go from vegas to what is happening in london. the city of coarse carving out a name for itself as one of the most exciting tech markets in the world. there was a report this morning talking about the number of startups in 2014. a new record. for more on what 2015 holds one of london's -- shouldn't say one of, one of london's leading tech investors. she joins us now. 2014, a pretty good year. >> absolutely. the amount of venture financing was actually 20 times that of four years ago. a really good time to be doing new things innovating and trying to take advantage of what is happening globally. >> it is great to have startups but the startups need to go big. >> absolutely. all the ones you were talking about this morning, they are going to get to scale. 20 people, 30 people, 50 people, showing they can generate traction. at the same time, you have more new entrants coming as well. the hottest sector will be financial services. we talk a lot about payments before. we talked a lot about foreign exchange services. then i think you are going to see things in cyber security right off the back of the sony hack and things like that. a lot of other sectors as well. much of like what caroline was talking about. >> is 2015 better than 2014? better, bigger, are we doing more with it? are we creating more jobs and more money? >> 100%. there will be more job creation more innovation, more value created. >> in vegas c.e.s. kicks off today. we saw a note this morning saying that in terms of europeans, the french have the biggest delegation. why not the u.k.? >> traditionally, .c.e.s. has been about hardware. 20, 30, 40 years ago, it was all about electronic goods. that is where they were doing all the buying. i think you will have more of that coming from other parts of europe than london, where there is a lot of software services versus some of the other places. they are going to try to court-martial from asia. >> do we think that is the right place to put our eggs right now? is software the place to be? hardware looks exciting to me. >> i believe that is where you can deliver scale. you can have a team of maybe a couple hundred people, but you are able to deliver services that can scale infinitely. as compared to when you have to produce and manufacture. we have also invested in hardware as well. you do have a lot of greater capital requirements than. i do think london is taking the smarter route. >> what kind of hardware? we know mark zuckerberg went after oculus because he was concerned he didn't have hardware. are we going to really do that kind of thing and use something like oculus all the time? >> i think the reason he went after oculus and virtual reality , and why hardware is becoming so predominant, is because it is not mutually exclusive to software. it is enabling software delivery in easier places. whether it is in front of your eyes or on your wrist or on your belt. the lines are blurring. when we used to think about software, we think, you need a laptop or a desktop. now, it should be integrated with hardware that we are used to using every day. >> you bring the belt up. i'm quite excited. [laughter] le belte, which is a smart belt. i checked this out this morning. it is a belt that adjusts when you stand up and sit down and monitors you 24/7. >> marketed by a french company. >> not for french people. >> this is a critical piece of kit for 2015. stay with us. plenty more to talk about. we will continue that conversation. >> what will the u.k. energy mix look like in 2015 and beyond? we speak to the energy minis ter. stay with us. ♪ >> welcome back. in today's new energy, we are looking at the uk's energy future and putting fracking in the spotlight. the united states continues to dominate the headlines when it comes to shale production. is there a future for the oil industry, for the gas industry here in the u k? let's talk about that now? we are joined by matt hancock, minister of energy and climate change. i read a lot of things about fracking over the holidays. 10 days, time to read. this was one of the subjects. what came through clearly was that gas prices are coming down in 2015. despite the u.k.'s desire to see fracking be part of our energy mix, these lower gas prices are going to delay that. is that a good analysis? >> i don't think they delay any necessity. the gas price hasn't come off as much of the oil price. >> it will. it follows. >> this is a long-term project. we are right at the start of a long-term project. it has got cross party support in the u.k. for the principle of getting this potential that could be enormous out of the ground. the geologists are clear that there is a huge quantity of gas deep underneath the u.k. the question is how much we can economically recover. we are right at the start of that. the planning decision this month and then others later this year just to get the first wells moving to get the first extraction out. the early signs are good. but it is really at that early stage at the moment. it is an exciting prospect. i think it is the duty of the government to try to make sure it happens in a careful well-regulated way. >> if you look at the timetable because the oil price is so low and gas prices will go lower, it doesn't give that sense of urgency. >> i don't think that is quite right. the benefits are not only getting the shale out of the ground for the companies involved, but also for the security of supply domestically. >> urgent? >> of course, it is urgent to see what the potential is. and