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tv   The Pulse  Bloomberg  January 28, 2014 4:00am-6:01am EST

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>> ukraine's prime minister resigns. he steps down in a bid to and more than two months of violent protest. shaken to the core. iphone, itsle's biggest source of revenue, missed estimates. bad news dragging european tech stocks lower. and a surprise rate hike from india. we will talk to a former central bank governor from argentina about the threat inflation poses to emerging markets. good morning, everybody. you are watching "the pulse."
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we are live from bloomberg's european headquarters in london. i am guy johnson. francine lacqua is off today, back tomorrow. within the last hour, we have learned that the ukraine's prime minister has resigned. he is stepping down to help ring protests the street that have paralyzed the country. let's get the latest from ryan chilcote. emergencyainian session began just a let -- just a little less than an hour ago. we got this surprise offer of resignation from the prime , who says he wants to try to encourage some kind of peace and reconciliation in ukraine. immediately after we got that announcement, the broadcast signal for the ukrainian parliament was cut. many questions remain. for example, will he remain in the job as the acting prime minister?
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if his resignation request is not excepted. what if no one takes the job or agrees to fill in for him? over the weekend, we heard the ukrainian president, that is who many of the protesters would like to see resigned, say that he is prepared to sacrifice his prime minister and he offered the job to one of the opposition leaders. however, the opposition leader declined his offer. interestinge an situation where we have an acting prime minister. in any case, all eyes on parliament, where those discussions are underway. undoubtedly he did while hundreds of people remain out and tens of thousands more people could show up just as soon as they want to. those outction from on the streets to the news of the resignation? is this being greeted as an further talks? >> the protesters have had a
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very large laundry list of complaints and demands. one of them has been the resignation of the prime minister and his government. the primeg to see, if minister does go, will the larger, wider government go as well? they have also demanded the resignation of the president. that is where the power is in ukraine ever since the president change the constitution. and they would like early presidential elections currently scheduled for early 2015, not early enough for most of the protesters. it is too early to say if this will be enough to dissuade any of the protesters from going out on the streets. as we have seen, some of the more militant aspects of them attacking government build -- government buildings and seizing them. >> ryan will stay on top of the story, monitoring what is taking place in the ukraine parliament and he will bring us any developments in that story. let's get to our top stories of the day. apple reported iphone sales missed estimates for what is
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typically the most lucrative period for the company. the disappointment is hitting european tech stocks. jonathan ferro has more. report does a company record sales and the shares drop off? about the outlook as well. look at the iphone sales, came in at 61 million. expecting 65 million. it is all about the outlook. analysts expecting some big things and they come out with the first quarterly decline in revenue since 2003. you can see this reflected in their market share. one billion smartphone shipments, yet apple sees their market share get smaller. >> we have now heard it from of thethe toop end market. it is beginning to suffer. that points towards margin compression. >> yes. and where are we seeing the trend? it is in the low cost phones,
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where apple just do not feature at the moment. on the other side of this, you have the lack of innovation. you have not entered a new product category since 2010. they have not entered a new product category since steve jobs departed this company. at is a big question hanging over this company. where is the innovation coming from? a lot of people are looking for things to happen, but they are not happening right now. >> the fact that r&d is now at levels we last saw prior to them putting the ipad out there. >> this is the little else of optimism. do we get something out of the other side of this? we have been talking about mobile pay. tim cook says this is something that intrigues him. was built with a screen potentially for that. we could see something huge. 400 million registered credit cards on the itunes platform. whether they can leverage that remains to be seen.
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it is something that investors continue to question and you can see that reflected in the stock after hours. we saw a big fall. >> thank you very much. the latest from apple. more earnings from the tech sector this week and we will continue to bring them to you. siemens reporting quarterly results this morning in the first full quarter of the new ceo. hans nichols is in berlin with all of the details. how did he do? how did they do? >> they did all right. these are mixed results. you can see that reflected in the stock. orders are up some nine percent. revenues down three percent. we have gone and sifted through the numbers. the strong euro eating into some of their orders. the infrastructure unit doubled revenue. that is doing better. perhaps the most interesting is the fact that they are delisting from the new york stock exchange. this could be joe kaser's first empowering his
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workers. he is talking about trying to increase shareholders among employees. of course, some five percent of their shares were traded on new york, so it is not a massive shift. it does seem to be bringing the moreny back and have a employee-led focus. as they try to become more profitable, 10% is what they are at this year and the old goal was 12%. it seems like this is an employee-led move and we will he whether it can withstand these other challenges, including a strong euro. it seems like they are on the right path. 12y have delivered 4 of 16, more to deliver and we will try to get a ride on one of those locomotives. >> that sounds like a cool assignment. thank you very much indeed. u.k. gdp figures for 2013 are breaking this hour.
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questions remain about the sustainability of that growth. let's find out more with manus cranny. how solid is this recovery going to be? >> the view that is coming through from the notes i am reading, you will see a bit of volatility in the construction number. industrial production stalled slightly in november. by and large, things are looking ok. this will be the first full year of robust growth post-crisis. they have upgraded the growth of you there. from legalul quote and general group. ande is a natural momentum a self-reinforcing cycle that creates a comeback. me, francine lacqua, everyone in this newsroom, do you feel more confident about investing, about spending?
