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tv   The Pulse  Bloomberg  January 14, 2014 4:00am-6:01am EST

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>> facing the cameras. francois hollande's alleged affair and not the french economy looks to dominate his press conference in paris today. will ask the former italian prime minister about everything from europe's economy to extremist clinical parties. -- political parties. >> and google pays $3 billion for a digital thermostat maker. good morning, everybody. you are watching "the pulse." we are live from bloomberg's
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european headquarters in london. >> this is what is coming up on the show. says it will start building the first suv since the 1990s. >> the original suv was called the rambo lambo. and detroit's top five, inside access to the hottest vehicle being unveiled in motor city. that is coming up later on in the program. >> how could you not want a car like that? i would buy adjust just for the name to say i have a rambo lambo. >> we begin with the news conference that europe is waiting for. francois hollande is set to give a major press conference later today outlining his political priorities. of course, the elephant in the room is his alleged affair with an actress. >> he is polling higher after those allegations surfaced. caroline hyde is outside the
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palace. difficultg to be very for him not to talk about what everyone wants to know, what is going on in his private life. >> you are exactly right. politics in focus. francois hollande will be walking into the policy -- into the palace this morning. parliament, a member of the socialist party, and also on the finance committee, thank you for joining us. this is a crucial press conference because he will talk about the economic policies he once the layout. willu think the questions be a bit distracted, talking a bit about his private life? >> in france, people outside the country are surprised but we are not very interested. i would say french people do not care about the private life of political persons. i think this will be sweep golf
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very rapidly during the press conference. more of a focus on morning headlines to dominate in terms of economic policies. if you are in france right now, what can you expect resident llande to president ho be outlining today? keep expenses for the public sector. i think it will be a very important message. something that is asked for by the business experts. the other thing is to confirm a betterants to give environment for companies in france and help companies to create jobs. i think that will be a very important part of his speech.
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would cutady said he 50 billion euros of spending. where? >> this year, france will cut by 6 billion euros. that is the first time in france over the last 25 years. it is a big change. a real big turn for our policy. >> what parts of the economy will be cut back on? frictions,be social what we want is to protect our social details. that is very important. protect for everyone in france. >> what is not needed? >> i believe there is a lot of relativity -- a lot of
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productivity with the administration. in the u.k., it has happened for a long time. now we are starting with thise- administration. a lot of things have artie been decided for the budget for this year. i am sure there will be even more on these cuts for spending. >> what about businesses? what charges will be cut? by 20are already cutting charges ofos the companies in france. it is a huge decision. the chargesby 7%, on companies. it is huge. i do not know if the president will announce even more, but we have artie decided -- we have
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already decided and we are putting in place issues for our country. >> and it will be trusted. he will stand by -- >> it will be trusted. something that is very important. we are also very keen on reducing the deficit, the debt. andre cutting expenses ectinging our -- and prot our systems. >> thank you very much, member of the socialist party, member of parliament, member of the finance commission, saying that those questions that will come his way about an affair will be swept underneath the carpet. >> she is a socialist. a lot of people say that. i read the biography of the ex- wife and she said, times have changed in france.
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people knew, but nobody really cared. over the last six or seven years, there is the internet. people want to know. >> the game has changed. we will find out a little bit later how much the game has changed. 3:30, that press conference will be taking place. in the meantime, we will be staying on top of this story. we will continue the conversation in a few minutes when we talk with a professor of political science. we will get that story and we will get mario monti's take on all of this. >> dangerous when we talk about things that interest everyone. s have found a home. it is the latest tech company to be snapped up by google. it is a vermonter, amongst other things. >> ryan chilcote is on the hot story. what is next? why does google want this and why is this setting the tech world alight? >> what is worth $3 billion?
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it is the internet of things. a have two products. the first one is a smart smoke detector. i know you have seen it. it is available in the u.k. since you interviewed the ceo, it is something you can purchase online for about 100 pounds. it basically adds wi-fi into your smoke detector so that you can monitor your smoke detector from your smart phone, your computer. it also allows it to interact with your other devices, like the nest thermostat, which is there other product. you can monitor it because it is web-enabled. it also helps you save money. the way the two interact, if the , ite detector detects gas will tell the thermostat to turn off your gas boiler. pretty handy. who would have thought thermostats would be hot? turns out google things they can, especially if they are smart. >> more about this a little bit later on. in a related sector,
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time warner cable has rejected a $61 billion acquisition of charter communications. >> the bid is backed by billionaire john malone. manus cranny joins us with the details. that inadequacy is a sum total of approximately $30. charter is backed by john malone. liberty media, 45% of charter. historically worked for time warner cable, tom rutledge. trying to do a deal with a $30 spread. that is what is on the table. is what time warner cable wants. what is up for grabs? 12 million video clients, cable assets in l a new york, and dallas. they have had conversations on several occasions.
