Transcripts For BLOOMBERG The Pulse 20150527

Our top story comes from zurich where swiss police have raided a hotel and detained a number of fee th investigation to corruption. Andrew martin has been covering the story. What do we know at this point . Reporter what we know is that the Swiss Police Raided a hotel injuring where the leadership were staying as part of an annual meeting and president ial election. At least six feet for officials were arrested fifa officials were arrested today. There were six arrests including some of the top officials. The top lieutenants were including jeff webb of the Cayman Islands who is considered to be the heir apparent. And Eugenio Figueredo of uruguay. A number of top chief officials. The allegations are wire fraud and Money Laundering, how much are we talking . We are still waiting for a lot of the details but the swiss police let out this tantalizing detail that there were bribes and kickbacks from the early 1990s to present day totaling 100 million. Some of the details have yet to emerge. It looks like some of this has to do with payments around contracts for the world cup. Some to do with bribery pertaining to world cup bids. Where looking for some of the details from u. S. Authorities. Mark this was started francine this was started by the u. S. Authorities are they facing extradition . Reporter this is a u. S. Investigation. The u. S. Has been investigating the for fifa for three years and apparently they were able to charge these people because some of these deals were executed in the United States or involved usas u. S. Banks. A lot of those details are forthcoming. Francine lets get more on this breaking news, we are joined by mark barton. What is it mean in light of the Upcoming Elections . Mark has our man in rio, who wrote a brilliant piece called a league of his own, a piece on set on how he controls world soccer, he spoke to us this morning. The president of fifa who has been president for four terms he will have to be pulled kicking and screaming out of the office before he leaves the presidency. Friday is the election. To be fair, set blatter was at the head of this and is set to remain for a fifth consecutive term. His one opponent is the brother of the king of jordan, king abdulla the second. He just released a statement saying today is a sad day for football. The details of which are still in emerging and it would not be appropriate to comment further at this time. We do know there will be a News Conference and roughly 55 minutes. It is a bombshell. To not underestimate the impact. A bombshell of 209 National Delegates meeting in zurich to vote. Francine so we dont even know if they will go ahead. Mark it would be a shock if they did not go ahead. In 2011 at the last of many scandals surrounding fifa when his opponent was accused of paying caribbean officials to win their vote. He stepped down days before the vote. The efa said this election should not take place amidst the scandal. It went ahead. The whole of fifa criticized the faa for daring to suggest it should not go ahead. This is a far more coordinated effort from the u. S. There have been so many alleged episodes of investment and bribery since sepp blatter won that election. Francine mark will be back throughout the day. The conservative governments prop planned for the next five years will be set out in a speech. The Prime Minister David Cameron says behind the queens speech is a clear vision for what our country can be, a country of security and opportunity for everyone. We are joined now by sanyo odonnell what are we expecting . Reporter we are expecting them to set out the stall. We have an idea of what will be unit. The elements that were in the manifesto should find their way into the speech. You mentioned the referendum that is top of the list. We will also get a housing bill. And his pledge to stop tax increases and enshrining that. Francine what are we expecting on the referendums, is her a chance he will say what he will call it for . Reporter timing is crucial. I doubt that we will get a date because it really depends on how much he can negotiate. He is about to set off on a two or of five different European Countries to get these negotiations started. Francine thank you so much. Sven you odonnell svenya odonnell. We are joined by john mills, thank you so much for joining us. Give us a sense of what you would want to see today. I think there are a number of things. The way that social and labor law works some very interesting issues around the way that europe is developing. In particular the way that we are now a minority among countries using the euro and we need some important safeguards that we will not be disadvantaged. It is the eurozone countrys form of a block. Francine a safeguard, if he calls the referendum, that is the biggest safeguard of all. Guest i think that is right. Whether it will be possible within a year or 18 months remains to be seen. It would be better to have a thorough negotiation than to rush it through. Francine we also heard from germany singh what the Business Community doesnt want is uncertainty. Would you rather wait to have a referendum in 2017 then push it forward . Guest it is important to have this whole issue properly dealt with. A rushed referendum which would only scrape the surface might leave the whole issue unresolved. I do agree that we need certainty and we need to decide whether we stay in the European Union and make a come of it or stay our separate ways. Francine the conservatives have a slim majority so they have a lot to lose if they push things that do not get passed through. Guest on the referendum issue they have a majority. Labor is not going to oppose that. There have been some other issues which are significant. What is the question going to be, the franchise. They may be more contentious. Francine there is something clear in the Election Campaign, the conservatives want to be seen as more friendly as a whole. Do you think that we will start to get a little bit of this now jacob we are talking now . We are talking about paying less taxes. Do we need a new conservative forum where they are considered more fair . Guest probably so. David cameron has made speeches and i think that is a move but i suspect labor will move toward the Center Ground as well. I dont think the conservatives will have a majority moving in that direction. Francine we will talk a little bit more about that eu next. Here is a look at what else is on our radar. The 25 stake in aer lingus. It paves the way for the takeover of the Irish Airline and i e. G. Iag looks to enlarge the group. Chanel and Louis Vuitton was the only Luxury Brands to increase in value last year. That is according to mill worth brown. Vuitton rose 20 while chanel rose 15 to 9 billion. Up next with the imf payment deadline looming, greek officials planned to meet with creditors in brussels. Francine welcome back to the pulse. Greek officials plan to meet with creditors in brussels today to secure a deal before the country meets the payment to the imf at the end of next week. For the latest lets go live to hans nichols before he makes his way to dresden. It is not looking very promising. On the boy hans boy hans you had a u. S. Official overnight saying the secretary of treasury will be warning about contagion and the unpredictability of the global recovery. Contrast that with the german view. We just heard from schmidt who is a key advisor to Angela Merkel and he repeated this argument and has quite a bit of credence. The contagion could be limited. Everyone will be arriving later today, it is a question on how much risk or contagion would there be if greece does not make that payment on june 5. We