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if that feel-good factor of our wages at least keep pace, we may talk about a reasonably-sustained recovery. the question for hammer and osborne, is it be on the year 2025? is it outwardly growing momentum? that is the critical point in this argument. >> mark carney, we will find out from his point of view how he sees things north of the border. this is talking about where we see the right cycle going -- the rate cycle going. carney has made it clear that rates will remain low for some time. if you look at the inflation numbers, he might have a point. ofhis project at the bank england, there is the iconic image of the very first meeting, the very first days work of mark carney at the bank of england last year. as you say, he is trying to push this subject between unemployment, which was a knockout for him, and beginning
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to look at rates again. three big calls, have a look at this. citi says that the job growth is rich and they go for a rate hike in the fourth quarter of this year. they are putting that back to the second quarter of 2015. paribas, let's have a look at the three big names. they are calling it the end of the affair. about gradualng tightening in 2015. they do not see the momentum for the tightening this year. of course, sterling is on a tear. could impact the overall trajectory of the export story in the united kingdom. back to you. >> thank you very much indeed. market putting out a note that the pmi reports are pointing to broad-based recovery in the u.k. thank you very much indeed. what else is on our radar? rbs is on track for its biggest pretax loss since 2008.
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the largest government-owned lender set aside 3.5 billion pounds more for legal compensation claims. the bank says much of the andisions are for lawsuits the sale of mortgage-backed securities. in talks with several states to build advanced manufacturing facilities. foxconn is the maker of apple's iphones and is planning to set up factories closer. from surprise rate hike the bank of india. it raised its benchmark rate. economistsof 45 surveyed were predicting an increase. talking of governors, we are about to talk to a former central bank governor of argentina about the threat inflation now poses to the emerging markets. he joins us next. ♪
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>> good morning, everybody. welcome back. you are watching "the pulse." economy is not the only emerging-market economy with an inflation problem. argentina, the price of goods is shooting up after the government let the peso plunged. joins us now, a man
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with some experience of this situation, the former governor of argentina central bank. good morning to you. >> good morning. >> let's start with argentina and we will broaden our way out. your thoughts on the policy shift that we have seen over the last few days from the government, are they missing something? have inflatione increasingly embedded into the economy. have done the easy bit, devaluing the currency, and the hard part is dealing with the implications of that. >> i think it has tipped in the right direction. comprehensiveis a and creative program that will affect inflation, reduce the panic that has been created in
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the market, that will create that they are willing to tackle the problem. it could be counterproductive if they do not come together with a comprehensive program to tackle the deficit, the monetization, you need higher interest rates. comprehensive and understandable to the public. the political situation is incredibly difficult in the country. are those who are controlling the levers of power capable of making that next step? is, the question is how the political environment will develop. are willing to pay a price for civilization. there is no free lunch. you need to stabilize the price
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and reduce inflation, reduce the deficit. you have to make good decisions. i do not see the government taking these. >> how much time do they have? >> they have reserves. >> they are being squeezed. time the cousin it is the summer there. there is time to put this thing together. but not too much time. because anytime there could be a run on the currency. i do not think there would be a run on the banks, but a run on the currency. let's broaden out and talk about other emerging markets. you'd have just come back from davos and your sense is that the elite had a grip on what was happening here.
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how serious are threats to some of these emerging markets? , but i thinkreat it is modified a little bit. something, it is not that suddenly there is capital outflow from emerging markets. from whenrrection liquidity was so plenty in the world. cleaner. like a vacuum the vacuum cleaner was functioning on the other side. resourcesity and the without this, all types of emerging markets were absorbing huge amount of liquidity from the rest of the world. now it is being reversed. if the right policies are put in policylike interest-rate
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and some constraint on fiscal expenditure, that is the next thing that the emerging markets will cope with. has already put through a series of rate hikes with more to come. turkey, a central bank meeting tonight. i bet we will see fairly aggressive rate hikes coming through. >> india, because of this policy , has avoided part of this problem. plungedency has not like other countries. these problems are being composed also by the fact that there are political issues in emerging markets like ukraine. if the right policies are put in place, the emerging markets can cope with it well. >> you mentioned raising rates. what else needs to be done? definitely raising rates is important and it is
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taking place. the currencies will appreciate from the inflow. avoiding creating too much domestic liquidity, this is part of the package. particularly the large emerging markets that are working in that direction and putting these policies in place. i would not worry so much. more sensible are and sensitive. >> who is the most at risk? >> the payment imbalances, the account deficits. >> so turkey -- >> they need the capital inflow. to finance it. , emerging markets have suffered from this crisis in the sense that you have to discriminate more now.
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emerging markets are not the same as they were before. >> we are going to leave it there. it has been great to see you. thank you for your time. blejer, the former argentinian central bank governor. coming up, we will look at the radical design that is gathering the most buzz right now. will they make it onto the production line? and president obama will deliver his state of the union tonight. we will bring it to you live here on bloomberg television. ♪
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>> good morning, everybody. welcome back. you are watching "the pulse." let's find out how markets are trading this morning. manus cranny is trading by. >> the biggest selloff over the in seven months. the cost of protecting yourself is falling today. and the turks had a special meeting this evening in terms of defending their currency. we are seeing a bounce in the emerging market currencies. here is the euro against the turkish lira. what will the turks do? what will the fed do? will he go for another $10 billion in perpetuity over the next six meetings? this is an upward movement for the lira. in terms of our growth level in the united kingdom, cable likes it. of eight out of
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the states today. confidence numbers, futures trading higher. you are going to get durable goods, consumer confidence. there is a traitor out there that is betting $18 million that volatility has topped out. back to you. >> thank you very much indeed. towards thatr way u.k. gdp number out in a few minutes time. housing -- tothe the recovery so far has been the housing market. chiefxt guest is the economist at the royal institution of chartered surveyors. give me the broad-based picture that you guys are seeing. we think about the institution as the housing market. you guys see what is happening in office space, the construction sector, what is the big picture? >> i think the .7 number is about right. the indicators that we are seeing across the sector,
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housing, construction, real estate in general, commercial property, all turning a little bit more positive. this morning, our commercial property survey came out and what we found is that there is increased appetite to take up space across the board. it is not just in certain parts of the country. we are seeing more interest in office space around the u.k. more interest in industrial space around the u.k. area, whichretail has been troubled for a number of years now. >> is this broad-based? >> there are indications that the recovery is broadening out. inevitably, there will be questions about how sustainable a recovery and domestic issues that could curb some of the improvements we are seeing in sentiment that will be driving the hard labor. there are some signs. >> we will be back in a moment with you want that number comes
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down. chief economist at the royal institution of chartered surveyors. the u.k. gdp number is breaking in three minutes time. we will break -- we will bring it to you after this break he -- after this break. ♪ .
