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tv   The Pulse  Bloomberg  January 13, 2014 5:00am-6:01am EST

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a bloomberg and elusive -- the chief executive of ubs says he will not spin off the investment bank. >> and there is enough speculation. i think the investment bank is a strategy for us. >> mercedes hits the streets of detroit early, daimler unveiled sedan with tech features. >> highflying airbus set to announce record orders any minute now. we will be live at the press conference in toulouse. good morning to those in europe
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and good evening to those in asia and a warm welcome to those just waking up in the united states. i'm shy -- i'm guy johnson. >> i'm francine lacqua. this is "the pulse." live from european headquarters in london. >> of exclusive look at the goldman sachs global strategy conference in london. manus cranny standing by with a quick review. >> we've had the european view, we got the japan view and next, all about u.s. economics with the chief economist with goldman's -- from goldman sachs jan had see us -- jan hatzius. chief executive is denying reports and that's what syllabi third-biggest bank will spin off its investment banking business. ryan has more of the details. >> ever sent to join ubs a couple of years ago he has been all about cutting. they close many of the debt trading desks. they are a little beyond halfway
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through cutting 10,000 jobs. it in an exclusive interview with us, sergio armani said as far as investment banking is concerned, they are done. >> our investment banking business again has been restructured and is up and running and the model is the one you see today. as no need to restructure. -- there is no need to restructure. we are able to generate i would say in a still fairly challenging environment, particularly because the environment was not so positive and we work through a big transformation. putast thursday analysts out a note saying ubs is considering spinning off its investment banking arm. you just heard the denial. i asked chris wheeler who put the no doubt last week why the denial. he says, look, armani is just playing politics here. there are really only two ways to bring down the leverage ratios at ubs. get rid ofld be to
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the investment bank. you just heard him say, no, they are done with restructuring. the other is curtailing lending. that, politicalaly speaking is not possible in -- not possible. the finance minister has suggested she would like tighter leverage, leverage ratio of anywhere between six percent and 10% and this is ermotti's way of saying if you want to do that, something has to go. >> let's stay in switzerland the go to basel, the committee has an impact globally on banks around the world. they have been tweaking the rules. what has been going on? in june, the basel committee told the bank said the way they may calculate leverage ratios. make them stricter and force banks to set aside more capital and invest or gamble with the less money. well, they did an about-face for the last 24 hours saying, no, in fact, they will keep the rules
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as they were. ed is obviously positive role -- news for shareholders and we see it in banking stocks today. while the rules may have made the banks safer, not changing the rules as they have suggested they would and now they are saying they no longer will, makes it easier and good times for banks to make honey and has money to shareholders. >> thank you very much, indeed. ryan chilcote. >> moving onto mna and an energy consulting company agreeing to buy foster wheeler. our bloomberg feels reporter matt campbell joins us with more details. we see a little bit of m&a in 2013, not as much as we were thinking. but 2014 seems like a nice start, especially for oil services. >> that is a bit of action in the oil services it another company rumored to be for sale samero, rumored to be the
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that's a similar thing and worth a few billion pounds, substantial. asset fieldme small occasionally. this morning there was a shale gas deal -- but we're are not seeing megamergers and oil and quiteace like they were regularly a couple of years ago. oil services is different. the reason is the oil and gas exploration is becoming more complex. it requires more work, more organization to exploit resources that are in inaccessible places. to get the resources to the end-users in populated areas. that is, on the whole, to the benefit of the services company and it is driving a bit of deal activity. >> and 2014, what are the names we should be watching out for? is rumored to be for sale, it is owned by a private equity firm. does a similar sort of oil and gas services thing. then we do look forbotl on the else from likes of halliburton,
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general electric, should numbers also- schlumberger, and siemens. all of those companies will be active buyers going forward in the sector but >> thank you so much. matt campbell with the latest. servicess go for oil to the end-user user. bmw held onto the luxury car top spot for the ninth year in a row in 2013. german rivals audi and mercedes been step up their efforts to overtaken in the fast lane. hans nichols has more. closer --e getting audi and mercedes are getting closer to bmw. total sales globally worldwide, 1.60 6 million units from bmw. closest competitor, audi, 70 9000 back. but you are seeing a narrowing.