have assurances from the greek finance minister varoufakis, that they will make that payment but he says its because they will have a deal. That seems like circular logic. Francine they were meant to meet facetoface yesterday and they actually spoke by phone, does it make a difference . Hans some of the facetoface meetings have not gone that well. These meetings are supposed to take place at a technical level in brussels and they were supposed to take place yesterday and will take place today. The question is how much progress can you have on a technical level before you can have some grand lyrical agreement. They seem far apart on the technical level and on the political level do not seem that much closer either. They have to get over these roadblocks with mr. Varoufakis saying there is only one roadblock. The germans and the spaniards want to see greece implement the reforms that agreed to and that includes some austerity. I dont see how we are closer today than we were yesterday. Francine i know youre making your way to dresden for the g7 but that question they will have to face is can we lead without greece in the eurozone . Hans the germans would is that the g7 has an official agenda and greece is not on that agenda. When everyone gathers i suspect that greece will overshadow and hijacked the meeting to some extent. The question is, is this the right forum and that germans will argue that it should be that eurogroup. The dutch finance minister will be in the meeting and that is perhaps an indication that greece will be on the agenda. Francine we are joined by john mills, when you look you have handled a lot of negotiations when you look at what is happening, is this down to the wire orton negotiating tactics or is this just a deal gone wrong . Guest i suspect it will eventually the a deal gone wrong. The timing on this has always been difficult to determine. There have been so many occasions where it looked like it would fall apart and then it was patched up. The underlying tensions are substantial and sooner or later my guess is the greeks will leave the euro. Francine what does it mean for that referendum. We assigned to have polls around 65 of u. K. Voters that would stay in the eu. If you start to see a breakup does that have an impact on the psychology of british voters . Guest it will depend if greece does. My guess is that it probably would be very difficult to contain it, especially over a reasonable length of time. The euro is supposed to be irreversible and clearly it wont be if this happens and secondly you might start to see higher interest charges on Vulnerable Countries like spain and italy. Third if greece does leave and then becomes more profitable this could really destabilize the political situation. Whether this will all happen during the time we are moving up to a referendum remains to be seen but i think that could happen. Francine before we were talking about the timing and how certain businesses want it earlier and youre saying if you dont give yourself at least 18 months, it will be difficult. Do you think we will have renegotiations echo we know that merkel wants them to stay, but there are red lines on immigration and freedom of movement that the partners probably will not give in. Guest i dont think you can expect everything you want. It will be a huge disaster for the European Union written wants to leave. They have got quite a bit quite a bit to push things in the direction the country will accept. There is a real danger for those who want to keep britain in a being to aggressive and pushing them in the other direction. There are some tricky negotiations to be carried out. Francine thank you so much for joining us. The chairman and founder of j m l. The ireland government approves the sale of aer lingus to iag. Francine welcome back to the pulse. The Irish Government has approved the sale of its 25 stake in aer lingus to iag. It paves the way for the takeover of the airline. We are joined now by our dublin trip chief. What did they give ireland that allowed the approval of the sale. Guest were going to rewind this to five or six months ago. They offered of fiveyear guarantee on the roof between london and ireland. They said no to that offer but left the door open for ie g to come back. The key changes that i e. G. Iag is now offering the key is the sevenyear deal. Francine what happens next . Guest a number of key developments. The transfer minister said he expects that to back the sale comfortably. The key now is Michael Oleary and ryanair. Iag will not proceed with the bid unless ryanair sales cells. Leary could wethe king maker. Francine im sure that he will be and european authorities and regulators, did they delay the deal . Guest not substantially. It checked out some of these guarantees it got with the commission but the commission has raised no big objections. That is not to say it will not have to go with a formal process. Francine thank you so much for joining us. Just a reminder you can follow us on twitter we are talking g7 and the queens speech. Francine welcome back. Live from the European Headquarters here in london. Our top news item, u. S. Prosecutors have charged at least 10 International Football officials as part of an investigation. In the last couple of minutes we had an exact breakdown from the department of justice on how many officials have been indicted. Nine fifa officials and five executives have been indicted on charges of corruption. This is something that we will keep a close eye on. Authorities have seized these documents early in the morning. That is the main stories and outlets get a legal perspective on the fifa arrests. Daniel, give us a sense, this was pretty much unexpected and yet there have been these corruption allegations for some time. This is a lot bigger than previous scandals and arrests, how does it compare . Reporter it is substantially bigger. You have been investigations over the past couple of years there were incidents in 2010. One was banned for attempting to sell his vote for the russian world cup. This now involves members at a much higher level. The timing of the arrests is clearly significant. Francine what does this mean for sponsors . Reporter it causes issues for the integrity of the game and that is the big issue for fifa. In terms of the vote as a whole it will only now go ahead if it can be seen to be clear and fair. Obviously fifa is a global brand and it will be something which we will be looking at extremely carefully. Francine how harmful is this to the Election Campaign . It is significantly detrimental. We will probably find out in the next couple of hours whether the vote will be postponed on friday or not. The timing is clearly significant. We will find out but perhaps the reason for that is because there is no involvement whatsoever. They will now want to be given a clear path to go forward, in other words taking the spotlight from these allegations or if the allegations he do affect the carrying out of the election and make them tenable, then clearly the election will not go ahead. The issue here is even if there is no connection whatsoever, the reality is such that blatter during his tenure, he became president and 9098 and as were hearing today these allegations indicate corruption from the early 90s to the present day which means he is going into a vote where he has resided over corruption of two decades. Francine how long can the case continue . When is it likely to have an outcome. This can take years. Reporter the arrest will only have been made if there is enough evidence whether prosecutors think they can make convictions, but you are quite right, this could take years. Francine will this have on young