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we did not put our house up for sale. we got a knock on the door and somebody was trying to lowball us with an offer. when it comes down to this retracted. period ofotracted negotiations, they are going straight to the shareholders that this stage. we caught up with one of the big thinkers over at deloitte. he is the head of tech, media, and telecom. he said, we get this idea that they will start dropping cable subscriptions. 50 million people out there will have two or more paid tv subscriptions. we are going to double up, if not triple up. which sort of blew my mind. and then we had a chat which said the cable operators need to get together. you need to have consolidation to deliver efficiency. back to you. >> thank you very much indeed. shares are falling even
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though the internet-only retailer posted sales that beat estimates. why the selloff? the share price has gone up quite recently. >> 150% in the last 12 months. the story continues. high-speed is dead. long live the internet. it is about positioning. a company with no exposure to high street has seen sales jumpingnd asos keeps over them. >> that is a one-year chart. >> that makes it a bit more special. and that is the point. yesterday, the shuttering of the high street, a big part of the retail establishment effectively walking away. this is a business that has the internet story right. others are learning quickly. how does the environment change from before? >> their target demographic is
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something francine and i have been talking about. their target is twentysomethings. these guys don't have the priorities -- they do not have to spend on the kids. and you can go home for longer as well. the bank along and a -- of mom and dad is still strong. >> i think it is fascinating. we do not have time. we wish we had time. thank you so much. have you ever bought asos? >> no. have you? >> i tried. let's leave it at that. here is what else is on our radar. >> lamborghini lands to introduce a suv in 2014. it will be the first lamborghini thee the rambo lambo in 1990s. it is part of the brand's push to expand the united states. >> credit suisse has told junior investment bank -- junior
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investment bankers to avoid the office on saturday. others are implementing similar policies to soften the image of early wall street careers as endurance contest with 100 our- weeks and no time off. ronaldo ended lionel run by claiming the ballon d'or last night. next, francois hollande faces the music. he is set to give a major news conference today at the height of what could be the worst week of his presidency. does he stay the course or use the moment to launch a significant shift in policy? we will debate that next. >> later, we will be joined by mario monti and ask him about the country's economy and the health of the eurozone. ♪
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>> today's news conference from francois hollande comes during a tough week of his presidency. this is how we communicate during the break. ofhe faces a crucial task convincing france and the world that he can be trusted, not only at a political level, but also his personal life. what will he say? joining us now to discuss this story is a professor of political science.
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good morning to you, paul. clearly, everybody is going to want to know about his personal life. tot can the president do downplay this story? how do you think he is going to treat it? how will you approach this problem later today. >> it is very difficult. this is a bit of the script that was not there originally. planned wasginally the sequence of his new year's message almost 10 days ago. this would be followed by this long plan for a press conference. it was already the bad jobs figures at the end of the year that prompted this rather about turn that was given in a new year's message. the idea was that this press conference was going to follow up on that. now you have another aspect of the story that has surfaced and
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even though the initial reaction has been the first traditional one, in france, that he try as much as possible to steer away from all questions involving politicians' personal lives, apparently the events over the weekend have shown that there is going to be a lot more curiosity and fallout from this story. >> is this the perfect opportunity for francois hollande to make more of an impact? he has more of the world watching. not only europe, but people who were maybe not that interested to see about his political life. he could do a big bang on the economy if he were to choose today to launch a very strong performance. strongaunch very reforms. >> i am not sure where they are watching, where they wanted him to watch in the first place.
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the prognosis of the economic and political situation in little-changed by the impact of this story or not. indeed, one big challenge that he does face, and that is not something that is settled by this new aspect of the story, is the fact that after his new year's message, there were still a lot questions raised as to whether he had this political capital, the means, the leeway, the actual political support from the people who he appointed to his government, the people who were elected in his name in the national assembly to effect this about turn. a lot of commentators have been wondering whether the policies are going to follow up to the declarations. unfortunately, that has been a question that has been raised for almost 20 months of his presidency.
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if this really corresponds to whateep-held vision of needs to be done for france, why was not -- why was that policy not implemented from the start? why was it not the main theme of the campaign that he ran on? that did run on the fact he was mr. normal, that he was not nicolas sarkozy, that he was not all about the bling. it turns out that his life is not quite as normal as most people would have first assumed. one of the things that has also helped him out despite his appalling poll rating is the fact that the party has not had a serious leader. do you think what is happening now in his personal life could make life easier for the opposition and strengthen the opposition and start to see the opposition putting people in place, maybe nicolas sarkozy, that could run against him? >> the opposition faces problems that are as -- that are, as we
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know, of their own making. if france will on and his party were able to exploit this absence of clear leadership facing them, that is maybe not something that is going to last. we are looking at the results of the forthcoming municipal and european elections. the results of those confrontations are going to weigh heavily on minds in the next few weeks or so. it would be hard to see how personal problems adding themselves to the well-known general policy problems in france are going to benefit the opposition if it does not overcome its own demons. certainly, the additional trouble for mr. along -- mr. hollande does not amount for a perfect goal for the opposition. >> thank you so much. of former professor
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politics. >> it is time for today's hotshot. one of the best videos from around the world. the car rally roars into the chilean desert. cars, trucks, and men speed cross mountains and deserts in south america. the rally will finish on saturday. only for the brave. ♪
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>> welcome back to "the pulse," live from bloomberg television, radio, and streaming on your phone, your tablet, and bloomberg.com. ferro -- manus cranny will tell us exactly what is going on. bankeraustrian central saying that germany could row 2%, austria could grow 2%. we had a bit of a reprieve during the first hour of trading. that reprieve has given way. even those of the comments that are coming out certainly begin to question the stability of the valuations. that is what is going on. keep an eye on emerging markets. as i said different scene, one of the bigger backdrop stories is the move in emerging markets. one of them is dollar-rand. a couple of different things going on here. you might get more strikes in
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south africa. that is the economic backdrop. secondly and more importantly, it is about what is happening emerging-market currencies per se. a five-yearing at low on dollar-rand. the aussie dollar is down against the dollar. again, this is all tied back to the view on tapering. charles plosser and mr. fisher speaking today and they will drive the tone and intonation on the quantitative easing and tapering debate. i think the subplot is much more about what is going on in terms of the timing of quantitative easing and valuation. the timing, according to goldman sachs, will stay at $10 billion per month. a lot of the papers today are citing valuation concerns. i did not get that strong sentiment. futures just flat in the u.s.
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back to you guys. forp next, an automobile america. lamborghini will start building the first suv since the 1990s within three years. ♪ .
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>> good morning, everybody. welcome back. you're watching "the pulse." the bank of england has an inflation target, which is 2% and we are there. >> for the first time since 2009. >> yeah. we finally made it. is it a good thing? we'll wait and see. it is going to make things interesting for mark carney. sterling selling off on the cable rate as we speak. it did spike earlier on. starting to reverse a little bit. we are there.
