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tv   The Pulse  Bloomberg  January 29, 2014 4:00am-6:01am EST

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>> turkey stuns investors with a huge rate hike. the move drives up the lira. other emerging market currencies and even stocks here in europe. 99%,president for the barack obama calls for a higher minimum wage taking aim at income inequality in the states. chrysler.for fiat they are set to announce a new name and they plan to set up a base outside italy. good morning. welcome. you are watching "the pulse"
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live from bloomberg's european headquarters. i am guy johnson. >> i am francine lacqua. i have missed you, guy. coming up, more money, more problems. you would think a private jet would make it easy to get around . we look at an issue that even billionaires can't avoid. >> it is going to be hard. we have a big interview this morning. coming up later today. deutsche bank's co-ceo anshu jain is going to speak to bloomberg before anyone else. we will bring you that conversation in just a couple of hours. >> the banks surprised investors last week with an unexpected loss and an early earnings report today. executives are meeting in frankfurt to discuss the results. they are just setting up now. hans nichols is speaking to the co-ceo first today. i am excited about the interview. >> certainly. they are taking pictures as we speak. we will go to that press conference and as this evolves,
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jain at the center of the picture, we will bring you their comments on that institution. >> let's start with turkey. the central bank hiked rates in an emergency late-night meeting. that has the lira jumping against the dollar. >> let's get jonathan ferro's take on all that we have learned. it was a big move. we were expecting something. really size of the move taking everybody by surprise. >> look. if you call an emergency meeting , you are expecting the central bank to produce the goods. they went much harder than anyone anticipated. big hikes on several rates. if you are looking at the lira, we saw a record lows for the turkish currency and then bang, the surprise. the highest level since 2008. the question now is, does this stop the rot? selling dollars didn't work. you are seeing the turkish lira come off the day's high. that is the dollar strengthening, the lira weakening again.
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if you look at this on a one-year chart, not much more than a blip. the central bank regain any credibility with this move? it is becoming or it has come under a lot of pressure. >> it was under a lot of pressure not to hike rates. there is a real political undercurrent. whether the government approved doganove or not, er knows that a political crisis can kill careers. his career was born about one. the question now is, even if it does stop the rot, even if the lira doesn't decline any further, does the choke off the economy? what happens then? what is interesting to me is that you are also seeing the south african rand strengthen as well. we have seen brazil, india, turkey move. what happens next? >> thanks so much. >> talking of the south african federal bank, will they raise rates?
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there is a key meeting taking place later today. that the south africans will keep rates on hold. no rate hike expected by the economists that we have told. -- polled. going to remain on hold. there have been surprises in emerging markets over the last 48 hours. india, then turkey. will south africa follow suit? oil giants had little to show for their spending. major players began issuing profit warnings this month. let's bring in our bloomberg energy reporter, brian spen -- brian swint. selling stakes is one way of dealing with this. >> shell announced this morning they were selling a stake in an offshore field in brazil. shell calculates their investment by subtracting out and he divestments they make and this helps get their numbers down. that net investment number was a wreck last year.
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-- a record last year. >> if i am a shell investor, i am bombarded at the moment. is there a communication strategy problem here? profit warnings after issuing numbers shortly before -- we are getting news on a fairly regular basis. they are not wanting it together which is the normal strategy. >> they are doing earnings tomorrow morning. it will be the first time we see the new ceo. hopefully he can clear the slate there and take care of everyone's questions. it is very unusual for them to do profit warnings like this. investors have to ask themselves, what should change so much/ --so much? >> what else are we expecting them to divest from? have monday of things. they tend not to tell us about them in advance. they're looking at the pipeline in the u.s.
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they have divested a part of the wheatstone project. they have this stake in a field in brazil. anything that they think will be particularly profitable in years to come, they will look at getting rid of. it could be a theme for big oil companies if they want to concentrate on their most profitable things. they will look at older fields, things that won't be as profitable as potential sales targets. >> brian, thank you so much. we are just adding some breaking news out of sainsbury. we have a new ceo at the helm. just thinking is steing down. shares are down at that. they have named mike gupta -- mikecoupe. he is becoming ceo. pe, the commercial director of sainsbury will become ceo as of july 9. the share price down some 3%. growinglation has been
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that he will be stepping down fairly shortly. that's speculation constantly denied by the business. nevertheless, we now have confirmation that he is going to step down. that 3% drop, i wouldn't read too much into that. >> we will get to the bottom of how you pronounce his name. madedent barack obama tackling inequality the centerpiece of his state of the union address last night. he says it is unacceptable for the rich to get richer and other americans struggle to survive. today after four years of economic growth, corporate profits and stock prices have rarely been higher, those at the top have never done better. average wages have barely budged. inequality has deepened. upward mobility has stalled. fact is that even in the midst of recovery, too many americans are working more than ever just to get by, let
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alone to get ahead. too many still aren't woing at all. for more on president obama's state of the union address, we bring in manus cranny. >> i think when you listen to this state of the union, this is isresident who really rerunning some of the arguments he used when he was running against mitt romney in 2012. the potent theme of inequality. i think the tone was fairly defiant. raising the minimum wage up to $10.10 for some federal workers, not obviously across the board. who is a president reaching out in terms of partisanship, which is a new word on capitol hill. ironic. in regards to global trade, that is the mandate he really wanted to try to get a hold of. i think those lines about and equality are the deep-seated heart of what the democrats are
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about, going back to basics. a very defiant obama. no doubt about it. that is certainly the take by most of capitol hill. , thet's move on to the fed first policy decision of 2014. it is the last time ben bernanke will chair. we have new voters as well. more hawks. >> this is going to be an interesting challenge for janet yellen when she goes to sit with these guys and gals. bernanke had to deal with them. that's have a look at some of the protagonists. richard fisher. let's have a look at some of the new faces running on board. there you go. kocherlakota,, plosser all dissented in 2011. will they kick back in 2014? richard fisher is not that
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bothered by what happens in regards to equity markets. as long as he has got blood in his veins, he is not going to find. er, he says ploss look through the noise in the december report. he is more of an advocate of moving aggressively on pulling back stimulus. kota perhaps a little more open to suggestions. those are the names i think will cause a bit of trouble. >> we will leave it there. thank you very much indeed. what else is on our radar? >> investors are punishing mulberry. shares are at a three-year low as they luxury goods company issues a profit warning. it says full-year earnings will be substantially below current estimates. >> lufthansa is canceling dozens of european flights. an air traffic control strike taking place across the region. those most affected are italy, france and switzerland. >> breaking news from the last few minutes.
