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tv   The Pulse  Bloomberg  January 30, 2015 4:00am-6:01am EST

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>> face-to-face in athens. the head of the eurogroup meets with greece's new government. landing a deal. qatar buys a nearly 10% stake in iag. touchdown. not only for the american football teams. advertisers aim to steal the show at this weekend's super bowl. good morning. welcome. you are watching "the pulse." we are here in london. i'm guy johnson. francine lacqua off today but back monday.
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we are going to start in athens. eurogroup president jerome is set to meet greece's new government for the first time later today. it is a story that everybody is watching. we are trying to work out whether there is a mandate. we will talk about that in just a moment. let's talk about sanctions on russia. this is also part and parcel of the greek story at the moment. increasing violence in eastern ukraine. we are watching the story very carefully. there is talk of more individual stories here potentially more visa bans. ryan chilcote is on the ground in brussels. what have you been hearing from the foreign ministers? >> effectively, what they've done is kick the can up to their bosses.
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february 12, the heads of state gather here in brussels. what the foreign ministers did last night was agreed to expand the black list of individuals subject to travel bans and asset freezes and also extend some sanctions that were imposed right after crimea was annexed. those are sanctions light. one to 10, 10 being the worst possible sanctions regime you could imagine, with iran at eight or nine, russia is a four now maybe 4.25 depending who is on that list. the eu leaders when they get together, they could take it to a six, theoretically. some of the division we saw yesterday, that led to us not getting new sanctions leads one to believe that that would be pretty tough. also, come july maybe there will be some issues on rolling
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over the existing sanctions. the interesting people to watch yesterday were the greeks. there was concern that they were going to come in and blow up the whole sanctions process. one foreign minister told me they were kind of destructive. >> so you spoke to the new greek foreign minister. what did he have to say? >> you know, he doesn't want to be perceived -- and maybe isn't the person that he's been portrayed in the last couple of days. he has been portrayed as this pro-russian eu sanctions spoiler. in fact, he says he is much more pragmatic. the reason why they are opposed to new sanctions against russia is for entirely pragmatic reasons. have a listen. >> we don't like to see -- [indiscernible]
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we don't like to have a rift between european union and russia. [indiscernible] that is the reason why we accept that the existing sanctions can run untold september of 2015. we are not against every kind of sanctions. we have been against new sanctions today. >> >> what is most extraordinary is, after that statement on tuesday, where they objected to the eu even calling this meeting and complaining about the calling of this meeting, he was really the actively trying to distance himself from this image as a pro-russian defender of russia's interest. he said he had only been to
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russia twice. you and i talked about that picture where he appears next to a russian nationalist. he says he was just walking down the steps. one of the students asked him suppose with the other people. he didn't necessarily know them. that russian nationalist had been invited by the university. he said he didn't think the russians could offer a whole lot of financial assistance. he said greece hasn't asked and the russians hasn't offered. this was a guy that went out of his way to dispel the perceptions that have been formed about him over the last couple days. he said that he tells his colleagues in the new greek foreign ministry that he doesn't recognize the man described in news reports. i will tell you this, he does strike me as the guy who is going to shake up the european union. not necessarily because of russia. they could pretty much end the
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sanctions regime. he did describe himself from a small country that is on its knees. i get the impression every single time he comes to brussels he's going to let us know what he things about everything. >> it is going to be interesting to watch. ryan, thanks very much indeed. that was the greek foreign minister. let's talk a little about the greek finance minister. eurogroup president jeroen dijsselbloem set to him drive in athens later. let's talk about that. let's talk to bloomberg's athens bureau chief. good morning to you, nikos. we are not quite sure what his mandate is from the rest of the eurogroup. what are we expecting from this initial conversation? >> it is sort of the official kickoff of negotiations between greece and its creditors.
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the new government does not accept the current bailout agreement as a basis for negotiations. in fact, the greek prime minister, alexis tsipras, will lay out his plans for the replacement of the current bailout agreement with a concurrent growth plan focused on combating tax evasion and corruption. it will include no privatizations, no further fiscal measures. will it fly with dijsselbloem? we will find out later today, i guess. judging by the first reactions the chances are slim. >> yes. mr. dijsselbloem saying there is
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little support for any change in the current terms for some sort of bailout for greece. is there a genuine believe in athens within the government that they can negotiate a deal? you get this impression that both sides are still a long way apart. >> yes, they seem to be miles apart. the greek government says the bailout agreement has failed miserably, that it exacerbated the steepest and longest recession on record and there's just no way for the greek society to continue accepting austerity measures and tightening measures any longer. disjsselbloem and greece's creditors say there is no way to -- for greece to escape from
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its commitments. >> so, we are here in london trying to figure out and scratching our heads, why mr. varafakas is coming to london next week. i would have thought that he be touring the euro area rather than coming to london. can you give us any insight in that? >> it is an odd choice. what is for certain is that the finance minister said that he will meet the city executives without specifying who and mr. osborne. then, he will meet his counterpart, and then to rome where he will meet his italian counterpart the choice of london
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to start his european tour is a bit strange. i get that he wants to start making alliances. the interlocutory in berlin are not very friendly. they are trying to make alliances elsewhere. >> interesting point. nice to see you. we will have more a little bit later on. let's get a market perspective on this. i wonder if our next guest will be part of that conversation. peter joins us now. good morning. >> good morning to you. >> how much credit risk is there in the greek bond market? >> there is plenty. if you look at what the market is pricing, relative to the other markets that had a credit problem in the last, it is miles apart.
