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tv   The Pulse  Bloomberg  May 19, 2015 4:00am-6:01am EDT

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francine: no deal and sites. juncker rules out a deal. -- no deal in sight. u.k. inflation figures are due in half an hour. could oil prices cause a dip in more than half a century? russia's richest person talks sanctions. the relationship with the west and life after putin in a bloomberg interview. ♪ francine: welcome to "the pulse ." i am francine lacqua. over the next hour, we will be
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joined by an award winning economists and get his take on all of today's news. the president of the european commission has ruled out the possibility of a great deal when leaders meet later this week. the greek government has expect awesome -- as experts -- has expressed optimism. yanis varoufakis gave an indication of just how close he thought the sides were to reaching a deal. yanis varoufakis: i think we are very close friend or until the deal is done, nobody knows when the deal will be done. could it be a matter of 24 hours? yanis varoufakis: let's say about a week. francine: for more on all of this, to berlin and hugs nichols. what did -- hans nichols and what did we learn. you had one side saying it will reach of the deal and a
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commission being more pragmatic. hans: that has been the dynamic for a long time. a great deal of optimism from the greek side. and the other side least optimism. the lease in berlin and then madrid. what we learned from varoufakis is he was any kind of deal in a restructuring of the debt. he said he cannot foresee any new deal that did not have any kind of change on the overall debt. it could be a dealbreaker in berlin. uganda back the way of a referendum which had been gaining currency. francine, he kind of laid out his negotiating strategy. he explicitly did not rule out to the idea of "rift" with his partners. yanis varoufakis: our mandate is to negotiate. in a negotiation and any
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negotiation, if you're not willing to consider the possibilities of saying no to crate a rift, you are not negotiating. really requesting. this is the relationship if you will between the mandate we have and amended we do not have. a mandate to negotiate may compromise to an honest beneficial agreements. this will never happen if you shop that shut out as some of the opposition parties ask us to do. hans: that is a master negotiator a one who is prepared to go close to the end and close to the line. as we keep saying and reporting on this program, time is running out. it looks like rigas will not be the venue as mr. tsipras strongly indicated he wanted to do. first request bank -- francine? francine: we do not have
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anything done. the ecb has said they will step a bond buying. hans: we have comments from -- saying they recognize the cyclical moves and they want to step up. that sent but the yield down everywhere including all across the eurozone including greece. yields were up and they dropped back down on the news. i have not checked in the last five minutes. yesterday, we saw a remarkable swings in greek debt. 300 basis moves and the 2-year note. this morning, they are down perhaps from the ecb board member and we will follow that. francine? francine: hans nichols. let's go to joseph an award-winning economists and author of "the great divide." thank you for joining us.
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we have a lot to talk about. greece, how do you deal with greece? they have never been this far apart and the clock is ticking and no one seems willing to give in, who will win or who will lose. joseph stiglitz: there is risk everybody will lose. i look at the kind of reforms they have done and it is very impressive. the macroeconomic reforms and breaking down the deficit and terms of the actions. but on the other hand, if you're economy imposed with austerity has caused you should be very clear it was the austerity that really brought to the economy down 25% low what it was before the crisis. one of the things everybody focuses on its debt sustainability. the debt to gdp ratio. if you get the gdp down low enough, the gdp goes down. debt to gdp ratio was 110%.
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it is now much, much worse because of the flawed austerity that has been imposed on greece. francine: does it mean that it they are right to not renegotiate on the red line or should they be embracing a little bit more? joseph stiglitz: have an economist, i cannot tell you the politics. what i can say, they are absolutely right in economics. the program that was put forth back in 2010 revised subsequently was a disaster. a disaster. as an economist when i sign it originally, i said it would not work. what is so remarkable is the ecb, european commission keeps coming out with forecasts. their models are really really bad. i teach my students, if you ever came out with that --
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francine: you would get a zero. how do you fix it? joseph stiglitz: i think they do not understand the macro economics when you have austerity combined with a weakening of the financial sector. this is a fundamental structural reform problem with the eu. they have a single market and these countries have a problem. you go to the public austerity with contraction in private lending and the toxic combination. the country goes down. they do not have it built into the model. the same problem in building the forecast for 2008 prices. francine: should greece be bigger? it would make more sense. take the pain, a lot of it. joseph stiglitz: in germany and the rest of europe refuses to change in the program i think there is no alternative.
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the first test would be for you to realize that austerity is a mistake and there are fundamental laws and the structure of the eurozone. racing bank we are too late. they need money as they need in the next couple of weeks. -- francine: we are too late. i understand what you are saying but we do not have the time. joseph stiglitz: under the conditions that did the eurozone , refuses to change a policy that has proven wrong and lead the country down 25% decline of gdp. this is depression like. more than 50% use unemployment. it is destroying the country and the future. i would have to lean and say you bargain in good faith. not everything but you did an awful lot and they will not face up to the realities for
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francine: what happens if greece leaves or default? joseph stiglitz: really serious for europe. greece is small but what it is saying is this contract, this union is a temporary union. next time spain has a little bit of a problem and a different government people will say well, european leaders do not bargain in good faith and do not face reality that their policies are not working. and pushing these countries out. that means interest rates will soar. you are really bringing more instability into europe. a real risk of the entire european -- europe, not just eu but the euro project which was flawed from the start could be repaired. could be repaired is going down the tubes.
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we will talk about if the eu can stay with a u.k. threatening a referendum. thank you for now. what else is on our radar this tuesday. deutsche bank has the both of his cohead on a lead. according to people familiar with the matter. the decision to offer the two men lead -- leave. a billionaire activist carl icahn said apple shares are undervalued at over $240. in an open letter to the ceo tim cook carl icahn had called for a bigger buybacks. the current share price of apple would be over one point richard in dollars. -- would be worth over $1.3 trillion. it ends 2 years of bitter negotiations and will add to the money spent on stage one of the mine.