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all three vying for the top spot. bmw has done on the back of their three series car. they sold over half a million of them. but they are going to be getting competition. sercedes has their new c-clas out this much. unveiling it in the detroit auto show. lots of tech. what wel be interesting talk about mercedes versus bmw. >> what is the latest for mercedes question -- for mercedes? touchy are putting screens them. it will feel like your ipad, your iphone. they're really trying to revamp the inside, making it much more techy. outside, the line that going to be a little different but it is really inside where there are changes and they will have swipe screen. all the cars going bid on technology. your car or will feel more like a computer and your phone and one day, they will be, as a talk about on the show, driverless. >> not bad. great.
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>> which works for you. >> guy johnson, after the great performance of ryan chilcote talking and driving at the same exceeds a personal driver but you don't need a driver. what do you do, on the other hand. i definitely need a driver. >> later this hour will will be live at the detroit auto show to get a warm-up of -- lori -- of that story. airbus has begun its annual sales and strategy conference in seven frames. record gross orders in 2013. you are looking at live look -- ,ive pictures from toulouse that is airbus ceo talking that is the airbus ceo talking. let's find out what he is saying. andrea rossum and is on the all in. good morning. we are seeing some of the headlines coming through. and he surprises noteworthy at this point? >> i don't think it is an entire
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surprise they have come out so well, but i have made an industry record gross orders. morebillion, significantly than they said that at the beginning of the year. relative to the beginning of the year it is quite surprising they well more than doubled what they were stepping. >> they are exploiting higher output of the a332 -- of the a320 and the a 350,. >> particularly the narrow bodies, doing extremely well. they have a backlog. people ordering them now cannot get them fast enough to cause there are so many planes on order. what they are thinking about doing is, number one, with the current generation planes now at the rate of 42 a month, thinking near-term actually a raising any bit. they have not given us quite a real number but it would probably -- outhey can get the planes
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the door faster. also longer-term, as they start eo which the a320 n starts production in 2015, i think after 2018 they may go to as many as 50, which would be more than boeing builds on the single isles. >> you talk about the 320 neo, any chance we will hear about a 330 neo? question. a very good so far they are hedging their bets. they are doing so well without even putting a new engine on it that we don't think we have to do it. however, they admit they are looking at it and there are certainly customers, including tony fernandez from air asia who has been very vocal. the engine makers are capable of offering something so i think we have to wait maybe a couple of months to hear a firm decision. but it is an issue, for sure. >> andrea, we will hear more from the conference later. hman joining us from
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toulouse. our airbus chief operating officer will join "surveillance" later on today. those on thee of radar. israel is our world leaders are paying tribute to former prime minister ariel sharon today. u.s. vice president joe biden is amongst those who flew in for a memorial ceremony at the israeli parliament. he will be buried later today. he died of organ failure eight years after a stroke left him in a coma. as blockingjust major roads in bangkok. adding pressure for the premise -- prime minister to resign. they also cut off access to a government complex last night. the government will do ploy 30,000 soldiers. awards at the annual golden globes last night. jennifer lawrence one for best supporting actress and amy adams
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was best actors in the comedy film. think david russell for strong female roles. >> airbus takes off. the playmaker with record orders for 2013. we will have live coverage of the announcement coming out of toulouse next. ♪
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>> welcome back. you're watching "the pulse."
