Skip to main content

tv   The Pulse  Bloomberg  May 15, 2015 4:00am-6:01am EDT

4:00 am
guy: the rally continues. as the s&p rises to a record, we look at the impact on europe. francine: netflix may partner with a media company backed by jack ma. guy: and, we look at the billion pound scans taking place in london's landmark building. 9:00. you are watching "the pulse." we are here in london. i'm guy johnson. guy: and i'm french -- francine: and i'm francine
4:01 am
lacqua. guy: talks continue between greek officials and the imf. pressure is building on the greek administration to present a plan to gain access to more aid. yesterday, greek finance minister varoufakis lamented the loss of the drachma. >> i wish that we have the drachma. make no mistake. this is not a statement that i want the drachma. i wish we had the drachma. i wish we had never entered this monetary union. i think all member states of the eurozone would agree with that now. it was very badly constructed. but once you're in you don't get out without a catastrophe. guy: interesting words. he also made comments on the ecb repayment, that were in his words reported as astonishing propaganda by the press. our athens bureau chief joins us for more. he is always surrounded by this
4:02 am
kind of controversy. he always seems to be allowing the media to get the wrong end of the stick. walk us through this controversy. nikos: well, the greek government spokesman issued a warning yesterday during the regular briefing of government reporters in athens. he said the ministers should stop commenting so much because they are not really helping. it remains to be seen whether mr. varoufakis will listen to this morning. it is not something new. mr. varoufakis has always been saying that greece shouldn't have joined the euro in the first place, but since it has joined, it is now it can never leave. it is a different thing for an academic to say that greece shouldn't have joined the euro
4:03 am
area and a different thing when the finance minister is saying this. francine: that brings us to what i've been wondering. why is alexis tsipras so committed to yanis varoufakis? he says what he wants but he's in a position of government. is this a game that tsipras is fully behind? why not change finance minister? nikos: i'm certain the greek prime minister has received the message from creditors, that mr. varoufakis' views are a liability for the country. the finance minister has been sidelined in the negotiations over the past few weeks. it has been the deputy prime minister and the deputy foreign minister who have taken the lead in the talks. since they have done so creditors report some progress in areas including sales tax
4:04 am
reform, tax administration reform insolvency law, and so on. but mr. tsipras cannot ditch his finance minister formally because this would be seen as a concession to creditors. it is not something he can afford politically. guy: thanks for the update. nikos chrysolaras joining from athens. francine: joining us is bank of montreal's european head of x x strategy to talk about weakness in the euro and the greek drama. thank you for coming in. we talk about greece every day. do we realize the urgency? every day that is passing, this really is in the next 3-4 weeks the fate of greece will be sealed. >> let's say that they set off on new term of deals before june. we still don't think -- we still
4:05 am
think it is going to be a shroud hanging over the euro. even if they have a deal before the deadline, we don't think they will get access to the full remaining 7.2 billion of the current bailout extension. we don't think the ecb is going to rush in and buy big bonds. we think it is not over for a long time. guy: how much of what is happening is related to the euro, and how much is related to positioning versus other asset classes? stephen: greece is an issue. there has been some minimal progress in the talks between creditors and greece. that has helped support the euro. when the fed did qe, you didn't have these fluctuating tail risk events. there is a risk premium in the euro.
4:06 am
that risk premium gets taken out when grexit risks decelerate a little bit. francine: if something happens with greece, a negative event what happens to the other countries? tweeps -- we spoke to the intel a sao paulo ceo. stephen: if you look back to the crisis in the early 1990's, there were countries that were ejected and countries that remained in the erm. short-term interest rates in countries that remained inside, take france for instance short-term interest rates remain high for a protracted period of time even after the crisis subsided. it suggests that there will be a protracted and permanent adjustment upwards in interest-rate risk premiums and that is not good for growth. we already have real interest rates rising without really much of an improvement in gross or
4:07 am
inflation expectations. and then another increase in real interest rate if greece were to exit the euro? not a good situation. guy: is the fx market trading on fundamentals at the moment, or is it trading on a bunch of things of which fundamentals is one? you look at what is happening in the bond market. there is a repositioning going on. there seem to the other factors in the next other than interest rates or grexit risks. stephen: there has been a squeeze on long dollar positions and short euro positions. you've seen a lot of short euro hedge is taking off. there are market forces here. if you look at the fundamentals, the way that the dollar performed versus the euro over the life of qe3 the strongest
4:08 am
weekly return in dollar must have been 2%, 2.3%. over the life of the ecb qe, which is only just getting going, the euro has broken that record twice. the weekly return in the euro has exceeded that of the dollar over the life of qe3 twice. we attribute that -- there is some grexit in there, but we also think it is the current account surplus. the eurozone is on track to become over the next five, maybe six quarters, a creditor to the rest of the world. guy: eight minutes, surprised it took that long. you are a big fan. stephen: it is a currency fundamental. it makes the squeezes on the euro still intense.
4:09 am
trying to say that with this build up net savings in the eurozone, that this supporting of capital may be more than what is needed to keep the balance of payments, is a negative for the euro but it has to have some place to go. the capital has to go somewhere. if it doesn't have a home -- and most of these flows are debt flows area -- debt flows. look what is happening over the last three months. you are an investor in the eurozone, are you going to keep money in foreign markets? you may not want to invest in your own markets but maybe it is safer at the front end. guy: you are taking out one of the risks. ok. i think we need to talk about the u.k. as well. francine: here's a look at what else is on our radar. president barack obama has told the leaders of gulf state allies that the u.s. will come to their
4:10 am
defense against any external attack. president obama stressed the importance of a deal with iran. >> the key purpose of bolstering the capacity of our partners, to ensure they can keep up with iran politically diplomatically , from a position of confidence and strength. guy: netflix is in talks with a chinese media company backed by jack ma as it seeks entry into the online video market, which is projected to almost triple in size by 2018. the network aims to be nearly global by the end of 2016. francine: bloomberg set down with the prada ceo as the fashion giant opens a massive exhibit in milan. he told us how important artistic beauty is to italians. >> to me, art is part of our daily life.