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what we have coming up later in the room. at 9:30 a.m., the latest inflation figures. will they be negative for the first time in more than half a century? we will be joined by james caan and will ask about the new conservative government. and deanne julius. we have plenty of things coming up. we are about the u.s. a u.k.. we bring you news that president obama has joined twitter. his handle @potus. his first tweet said -- he has more than 1.5 million followers. he is only following six people. which other world leaders should be on twitter?
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you are on twitter. who would you like to see on twitter? a world leader? joseph stiglitz: some of the presidential candidates to see what thoughts are going through their mind. for steve engle we are back with professor joseph stiglitz -- francine: we are back with joseph stiglitz stay with us. ♪
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francine: a welcome back to "the pulse." we are back with joseph stiglitz
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, an award-winning economist. in the book you talk about inequality and we are talking about austerity and the difference between the haves and have-nots. in europe, it resonates a lot. there is also more concern about shareholders. there's too much pressure on corporations to give back to shareholders instead of investing money in a more useful way. do think the current form of capitalism will survive? joseph stiglitz: no, it has not been working. take the united states, i know about the data. if you look at what just happened since 1980, just 1/3 of a century, the bottom 90% has seen no increase of their income. this is not a successful model. where those, a majority of
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citizens are not getting any gains, stagnating, declining over 1/3 of a century. that model is flawed. one of the reasons is the focus on the short term. and short-term to capitalism you might call it. i want to say it is not just the question if you're looking at the long-term interests, it might be one thing. that is not what is going on. last tuesday, just a week ago, a chief economist said -- we had a big event in washington where we talked about presenting a report called rewriting the rules and we went through and showed how the rules of the game, the legal framework had actually tilted to the economy into the wrong direction. francine: you are talking about big companies.
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we just heard all about carl icahn asking for more money from apple. tim cook talks about inequality a lot. if you were in charge of apple, would you do things differently? joseph stiglitz: talking about apple, one of the largest corporations and the largest capitalization in the united states largest general motors larger than anybody. it has about 50,000 employees and 30,000 are well paid retail workers and when i say well paid, roughly at the level of minimum wage in australia. above america's minimum wage. our is lower basically in almost half a century. they are not really investing in the company and not paying their social responsibility. they have given as clever as avoiding taxes as making attractive devices.
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they are living off of investments by american people in terms of technology. who invented the internet? if it did not exist, it was the united states government and the other governments that did the basic research. francine: it is a catch. shareholder pressure. does want to give back more but shareholder pressure. how do you separated that? joseph stiglitz: that has to do with the rules of the games. with had a change in a legal structure over the past 35 years that has allowed for and generated this kind of pressure. it used to be that corporations had a longer-term view of their workers and the company and the survival of the company and the growth. it goes to the ceo pay a gamut of regulations of how the corporate structure functions. francine: can it only happen if
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you are not listed? joseph stiglitz: wicked have a legal framework that goes beyond that. the real problem is if we push pressure just on the list of companies that will force them to the list. -- we can have a legal framework work that goes beyond that. it is a man-made creation. we created at the corporation with rules and limited liability. that form a week of put other regulations to make it our business entity worth more -- work more for the citizens of the country where the u.k. or the united states. francine: everybody has to have the same rules. professor, thank you so much. joseph stiglitz stays with us. we will talk about the u.s. next. $17 billion, vladimir potanin is
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russia's richest man. he is the ceo all the country's largest mining company. despite sanctions, he has personally increased and his personal web. ryan chilcote spoke to him about russia's future after vladimir putin. vladimir potanin: who is and only leader of the country. there are no rivals there. not a single politician of even on the same side. that is even comparable. maybe ok for putin because he me something about growing younger people who can continue with to leave russia. i think it is a part of his job to -- a successor.
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the idea -- i believe in a competition. i believe in leadership and competition. in order to find a leader, let people compete in order to understand who is really more efficient and a strong leader. that is what i think we need in russia. and the business politics and sports and everywhere, we need more competition. first the bank ryan -- francine: ryan joins us. ryan: what is quite extraordinary there is you year vladimir potanin talking about what is next after vladimir putin. what is clear from the interview is his a big supporter of vladimir putin. it might be surprising and would be surprising if he said anything different. as they just played hockey together earlier this month.
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he said russians are firmly behind vladimir putin. and i think to a certain extent vladimir putin's foreign policy which he said was exactly why the sanctions against russia imposed on brushes actions in the ukraine were a mistake. all it does is alienate the entire russian population. vladimir potanin: people are making a huge mistake trying to push russia and our limits. from america and europe. it is a big mistake. we are mentally europeans and we want to be part of europe and that civilized world. and have our own intelligence and on interest etc. it is a big mistake to push us. we are friends not for pupils in a class.
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ryan: pupils in of the class make me think of president obama's comment about to the russian president that use like the kid in the back of the classroom not paying attention that further alienated a russian later from the u.s. earlier in the year. interesting to hear russia's richest man talk about politics and the president that is not something most russian billionaires are prepared to do. there you have it. the key thing is he believes that in the sanctions are now the threat of sanctions are effectively behind us. the uncertainty and unpredictability that they crated that led to the germanic devaluation of the ruble and how to the contraption on the russian economy alongside oil. that is all behind it and he needs that means now as an investor, you can disagree, a time to get into russia. francine: thank you. ryan chilcote.
