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tv   The Pulse  Bloomberg  January 2, 2014 4:00am-6:01am EST

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>> fiat finally takes control of chrysler. shares sore as milwaukee union marchionne bias them out for $3.5 billion. >> sampson's in strategy. they want to company to move beyond hardware in order to beat apple. good morning, everybody. welcome. you are watching "the pulse" live from bloomberg's european headquarters in london. i'm guy johnson.
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>> we are getting manufacturing data out from the euro-zone. we have seen a series of numbers coming out already this morning and we are waiting for the final number. 52.7 is the number. the french number was weak, wasn't it? >> it came in at 47. german 54.3. areas of the periphery that had been weak in the past, such as spain actually strengthening. that was against a 48.6 reading in november. turning around, the spanish number. >> later on the program, we'll speak to unicredit about the oreign exchange story. fiat shares are surging this morning. they agreed to buy the remaining stake in chrysler it already
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doesn't own. it gives them full ownership of the u.s. automaker. ryan chilcote joins us with more. marchionne finally gets the deal he was looking for. >> >> the stock is up more than 15%. you have to go back to april 2009 to see that kind of share price increase. really extraordinary. worth mentioning the italian stock exchange has an upper limit of 10%. they waved it. investors seem to like it and think it is a good deal for fiat. $4.2 billion is the size of the overall deal. less than what was anticipated. other factors are that fiat is going to pay a small parliament of that. perhaps a lot less. and the market loves certainty. now we have a little bit more
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certainty. this merger is going to go forward now. this merger, you know, sergio marchionne's goal since he wasn't able to pull off the purchase of g.m. lewis, some think that is what fiat needs. >> how significant is this for marchionne? this opportunity with deal he was first working on but plan b perhaps? >> he spent pretty much the last decade trying to do it and it was worth wile. since he became c.e.o. in 2004 2004, he had two mantras. you have to be big and you have to cut production. effectively what he has got is what he wanted and it is a lifeline for fiat for at least the next couple of years. they will be able to ackstheas
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cash pile that chrysler has to reinvest and try to make them work and get people buying cars they want to buy. that doesn't mean people will actually buy the cars. he has a couple of years to get his plan up and running. now investors very excited that we have reached the implementation part of the plan. >> he has to execute now. it will be interesting to see. starting to push cars back into a booming u.s. market. you can see how the story works. >> yeah, you know, at least from my perspective, it is a lot more clear of what fiat gets out of this than chrysler. the problem for fiat has been exposure to europe. now it can sell its cars in the united states and it is already change to to a certain extent with the fiat 500, for example. it is able to reduce its
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dependence on europe. after all, we're at a 20-year low for car sales in europe. marchionne has been at it for a few years. he hasn't been able to make it work there. it is still a loss-making company. now gets a shot. >> thank you very much indeed. >> a mixed bag for u.k. retailers this holiday shopping eason. they have announced the departure of their c.f.o. >> farewell simon, chief financial officer for two years. he has announced he will be stepping down with immediate effect. kennedy is taking over for the interim period as they search out for a new leader. there was much speculation in
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the press that he might step down because the numbers have een appalling. the christmas period is meant to be standout performance. there was not any. we have not seen a surge in demand. they are having to slash prices. they had to cancel their share buy back. big concerns at debenhams. >> that runup to christmas was really quite interesting. bad weather. people not hitting the stores. the runup to christmas did not go as planned. >> certainly not for the u.k. high street.
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i was out there on the streets for what was termed manic monday for john lewis. quiet looking at marks and spencers. there really wasn't that much until midday. john lewis, the biggest chain in the united kingdom said we saw a huge surge. christmas sales up 7%. they had 11 million hits on youtube. they did a little bit of price cutting in the runup for black monday when we are all meant to go out and go mad online. they saw an increase of 23% in online orders. that was a record third of their christmas business. they got 3/4 of traffic on line was in the mobile. they got serious orders on that
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day as well. john lewis -- outperforming. best ever christmas trading period. deben hams is not. they are saying look, it is early but there is little doubt that john lewis will emerge one of the main winners of christmas. they are going to be stealing market share. they stole it from debenhams. they had manic loss. >> thank you. the latest on u.k. retail. christmas shopping on your tablet. >> aing. shows you how much of a success they made of that project. adopting new way s of thinking about what the company does next. in a note from the company, we must give a bigger push for innovations including the
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business structure so that we can lead industry trends. let's move on and talk more about this with matt campbell. he is our deals reporter. i read this story twice this morning. i'm trying to figure out what he is talking about and how you shift a company of this size in the way that he is talking about. >> there are two things going on here. there is a macro and micro going on. macro is the tech world, particularly the mobile tech world is littered with one-time leaders who have fallen off the pace and fallen into irrelevancey. micro is samsung is apple's big rival. the only company to keep pace with apple. part of that has been the strength in asia. if you go to asia, other than japan, you really don't see many iphones. ou see a lot of samsung galaxy
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devices. apple realizes this and has made a huge push into asia. recently making a deal with china's largest mobile provider. they are coming into samsung's territory. the other thing is samsung is enormously dependent on google. these devices they sell run android. googsl not in the business of making money for samsung. they want to make money for google. they are selling their own flagship smart phones. >> is this how samsung tries to keep up with apple tries to move further than just hardware and into software. is the battle about apple or google? >> you want to compete with apple because where the profit is. they sucked up 75% of the profit in the smart phone world.