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>> yep. it is a touch below what we were expecting. we were expect 2g.1%. now the bloomberg top headlines. francois hollande is in the hot seat. allegations of an affair as he elivers his 2014 agenda later. his popularity rose from a record low. >> house and senate lawmakers have agreed to a $1 trillion bipartisan bill to fund the u.s. . >> a german brewery cartel has been fined more than 100 million euros for fixing the price of beer. five german brue brewries and seven people were fined. on avid tweed joins us more
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that story. >> anheuser-busch imbev msm this is the biggest beer maker in the world by sales. it wasn't fined but only because this was the company that was the whistle blower on the cartel and it blew the whistle about 18 months ago. what turns out has been shopping that representatives from some of the biggest breweries in germany have been getting on the phone and getting together to work out what the price of 20 beers was going to be. that was a specific example. they agreed to encrease the price by one euro. you mentioned the biggest privately owned brewer here in germany. veltins.
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some of the most famous beer in all of germany. the amount of the fine isn't terrible but the reputational damage is severe. particularly given the fact that this market here in germany is really declining. 25%. the margins in these markets are absolutely paper thin and beer makers today simply can't charge enough for their beer. > no froth in this market. >> david i. also going to make a bad joke. it is a tough life for david to have to try all of these beers, but you did try to them and talk to us about how much it costs having a beer in paris compared to london. >> if anyone in paris wants to have a beer before this speech coming up later from francois hollande, they are going to have to pay 5 euros 75.
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in germany -- the cheapest place to buy a pound of beer is the czech republic, just 82 euro cents for a pint of beer. >> that's why it is the party place. david, thank you so much. david tweed. now the autoautoindustry closes out one of the best years on record. ryan chilcote joins us now. this is the first time that iat's c.e.o. sergio marchionne has talked. >> this is the first time we have seen him as an emperor. he spent the last several years
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building the empire and now is intercept on using the products he -- intent on using the products he has in the stable. they have a new jeep cherokee out. surprised everyone. 13, they sold almost 750,000 jeepses. they think this year and next year they will hit the 1 million ark. it is one of the most profitable. they want to capitalize on that. have a listen. >> we need to hit that number across the world and see how far we can take jeep. it is an incredible brand and has incredible international potential. we need to take it there. that is the first to-do listmony agenda. the second is the development of -- to bring it back. > bring it back, alpha romero.
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it was supposed dom in 2013. there was some talk this year. in any case, sergio marchionne clearly has a lot of hopes for rebuilding alpha. skeptic also tell you their concern, this is not the first time people have tried to remake alpha and reintroduce it. they are going to be pretty leveraged up with this merger. will they have the money to invest to make it a car that people want to buy? >> it is mot just that italian brand that is doing that. i guess across town, lamborghini, the company saying it is going to introduce their s.u.v. in three years. it has one in the museum. the rambo lambo. >> maybe i should come out with my own. it is going to be called the ooze. it is going to hit the road
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according to the c.e.o. we spoke to, in 2017. i guess we can expect this is going to be a very fast, very expensive way to get your kids to school on the school run. that is coming in 2017. i was talking to the rolls c.e.o. asking if rolls was going to come out with an s.u.v. he said he didn't know it fit in with the brand because a lot of people that own rolls own second cars. everybody wants to make an s.u.v. now >> normally in a lamb almost a, you look over your shoulder -- in lamborghini, you look over your shoulder and there is a big engine there. a name? s in >> they may not call through it. >> i'm sure there is a survey online. if you feel strongly just go and
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do something about it. >> the nevertheless is going to be felt. >> let's get back to our focus. france's president hollande is set to give a news conference on the economy. >> allegations of an affair threatening to overshadow this agenda story. so what is his next move? how does he play this? what does he need to do with the economy and what does he need to do to get both stories back on track? we're not going to ask eric neilson about that but we'll have him about the economy. he has enough problems now. let alone his private life. >> which one do you want to talk about? >> what ch one do you want to talk about? >> he has a massive economic agenda in front of him. he has been a disappointment so far. i don't think france has a massive problem.
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people keep on beating on france. they have a small deficit. they have decent growth. the budget is ok. inflation is ok. they have great ips tuitions and o on and so forth. i thought that if anybody could change the pension system and maybe get inroads of the labor force, it would be a socialist president. he hasn't done anything. now we know what he has been doing. >> now we know what the french president has been doing. >> you're actually right. on fund memories it is not that bad. if you go to france, the mood very depressed. the older generation saying i want what they had. they are not competitive. problems entrenched in the french community. >> that is true.
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one reason people are very de pressed is the media keep going on saying they have made mass i bluppeders. -- blunders. they spent a couple of years talking about this. people get very depressed along the way. >> you a president who is very unpopular. >> yeah. he is very unpopular. at the end of the day, the french, after sarkozy, they wanted a normal president. he turned out to be too normal. he didn't articulate a clear vision and didn't stand up to things. >> the socialist party, you wouldn't think would be a party that would go after the -- but the fact that the left has got to go after the size of the
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satellite tells you about the situation we find ourselfs in. >> that's right. you have seen it before. left pears turn into the middle and do quite impressive things. tony blair was one example here. in italy, you're moving towards a much more centered guy. the old left i don't think is really at fault anymore. to some extent, the far right has become because of a phobia and many companies have become a force. to some extent, you see them move to the middle and then start to deal with the far right. it is a funny landscape now. a little bit scary i think. >> thanks so much. we'll talk more about this possible political extremism later on the program. unicredit's eric nielsen stays with us. >> ok.