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we'll have a special half an hour special this weekend. reaction from joseph stiglitz. when we were listening to the comments wondering whether the western world spoke the language and it seems the two sides just see the world differently. joseph stiglitz: it is very much so. the clear issue is you crank. -- ukraine. we had an agreement that they were not innovative ukraine and that was part of the agreement about taking away the nuclear weapons 20 years ago. ukraine had nuclear weapons and gave them up. and they were worried as to the time that may be russian would innovated them and russia said never. the united states said we would protect you. of course, both sides of violated. russia invaded and the united states did not live up to the commitment.
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i think we had no choice but to impose sanctions. if we were not going to fulfill the agreement by -- you cannot get support because of the other problems going on, we had to have sanctions. actually right now, we need to have a lot more support for ukraine. they had democratic reforms and they are moving in the right direction and there on the financial brink. francine: this is a taste the were economics and politics of the land into one. and inflation is running wild in russia. especially for food prices for he are out of control. it is almost like a political maneuver. -- especially food prices, they are out of control. joseph stiglitz: the point of the view of the world who is concerned about the independence of ukraine -- the sanctions have
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interacted with the off all of the price of oil. one of the big mistakes and that russian-made was it did not diversify the economy. and that is meant and has become totally dependent on natural resources, not just oil but other natural resources. and that means when oil prices go down, they are in a pickle. francine: in 20 seconds we will have u.k. inflation numbers, are you worried about europe because of low inflation? joseph stiglitz: very much so. low inflation is a signal of a weak economy weak aggregate demand. i inc. of it as a thermometer. the real problem is austerity over the last five years seven
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years has really weekend europe. it has caused the problem. it is making the future destroying europe's future potential growth. francine: thank you. we will be back with the inflation figure from the u.k. ♪
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francine: welcome back to "the pulse." we are getting breaking news on u.k. inflation. the numbers are below estimates. year on year cpi figures for april 0.8% in 71%. -- instead of 1%. we were expecting no inflation and zero and it is below that -0.1% for the month of april. you can see it going down.
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as some is the news broke. we ended up a little better higher as investors were eyeing the inflation data as a came a couple of seconds ago. 1.5536 below estimates. we have a clear picture of what they are doing. 1.37. still with us is award-winning economist joseph stiglitz. and we are joined with marc. give us a sense of how worried we should be. the bank of england say we are expecting a week number. mark: it is difficult for the central-bank. it will be hard to go and say we are making your mortgage is more expensive even there is no evidence at the moment of rising prices. i think you will see that and the rhetoric we will start to see from the bank of england.
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they changed their mind and that was expected to come back. i am not sure you can come back. there's a lot of criticism anyway of the idea they should do a rate increase of this year. the professor will probably agree with me. i think the federal reserve is going to struggle to raise interest rates. to mark carney, a red flag. francine: you were saying below inflation, or deflation, it means a weak economy. we are in uncharted territories that where massive oil drops. how much do we need to look through one number? joseph stiglitz: i think from the global point of view is we global economy. we expect the united states when their revised the first quarter numbers will show negative growth in the united states. and increasing evidence that even the second quarter will be very weak, maybe negative
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territory. in any case far below that kind of recovery a lot of people expected. the picture that is emerging clearly is that europe is weak u.k. is weak at the united states is weak. and that context, hard to see an increase in interest rates even though that they talking about moving out of this low interest rate environment. mark is right and it will be hard to justify. mark gilbert: if you look at the most optimistic forecast, barely zero this year and gets above 1% maybe one point 5% next year. we are still not meeting targets. joseph stiglitz: to reiterate inflation or deflation is a symptom of a weak economy. when you have strong demand prices are going to be going up. this reflects and the fact is that incomes, median income income in the middle has been
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going down in many countries. you see it in the labor market, wages are not back to where they were just a few years ago. we have not really recovered from the 2008 crisis. francine: this is the first time we see an inflation rate and a u.k. below zero since the 1960's. with a productivity puzzle, we hardly have wage growth. people feel they are better off? mark gilbert: if you look as surveys, capital spending will get to the economy go so much a nervousness. jan grexit on the horizon. they may be britain will lead. if you are running a business and thinking about building a new factory, i cannot see how you can make the decision. joseph stiglitz: you make investments because you think you will sell goods. if you look ahead and see no
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income, how can they consume? unless you believe they will get more in debt and that is not sustainable either. you are caught in this situation where you look forward and see this decline in incomes and who is going to bet this will be a strong economy a few years from now? mark gilbert: across europe capital expenditure is not a they're it is not there yet. francine: what about germany? mark gilbert: still struggling to get the finance and they need. joseph stiglitz: that has to do with the failure of europe, the structure is that they have not yet created a banking unit even though they crated a single markets. it means money is flowing out of italy spain, all of the countries where there are
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difficulties and that means the banks can not provide for snd lending and not made up by germany. francine: a point mark alluded to if you are the u.k. and bank of england, do you wait for the fed to move first? joseph stiglitz: you want to keep your interest rates low. with no signs of inflation, how can you defend raising interest rates? you are worried about an overheated economy, now is not exactly the time to worry about than overfeeding -- overheated economy. racine bank mark gilbert -- francine: mark gilbert and joseph stiglitz thank you. after the break, we will be joined by a ceo. ♪
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>> it would change our relationship with the europe. in britain, at the time 50% of the exports and trade and that's was then. tremendous resilience for the businesses. francine: that was stephen kelly share his thoughts on how u.k. businesses might call.
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let's keep the conversation on small businesses. we are joined by the ceo of hamilton bradshaw, james caan. james, great to have you. inflation for the first time since the 19th is, inflation is below zero. down 0% -- down 0.1%. james caan: i am bullish because we are growing better than any european nation. written is experiencing a fantastic growth. if we could've seen this four years ago, we would've been ecstatic. -- we are experiencing fantastic growth. francine: would you not want the benchmark to go to the u.s.? james caan: we have a population of 70 million and they have a population of nearly 30 minute -- 300 million.