4:11 am
in italy, we are born, we go to school sometimes in small cities. the school is close to a square. a church built in the 16th century. our eyes are used to artistic beauty. guy: fran is italian. i can't stop her talking about art. first thing she does when she walks in. francine: maybe we should have an art show. that brings up today's twitter question. in all links together. we are going to get stephen gallo's deal on this. guy: who is the most stylish politician? the reason we are doing this is we have a stylist coming up on the show later on. we are going to ask what she thinks of yanis varoufakis. that is not the only thing we've got coming up. francine: we have much more on netflix's possible entry into china. at 9:30, we will hear from ian bell about new zealand and
4:12 am
australia. guy: if the italians ask the english, definitely cricket. we are going to talk to the founder of a startup that's bush allies is in style. this is crowd -- that specializes in style. this is crowdfunding your wardrobe. ♪
4:13 am
4:14 am
4:15 am
francine: welcome back to "the pulse." we are live on bloomberg tv and radio. guy: ecb president mario draghi praised the early success of his program in washington, d.c. yesterday. he also highlighted the controversial monetary policy that could cause potential threats. francine: here's all you need to know in under two minutes. >> the ecb has taken a series of major monetary policy measures culminating in our decision in january this year to expand our asset purchases towards public sector securities. while a period of low interest rates will result in some local misallocation of resources, it doesn't have to threaten overall financial stability. structural reforms have increased confidence in economic prospects and encouraged entrepreneurs to capitalize on today's accommodative financing conditions.
4:16 am
while we have seen a substantial effect on asset prices and economic confidence, what ultimately matters is that we see a real affect on investment consumption, and inflation. to that effect, we will implement in full our purchase program as announced, and until we see a sustained adjustment in the path of inflation, it is ultimately a combination of policies that are complementary and fully consistent. they will allow our policy to reach its full fx and bring about lasting return of both prosperity and stability for the whole euro area. exiting from liquidity policies has to be done very carefully because the expectations of
4:17 am
long-term premiums are rooted more and more because of the length of time liquidity has been around. guy: stephen gallo is still here. you were listening to that. draghi says -- that was an inside joke. francine: you were listening. we listened to it this morning. stephen: qe. the announcement effect was significant. you look at the upturn in the eurozone data. the announcement effect was pretty dramatic. you have this strange gap between creditor and debtor countries and peripheral countries where the debt is increasing in a slower way than
4:18 am
it was precrisis. but qe is generally good for debtor countries and bad for creditor countries. the yield less. it is a unique situation that you have in the eurozone. francine: in terms of your favorite play on the currency markets, what are you buying? stephen: there's opportunities in relative value. with the big crosses, the bigger currencies like the dollar wait and see what happens with the u.s. data. i like sterling 3-6 months out. we are talking levels like 1.98. i think the buying area in sterling is 1.86, 1.87. unless we get a break of of 1.9050, you will buy that break.
4:19 am
but if it moves back down a little bit, i think the by area is 1.86, 1.87. the u.k. balance of payments is a mess, but usually, wide domestic imbalances don't hurt sterling in the short term. in the short run, they tend to benefit sterling. in canada, current account deficit is new. not only does it have weak oil, but it has sluggish conjunction -- consumption in the u.s. it could be detrimental to canada more than the u.k. guy: it has been a great pressure. thank you for blowing the lid off what we do in breaks. francine: we were talking about christine lagarde's appointment. guy: it was a sensible conversation. francine: as always. let's get on to corporate
4:20 am
stories. netflix looks east. the streaming giant is in talks with jack ma as it seeks entry into the country's online video market. anna edwards is here to tell us more. what is the potential here? anna: why go into china? it is a very big market. it might not be a simple operational thing for net >> to get into the chinese -- for netflix to get into the chinese market. how quickly could it grow? shanghai-based research says that this market by 2018 could be worth $14 billion. as you said francine, we do understand that netflix is in talks with media company backed by jack ma, the alibaba chairman. this fits with netflix's global ambitions. they had plans to be nearly global by the end of 2016.
4:21 am
nearly as ambitious as frank underwood of "house of cards." they are talking about the business that makes house of cards and "orange is the new black." guy: i feel like i need to say this in a southern drawl but i am going to resist that temptation. i don't do it as well as other people do. getting into china is tough. this isn't going to be easy. anna: it is not going to be easy. they need a partner for this. this is a heavily regulated market. the regulator in china regulates press, film, tv. it has given seven licenses to businesses the broadcast online tv content. there are strict controls over all this. what the companies need to do is have a partnership. netflix will have to have a partnership with a business that has a license to broadcast over all devices. you don't just want to watch this on your desktop.
4:22 am
you might want to watch it on your mobile or other device. there is going to need to be a partnership that covers these areas. why would that be one of the partners that netflix might go after? this is one of the first companies that has managed to secure one of these licenses in china. it operates in hang zoo, where alibaba is based. there are many relationships between alibaba and netflix already. alibaba has been working with netflix on set-top boxes. wasu said that in 2014, they would sell 20% of their business -- there was an established relationship between these businesses, with alibaba working with them on set-top boxes. we will have to see if they managed to forge anything meaningful. francine: the other challenge is chinese censorship of content. anna: that could be an issue if
4:23 am
you watch netflix content. if you watch "house of cards or "orange is the new black," you might be a where that some of sensors. they do have rules to do with violence or sexual content, or anything they deem to be offensive to the ruling communist party. netflix says they are going to try to figure out china. a big opportunity when you consider this is a nation of 1.4 billion people. francine: anna edwards with the latest on netflix. i have another twitter question of the day. please tweet us if you want guy johnson to have a southern drawl. just a very short bit because we are talking about "house of cards." just tweet me. guy: moving on. saying with american politics.