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sainsbury has named mike coupe as ceo. he is the group's commercial director. the current ceo is stepping down after a decade in charge where he has managed to turn around retailers. >> the stock initially dipped on that comeback since the news was announced that king is stepping down. still to come, barack obama vows to sidestep congress if needed to narrow economic disparity. we will be looking in detail at the president's annual state of the union address. eric nelson, the chief level economist at union credit. >> let's look at today's pulse number. about the number of words in obama's speech this morning. the most invoked word, america and variations like american. other words, people, jobs. that is as the nation grapples with unemployment at 6.8%. ♪
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>> good morning, everybody. welcome back. you're watching "the pulse" live from bloomberg european headquarters. news from sainsbury over the last hour. after 10 years at the helm, justin king is going to step down as ceo in the summer. he will be replaced by mike coupe who is currently the commercial director. we have had that confirmed. >> he is taking over july 9. i find it quite important.
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he is a commercial director. this is about retailers. in the u.k. market, they have to find about what the commercial director can do since he has been successful so far. >> it has been quite a ride as you can see judging by the share price. he has completely repositioned this business. share prices are in the mid-300s now. they got as high as 600. remember what happened with qataris and the takeover that surrounded this business a few years back. company did well off the back of that with the share price lower. let's bring in caroline hyde to give us more detail on what we need to know. has been with sainsbury's has 2004, almost as long as justin king. there will be a seamless transition, it seems. justin king staying on until july to ensure that the handover goes smoothly.
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it has been since december that oupe has been at the leaderboard in terms of who would be the successor. he had been picked back in september -- december. bloomberg put out a story saying he was likely to take over. he is one year older than just thinking and has been front and center of the growth at things very. he is the commercial director overseeing marketing, information technology, online operations as well. he has been the right hand man helping steer sainsbury's. we know that sainsbury's was basically the outperform her of this christmas. they seemed to be stealing market share from tesco. of course, the discounters on end offering cheaper products. sainsbury's has been able to
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offer a different range. also, the basic range when we want to ensure that we keep our payments low when it comes to retail. overall, justin king has stepped down in july. commercial director mike coupe to take up the reins. justin king saying this is an nad decision. he felt that it is never the right time to leave sainsbury's. shares are down today because of justin king meeting. many analysts saying this is always going to be a negative. he has been there since 2004. eight years. he knows the business inside out , in charge of online and trading. ugh thes as tho transition is likely to be smooth. >> thank you very much. i an always interested. it is never a right time to leave.
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>> i guess you should always quit when you are ahead. >> that is a good point. >> president obama is urging lawmakers to do more to help america's jobless. his state of the union address focused on economic inequality. he said boosting the minimum wage to $10.10 from the current $7.25 will make a massive difference. is it good economic policy? >> let's ask eric nielsen. is it good economic policy? i guess if he gets reelected and have the right policy in place, it makes sense. >> he won't be reelected here. he is not running for anything anymore. he has a point. if you have been in america, seven dollars an hour is nothing. if you have a family and put your kids to school for seven dollars an hour, even if you are two parents working it is tough. he has a fundamental point. poverty is huge in america.
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the income distribution is huge. somebody has got to do something about it. is this going to change the world? absolutely not. it is a small step in the right direction. grappling withof two big issues. one is the impact of the fed and the monetary implications on the rest of the world. the other is the inequality. the venn diagram between these two issues seems to have quite significant overlap. when you look at how policy is going to evolve and you look at the inequality issue, how much crossover is there in your mind? >> it is a big issue. is part of thert normalization process. we can't keep on putting money in. you have to go back to a state ofre the end of the 30 years interest rates -- we are in a transition there. the other side of it is the globalization story. whole issue that
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obama is talking about and the theme distribution, it is result of the fact that the americans and europeans have not adjusted properly to globalization. globalization is bringing chinese cheap labor into the world labor market. those who are less fortunate in our societies with less education have been squeezed out. politicalcoming a issue. in america you have the tea party. in europe, you have other people who are becoming more nationalist and last -- >> is that the case? then what you should do is take the focus off foreign policy and drive the dollar down. the fed policies going to do the exact opposite. >> if you could do it through the exchange rate, yes. i don't know if you can drive the dollar down. -- onense, think about
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of the big issues between america and china has been the exchange rate. you can't really -- the only way you can really do it is threaten them with trade restrictions. they don't wipe like that. you have a real problem. the exchange rate market is affected but not really affected. we talked about it before. to have china with the trade rate linked it is crazy. it is like denmark. s, income and equality was talked about. the american disparaging. they said the ceos and businesses are not taking notice. in europe i think it is different because there is different of civil -- social uncohesion. should we talk more about and equality in europe? this can really topple governments may be more than the u.s. >> the reason is that in europe,
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we go on the streets. is -- it isit important in both places. ultimately we should do the right policies for the right reasons. it seems reason enough to share the growth. at least people keep -- at least give people the opportunity. the fiscal cuts have been an investment in education. these types of things that ultimately give everybody a fair chance at doing well. >> thank you so much. erik nielsen stays with us. >> still to come, what in the name? we're going to take a look at past hits and misses when it comes to corporate rebranding. ♪
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"> welcome back to "the pulse live on bloomberg television and radio. >> how are the markets trading? big moves over the last few minutes. manus cranny at the touchscreen with more. >> equity markets have got a spirited lift this morning. it is called, look after yourself. how long does it last when you are a central bank that the market knows doesn't have enough reserves?