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francine: what is so good about the u.k.? it is on for numerous that are driving -- entrepreneurs that are driving the economy. is it a badge of honor or actually the government and that is supporting entrepreneurs? james caan: it is both of them. i am proud to be an entrepreneur. entrepreneurs and this country are experiencing a fantastic period of growth. this government is doing everything it can to support for newer ship. three years ago i started an organization called star of loans where the government was looking to encourage small businesses. in three years, we started 28,000 businesses which has led to 34,000 jobs. this government has pledged to increase that number 275,000 bits hoping -- businesses hoping to him -- hoping to increase to
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100,000 jobs. it is open and exciting. the u.k. economy is doing well. a great sentiment. it is great and news right now. francine: do you worry about the wage growth? james caan: when you see the strength of economy, you will see it. part of the country where they think is right now, sometimes in london we live in a bit of a bubble. probably not a bad thing. francine: would you move around some of the hot spots, a lot of entrepreneurs andbuzz buzz. the u.k. does not have some of the big businesses like airbnb and uber. there's nobody behind it that says i will give you $100 million and see where it takes you. you lose market share at the?
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start james caan: you are right. i think we have done pretty well. we were tech city a few years ago. thousands of businesses created through tech city. a lot of investment. that is what i want to see are those small businesses developing and being crated they give us the opportunity of creating an airbnb. francine: what happens after that? does scalability that is viable? james caan: do we have the funding available? i absolutely entrepreneurs and his company if you have a great idea and in the business no shortage of money. there's a lot the capital available for good businesses. right now, we are seeing a lot a successful opportunities being developed. the campaign of looking at today
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is the role. zero is a software in one of the best in the world for small businesses. 95% all small businesses recognizes that technology was the one thing holding them back. 45 percent all the same said they do not have the solution. using technology to enhance. zero right now is leading the way. one of the biggest challenges i used to recognize with entrepreneurs coming in is they do not know their numbers. it gives them the immediate access to numbers and makes such a difference. what i would like to see is business is not just making money but being happy with what they do. having the right sentiment -- francine: there is a badge of that the u.k. would want which is crating and uber and airbnb? will it come in the next four or five years? james caan: i would like to see
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it. that global success would put business -- british businesses on the map. we are doing well. our economy is great. that number of jobs being created. a stable government. i want to see if the glass is half full. francine: where is the next big thing? one company. for a cluster of companies that you think will take over? the economy that needs to be disrupted? james caan: syntec and biotec are looking exciting. lots of different sho ie am seeing. my particulars interest is the startup phase. i know to get to where you are saying, you have to have the grassroots. we need to be encouraging the orange for norse.
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the greater chance we have to get to where britain will do a global brand. -- we need to be encouraging the other for norse. -- entrepreneurs. francine: do you worry about austerity? james caan: i do not. if we have a strong economy, it generates a more money for the government and helps that whole challenge we face with some of the challenges the government is facing. ultimately, it comes down to the point of how strong is your economy and are you generating enough revenue to support welfare, jobs etc.? my vote is, absolutely. that's it that's right and that will help all other areas. francine: that is the problem is you can focus on the economy and financial services? james caan: not just financial services.
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we want to be brighter. i do not think we should be overly cousin treated in one market. -- we want to be broader. francine: james, thank you. james caan joining us for an exclusive interview. over phone has posted -- vodafone has posted a return to growth. what has driven the turnaround? caroline: looking at a juggernaut the standout company where we saw a u.k. growth. but initially vodafone is find to be reinstated its power in europe not only the united kingdom and finally a turnaround. finally after 10 quarters of declining turnaround sells. an uptick of just 0.9% improvement but an improvement nonetheless. shares perhaps not getting quite
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the use for it. organic earnings growth did not quite to meet some of the analysts' expectations. when you're digging into the first quarter, we saw a turnaround and the best growth and 11 quarters and promising to grow the dividend. that will be music to investors' ears. if you get into the region, we are seeing a u.k. turnaround. and the fourth quarter, they said it turned around pretty in the annapolis as well and the czech republic. it has been growing in hungary and their areas to be concerned about. recovery in europe and growth in asia. and africa and the middle east. turkey is up 9%. germany is a key area of concern. goldman sachs lacking this saying competition is eating into it. you have telefonica upping the
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ante. what we are seeing is a hunger for data. 18% growth in data sells for the full year. that is across europe and the emerging markets. they call this "exceptional." how will they turn day growth in data into growth in revenue? francine: what about further acquisitions? people are asking if they will merge with liberty global. have we heard anything? caroline: sadly, we have not heard about that. earlier this year we heard from bank of america and merrill lynch saying this kind of deal would be vital for vodafone. you have citigroup saying a vodafone buying liberty global in an acquisition would be positive for both sides. yes, well not seen that sort of a deal.
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a company trying to play of the element by making acquisitions. they spend big last year. 50 billion euros for cable companies and they bought one in spain and one in germany. they said the synergy is working. likely to see smaller acquisitions continuing from vodafone. they could the eying a portuguese company about 300 billion euros. cable television. the reason is it is all about cord play. vodafone not just being mobile but for tv, broadband. and the united kingdom they are fighting the m&a whirlwind. you have teams -- companies teaming up. they are fighting to show that it they can unleash a tv service at this year and get into broadbent. start to see this growing. -- and get into broadbent --
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broadband. francine: former thai prime minister has been granted bail. prosecutors say she was criminally negligent and the rice subsidy program. she denied charges of dereliction of duty. developers have started 31 office building projects in central london and the past six months. according to a survey developers are increasingly willing to start construction. uber is teaming up to pursue another business. according to people with knowledge of the matter. the next round of bid is said to be due in two weekss. coming up -- we hear from an executive about how the recent
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europe situations helping sales. ♪
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francine: let's turn to tech and ebay. >> we are seeing actually a strong performance across europe this year so far.