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we're going to take a short break. stay at home. saturday is unheard of for some banks. credit suisse is trying to improve working conditions. we'll have details on that story when we come back. ♪
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>> welcome back. let's get you some company news. fooling is meag an effort to
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buyers.ts web-connected solicited acquisition bid. charter is backed by billionaire john malone. >> credit suisse has told junior investment bankers to -- on saturday. other terms including goldman sachs are implementing the olicies. endurance test, eric nielsen with flying colors. we no longer have to see work as an endurance test. lumple is for wimps or whatever
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-- lunch is for wimps or whatever the quote was from wall street? >> i think it is p.r. from the banks. at the end of the day, everybody works hard. people work hard in the finance industry. we like to tell people we work hard. we do. i'm sure you guys work really hard. everybody is looking at it as -- all of these stupid emails that came out in the process and then we had this tragedy last year with the young german intern in one of the banks collapsed. i'm not familiar with details. the banks had to show that they cared. that they were more human. that is all it is. it is a p.r. stunt. >> would you not say if you have a better work/life balance, you become a better worker. >> you have absolutely right and completely believe in this.
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people must take their annual leave. we will kick people out of the office toward the end of the year if they have not taken it. they must take two weeks a year. i would often tell people to go home at night. at the end of the day, it is important. it is very important. but i think most people do this. but it is difficult. young people come out of university and they have a ton of energy and they want to show themselves. it is a good thing that they say one day of the weekend you have to stay home. the question is whether you log on at home? >> there are ways around these things. if you say it is just a p.r. exercise, nobody is going to be particularly bothered by that. eric, i just want to get a quick comment from you on the u.k. inflation story. at target now, 2%. slightly below expectations but
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given the fact that we now have an inflation rate which is moving south in the u.k. but we have a housing problem moving north, how does carney deal with this? >> i think he has a massive problem on his hands. the economy is recovering nicely but it is very uneven. t is london versus the rest. exports have not done particularly well. compared to global trade. so i think you have a very complicated task at hand. a nice recovery but one that is skewed. i think it is a real question whether he can wait until 2015 before he can hike rates. we think he will just make it over the end of the year. he has committed himself to forward guidance. >> you think he will be raising in 2015? >> our forecast is early 2015.
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there is a probability that it will be late 2014. >> the reason first? >> the reason is that the economy is growing too fast now and too unevenly, to make other monetary tightening measures. >> the macro rules won't allow him to be able to hang in situation where he doesn't have the hike rates but at the same time he can take some steam out of the housing market. >> it remains to be seen if they are successful. > thank you so much for now. erik nielsen stays with us. we will be talking about italy. and monti. he has a job to do. >> crack the whip on the interns. >> coming up on "the pulse," turbine. >> a c.e.o. raising 20 million
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pounds. that story coming up next here on "the pulse." ♪
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>> welcome back to "the pulse" on bloomberg tv and radio and streaming live on bloomberg.com and your tablet. the northern tip of scotland could soon be home to europe's largest turbine project. they are raise 20g million
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pounds along the stock exchange to fund it. the c.e.o. is here. great to have you on the program. you're planning an i.p.o. in the next couple of weeks. how is that going? pretty confident? >> yes. demand seems to be strong. >> this would basically mean that you're one of the few industry players on the market. what is your main concern? when does the technology become usable and how much do these projects cost? >> that's right. at the end of the day, we are very much behold on the the same cost parameters that exist in a lot of renewables. it will be driven by investment such as the atlantis investment that we have up in the north of scotland. it is one of the fastest growing asset classes. >> when would it become competitive compared to other renewables? >> if you look at the closest
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comparisons, you look at offshore wind, we have a program investment team in our technology that would see it in the coming years, offshore wind and by 2020 with onshore wind. >> what is the most valuable piece of technology that you have? it is something that we don't often talk about, right? >> yes. >> give us a sense over the complexity of it. >> what we try to do is not be complacent. we have take an lot of the developments to have wind industry and applied those overseas. it is like putting a windmill underwater. we take very much the same technology that has been developed in the wind industry nd apply that under the sea. it is survivability in many respects. we want to make sure the turbines last 25 years under the water. if you look at some of the weather we just had in the united kingdom over kris marks
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it demonstrates how robust these turbines are. atlantis specifically has one of the largest if not the largest portfolio of portfolios globally. we have projects in the united kingdom. in india. we're developing in canada and we have aspirations to develop also in france. >> how big can you become if i speak to you in five or six years, how much will you have grown? >> we think very much that there are opportunities to start acquiring some projects. we would like to think that atlantis would be a multihundred not thousand megawatt installations. >> when do you expect to be on the market? >> certainly within the coming months. dependent on finalizing the process. >> we'll have to get you back on after that.
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tim cornelius of atlantis resources. >> there is this thing on bloomberg. the first word is up next but for viewers, it is the second hour of "the pulse" performs first up, francois hol land facing the music. we are live in paris to find out exactly what is going to be on the agenda. he would like to talk about the economy. he is probably going to have to talk about his personal life. how do those two factors interact? what impact will this have on european politics at a time when the political spectrum is gaining ground. we'll find out when we talk to mario monti. the former italian prime minister will join us to give us his take. we'll find out what his take is on the wider political story here in europe. he is coming up very shortly.
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you can follow us both on twitter. i'm at guy johnson tv. francine is at flacqua. ♪
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>> facing the cameras. francois hollande. alleged affair. not the french economy expected to dominate his press conference today. mario monti joins us in just minutes. >> google buys nest, the hermostat maker. good morning to our viewers in europe. good evening to nose in asia. a warm welcome to those just
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waking up in the united states. i'm guy johnson. >> i'm francine lacqua. this is "the pulse" from our european headquarters in london. >> what have we got for you at this hour? america.bile for >> and detroit's top five will get you inside access to the hottest vehicles being unveiled in motor city. >> we begin with our top corporate story. next labs have found a home. they were snapped up by google paying a cool $3.2 billion. >> ryan, what is nest and why would google want it? we interviewed the founder a couple times and they look pretty cool. >> i guess the question is what is worth $3 billion? the internet of things.