impact on International Sporting laws . Reporter yes it will. Obviously fifa are the governing body governed by swiss law but they are the lawmakers. And clearly there will be a significant shakeup. Francine i know we talked a little bit about sponsors and the impact on International Law but what is the one thing that will change after this does it have to be from the corporate world or customers, what will this lead to, if any . Reporter i think there will be a more seismic change if there is a change in leadership. If prince ali, gets in, that is more likely to single signal fundamental change. Francine more breaking news the department of justice saying that the end i meant is not the final the indictment is not the final chapter in the investigation, how do you interpret that . Reporter it is likely that more arrests will be made. The timing is significant and as the day goes on we will hear of more allegations and it is likely there will be more arrests. Francine we are also understanding from the doj that the search warrant is being executed in miami. It seems that this is widening. Does this mean we are almost at the end of it that if we have Something Big of this size that everything can with time get back on track . Reporter quite likely. You have to remember that jeffrey webb is based at the headquarters in miami so it is likely the search warrant is being undertaken there against jeffrey webb, the Vice President. But certainly this investigation will go throughout football. Francine are you surprised . Its is a lot of countries are involved. Reporter the reality is there are 209 federations so with it being a Worldwide Organization with members of the executive committee being spread around the world, it is not surprising at all it is going to go global but you can imagine the size and the scale of doing an investigation at this time. Francine thank you so much. Daniel draper, sports lawyer. Earlier today i sat down exclusively with the ceo of the thirdlargest to strip it are announcing key targets here in london. He told me qe is spurring growth but will not last forever, take a listen. The ecb has stepped up to the challenge of stabilizing europe and qe has made it possible. We should all be grateful. Of course, the other side of the coin it is absolutely depressed and would remain depressed. But in changing the liability structure, we are prepared to live with that for the next many years. So we dont see that as a major issue over the next years. Francine how do you see qe . Something to spur European Growth . What is happening today is that qe is helping to spur the growth. Together with the Oil Price Europe is taking advantage of this. The european governments are having the break that will not last forever so they have to do their part of the job and take the structural action that some governments have been taking. But qe is giving them the opportunity to do this action with a little bit more time and possibility to think about it. Francine up next, luxury losers will be examining a new report which claims francine welcome back to the pulse. Slowing sales in russia and china have hurt the worlds biggest Luxury Brands. Louis vuitton and chanel increased in value as others suffered. For now, Andrew Roberts joins us from paris. At the report, what price you the most. The decline overall is the big surprise. Unsurprisingly tech is top of the game top spot from google and microsoft moved up one space into third place. What is different is they are rising and doing particularly well and Luxury Brands are going in the opposite direction. All of the top 10 brands, with the exception of louis and chanel, the rest declined. There is another access to work on which is the tradeoff between affordability and exclusivity. What luxury bands brands have been doing is trying to put off crisis. While Louis Vuitton and chanel have been better that doing this than others the book of the rest of the group which includes people like gucci and burberry, they have been perceived to have done not quite as well. Their value has gone down and at the same time some more affordable Luxury Brands have come into the top 10 for the first time. The one thing that is true is that Louis Vuitton maintains its spot at the top of the list. When we talk about brand value we are not talking about revenue or market share, we are talking about something more elusive. Brand recognition. Such right, they try to spit out what it says is the value of the brand to overall shareholder value. There is on young element of financial measure in their that it is also looking at interviews with consumers and looking at their take on the perception of the brand. It is adding the consumer angle here to this intangible value of these grants. Francine thank you so much. Staying with luxury lets take a closer look we are joined by the chairman and founder of the highend operator. Great to have you on the program. Give me a sense of what you would like to see in the queens speech. A lot of executives around the world, the rich and powerful. Guest what we are seeing is that london and the u. K. Is one of our bigger markets and this will be business friendly and private jets are really a business tool. It gets executives around the world and it helps the global trade and the globalization of Companies Getting pointtopoint anywhere in the world. Francine although we are seeing subdued growth you keep on growing and are able to do it. Explain to me the reasoning behind this or why this is happening. Guest we are seeing year over year 20 plus growth rates. Asia africa the bond market give us opportunities to prove to the market that we are here for the long term and it is on young unsecured bond. We were very proud of that and it really validates the growth plan. We are basically aiming to make the world a flying zone. People can fly oneway pricing anywhere in the world. Francine 20 growth is incredible. Is it the same customers that come back and look more flights or is it trying to broaden your Customer Base . Guest what we see is about one third of our growth comes within, a third from reference selling they recommend is to their friends and other corporations in the third comes from expanding into new geographies. Wherever we get to, we are more or less the only solution. One way flying around the world. Francine what about russia . Guest in a way they are countercyclical because if there is a recession and a certain region, people stopped buying airplanes but still need to fly. That becomes a business tool, you have not seen any decline and in fact we have the strongest year and russian sales in the last 12 months. Francine are you concerned that as we step off to the referendum day that some of your clients will have less investment in the u. K. And will fly less of your plants . Planes . Guest if it were my vote britain would stay part of the European Union. Francine we dont get to vote. [laughter] guest exactly. But the u. K. Is a major of and europe is one of the places in the world where every corporation comes. We believe that the u. K. Should continue to be part of the global infrastructure. I dont think at the end that the vote will go against it. I believe the u. K. Will stay in it and the European Union will be a dominant lace to do business. Francine does it impact your customers . It doesnt really. Guest we dont have a central hub. We are flying pointtopoint. Los angeles london, hong kong and the middle east. One more stop for global business. Francine when we talk about russia you say your business is countercyclical is there anything that surprises you in countries where you see particular strengths and demand or vice a versa . Somewhere you