4:24 am
president obama has promised leaders of the persian gulf states the u.s. will come to their defense in the case of an attack. president obama hosted a meeting in maryland. he said any meeting with iran would prevent it from getting a bomb. elliott gotkine joins us now. have the countries' concerns been eased with what happened at camp david? elliott: i suppose there wasn't much more they could hope for, other than the guarantees that president obama was offering them and more practical help in terms of equipment and the like. there was never going to be some kind of nato-esque treaty of mutual defense. that said, the gulf nations are concerned about ongoing talks with iran. they are worried that when sanctions are lifted, iran will become emboldened. and ultimately that once that deal expires, it could set off a
4:25 am
nuclear arms race. that said, president obama's message to the leaders from the gulf, president obama really saying to them, we've got your back and we are also going to help enable you to better deal with iran as well. president obama: our key purpose of bolstering our partners is to ensure that our partners can deal with iran politically and diplomatically from a position of confidence and strength. elliott: just to underline some of the concerns in the gulf, we had iran firing shots across the bow of a vessel in the persian gulf, ostensibly because this vessel allegedly damaged an iranian oil rig. this is the third time in as many weeks that iran has aggressively tailed vessels in
4:26 am
that key chokepoint for global trade. you also have the trade in oil. there are concerns that things come to a head on may 20, when an iranian ship is due to bring aid to yemen. guy: great stuff, elliott. thank you very much indeed. elliott gotkine bringing us up-to-date with the camp david story. francine: coming up, a big summer of cricket ahead for england. you will hear about the team's chances. guy: also, the controversy surrounding kevin peterson. a reminder, you can follow us on twitter. our twitter question of the day is, when it comes to fashion, how would you rate our politicians? which is the most stylish politician? mr. varoufakis? francine: this is not a simple
4:27 am
question. the language of how you persuade the other side in creditor talks. guy: we have a stylist coming on. ♪
4:28 am
4:29 am
4:30 am
francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. guy: these are the bloomberg top headlines. francine: david capron -- david cameron meets the scottish national party leader. the u.k. prime minister is supposed to promise a devolution bill for scotland. this follows a general election last week in which the conservatives won an overall majority, but snp emerged as the biggest party in scotland. guy: pretty much the only party
4:31 am
in scotland. cosmetics firm avon says the company's share price surging yesterday before it was discovered to be a hoax. the apparent offer came from an entity which claimed it was offering to buy avon for $18 a share. not ppg. the offer was three times the market value. francine: blues legend bb king has died. the guitarist and singer best known for his hits had been in hospice care in las vegas. he was 89. guy: sab miller is entering the u.k. craft beer market. the brewing giant has acquired the craft brewer meantime, based in london's greenwich. matt boyle joins us now with more.
4:32 am
like him into the u.k. with craft beer? obviously it is a growing play here. what are they hoping to get out of it? matt: it is one of the only plays in beer right now. there is no growth in mainstream beer. sab miller beer volumes were flat last year. meantime is one of the most established names in u.k. craft beer. this makes sense. the guy running meantime used to work at sab miller, so they know each other. francine: in terms of this industry, craft beer, how big is this going to be? matt: difficult to say. we think it is anywhere between 8% and 10% of u.k. beer sales. we have better data in the u.s. where it is 11% of volumes growing 20% a year. it is exploding. going back to sam adams, the
4:33 am
british have learned quite a few things about craft beer from my friends in america. the u.k. craft sector is picking up pace as well. brew dog, a scottish craft brewer, is doing a crowd fundraising. we think this might set off a land grab. the problem is, we don't know how much sab miller paid. guy: is a craft beer if it is taken over by sab miller? matt: that is the question. sab miller would be stupid to tart -- to start tweaking the formula. guy: never stopped management teams in the past. matt: that is true. they say, let's tweak this. obviously, they are going to plug into sab miller's distribution. it is already exporting to 40 markets. some of that might be very small, because it is tough exporting and dealing with taxes
4:34 am
, but this will certainly increase that. also, this gets sab miller into the pub business. meantime has about 25-26 pubs. francine: where they make it? matt: not where they make it but where they distribute or sell it. interesting thing that sab is doing is, they are taking unpasteurized beer from pilsner or cal -- pilsner urquell and shipping it unpasteurized to these tank beer bars. they claim it is fresher. it certainly is better than your average kind. meantime does this as well. you see some synergies there already. i think this is good news for sab miller. it is an attempt to get some growth out of europe for once. guy: growth versus margins. do you make money off it?
4:35 am
what is the margin like in the craft beer sector? matt: a pint of beer in a london pub you never thought it would hit five pounds. now, you almost expect to pay five pounds. how much margin are they actually seeing? it is difficult to say. we don't know what the margins are for meantime. if you are selling a higher priced beer, you want to get a little more of a margin than you would on coors light. francine: craft beer is so popular because of the taste or because it is more fashionable? matt: it is the taste, it is more fashionable, it has a story behind it. there is not much story behind the mainstream bloggers. meantime, breed dog, they are good at creating these stories. some of it is artifice. as you see with the whiskeys and bourbons, a little bit of math as well as fact, but people eat that stuff up.
4:36 am
bottom line, these are better tasting beers. francine: you can see i don't drink beer. matt, thank you so much. guy: from beer to cricket. let's turn to sports. it is another big summer for english cricket. test series against new england and australia. england's preparations have been overshadowed by controversy surrounding england's leading run scoredr, kevin peterson. he has been told he wouldn't be considered because of trust issues. mark barton caught up with ian bell to talk about the state of english cricket and started by asking him if england can replicate the success it has seen against new england in 2013. >> new zealand is one of the informed teams.