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let's take a quick look at the currency markets. the dollar-yen, a one-month chart. the dollar beginning to retrace recent gains. we are certainly turning around. i am reading increasing number of notes saying you are -- if you are going to see a move against the dollar it will most likely be against the end, suggesting this move has further to go. --whats tilts increasingly good with a new form of scottish that if it were to break from the united kingdom could be, and slang, call the kilts but this morning the british treasury said it will honor gilts for u.k. debt and all circumstances. pay attention to the gilts versus kilts debate. >> it sound so good. let's go back to breaking news on airbus. it booked a record growth a
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number of orders in 2013 but also sees 2014 deliveries on par with blaster. business, of this remember, the whole business now called airbus. what 2014 is going to will. john strickland is an aviation analyst. good morning to you. 2013, much better year than we thought it was going to be at the start of the year. delivered more -- many more aircraft. just 114 going to continue the trend? >> it looks very positive. airbus has a success is the short arena, the a320 the most commercial successful -- commercial aircraft of all time. mineo, the new generation version, has really got enormous .anks -- the neo they were ahead of boeing in making a decision to the next generation with the a320 neo and airlines lapped it up willingly
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because of the fuel economy. boeing has some ground to make up there. what airbus has not gotten the moment is the same momentum on long-haul. ahead with the dreamliner, the 787, the smaller . but it is a double-edged sword because boeing is ahead in orders but, of course, with delays in the service and the ground in last year they will have to really was hard to get to the level where it makes money for them. >> if you look at the figures, gross orders -- they said they will boost it not only for the 350 for the a320. how significant is that? >> it means the appetite is there from airlines around the world. i mention the momentum airbus has already got with been -- the neo. out of the stock7 advice compared to the boeing87 things to be doing well in the flight test program. we are talking about a market of
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about 4000 aircraft for the long-haul twin small capacity. though we may be ahead currently. this is an aircraft to which will be supplying business to both manufacturers in this bracket for the next 20 or 30 years. >> what is out of fashion -- a big, wide body for engine aircraft. airbus makes the biggest widebody for aircraft engine, the a 380 and if it wasn't for mr. -- at emirates and they would have a problem. minute boost last from emirates ordered about 40 of these. it brings the emirates total 140, farks to about and away the biggest customer for this aircraft. the orders, which now passed 200, still short significant levels of profitability. but without emirates airbus will
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be nowhere with this play. i have a forecast of about 2000 aircraft with his very large widebody bracket, for engines. much higher than boeing which is half that level. 747 -- lufthansa -- the focus on long-haul, if not the smaller twins let the 787 or 350 or then newly launched 777x for boeing. were talking about emirates. a lot of them and actually for new airplanes came from the middle east. but last week we were bringing you the story that norwegian air also bought quite a lot of planes. what they are trying to become is the cheapest long-haul air flights between europe and the u.s. who will be buying the book of these planes? is a low-cost airlines trying to do long-haul, maybe in asia, or the big national carriers? going on.two things
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certainly asia and the middle east are the big growth regions of the world, which are going to become the larger players in the future. ofstill see a lower rate growth in the to mature markets in europe in the u.s., with fleet replacement. the investment for a long haul -- the americans, uniteds, deltas across the nine it -- atlantic. carriers, coming out of the various chapter 11 bankruptcy restructurings, they are now in the position to renew their fleets, so we are not seeing growth particularly but bringing in modern aircraft in the short-haul arena in the u.s. markets, so quite different from asia where it is the rising middle classes of spending power and a desire to travel driving the growth in asia. >> john, thank you so much for all of that data john strickland, aviation analyst with jls. will continuewe
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the coverage of airbus. the chief operating officer, the "valence" team, coming up later today -- will join " "bloomberg surveillance." ♪
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>> welcome back to "the pulse"
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live on bloomberg television, radio, and streaming on the ipad in >> time now for a look at the best pictures from around the world. divekes guts -- guts to off of actual go's cliff it they more guts for this -- spent hours scaling the cliffs picking up trash them to buy tourist. >> i did not know they have cleaners. monster trucks are redefining the notion of an alpine sport. professional drivers behind the wheels of these 900 horsepower trucks raced one another's on the slopes of a ski resort. red bull sponsored the competition and crowned the fastest truck king of the mountain. christmas came late to six astronauts aboard the international space station. a private supply ship from the united states caret christmas present. in addition to 3000 pound
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equipment. runfirst official supply under a nearly $2 billion contract with the nsa. private business, big space. >> from hotshots the hot sauce. the billion-dollar hot sauce industry. billion-dollar, that is what i can't it over. is growing along with america's appetite for spicy food. what is hot in the world of hot sauce.