thought there would be more demand and are not seeing it . Guest one of the surprises is southeast asia. We were focusing on china and hong kong and lately we have expanded into seoul singapore and jakarta. Think about it as movable real estate. The planes go where the business is an flight our clients where they need to do business. It is really a truly Global Operation and every year we are expanding into new territories. Francine do you look at the tax regime . I prefer room this is for businesses that have their own boards in malaysia is one of the countries where the tax regime is very favorable areas does that help you choose where to add roots routes . Guest we dont ask people to buy airplanes. We own all the airplanes and it is an operating expense. It is obviously taxdeductible. People by 200 per year or whatever they need and they are being billed by the hours they are flying, rather than assets going on a balance sheet. Francine thank you so much for joining us. Up next, the challenge facing the french opens stadium and might the world famous tennis event move away from the Historic Site . Francine welcome back to the pulse. Here are the top headlines. Reynolds americans 27 billion purchase of lorillard has won approval on the condition that the companies sell. They produce nine out of every 10 cigarettes sold in the United States. General electric is in talks to sell its Fleet Management business to element. No deal has been reached yet and the discussions may still fall apart areas apart. Firstquarter earnings dropped due to product promotions in the u. S. Underlying operating income fell 0. 5 to 390 million euros. Lets turn to tennis the second grand slam event of the year the french open is underway in harris. The defending champion began with a straight set victory. The stadium urgently needs to be extended to catch up with rivals or risk moving away from the paris site it has occupied for 100 years. Rafael the doll rafael nadal is a master on the clay, but this year another batter is battle is taking place off the court. It is the smallest of the four grand slams and will soon be the only one without a roof. It needs to up its game. We anticipate increased sponsorship revenues and increased gate tickets. If we want to play quality and we want to be the nicest tennis place in the world. Reporter the project will come at one extra 100,000 it has been delayed for more than five years. The Tennis Federation has decided to stay in central paris and extend into the historical botany gardens next your that has a lot of people upset. I love tennis, it is my sport but parisians need these gardens, we cannot choose between the two it is bad politics. The opponents have proposed an alternative plan putting longer roof extensions on the platform above the highway. The highly solution is the least bad solution. If you want to stay in paris. A brave decision would be to say lets go out of paris to its place not in the center of town. Despite the opposition the director is optimistic areas this is the famous historical greenhouse and this is what we are going to do in the same garden. It will be very nice and go through the city good for the image of the city and neighbors as well. Reporter until the project puts the delays behind, the question is will rafael still be there to play. Francine for those listening on the radio, the first word is up next. On tv we will be continuing and are back and two. Francine Swiss Police Raid a hotel in zurich as the u. S. And guides nine fifa officials and five executives. The conservative governments plans for the next five years will be set out in the queens speech in a few hours time hating the way for an Eu Referendum. As greece and its creditors prepare with the deadline looming ahead of the meeting. Good morning to our viewers and europe and good evening to those in asia and welcome to those just waking up in the United States. I am francine lacqua. Welcome. Our top story this morning comes from zurich where swiss police have raided a luxury hotel and detained a number of fifa losses in connection with the u. S. Investigation into corruption. The department of justice says it has indicted nine fifa officials and five executives including jack warner arrowhead you figueredo and jeff webb. We are joined by more of this from ryan chilcote. Your experts in the football field, we are just getting news that the swiss are opening criminal proceedings into the 2018 and 20 22 world cup vote. We have had scandals in the past but never really quite so big with so many people. On the swiss side we have quite a bit of news helping the United States and also adding their own criminal probe. The most recent is they have raided the fifa headquarters where they seized documents and ordered swiss banks to turn over any of the documents that they have. That is on top of the raid in the hotel you mentioned earlier this morning where they arrested six individuals. They are really pursuing this. Francine the impact is on the elections . Sepp blatter was up for election friday. Mark he is the resounding favorite. One against one, he is against the jordanian prince. And blatter with the bookies was a certainty. How does that change . The prince has released a statement. There is only so much he can say. It is a bombshell. For this to happen two days ahead of the election, it was time to perfection. They are all there. Francine it is easier for a raid of this size to take waste when the officials are meeting. Mark for those who do not know there are 209 National Associations who will vote for the president on friday. They have equal votes as well. The Cayman Islands has an equal quote, the same as brazil. Brazil has a population of 200 million and they had equal votes. That is why the likes of blatter have courted these countries by giving them grants to build football pitches. Francine joining us on the phone, he has been covering the story on my and is expecting to join that News Conference. We have a lot of unknowns which we are hoping to find out more of or about in the News Conference and the first one is whether the election goes ahead friday. That will obviously be one question that will be the first journalist now and obviously the second will be what did you have to say about the swiss launch into russia and qatar. But to marks point i was in the hotel this morning. I spoke to delegates from the maldives and peru, two smaller countries which very much in a fit of the bladder strategy. He has done so much for football around the world and small countries and whether the vote goes ahead as mark said mark set latter sepp blatter has not been implicated or charged but scandal have surrounded fifa, even that first election in 1998. Allegations of vote buying, is it possible that this time he will be affected by these allegations. This seems to be the most serious instances in his tenure. Up until now he has been the teflon football chief but another question people would be asking this morning is if the attorney general is pulling in 10 people to ask about allegations of vote rigging how can you not ask the man in charge to also answer questions. As we understand he was not one of 10 arrested and called in for questioning but one would hope that at least the swiss attorney general would be asking hard questions of the man himself. Francine when we listen to you and mark and yourselves, this case is different. And now there are also investigations into russia. One of the things that both the u. S. And swiss prosecutors are looking at in terms of vote rigging for russia for 2018 and katter for qatar for mark announcer mark mark and qatar for 2022. Russia got 13 out of the 22 votes necessary. When