4:37 am
it is an exciting series. we have to play our best cricket to win that series. it is a good test for us. mark: england 10-3 to win the series. australia 11-4. does that tell us about the gulf between the two sides right now? >> i think it says a little bit of may be where we are. australia has been fantastic in all formats of the game. they've got -- they are very stable in terms of what is on and off the field. our results haven't been great on the field. a lot of distractions off the field. i think it is a fair reflection of where we are. in my time of playing against australia, i've been on both sides. we've been underdogs. in 2005, people didn't give us a
4:38 am
chance. through good leadership and some amazing performances along the way, we managed to win that series. i don't think being underdogs is a bad thing to be. mark: you mentioned distractions. there is no greater distraction right now then kevin peterson. he has been a distraction on and off since 2012. you are one of the leading players. how difficult is it when it is the off the field things taking center stage rather than the on the field things? >> in part, i suppose being a sportsman in england, being able to deal with the media, dealing with issues off the field as a senior player, we've got a young group of players who haven't been through it before. also, this is our responsibility , to make sure we are performing well as individuals and as a team. the important thing for us as a
4:39 am
group of players is to win this series. mark: is there a trust issue? that was cited by the new director of cricket. >> it is difficult to know. i don't know where andrew was going with that comment. i'm sure we will sit down and he will go through more in-depth. it is very difficult to answer that question, since we don't know the conversations that happened. mark: do you feel sympathy for him? kevin scored some runs this week. it seems as if that wasn't the case? >> colin grays is the guy that can answer that question. i wasn't involved in that conversation. if you score runs, then you will be considered.
4:40 am
you would expect that to happen. it is difficult from the outside. we were on tour when those conversations happens. for us, those conversations carry on for a while. we have to make sure we turn up to lords next week and we concentrate on that. mark: -- maybe the coach long-term for new zealand. are they trying to entice the best coach in the world? if he can't choose the players he wants, kevin peterson, is that a risk? >> i don't think so. being the coach is the huge job in cricket. i think the group of young players this coach will have to work with is as exciting as anything you could have going forward. there's a lot coming through. we are seeing that in all forms.
4:41 am
we've got a test team here that has been more consistent than the on bayside. there are some serious players. mark: do you have any favorites? jason gillespie seems to be top of the pile when it comes to favorites. are you a fan? >> as a young lad watching cricket, watching gillespie, you have to be a fan. he's one of the best cricketers of his era. it would be great to pick his brain on cricket. i'm sure he would be a great candidate for the england job. i'm sure andrew strauss and the board are looking for the best person they think could take this team forward in the immediate future. mark: do you feel sympathy for peter? he was exposed around strategy and tactics. was that the case?
4:42 am
was he lacking in those areas? >> as players, you have to take responsibility as well. we didn't perform as well as we should have done for an england team. they made that decision and that call. i'm sure he will be thinking, if he had more time, maybe he would have got things how he wanted them to be. guy: i'm not going to comment much on english cricket at the moment. francine: me neither. guy: otherwise we could end up going wrong. francine: coming up, y and impressive dress in a building is this year's must-have accessory. stay with us. ♪
4:43 am
4:44 am
4:45 am
francine: welcome back to "the pulse." small investors in the u.k. lost more than 1.7 billion pounds the boiler room scams last year according to police estimates. for the rooms are staffed by plausible salespeople who persuade victims to invest in phantom investments. police say there is an increasing problem with criminals renting office space at prestigious financial
4:46 am
addresses to gain credibility. let's speak now to detective chief inspector dave manny. thank you for joining us. give us a sense of how big a problem this is area -- this is. we are seeing more of these scams getting into prime real estate. >> it has changed. london still remains an economic hub. it works on reputation. it gives an air of legitimacy. the phenomenon is that the business rentals they rent the room for 100 pounds to have an office and a lot of people work on what they see on line. if it is about cybercrime, every one of these boiler rooms is working off a website with portals and links so that people
4:47 am
see this is london and they believe it to be real. guy: how the you prevent that from happening? you've been running this for a year now. how do you knit it in the bud? what are you doing to tackle it? mr. manley: it doesn't work just on enforcement. by the time you get to enforcement, there's victims. we are looking to take it out before there is victims. where there is a suspicion we are working with the big companies that are multinationals. you have companies that used to work in the money-laundering framework. it is about increasing their knowledge around their customers, looking deeper into who is using their offices what they are seeing, and reporting
4:48 am
to us. guy: and that has proven to be successful? mr. manley: it is. if you go out to camden, westminster, and canary wharf all these big areas have got a business footprint. they have the same problems. we are working with those as well. as we push them out we displace them. they don't just roll into another barrow to set up. we share the intelligence. if a company name sounds suspicious and it is not regulated investments these things have very subjective value like antiques violins things that you could buy but you don't really know what it is going to cost you. it is not like the gold measure. francine: the problem of course is that the sales force are
4:49 am
usually experienced or very good at what they do. are there any tips to watch out for? mr. manley: basically, mimic true business. everything they use is what you would expect from genuine business. the first thing i would do is check on the website. they will give you some indication of what to look out for. if you are not investing in something that is regulated victims are vulnerable. they may not have a background in finance. speak to your bank. the banks are very good at spotting these. speak to your family. get some input from somebody else. guy: do you worry that with the recent deregulation of the pension industry that you are seeing more of this in the future? mr. manley: the challenge to pension regulations is outside
4:50 am
the police agreement. a lot of people are going to have money to invest. the problem is people seeking higher interest on their incomes. you get one or 2% from a bank. it doesn't give them the income they want. they are looking at the higher risk. these aren't higher risk. guy: they are going to be looking for even more of that kind of thing. mr. manley: extreme caution. we are working hard for the regulators and the cities. the city is a far safer place because of this operation. moving forward, the key is to seek advice seek professional advice. do not do it on a whim. do not take for granted what you've been told over the phone. guy: another advice-related question. if i'm working at the building and there's lots of companies in
4:51 am
there, what am i looking for? mr. manley: first thing is, when they start the company, they change the company name in a short space of time. what they are seeking to do they should be able to tell you what kind of company they are running, the staff, the hours they keep. you get an idea. it is actually a sales regime or it may look like a trading floor. ask the questions, are you regulated? they've got to be doing their job. they are providing, they are enabling. once they provide the service for lots of small emerging businesses in a city very diverse, they've got to be in a position where they are not enabling crime. francine: how many boiler rooms do you think are still out there? mr. manley: in the city of the moment, very few. we get out every single week with new intelligence.