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everyone else was trying for market share. google is an important ally in that fight because they bring software and expertise in the u.s. and european markets that samsung doesn't have. but you don't want to get too close with google. that is where samsung is with apple. >> yeah. it is going to be making this actually happen is going to be fascinating to see how it does. we'll be watching this quite carefully. thanks very much indeed. >> let's have a look at what else is on our radar. the billionaires index shows the world's richest people adding half a trillion to their figures. ill gates is at top again with $78 billion. severe kerr sustained
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schumacher sustained serious head injuries skiing in the alps. >> >> what have we got coming up for you? the currency trades you knee to know about for 2014. that is coming up next. ♪
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> you're watching "the pulse." let's talk about what 2014 is going to bring for the foreign exchange markets. plenty of risk out there. joining us with his top tips is the head of global fx strategy at unicredit. good morning to you. happy new year. >> and to you. >> your trades focus on the euro. we have seen some ok numbers coming out of the euro-zone. germany producing good numbers. greece is looking like it is
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back on the positive trajectory. we'll talk about france later. how convinced are you? what is the risk associated with betting on a bullish euro in 2014? >> we're quite convinced as far as the euro-zone recovery is concerned in being stronger than consensus. 1.45% on average for 2014. think it is 0.9%. we are considerably higher than that. there are factors in favor of a stronger euro-zone recovery. first of all, we think a potential boost to growth is going to be a pickup in investment and values largely because of the fact of the first half of 2013 what we have seen is a big cap in productivity and profitability and that usually leads into better numbers in investment -- at the same time, inflation, having low inflation,
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having not deflation. having low inflation is actually boosting real incomes in the euro-zone. couple that with the fact that we are running consumer confidence surveys, multi-year highs. usually is followed by any -- in private consumption. we should not forget that we are coming out of an era where it has been squeezed really, really hard and the low inflation is providing relief -- basically. overall we think it is going to be a domesticically demand-driven story. on the back of it, the euro is likely to continue to remain firm throughout 2014. >> how do those two things interact, though? ou have a firm euro.
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135-plus euro on euro/dollar. does the fact that we have the strong euro impair the recovery that we're going to get? >> based on our research, what the e.c.b. is projecting, the important thing first of all is to remember that the e.c.b. is looking at the index of the euro. a 10% increase in the trade-weighted index usually shaves off about 80 basis points from growth in the euro-zone over a period of two years. 80% of that over the first year and 20% over the second year. now this year, the trade-weighted euro rose by 4%. so its impact on growth is likely to be quite small. for next year, where we have uro ending 2014 at 140, this implies another probably 3% to 3.5% appreciation in the
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euro-traded index which again is going to have a small impact. >> let's go through how you play this. you play this euro/yen and against swiss franc as well. >> yes. one of our dominant -- first of all, euro is fimple. there are four reasons for that. these are the four things that we base the story about our firm euro. increasing account surplus. a stronger recovery in the euro-zone. it is exactly the fact that managers are going to start restoring their usual reserve in currencies which went down significantly. and yen, and swiss franc reserve accumulation went up significantly over the pags three or four years. with a sovereign risk
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perception, continuing to decline in the euro-zone, managers will probably start restoring more normal, traditional levels and finally, you the fact that euro stocks had a very good year but on a four or five-year, they have massively underformed s&p. u.s. equities. the fact that the recovery, as we expect is going to be stronger, we think they are going to play some catchup and usually, there is a positive correlation. a portfolio effect. as basically equities go higher, people put more money into risk assets and therefore the euro remains stronger. as far as the yen is concerned, well, the yen are -- our general story is one of risk normalizeation. that was the story for 2013. it continues to be the story for 2014, meaning that you want to fly away from safe havens
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euro-yielding assets. we also think it is quite likely that the bank of japan is going to boost its monetary stimulus because they would like to count act act the negativefect from the tax hike and to increase the chances of achieving its inflation target. >> over to you. >> thanks, guy. 9:21 here in london. still to come, concern about burning off those extra christmas calories. we'll get tips from the u.k.'s prime minister. he will tell you how the latest technology can help you get fit faster. ♪
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>> welcome back. a popular new year's resolution is to get into shape. the trainer of the u.k.'s prime minister gave me some tips. matt roberts trains top business leaders, actors, even british prime minister david come ron and he is emoperation cutting edge technology as a way to get fit. his gyms in london already use personal monitors but he believes in the next few years the technology be bound ahead. >> monitoring all sorts of data about you. everything from your heart rate to temperatures to the way that
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you move. which direction you have been moving. >> respiration rate. looking at your grew coast levels if for your -- gluke owes levels. >> if it all sounds like big brother, they will know if you're slipping the moment it happens. he said technology is getting so good it could put some personal trainers out of a job. >> it will be better than some trainers because it is so detailed, what they are monitoring and providing. they are phenomenal. >> if you think personal monitoring is invasive, how about looking at the very makeup of your body. d.n.a. testing and analysis is being used to pinpoint your strengths and weaknesses. >> if you can get the information, it means we are wasting less time. >> roberts is already using this technology and seeing the
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results. good news for some and bad news for those of us who would rather keep our trainer in the dark. >> there are limits. apparently he goes running on christmas day, guy. >> after the christmas i just had, i can believe that. >> they are perhaps a little bit light on volume but i will show you a market on the move this performing msm the bond market. yields down, particularly in italy. italian bonds having their best day in five months. we're getting strong manufacturing data from those countries. spain, italy, germany all showing expansion. whereas the standout ill performer is france. yields are just climbing up about o 2.6%. so clearly bonds falling in france. that is on the back of a disappointing data. a quick check on the euro, down about .3 as i speak.
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back to you. >> you can follow us both on twitter at guy johnson and at anna edwards news.
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>> good morning, everybody. welcome back. you're watching "the pulse" live from bloomberg's european headquarters in london. i'm guy johnson. these are the top headlines. the hsbc purchasing managing index came down to 50.5 from 50.8 the previous month. a separate official gauge yesterday showed a similar drop. the british government got more than 6,000 mortgage an -- applications during the first six months according to david cameron's office.
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almost 1 billion pounds have been sought under the program. michael schumacher remains in a stable but critical condition. the former formula one champion is in an artificial coma. he was in a skiing accident in the alps. let's bring in greg from paris. what is the latest on his condition? >> well, there is no latest, which i guess is good news. on tuesday his doctors gave a press conference to say they had done a second operation on him. there had been a slight improvement in the swelling in his skull after that second operation on tuesday. doctors said they would not be making any more statements. that was the second day in a row they had given a press conference. they said they would not have any more communication until they had something to say.