to make sure we can get that exploration going. but we already know that full scale production is some years off. so you've got to look through the short-term moves in the price to a degree. there may well be an impact but the scale of the production in the next couple years will be small anyway. this is about finding out how much can be brought out of the ground. >> what i'm hearing from you is, lower gas prices will have very little impact on the u.k. and its desire to frack. >> certainly in terms of the motive, the need to do this exploration, absolutely. there are benefits. not only the economic benefits but benefits in terms of jobs also, it helps reduce our carbon emissions. >> economically, the economy of these things is very important. if the gas prices appear at a low level and you can frack at a price above that, it is not economic to do that. are we looking at other arguments? if gas prices come off 50% the way they have in the oil market, are we going to see it being economic to frack in the u.k.? at current prices. >> let's separate out two different groups here. from the government's point of view, from the u.k.'s point of view as a country, the benefits remain. but also, the benefits in terms of energy security which is obviously a big issue. in terms of companies who might be looking to take part, obviously, we've got to make the margins work. we have a generous fiscal regime in place. offshore, we are looking to change the fiscal regime to make sure it remains economic. we've got to get all of those details right. at the moment, we are at such an early stage that the current wells being drilled are for exploration purposes anyway, to find out what the potential is. >> if you look at oil, it will affect some of the drillers. do you plan on giving any benefits to alleviate the burden on these drillers? >> we've got this fiscal review underway that is going to report later this year. it is really important that we get the details right. that has to take into account the fact that oil is so much lower than it was months ago. >> a lot written over the last few days over the interconnect between oil and the u.k. i'm hearing march as a possible date that we could see a green light. is that the timeframe you are operating under? >> i don't want to give away any details on potential timing right now. the benefits of interconnect or's are big. we are looking forward to -- i've been working very hard towards it. i hope that it happens. >> matthew hancock, thank you for joining us today. the u.k. general election will be held on may 7. we will be bringing you interviews over the coming months. >> coming up, one million reasons for ryanair to cheer over christmas. december numbers were good. we will find out how good after the break. ♪ >> welcome back to "the pulse." >> these are the bloomberg top headlines. >> iraq's president said the country cannot acheive sustainable growth that iran cannot achieve -- in isolation. >> been indonesian weather office report on the path of the crash airasia jet may have flown into a storm cloud and that ice may have formed around the engine. search teams have recovered four more bodies in the java sea earlier today. >> the boston marathon bombing suspect's trial begins today. he requested to have his trial moved out of boston. the attack in april 2013 killed two people and injured dozens of others. >> let's find out how trading is going. >> in a word, trading as volatile. we have got lower once again. you have session lows on italy and in spain. the oil story is starting 2015 where it left it in 2014. brent, $55 per barrel. ftsy is lower by 0.5%. the biggest headline has been in the fx. euro weakness. we are off by 0.6% right now. we are touching levels we have not seen since 2006. mario draghi thursday night-friday morning, talking about the excb qe potentially being on its way. then the report the german officials could be ready to expect -- accept a greek exit. german officials and cold water on that, but nonetheless the political race is on. the story in germany has been the bundesbank stronger. we have negative yields from one year to five year in germany. the spillover has been pretty limited in spain, italy. yields are up a little bit today, but the contagion has not been there like it was before. the firewalls have been improved. how long can this go on for? the lack of contagion and spillover? investors are starting to get a little complacent about what greece may do. >> thank you so much. jonathan ferro with your asset check. tom keene joins us with a preview of "surveillance." happy new year. >> happy new year. i thought the jonathan ferro interview earlier this morning was absolutely must listen. we will talk about investing. kate moore is always of interest. we will be joined by ian bremmer of eurasia group and carl weinberg and we will focus on oil in europe. judd gregg will also join us. the republicans do better than good in the last election. >> thank you so much. >> now, it was a december to remember. joining us now is the coo of ryanair. is this the finessing of the ryanair message that is delivering the numbers? >> i think it is ryanair doing what they have always done best which is giving consumers low fares across europe. with the average fare at about 46 euros, customers are saying that is what they want and we have made improvements in the experience. we are delighted with the numbers. delighted to carry one million more people this december versus last december. customers