you look despite the fact that both prosecutors say they are looking at the selection processes there doesnt seem to be a lot of detail about what they are looking into when it comes to russia. It feels like there is a bit more with qatar the russian saying as far as they know there are no issues with the issue individuals arrested visavis russia. Francine for more insight we are joined with the former Football Association chief executive mark palios. Great to have you on the program. I am not so sure at this point in time whether you can evaluate it. The sponsors will sit back and wait to see the outcome as the investigations by the fbi and swiss authorities. The question has been voted as to this is Salt Lake City and we cannot say that until we get to where these investigations go. Francine we have some formal arrests, how can the corporate world not react sooner . Arrests are arrests and people in most countries are innocent until Proven Guilty so that is the stance they will take. With football you have a very lucrative access for the marketing. There are a lot of people who have to be pushed very hard. They cannot push them too far but there is still a way to go in this is a seminal moment. For me, the one thing that really stands out to me whenever sporting authorities conduct an investigation they always suffered the fact that they cannot really get at the evidence. They havent powers of investigation this is a change because now we see an intervention from a well resourced organization like the fbi and cooperation across governments and that is the seminal change. That puts fifa back within the realms of normal regulations and underneath the law rather than above the law. That is the change today and that is what the delegates have to now understand. They will be feeling with the fact that the government is no longer just an esoteric concept. Mark in 2011, the fa was vocal that the elections should not take place after the candidate stepped down and sepp blatter one because he went unopposed. It leads to this question, will the election take place and if it does, is sepp blatter still guaranteed victory . I think the only person who could answer that is mr. Blatter himself. I personally dont think it should take place because the candidates standing in front of the congress at this point in time all of them who will vote should be able to stand back and take into account what this means for the organization. At this point in time it is close to the event. It will take some time before the Legal Process is carried out and you get to a conclusion on this but there are still ramifications as you highlighted for fee for and they need to digest it. At the least he should delay the vote. It is quite well articulated by your previous guest that this is a question of maths. If you target countries that have one vote, the smallest countries have one vote just as the f. A. Has and sepp blatter has always done the math and then arrogant because he knows he has the support. I think that at the moment, he was the certainty candidate. I wouldnt think this would change the vote or the outcome of the vote on friday at this point in time but i do think it is incumbent on him to delay the vote so that people can digest this and if they want to change their vote, change it. Francine thank you so much. The chief executive and of course we have many more questions and answers and we hope some of them will be told to us in the News Conference that we are expecting from zurich shortly. Stay tuned to bloomberg because later we are expecting a News Conference from the u. S. Attorney general, a loretta lynch. Here is a look at what else is on the radar, the Irish Government has approved the sale of aer lingus to iag. It paved the way for the takeover of the Irish Airline and iag looks to bolster its lucrative network. Louis vuitton and chanel with the only Luxury Brands to increase in value last year. That is according to no word brown. We told Louis Vuitton gained and chanel value rose 50 . Up next with the imf payment deadline looming greek officials plan to me creditors and russells. The latest after the break. Francine welcome back to the pulse. We are joined by the head of the global fx strategy at rbc. Thank you for joining us. We have been talking about greece all morning. In fact, for the last five years. If there was going to be a negative event like a default or greek exit, what does that mean for fx . I think on a reasonable time horizon it is overwhelmingly euro negative. Weve seen that transition helmet element first being a result of contagion. Also, some risks to Economic Activity through confidence and finally because of that we raise the risk of the Monetary Policy from the ecb. Those effects are the overwhelming three to six months affect and the consequences would be overwhelmingly negative. Francine we have the possibility of a greek exit which are think would be negative and the fed we know that they will raise Interest Rates soon and yet the market at almost every opportunity says it will be this week in three months time. We have seen a huge volatility in the dollar. In the near term we still see the risk on the downside. We think the market is priced for a 40 probability of greek exit at the moment. That is the highest it has been since the greek elections and the worst of the eurozone crisis but that probability can probably go higher and that buys you more independent euro weakness. If the situation is ultimately resolved without exit then we come back to the question of general dollar which is essentially vanilla on the timing of the first fed rate hike. That is well ahead of where the market is currently priced. The downside from there becomes a question of general dollar strength. In the next month or so we still have some independent weakness for the euro. Francine you are one of the only few out there still calling for a september rate hike, what does it mean for dollar yen . It means there is a lot more upside with dollar yen. We have always maintained the key play on fed policy and fx is dollar yen. There is a clear transmission channel from higher shortterm transmission rates and i think it is independent, although ironically it is the fed that drives it. On our view of a relatively early rate we have an and your target of 1. 32 and im still comfortable with that. Francine i did not ask you eurodollar target for the end of the year and september . We think for september we get down to a low of 1. 05. We could even challenge parity at some point but that is the endgame. As we go into the second half of the year they key player is dollar yen. Francine even challenging parity on eurodollar. Tell me what you are expecting for the queens speech and what it means for sterling. For our markets not too much. The main focus will be on the timeline for the Eu Referendum which is coming by 2017. If anything it sounds like the timeline will be compressed somewhat and you get a rather earlier vote. Really we think that the risks for that are quite limited. I think the market has certainly repriced the risk of the euro or the eu exit after the election and the probabilities are something in the region of 30 . We think the risk is lower than that and the risk for sterling is quite limited. Francine thank you for that insight. We are just getting that conference we are telling you about from zurich after several chief officials have been arrested in raids. It had to do with the attribution of the world cups 2018 and 2022. They rely on the attorney general for their current investigation and the important point to me is that fifa and the timing may not be obviously the best that definitely fifa welcomes this process