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you go for something radical like raising your rates. this is the euro against the turkish lira. we saw them raise the rates. the euro went down. the turkish lira bounced. this is euro going down, turkish lira bouncing. look at this. in the space of one trading session, almost a complete u. we are almost back at the level where we were when the news came through. what is that? you have eric nielsen there. maybe he has a better answer. one, they don't have the reserves. up the richest rates by five percent. is that really a robust policy? india raises rates by a quarter of one percent. turkey goes for five percent. of bank fory cent themselves. defend yourself and let's worry about the fed later. back to you. >> we have the central bank
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meeting today. that announcement will be out just after lunchtime. >> up next, a shakeupt sainsbury. we go through the new ceo in charge. that is next. ♪
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>> welcome back to "the pulse" live from bloomberg european headquarters in london. i am francine lacqua. >> i am guy johnson. these are the bloomberg top headlines. >> barack obama has delivered his annual state of the union address. voweds. president out -- to end economic disparities. >> america does not stand still and neither will i. wherever and whenever i can take tops without legislation expand opportunity for more american families, that is what i am going to do.
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kong's cable tv is reporting that a man has died after being infected with bird flu. the government has issued a statement that the hong kong bird flu case was imported from china. more thanhas culled 20,000 birds. >> breaking news on sainsbury. it has named mike coupe as ceo. he is the group that commercial director. karen ceo justin king is stepping down after a decade in charge. >> caroline hyde has more. 10 years in charge. transformed the business now he is stepping aside. >> he said it was a difficult decision, never the right time to go. he helped build sainsbury's, helped it become a winner in the christmas trading period. sainsbury's, really the only store, the biggest grocers that saw sales increase. improving market share helping in terms of their range. for the higher-end and also the
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basic, just stopping the outpouring to the rivals which offer the more luxury goods and the discounters. he is handing over the reins to a man who shouldn't come as a surprise. 2012 was when we were talking about mike coupe becoming the potential leader of sainsbury's. he was the person who was front runner to take over as chief executive. he is a 53-year-old man, he has been at sainsbury's since 2004. almost as long as justin king himself. he knows his rivals. he works for many arrival. he worked at tesco. well-known names on the u.k. high street. he knows also what it takes to win. he has been in charge of trading, the ip, -- the i.t., the online presence. this is a company he knows inside out. he is also tied to its success. he is paid 1.6 million pounds in
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2013 and he owns some 800,000 shares. it is worth his while to keep the growth of that company. >> let's hope that transition is smooth. caroline, thank you. had aney's central bank emergency central bank meeting that had the lira jumping. in the last few minutes, the situation has changed. let's get eric nielsen's take. he is the chief level economist at unicredit. that is a brutal move. first of all, the lira strengthening. since then, we have seen a completely reverse. what is going on? >> first of all i think the central bank has to be congratulated on stepping in. they have been behind the curve and people in the markets yesterday talked about maybe 200 basis points. this is about double that.
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they said, we have to step ahead of the curve. the early reaction was positive. then i thought the people started to think about what it means. what will it do to growth? the answer is, probably flat growth now. we are looking at possibly recession in turkey. we had a forecast of only 2% as credit came down. now it comes down brutally. the worst-case scenario that is starting to play out for me is, you have to close your current account almost overnight. you go from eight percent to 10% deficit to almost zero. it is massive. the problem here is that the world has changed. you have to bring being talked about. -- tapering being talked about. you have the issue of the political stock. they have a current account which means they have to import 3.5 billion today. it is not a matter of outflow. what you're seeing now is the
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buying of dollars, that is the danger. it is not enough to stop the outflow. continuing to of attract capital and they can't do it in this environment. that is why i feel if there is no finance, you have to do what spain or ireland bid. that is nasty. >> central banks here also have a credibility problem. >> that is exactly right. was it cleared with the prime minister? either way, it is good that they react. only the central bank, it is also the government. you have a prime minister talking about interest-rate lobbyist. it is not a-- market friendly thing to say to people who you want to borrow money from. compared to 2011 where you have a move and then a stabilization, i think this is quite different.
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>> imf? >> before the election. be a can sense would to spain. spain took two years to eliminate this current account ecbcit with the help of coming in. there is no ecb for the turks. there is the imf. the imf is going to come in and talk about restricting credit growth. that is not going to be nice. i think there is a long way down to that but it could. >> what are you expecting from other emerging market central banks? will south africa have to fight back? >> everybody has. one with the big financing needs. there is a lot of -- you can buy a lot of interesting stock. you can buy greece, romania,
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poland, a lot of things. e.m. perctiveness of se is not what it used to be. people are looking around and saying, and i the first one to catch this falling knife? the answer, generally, is no. why would i take this opportunity or chance. unfortunately, those emerging markets which have the big imbalances live beyond their means for many years. they could be hitting the wall. end to these days would be very painful. >> thank you so much for all of that. ok, result a little bit later today. completing the acquisition of chrysler. investors await sergio marchionne's plans. >> ryan chilcote joins us with more. leaving earnings aside, tell us about marchionne's game plan.
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>> he spent the last five years trying to build fiat from a regional carmaker into a global carmaker. you can expect the gains and the structure of the new company to be very multinational. there is five parts to this. shares, almost certainly listed in new york. quite likely the new york stock exchange with a secondary listing in milan. where will the tax headquarters be? the expectation is the united kingdom with a legal headquarters in the netherlands. that is the blueprint that mr. marchionne employed when he spun off the tractor maker that fiat owned back in 2011. now it gets more automotive. where will the headquarters they? sergio marchionne himself said he thinks the united states has a large claim to the corporate headquarters. that is where the company makes 4/5 of its profits and gets 54% of its revenue. quite a change from back in the day.