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he continues in that situation a bit better than before the second operation but he is still in an artificial coma and still has lesions on the brain. for the moment, there really is nothing new from tuesday. >> our understanding of head trauma has improved significantly over the past few years. what do we know about the kind of trauma he sustained? there are, i guess ironically plenty of comparisons with the motor industry and people have learned an awful lot about how the brain reacts. what are ear people saying about what the -- other people saying about what the proknow sis is going to be? >> the doctors refuse to make a prognosis and say things could change for the better or the worse. we know it had to be an extremely violent crash. he was wearing a helmet. he would have died without a helmet. the doctors were clear about that. it would have broke. -- the helmet broke.
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doctors have been very, very cautious about making any sort of forecast they will not be drawn into it. they say it is too early. the next hours would be critical and we're about 48 hours from the last press conference. i would imagine that we will know more in the next day or so. >> thanks very much for the update. anna? >> jpmorgan has stopped clearing dollar transferses for latvian lend rs. jpmorgan has been reprimanded by u.s. regulators for lax controls that could allow for money laundering. jonathan ferro has more. let's start out with the decision by jpmorgan to stop clearing dollar transfers. what is the significance? >> there is concern in the country by some people about -- which is quite worrying for countries joining the euro-zone.
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a lot of people are asking why would anyone want to join the euro? you have to ask what is in it for the euro-zone as well? that is where it really gets interesting. not just for the p.r.. also for the country itself. the country that has been through quite a lot of restructuring. a contraction. since then, the last few years, the best performing e.u. country. this is the country that embraced austerity. almost the poster child for it as well. you have a country joining the euro that germany can hold up and say look at them, good growth on the back of a lot of austerity. >> what is in it for them, joining the euro right now? they want to join. they are joining. they have joined but some of the polls are suggesting not neve latvia was as keen.
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>> you see half of the country are against joining the euro. like it or not, they are in it now. what's in it for them? if you look at politics, this is a country that is part a europe. anything that happens in the euro-zone will affect them. having a seat at the table means you can impact some of the outcomes. they don't have to worry about transactions anymore. that cakes away some currency risk. for a businessman, you may see more bank lenders for these businesses and more investors investing. officials in latvia saying we expect borrowing costs to come down. you're a part of the euro-zone, a small country, you know how they -- an insurance policy in the shape of germany. they have been there and dead keen to make sure every single kunduz not default. even the likes of greece.
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you know greece will be towering above them saying no defaults on our watch. >> the euro-zone is still seen by some of these peripheral countries as a bit of a lifeboat even though it turns out to have a few little holes in it. >> a little bit shaky. >> guy, back to you. >> let's continue the conversation. manufacturing data out of the u.k. slipping in december. november, revised lower. earlier on, we saw some euro-zone numbers out as well. the french number weak elsewhere. signs of strength. the overall number, 52.7. david tweed joins us now with more from berlin. david, what does this tell us about the agate picture and the sh -- aggregate picture. >> we are seeing a pretty good aggregate picture, guy. it represents the fastest increase in manufacturing
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outputt in the euro-zone in 2 1/2 years with momentum behind it. that is probably good news. you're also right. it does show a story of different pictures going on within the euro-zone. ireland, the fresh numbers that we got this morning. the irish numbers show 53.5, up from 52.4 in november. it is the sixth month in a row that we're seeing momenting um in manufacturing activity in ireland. the purchasing managers that we spoke to indicating that they are seeing good exports, number one destinations, china, u.s. and the u.k. the other good news in ireland, it was seeing seven monthses of job creation. unemployment rate needs to come down further but it has come down from 15%. let me quickly touch on italy too. we got numbers there. output growth, 32-month high in
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december. they have also got job creation. germany, of course we expect to see germany doing pretty well. it is the driver in europe at the moment. germany also interesting news on job creation abuse we're seeing job creation among manufacturers for the first time in seven months. pretty good news coming out of germany as well. >> yeah. that is the good news. let's talk about the bad news. >> which is france. and france, well, what did we see? it is unusual. these are the final manufacturing numbers, p.m.i. numbers that we're getting. usually you don't see much change from the initial numbers but in france they are actually revised lower. 47 instead of 47.1%. market economics also seeing jobs being lost in france as well. clearly got problems with competitivity. hollande trying to deal with
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that. he said in his new year's eve speech that france is going to reward companies that actually create jobs by letting them have lower labor taxes but france is clearly going to be one of the big theme s of 2014. they need to do a lot of work on becoming more competitive. >> elections coming up there too. going to be interesting. dade tweed joining us from berlin on the latest p.m.i. tripped. we're following rise of a pharmaceutical company that banks on a tiny crustacean for newt recents. that is coming up after the break. ♪
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>> welcome back to "the pulse" live from bloomberg's london headquarters. it is now 9:42 in london. in today's global outlook, we focus on the environment beginning 2014. joining me is the director of a telefonica initiative that provides support for tech entrepreneurs in europe. tell us a little bit about the staff and environment as we head into 2014. just how buoyant it is. >> i think it is incredible. we're seeing continued momentum in growth and the birth over the digital economy that is transforming businesses and how
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relive our lives. it is easy to forget the technology that we take for granted now is actually really very recent. >> yes. i'm interested in one of the companies you given us notes on. a number of companies that your business is supporting, if you like, helping to support. one of them took my eye. an online booking site. his is a way of bringing transparency in the digital economy. we can do it with a bit more ease and a high-tech way. >> it is three years old and has invested in more than 2300 digital -- all across the world. they are very eclectic. they are able to really bring together the absolute benefits of digital technology to transform the user experience. it is just one example of enthusiasm >> give us an idea of some of the sectors that are hot now. we were talking to matt roberts,
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the fitness trainer to the stars and he was talking about how technology is really finding its way into the personal fitness space. that is something that fits in with the staff you work with. >> data is a key area and data for people's personal benefit rather than just for the benefit of society and businesses. med tech and health tech. one of the areas that we're seeing huge growth, though, is e commerce. particularly removing friction from ecommerce and improving security and removing fraud. we're seeing these early seed stage companies being valued in the tens of million s of euros. >> one other business you mentioned in your notes. a secure mobile payment device. mobile money is something that lots of people talk about both in europe and in other parts of the world and perhaps even more
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in other parts of the world where they don't have the same financial infrastructures that we have in the west. >> one of the things that you have been reporting this morning is the continued dominance in growth and success on online retailing for some of these established retail players. what they are doing with their technology is making that friction-free environment for users. this is nabling with just one click. previously it can be a kerfuffle o make that transaction. the abandonment rate in online varies from one retailer to another. it is colossal. if you were to compare that with a conventional retailer experience. imagine you were in your supermarket and 90% of all trolleys got abandoned that is idiculous.