have told us what they wanted us to improve. we have worked very hard and quickly to make those improvements happen. these numbers show that improvement. >> it is, in many ways, that effect. we are seeing a different message coming out of the company. is that the differentiating factor? >> absolutely. we put in place an improvement graham which is the -- program which is the "always getting better" program. we launched business plus service a much improved winter schedule. we have seen the load factor the best on u.k. domestic routes. a lot of main airports. that is where we see improvements. >> give is a sense for your outlook for january through march. >> we are still guiding cautiously. while we don't have full visibility of yields we have raced our guidance on the number of people we carried this year to over 90 million up from 81 million last year. but we are cautious in terms of where yields where be. we have a lot of fares available at 19.99 and we expect consumers to take advantage of those. >> how is the business story going? >> we are very happy with what we are seeing with the business customers, particularly driven by some of the newer retail. glasgow cologne, warsaw, lisbon, milan, rome. we are seeing domestics and connecting key city pairs. that together with a much improved schedule for business travelers. they want to get out early in the morning and get back in the same day. where they can do that with the flexible tickets and allocated seating, that is what they are looking for. we are happy with the take we are seeing on that. >> if you look at the load factor, december was 7%. is that the kind of forward guidance you would give? >> we were up by 0.5% and we are cautiously optimistic saying we expected to be above for the full year. november was also strong. there were some challenges with the christmas period, with whether -- the weather. we don't have full visibility on yields. we are confident we will hit the plane we set out for the remaining three months. >> a few months back, you were telling me that 2015 would be the year we would see a shakeout of some of the capacity in europe. do you think low oil prices is going to defer that shakeout? will it keep some airlines flying in a way they would not have done when oil was higher? >> i think we are starting to see a shakeout already. if you look at the large legacy carriers a lot of them would be hedged across europe. we'll know an expected oil prices to be where there are at -- they are at, we don't think there are too many large players taking advantage of that. everyone is hedged quite similarly. i would expect to see some heavy competition for the business traveler on the key city pairs. we are seeing that already. we are taking customers off other airlines. people will be hurting and they are probably hedged on fuel. >> how much are you hedged? i think it is 95% for the full year of 2015. are you regretting that decision to hedge? >> know, we are happy with the decision we have taken on hedging. i don't think anyone would have expected it to be where it is today. our investors would want the certainty, rather than taking a chance. we are 94% hedged for next year. we have some aircraft coming new aircraft arriving next year. there would be some advantage if you'll prices stay where they are at. but we would always value certainty rather than taking a chance. >> you guys hold a big chunk of the shares in caig. >> we are staying out of things so far in terms of the conversation. in terms of what it would mean if the average iag fair last year was much higher than the average aer lingus fair. from what it means from a competition point of view we certainly would not have any fear in terms of iag taking over aer lingus. it will make ryanair even more attractive. it is early days yet and we will have to see what is happening in the coming weeks with what they are going to do next. it is a new option that was not there before. >> always a pleasure. nice to talk with you. >> good morning. >> coming up, we will get back to top tech investor eileen burbage. we will also get the latest gadgets. stay tuned. ♪ >> welcome back to "the pulse. >> let's continue the conversation about tech. london is a big center for tech now. eileen burbage is at the center of the scene here. let's take a look at the other side of the atlantic. >> i'm so glad i am here with you. you do look at trends. that is why so many people go to cover. if you want to predict what people are going to be using you can only do that based on what you think manufacturers are going to be producing and what distributors are going to be carrying. however this is a traditional show based on traditional distribution. what we're seeing now people are not buying that way anymore. apple does not need to go and they don't. actually, technology itself is changing and the world is changing and cef has evolved from what it has traditionally been for buyers and maybe just looking at generally what a lot of followers are going to be doing. you don't see what apple is going to do. >> it seems that this year a lot more software producers are going. you think software is a better place to invest in. >> i think software generally and i know that it is a sweeping and bold statement -- if you look at the profit margins and software, it is inherently greater than in hardware. i think every time we talked about things like facebook or apple or these businesses, a lot of them value added services -- a lot of the value and added