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a decade ago it got 92% of its profit -- its revenue i should say in italy. the big question is, what is the company going to be called? thoughts on that? >> we already know from marchionne and his management team that both fiat and chrysler are going to be in the name. i guess it is just down to, who comes first? there is a joke right now -- we look at these slightly forensically. what does fiat mean? francine, i know you know that. the joke is that now it is going to be fat, not fiat. this is an issue that undoubtedly came up when the prime minister met with marchionne yesterday. it is a big deal. fiat is the biggest industrial company in italy. in a way, they feel like they are losing it. >> they wouldn't appreciate
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that. it is not the only company to change their name. we have had this before. some successes and some disasters. >> it is not always a huge affair. if you think about eads, the change themselves into airbus. probably realized that no one associated them by name with aircraft. that was an interesting fixed of that problem. there are some less likely ones. google used to be called back rub. who would have thought? this is entirely not a new development. would you get a hyphenated name, people don't usually include the hen so my money is on chrysler-fiat and people just color chrysler. >> that was definitely a smart move on google's part. >> do you want a back rub? [laughter] ryan chilcote with the latest on fiat and what is in a name? >> up next, a shakeup of sainsbury's. the supermarket has named the
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e coupe ass -- mikr v its ceo. we have more on that news when we come back. >> also, a bloomberg first. don't miss our interview with deutsche bank co-ceo anshu jain. ♪
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>> we have had breaking news this hour. a shakeup at sainsbury's.
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the chief executive will step down in july after a decade in the role. mike who -- coupe will succeed him. joining us now with more, charles allen from bloomberg industries. , justin kingrget took over about 10 years ago. this was a company which at the time we weren't sure whether it would survive or not. >> sainsbury's was the king of supermarkets in 1990. then it went through a decade of disaster. then it went through three years where it got even worse. when he took over in 2004, we were talking about breakup bids, should it merge into marks & spencer? first of all, he stabilized it. secondly, he took control of a lot of the systems develop and send things. he put it onto an even keel. >> it is not just a ceo leaving, this is justin king, the man who turned sainsbury's around. what do we know about the new guy? >> mike has been there for a long time. ,s far as investors concerned
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he has been part of the response team. he is on all the calls come at the analyst meetings. he is part of the team, not an unknown coming from completely left-field. we know he is part of the team. it is a signal for continuity, i think. >> this is very important when we see a lot of other rivals choosing external candidates. >> there is always this sort of external-internal debate. we have seen it at morrison's. they have had a succession of external people. there is a question of whether people know what morrison's stands for. in sainsbury's, he is integral to what they stand for. we can expect continuity. -- thereave to think are strategic decisions to be made. who else will they add to the board to give that external view? >> charles allen, thank you so
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much for that. guy. >> thank you very much indeed, francine. we have a big interview to bring you later. deutsche bank co-ceo anshu jain will be speaking to bloomberg first today. we bring you that conversation around 12:30 london time. announcedank remember earnings early with a surpse fourth-quarter loss. it has released more details this morning. there is a press conference underway. a 23% cut in investment bank pay is one of the headlines. let's talk about all of this. good morning. thank you very much indeed for taking the time to come see us. jane and finch and have a difficult communication strategy they need to get across to investors. they are saying they are not happy. investors should be getting more. that is great. thank you. what are they going to do about it? i think you are pointing to
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where the issue that deutsche bank is really an a fundamental and very large transition program. really issue for them that investment banking as deutsche bank d it and pursued it is really under attack from a lot of fronts. in particular, the regulatory side. they need to transition that to a new model that is not entirely defined yet, i think. >> because of the regulatory environment? >> correct. also because the effect of all the changes are not really fully understood yet. that is something ongoing. one of the outpourings so far is that -- especially the fixed income business which is deutsche's strongest suit, has been under a lot of pressure. this morning, we
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are going to remain the leader in fixed income and currencies. you look at what ubs is doing. you look at other institutions. is deutsche making the right call? is anshu jain making the right call? at what point do we start questioning their business strategy and the targets they set out in 2012? >> only time will tell. it certainly seems to make sense if you are a market leader in a certain business to not give that up easily. since it is a core of what deutsche bank stands for, it certainly seems to be some sense in that. deutsche bank has moved away to some extent from earlier strategies where they said, we want to be a top three player. otherwise, we don't think we can make any money. they have actually pulled back a little bit already from that and are now saying, they will focus
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on costs. ongoing a retrenchment as well at deutsche bank. we don't really know how far that will take us. >> let's talk about the finances. saying the cost of litigation will not be "above average." let's talk about the capital ratio. on, on the tape as well, talking about the fact that the capital ratio could come under pressure. it is going to be volatile. this is the issue that got everybody frightened with deutsche 18 months ago, two years ago. they are not well-capitalized enough. he is talking about volatility. >> clearly that is not a helpful thing. the fixed income market, their ratios are arguably strong enough not to make this a big issue. for the equity market, it is
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much more of an issue. the unspoken thing in the room there is, will they go for another capital increase? >> do you think they will have to? >> on balance, i suspect, yes. >> but not yet. >> probably sooner rather than later. >> ok, we will leave it. thank you very much indeed. reminder, anshu jain is going to be talking to us later on. he is the co-ceo of deutsche. he will be speaking to bloomberg first today. we will bring you that conversation with hans nichols a little later on. coming up, crowd funding goes green. we speak with a company aiming to reform the culture of investing and get communities involved in renewable schemes. that is coming up next right here on "the pulse." ♪
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>> welcome back. it is time for today's new energy. have you ever thought about becoming a green energy investor? now you can for as little as five pounds. this is the first crowd funding site in the u.k. that allows anyone to invest in renewable schemes. bruce davis is here to tell us more. great to have you on the program. talk to me about this crowd funding. a lot of times, it is people that already have a business in renewable energy. or is it because they want to do
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good for the environment or get some returns? >> i think it is a mix of all three. we have people who are very keen on riddles and green in general. they want to invest somewhere where it does some good. also, a lot of people in the industry what to support these projects directly. >> they can be very diverse, something that is a little gadget that will help with, for example, new energy in your home, to large-scale projects. >> we are funding the infrastructure side of renewable energy. we are helping to build wind turbines, solar power, putting solar panels on people's roofs. the return people get is from the energy being generated. it is a relatively low risk. we are looking for people to lend money and get a return based on the amount of energy they produce. >> would you have to be living in close proximity where you are building these things? like you can invest directly. -- >> you can invest directly.