and fifa cooperates fully with the attorney general of switzerland and the federal office of justice. It of course bonds to all requests for information. The third point is very important, this was also underscored by the attorney general in their press release, this was underscored explicitly and i wish to repeat this that in this case fifa is the damaged party. In this context. This leads to the fact that there were no searches within the offices of fifa the people of the federal attorney are here and we cooperate with them and we provide all of the information requested by them and this for our own interests. It is of our highest interest that all open questions can be answered and all questions open in the light of these complaints we have lodged on the 18th of november. I saw tweets and i saw a media releases and comment and speculations let me say that the general secretary and the president are not involved in this procedure, as to the names that were published in the media this morning i am unable to comment. This is also obvious in the press release of the general attorney. You would have to address if you have questions to the federal office of justice, you have the person to get in touch with. You certainly have questions when it comes to the questions and answers, there is hardly anything we can say as to the current procedure i can only say nothing more and nothing less than that which has been said and written by the federal Attorneys Office about an hour ago. Let me tell you that in spite we are very happy about what is happening right now. It is once again unfortunate to see fifa suffering under these circumstances. It is a difficult moment for us. We have the congress about to start and lots of questions will take place or not, of course the congress will take place, one thing has nothing whatsoever to do with the other and there may be dissenting views on that but from our side this congress evidently will be carried out but taking into account this current siege or. This is not related to congress. I hope i have been perfectly clear and i thank you for being here. I am giving you this information at 11 26. We are in close contact with the attorney general and it is quite possible that later during the day or tomorrow we will be able to give you an update on the situation concerning us concerning fifa. Take this information. We know nothing more right now. We only know what we have been informed through this press release and perhaps my colleagues with the microphone could gather their questions. Martins eagle are Martin Ziegler . Thanks. You said that congress will go ahead as planned. Will the election take place as planned . There have been suggestions that mr. Blatter is looking to have it postponed . You know more than i do. There was never such an idea to postpone congress nor the election. As i said before one thing has nothing to do with the other. We go on with the agenda and the election will take place as planned. Thank you. Do we then assume that both of these investigation probes call them what you like are just coincidence in terms of the timing . I give you the answer from the general attorney. He said it but you can ask him as well. The fact that all of the people that are interested to talk to are here for the congress. For them it is easier to talk to them once they are all here trying to talk to them in a different context but this is something you can double check but this is the answer we received. Good morning, sky sports news hq, can you confirm how many serving members of fifas executive committee have been arrested in connection with the investigation . Is there any doubt over the world cups in 2018 and 2022 . Will fifa reconsider a revote . Two nos for you. I cannot confirm the names and i cannot confirm how many people have been arrested and how many people are investigating and someone and i can say what the president said in the past press conference, the world cup 2018 and 2022 will be played in russia and qatar. You say that the events today have nothing to do with the congress but the fact that they have been arrested and you didnt know about one, and others that you did know about how can you say the events are unrelated to fifa . You can ask the general attorney. That is the answer we received. They are two separate investigations. It was made clear on the press release and as they explained to us it was a question of coordination. In other words, no one could start first. They had to coordinate and try to be as efficient as possible and the fact that it took place two days prior to congress, one explanation i already gave to everybody here, the second one is, of course we have Good International coverage. Since he said he basically implied that the police and the justice is doing this in part for the price, can you tell us have you ever thought of the lowest moment in the history of fee for than this one . And over which fifa will president blatter preside after this . As i said in the very beginning, you dont believe me but im going to say once again. This is good. It is not good in terms of image. It is not good in terms of representation. But in terms of cleaning up and everything we didnt ask for, yes. In terms of processes, this is good. We would not have any interest to give files to the general attorney if we would not have known that the consequences are exactly what we are doing here. For us once again, it is not a nice day. As you know, we have other things to do as well. In other words, it is mostly a good day. I think the process goes on. I think we are looking forward to the after results. As long as we do not have complete results, it leaves room for all kinds of speculations. That is for sure not something were looking for. On the second part, im not saying it didnt occur because you guys are here. But because it is more efficient when everybody is here. You also have the right coverage of the media. This for sure was not the main goal, i guess. Rob, please. Rob harrison, associated press. First of all, how when the world cup bidding process is under investigation can you category leads us categorically rule out that the world cups will stay in russia and qatar . Many will see that although set blatter has not been indicted but that he has been headed of the committee running feet for years how can he continue in power . Although you just said, it is not something that is not important. It is important. He is not involved. How can you say although . This is important information. The second part what you expect from us . You start to speculate and say that russia and qatar we would have to redo the whole thing. Russia and qatar will be played. I dont go into speculation on what will happen tomorrow after tomorrow. This is what i could tell you coul. Please. Next one please. Walter, channel four news. Going off of robs question, in any normal organization that has received scandal, crises for decades, and again today with investigations, the leadership the Senior Leadership would be held accountable. Why on earth is mr. Blatter still the right person to run feeifa . You say that fifa is the damaged part here. Is it not the football fans around the world who are the damage party . The damage party is all of us. I agree the footfall fans for sure. On the first part, what would you want me to answer yet . He is the head, but he is not involved. How can he step down . He is the president. In two days, there are elections. If they want him, they will reelect him and he is president for the next four years. Please. Hi, can you confirm that mr. Blatter had no advance warning about what took place today . Have you spoken to him since it took place . Can you give