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>> $1 billion. >> and that is amazing, isn't it? the chili lollipops as well look pretty frightening. >> i think not a good idea is what comes to mind. still to come, the hot cars. >> we are going to be talking about hot cars all this week. we are going to motor city, live from detroit where the big carmakers are competing for the spotlight at the auto show. >> and the ubs ceo ermotti
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sticking to his guns and shutting down speculation about a spinoff business. we will bring you his comments next. ♪
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>> welcome back to "the pulse." i am francine lacqua. >> these are the top headlines. has agreed to curtail its nuclear activities starting january 20. in return, they will benefit from sanctions relief and the start of a 6-12 month timetable to reach a present accord. >> blocking major roads in bangkok -- pressure on the prime minister to resign. the demonstrations have also seen active cutoffs to
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government complexes. chief executive sergio ermotti will not spin off its bank. he says the current model is working. a very small elephant and i think the investment bank is very strategic for us. we have been making changes to our strategy. the strategy is working. it is focused on supporting our clients, corporate, institutional. assets a very defined and capital that we want to put at work in the investment bank and the business model works, therefore there is no necessity for us to make changes. >> is a spinoff one of the options you are considering? >> no.
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we are not considering that option. >> what would be next for you? are you happy with the pace of asset reductions right now? >> we are ahead of our targets. that we announced two years ago. a year ago we announced the acceleration of that strategy. us tois no necessity for revise our targets. >> are there other potential assets? is there something else that would be a possibility at this time? >> no, i think that we have very well defined business model right now. assets are coming off as expected. we are the best capitalized bank. we have almost reached our targets.
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the 13% ratio to by the end of the year. we are on track. >> are you on track? there is talk that that target is being pushed back a year. >> we are on track. we will achieve our targets by the end of this year, as announced two years ago. ubs ceo sergio ermotti. we will get back to the conference now. >> manus cranny at the conference. over to you. >> thank you for that. go to my twitter account because we have the japan version, the european version. now is the chief economist for the u.s. great to have you with us. let's talk about the u.s. the sequester has passed, the
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tax cuts are gone. strength of the u.s. economy -- what is your view? >> we think things are getting better and when the 14. 2014.- the deliberating process has moved very far. the housing market is slowly improving. the business sector is in good shape. headline growth was being held back by large amount of fiscal drag. that is not going to be true in 2014. are going to be above 3% this year. >> we are now in taper mode. fed has promised to lower rates for a very long time.