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very pleased and also with the u.k. and germany at both performance strongly for us right now. and we see positive indicators and fingers crossed the european economy cut to outperform. francine: does the conservative win affect anything for ebay? they promise to have a tax at the lowest of g-20. isn't that someday you will look at our headquarters or does it change? paul todd: i do not think it changes our european story to an extent i am a wear of three specifically and the area of compliance and make sure we comply with whatever kind of regime is in place. and hopefully for the u.k. government, they will continue to support open market and open trade. and export 90% typically to
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18-20 countries. anything that supports free trade is good for us as a u.k. economy, european economy and for ebay and allowing us to grow our capabilities and performance. francine: do you worry about a u.k. referendum? paul todd: i do not worry about the referendum it self area i him hopeful the british kind of people -- itself. -- i am hopeful the british kind of people will stay and it's given the u.k. a voice in world matters that allows the u.k. to carry its weight and good for the united kingdom. our interests and ebay is we have free, open markets to the extent that is good for the small sellers and the u.k. and good for business overall. francine: for those listening on radio first word is an at for viewers, a second hour of "the
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pulse." we will speak to rio tinto and the inflation report and we are and a negative number since the 1960's. all of that is coming up next. ♪
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francine: the ecb says the back nk will step up on buying. welcome to those
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waking up. what is behind the number? >> may be the timing of airfares. we have seen a much smaller increase and that has pushed down the headline rate. i think all of the decline is made by that factor. guy:francine: we want to talk about said ew -- zew figures. we are concerned about deflation filtering through invective to her -- investor expectation.
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the moves across europe -- the mood across europe is not as bright as it used to be. this is the more european story. there is concern that we are not seeing that much big growth. the mood we are seeing green shoots of recovery, but it is still very fragile. dame julius: they are a bit fixated about what is going to happen to greece. they are a heavily-export oriented economy and china is slowing. they are in a gloat -- growth
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trajectory, but a slow growth trajectory. francine: what do you worry about the most? are we becoming japan? dame julius: no. i suppose these things could happen. but this fixation with the zero is a bit excessive. this country is not in a deflationary mode. i think we will see low inflation for a few more months as has been predicted, but once the index features dropout, once the oil price decrease drops out of the index, we will see inflation come back toward something normal. i think the fact that underlying inflation is also reasonably low is something to keep an eye on. francine: at least it takes off the pressure from the bank of england to be raising rates anytime soon. >> they are going to be looking for the waging data to inform
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what they are doing. the market reaction today is a lot going to tell you a whole lot about bank of england policy. francine: expectations have moved into 2016. dame julius: they keep saying it is going to be a little gradual, maybe later, depends on austerity, but i think there is also a counter argument that is going on inside which is that growth is actually pretty good in this country, unemployment is very low it can go a bit lower if not too much -- if not now, when can we start moving toward a more normal situation? that argument, which surfaced a few months ago -- my personal expectation is that they will wait until the fed moves in the
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u.s. a little bit of concern -- concern about the currency moves. francine: would you wait for the fed because fighting the fed seems like the wrong thing to do? dame julius: i would. the fact that we are technically in deflation makes the case a little bit harder to explain. they are looking at targeting inflation two years ahead. they are not supposed to be looking at yesterday's figure. francine: what are we expecting from the u.k. from now on? jamie: a lot of things will be dropping out in september, in the third quarter, and they will increase from then on. we are looking at 1.6% for the beginning of next year. it will come up cry fast. francine: so this is just a blip ? or should we be more cautious? dame julius: i think you can
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call it temporary. a blip is a little bit too small . but it is temporary. low income consumers have a bit more money to spend on things. petrol bills have dropped. the food price war is still going on. we have not had a lot of restructuring. tesco and others are in the process. that is good for consumers. francine: enjoy it. i like that. [laughter] francine: thank you so much. dame deanne julius stays with us. here is a look at what else is on our radar. deutsche bank has put both of its co-heads of corporate finance in asia on leave. the decisions were unrelated and no interim head of corporate finance has been appointed. the head of the private business client division at deutsche bank is preparing to step down.
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carl icahn says that apple shares are undervalued and are worth $240. he called for a bigger buyback. his new enthusiasm comes as the market debates apple's driving sales growth. an agreement will add to the mongolia mine and the rio tinto. before we get to our twitter question of the day, we bring you news that president obama has finally joined twitter. his handle is @piootus. the already has more than 1.5
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million followers. there was a very funny exchange between him and bill clinton. which other world leaders should be on twitter? tweet me. ♪
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francine: welcome to "the pulse."
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the european commission has ruled out the possibility of a greek a deal, however the greek government has expressed optimism. the finance minister gave an indication of just how close he thought the sides were to reaching an agreement. >> i think we are very close. until the deal is done, no one ever knows when the deal will be done. >> could it be a matter of 24 hours? >> let's say it is a matter of about a week. francine: let's go live to berlin and our international correspondent hans nichols. the greeks are optimistic. hans: normally, you have the greeks somewhat optimistic. in the middle, you have the european commission. then you have people saying that
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greece needs to stick with the current bailout package. now, we have the middle cap saying, they are not going to have an agreement at the end of this week, it is not the right forum. the greek camp says they still have their own red lines. they need to have a deal that is going to foresee some sort of debt restructuring. for the german and dutch and spain side, that says they want to see a completion of the programming, they are talking past each other. i would take the silence of the last 48 hours from the german government as that there might not be a whole other progress. on the positive side, you could say they have not shot anything down but we have heard virtually nothing from the german side.