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they have the smart smoke detectivor that has wi-fi. not only can you monitor by listening to the very loud alarm that it is equipped with but also follow what's happening with smoke detectivor on your smart phone and computer and it can also interact with other smart devices in your home. more on that a little bit later. then they have this thing called the nest thermostat. it also has wi-fi so you can monitor it in the same way. interestingly, it learns your behavior and uses that learning to help you save money. now perhaps the most interesting thing about these two devices is that it can talk to one another. if your smoke detectivor actually detects gas, it will tell the thermostat to turn off that gas boiler. it could be very useful. who would have thought thermostats could be hot? they in fact are, at least as
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far as google is concerned and that is because they are smart. >> they are also really cool. they look cool. they are easy to use. the design beautiful. something that obviously you could draw a line to apple with and maybe -- they are not buying the thermostat. they are buying the guys that designed the thermostat. > they was father of the ipod. he made a pile of money. retired. got bored. linked up with another guy from apple. another former guy from apple named matt rogers. they started working on this project. why? because tony decided he needed a really smart home and wanted a really smart thermostat. they got cracking on this. they bumped into s everyone rgey -- to sergey.
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this guy, tony fadell is 44 years old. you know him. you have interviewed him. if you look at the products, they like even look like to ipod he came up with. they are simple, they talk. they have that big button. he has moved from am to his own thing sand now part of the google family. >> i guess you would call him a high achiever. >> slightly. 44. he never said how much of the company belonged to him. we can assume that somewhere close to half of that company belongs to him. he has at least several hundred million to play with. >> whatever happened, he is doing well. ryan, thank you so much. ryan chilcote there. an offer cable has to charter communications. >> time warner's board calls it
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grossly inadequate. nus cranny joins us with the details. manus? >> some say the reason charter has gone public. john malone, -- they have been haggling with these guys for 114, now they came in at 127. it looks like time warner cable wants $160. the question is this. will chatter go nuclear? -- charter go nuclear? there are a number of options left. charter said we want all options to be open. we would prefer a friendly cash deed. we're fully locked and loaded and ready to go. the other part of story is could
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charter and comcast maybe get together and do a deal where arter does the deal buying warner cable. offered at $160. a lot of negotiation. this is where the advisors earn their fees. back to you guys. >> oh, yes. manus, thank you very much indeed. our markets editor, manus cranny. >> the french president, francois hollande is under scrutiny today. he hopes to convince people that he can pull the economy out of decline, but what do we want to know about and what does france want to know about? >> about the alleged affair of course with a french actress. it has been dominating headlines across europe for the past few days. caroline hyde is there ahead of that news conference. i guess he is going to find it very hard to avoid talking about this. >> you're right.
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questions will of course be flung his direction as reports swirl about the alleged affair he has had with a 41-year-old actress that was in a seven-page report just on friday. today when he has to answer questions to the press, he walks into the hotel and of course it is going to be in front national and international press. it may be why we're seeing his first lady, valerie in hospital with exhaustion. but he has not made a denial. instead he said he deplores the intrusion into his private life. maybe the french electorate agree. 77% believe that it is just that, his private life. they really want to get to grips
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with this story. any questions asked of this alleged affair will be swept aside by francois hollande and he is hoping and praying that he can steal the headlines with his political ambitions, the way he wants to move this french economy forward. he is fighting for his career now. we have unemployment at a six-year high. a slug ireconomy. taxes the highest in terms of burden on the employment here in the entirety of the euro-zone. 45% is what we see in terms of taxes versus g.d.p. now he is having to bring usinesss into the fold and about turn for hollande. he slapped 575% tax rate on those being paid in eck says of 1 million euros.
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he has to promise them a responsibility pmp amp c tmp. saying if you hire, i will lower your taxes on business and regulations. businesses want to know what the exact details of this will be. >> caroline, everyone is looking forward to seeing how that press conference goes. thank you very much indeed. caroline hyde joining us from paris. >> now francois hollande's alleged affair is one more distraction they don't need to talk about. we're being joined by the former italian prime minister, mario monti. thank you so much for joining us on "the pulse" today. talk to us about your main concerns. france comes up as being possibly one of the ones that we should be most worried about, competitiveness is very, very lackluster and the political class can't seem to be able to turn things around.
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>> yes, this is a big concern. not so much because france is at risk. i don't believe that is the case. because europe and the euro-zone do need france to fully play its role of partner with germany in the development of europe. not that the franco/german access sufficient but it is nevertheless a necessary condition for europe to move ahead. >> are you saying that that relationship is unbalanced? germany hasn't had france to balance at the end even other end and we have had too much german influence? >> it is not necessarily a negative influence. it is one part of the influence we need. i always saw germanyed a providing the rest of europe with a spirit of discipline, fiscally particularly and we
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need at the same time other parts in europe high on the agenda, gross imperatives and my own direct experience is that that can be played out rather well, like in 2012, where with the contribution of francois hollande, we deliver that the european council, the growth pact and acting altogether with the statement over the euro summit that declared stabilization of government bond markets necessary for those countries which were behaving well, which in turn allowed the e.c.b. to make what it made subsequently. >> mr. monti, right at the start of the crisis, i remember talking to you and you putting everything simply and saying the main problem we had is that countries were too polite with each other. if you had a deficit that was too high, i would be -- i wouldn't say you to do something
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about it. what is the main problem politically that we're seeing in europe? >> well, since those days, the oblem is no longer excessive politeness. because things have become tougher and countries have spoken out to each other. maybe even too much in the sense that we now have seen across europe, particularly between the north and south of europe, a lot receptment resentment and a lot of mutual backlashes, look at the german weak relationship over the past three or four years. now we need the leaders of europe to state the perception of a collective leadership and also we need them to consider nationalistic
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backlashes are maybe the number one problem. their attention must be devoted to how the public sees all of that. >> thank you very much. >> we'll talk about that a little bit more. stay with us. mario monti is going to continue to stay here on "the pulse." we actually have him for a little while longer. the next 20 minutes at least. what else have we got coming up for you? five cars you need to know about from the detroit autoshow. the top models getting all the buzz this week.