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across any invest project from anywhere in the u.k. >> where is it coming from mainly? >> it is quite mainstream. there is a growing band of people who want to move their money out of conventional basis where it is invested into alternative finance, whether it is peer-to-peer lending or crowd funding. we are part of that movement. we are offering something different that you can visit for yourself. crowdave always been told funding is great, but be prepared to lose your money. maximum someone has given? about 100,000 pounds. that would be across several projects. so far we have done about 4 million pounds of investing. people are diversifying across wind, solar, in wales or nottingham. it from places across the u.k.
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i think it is people looking at this for different reasons. some people are doing it because they want to feel they are doing some good. aher people are seeing it as way of investing in something that is not really correlated with the rest of the investment world. >> interesting. thank you for all of that. to you. over >> thank you very much indeed. for those listening on bloomberg radio, the first word is up next. for our viewers, it is a second hour of "the pulse." we are going to continue the conversation about sainsbury's new ceo, mike coupe. justin king stepping aside. we will talk about the state of the union. us to talks joining about inequality. looking forward to talk about that conversation. fiat chrysler suspected -- expected to announce a name change. what should we take away from this? will be joining us to talk about these two companies, or one company as they are now. we look forward to that co
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nversation as well. we will take a break and see you in a moment. ♪
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decisionrst fed policy for the new year will be delivered later today. the last time the ben bernanke will be in the chair. >> turkey hikes rates. philly route reins volatile. lira remains volatile. takes the helm at sainsbury in july. morning to our viewers in europe. a warm welcome to those just waking up into the united states. >> this is "the pulse."
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chryslerly merged fiat- gets ready to hit the road today. they're expected to announce a new name. company asmine the it plans to post earnings later. >> our top story. u.s. president barack obama vows to sidestep congress to narrow economic disparity. he made the comments in his state of the union address earlier this morning. he urged congress to back to priorities to change immigration laws. onwe need to work together bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets. [applause]
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china and europe are not standing on the sidelines. neither should we. >> more on the state of the union -- let's bring in manus cranny. >> interesting were there -- word there. bipartisan. it is a little bit of an anathema. very strong toned in his rhetoric. on ang grand bargains stage to reinvigorate trade. he is going to need capitol hill if he wants to deliver those kinds of policies. it was somewhat misguided in terms of the word bipartisan.
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maybe he has decided to go a little bit stronger. >> leave the economics to one side. let's talk about the fed. >> ben bernanke's last roundtable. is janet yellen's job for 2014. let's look at the changeup for the potential for dissension. you have mr. fisher. all of these are dissenters. will they run the same gamut of controversy in 2014? yellen --e the janet
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she has a very different role when she elevates to the chair. very different than running her own thoughts or on dissension or change of opinion. the rhetoric that has come out said he is that fisher will be motoring -- voting for more taper. have a look at this. it is not about the jobless numbers. -- it is about the jobless numbers. but seven look at some of the issues. -- let's have a look at some of the issues. if they are not talking about what happened in turkey last night, they ought to be. >> some say why stanley fischer is being put on the board. rosengren is a great advocate
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of the economics of gdp. benefits, thee real benefits, the efficacy of qe. we are in a different paradigm. we are going to get the growth numbers. some of the numbers are getting better. company spending. it was tough in december. we will wait and see. there was an irish saying. me, myself and i. >> it will be a battle of the central banks. manus, thank you. >> let's talk about those central banks. turkey is center stage. an emergency, late-night meeting. an incredibly volatile lira.
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they assess what is next. >> they hiked rates aggressively. the biggest hike in the last five years. a massive turnaround. check out the charts on dollar- lira. they can only buy a nine hour reprieve for the turkish lira. what the daily -- do they do next? if these moves hold and the turkish lira continues to weaken -- you have got to say, what can they do next? politically, it would be very hard. >> a country with a huge current account deficit. south africa, the next in the firing line. a meeting later on today. >> we look at the dollar against the south african rand.
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expectf people do not the south african central bank to move today. the pressure is building on them to do something. the rand continues to weaken. within turkey itself, the political crisis continues. corruption of continue in that country. they are losing credibility within the country from investors outside. >> thank you so much for that. the very latest on the central bank's. it could get very messy. >> we will get more news on that as well. in the next few days. players began issuing profit warnings earlier this morning. big oil companies have a big problem. to get the cost it takes
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oil, gas, etc. out of the ground. we have disposals coming through. put this in context for us. put it in context. >> shell and exxon both go tomorrow. they are the two biggest in the world and the first to that report earnings. people expect the first quarter to be bad. oil companies were starting to rely on ever higher oil prices. now one end of the chain is coming to an end and the cost is going up while oil prices are not. that means lower profits. we will find out more from jill tomorrow. -- shell tomorrow. profits will be about half of what they were a year earlier. >> they said they would sell stake.