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>> welcome back. you're watching "the pulse" live from bloomberg's european headquarters. i'm guy johnson. francine lacqua off today. she will be back tomorrow. a little bit of a slowdown in the construction center is what seems to be driving the g.d.p. let me show you what's happening with the pound dipping on the back of this umber.
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1.6577. maybe this will help out mark carney. we have unwound the bulk of the gains made already on the pound greenback rate. let's get a reaction from sychon rubenson. construction dragging the number from .8 to .7. >> we have had two strong quarters in construction. it could be y of revised back in line with expectations. we have had two strong quarters. they are volatile. the outlook for 2014 our only indicators are sending out a positive message. >> look at the aggregate number. what is it going to look like
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for 2014? >> 4%. housing, 9%, 10 kt. it is not just housing. we're looking at infrastructure. the public sector is going to e lagging. >> inflation is well behaved at the moment. what do you think the right response from the monetary policy authorities? >> we only have to look at the rends. why would you be looking to tighten policy given that the headline inflation number is now around the 2% target and probably heading south of that. one of the things we're noticing is a bit of a shortage of skilled labor.
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it will be interesting twrozz that fits into higher wages. >> if you have nearly double digit growth, that has to lead to punchy wage settlements from the big firms. a lot of laborors left the market. >> i think it will slowly come back. one of the interesting issues is one of the key areas we're seeing shortages in bricklayers. in the last cycle, i think a lot of migration helped to fill that gap with a change in government policy and will it be an impediment? >> your sense that is to feed through yet. >> our indications are overall costs for most constructions companies are under control.
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>> the risk for this rosy picture you're paint arrange what? >> the domestic risks linked to surprises on the inflation side. >> are the bisks downside or upside of that? term, downside. i'm more worried about the global picture. the turmoil in the markets. india raising rates today. uncertainty about turkey. china slowdown. these factors, this global picture presents the biggest risk, both the u.s. and u.k. central banks. >> nice to see you. thank you for stopping by and analyzing the numbers. the chief economist of the royal chartered survavers.
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- surveyors. britain and the rest of europe egaining appetite for ikea furniture. jonathan ferro is an expert at constructing it. let's see how he does with the numbers. >> if you want to pop in profit, then you want more people to move homes. we're seeing mortgage approvals climb back to precrisis highs. ikea has strengthened. that is what we want to see from this company. they have an aim to bring profit up to 50 billion by 2020. revenue last year climbed to the 30 billion level. it looks like they are on target to hit that level pretty soon. >> the u.k. is the epicenter of online retailing. ikea has been incredibly slow
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but the technology story is becoming a bigger part of it. >> it is. when you think of a this company, you have to think of something else. this is a shoming shopping experience. you go into the store, they make you follow the maze to get you to buy things. they are very good at it. look at some of the numbers. 1.3 billion visits to their website. how do they leverage that? what i'm interested in is the products of the future. this company will reflect what your home looks like over the next 10-20 years. some of the product offerings will be interesting. >> thank you very much ip deed. jon ferro on ikea. from outrageous grills to futuristic sunroofs. for a roundup of the models
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generating the most buzz now, matt miller sent us this report. >> edgy lines and radical designs define concept cars. most will never see production. so why build a concept car? to create that all-important buzz. here are five new concept cars ranging from fantasy to near term reality. what you see behind me is an example of what is both amazing about concept cars and the problem with concept cars. this is toyota ft-1. it doesn't even have an engine. toyota execs tell me there are no plans to build this beauty. fcev. a honda although they will make a vehicle for the u.s., this has
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opaque. ely o paying some concepts like this audi are made to display a certain aspect of the future car. in this case, the display is on ther into area. there is no center stack here and all of the gauges will be in display right in front driver keep his eyes on the road while he is operating his vehicle. this is nissan sports sedan concept. it is a rolling concept meaning there is a working power train inside. it does have a rolling roof that makes the interior feel roomier and a lot of people
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feel the design really striking. some people say this could be the next nissan maxima. it could actually see roduction. so on concept cars that will never be made and almost in production, this one falls at the lucky end of consumers. if you want a long could be, 450 horsepower and more than -- of torque, the mercedes k coup is about to become realization. they are only going to change little things like these mirrors. >> cool cars. fantastic cars. they need to make a few of those cars. some of them are amazing. that toyota looks fantastic. let's head towards break. what have we got coming up for you? not your average sweeper.