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>> good morning, everybody. welcome back. you are watching "the pulse." earlier we saw a spike in the cable rate. we have had inflation data out of the u.k. for the first time since 2009 is 2% what the bank of england says it should be. how do you balance that story with this roaring housing market in the south of england? it is going to make life very difficult i suspect over the next few months for mark carney. >> just before christmas, the italian prime minister said the economy was out of the -- but the country is still struggling following its longest post-war
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recession. david tweed joins us. >> italy's economy looks pretty good on paper because they are out of recession. the confidence indicators are up. the p.m.i. indicators show that output is expanding again and if all goes as planned, they are on track to grow by the summer of this late. the problem for italy is growth is only at 1%. mr. monthi, when he was prime minister in 2012, he tried to tackle the labor market, labor market reform. a lot of people say he didn't go far enough, which is why what is going to happen this week with the new leader to have democratic party, the summer left party, is going to come out with his concrete proposals about what to do with the laker market. will he be able to -- labor market. will he be able to get them on
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the table? that is big question. >> thank you so much, david. david tweed with a roundup of what is going on. >> let's answer that question. mario monthi is still with us. -- monti is still with us. rensi could be the future prime minister of italy. he wants to look at the labor markets. he has a 15-point plan which he is going to deliver the details on. how would you rate his chances of success? >> well, first of all, italy does have a prime minister, a highly respected prime minister in is doing a very good job putting and still keeping public finance under control. that should not be neglected and italy right now is let me remind you, the only country in southern europe which did not need to have that program and is the only country in an enlarged
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southern europe which is out of the deficit prenal, because france and even the netherlands still are under excessive procedure. not just greece, portugal and spain. having said that, there is a huge problem of competitiveness in italy and still a big need for labor markets. we tried at our time but the main obstacle was as far as labor markets reform was concerned, the resistance within the democratic party and within the main unions. now here comes mr. renzi. he does not need to become prime minister in the short-term. he doesn't say -- he says that -- ot his objective, but as he wants to put pressure on the government to deliver more and start the reform.
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and i believe that the prime minister should support this move. now there is smog very original in the ideas -- nothing very orblingal in the ideas of mr. renzi for labor market reform but the big thing is that these ideas which are pretty classical come from the heads of the democratic party and it was precisely because the head of the democratic party wasn't able to move the majority of the party that n that direction that we couldn't deliver as much as we would have like it. >> he also talks to the -- if you're going to have reforms, which may be a bit classical, you're absolutely right. italy didn't ask for a bailout. we're a g-7 country. we should expect better from itly. >> indeed. bsolutely.
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>> it is good that italy was not the fire igniting the euro-zone. the gmp-7, g-8, to deliver more growth. that is not going to come through a budgetary policy. it needs to come through precisely a movement in growth. which means structure reforms. not just labor. there i would say that the left, mr. renzi has to deliver in terms of enabling the labor market reform. he has to deliver in not blocking the liberalizations in the product and services market to the extent that they tried to do during my time as prime
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minister. thank you so much, mario monti stays with us and we'll be talking about political extreme im. >> he knows a lot about italian politics and what life is like in brussels and the story there could change very shortly. we'll be talking about that when we come back. >> a new face for the luxury s.u.v. market. lamborghini says it will introduce his first new s.u.v. what is it called? the urus. jan-michael gambill getting in on the s.u.v. market. we'll zhause later this hour.
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>> welcome back. still with us is former italian prime minister, mario monti. thank you very much for staying with us. when we started the interview, we asked you what were you most concerned about. one of the things you pinpointed to was a lot of groups politically are becoming extremists. how do you tackle that? >> that is a big challenge, not only for europe, it is on the rise everywhere. also because of the traditional parties tend to speak a traditional language and populism is based on oversimpification. it is particularly difficult to explain to europeans why the
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european union is part of the solution to issues pose bid globalization. i believe that much too little has attention has been paid by the leaders of the institutions and the european member state when handling the crisis. after greece, much too little attention in coping with the issue of populism. so now, i believe that populism plus the north/south divide that exists in would neutral suspicion and resentment have become the biggest problems to be tackled. >> big political centers sometimes exist in bubbles. they are not fully ware of what is going on in the landscape around them.
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brussels is often accused of this. do you think those that exist in the cor or thes really understand the change that is coming with the european elections that are going to take place later this year? extreme parties. >> it is going to be profound. it is going to be in a sense take away energies from building the european -- but it may well provide also shock. europe has proceeded by way of eacting to crisis. feel a strong pressure towards working more together, to cope with the populist extremists and
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i must say this requires big hange on the part of brussels. more in tune with the needs and also the language of people. but also requires big changes, even bigger in national capitals because obviously this populism and anti- europianism is largely a reflection of a cynical game of blaming brussels on a the part of political leaders and an escape for decisions that political leaders took together in brussels. >> what countries concern you most? france is a country which has well reme -- doing very in the polls. >> france is a concern and it is populism isce where
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increased. also i was recently impressed taking part in debates in france about the euro-zone. , can feel among the french the younger general nation france a sense of alienation with respect and frustration that espect the euro-zone you may well have the impression that you are not in paris, but that you are in athens or lisbon. after all, the french public should feel co-owner of the project of the euro. that is no longer the case. this is very worrying.
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>> do you think european construct have gone too far? what we are wngs now is resistance to the fact that a political project has reached its limits and we have seen this over the last few years, the construction of the euro wasn't an exact sort of -- wasn't xactly what europe needed. >> if the various steps in constructing an integrated europe were to aim at the faction would still be at the 950 declaration. now a lot of mistakes have been made including in the construction of the euro, but the euro is there.