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until we do, i would have a healthy dose of caution about all of this. francine: what do you make about the zew number? hans: it could be an aberration. it diverges so strongly from the generally positive numbers. gdp growth is a little bit down in germany. when you look at the eurozone at a whole it is down slightly. it does seem that their investor confidence is being sapped slightly. it is difficult when you have the conflicting numbers. which one do you take? how do you reconcile them? we will get an e pro number pretty soon. -- epo number pretty soon. the animal spirits don't seem to be going that strongly in germany. even though the bundesbank is expecting continued growth. francine: if the animal spirit
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goes that way, we would not want to argue with that. we are back with former bank of england monetary policy commissioner dame deanne julius. thank you for sticking around. what do you make of greece? there are still to cap's -- two camps. dame julius: i expect the worst, frankly. i think the negotiations had a chance at the beginning to succeed. greece is a small country. it is feasible, in theory. i think the very hard-line stance that they took early on, the finance minister especially . right now they are still refusing to follow the recovery plan, the structural changes that they said they would. this discussion of having a
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restructuring or a forgiveness of some of the debt i think that is a no go for the eurozone and would open a door that would create more and more problems down the road and countries realize that. francine: they said, the problem is that austerity does not work and the program imposed by the creditors was flawed to start with. is that part of the conversation or have we moved beyond it? do they have to find a compromise no matter what? if they messed up at the start as creditors, you would have talk about that. dame julius: i disagree completely on that. greece did not do the structural reforms that they said they would do. they did not do the privatization, they did not change privatization -- the pensions. they have had a corrupt tax system as long as anyone can remember. they did not do the right reforms. greece is a case study that
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proves austerity does not work -- that is just not the case. other countries have proven that it has worked. francine: if greece were to leave the eurozone, what happens? in the immediate after worth -- immediately after, what is the negative effect? dame julius: i think there is very little chance of a lehman brothers type moment. the bulk of the greek debt is now held by official holders ecb, european governments, the imf. there is not a private sector or private banking sector to be affected the way there was in the lehman case. it has been anticipated, as a possibility for a long time. i don't think the effect would be very large.
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certainly, the ecb's current qe program flooding europe with liquidity will help to cushion whatever shock or blow there is. francine: one of the ecb board members was saying that they are buying some of the purchases in the bond markets because of weak liquidity during summer months. they are buying some bonds in may and june because of the weak summer months. should we read more into that? dame julius: i did not realize there was a summer low. there might as well be. it could be that they are trying to achieve their target. that does not necessarily mean that they do it each month. it could be that they are frontloading it to get ahead of the target. it probably does explain why some of the yields have been so
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negative. francine: do we need to get used to negative yields? is this the new normal? dame julius: i think it is the normal as long as the ecb has the qe program going. i think it is that extra, very large animal in the market. it is not a sign i don't think, that investors think we are into a 10-15 year period of deflation. treasuries have had a wild ride. francine: what is your take on the markets? are they starting to realize that there may be rate rises coming? it takes until the very last minute to understand it. do you expect huge volatility moves? dame julius: i think we have been in a bit of a false market for quite a while now with the
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activity of central banks. that makes it even harder for the investor to figure out what is going on. a lot of it does depend on that. i think the election did cause a great deal of uncertainty leading up to it. the relief rally that we got post-election not necessarily for the whole country going conservative, but we were not going coalition -- we had the same cast of characters -- that added a lot of certainty or removed uncertainty from the markets and that was a big help. francine: thank you so much for coming on. former bank of america --bank of england policy maker, dame deanne julius. ♪
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francine: welcome back to "the pulse." changes at the top of unilever this morning. the cfo will step down later this year. for more, we are joined by matt boyle. >> the cfo is only 46 years old. he has a lot runway left in his career. paul pullman said he is not going anywhere for the next couple of years. i think he is going to see what else is out there. he is not a traditional bean
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counter. he is an investment banker by training. i think he will be in high demand. francine: do we have any indication where he might go? matt: we don't? -- there was indication he might land there. he has a noncompete clause until april 2016. nestlé is not going to wait until then. nestlé is not the type of company that is going to be looking for an outsider in terms of somebody who is going to be in senior management. he could end up at a company like jab. they are cobbling together a coffee empire. who knows. francine: his report card has been pretty good. matt: it has been pretty good. he has gotten a few bad grades recently. the company went from sales
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growth of about 8% when he arrived to 2.8% last year. the growth has been cut in half. there are some analysts clamoring that profit margins should be higher. they have sold a lot of pieces. he has made the business a lot simpler. he sold pasta sauce skippy peanut butter. he sold a lot of the tired food brands. they are much more focused on personal care products. francine: do they have a margin problem? matt: it is not a margin problem, analysts have just been hoping for more growth in the profit margins. some businesses that are not growing as fast as others have been a burden for them.