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they are selling a stake for a brazilian project. >> that is right. that is the second sale in less than a month. they sold a ste in australia. stake in a biger australian company that is not essential to them. we have been looking for that to be something that comes up. >> thank you so much. our bloomberg energy reporter. >> what else is on our radar? punishing milbury today -- mulberry today. >> sainsbury has named mike coupe as ceo. he is the group's commercial director. justin king is stepping down after a decade in charge. >> discussing the company's
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earnings. an unexpected loss for deutsche bank. remember, for our viewers in europe, we will have the first interview with deutsche bank's co-ceo anshu jain. that is coming up later. >> president obama vows to fight economic inequality. andays he will go it alone sidestep congress. more details on the state of the union speech after the break. ♪
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>> good morning, everybody. you are watching "the pulse." --eign-exchange markets turkey is the center of attention. let me show you what has been going on with the turkish l ira. the central bank aggressively hired rates last night. we have retraced the gains since two days ago. the market is coming to grips with the idea that this is a country that need significant daily funding to satisfy its current requirements and that is going to be tricky to solve. heard earlier on that we may country to close the
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current account deficit overnight cash -- that is going to be brutal. spain is target number two. let's move on. income inequality taking center stage at thpresident's state of the union address last night. he said it is unacceptable for the rich to get richer and other americans to struggle. years of after four economic growth, corporate profits and stock prices have rarely been higher. those are the top have never done better. average wages have barely budged. inequality has deepened. upward mobility has led. the cold, hard fact is that even in the midst of recovery, too many americans are working more than ever just to get by, let alone to get ahead. too many still are not working at all. president obama called for
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extending unemployment benefits and boosting the minimum wage. he pushed for more affordable college education. it is a debate that is raging on both sides of the atlantic. how do we deal with inequality? how do we manage it? how do we pursue a narrowing of the gap? by a professor of international economics and finance. he is an adviser to the u.k. for an office. economicave the advisor to the greater london authority. let's talk to both of these gentlemen about what we need to see. professor, let's start with you. the president, addressing the issue of inequality last night. we knew he was going to do that. in terms of the policy that he would put into place to deal with this, raising the minimum wage, talking about wages, is
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that the right approach? >> not really. people on minimum wages are still going to be poor. they are not going to go up. you have really got to fundamentally think, what causes poverty? things like unemployment. youth unemployment. it is huge in the u.k., in the u.s. people look at the headline unemployment rate, but the youth unemployment rate is double, triple that. neither here nor there. governments need to look at tax reform. this is a waste of everybody's money. you need fundamental reform. we have got this problem at the top end -- they're getting extremely wealthy. this is very worrying for democracy. his ruling elite -- this ruling
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elite, $1 billion is a lot of money. it can last you 20 generations. we are creating a global elite of billionaires telling us what to do. focused on thet tax-wage debate. we will touch on the oligarch story later on. we are having the debate about the 50p tax rate. are we having the right debate on this side of the atlantic or are we looking at this the wrong way? the debate seems to be largely reinforced. do we need to broaden the debate and look at the whole thing? do we need to look at regressive and and progressive taxes and have a wider debate? >> the key issue should be on economic growth. the economies are recovering. the best way to address the
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issues is stronger economic growth. you need to look at it in the global context. both of these economies will do well in the global economy. they are not isolated in what is happening. the bulk of people globally are doing phenomenally well. if you take the last country 25 years, everyone , apart from extreme poverty, as some phenomenally well in the last 25 years. the top five have done really well as well. middle is middle and lower income earners in europe and the states -- these guys are not doing badly, they
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just are not doing relatively well as people globally. the last five years, we have had the deep recession. you have got to keep taxes as low as possible. you should not be taking income off the poorest of the poor. the best way to address the issues is to make sure your economies have strong enough growth is possible and try not to micromanage. was at the start of the electoral cycle, let's not forget it. >> let me get a couple of things out of what you said. we are in a situation where some would say you have the squeeze middle, the portions that have suffered in the united states and europe -- they have not reacted or adapted well to globalization. is that a fair comment? >> i think it is. the squeeze middle is the correct term.
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you cannot increase taxes on the poor. the top avoid the taxes anyway. governments target the middle class. this is what has happened and certainly britain. -- indent certainly britain. -- in certainly britain. >> this is the portion of the economy that has not reacted well -- has not been skilled enough to be able to deal with globalization. >> this whole host of issues in the states and britain, they are pretty different. in previous recessions, unemployment had gone through the roof in the u.k. the last five years have been very different. in this cycle, companies have held onto stuff, but they have not paid them high wages. unemployment has not gone up as it might have done in previous cycles. have note and work
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seen big wage increases. you need to get taxes down and control inflation. >> inflation is not a problem. >> it is a big problem in certain areas. the cost of living in parts of the u.k. is very important. what can you do from the policy perspective? not interfere too much is the key thing to do. make an environment where private sector starts to invest, generate jobs, and then you try to keep government spending control more focused. >> how do we get wages up? if we can get wages to go up -- >> wages go up one productivity goes up. good, but theyre cannot be forced. in london, the mayor of london has a london living wage. it is a voluntary thing. here in london, there are big sectors where if you impose a
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high minimum wage, lots of companies will be squeezed. you have to make it a voluntary thing. some people might not like that, but once you start to push wages up as active law, there will be law,osses -- an act of there will be job losses. labor income has been squeezed because of globalization. >> the share of gdp for labor in the u.k. is fairly stable compared to the rest of the country. we will have to leave it there. thank you very much indeed. francine, over to you. >> still to come, we have had breaking news. fiat has just reported results. rebranding we are expecting. that is coming of next. ♪
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>> welcome back. numbers coming up from fiat. it has missed estimates. >> they have missed estimates on two fronts. trading profits came in at 931 million euros. more importantly, 2014, the wasance, the expectation not met. it is less than what analysts
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thought they would make. revenue looks ok. line -- he much smack in -- for 2013, pretty much smack in line. they're recommending against paying a dividend to maintain liquidity. made ito marchionne has clear that he wants to invest in this business. >> they want to turn around the european operations. >> the luxury quota. they only serious investments. >> it will be interesting profit margins, but chemical off that transition -- can they pull off that transition? work -- will people pay more money for fiat? but they weren, up by 53%. >> we will be back. we will take a short break. even follow us on twitter.