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we haven't had by any means a crisis of the euro. we have had a fiscal and banking crisis in many countries in the euro-zone but the euro is there. very strong. some would say too strong. i wouldn't say that europe has reached the limits of the project, but europe has done too much in certain directions and oo little in others and europe permanently requires monitoring and a rebalancing and there are clearly areas where there is a eficiency of europe. just consider foreign policy and defense policy. there are areas where there is too much of europe coming out of brussels and we should land themselves to unharmful and even positive -- of competences.
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so this is a permanent adjustment and europe is not a state. europe is a flux. >> we'll leave it at that. thank you so much. mario monti, the former italian prime minister. >> let's get you up to speed with bloomberg's top headlines. hollande in the hot seat. battling allegations of an affair. a poll found his popularity rose from a record low after the alleged affair was reported. >> u.s. house and senate lawmakers have agreed to a $1 trillion bipartisan bill to fund the u.s. until the end of september. >> ok. u.k. inflation unexpectedly slowed in december. reaching the bank of england's
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2% target for first time in four years. the housing market is starting to change the game as well. manus cranny has more. >> equities really finding it difficult to get any traction on the upside today. london heading for its biggest loss in four years. the dax breaks trend. they are down for the first time in two days. novotny says growth on this map may indeed be up 2% in germany and austria. no deflation. doing little to give -- to these equity markets as you have a look at the inflation story. we're probably not going to see -- we're at the 2% target. we haven't seen that in quite a few years, since 2009.
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u.s. equity futures will be hinged on three key issues. one is retail sales data. what is u.s. citizen spending? two, what does charles prasser have to stay in quantitative easing and she will shape the debate about momentum for tapering. could it really go at a faster pace? keep your eye on the back story. the back story for me is not much of a decline. it is this. the emerging market currencies are setting up for a bigger play in terms of the impact of cable. where are we now? aussie dollar coming back towards that 90 level. i'll leave you with a look at that. five-year low on dollar-rand.
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>> thank you very much indeed. now the detroit autoshow is underway this week and car makers are rolling out new models. blockbuster brands certainly changing their looks. let's take a look at the five most exciting new cars being unveiled in motor city. ♪
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>> cool cars. which one caught ryan chilcote's eye? et's find out. >> this namely, sergio marchionne. this is the first time we have seen him since he announced the big deal where fiat has taken full control of chrysler. it is first time we have seen him in this new status as emperor. not the emperor. there are a few out there. we have been watching him build this empire for years. now it is about how he makes use of what he controls. one of the things he controls that is excite exciting is the jeep. it is not a brand new car. it has been out a few years. the cherokee. it is doing really well. this year, next year, they think
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they can reach a million. it is one of chrysler's best selling cars and he wants to build on that. have a listen. >> we need to take that number across the world and really find out how far we can take jeep. it is an incredible brand and has an incredible international potential. we need to take it there. that is my first to-do list on my agenda. the second obviously is to bring alfa back. >> the alfa romeo. that is a more transformtive idea. i think this might be a tougher sell. it is going to cost more than $50,000 in the states. he is going invest $12 million in trying to make alfa romeo work. try to make the made in italy kind of idea make sense and sell it in the united states. take the jeep east, the alfa
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romeo west. >> we'll see. >> they are pretty cars. >> very pretty cars. >> they are going to sell them in the maserati dealerships. they are going to have that mystique. it has been a long time since people have seen alfa romeos in the states. >> let's talk about the s.u.v. space. the jeep cherokee, certainly a uccessful story there. they want lamborghini to do the same thing. the urus. >> will it be called the urus, though? >> that is what we're being told. that is the name they are going with now. we are told it is supposed to hit the road in 2017. it just talks about how big s.u.v.'s are now. they make up more than 30% in the u.s. >> this is -- this is going to be an audi. it is going to be a bentley. it is going to be a lamb almost
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a -- a lamb almost a. they are all going to have the same chassis. >> porsche is going to have the same as well. >> they think they will sell in 2017, 2018 perhaps 3,000 cars. this is not a high-volume car. they are going to make the 10 a day and make a killing on that. >> a rambo lambeau. > thanks very much indeed. now in just 20 minute from now, tom keene joins with us a preview. are you a man that likes cars? >> to be honest, i'm a true new yorker. i don't have a driver's license which i know is bordering on criminal. we like cars a lot. we have a busy day here. no question about that. jpmorgan earnings. william cohen will join with us
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his wonderful set of books on a wall street precrisis. we'll talk about the start of earnings season. we have different mergers and acquisitions. charter and time warner at battle. google and next. the government tops them all with a spending bill agreement in washington. his name is p.j. o'rourke. with 16 books out, truly one of the funniest people looking at the american landscape. he will try give us laughter. >> thank you so much. tom keene with "surveillance." coming up, stay at home saturdays. it is unheard of at some banks but credit suisse is telling its
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junior bankers to put their feet up over the weekend. details next. ♪
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>> now bank earning season starts later today with the largest u.s. banks including jpmorgan and wells fargo is reporting 2013. it hasn't been a record year for
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profits. will legal costs take profits? what exactly are we expecting? >> a good year for profitability all around but if compliance and litigation don't even don't get you, i don't know what will. overall, the top six banks paid out on average $18 billion for broken promises, declines for misleading investors. three years of record profits. billion they paid $23 last year. when you look into the numbers, it tells you very clearly what's happening out there. trading revenue down. the last quarter of the year, equity revenue down. but investment banking fees. god bless the fees. they are up. i.p.o.s rocking away. they are having to pay the price for compliance.
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another $2 billion and legal costs expecting to rise. >> manus, when you look at some of the banks, this is a story we have gone through europe. u.b.s. basically want to be asset managers. the same in the u.s. goldman sachs wants to be an asset bank. >> all looking at the wealth management business. you bring in the fees and you do quite nicely. wells fargo also. one in five mortgages are given in the u.s. by wells fargo. mortgage lending and refinancing. go read my twitter account for my opinion on goldman sachs telling bankers to take the weekend off. at manus cranny. you'll see it in three words coming up. really? really. >> i agree, really. >> don't take saturday off.