services come from software. that is why they are converging. or your tvs. smart tvs are going to be connected to the dishwasher and other devices in your phones. we are trying to find out how to get to everybody more readily than we do now. >> in terms of the next year -- we start with ces and then we get the apple event and work our way forward -- we get the mobile world congress later this year. trying to put -- i struggle with these events. car shows. how useful they are as predictors to what the rest of the year is going to look like. the car guys are going to ces and the tech guys are going to car shows. if you are not seeing the cool stuff here where do i need to go to find the cool stuff? where is it happening? >> i think that is a great question. tech is not going to be its own sector after a certain point. it is part of cars, medical energy. you have to talk to teenagers. you have to talk to the kids and see what they are adopting and using. that is what people will be using for how they communicate, how they stand touch with people. >> how do i do that? >> we talk to teenagers, kids, look at what they are using. you can measure who is using what with software. that is why this really interesting. then you also look at what the kids are creating. this is what facebook is done so well and why these big companies are spending on new companies. they try to get fresh ideas. they're trying to find the new things coming around. >> are the big disruptors going to come from china? is 2015 the year where they do it? how much of a game changer will it be? >> i think you will see alibaba doing one or two things more in the western markets. having listed in new york it makes the statement that they will not stay in their domestic market. they have the ability to do it. they have the resources now to look at all the markets. they need to look at growth outside of their home turf. i think china is a force to be reckoned with. >> just one final question. every tech person that sits in that chair tells me that they are not worried about and market consumers, they are worried about hiring people. that is the thing they all seem to say. is that the challenge for 2015? how big of a problem as it coming getting the right people to build the stuff that we need to build? >> talent is a challenge globally and having the right skills to continue innovating. that applies to every market in the world. silicon valley's hardest issue is recruitment. they have turnover, retention issues they have to pay exorbitant salaries to get the right developers and engineers. we have the same problem in the u k and london. i totally disagree with what the home secretary was saying but i understand she has to balance issues. i think it would be disastrous for our market and our sector and for britain and economic growth fundamentally. but i appreciate that she might be trying to explore some things and have other reasons for talking about the narrative. that would be the wrong thing to do if we want to continue to see the u.k. and london as the epicenter of technological change and value creation. >> great to speak to you as always. >> coming up how low will the euro go this year? we have had something of a move over the last couple of days. what will 2015 bring for us? keep the tweets coming. we will see you in a moment. ♪ >> welcome back. let's take a look at the euro, the dollar. you have been tweeting about how low you think the euro will go to this year. >> hans nichols, the politics is driving the story at the moment. your sense of the politics and the currency markets? the two together. >> right as we speak, the official government german spokesperson is answering questions on the spiegel report. how he finesses it, whether it is an absolute denial -- that the german government does not think that a great exit is manageable, which is what the current -- core of the spiegel report is, i suspect we will get currency reaction to what the german government is saying right now. other than that, we are just guessing a quantitative easing. and unless you are in monitor your oh -- mario draghi said -- mario draghi's head, you are just guessing. that's why we need jonathan ferro. [laughter] >> mario draghi is thinking, get him out of my head. [laughter] we have asked our twitter followers. a lot of people are saying that the euro is going to go lower. >> it is a dollar story at the moment. >> things are going to get more and more expensive at home. i hate to say it. it could get to parity. that is going to be a painful trip. >> it means more relatives, more in-laws. more in-laws visiting. you have to think on that glass half-full side. [laughter] >> more in-laws. [laughter] that is the take away for 2015. that is it for "the pulse." keep it right here on bloomberg tv. >> "surveillance" is up next. with tom keene and the team. we will see you tomorrow. >> you can tweet us in the meantime. ♪ >> this is "bloomberg surveillance." >> oil descends as europe descends into deflation. fragile geopolitics. republicans take over the senate. is there a moderate to be found? inequality is so todd 14 and-surprise -- 2014 and -- surprise -- so 2015. right now, our top headlines of this first working day of 2015. >> oil is falling again. futures are down as much as 2% after moving 5% last week. brent crude trading at $55 per barrel. prices are likely to head south further. russia says it's output jumped to the highest since the soviet union broke up. the euro is its weakest in nine years.