4:52 am
we meet with the fca and decide where to put our resources, and then we go out every two weeks and visit. the big providers are looking to cooperate with us. over of the bomb of time, it is getting that -- over a period of time, it is getting that network. francine: thank you so much for coming in, dave manley. guy: we are going to take a break. still to come, we are going to talk luxury. we will hear from the ceo of prada about preserving the cultural dna of the company. ♪
4:53 am
4:54 am
4:55 am
francine: welcome back to "the pulse" live on bloomberg tv and radio. guy: prada has opened a new milan headquarters. this is a 200-5000 square foot space which will host classical and contemporary art exhibitions. the company's ceo and husband of the designer spoke exclusively to bloomberg tv about the project and the importance of preserving a cultural dna. >> everybody felt, at least europeans did, that we needed to find a new identity.
4:56 am
in italy, we had the urge to revive italy not as a product but as a cultural asset. made in italy shouldn't only refer to material products. this awareness prompted many cultural sponsorships from other brands. francine: for those listening on bloomberg radio, "the first word" is next. for our viewers, a second hour of "the pulse" is next. guy: pressure building from creditors to present a plan. francine: we are also going to look at yanis varoufakis and whether his style is riling up creditors. then, we talk a little bit of m&a. guy: we have been talking about boiler rooms and fraud. we are going to talk about hoaxes. yesterday, we saw that in avon. plus, we are going to talk about fashion. back to yanis varoufakis, who is the most stylish politician?
4:57 am
we will be talking to a stylist. francine: what we will be talking about is consistency. we will be looking at nicola sturgeon and angela merkel as well. ♪
4:58 am
4:59 am
5:00 am
francine: the rally continues as s&p rises and we look at the impact for europe. guy: netflix may partner with a media company backed by jack ma to enter the chinese market. itfrancine: we look at the billion pound of scams. guy: good morning to our viewers in europe and good evening to those in asia and a warm look him those waking up in the united states. francine: this is "the pulse."
5:01 am
guy: greek officials are negotiating with creditors. the l latest round of talks started yesterday. they had to dip into the imf reserves to make payments. francine: what is the latest on the talks? guest: everyone is just getting their heads down around the negotiating table. they are trying to convert this talk of convergence or non-convergence that we have been hearing a lot of conflicting messages, trying to get as much as much in writing that they can all agree on it. that does mean that after all of the excitement at the beginning of the week where we had a quite a bit going on in terms of making imf payments we are going for a quieter stage in
5:02 am
terms of big glaring headlines. of one tries to hammer things together. they can be reasonably happy with it. guy: in the sense of what's about to happen, what is the sense in athens at the moment about what is happening behind the scenes politically? i am struggling with the idea that he is making all of these wild statements and we have a different negotiating team. if where do you look for a sense of what the real story is? guest: he is not in the negotiating team. we have to give credit where it is due. he his -- i almost feel for him
5:03 am
and his comments yesterday were quite an oculus. they were a little bit misconstrued. he is in the public spotlight and that is what is going to happen. ithat is the price of having that kind of profile. within the government itself you had three days of long marathon cabinet meetings. clearly, they have used within the government the feeling that they want to get this deal done and compromise on it. they need to cover themselves politically to do that. we had some reports in the greek media today also about the imf meeting at yesterday.
5:04 am
paul thompson briefed his bosses that we set down around the brussels group, but we don't have access back in athens. we don't know how much political backing these guys will have back home. guy: thank you very much indeed. marcus is joining us from athens. francine: let's head to frankfurt. he is germany's chief economist. great to have you on the program. what you make of the next couple of weeks? are you going to see volatility? are you worried about what's going to happen with greece? guest: i think we are moving closer to a compromise. this explains why so many germans are afraid of him. i think we are moving to this compromise.
5:05 am
the big question is if they are discussing a third bailout package or not. this will be the big issue after having found in immediate compromise. guy: the you think a third deal is possible? we struggled with the second deal. the you think a third deal is in any way feasible? guest: i think a third deal is needed. there is no way around the third deal. it is either a third bailout package or an exit. there is no in between solution. will it be possible? i think it is, but it is going to be tricky. both sides will have to sell it to their publics. the greeks have to sell it at home and explain why there will be monetary -- monitoring. the germans will have to sell it in berlin. this time, the promises of
5:06 am
greece will lead to real reform. francine: where is the euro-dollar heading? guest: i think we are still going to see parity. i think the fed will hike interest rates later this year after the summer. the ecb will continue with qe, at least until the end of this year. this means the gap between edger rates will widen and this should push the dollar further down to parity. guy: what do you make of what draghi had to say yesterday? it doesn't sound like in any way that he is going to be backing off, even if we see an early stage recovery getting more momentum. guest: he won't. i think it will be his task to
5:07 am
defend and explain why this tapering discussion we are starting in the eurozone is nonsense. it's naive. we just had one good quarter. if you look at most eurozone countries, the gdp is still lower than prior to the crisis. talking about tapering right now would be counterproductive. draw he will continue to show that tv is necessary. this might be the moment where we start this tapering. francine: overall, are you more optimistic than you were six or seven months ago? i know we are in difficult waters at the moment. because of qe and the fed rate rise a little bit later than
5:08 am
people think, argue more generally optimistic? guest: i am more optimistic than half a year ago. there are still problems and challenges. if you compare things with the last years, it is clearly better. we have tailwinds that are strong. we have low interest rates and we see this rebound of consumer confidence in business sentiment. we do see the countries are improving, except for greece. spain and ireland are becoming strong growth performers. this looks more optimistic. guy: every time we are more optimistic about the eurozone the politicians stop worrying about structural reform. guest: when we become more up to test -- optimistic, we slow down
5:09 am
structural reforms and we slow down european integration and we deny the stance on greece. there are clearly still challenges and problems out there. the biggest one is complacency. you can be too satisfied with the current state. that is something that it can't be. unemployment plates -- rates are still high. we need to reduce unemployment and we need to have a plan for europe. this is something that is still out there. francine: thank you so much. he is the chief economist in at germany. guy: barack obama has told leaders of the gulf state allies that the u.s. will come to their
5:10 am
defense. he stressed the importance of a deal over iran. >> the purpose is to ensure that our partners can deal with iran at politically and diplomatically from a position of confidence and strength. francine: netflix is an talks with a chinese media company. it is backed by jack ma. the internet television network aims to be nearly global by the end of 2016. guy: bloomberg sat down with the ceo of product. he told us how important artistic duty is to the italians. >> art is part of our daily
5:11 am
life. in italy, we are born and go to school. the school is close to a square, a church built in the 14th century. from the first day of life, we are used to artistic beauty. francine: i wish that were completely true. i think in a romanticized world that is true. for the rest of us, maybe. maybe not. that brings us to our twitter question. from fashion to politics and art, we want to know who you think is the most stylish politician. is that counterproductive? in some cultures it may not be a good thing.