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subsequently, we'll see more growth in e commerce. >> what are they doing in mobile money that others aren't? they are the next big thing in mobile money. who is? are they all competeing with each other or do they do different things strrp they all do slightly different things. insignia has a brilliant user experience and an inhansment to he infrastructure. being backed by some of the world's most prestigious p.c.'s. what they are doing is eliminating fraud by bringing your personal social network profile into that transaction. so to authenticate yourself with your facebook profile doing it in a way that is sophisticated to confirm that you are you. >> particularly in europe and in
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latin america, obviously reflecting the footprint of your parent company. what are the differences in the types of staff you see coming out of europe or latin america? >> there is a similarity. in latin america we have some amazing startups. they reflect the loco ecosystem and specifically we have one or two that are in agricultural technology which reflects the local market that they operate in. we now have 14 acadnymies in 12 countries. we really have that global network which brings huge value to all of the startups, particularly in europe. as you know, the compless still growing prolivically. we have startups in europe benefiting from that. >> thank you very much for joining us. guy, over to you. more talking tech. >> yes.
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that is absolutely right. let's focus on food tech now. when whales are a little bit hungry, they like nothing more than a few large mouthfuls of critical. it is apparently a -- of cril. it is a source of omega 3. it is also a rich source of profits. elliott gotkine now reports. >> from tiny crustaceans grow mighty companies, at least they hope so. here in the factory floor, you can smell the crill. it has been shipped in from the southern ocean. the lipids are extracted and eventually sold on and turned into crill oil. it is aimed at people with high cholesterol and stiff joints. they are also in the business of nutrition and medical food and is looking into getting into
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prescription drugs. having all three under one roof is a winning formula. the last three years, our growth was about 50% and the last nine months, it is 80%. we cannot promise but i'm saying that we are very confident that this is only the beginning. >> investors seem to agree. the shares have more than doubled. but that doesn't mean there is no possible downside. in a recent note, jeffreys said the shares are already discounting earnings growing more than five-fold in 10 years and that there is a risk of new studies critiquing the health claims of ingredients and that regulator parameters shift, for example change ns the crill harvest. then there is grappling with getting bigger. >> to be able to continue
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managing the company. we are have ar diversified company. we are not dependent on a single product or a single market or single customer or single business. our challenge is to ensure we continue to manage the company and deliver our promises. enzyme tech is the u.s. a tiny crustacean with its sights set on becoming a lobster. aspire to be ato lobster, that's what you should aspire to. probably a few grumpy whales wondering where all the crill has gone. passengers stranded aboard a ship in the antarctic. the vessel got stuck as it ttempted to retrace a former
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expetition. 12 of the passengers have been transferred by helicopter. we'll have more on that story in a minute.
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>> good morning. welcome back. you're watching "the pulse" live on bloomberg tv. we're on the radio, streaming on your tablets, your phone and now in today's new energy, german power prices fell below zero for the first time in a year recently. negative prices in the power market have been happening more an more often than in the past. joining me to discuss this is rachel, she covers the european power and gas markets. first of all, let's get through the obvious. how on earth do do prices go negative? >> well, it happened for the first time ever last year and again this year. it happens usually during holiday periods or low demand periods when people are not in factories or offices so there is less power taken off the grid.
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then when we have lots of wind creating lower supply, prices can fall negative. >> how does this affect the companies involved? if i am e.d.f. or a giant like that. how do i navigate this? what does this mean? >> obviously they do have people manning the trading desks during the holidays. they are there to deal with it. but it means that usually we pay to take electricity but in fact the companies are paying people to take electricity off them. the payment system is -- >> when i get my electricity bill next time around, they are going to say you know what, guy? here is 50 quid. >> unfortunately it is not retail that do get paid. >> in terms of the -- this has to do with the fact that we tend to get holidays clustered around the winter, we have seen quite high wind speeds over the last few the weeks. it is generally just a winter phenomenal? >> it can ham -- phenomenon.
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>> it can happen in summer as well. germany has been adding a lot of renewable capacity. it is happening more an more. it can be for some hours. what we have we have seen are for a whole day. which is happening more and more. >> we'll work on that one. thank you very much indeed. rachel morrison. anna, back over to you. >> for those listening on bloomberg radio, "the first word" is up next. for our veers, the second hour of "the pulse" is coming up. fiat takes full control over chrysler. how american does that make fiat? how italian does that make chrysler? we'll have full analysis of what it means for both businesses. we'll also put retail in review. the retail champion. we'll look at the winners and
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losers over the holiday season. we have some clues already as to who those are. you can follow us both on twitter. ♪
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>> fiat finally takes control of chrysler. shares soar in milan as sergio marchionne buys the union out. >> samsung's shift in strategy. they want to move beyond hardware in order to beat apple. >> hundreds of flights are canceled in the united states. due to blizard conditions. good morning to our viewers in europe. good morning to those in asia. a warm welcome to those just
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waking up in the united states. >> i'm anna edwards in for francine lacqua. happy new year. >> a very happy new year. let's talk about samsung. a cultural shift in the company to stave off competition. next. uld be ech changes quickly. >> some sung has had enormous success competeing with apple. samsung has gotten the farthest there and by some measures, it has actually been more successful than apple, certainly in emerging markets and in asia. that can breed a certain amount of complacency. the landscape is littered with
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those that didn't keep up with the pace. asian companies struggle to keep up with more nimble american players, i'm talking about sony and panasonic, which have had terrible problems over the last few years. samsung is saying don't let this go to your heads. stay nimble and focus on software. that has not been their strong point. they have converted their energys into smart phones without picking up a lot of the software expert's which is so important. >> is this about taking on am or their relationship with google? >> the relationship with google is a very interesting trend to watch. their device use android, gooping's system. anyone can use android for free. the goal is to drive surge traffic.