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emerging markets have gone from a boon to a burden for them. francine: what do we knew about the new cfo? matt: we know a bit. we know that he is scottish. we know he is currently running their u.k. and ireland business. it is not as big, but it is certainly important. he used to run m&a for a time. he is 42 years old. he was the right hand man for the chief operating officer for a time. francine: unilever has challenges, like a lot of their peers. matt: they certainly do. all of these consumer product companies are grappling with slower growth and how do they get the profit margins up and how do they innovate? common problems. francine: coming up rio tinto takes its piece of mongolia over
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expansion plans. we are also seeing live pictures coming out of italy. the chief prosecutor is holding a news conference on migrants. he will announce his conclusion of a preliminary investigation into the deaths of 800 migrants in april. this comes on the back of a couple of weeks were we have been talking about the migrant situation and we had an agreement yesterday for a lot of the navies of a lot of u.n. countries to try to deal with this massive migrant issue which has seen a lot of deaths in the mediterranean. you can also follow us on twitter. who are the big leaders of the world that are not on twitter that you would like to see on twitter? this follows @potus, of course barack obama joining twitter
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last night. there was a very funny exchange between him and bill clinton. it was great. check it out. ♪
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>> it was the austerity that really brought the economy down. 25% below what it was the crisis. one of the things everybody focuses on -- debt sustainability. if we get that debt gdp down low enough when the crisis started in 2010, debt-gdp ratio was 110% -- it is now much worse because of the long austerity policy that has been imposed on greece. francine: welcome back to "the
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pulse." that was joseph stiglitz speaking about greece. let's check in with jonathan ferro. jonathan: a bit of a rally. the ftse is up. a bit of an epic rally through the trading session. gains on the periphery, spain italy ecb lighting a fuse under this market this morning. i will show you how it has impacted the fx market. he said the ecb could frontload some of those purchases of bonds through may and june, ahead of the typical market will in the summer -- lull in the summer. that is having an impact on the market this morning. equities higher, euro weaker. off by 1%.
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a weaker euro, equities higher. bonds are rallying, as well. the german bond market -- lower to zero point 7%. -- 0.7%. we erase losses for spanish and italian debt. how much the comments changed things fundamentally? probably not by much. it is a typical supply-demand issue. elsewhere, one final story just to bring to your attention if you missed it, the pound -- 1.5529. bang. off by 8/10 of 1% -- 0.8% against the dollar. you have heard it all before, haven't you? the central bank is willing to look through inflation, looking
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for a rebound in the second half of this year. u.k. inflation below euro zone inflation, who saw that coming? francine: not many people saw it coming. dame deanne julius said she has never heard of a summer lull. whether we should be reading more into those comments, i don't know. jonathan: he is saying istit is because of a summer llull. some people are talking about greece. it could be a volatile couple of months ahead. the official line is one thing and that speculation is quite another. i guess we have to go to -- with the official line right now. francine: mining giant rio tinto has settled the future in mongolia. we are joined from dubai, where
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the deal was signed. we joined by the ceo of rio tinto's copper and cold group. -- coal group. congratulations on the deal. give us a sense for when you will be able to start extracting copper from the mine. >> first of all, good morning to you. thanks for taking the time. yes, we did sign the agreement during the night. it was the outcome of 2.5 years of hard work. as everybody knows, 80% is underground and we now have a way forward. pieces need to be in place before we can give you a definitive answer. we need to put in place around $4 billion of project finance.
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the study needs to be approved. at that point in time, we will be able to start the construction. the construction will take 5-7 years to get additional copper units. francine: how confident are you of getting support of the banks in this volatile environment? >> in the current environment, where copper is a hot commodity everybody is trying to get more copper units because of the attractive fundamentals, i am pretty confident we will be able to put in place the things going forward. lots of forecast to be carried out in the coming weeks and months, but i'm confident we will get there. francine: you are absolutely right, copper has been resilient compared to other commodities. what kind of markets do you foresee when you start extracting copper from the mine?
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>> by the time we have the mine up and running we believe the copper market will be very attractive. if you take a 10-your perspective, there will be a shortfall in terms of supply. market conditions should be very good. francine: what is underpinning the performance of copper at the moment? >> i think there is a shortfall of copper. the demand is pretty strong on the back of energy. if you put precious metal aside copper is the best conductor of electricity. people are very keen to have more copper. francine: we will go back to the financing package. are you were -- more worried about that with a feasibility study on development?
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>> i am not too worried about the financing package. i am more worried by the feasibility study. the study, as it stands we need to have this piece of work. it has to be approved by the government before we can make a decision about taking the project forward. francine: had you expect mongolia to deal with their share of the financing package? >> we have agreed on a comprehensive financing package and we are all aligned on this one. francine: thank you so much. with the wealth of almost $17 billion, this is russia's
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richest man. despite sanctions, his personal fortunes have climbed by 50%. ryan chilcote sat down with him for an exclusive interview. >> putin is the only leader of the country and there are no political rivals. not a single politician, even of the same side but comparable. there are challenges for putin. he needs to think about growing younger people who can continue to lead russia for many decades.
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i think it is one of his jobs. ryan: to come up with a successor? >> not exactly a successor. i hate the idea that he would -- ryan: anoint someone? >> i believe in competition. you need competition to find out who is a strong leader. that is what we all need in russia and that would be good for everybody in business, politics, sports. we need more competition. francine: ryan joins us now with the latest. she was quite upfront with what he thought about the world. ryan: he was. that is extraordinary. normally, when you have wealth in russia, it is in your best interest to not talk about politics, but he was quite comfortable to go there. >> some people are making a huge mistake trying to push russia
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and our leaders -- it is a big mistake. we are mentally europeans and want to be a part of europe and part of a civilized world. we have our own mentality, our own interests. it is a big mistake to push us. ryan: quite a comment there. i think the takeaway on sanctions is that the threat on sanctions the worst impact of the sanctions is behind russia he said. it is an interesting comment. eu officials get together at the end of june.