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what can unsettle that? that is not a bad situation. >> it is a good situation. when i look at all the forecasts, pretty good growth, still low inflation, still benign monetary policy -- no 2014,e from the end of but a low funds rate through 2015 and then all of the increases of starting an early 2016 -- a very benign scenario. i worry that it may all be a little too benign. i have been looking at the u.s. economy since the late 1990's and i do think the risks are much smaller than they have been for most of that time. we are in a relatively benign environment. we can still think of some risks. a backup in short-
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term rate expectations before the fed wants to deliver high short-term rates. it could get into a stronger growth environment. it would be natural for a market to get a little more nervous. that they, we think fed could push it back again some. >> let's talk about that. we have an unemployment rate of 6.7% -- the lowest since 2008. does the fed need to come out with new guidelines? do they need to reinforce the position that you just refer to -- referred to? >> i think they need to explain quite a lot, especially in a transition. period, as you go from the bernanke fed to the yellen said. -- fed. to explain what they are expecting. .o explain the new developments i think there is a case for
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introducing additional guidelines, lowering the unemployment threshold in light of the new information. i don't think they're likely to do that at this point. i think it will be all more qualitative. we do need a significant amount of discussion and guidance. consumer,ed about the pricing, and business and companies. talk to me about wages. equity is rising in houses. you need more than that. you need real wages to improve. that is a baseline scenario for you. >> real income growth needs to improve. i think it will improve in 2014 relative to 2013. this year, we think real income will grow 3%. most of that acceleration comes from the fact that the tax hikes
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, which held income growth last year, are dropping out of the calculation or fade into the background. beyond that, we would expect a gradual acceleration in wage growth. very, veryhasize, gradual. i do not think that will happen quickly. that is one reason for why we think inflation is going to be low. on the consumer side, most of the work being done by fiscal policy. >> we will have to leave it there. packing a global view into a few minutes. thank you. chief economist for goldman sachs. it had a bit of japan, a bit of europe. back to you guys. indeed. you very much manus cranny joining us from the goldman sachs headquarters. >> tom keene joins us from new york with a preview. >> we are looking for swans.
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i thought those comments were most interesting. on 3% plus.tein he would suggest optimistic. half of that crushing jobs report on friday. we will look at the banks. a numbers person on the bank will join us -- nobody does ratios onto big to fail wall betsy also, i have no idea what i am talking about. fortunately, --rlet fu is my celebrity here is what i can tell you. hot.fey look top -- looked that will be a big topic this morning as well. >> that is the headline morning
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-- of the morning. big on the very amazon son. n.h em -- emma thompso they have been announcing big numbers this morning. the ceo of airbus. , what i look at airbus find interesting is that the planes are beginning to merge. one used to be metal in the other was composite. they are both the same. we will see where that goes. coming up in 2014. we will talk to him about the ongoing airline battle. >> see how many of those he will sell this year. thank you very much indeed. tom keene joining us with the "surveillance" stories.
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>> let's take a look at how the markets are trading. caroline hyde is that the touchscreen with more. >> a crushing payroll report. 74,000 jobs added in the u.s. has that mean tapering happened too quickly, too fast? is bad news good news? equities are getting a lift from the hope that tapering will not happen. easing that concern that stimulus will be rained to quickly.- reigned too we have the yen gaining against the dollar. the dollar off by 0.8%. lynchf america merrill saying look to 2014 for the euro-dollar. the euro is set to fall, set to we can. -- weaken.
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stocks are still holding onto your gains. the banks are almost up i 1% -- by 1%. global regulators are giving a stay of execution for the banks. debt limits are scaled-back by committee. that pollution is hoping to drive the bank sire this morning. it's have a look at individual stocks. we have got some movers. we have some movement coming in terms of retailers. we have a profit warning. enhams. retailer.another it posted concerning numbers. dropping for the christmas period, but morrison's is raising money by saving quality assets. analysts say please do not sell
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the crown jewels quite yet, but stocks are driving higher on the potential of those sales. companybuying into a based in geneva come all about expansion into oil and gas engineering. about expansion into oil and gas engineering. up, motor city. we are live from detroit with a look at the big carmakers competing for the spotlight at this week's auto show. ♪
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>> welcome back to "the pulse." >> the detroit auto show kicks off today. it will feature big dave use -- debuts from the likes of ford and chevy. detroit, what is up? >> good morning. it is going to be a very busy day here in detroit. you have to start by talking about the ford f-150. you're going to be seeing some military grade aluminum in that truck. pounds coming00 out of that pickup.