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we'll look at a kitchen paying staff to stay away from the office. as we head into break. a man in new zealand fought off a shark with the a knife and stitch up the wounds himself when he made it back to shore. he is a doctor. before heading to hospital, he swung by the pub for a nice, cold beer. priorities straight. shark lost out on that one. we'll be back in a moment. ♪
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>> good morning, everybody. welcome back. italian consumer confidence figures came out. the economy faces an uphill truggle. our next guest is the great grandson of the man who created the signature design brand. the international sales and development director. good morning to you. there are plenty designed to help companies such as yourselves when you have too many laborors. why did you decide to take that route? >> because we simply don't
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agree that system that is in place for italy for the temporary layoffs basically tells people to stay home and to get paid anyway so it is not really stimulating for them. what we decided to do since we were in a lucky position from a financial point of view, was to keep paying them the full salary and instead of asking them to stay home and just don't do anything, do something or the local area. because of cuts in the budget, we don't have the money to perform all the normal work they would have performed otherwise. >> how did the workers respond to this? i'm curious. >> in the beginning they were surprised because it is very strange. it never happened before in italy, but the reaction was very, very positive. we have an 87% par tissfigse this project. my father often jokes he never
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had an idea that had 87% of consensus within the company. >> any other companies in italy decide to follow suit to your knowledge? >> we did receive a lot of positive feedback from other companies. it is something that has generated a lot of interest. the problem is that usually when you a problem with overcapacity like we were having, it usually goes together with a problem in sales and therefore in the financial position to have company. so i guess that for a lot of other companies, it is very difficult. while we were as i said before, in the position to be able to afford paying the full salary to our employees without having them work for the company but actually working for the municipality. this is not something that is easy to replicate. >> clearly italy has unemployment problems. the official number is north of
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12%. real number is probably significantly higher than that. mr. renzi came out with some ideas a week or so ago to try to alleviate the situation. to try to get money flowing back in and reregulate the labor markets. what did you make to have efforts? what do you make of the efforts the politicians are making now? >> well, there are definitely plenty of things that need to be done. i'm pretty sure that the most important ones are very clear to everybody. is stimulating growth of the company, finding a way to reduce what is called the wedge between what the company pays, what is the cost for every employee for company and what oes the employee actually get? these are the two biggest issues. all the measures that go towards a resolution of these issues are sprorpt. i honestly have to say --
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important. , honestly have to say my work all of my attention goes to this. following politics now day in italy is difficult. they change their ideas in the plant every other day. i would rather wait for the plan to be approved. >> fine. that is fair enough. nevertheless, if you were to make suggestions, what would they be? you say the clear things that need to happen are fairly obvious. what would you as a guy whose family runs one of the most clearly recognized companies out of italy, what would you want to see? >> i think the most important thing really is to find a way to create a more flexible contract. so the company is finding it slightly easier to employee. second, reduce the wedge
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between what is the cost of an employee for the company and what the employee actually earns. we had an issue last year. we were trying to hire a manager from hong kong and in order to pay him the same as he was paid in hong kong, it would have cost us almost three times as much as the cost of the company. which was working before. this of course creates an imbalance in the ability of italian companies to be competitive on the work market. these are the two main things that should be resolved as quickly as possible. >> thank you very much indeed for the time. matteo alessi. let's talk about some of the other company news we need to tell you about. stmicro has talleyed more than
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$1.6 billion in losses over the past two years. a staggering number. phillips reported profits that beat estimates. philips is . changing as company. they are becoming a solution company. that will eventually help us to get to higher growth. it is just that the year will start in a very modest way given the uncertainties of the world. >> that is the c.e.o. finally, the u.s. is allowing tech giants such as apple and google to disclose more information about government orders. companies are allowed to say how many accounts for studied and whether the contents of user communication was sought. coming up, the latest breakfastthrough in renewable
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tech. we'll speak the c.e.o. of oxford will join us. president obama will deliver his state of the unionard this evening. we'll bring it to you live here on bloomberg television. ♪
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>> welcome back. good morning, everybody. you are watching "the pulse." today's innovation in renewable
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power. they can ulates generate enough electricity in one day to power all of the ipads. how complicated is this technology? what are we talking about? >> it is nanotechnology. in detail, it is complex but in application, it is simple. it is something we coat on to architectural glass. >> you a piece of it here. that looks like a regular piece of glass. your tech is sandwiched in the middle of two glass panels. >> one we coat with very regular coating process. then we seal it with another sheet of glass to protect it. >> how efficient is this? >> we have had cells in the lab over 16% efficient. that compares with silicone.
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a low cost and efficient process. >> this is mainly for commercial. the bigger usage would be the a d of buildings we see -- lot of glass there. receiver bathed in sunshine. it is a perfect application. we're looking commercial buildings rather than residential because it is a surface thing. with large buildings like that, it is a great place for us. > that is east-facing. most buildings work better on the south side and on the west side. is there a sort of -- do you do the whole building? just two sides? how does it work? >> you can do all of them. it doesn't need direct light to
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make it generate electricity. it is great. you can go the whole of the building but clearly the south and west will generate the most energy. you need to make an economic decision on what flanks -- the geographic location. >> tell me what the next years going to bring to your business? i was reading a report talking about the number of skyscrapers that could be going up in london alone. what are the opportunities? where are you now? where do you hope to be? >> we're in scale-up now. it is going very well. the market is enormous. at the top of my head, i think the total glass that goes into buildings like this is in the.9 billion square meters a year. we have an enormous market to go at. you can see the market out the window. you know exactly what we're targeting. for us, it is about scaling
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thing to up. >> in terms of the construction industry, what has it been? >> good response all the way through the value chain. rchitects love the idea. we're talking to three of the biggest and they are all very, very keen on the technology. >> we wish you the greatest of success. he c.e.o. of oxford. coming up, the second hour of "the pulse" is coming up. anna edwards is joining me. > is apple losing steam? we'll move on to home technology trends. you'll want to pay attention to ikea. their numbers were out. we'll ask about some of the
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consumer technology trends that could be coming to your home over the next few decades. we might mention the internet if we have time. stay with us. the second hour of "the pulse" is coming up. ♪
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>> ukraine's prime minister offers to resign. nicholas azarov says he will step down. >> shaken to the core. sales of apple's iphone missed estimates. that news dragging european tech stocks lower. >> ike yooia seeing a profit gain. are they tuned into homes of the future? we'll show you how tech could nose with home design.