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when we come back, we will continue the conversation surrounding the fed. join us after the break. ♪
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>> welcome back to "the pulse." i am francine lacqua. here are the top headlines. barack obama has delivered his annual state of the union address. the u.s. president vowed to fight congress to narrow the economic disparities. >> i am eager to work with congress, but america does not stand still and neither will i. wherever and whenever i can take tops without legislation expand opportunity for more american families, that is what i am going to do. >> we have had breaking news
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from fiat. the carmaker says that profit missed estimates. euros. in at 931 million they have recommended not to pay dividend. a successor for justin king. the sainsbury ceo is ticking after astepping down decade. mike coupe will take the helm in july. let's check out of the markets are trading. >> equity markets are banking. markets central banks are going for rate hikes. how enduring are these markets? you begin to understand that you may quite like the idea of raising the rates, but doesn't last? -- does it last? does it have a real impact? not if you look at the lira
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against the euro. companiesurkish issued debt in dollars -- they were getting crushed. the neates -- needed the turkish lira to rise. the chance tove defend themselves. think about trying to defend yourself in the fx market. thes a peashooter against mighty power of the federal serve -- reserve of the united states of america. you are seeing an attempt at defense. the rant, what is going to happen with them? a quarter of one percent? is that going to change the dynamics of what is going on in emerging markets? i do not know. there are greater minds than mine out there.
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u.s. futures indicated -- the 1792.1.79 to -- could they throw a curveball? to about their heads to the fact that there is a whole world beyond the east coast and the west coast of the united states of america call the rest of us. back to you. >> i will pick it up. ibm.uld be a win-win for they will get a big payout even if the deal falls apart. what is going on? caroline hyde joins us. whatever happens, the deal goes through, ibm gets paid -- the deal does not go through, there is a nice kicker as well. vo is having to take it
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on the chin. they could be havi to pay 8% to 9% for breakup fee to ibm if the deal fails. double whatfee is is usual. if the deal does fall through. ibm is threatening them a little bit. ibm is still talking to a japanese company who might offer them more. lenovo is between a rock and a hard place and they have had to take on the risk. >> why is ibm pursuing this strategy? >> it is nervous whether the u.s. regulators will go through with this deal. they have been talking that it will. novo haveand le tried to make out that they are
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not too concerned. national security concerns are pretty raised in the u.s. at the moment -- especially when it comes to the chinese. contracts with the u.s. government in supplying service and more profitable maintenance of the server units -- that is where the dubious nature comes in. ensure, it ibm wants to that they are not left carrying the baby here. lenovo is taking on significant risk. they are saying, we will give you at least $200 million, if not the $2 billion, for your server units. >> thank you so much. back over to you, francine. >> time for the top numbers. 6778 -- the number of words in president obama's state of the union address. the most invoked word -- america.
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in other words, people, jobs, work, congress. unemployment is 6.7%. one of the biggest public works projects ever. new york's 2nd avenue subway will carry 200,000 riders per day. crane discovered. >> under new york city streets, there are 659 miles of subway track. for the first time in more than 50 years, the system is finally getting in . new line. a the 20's,eived of in 85 years later construction is blasting forward. this is where we go underground? >> yes. >> descend 11 stories. this is awesome. below ground, they run a tight ship. above ground -- are you the face
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of the 2nd avenue subway? >> it appears to be the case. onehe price tag of phase was just $4.5 billion for three stops. miles.llion for two are they just being near sighted at being alarmed? >> absolutely. it is putting a lot of people to work. >> planners used a map first drawn in 1865 which shows the waterways that crisscrossed manhattan. so far, so good. >> here and there you have a spot, but in general it is very dry. >> officials have yet to raise the money or budget the remaining parts of the line. are you not budgeting it because you are scared? >> we are in the process of
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doing the budgeting. we do not yet have any idea exactly how much it will cost. >> this short section spells relief for the subway riders who now squeeze onto the single train line running under manhattan's eastside. more writers in boston and san francisco's networks combined. it is an economic success. this investment will be returned to the city many times over. >> what is the timeline? >> in the next 20 years. >> rachel crane, bloomberg, new york city. is20 minutes from now, it surveillance with tom keene. he joins us with a preview. tom, income inequality. itsident obama has made number one in his state of the union. upon a little bit less than people expected -- you see it through the debate.
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the contentious debate over minimum wage. moren all, inequality and on the dynamics between the executive and the legislative branch. the former secretary of congress will join us. aboutl talk to him immigration. it a lot of lip service. we will talk about the migration of apple computer from a growth stock -- maybe they will become blue-chip like. former appleto a and pepsi executive about what it means to be a quality company. we turn to the super bowl. francine, help me here. wednesday, thursday, friday, saturday, sunday -- it is upon us. the new york jets and new york giants host a football extravaganza. >> football means big box in the
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advertising world. >> we will touch on the 32nd commercials. their iconic within american messaging. there is a lot more around that. the scarlet fu has dug into that deeply. >> think is so much. tom keene with "surveillance" in 20 minutes. a big difference the yacht. they have announced earnings and the board meeting to discuss details of the merger with chrysler. what we can expect. plus, the first interview with deutsche bank co-ceo later today. executives meet today in frankfurt. looking at live pictures from the event. ♪
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>> welcome back. fiat out with results this hour. chrysler out with results. fiat -- profits of missed estimates. chrysler is just a with numbers. -- 14.6.dity number sergio marchionne plan for the newly combined companies are what we now await. that liquidity is important. that is the catch valve. >> that is critical for fiat's future and for chrysler. >> fourth quarter missing
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estimates. analysts were looking just over one billion euros. they were looking for 4.2 billion euros in trading profit. fiat is having trouble selling cars globally, in particular in latin america. chrysler has been driving things with the jeep cherokee doing really well. >> it is interesting to look at that liquidity story. sergio marchionne is recommending to the board that there is no dividend. that is something of a liquidity conservation exercise. they want to hang onto the cash in order to be able to invest them potentially in the sky and high end-- these markets, potentially like maza roddy -- masseratti. >> we will get the details of how fiat intends to spend.
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spend marchionne plans to on his master plan to reinvent italy -- fiat as a made in italy brand and move into the luxury space. it sounds nice. will it work? will people be willing to pay ,ore money in western europe where the car market is just starting to pick up, for an alfa romeo? >> he is the consummate poker player. he has played his cards well. now it is about execution. starting to gel these two companies together. at least they have managed scale. >> his whole plan for the last five years has been to take a regional carmaker and make it into a global giant. as a result of this merger completed early last week, fiat- chrysler will be the seventh biggest carmaker in the world. where is the company going to be listed? we are hearing new york.