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what he suggested yesterday was that maybe we should think about more sanctions. one of things that held russia back last year was that it was just not clear where this is going. it felt like they were going into the abyss question -- the abyss. he says now there is more predictability and stability. francine: is he an oligarchy? ryan: he was one of the big seven. they lend money to the government and they received an opportunity to get shares in some of the biggest companies is he an oligarchy now? it is pretty clear that there is only one man with political power in russia today and that is vladimir putin and his
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government. he does not see himself as an oligarch. he sees himself as a rich man. he said, that is not something to brag about. he said russia is still a poor country and he is concerned about people around him. it is the mantle you where. francine: he said it would be difficult for it would -- it would be difficult for him to be russia's richest man if he did not have political support. ryan: that is correct. francine: that is a diplomatic way of ending -- ryan: that might be the understatement of the day. [laughter] francine: coming up, the developer behind this skyscraper. ♪
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francine: welcome back to "the pulse." lan security says profit increased thanks to rent revenue. the developer of the tower known as the walkie-talkie has been benefiting. the u.k. election jitters are
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now behind us. are you comfortable with where we at? we had this referendum. how does it impact the perception of the u.k.? >> interesting question. we deal with a lot of uncertainty. we have seen the scottish referendum. we have seen the uncertainty over the current election. it is a good thing to have one party and control. that has removed uncertainty and there have benefits on the residential side. there is clarity around mansion tax and the like. looking ahead, there is a degree of uncertainty over europe. we need to get the arguments out on the table and move through that relatively swiftly so that we all can remove that uncertainty and get on with our business. francine: in terms of the impact on the u.k. election, will it have an impact on central
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properties? martin: we have a lot of developments. over the short term there is absolutely a lack of available technically resilient, good space. we are developing into that. we are letting very well. we see that continuing for the next couple of years. francine: what is your strategy? is it steady as she goes? are you looking to branch out? martin: we will continue to let up our development programs. we have 1.1 million square feet to come. that is likely a walkie-talkie and a half. we will see that through. we are planning -- we have kicked off a development in oxford and it is going to be a fantastic new shopping center. london development takes us out a good couple of years. that is where we will be focused. francine: are you concerned that
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the value of land in london is rising to quickly? martin: no, we are not particularly concerned by it. our results are very strong for the 12 months for the value of our properties of ricin. we are not looking to buy land at the moment. we did buy a site at 21 moorefield, which is a great site and we got it very cheaply. we have been in negotiations around that for a number of years. land prices are high in london to. we are early cycle developers. we will finish out what we are doing. in terms of looking at the rest of the country, we are focused on retail and we will take opportunities as they come. francine: we have negative inflation for the first time since 1960. does that impact rents? martin: generally, the rent is set that they are not to go
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backward. over the long term, rent pressure would, if there was deflation but we are seeing rising consumer spending. actually, the retailers are doing better and their sales are going up. we have not seen the deflation coming through into that. francine: it is pretty clear that we are not in a bad place in the u.k. economy. we have concerns about productivity and wage growth. we feel richer. what are your main concerns? martin: rising consumer spending is good for retailers, so that is good for landlords. the important thing for us is to have the right assets and be in the right places. retail is a difficult market. there is too much retail space. you have to be in the place where people want to shop because that is where the retailers want to be.
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for us, it is about owning and developing those centers in terms of our retail portfolio. in london, it is taking advantage of the demand of space we are bringing through and getting that let-up. francine: are you looking at acquisitions? there could be a danger that you overpay for them. martin: there could be that danger if you have to be fast. in the last year, an opportunity came up to buy 30% of bluewater -- a fantastic shopping center. that was a fantastic opportunity. we wrote the check very quickly. you have to be fast and relatively big to take advantage . if another one comes along, we will judge it on its merits at the time. in terms of our general approach, we are actually selling certain assets to fund the capex for our development program. francine: are you going to call
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those acquisitions because of the grexit debate? some were saying yesterday that we are looking at our strategic european headquarters. martin: we are not. we think for the next couple of years there will be strong demand for our space. we need to have the debate on europe. we need to get that out of the way. from our perspective, as a provider of space, we do not want a situation where people decide that they need to take space in mainland europe and not in london. that would be our position. francine: thank you so much. martin greenslade. his first interview of the day. coming up, watching germany and a bigger than expected drop in investor confidence. ♪
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>> we expect that when they revise the first-quarter numbers , we will show negative growth in the united states and increasing evidence that the second quarter will be very weak , maybe negative territory but in any case, far below the kind of recovery that people expected. francine: that was nobel
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prize-winning economist joseph stiglitz speaking to me in the last hour of the show. we are joined by hans nichols. we are watching the ecb and the zew numbers. hans: the numbers came in very disappointing. last month, they were in the 53 range. as we talked about earlier, it could be an aberration. efo continues to be positive. surprising on the expectations there. we do have a bit of a disconnect. europe does not seem to be affected by the zew number. you combine the interviews and it amounts to one thing. the euro is going to increase this summer. fewer american tourists. that is my take away. [laughter] francine: that is a good take away. french president all longed is
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meeting and kill a merkel -- hollande is meeting angela merkel later today. hans: they want a united front heading into the talks later this year. there is a mockup of the eiffel tower with a min well -- windmill on top of it behind me. they want to try to lower overall carbon emissions. angela merkel has made great strides. they have also had to increase reliance on coal more than expected. the problem with the electricity grid is that it does not work that well if it is raining or the sun is not shining. the renewable energy story is remarkable. francine: i cannot see the windmill. you will have to take a picture and tweeted. we will debate on whether it is good enough. that is it for "the pulse."
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keep it right here on bloomberg tv. stay tuned for the "surveillance" team. our twitter question of the day. which other world leader should be on twitter after potus? tweet us. ♪
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tom: the ecb tries to get out of summer doldrums. in stock search across the
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board. a better 2000 15 -- a better 2015. the new normal for the american trade deficit. this is "bloomberg surveillance." we are alive from new york. i am tom keene. joining me, brendan greeley. roger speaks today in new york. brendan: this is going to be a closely watched speech. there has been some conversation. the data we want to look at is the quality of indian banking. tom: he may say something unlike most central bankers. brendan: he is leaving the country. tom: home depot


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