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asia and a warm welcome to those just waking up in the united states. i'm guy johnson. >> i'm anna edwards. francine is off today. this is "the pulse." >> let's start with the ukraine where the prime minister said he would resign. prime minister as rove said he could step down to help bring an end to street violence. >> the ukrainian prime minister has offered to resign. the president has not accepted his resignation request just yet. -- his offer is accepted by the president, he would remain acting prime minister until someone agrees to accept the job. he said he is doing this as an
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olive fwrooverage the on decision to quell the protests. the opposition or at least two opposition leaders said they don't want that job. so it is entirely possible that as prime him minister for sometime. they have been in recess at the parliament. they are supposed to come back in. he says i'm prepared to share power. why don't you accept it? >> to what extent is he prepared to share power? power is quite concentrated in the you can rain in the president's hand. >> the leaders are in the head of the parliament's office now. i suspect that is exact question they are asking. as you pointed out, they changed the constitution to make it a presidential republic. the president has almost all of the power. if they were to accept the prime minister's post, they will want to know what is he prepared to do to change the
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job distribution for that prime minute steers job. in any case, really what people want is for the president himself to resign. there is no sign of that. the elections as set now would happen in 2012. the two other -- 2015. the two other objectives is an emergency parliamentary session. many people are arguing the ukraine could be on the brink of civil war in the coming future and the anti-protest laws sparked the most recent round of violent protests that we have seen recently. amnesty for those arrested over the last couple of weeks. no word on those objectives just yet. >> meanwhile the protests continue? > they continue. there is more than half of the
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region eal government's headquarters occupied by protesters. one of the things that the ukrainian president said is if he is going to this amnesty and annul the law, then those protesters have to free those buildings and they have to stop that round the clock protest on the mighty dime. remember, the opposition leaders have control over the protesters so that is a very important if or condition to breaking the impass in the ukraine. >> thank you. let's turn our attention to the top story. apple missed iphone sales. tech strocks taking a hit on the back of this news. jonathan ferro has more. how often do you hear a company delivering record iphone sales and turning around and saying their stock is down extended
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hours around 8%. even with the china mobile tieup that a lot of analysts were pinning hopes on for an increase in revenue, they could deliver the first revenue decline since 2003. if you look at some of the data, if they are looking at the smart phone market, 1 billion smart phones delivered last year. consumers want cheaper fopes and cheap r smart phones and they want big screens and apple in that space, they just don't feature. >> do they want new products? you have been making the point, the no, ma'am years it is since this company started or joined a new product category? >> yeah. they have not entered a new product category since 2010. i've been talking all morning about them not launching a new category since steve was with
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the company. that is the thread, the lack of innovation. a lot of people want them to come up with a new product. a bump-up in research and development spending. that is promising. it depends on what comes out on the other side of that that is key, though. if they leverage those 400 million credit card details attached to that i tunes account then they could make a big push into the digital space. tim cook said the touch screen is there precisely because of that but it is what comes out the other end that is going to be really interesting. >> still, watch this space. indeed. ks very much foxconn is of looking to build manufacturing plants in the united states.
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caroline hyde joins us. this is a fascinating story. so many names given to a particular trend of businesses going to a developed market. we're talking about businesses returning to the emerging markets. decide wlg the manufacturer in a developed market setting. >> it is going closer to its client. that is going to be half of the reason. they are looking at the united states. in fact, they are looking at six states are clamoring for foxcon to come to them. the likes of arizona and colorado. they want them to start building plants. that means more jobs and more money going to the state. why on earth would you leave an area where you have cheap labor costs to go where there is higher labor costs? in china, they are having a bit
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of a labor shortage when it omes to engineering. labor costs are not as low as they used to be wages are going higher in china. they are looking to the talent pool that the united states can provide. they work for the likes of many company. they work for microsoft. they build tablets for microsoft and amazon and provide p.c.'s for dell and hewlett packard. fox conn wants its on clients to be closer. the likesor corning. >> the glass maker. is it going to say made in? >> that is the question. it is going to be the highly skilled area. you're not going to suddenly see the imp phone -- the labor intensive bit is not going to
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come to the united states. that is going to stay in the cheaper part of the world, in china. what is coming is the more high-end area of it, the parts you make, the skills and knowledge, the development, lready in fact foxcon group is investing $30 million to high-end technology manufacturing facilities. 5000 jobs they are creating in pennsylvania. it is about connectors and engineering operations. ighly skilled parts. robotics, advanced manufacturing. $10 billion invested there. 3 no wonder six states are clamoring. you wonder how much this is a part of it. how much that is fox con specific story.
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>> what have we got coming up for you? >> the british economy expanded 0.7% in the fourth quarter. that makes it the best year since twen. there was growth every sector except construction. >> venture capitalists from perkins told bloomberg he doesn't regret the message he attempted to convey in his letter to the "wall street journal." apologized for using a word in the message. the message any time the majority starts to demonize a minority no matter what it is it is wrong and dangerous and no good ever comes from it.
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>> he made comments in an exclusive interview with bloomberg. do, ll ahead, am results the prospects look just as bleak for other tech giants? we'll talk to two experts next. ♪
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>> good morning, everybody. welcome back. you're watching "the pulse." a quick look at the currency markets. the british pound trading at session lows. a significant drop that we have seen over the last half-hour. you did see a drop following the .7 read on the g.d.p. number which came in line with expectations. we then retraced that loss and since then have nudged lower as well. still in the range that analysts are comfortable with at the moment. nevertheless, watch out for the inflation data. you saw the indian central bank today raising rates higher. inflation is something of an issue. that is going to be a theme that i suspect we're going to see running through many emerging markets over the next few days and weeks.