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now google of course also makes its on smart phone through motorola. they have not been hugely successful so far. but in the long run, it seems google wants produce and control itself. where samsung fits into that picture is unclear. samsung has to think about about where it is positioned relative to google and not being too dependent. >> it is all about frenemies. >> that would be the word of the day. >> the fiat finally agreed to buy the remaining stake in chrysler. they have full ownership of the u.s. automaker. ryan joins us now with more. marchionne has wanted this deal for a while. >> the shares were up more than 15%. almost 16% at one point this morning. just to look back in the past for those shares. that is the biggest gain
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percentage-wise on any day since april 2, 2009. pretty extraordinary. interesting to note that they have a circuit breaker on the italian stock exchange. shares are not supposed to go up or down more than 10% or down for that matter. they are evaluating the shares every other minute and there was no need to suspend it at this point. there were a lot of factors they looked at. when you talk about investors and whether it is a good deal they are focusing on three things. it looks like marchionne paid less than the market thought he would have to pafmente it was valued at $3.5 billion. some thought it would be over $4.5 billion. fiat will have to pay very little. $1.7 billion. the remaining amount is being paid by chrysler, which is quite nice for marchionne. it is happening in installments like when you buy a sofa.
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chrysler will have to be able to pay for fiat's acquisition over time. finallies we have this certainty that this merge will come out of this. looks to be a certainty. >> a very big sofa. more commitments than your average sofa would involve. what does this mean for marchionne? >> the obvious thing is that it solves fiat's problem in terms of its exposure to europe. so after the merger, you're looking at a fiat has that exposure to the united states. it could sell its cars there. if things take a while to improve in europe, they can weather that. it has access to chrysler's substantial $12 billion cash ile this it can use that and invest that money as marchionne wants for fiat in europe to rebuild and remake fiat.
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rrblings it sort of, what he has been working on for the last decade, at least five years after he failed to buy g.m. europe. gifts him what he wants. to usep to him to see -- that lifeline to turn fiat around. n a few years, people will expect fiat toiths turn a profit. >> we'll leave it there. ryan chilcote joining us on the fiat story. sales surge at the chain john lewis. they have announced the departure of the c.f.o. caroline hyde has more. > farewell to the c.f.o. simon herrick which had been speculated over the british press.
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after that profit warning that took the market by surprise sent ebenham's shares down. kennedy is taking over for the interim short-term period. the numbers were so appalling when they came out on new 're's eve. holiday discount. they were slashing prices by 15% at times in the runup to christmas. the time we were all meant to be shopping. no one was rushing into debenhams stores. they blame the weather and the pressure on household incomes and the fact that fewer shoppers were going into stores and were shopping more online. clearly debenhams is being hurt now. there had been concern going into the christmas shopping
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period that things were getting tough. we have seen increasing sales being announced by some of these retailers. >> certainly debenhams and marks and spencers all had 30% to 50% off. john lewis played a little bit of that game online for the likes of black friday and fiber monday. -- cybermonday. we have numbers from the biggest department store in the u.k.. huge surge at the end of december. they were packed with the last-minute manic monday. that was december 23. record online sales. 23% gain. 1/3 of all of their christmas business is done online. another winner is another department store here in the u.k. they had the best ever christmas trading period. they saw margins, profitability actually rising. this discounting is not hitting
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the bottom line all across the board. debenhams seemed to have goten the mix wrong. that was really where the winning products were in fashion and in electrical good. what the key test will be is how does next come out tomorrow. we get the numbers likely to be slightly better. many analysts are saying they didn't discount in the run-up to christmas. they should be ok. the scope for clothing retailers, especially those who did early discounting. clearly the winners, house of frazier and john lewis. >> what else is on our ray dor this morning? -- radar this morning? hundreds of flights have been canceled in the united states.
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357--mile-an-hour winds could make the wind chill reach minus 10 fahrenheit. >> a rescue operation is underway for a group of scientists and passengers stranded aboard a ship in the antarctic. the vessel got stuck as it attempted to retrace a famous expedition. of the passengers have been transfered to an australian ice breaker. >> michael schumacher is in an artificial coma. he steaped severe head injuries while skiing in the alps just before new year's. >> strategies aimed at wooing shoppers. what will work and what won't. stay with us. ♪
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>> let's talk about what's happening in the currency markets. start off with the british pound ersus the u.s. dollar. 1.6553 is where we are trading. we saw manufacturing p.m.i. data weaker than anticipated. 67.3. the november number also revised lower. a bit of softness coming in. let's take a step back and look at it in the big picture. you see the euro numbers.
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these numbers are significantly better. come off a very elevated level. the pound trading at an elevated level. let's talk about the aussie dollar versus the u.s. dollar. we saw softer than anticipated data coming out of china, the hsbc. this chinese credit story is going to be one to watch this year. it really highlights the challenges and leadership that beijing currently faces. could be an interesting 2014 story. >> let's talk about what's happening in retail sector. the u.k.'s largest department to store chain john lewis said christmas sales beat estimates thanks to a rush of last-minute shoppers. joining us now to take stock over the holiday shopping season is claire rayner. thank you for joining us. happy new year.
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let's talk about what worked and what didn't. click and correct, where you combine a brick and mortar experience with an online experience seems to be working for them prrment it is an absolute genius move. there are a lot more stores than john lewis department stores. for the customer who perhaps wants to organize their busy lives differently, we can buy online in the comfort of our home 24/7. don't have to wait for delivery. we can collect it at any store at our leisure. they make it real easy to bring products back. they offer a price promise. there is a great deal of trust in the brand. as a whole, they have developed a good rap port with customers. you know that what you buy is great qualitiened that the process will be given security so you'll be lookinged after.