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secondary, perhaps in the long. fiscal headquarters could be in the u.k.. legal headquarters, the netherlands. that is what he did with the tractor company they spun off in 2011. the biggest issue is corporate headquarters. the italian is not their most important industrial brand. he said the u.s. has a good argument for getting the corporate headquarters. more than 4/5 of their profit in the combined company comes from the united states. more than half of the revenue. we will have to see. it is a political decision. he met with the prime minister yesterday. i'm sure the issue came up. and the issue of, what is it going to be called? >> the brand name will remain the same. >> we know fiat will say there, chrysler will stay there -- we know it sounds petty -- but the
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question is, what order? [laughter] take will get an italian's on that. francine, over to you. >> and italian take. a lot of people are saying that the italian government is putting a lot of pressure on the company. for more on fiat, the expected name change, and the expected earnings, we are joined by an automotive analyst. you are expecting a mixed bag in terms of the results. >> precisely. fiat is having trouble pricing in southern europe, which is very depressed. latin america, which is been the cash cow for so long, has been struggling. chrysler is doing very well. it would have done better if they brought cherokee to market when they said they would. it was late 2 months. >> he needs to focus on growing the business and getting the right models out there. >> they are in investment stage.
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a couple of weeks ago at the detroit show, looking at the new chrysler 200, they invested $1 billion into that plan. it is a game changer for chrysler. they're looking to do the same in may. we will see the combined architecture for offer on mail rd chrysler -- a r -- alfa omeo and chrysler. it will be where the future is decided in terms of product. >> for sergio marchionne, how much does it have to do with his personality? he is aggressive, no-nonsense. >> if they can pull off the brand strategy with the new platforms, investment, technology and the right ways -- they have the brands. it can also go the other way. it is entirely how they can invest it and if they can pull it together. then it will survive. >> how much time are we giving
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him? 6-8 months? plan,terms of outlining a we are expecting it by may. will betation of that much longer. this year and into next. i then, we will see whether the cherokee is doing well. we will see the recovery in europe. latin america, will they be able to recover their market share? there are positives and negatives. at year will be a transitional year. that the nameking is important. people associate the brand. a lot of purchases are made by women. you have this transatlantic company. will the italians be mad if there is no fiat and it? will the american spy something that says fiat and of it -- in it? >> i am not expecting anything
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crazy in terms of the name. we will look back at the history of both vehicle manufacturers, as well as the future. not expecting any groundbreaking decisions. >> nothing wild. a bit of a disappointment, but nevermind. paul, thank you so much. , theg up on the program super bowl mania arrives in new york. we will take a look at the decade-long effort to bring the game to the region. ♪
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>> welcome back. let's talk about the currency markets. real action over the last 24 hours. not too much volatility. how do you trade this one? dollar-turkish lira. a massive hike by the turkish central bank sent the dollar down. the trajectory has changed. a very different picture as we move into the start of the u.s. day. that is the story. >> brings the super bowl to the new york area has been a decade- long task. preparing to host one of the biggest games of the year. >> millions of people around the world will be watching super bowl xlviii. is betterr staff prepared for an event like this. 20 times this season, metlife undergoes a total
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transformation. the staff takes two days to change from one stadium to the other. to new yorkk jets giants and vice versa. that includes the changeable and son. special end zones will be unveiled for the broncos and seahawks. what will be the cosmetic changes? >> you will find out some of the cosmetic changes when i find out. >> you do not know what the stadium will look like? >> i know we are standing on the 50 yard line and that is not moving. >> [laughter] >> i know there will be a coin toss right here. johnson,er with woodie jonathan tisch is the cochairman of the super bowl committee. that means making sure the stadium he helped build is ready for the big day. it is a lot of responsibility. what keeps you up at night? the big issue. remember, there was a blackout
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at the start of the game at the superdome. >> can you guarantee no powe failures? >> so much work has gone into ensuring that there will not be a power failure. there is back up, there are contingency plans, there will be generators on-site. >> another problem -- mother nature. the stadium has a team of 1000 at the ready to clear snow from the stands. the vice president of facilities say they are ready. have a 600 tons no melter that we can use in the parking lot. they have a jet engine inside. the heat produced from these jet engines is what melts the snow. >> it is a very big operation. >> no matter what the weather, it is going to be a great day, jonathan tisch says. greatest games in history of the nfl have been played in increment weather. it may snow, it may rain, it
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also could be 45 degrees and gorgeous. super bowl xlviii at metlife stadium is going to be very exciting. we want to make sure that the region knows that the super bowl is here. engine.use a jet that is great. withnathan ferro is back what we need to know for the rest of the trading day. the super bowl is just days away. mayweather,y, floyd the boxer, put a $10 million bet down on the broncos to win. >> we were having a debate. the weather. sporting event, weather, good, nation? >> it is safe to say we will all be in bed. >> deutsche bank later. we are speaking to the co-ceo. i'm excited. >> i am excited to. they will cut compensation by 23%.
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how do you retain balance? >> none of the u.s. banks are offering more. thank you so much. "surveillance" is up next. we will see you tomorrow. ♪
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>> this is "bloomberg surveillance." alone.ill go it in an election year, the president will not stand still. will not see congress with the full faith and credit of the
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united states. use of catch -- cash is the corporate rage. is a super bowl ad worth it? that is the $4 million question. this is "bloomberg surveillance ." we are live from world headquarters in new york third it is wednesday, january 29th. i'm tom keene, and joining me as all with scarlet fu and alix steel. >> turkey raising rates, increasing the overnight lending rate to wealth percent. it was an emergency meeting to help and the lira fall. resisting government pressure and reversing years of policy at stoking growth. it was a very impressive move out of turkey. 7:00 a.m., mortgage applications, two :00 p.m., fomc rate decision, the finale for ben bernanke. p.m.00 >>


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