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the pressure seems to be to raise rates. from foreign exchange to technology, apple's -- seems to be hitting a sales ceiling. they posted holiday sales that trailed estimates. that is usually the most lucrative period of the year for the company. is apple losing its steam and what about the rest of the tech sector? what do we need to know about that? let's bring in a couple of guests. good morning to you, gentlemen. first of all, big drop in the stock. in apple. over night. the reason for that is the guidance moving forward from here and due to the fact that there was an expectation that they would take market share from the likes of samsung. >> it has been a worry for a long time. smart phone sales that are increasing are at the lower end of the market and apple is a
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player at the top end of the market. -- unaware ught urn by it. >> innovation is something all tech companies need to continue o do. some say apple is not ino vating. is it going to be a hardware innovation or a software innovation? >> we have been waiting for the last two years for apple to release a new project. every phone has been an it ration of the previous successor. we thought it might be a watch or television. we don't know if it is going to be software. they never talk about it at earnings time. we'll have to wait and see. we don't know what these guys are building. >> in mobile make or breaks.
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facebook, some said it was going to make the progression to mobile. t has done successfully. >> everybody is expecting pretty good numbers from facebook. business reaccelerated in the middle of last year on the back of their mobile advertising business. that seems to be doing very well, despite the spat with princeton over the rumored demise of facebook which some princeton analysts have suggested that facebook might ome to an end in 2017. but actually their advertising business seems to be powering ahead very strongly so we're expecting very strong results from them. >> strategies from a series of tech companies at the moment. google investing heavily in a.i. and engineering and robotics. facebook is reengineering
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itself over the last 18 months. apple, you look at it versus android. when you look at the landscape and try and understand the trends that we can get from that, not just hardware but software, what are we seeing at the moment? where is the space going and what do we need to latch on to? >> we're going into conversion device scenario. one device is controlling things in the house and the house is more intelligent. nobody has seemed to figure it out. the one that is most aggressive about the strategy now is google. what they are focused on is the advertising side. they are going to launch video advertising. they are focused on a business rather than a technology company. >> how do social media deal with that? is it going to play a part in this connected internet of things? >> i think now it is all about
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mobile. everything is about mobile. all the growth in devices and advertising and commerce and internet con semmings. he growth is being driven by mobile devices. that has while to run. google is investing in that which makes devices for controlling your room temperature. hings like that. >> when you look at how that is happening, is it becoming much more mass media? the high-end phones are slowing down? is that good news for social media companies? as you get the basics expanding, that means the base is expanding for social media companies as well? >> yes. advertising is a mass market scale game. the bigger the market, the more
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revenue they can generate. >> can i read anything into the apple numbers last night that would tell me maybe the dominance that i.o.s. had is starting to ebb away? >> it is windows versus mac all over again except on a much smaller pace. the low end of the market, the commodity driven devices are going to drive all the growth. the mac will become an increasingly premium product. there is still a gap between android and i.o.s. i.o.s. is easier to use. >> the question actually -- does apple want to get into the low end of the market? >> we thought they would. with the 5 c and it wasn't a very good product. >> it probably should have been
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$100 cheaper. >> the beauty of apple is its margin. it makes so much money on every device. >> the margin is deteriorating. their margins went from 38.6% to 36.9%. they are selling more and more things for less and less money. that will continue the happen ith the company. >> do we understand the princeton point, do we understand the life cycle of companies better than we did three or four years ago? >> just to explain what princeton did was to model facebook's evolution. myspace pretty much died out years ago. which is kind of akin to model google search. it is a ridiculous comparison. social media applications do seem to have a different
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lifespan. facebook is at a different part of its evolution. >> we're moving into -- things are moving in the next year. movinging into the internet and saying the game is changing again. do we start again? is it just press the reset button? control, alt, delete? >> it comes down to a low decline. that is what ends up happening for all of these companies. the question is timing the good and the bad. anna, over to you. >> i'll tell you what's coming up on the program. a profit gain for the world's biggest furniture retailer. is ikea tuned into the future of home telling? from a fridge that warns you're out of noil self-cleaning surfaces. and a reminder u.s. president
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barack obama will deliver his state of the union address tonight. that is at 9:00 p.m., 2:00 a.m. if you're up that early here in london. ♪
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>> welcome back to "the pulse." time for three stocks that are moving in the markets. never mind the americans, the
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canadians are coming. keep an eye on f & c. moving along. advertising. an upgrade. saying 2014 will be a strong year for the ad market reflected in the stock move and when it comes to software, there is another competitive threat. software a.g. up 7%. they are on the acquisition trail. that is what the c.e.o. said. they are on the march for more business in the states. back to you, guy. >> thank you very much indeed. manus cranny. as we head to break, let's get some numbers. 2.3 million pounds. that's how much queen elizabeth's household
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overspent. they have just one million pounds in reserve. the queen has not been served well by her household managers and the treasury. we'll take a break and see you in a moment. ♪
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>> good morning, everybody. welcome back. you're watching "the pulse." live from bloomberg's european headquarters here in london. i'm guy johnson. >> i'm anna edwards. here are bloomberg's top headlines. e british economy expanded 1.7% in the fourth quarter. there was growth in every sector except construction. the strength of the economy is forcing the bank of england officials to reconsider their forward guidance plan. ukraine's prime minister offers his resignation to bring about an end to more than two months
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of protests. as rove said the conflict is threatening the country's commercial and economic evelopments. there is a bird ban after a bird tested positive for flu. >> did you ever hear of charlie they see 24-year-old vice chairman of the bitcoin foundation. he is also known as the bitcoin millionaire and he is in a bid for trouble. sorry about that. let's bring in hans nichols. berlin on now from this story. are ar he was arrested when he landed at j.f.k.. he was coming from amsterdam. the general takeaway from the indictment against him, don't use bitcoin, don't be an
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evangelist from bitcoin while brownies. buy pot he has denied through his lawyers any wrongdoing. he is out on $1 million bail. he is an evangelist for bitcoin. he did have some backing from some high profile also evangelists for bitcoin. they released a statement trying to distance themselves from this particular enterprise. they said we were passive investors in bit instant and we will do everything we can to help law enforcement officials. we fully support any and all government efforts to make sure retirements dering are enforced. how do they escape being a
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crypto currency that is used for illegal processes? it makes it a little bit harder. prosecutors are cracking down on silk road as well. they made a couple of high profile arrests there. this is the biggest high profile arrest we had on the bitcoin side of things. we'll see to what extent prosecutors try to tame this crypto currency in ways that regulators so far haven't mustered the will to do so. >> it said on the graphic a moment ago that the twins invested over $1 million. how much did they actually invest? what is the number they put into this business? do we know? >> i think it is $1.5 million into bit instant. as they said, they are passive investors. >> yeah, still going to hurt a little bit if they don't get that money back.