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stay ahead of the game. >> let's continue the conversation surrounding the bank earning system. are we going to get any surprises? let's find out. charles peabody joins us on phone from new york. good morning to you, charles. are we going to see any surprises top line, bottom line? >> i don't think we're going to see surprises on the bottom line but i think the earnings are going to be disappointing in terms over the quality of those earnings. >> what do you mean exactly by that? where are we going to see disappointment? >> i think revenues are going to be disappointing. there has been hope that we start to see some top line revenue growth and net income revenue growth because there was hope of a pickup in loan demand. we think margin will remain under pressure and there is little sign of loan growth. banks have to rely on expense
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cutting to get to their numbers. >> it is going to be on a spectrum. who'll be at the top of the speck strum and who'll be at the bottom? >> each bank, each major bank has their own unique problems. citigroup is facing problems with their merging market exposure and reliance on fixed income which is going to become weak on the trading front. bank of america has some unique positives in that they have a very strong expense controlled program in place so they can make their numbers by cutting numbers. jpmorgan is probably the most solid of the results. >> when you look at how the evolution of this cycle has happened, though, if you look at the share prices and look at what has taken place on the ground and the reality of the situation, share prices have done very well. you have done very well investing in some of these american banks. would you continue to put fresh
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money to work in an industry you're telling me is not going to do very well? where the pressure is? >> all of these banks were up 30% but underperformed their benchmark. the reason that they were up is because of multiple expansion and that multiple expansion reflected the reparation of the balance sheet. the fact that the balance sheet is fully capitalized and there is excess capital that can be returned. this year werks have now reached the point where you're going to have to show earnings growth in order to have further price appreciation. so we think this year is going to be much more of a trading market and we think we're going to start off on a weak note and they are not going to show the revenue improvement that people are expecting. >> 2014, when you look ahead at what they are going to deliver, are we going to see the same kind of particularly regulatory
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problems that they faced in 2013? 2013 dominated by headlines surrounding the -- has that kind of noise started to abate do you think? >> well, it is shifting. it will shift from the mortgage space tch has been the heart of all the litigation and to the mores o terrick things like currency things like libor fixing or, you know, the sons and daughters of what we call the foreign corruption protection act. it is going shift towards a lot of different variables. on average, i think the litigation costs in 2014 will be lower than 2013 but they will remain elevated. >> when you look at how the u.s. banks are positioned at the moment, where would you put them on that spectrum? the european banks face some of the same challenges you have been laying out. the libor problems being talked about a great deal here in london. if you were to look at where the
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value lies, u.s. banks versus international banks, where would you be looking? >> i think the big disstinks that the european banks are still undercapitalized and they still have to raise capital. u.s. banks are in a position to start returning capital and we think they will announce significant dividend increases and share buybacks in march. i don't follow the european banks closely so i'm hesitant to make a strong statement. my guess is the u.s. banks are going to be marked performers at best and selectly -- selectively underperform. >> thank you so much for the heads up. charles peabody joining us on the phone from new york. francine, back over to you. > we'll head to paris as president hollande is getting ready to give some of the most important comments of his career
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regarding politics and probably his personal life as well. details next. ♪
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>> welcome back. you're watching "the pulse." i want to start off by taking a look at the cable rate, the u.s. pound versus the greenback. now we have a situation with inflation at 2% exactly in line with the bank of england's target. inflation is falling. you don't have higher rates when inflation is falling. housing. do with
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the economy these make sense of what is going on here. take a look at what's happening with the rambo. his is the green back versus he south african rand. turkish lira also under pressure. the focus back on those can significant current account deficits. that story continuing to trend as you can see. >> for a look at what you need to know for the rest of the trading day, let's bring back caroline hyde in paris andette yacht gotkine. >> the first vote that egyptians have had a chance to cast since the ousting of morsi. they are holding the referendum to endoors new constitution.
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ffectively expunges what morsi's government had installed. they want a lot of people to turn out so that it gives them vindication of what they did to morsi. they also hope it will bring stability and should pave the way to presidential and parliamently elections and perhaps lead towards the presidency. there are many concerns as well. that will highlight the division within egyptian society and that more violence could be in the offing. there have been some isolated protests. nothing major, it should be said but it is worth noting that the no campaign was drowned out by private media and people trying to put up no campaign posters. some found themselves in jail as a result of expressing that wish.
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that referendum vote taking place in egypt today and tomorrow. official results on thursday at the earliest. >> thank you so much, elliott. caroline, all eyes on francois hollande. >> exactly right. 4:30 p.m. local time. 3:30, i'll be in paris listening to francois hollande, the president of france, fight for his political life and also be forced to answer questions about his personal life. allegation swirling regarding his affair with julie gayet. questions about what sort of relationship they had after a seven-page exposea. he is fighting for his political life as well. back to you. >> all eyes on that press
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conference later on. caroline hyde in paris. thank you very much indeed. >> that is it for "the pulse". keep it here on bloomberg tv. "surveillance" is up next live from new york. we'll see you tomorrow. ♪
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>> this is "bloomberg surveillance." democrats and republicans agree on a spending bill and the gop relents on obamacare? the policing on the irs.
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jpmorgan reports earnings amid record profits. thefirst snapshot of american banking landscape and retail america reports on critical holiday shopping. the chief executive officers of high fashion will join us. they look forward to 20. good morning, this is "bloomberg surveillance." it is tuesday, january 14. joining me is scarlet fu and cristina alesci. it is all of a sudden busy. >> yesterday was slow but we have a lot to talk about today. in the u.k., in inflation unexpectedly slowed and set -- in december but reached the two percent target for the bank of england in more than four years. in japan, the current account deficit widened to a record in november as imports climbed. here in the u.s., congress unveils a $1.1 trillion measure to fund theov

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