5:12 am
we will discuss that next. we will discuss the avon bid that never was. there was a fake $8.2 billion offer. we will be back after the break. ♪
5:13 am
5:14 am
francine: welcome to "the pulse." a buyout offer for avon set the
5:15 am
share price surging on thursday he for it was discovered to be a hoax. the takeover offer came from ptg capital partners which claimed it was offering to buy them for $18 and seven -- $18.75 per share. first of all, how did this happen? guest: this is bizarre. these fraudsters took advantage of something called edgar, the system for filing corporate documents in the u.s.. there is huge amount of traffic on it all the time. there are trading programs that are scraping these documents all day long, looking for things that might indicate a takeover bid. whoever did this put this on edgar. they said they had made an offer for avon.
5:16 am
this gets picked up by the media and the shares go flying. it did not take long for everybody to figure out that something was amiss. guy: tpg should have been a clue. guest: they did by avon in japan years ago. they claim to be based and said they had no record of any such company. a phone call to the number listed, nobody picked up. that in another itself is an impossible. someone was having a bit of fun are trying to make some money off a quick hop in avon shares and they did go up about 20%. guy: in terms of the just ask, how can you make this happen? this has happened, is it still just as easy to make it happen? if this is an open forum in which things can be filed and
5:17 am
easy to do, they scrape the data. that sounds like something hard to keep this from happening. guest: one of the other factors we have not talked about is the financial markets are a hair trigger because of high-frequency trading. when something moves, it moves very fast on fragment three information. if it was not spoofing the edgar file service, it could be a fake press release which is an even simpler way to do this. there is no easy way to prevent this. whoever did this is probably going to get caught. it's not a great strategy. this is pretty unsophisticated. francine: let's leave the hoax to one side. are they likely to be taken over of one point? guest: it's a possible private equity target. it's a company that is quite
5:18 am
troubled and diminished from its iconic consumer brand. there has been some pressure on the company to look at a leverage buyout by a pe firm. they could restore the brand and turn things around. that is not impossible. francine: matt, thank you so much. guy: why an impressive sounding address is the must-have accessory for a boiler room scammer. we will talk about fraud in just a moment. stay with us. ♪
5:19 am
5:20 am
5:21 am
guy: welcome back, you are watching "the pulse." we are on the brewing giant has acquired craft beer brewer based in greenwich east of london. why is sab a giant of the brewing industry wanting to buy a small brewer out of greenwich? guest: craft is the only sector that is growing right now. sab miller is flat across
5:22 am
europe. craft is where the growth is and it's going to become a land grab. it's already a land grab in the u.s.. i'm has her bush is picking up small brewers left and right. this could set off a land grab here in europe. there are plenty of targets. francine: how fast is it growing? guest: it's a little under 10% of the u.k. beer market. it's hard to get a figure on that because opinions vary in terms of what is actually craft beer. do you base it on the size of the brewer or the quality of the craftsmanship? there is a big argument about what is a craft beer. it is growing faster than mainstream longer. that is going nowhere in the u.s. and across europe. this is the one area of growth and miller is wise to go after it. in the u.k., there are more breweries or person than any other country in the world.
5:23 am
there are lots of targets out there. guy: you've got to be happy about that. i guess we do talk to at the definition of craft beer. my local brewer produces a lot of beer. they've done that as long as i can a member. is at a craft brewer? should they want to be taken over? guest: a lot of companies are trying to glom onto this. suddenly, they are artisan will. that word is now in vogue. we are seeing that with craft. i think beer drinkers know a craft beer is. budweiser is not a craft beer. in the u.k., carlin is not a craft beer. if they are smart, they are pry trying to attest them to the craft wagon. it can mean a lot. buried in the release was a notice that they are building a
5:24 am
pilot brewery that sab will use to innovate new product. it's going to get sab's peers in more places. -- peers -- beers in more places. europe is not the big region by far. if they can get a little bit more growth out of europe and product margin, that is a good thing. guy: that has always been an interesting area. francine: don't look at me. that's exactly your point. guy: will it help that? guest: craft beers over index women are more likely to drink a craft beer than they are a mainstream beer. sab miller has talked about this. they want to reach more women. what i found interesting was they had a seminar about this
5:25 am
last october and they talked about all of the occasions where beers are not being drunk by women and others. they found that they just don't have a product that is available at all and women don't want to talk about wiser. -- drink a budweiser. they are intrigued. perrone does well with women. francine: it used to be italian. thank you so much. guy: right. francine: millions of pounds are being scammed. here with more is caroline hyde. how much are we talking about? guest: it's 1.7 billion pounds in just the year. 5000 people were swindled out of their cash. the money is racking up.