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that is reallyng important. it is a huge gamble that ford is taking. alan mulally has expertise working with aluminum, having come from boeing. ford is taking a really big bet on the material with this new truck. you have a corvette v06 -- the high-performance version of the corvette they showed for the first time last year. and chrysler, you have the 200. you remember the super bowl commercial a few years ago. this new car is really important. chrysler has had a great comeback. it has been with suv's and trucks. it is important that they get better on the car side. it is going to be very closely watched. >> let's talk a little bit about mercedes. they unveiled this new sedan
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with high-tech stuff. it almost marries her i had with the car. will we see more of that -- your ipad with the car. will we see more of that? story likening that c class to running an ipad or an iphone. there is great tech inside. there was also a really interesting thing -- it is happening with that c class -- it is more than 200 pounds lighter. even though it is wider and liker a car, we americans the bigger cars, they were able to take weight out of the car, the same way ford has. >> tell me where we are in the cycle. last year, people were feeling optimistic at this show. since then, the u.s. economy has
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only strengthened. is this as good as it gets? >> absolutely optimistic. it is tepid because we are starting to bump up against where we were before the recession in terms of demand. everyone is expecting this year to be more than 16 million sales in the u.s. -- we have not done that since 2007. since 2009, we have been on the steady increase year after year. last year, 15.6 million units. everybody is pretty happy to be in this industry and in this market. if you're doing well in this market, you are making good money. >> thank you very much indeed. us from detroit. >> bloomberg news will be live at the detroit auto show later as well. guests will include ford ceo alan mulally. >> let's get some other company news for you.
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in talks to sell enterprise businesses. the unit selling services equipment. a chinese investment sale would allow the company to focus on more profitable network contracts. president of the north american division loses the third north american had in seven months. accenture has won a contract with the u.s. government to take over construction of that is if the obamacare and enrollmentte -- website. a one-year contract with an additional payment of $45 million. >> a meeting of the mines at the white house today -- president obama and the spanish prime minister sit down to talk trade.
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>> we will tell you what you need to know about the rest of the trading day. that is coming up next. ♪
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>> welcome back. it lets talk about the currency markets. the impact of the poor payroll markets -- reports beginning to be felt. again trading at three- tradings -- dollar-yen
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at three-week lows. i want to talk about gilts vs. kilts. kilts, potentially the scottish denominated. this morningened is that the u.k. treasury a said that it will honor gilts in all circumstances. official namethe of the new scottish debt, but it does have a nice ring to it. >> what you need to know for the rest of the trading day. elliott, let's start with you. we have heard from joe biden, tony blair. the coffin with the former prime minister is on its way right now to the armored corps memorial -- the scene of a decisive battle.
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there.haron was wounded the procession will continue down to his ranch on the edge of the negev desert. it was a place where he often sought refuge. he was often happiest on his ranch and he will be buried there at another ceremony. start inral is due to about an hour's time. the whole procedure should be over in a couple of hours. >> thank you. we are also watching -- ryan is here to get us up to speed. >> he will meet with president this morning. spanish-american relations are going through a bit of a
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renaissance. >> that is what we are watching. we are also watching the golden globes. it is all about the dress is really. -- dresses really. >> we got the oscars coming up. we get the nominations on thursday. the ceremony itself in march. we just of the golden globes last night. tina fey and amy poehler got a lot of kudos for pulling off a classy act. the best moment of the evening is when the described gravity is the story of how clooney would rather drift off into space than spend one more woman -- moment with a woman his age. the last two or three golden ceremonies were considered to be over the top. whyt of people wondering these two ladies will not be hosting the oscars. that will be ellen the generous -- degeneres.
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>> they are all great. thank you so much. keep it right here on bloomberg tv. >> stay tuned. ♪
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>> what is the to-do list for chairman alan? a stunning friday jobs report. adapts to the new new.
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and protest in thailand. a search for good people. good morning, this is "bloomberg surveillance." it is monday, january 13. i am tom keene. joining me as scarlet fu and cristina alesci. we're are looking at bank earnings. time for the morning brief. >> it is a short brief. we have to condense it. china's yuan rose to a 20 year high after the reference rate raised to a record. the items to note today, prime minister from spain will visit president obama. a memorial service will begin for ariel sharon. joe biden will be there. >> tony blair, i thought. what else do have?


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