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>> how seriously should we take the concerns that we are heading for an accident here? that face says it all. everybody's assuming there is a risk. nobody will say that risk is real. everybody expects some sort of meeting of minds in the middle. >> one of your colleagues earlier said the crucial word pragmatic. how pragmatic is the new government in athens going to be? if we strip away all the politics and look at the hard numbers, the greek government has before the election said that they will renegotiate some of the publicly held that. if you look at that and look at the cost that this part of the debt bears, it is tiny. even if you have a significant drag down of the budget this yields very little giveaway.
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that, for me, is the crux of the matter. will the push for this, which will not go down well for the partners -- >> where does greece improve its solvency's? >> let's keep solvency to the side. for me, the crucial issue, let's focus on what the government wants. they want to spend more money. they can negotiate something on the bailout terms if they choose. they have to find cash they can spend. here is where europeans potentially have something they can offer. they have a surplus on the noninterest part of the budget. even if you go into these negotiations, when you picture, what can this guy bring to the table, there's a few things the europeans could do that could lower the interest burden that greece has even further.
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that is real cash that potentially can be spent. that is something, if the greek government engages with european partners, where i can see a tangible outcome that yields tangible results. but only -- in my opinion, that is only possible in conjunction with the europeans, not against them. >> so the tone has to be right. we also have a few little repayment humps in the private sector coming up. you get to august, it starts to get more lumpy. the ecb has to hear a decent tone coming out of athens to let that happen as well. how much of a sort of hanging over these negotiations is that? >> i think it is a serious one. these are repayments that greece will have to honor unless they are going into default. what we also know, is if something happens that is not going their way, one of the
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threats hanging over the economy is the greek banks. if the greek assets are not being accepted as collateral the greek banks have serious trouble. here, again, they have an incentive in negotiating with the europeans. i think these repayments can well be managed in conjunctionk with the international partners, the european partners. but if you just choose to play hardball, it is going to be tough. >> peter, stay with us. peter schaffirk head of research at rbc. he will be with us to carry on this conversation. we will also be talking about qatar. qatar airways taking a stake in iag. the gulf airline has taken a near 10% stake. we have details up next. ♪
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>> good morning. welcome back. qatar airways has bought a 9.9% stake in iag, parent company of british airways. the company says it may raise its stake further in the future. iag's willie walsh says he is delighted to have qatar airways as a shareholder. for more now, kari lundgren joins us. good morning. why? >> big news. it is an interesting move by
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qatar. unexpected. i was expecting something else this morning. it is something that you might have seen in the relationship that qatar and british airways have developed ongoing since 2013. willie walsh, the ceo of iag, was very involved in getting qatar into one world. that may be one element of it. they have a lot of respect for one another. al bakar says wonderful things about willie. qatar actually has a holding in heathrow airport. maybe it is just consolidating their position a little bit. ask does it change the operation? >> it will be interesting to see how they work together. qatar says that both airlines were fairly limited. they said it was about leveraging flows and working
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together and improving their partnership. i think in the short-term, it won't change anything operationally. you have to look at qatar's position in the middle east. they are looking for ways to expand. they are all trying to do different things. etoihad has gone down this route. >> hogan has bought a bunch of stakes. is this them just taking one stake? >> i think he would say that this is different than what etihad is doing. each of these airlines tries to forge their own path. this is about the relationship with iag. >> you talk about heathrow. willie is looking to buy a slot at heathrow. you've now got this new airport in doha are as well. you have two major hubs now. how does that fit together?