5:26 am
cold calling is one avenue. the air of respectability that an address earn shoot, some are able to rent and it only costs 100 pounds a month. you start putting in calls and by phone numbers. you call people who are pensioners and say you can buy these gemstones, these assets. tell them what a wonderful bet it is. suddenly, you are raking in. they are getting about 1.5 million pounds from people by calling them before they are shut down at. we are seeing more space being leased in london and some of that is being driven by these boiler rooms. lease are cracking down on it. we understand that it is called operation of broadway. they are trying to up the
5:27 am
realization of these crimes and people are being put in prison. it seems we need to be educated a little bit more. francine: you can read it more about that on we are going to take a break and we will be back into. ♪
5:28 am
5:29 am
5:30 am
francine: welcome back to the pulse. we are live at bloombergs european headquarters. guy: these are top headlines. francine: david cameron is meeting with the nat -- scottish national party leader. he will promise a resolution for bill for scotland given them control of 60% of spending. the conservatives won an overall majority, but the s&p emerges the biggest party in scotland. guy: it was a hoax.
5:31 am
the takeover claims from a hoax that was trying to buy avon. francine: bb king has died. the guitarist and singer best known for his hits "lucille" has been in hospice care in las vegas. he was 89. guy: right. jonathan ferro is here. jonathan: it's been quite morning -- boring this morning. we had a volatile week and we finished on a high. let me show you the equities. the dax is up 6.1%. gains on the proofread are just up by a tent.
5:32 am
the map is painted green. let me show you the bond board. bonds painted green and yields go lower. i am looking at the german 10 year. that relationship, that correlation that relationship at its tightest since september 2013. german bonds are in for a week of declines. we add another 10 basis points once again. in the euro land, we went through and we came back. the dollar heads for another week of losses. crude is headed for a ninth week of gains. that is a record winning streak. the rally seems to have taken a pause.
5:33 am
at 1:00 eastern the rig count drops to a september 2010 low. last week, we did not really talk by much. people are stored into at on rigs once again as the oil price stabilizes. back to you. guy: thank you very much indeed. francine: according to people familiar, netflix is in talks with a chinese media company backed by jack ma. caroline hyde is here with all of the details. the potential is huge. it is difficult to get into china. guest: it's about $6 billion at the moment. it could be trouble that in three years. we are looking at a $14 billion
5:34 am
market by 2018. the explosive growth is not surprising when you have an explosive number of people. discussions are on with a number of players. one of them is backed by jack ma. they could be looking for a partnership. at the cannes some festival, the chief content officer is speaking. it was a hot ticket. he spoke back on may 13 two investors and said we are trying to figure china out. we've got to get in there. it's difficult in china. guy: there are number of reasons why it is difficult. this is a heavily censored company. guest: the reason they are talking to a number of players is there only seven companies in the entire country that are allowed to stream video.
5:35 am
they are having to work out who is the best fit to access some chinese viewers. then, they've got to tackle regulation. you've got censorship. just in april, madmen, the simpsons, they were not allowed to be viewed by the internet until all the episodes had run. they can actually watch these episodes and if there is any violence, sexual, offensive language, it is cut. madmen, all of these things are going to be censored by the communist party. the hurdle is to get yourself a partner and make it fit. as the content going to be that watchable? francine: what are they going to do?
5:36 am
we understand the company is backed by jack ma. does that mean they won't be able to see house of cards? is it even worth doing? guest: they say they want to be global. they think it is worth doing. they have said china is a priority. of course it is. they are having discussions with the company, it is the most open tech rockstar there is. he is able to open doors. francine: thank you so much with the latest on netflix. guy: a big summer of cricket is ahead. we'll hear from one of the leading players about the team's chances. ♪
5:37 am
5:38 am
5:39 am
guy: welcome back. we are live from london on bloomberg television. let's talk about cricket. it's going to be another big summer for english ticket. england's preparations have been overshadowed by the leading run score. he has been told by the new director of cricket that he will
5:40 am
not be considered for the test because of trust issues. he scored a quite a lot of runs recently. we talked about the fate of english critic and asked if england can replicate the success they enjoyed against new zealand in 2013. >> they are one of the teams. it's an exciting series coming up. it's going to be very difficult. it's a good place to start the summer. it's a good test for us here in. guest: 11 -- australia is 11 to four to win the series. >> it says a little bit of may be where we are in the last 12 months.
5:41 am
australia has been fantastic in all aspects of the game. they are very stable both on and off the field. the results of not been great on the field. there been a lot of distractions off the field. i think it's a fair reflection of where we are. i've been on both sides were you have been favorites and we have been underdogs. in 2005, nobody gave us a chance . through good leadership and some amazing performances, we won that series. i don't think being an underdog is a bad thing to be. there is no greater distraction right now than it kevin peterson. he is a distraction on and off since 2012. you are one of the leading players on the most respected how difficult is it when the off field things take center seed
5:42 am
rather than the on-field things? >> i think any part of being a sportsman in england is dealing with the media. as a senior player, we've got a young group who have not been through it before. this is our responsibility to make sure that we are winning games and performing well as a team. that's what it comes down to. the important things for us is to win this series. guest: is there a trust for you. >> it's difficult to know. i don't know where he was going with that comment. we will sit down and he will go through more depth where he sees this going forward. it's very difficult. we will have a lot of
5:43 am
conversations. guest: he intimated that if kevin scored runs that he would be considered. that wasn't the case? >> he is the guy that can answer that question and i was not involved in that conversation. if you're told to score runs and you will be considered, you would expect that to happen. it's difficult from the outside. we were on to when those conversations happened. those conversations will carry on for a while. we have to make sure that we win that game of cricket and concentrate on that. guest: you're looking for a coach. could england expect to entice the best coach in the world if
5:44 am
he can't choose the players he wants? is that a risk or a worry? >> i think it's a huge job in cricket, one of the best. i think the group of young players that this coach will have to work with is exciting going forward. there is a lot of talent coming through. we have seen that in all forms. we've got the test site, or consistent. within that, there are some serious players. this coach would take the team forward. guest: do you have any favorites? >> again as a lad growing up watching cricket, you have to be a fan. he's one of the best of his era.