it an idea on what his general reaction is to what happened . Yes, i can confirm that none of us that at this morning at 6 00 they will start direction. If they wouldve had information, i would assure you that i wouldve gone to bed earlier yesterday. There was no way that we could know that and that is normal. The general attorney they will not tell us that we were coming at tomorrow at 6 00. We were all surprised. That is why i decided after talking to the president and his general secretary to do a press conference right now, although all the information you might need to have, i dont have them. He would have prepared this in another way. I cannot tell you. We are as surprised as you guys were. [indiscernible] the motion of the president emotion of the present . Ident . First of all, he is focused on the congress. The stress factor is a little bit higher today than it was yesterday. I mean, he is quite relaxed because he knows and he knew before and it is confirmed that once again today that he is not involved. He is not involved in that. All the rest is he going to accept what will happen. Im sorry if i have to repeat myself, but it was fifa who asked the general attorney to open the case. Let us go the first row and then the swiss journalist from work. Sam farr borden from the new york times. After all the scandals that the fans of fee football have seen over the years, is it made public for people to see . Walter im surprised you are asking the question because you are misinformed. Last year, all the people were there. You know that they decided we are going to publish the report. After all this open cases were solved. The report once again will be published not only for you guys, but for the general public. Then you can read what you are interested in. This report will be published. Yes, please. Richard conaway from bbc. The statement from the department of justice in the u. S. Has been released in the past few minutes and it says that this is not the end of their investigations. Mr. Blatter said in december that fifa was in a crisis and now it wasnt. Todays events plunge this organization back into another crisis. Walter on your first question, it is not of to me to comment what they just said. If they go on, they go on. The second part yes, im sorry. I have to repeat myself. For us, it is a hard time. It is not nice to be here in front of you and try to explain something that is not nice. But at the same time, for us for fifa, this is good what happened. It confirms that we are on the right track. It is not easy. It is the only way to go. We are ready to go the way we started four years ago and nothing will stop us. Now i give the floor to you. Peter. There is an exhibition agreement with the u. S. And canada. How are the travel plans of mr. Blatter being revised for the womens world cup . As to the travel plans of the ex members, i certainly have no information whatsoever. The travel plans of the president are not changing. As planned, he will travel to canada, i think more towards the final match. That is with the president in the opening match. It is not as i read and face media that the president would avoid the u. S. For fear of being questioned at the airport. So yes, there is an agreement between switzerland and the u. S. For legal help. So if somebody has to be questioned by the u. S. Authorities, they can not have to wait until the next trip to the u. S. So there is no problem. It has no inference on the pleasant its plan to travel. President s plan to travel. I cannot comment on the president s plan and its members. Walter kato was more about what happened at 6 00 when the swiss authorities came. He say that fifa cooperated fully fit did they have this the door down or what happened . Walter at 6 00, i was sleeping. And how it worked and what they did and if there was any problems to do what they had to do, it is something that you have to ask my colleagues from the general attorney. He is more than happy to give you that information. I just received a phone call around 7 00. I did not know anything about what happened at that time. You said you made a legal complaint in november. Was it the garcia files or was it a legal complaint . Walter they have the garcia file. As part of that legal complaint . The general attorney can switzerland walter the general attorney can switzerland sees it just after. First row please and then we go up. And another three questions and then if there is anything else i will ask you once again. Let me go another three questions and then we move on. Sky news. Can you tell me if any of the officials arrested this morning will be suspended from fifa as a result of their arrest . Just as a follow up on what you said about the president , you said he is relaxed. How can he dobe relaxed . Is he interested in his own reputation or the reputation of fifa, how can he be relaxed when fifa is once again involved in such a situation . Walter maybe i can correct what i said. He is not dancing in his office. This kind of relaxant. He is very call. He sees what has happened. He is fully cooperative with everybody and that is what i meant. He is not a happy man today saying that is really cool what happened here. But he knows that this is the consequences of what we initiated. It is a surprise that happened today, but it is not a surprise that it happened. The second question was . [indiscernible] walter they were arrested. Then we are going to see. They are not convicted yet. We cannot just suspend someone because they are arrested. They have to be present. If they are not present, then they cannot vote. Charlie. Im starting to mix of names. Im not charlie. I might clip from reuters. Walter, is this a case of chickens coming home to roost . Mr. Blatter has been talking about his mission for years to clean up fifa. It seems that even if you did instigate these proceedings, they havent taken out of your hands. The fbi is involved. The swiss authorities are involved. Some of the else is cleaning up fifa and it is not being cleaned up from within. Walter we can clean up to a certain point, but we need this report from authorities. That was also our statement a half year ago. So why did we hand over the garcia files and other things to the general attorney . Because we need support. We cannot investigate as the police can or a general prosecutor can. Thats the reason why we did it and the reason why we fully cooperate. Last question please. We have a german won theirone there. If i understood you correctly, fifa will not drag on consequences from what has happened because people have arrested but not accused. What will be the condition for accusing or suspending someone . What they have to be formally accused in order to be suspended or when will that happen . You understand, of course, the basic idea. There is this presumption of innocence. Walter you need a legal procedure. There are bodies involved. They will decide whether a member for whatever reasons will be suspended. You cannot expect that at 6 00 in the morning the attorney general shows up and arrest people and to say they are to be suspended right away. If there is nothing behind all of that, we cannot do any kind of preventive measure. This will not be the case. And once again, and now it is almost 12 00, we are talking about something that started five hours ago. We are still trying to gather information and provide the federal attorney and the office of justice we will provide the necessary information. Then we will see. To suspect now on such short notice that we would suspend people, that is not possible. For now, the very last question right here. Walter, you do not want to confirm any names. That is understandable. But