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we'll leave through it. thank you very much indeed. hans nichols joining us from berlin on the latest from the bitcoin story. >> let's take a look at margarets and manus cranny is at the touch screen. >> we're seeing a little bit of reprieve in these markets. question of play is this. are the taper tantrums done? is the emerging market over? nobody can call that in a space of 24 hours. federal reserve meets today and tomorrow. we'll talk more about the changing in the fed tomorrow. london is up for the first time in six days. you have overall europe, the three-day selloff that we have just seen was the biggest route in seven months. now, we're going to take it to the afternoon session because as i said, the fed is meeting and that announcement will come tomorrow night. futures are at the moment
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indicated a nice, strong -- in there. there is a cracking piece that there is a trader who has take an view on volatile fifment that trader has taken the view that volatility is over or probably will be over in february. $18 million bet that it is going to fall from where it currently stands at the moment. durable good today. consumer confidence today. that is going to play out as far as the equity markets are concerned. the great debate is where are we with emerging markets? by the way, we had that g.d.p. number that i was banging on all day. it came in pretty much as the market estimated. we're above that level. 2 1/2-year high. we're putting in a base level. the turks are going to get together, the central bank, that is, and they are going to
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have a discussion about defending themselves. they are going into their emergency central bank meeting tonight and if it is anything to go by, the indian rupee is bouncing and the dollar is declining. the rupee is rising. the india saying we're going to raise our rates. the fundamental question is how much reserve f.x. exchange reserves do these central banks have? go back and read morgan stanley's notes. they don't have a lot. >> in 20 minutes, it is "surveillance" with tom keene. he joins us from new york with a preview. what are you looking at? i know the state of the union address is going to be the focus for you. >> valerie jarrett will join us. she is from chicago. one of the president's original supporters. the phrase i like best here is we go into year six of the obama administration. it is bread and butter.
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the president will get back to bread and butter basic economic issues. they are lowering expectations. no grand vision. a delicate view forward into 2014. of course bloomberg television will cover that. 9:00 p.m. eastern standard time this evening. we'll look at the markets as well. tony dwyer will join us. tezz a bull. -- he is a bull. he wants a correction. he thinks they are normal and healthy. we'll talk to him about how the emerging markets link him to recent setbacks and the u.s. market as well. a lot of stuff going on as well including super bowl ads. this is a huge deal in america. this year a different twist, making the ad extend out. doon yogurt, you know them from france, they will be doing a super bowl extravaganza. what i can tell you is it is
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really cold here. this temperature will be difficult. >> yeah. the idea of bringing together the super bowl and yogurt, yeah. >> the super bowl and yogurt. >> it is a -- >> a giant serving of yogurt. i think you should keep yogurt away from the super bowl in a literal sense. the state of the union, 2:00 a.m. if you're up that late. i am up but i can't speak for the rest of you. >> early for anna. late for some. coming up, ikea posted record profits. what does the future look like for the number one furniture maker? that is next here on "the pulse". ♪
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>> good morning, everybody. welcome back. you are watching "the pulse" live from london here on bloomberg television. now the world's biggest furniture retailer reported a bump in profits today. europe is regaining its an tate for flat, packed furniture. jonathan ferro has assembled ikea furniture in the past. he tells me he is not very good at it. >> there comes a certain understanding of the methodology. >> it is frustrating. >> but gaining traction again, this company. >> let's be clear about it. it is the biggest home
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improvement company on the planet. in the u.k., you're seeing a pickup in mortgage approvals. back to precrisis highs. you're seeing a pop in profit as well. >> early on we were talking about google and its investment in next and the sort of the internet, the homes. samsung making a huge leap into this space as well. this is ikea's home territory. >> what they are known for is the ike onic shopping experience on the shop floor. they get 1.3 billion visitors on their website a year. we get a continued improvement with technology you can load your flat pack -- it could be one way they are doing it.
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you have seen the numbers today. 2.5 billion euros they are investing in stores and factories. the future for them is still in the store. they want it on the high street and they want it online as well. ikea has a fantastic online presence. >> you were talking earlier on about apple. you scale that up when you come to ikea. >> you want to threaverpblg over the next decade or so -- leverage that over the next decade or so. >> going to be fun. probably quite complicated. that allen key you to have to assemble everything they make. >> iconic shopping experience. is that how jon described ikea? that is one way of putting it. let's look to the road ahead for ikea and other home furnishing retailers.