5:45 am
it would be great to be a will to pick his brain. i'm sure he would be a great candidate for the england job. the best person to take the team forward in the immediate future long-term as well. guest: do you have any sympathy? you have worked closely with him twice. was at the case? was he lacking in those areas? >> at times you did not perform as a group as well as we should have four in england team. he made that decision. we would've thought he would've had more time it. maybe things would have gone the way he wanted them to be. francine: cricket.
5:46 am
that is very british. here are bloomberg's other top headlines. guy: pimco will close three the cap has no plans for a replacement. francine: netflix is in talks with a chinese media company backed by jack ma. they are wanting to get a piece of china's online video market. they want to form partnerships. they aim to be global by 2016. guy: barclays will be fined for interest rate rigging. u.s. prosecutors will stop short of seeking a guilty plea. fines could come on the coming days.
5:47 am
they were manipulating currency benchmarks. francine: you can make it to the hollywood a-list in kim kardashian's videogame. guy: bloomberg sat down with the reality tv star to talk about what made her game. >> you plan your journey to make it to the a list in hollywood and you get to do these fun challenges along the way. you get to go shopping. it's like what you would assume my life or a celebrity life would be like in hollywood. >> she is a mentor for the player. guest: you get extra points. >> who should you work with? who should you day? >> we have real life people in the game, all of my real friends. i try to make it as lifelike as possible. when i go on vacation, the player can go to the same city.
5:48 am
it's so familiar to my real life. we spent a lot of time making sure it is accurate. francine: we were reading about this. some of us were. this is a video game where you can log on and see her life style and pretend to be part of it. if you want to, that is another problem. guy: you can be part of the hollywood a-list in canada this weekend. francine: the weather is amazing. let's talk about politicians. guy: he is going to withdraw his nomination for leadership of the labour party. the scrutiny he has been subjected to is not to his liking. francine: up next, we will look at what to watch for the rest of the day.
5:49 am
why some u.s. airlines are stepping up their competition with middle eastern airlines. guy: financial markets, let's check in and see what happens. yesterday was a day of holidays in europe. many people are taken the day off. the markets are not doing very much. the rally continues. yesterday we had a decent stock rally. we are above the 7000 mark. the dax is up. eurozone volatility is part and parcel of the story and what is happening with the dollar. this seems to be one of the transit is out here at the moment. that is was happening in terms of the yields. as you can see, yields are
5:50 am
falling. bono is down. a quick look at the euro could why not? francine: we had stephen gallo, one of the most accurate forecasters. the story is playing into that gdp story where france and italy did better than expected. guy: we will take a break. we will see you in a couple of minutes. ♪
5:51 am
5:52 am
5:53 am
francine: welcome back. guy: here are your top headlines. david cameron met these scottish national party leader. they are expected to give scotland control of the city percent of its spending. last weekend, the conservatives won overall majority. francine: a buyout offer for avon set the sheer surging until it was discovered to be a host -- hoax. they claim to be by being --
5:54 am
buying avon. guy: finally blues legend bb king has died. he was best known for hits like "lucille." he had been in hospice in las vegas for some time. he was 89. francine: prada has just opened a new space. they will host art exhibitions. they spoke to bloomberg about the project and the importance of preserving a cultural dna in the fashion industry. >> everybody needed to find a new identity. in italy, we had the urge to revive made in italy not so much
5:55 am
as a product but as a cultural asset. made in italy should not just reaped -- refer to products. this awareness caused many cultural sponsorships. francine: that was the ceo of prada. there is a linkage between fashion and art. 11 fashion brands have taken it on themselves to restore some of the beautiful buildings on the canals in venice. they have the money for it. you have you have the money, you have to spend it somehow. guy: elliott is standing by. we've got a battle in the skies above washington. guest: not just above washington . all the way back over to the gulf. later today, ceos from the main
5:56 am
u.s. carriers will give more testimony in washington to press their case for sanctions against the gulf carriers. they will present a report and say they have found that gulf carriers have stimulated new traffic. all of the expansion that the gulf carriers have enjoyed have been subsidies. the gulf carriers are not taking this sitting down with their seatbelts fastened. they have said that the carriers have enjoyed subsidies thanks to reductions of their liabilities. the u.s. carriers are greedy and offering up service. guy: there are a lot of u.s. planes.
5:57 am
i'm sure boeing will have an adjective you on this story. francine: that's it for "the pulse." ♪
5:58 am
5:59 am
announcer: this is "bloomberg surveillance." tom: the state of the animal spirit in this hour. michael garda on what the fed is getting wrong. it is all quiet on the grecian front. we consider an italian recovery.
6:00 am
while there is no 13th floor on an elevator, we consider trust safety among the elevator wars. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm tom keene. joining me, brendan greeley. brendan, look at elevators. brendan: i'm excited. new elevator technology means new building. we can look at everything with an elevator. tom: it is going to be -- it is quiet out there, so we have a lot of the things to talk about, including getting to michael darda. right now, top headlines with vonnie quinn. vonnie: investigators want to know why the amtrak train sped up before it derailed. the ntsb says the train went from 70 miles per hour to 100 just before it ran off the tracks. the crash killed eight people and injured more than 200


info Stream Only

Uploaded by TV Archive on