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>> the retail world has come up with a fancy title for this. >> it doesn't matter how you interact with the brands. the point of whether that be a shop, online, your mobile, wherever that may be. the point of transaction and point of fulfillment can be mixed up but ultimately you get a single brand expert that you can trust. >> and you decide where you do all of these things. >> at your convenience. to fit in with your lifestyle. >> what about some of the other retailers. we saw some heavy discounting. there was some heavy discounting. is that the case? more so than normal. >> it has been a trend for the last few years. what the retailers have done is -- expectation in the yivers customers who are holding back their spending at the last minute in anticipation they will break early and go to the sale before christmas. that spells bad news.
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kris smass the time where retailers bank the most significant amount of cash which feeds them through to the rest of the year in most cases. if they are discounting early, they can't cover their costs for the next come of months. others may well be giving forecasts for profits lower than expectations if they were forced into sale and discounting ahead of time. >> if we are looking at other retailers, which doomp do they fall into us? are they more like deben ham or john lewis? >> they have significant discounting prechristmas. possibly their roult results on't be as good as expected. now next is a brilliant example of a retailer who does do it roperly.
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they discount incredibly deeply. 50% to 70% to clear out all of that old stock fast. consumers go mad for their sales. they know they won't go on sale early. so maybe some holdback but if you want a product in time for christmas, you pay full price. i think they do it brilliantly. >> how do they perform online? they had a catalog business where others didn't. has that made it much easier for them to transition into the online world? >> they have always been very strong in the omni channel environment. they have the catalog. customer can have products delivered to their home or their local store. it is giving the customer a sing way of shopping with them or many ways of shopping with them but a single brand experience. when you buy from next, it doesn't matter whether it was
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with a catalog or a website or a shop. you will get treated the same. >> thank you very much. discussing the retail experience. for johnas big as well lewis. up next, when whales are hungry, they need a huge source of krill. find out more when we come back. ♪
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>> welcome back to "the pulse" live on bloomberg television, radio and streaming on the ipad and >> ok. let's get straight to tel aviv and the stock exchange. elliott gotkine standing by. elliott? >> thanks, guy. today we saw some intervention from the bank of israel in the currency markets. israel buying about $100 million of foreign exchange trying to weaken the shekel. it has been hurting exporters.
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third quarter statement saying that had it not been for the strong shekel, revenues would have been higher. what do you think to have bank of israel's current policy? should it be buying more foreign exchange? should the government be doing more to help companies like yours and exporters? are first of all, our exposure is limited. there are some natural hedges. swaps used as a hedge against currency fluctuations. it has had a minor impact on us as well. it is limited in its scope because whatever is going on in the world, interest rates at a low minimum with the u.s. interest rates being close to zero, then the flexibility is limited. but other companies use other methods like switzerland or the czech republic recently where they announced they created like
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a floor. this is something they need to consider at some point. >> more than 600 shoppinger ins and 20 companies around the world. what is a global economy saying to you now? what is your sense of how things are out there? >> the sense is that the worst is behind us. of course barring some events that nobody can control, but assuming our -- there are no major events happen around the world, the world is becoming a more predictable place and 2014 will be more predictable than 2015. 2013 was a bit more predictable than 2012. i think you are in the mode of slow growth and recovery. but i think it is taking growth all around the world as we see it quite obviously, the u.s. or in canada, but i think you also stop seeing it in -- start seeing it in certain parts of europe and i think this is quite
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encouraging. it is going to be slow. it is going to be very anemic but i think the trajectory is pointing up. >> where do you see growth opportunities for buying or developing new shopping? >> the best opportunities are where nobody else was buying between 2009 and 2011. maybe a little bit in 2012. even in 2013. most of our activity was actually on the south side on the said of really improving the quament of our portfolio rather than just -- quality of our portfolio. which took place between 2009 and 2012. you definitely see opportunities in my view in places like brazil and poland. in the nordic region. i think those would be the places that i would focus on opportunities. >> how much of a threat to your business model of shopping centers anchored by supermarkets and the like. how much of a threat does e commerce given the growth that
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we're seeing in growth on online supermarkets? >> clearly that is a part that everybody these reckon with and to think about about it accordingly. luckily for us, we are the provider of daily necessity items and services. each of our shopping centers, almost all of them have a supermarket. this is the least vulnerable asset class to our e commerce. that would really bring a change in retailing. e commerce would behoove our major shopping center owners to think about the mix of tenants, to think about the mix of -- >> i'm sorry. we have run out of time. we have to have you own again soon and we'll finish that thought. for now, back to you in london. >> elliott, thank you very much indeed. elliott gotkine joining us from tel aviv. >> still to come on "the pulse," fiat takes full control of the
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part of chrysler it doesn't already own. ♪
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>> good morning. welcome back. you're watching "the pulse" live from bloomberg's european headquarters in london. i'm guy johnson. these are the top headlines. chinese manufacturing fell december. the hsbc purchasing managers dex came down from 50.5 from 50.8. fiat shares surging today. it has agreed to buy the remaining stake in chrysler, owned by the united autoworkers union. the $3.5 billion deal will allow
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the companies to merge and form the world's second largest automaker. and michael schumacher remains in stable but critical condition. he is in an artificial coma after a skiing accident. let's get more on that story now with greg. that is situation changed over the last few hours? >> no. they give press conferences monday and tuesday. tuesday they said they did a second operation. it reduced the swelling in his brain. they refused to make any prognosis about his future. his personal spokeswoman spoke yesterday and she basically said the same thing. he was stable and there was no change in his medical condition and there will not be any
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statements until there is a change. things are slightly better but he is not out of danger. doctors always warn with these kinds of brain dramas things can turn very quickly for the better or the worse. we're waiting for the next set of updates from the doctors. >> we'll look forward to hearing from you when we get that news. >> jpmorgan has stopped clearing dollar transfers for latvian lenders. the bank has been reprimanded by u.s. regulators for lax controls that could allow for money laundering. latvia adopted the euro yesterday. john, runs through what is the significance of this? >> the direct impact, it is a concern because there are concerns among some people about a country that has just joined
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the euro. this goes without risk, of course. there are certainly some benefits for the euro-zone. the p.r. machine gets to say the queue is at the door. remember this. this is an economy that shrunk by 20%. 1/5 that the economy contracted. quite a contraction. they embraced austerity. the fastest growing economy in the e.u. almost a poster child for austerity. this is what can happen if you embrace austerity. >> a number of eastern european countries people got themselves in trouble by taking out mortgages that were denominated in euros. they found their mortgages in trouble and unable to pay those mortgages because they were not earning euros. what are the latvians going to get out of it?