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3-d printing is the future. let's welcome our guest who focuses on brand strategy and research. their clients include b.m.w. and mrks & spencer. is ikea going to be at the front of this or are we looking elsewhere? >> one hopes that ikea will stay on the wave of this switch. as we discovered at the consumer electronics show. it is geared to whattologists are calling the third industrial revolution. that is 3-d printing in the home. >> is that the person that prints the food in the kitchen? how far can that idea go? >> i think there is no limit to how far it can go. people can print wood filament, you can print plastics. you can print almost any kind of material. when you think what that could
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mean for ikea, in terms of cutting down on shipping and adding greater levels of personalizeation to products, i think it is really fascinating. >> it is interesting to think about 3 d transforming, the process of getting the furniture to you. not so much my cooking. what about self-cleaning surfaces? remote controlled cookers? these things. how far off? >> the u.s. president of samsung actually branded 2014 -- s a year of the internet when we start seeing things like smart cookers and smart blernsd taking over the home. it is really fascinating. >> there could be no limit to the number of technology items we could connect to the internet. is there a number of that werked connect to -- we should
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connect to the internet? >> in 20 years, it is going to be difficult to buy an item, whether that is a shoe or a shirt, which is actually not going to be connected to the internet, which is kind of an odd feeling. >> there was a lot of conversation, i know, toothbrushes that will monitor how you're brushing you teeth and feed that information back to your dentist. what kind of information is a shoe going to store? >> there is a common link no all of these things that allow us to be active rather than passive. talk about the toothbrush. you would not go to the dentist when your tooth is not hurting but from the data from that toothbrush you would know when your tooth is going to start hurting in a fortnight. the same thing, i suppose when you have a problem with your ankle, that kind of data that is
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analyzed and harvested is going to make you live in a slightly more reactive bay. >> who is going to be at the forefront of pushing all of these advances? bringing parts of our lives that we didn't know needed technology? is it the technology companies pushing for this or fast-moving consumer good companies pushing for it? where is the push coming from? we were calling it the rise of the megasystems. governmental brands which have their fingers in a lot of pies so to speak. you have google. samsung. cisco. what is interesting is with the link back to ikea, if you think about google, they started off as a quirky search engine which had a funny name. ikea started off as flat-packed furniture. google is looking to drive cars with artificial tension. it is not hard to -- artificial
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ntelligence. ikea, almost kind of mimicking that in a way that they are looking at town planning and hotels. it is not too far out launching publishing or a restaurant. >> they already sell a lot ofad. just how far has the president come? e take a look at the human faces on his past proposal and we'll bring you his speech live on bloomberg television. ♪
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>> good morning, everybody. welcome back. you're watching "the pulse." let's talk about the currency markets. first of all, we have seen a g.d.p. raise for the british economy. .7 for the quarter. pretty much in line with expectations. since then, the pound has given way to the dollar. trading at 1.6552. the big surprise came from india. the rate rise very few saw coming from the india central bank as it tries to fight inflation. later on today we get an emergency meeting of the turkish central bank. speculation growing that we could see a rate hike from the if you recollects as well. -- -- from the turks as well. >> president obama has
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criss-crossed the united states talking with regular people. if he were to look back at some of the people he has highlighted he would see some mixed results. >> six months after president obama signed the affordable care act -- he stopped at paul's home to talk about one new provision that would help him. paul is a hemophiliac and his bills could reach $1 million a year, which was the cap for some ininsurers. >> paul mentioned the issue of lifetime limits. that is not going to be the rule anymore. >> today paul jokes about being the poster child but says he was happy to help. >> that's when i started thinking i was a prop. i'm disclosing my medical condition publicly and it made me feel kft that it was the right thing to do for the gaps that the law was going to cover. >> he is worried that he might have to rely on obama care if
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he loses his job. there are still a lot of unknowns. >> he is concerned he may not be able to see the same specialist or get the medications he has been taking. >> a lot of the providers may not carry them because they are expensive. >> let's look at the housing record. nevada led the nation in foreclosures. that brought the president to the kellers home in 2012. they were underwater. harp helped them save $3,000 a year. that savings kept them in their home and their house is now worth what they originally paid. the president has not gotten congress to exand if program to help more underwater families. what about his jobs record? 2009, he paid a visit to the unemployment capital of the .s., elkhart, indiana.
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a man laid off as a coach just a few months before, introduced the president. >> there are too many people in our community whose way of life is at risk. >> the unemployment rate has dropped from 20% to 7.6% in november. at 67, ed found work too. every morning he leaves his house at 4:00 a.m. driving his pickup truck to the local grocery store to stock shelves and from there he is off to another job at a local bakery. he ends the day at 8:00 p.m. he said even though the glory days are a thing of the past, he feels fortunate. >> lemb ask how are you doing? they will laugh at me because i said i'm living the dream. five years ago i couldn't find job and now i have three. >> president obama said his state of the union speech will focus on income equal tay.
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- -- equality. >> let's continue the have our conversation on this state of the union. our international correspondent hans nichols has covered several white house administrations. what do you expect from the state of the union and ryan chilcote watching the events in the ukraine. hans, let's start with you. >> state of the unions are full of theater. they have some substance but very little followthrough. this is the chance for president obama to set the agenda. all presidents use props. it is interesting to go back and see where they are now and take their temperature on what the president's policies have done but in many ways president obama has been challenged by difficult economic circumstances and opposition opposed to him. those dynamics have not changed but the economy is a little bit
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better. tonight we'll look to see how frequently republicans sit on their hands. that will give you an indication how successful the president's agenda will be in the next year. >> that is one thing we're watching with hans. you're watching the ukraine. that is ongoing. >> in three hours from now, they are going to be discussing amnesty for the protesters who have been arrested over the last come of weeks. the anti-protest laws were annulened and also we had earlier in the president offering to resign. >> that's it. "surveillance" is coming up next live from new york continuing coverage of the state of the union speech with tom keene and his team. ♪
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the president space to the nation and the economy improves and is a beleaguered white house searching for traction? the markets are steady. the link to your 401(k) in the markets may be clear. and tom perkins writes a letter of apology to the anti- defamation league in an exclusive interview he tells "bloomberg west," his wording was awful.
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we are live from our world headquarters in new york on this tuesday, january 28. joining me as always, scarlet fu and olivia sterns. it is wonderful to have you here. what do we have today? reported the u.k., it of oneanded at 7/10 had growth in every sector except construction. they calculate it differently. year-over-year 2.8% and that was the surprise of 2013. >>

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