there are two Vice President s of fifa among the names mentioned. The world cups of 2018 and 2022 the slots for the world cup. Can you do that . Can you explain that . Walter i cannot give you any names. You have to wait until friday and saturday to see what will happen if they are present or not present. You will have to be patient so please accept that for the time being. I can say nothing more. We think that we have to say and remind you for another press conference. Thank you for coming on such short notice. Francine that was walter day gregorio, the spokesman for fifa. Ryan chilcote is here. Quite a press conference. Some comments were funny. In terms of news content, the election will take place on friday. He says that the world cup in russia and qatar will go as planned. Ryan sort of business as usual. Four points two points on substance and two on style. You heard the spokesman saying that none of this is good for the reputation or image. I guess that is the understatement of the day. You can say the same for that press conference, i think. Francine he was not happy to be there. Ryan no. A little like a train wreck. He says he wouldve got more sleep. He did not get the impression that fifa high quite figured out how they want to respond to these allegations before the press conference. In terms of the substance, the elections will take place on friday. We are widely expecting sepp flatters to be reelected. On russia and qatar, he said unequivocally that they would host the 2018 and 2022 world cup. He said that that is the position right now. Francine did he seem quite defensive . He was not prepared from this. He was not given a heads up. On the timing, it seems because all the journalists argue. A little bit tongueincheek. A bit defensive of fifa, wasnt it . Ryan i think he flipflopped. At one point, he said that this investigation is the result of fifas own investigative work. On the other hand, he seemed to say that well, actually this has come out of the blue. An Interesting Press conference well worth watching. Francine thank you so much, ryan chilcote. Coming up, we will have a new guest to talk about fifa and where to go from there. It will be very interesting to see how they deal with this fallout and see if it alienates customers they have. Let us bring some pictures from the opening of parliament. This is very crucial. We hope that all the ceremonial pomp, if you will, that we want to know what the queen is talking about it this has been drafted by David Cameron. We are hoping to find some news on the referendum like a tax cut, for example, for low earners and the extension of right to buy. That is what we are expecting and that is what the Prime Minister has promised in his election. We will bring those live pictures from the Great British ceremony about to start. And that speech by the queen start in four minutes from now. In the meantime, here are bloombergs top headlines. Reynolds turkey does purchase has won approval from u. S. Antitrust officials on the condition that they company will sell. The company will sell about nine out of every 10 cigarettes sold in the United States for. It is a 9 billion Fleet Management. No deal has been reached yet. Discussions may still fall apart. And the owner of the stop and shop and Albert Haynes supermarkets said that firstquarter earnings dropped due to product promotions in the u. S. As it faces competition from chains such as walmart. Income fell nearly 5 to 390 million euros. One of the people behind the top 100 most valuable brands reports is peter washer. Peter, gray tabby have you on the program. We are now going to talk about fifa. As you look at brands and the pr disaster around fifa, how would you rate it . Peter fifa certainly is a global brand. Any brand needs to be highly concerned about the way it behaves and its trust and its responsibility. These latest issues do not really help. I think the key issue is how are the sponsors for fifa and brands like that are they going to be concerned . They might well be that this thing blows up out of proportion. Our evidence at Millward Brown shows that the data and the people react to them is that they themselves are thoroughly trusted brands indeed. To date, they are less likely to be affected by some of these scandals. Francine you are a brand expert. How would you manage the fifa scandal . That is election that they say will go ahead on friday. Is this a mistake . What do you bat let the hatches to start over or do you bat and of the hatches to start over . Peter in terms of actuallypeter being sensible with your constituency, which is the world, clearly these issues are not positive for fifa at all. Francine this seems to me like this brand will survive it because it is football. Probably nowhere else in the world or no other brand could get away with Something Like this. Peter i think the issue is if there is a divorce between football, the fans, and the people who play it and so on it and the governing body. I think that is the issue at we have seen coming for these past couple of years. The issue is does it really represent football . Does it really captured the passion and the honesty and the sheer joy of football . And that is the dilemma that fifa really needs to address. Francine peter you have a report out today and it shows Luxury Brands come out on top a little bits well. You still have to cheat and Louis Vuitton of their. If you were to look at fifa, how would it affect the brand value that you measured . Peter i dont have any data on fifa. Certainly when you look at scandals in the past or problems in the past take for example toyota, which had a big recall problem in 20092010. The interesting thing was the difference between the corporate brand. People would be blaming the corporate brand for being a reactor and responsible for what is going on. The product brand which is most peoples experience was largely unaffected. So you did see a dip in trust and you did see a small decline in value. But it is strong, it can ride these aspects because it is communicating and meaningful to its constituency. And that is whats crucial. Francine using fifa a Strong Enough or do we have to see the next three or four days how it deals with this . Peter i think fifa is a strong heritage brand. These issues still are something that it really does need to deal with. Francine peter, thank you for joining us. The global brand director at Millward Brown. Later this afternoon, we are expecting a News Conference from u. S. Attorney general loretta lynch. That is it for now. Stay tuned for the surveillance team. We will go to the queens speech. Very important for the Prime Minister. You can follow us on twitter. Stay on top of any developments from fifa. We will see you a little bit later on. Keep it right here on bloomberg. Announcer this is bloomberg surveillance peter tom tom soccer and the world cup. Racketeering and Money Laundering charges. U. S. Banks were involved. There is good on wall street and it starts and ends with a partnership structure. Managing big pots of money at colleges and universities. Here is an exclusive yelp beats yale beats harvard. From our World Headquarters in new york, im tom keene. Joining me, Brendan Greeley. You have been up all night in the fee for in the fifa story. Brendan we will see a presser with the justice department. The irs will be there. We think the fbi is going to be there. What i want to find out today is why exactly the u. S. Attorney Generals Office cares so much about global soccer. Vonnie quinn is here and she will tell us where we are right now. Tom we are most fortunate, Brendan Greeley with encyclopedic knowledge of what i dont care about, which is fifa. Vonnie