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>> it is a problem on the currency side of things. they don't have to face that anymore they are part of the union. you have half the population against this but businesses may be more likely to receive more loans from the banks and investors may be more likely to invest. if you're an official within latvia, you're hoping for lower borrowing costs. there is no country in the euro-zone that wants to see countries exit. they get to come out and say we have a seat at the table. if you're impacted by what goes on in the euro-zone, you'll be impacted whether you're a part of it or not. it makes much more sense to have a seat at the table and be part of the decision-making process. >> the factory readings for european manufacturing outputt
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across the e.u. david tweed joins us now from berlin with all the latest. what is the big picture? >> well, the big picture is that you can say that the euro-zone is certainly seeing an expansion, which has got a bit of momentum behind it. the euro-zone number you mentioned, guy, 2 1/2-year high. that is the fastest expansion in 2 1/2 years. one little surprise that we saw coming from a country outside the euro-zone. i'm talking about the u.k. actually we saw a slight calling of the expansion of the euro-zone -- of the u.k. output, expansion david cameron saying yesterday, that yeah, the u.k. recovery is real, but it is also fragile. i suppose these numbers do underline that. but market economics, they describe this number as a pretty robust number, just to remind you, the u.k. has been expanding
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number of 50. main export markets. brazil, china, ireland, russia and the united states. guy? >> so the picture is in aggregate looking ok. there are still large parts of the euro-zone that are performing well and france really sticking out on this one. >> france absolutely is the one sticking out. we even saw a revision of the initial estimate for france down. so instead of 47.1, it was 47 and that is the fourth month of a contraction, of a decline in contraction activity. contracting since february, 2012. not really seeing a lot of good happening in france. jobs are also being lost. companies continuing to shed jobs, which is why francois hollande tried to put this front and center in his new year
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address by saying that france is going to try and reward companies that create jobs by giving them fewer social taxes, but we still need to see that job creation first and it just isn't happening there. >> thank you very much indeed. david tweed joining from beuerlein. -- berlin. >> let's have a look at the bond market reaction. we are seeing appetite for italian and spanish debt today on the back of expanding growth certainly in manufacturing. spanish bonds on track for their best day in three months. if we look at the italian two-year, we are actually at a record low in terms of borrowing costs. 1.1%. clearly we're seeing risk appetite, money getting into the riskier bond markets, getting out of the likes of germany and france. germany has been deemed a haven. better than expected manufacturing in germany.
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france bucking that trend worse than expected in terms of contraction. euro up .3%. down 1.3726. we're turning to the red. all eyes on u.s. futures. the s&p closed at a record high to end the year of 2013. germany up .5%. volumes pretty light across the board. we keep rising, particularly in italy, hanging on to those gains, .10% higher. >> coming up, "surveillance" will be here with the team. hosted by tom keene. he joins with us a review. are you prepared for some fairly extreme weather? >> we have some weather coming in the east coast of the united states. it will affect trading on wall street. it is thursday.
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it is a strange day. we get started here thursday/friday with the year really beginning next monday. no jobs day tomorrow. they delay that until january 10. what we have is a storm. actually two storms. one comes in and moves out and then a bigger storm comes in as we go into the weekend. very cold weather hear, hear as well. on the business side, we'll talk to william harris, the former chief executive officer of paypal. this on the whole digital transformation into 2014. we look forward to that. anna? > thank you. from whale food to a nasdaq i.p.o. banking from on a tiny crustacean for nutrients. details next. ♪
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>> welcome back to "the pulse" live in london on bloomberg television and radio. >> ok. when whales are hungry. this is not normally how we start the show. than a ke nothing more few large mouthfuls of krill. omega 3 is what they are after. t is a super lipid or fat. elliott gotkine sends us this report. >> from tiny crustaceans grow mighty companies, at least they hope so.
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here in the factory floor, you can smell the krill. it has been shipped in from the southern ocean. gets poured into these reactors where the lipids inside the krill are extracted and eventually sold on and turned into krill oil. it is aimed at people with high cholesterol and stiff joints. enzymotec is also in the business of nutrition and medical food and is looking into getting into prescription drugs. having all three under one roof s a winning formula. >> about 40% -- the last three years, our growth was about 50% and the last nine months, it is 80%. we cannot promise but i'm saying that we are very confident that this is only the beginning. >> investors seem to agree. since their debut on nasdaq in september, the shares have more than
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doubled. but that doesn't mean there is no possible downside. in a recent note, jeffreys said the shares are already discounting earnings growing more than five-fold in 10 years and that there is a risk of new studies critiquing the health claims of ingredients and that ossible litigation on -- as regulator parameters shift, for example change ns the krill harvest. then there is grappling with getting bigger. >> to be able to continue managing the company. we are a very diversified company. we are not dependent on a single product or a single market or single customer or single business. our challenge is to ensure we continue to manage the company and deliver our promises. >> enzymotec is still just a tiny crustacean with its sights set on becoming a lobster.
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elliott gotkine, bloomberg, northern israel. >> some fairly hungry whales. >> grumpy whales. elliott sent me a little note. i would krill for a sandwich. >> there is no pun that escapes him is there? really. >> we're going to try hard in 2014 to up the game on the pun front. india has canceled a deal to fly helicopters from the italian company following a 15-month corruption investigation. >> john lewis reported growth in holiday sales thanks to its strong online presence. they saw revenue rise 7.during the period with online orders surging. >> fiat shares are also surging. it has agreed to buy the remaining stake in chrysler which was owned by the united autoworkers. the $4.3 billion deal will allow the companies to merge.
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>> let's get more details on that story. matt is back with us for more on the agreement between fiat and chrysler. you know, it is early in the new year, matt. my head is a little bit foggy. i don't know if that applies to any of the viewers. it is not your average takeover or merger, is it? >> it is a bit complex, but the important thing to note and what the markets seem to be really appreciating for fiat investors is that fiat, despite getting control of chrysler, a successful u.s. automaker, isn't putting up much of that money. quite of the bit of the money is coming from chrysler itself. in effect chrysler is financing its own takeover. it is a little bit like a private equity deal of yore. it gives fiat a much firmer industrial footing. >> what does chrysler like about
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the deal if that is the case, if they are having to pay for part of their own takeover? >> it makes chrysler and fiat a global player. chrysler strong in the u.s. and fiat strong in europe. what we now have is a global automaker that will be able to go head-to-head with the volkswagens of the world and the toyotas of the world and g.m. and ford. which have rebounded quite impressively in the u.s. market. these companies were left for dead with the exception of ford a few years ago that had to be bailed out by the government. now they are back on their feet and driving ahead. fiat t does this mean for in the long run? the fiat end of the business is struggling. what is the future for that division on those division? how the marchionne now going to get most out of this deal? and what is the long-term future
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for carring in italy? >> that is the key question. while fiat is the aggressor here, they are taking over chrysler, it is actually fiat that needs the help. it is in terrible shape. demand is weak. there is enormous overcapacity. in the u.s., thanks to the u.s. economy and the fact that for all the troubles in detroit, americans do still love their cars. the u.s. automarket is doing ok. this means that fiat has an anchor in the u.s. that will keep it afloat. whether in the long-term, that means does fiat remain an italian company is anyone's guess. sergio marchionne, the c.e.o. of fiat has a lot of experience working in north america. that is where his head is at. he is looking for a stronger foothold in the u.s. >> how is he seen? as one of us or a foreigner coming in taking over chrysler? >> he has managed to make a lot
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of friends. certainly they have had some friends. ron bloom, a long-time washington insider who now works for lazard has been advising fiat helping them navigate the political mine field that is the u.s. autoindustry. you huge interest in washington how things work out. he is seen as much less of a foreigner than he might be taking over this iconic american brand, chrysler, is not for a foreign company but so far they have done it without a major uproar. >> right now they are focusing on selling made in italy as a brand. it it worked for luxury end knitwear. >> i was looking at the website just now. it is trading on this notion of a bit of italian glamour coming into the car market. which is interesting because until a few years ago, you could not buy a fiat in the u.s. they now sell the fiat 500 quite
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extensively. we will look for more of that and from maserati as well. >> thank you. >> let's move on. still to come, new york gearing up for a foot of snow. the 40 million people in the area brace for a mammoth winter storm set to begin today. we'll have details when we come back. >> a rescue operation is underway for a group of scientists and passengers stranded aboard a ship in the antarctic. 12 of the 52 passengers have been transferred by helicopter to an australian ice breaker. we're back in two minutes. ♪
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>> welcome back. you're watching "the pulse". now 2014 kicking off already on a weak footing when it comes to the turkish lira. last year it was one of the fragile five. today we have moved into new territory. so the previous record, 2.176. we're now moving into 2.178 tert. we have been up further than that. this is the short-term chart you're looking at here. 2014 is going to be a difficult year some are saying as we work our way through the taper. adding a little bit of political tension and turkey already off
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to a bumpy start. >> let's take a quick look at what you need to know for the rest of the trading day ahead. jon and ryan joining us now for a look at what to watch. one of the things, jon, we're going to be watching is the weather in the united states. >> yeah in the northeast, tri-state area up to boston. already seeing the effects at the airport. almost 1,000 flights canceled into or out of the u.s. cleveland, newark, chicago. definitely having an impact. the u.s. bracing for this one. some saying people are about to get another day off after christmas. let's be sensible about it. brace yourselves and stay safe. >> dangerously cold wind chills. ryan, what are we watching? we're watching the car story of course. > fiat getting the part of chrysler it didn't already have. chrysler is paying the bulk of the bill. fiat as a result of that up almost the most it has been at
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any point in five years. what you want to watch there is what sergio marchionne says next. he's in detroit scheduled to speak at the detroit car show in the middle of january. we want to know where the headquarters are going to be. there is speculation it will be in the united states. when will it be listed in new york? >> he says it is important to be big if you're going to be a car manufacturer. this only makes them seventh largest, doesn't snippet >> who else would he like to partner with? september is not big enough for sergio marchionne. >> what is going on in russia? they take over the g-8, don't they? >> they do. 2013 was a big year for russia and for putin. 2014, you know, they have got the lims coming up in february. the -- olympics coming up in february. they have the g-8 and we just got the agenda. always interesting. top of the list is fighting drugs.
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second is fighting terrorism. this is a big issue in russia. if you were listening to president putin's new year's eve address to russians, it was all about preparing for the olympics and he said he was going annihilate terrorists after the two attacks, one killing more than 30 people. really interesting to see what comes of that. we have the olympics first. the securities crackdown, the city actually gets sealed off from the rest of the world starting on monday of next week. that could be a bit of a -- the g-8 meeting in june is also going to be in sochi. >> will also need high security. >> will also be in sochi. interesting, he is putting a lot of emphasis and hope into that city. >> gentlemen, thank you so much. jon and ryan? >> that's it for "the pulse". keep it here on bloomberg television. we'll keep you up to speed with the weather and what's happening in new york. "surveillance" is coming up next on bloomberg television.
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if you would like to follow us on twitter, please feel free. i'm at guy johnson tv. anna is at anna edwards news. >> see you tomorrow. ♪ >> this is bloomberg
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"surveillance." >> the italians are coming. fiat takes full ownership of chrysler. the affordable care joining me is erik schatzker
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with us today after a wonderful hockey game over the weekend. cristina alesci just coming in from new year's. 5:00? good for you. >> it was fine. getting to the morning brief. euro.g the three things to look for. actually one thing to look for. china manufacturing index falls.


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