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>> we will have to see if they get it in the first place. i was watching a hearing yesterday from the irish government hearing on this. the shares were tanking. the things that were said in that hearing made you think that maybe the government is not going to favor a deal. having said that, this will put aig -- iag in a strong tradition. they have the third runway out of dublin. then they would have this partner in the middle east. willy has always been of the sort of, if you can't beat them, join them cap. while left anza and air france have said negative things about the middle east carriers, willy has said, they are there to stay, they are strong, they are well-positioned and develop a relationship rather than fighting it. >> thank you very much indeed kari lundgren. we are going to take a break. ♪
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>> welcome back. you are watching "the pulse." still with us, rbc's head of fixed income -- head of economics, let me get that right. let's take a look at the
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euro-dollar. just to give us a heads up in this conversation. we are waiting for the inflation data to come out. 0.5 negative is the expecti ation. this is the channel by which draghi wants this to work. he has a negative number, he has to get that up. when you look at your will dollar at 1.13, what is the trade? >> first of all, i think it is not the only channel that the ecb wants this to work, but one of the channels. the other would be reducing yields even further. in terms of the euro-dollar itself, if you look at various metrics that are available, the euro probably already is cheap. given what is happening, there is every chance that the risk premium continues to increase driving euro-dollar further down. that is quite possible. other trades that we like what
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this does is said negative yields and all the money that the ecb will be pushing into the market, is pushing it even further down. and then, even further out, we get to see what that does to the real risky assets. it is probably positive. but you've got to be much more selective here as we've just illustrated. >> that money that is going into equities, there is a natural bid for bond markets in europe. banks have to hold this up. it is part and parcel of the way they are structured. who will be in and who will be out? ecb is buying a big chunk of this stuff. >> absolutely. there's quite a lot of people who have to hold fixed income. that's not going to change. in part, they've got the bite the bullet and face lower
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yields. we hear complaints out of northern europe. that's just the way it is. in a way, that is how we carry the debt we have for quite a while. but who is going to rotate out of that? that is the crucial question. there's more allowance being made for overseas investment other markets outside the euro area and there's incremental change in allowances for other assets. if you look at infrastructure financing these type of things that have higher yields, but probably more liquidity. >> interesting to see how the bonds work. do the danes maintain their peg? >> we think they will. we've seen a huge step yesterday when they cut interest rates. there's probably other elements they can take. i think there is every chance that they maintain the peg. >> peter schaffrik joining us
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from rbc capital markets. stay with us. up next, we are talking about amazon. later, we are talking about the super bowl ads you can expect to see this weekend. ♪
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>> welcome back. you are watching "the pulse." we are live from bloomberg's european headquarters in london. eu foreign ministers are meeting in brussels. they've given the go-ahead to prepare new sanctions against russia for it involvement in ukraine. russia's ambassador to the eu told bloomberg the sanctions against his country aren't having the desired effect on president clinton's calculations. -- president putin's c alculations.
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>> they may be having an effect on both sides in the economic area, but not politically. >> the pilots of air asia flight 8501 cut power to a computer system shortly before the aircraft plunged into the java sea. that is according to people with knowledge of the situation. this triggered events that led to the climb so steep that it stalled and then crashed. all 162 people on board were killed. the u.s. senate has passed a bill to approve the keystone xl pipeline. the vote sets up a conflict between republicans and president obama, who has promised a veto. he wants to rate until a review of the pipeline is completed before making a decision on approval. let's find out what is happening with the markets. jonathan ferro. >> thank you very much, guy. don't let the color of this map
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deceive you. there are losses but they are minimal. the dax doing nothing in frankfurt. here in london, the ftse 100 is off by 0.5%. the big story, qatar airways taking that 9.9% stake in iag. that will make them the company's largest shareholder. i want to show you what athens is doing. stocks in athens, a little bit higher after the brutal selloff in the first three days of this week. the banks got pummeled. alpha bank up by 7%. they are basically penny stocks jumping up and down. i'm going to talk to you about greek government debt in about an hour. stay tuned for that. yields are lower. off by 34% -- 34 basis points, rather. in a little bit of time, we get a big piece of data. euro-dollar, lower.
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1.1321 is where we are right now. inflation data expected at -0.5%, the lowest since the summer of 2009. elsewhere, dollar-ruble, here is a cross to watch. stronger dollar, weaker ruble. that is a record low for the ruble on a closing basis. 69, approaching 70 ahead of a big central-bank decision at 10:30 u.k. time. rates 17%. i leave you with that. >> bit of a punchy number. jon, we will manage those for you as we work our way through the day. let's turn to attack now. investors cheered amazons sales. once again, there is evidence of tech companies investing in their future. here with more, caroline hyde. people happy with the amazon
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numbers, which have been volatile of late. this is a company pushing aggressively as it has done historically, putting the money back into the business. >> and still, investors are buying into jeff results' vision. you've got to splash the cash to do that. my a euphoria in the market after these numbers. 12% rise after hours in terms of share price. $200 million profit. $18 billion from apple. but they are getting $29 billion of sales. they are managing to spend most of it. they are still believing that amazon is no longer an online retailer. it is also a media company, a software company, a consumer hardware company. it is not just ebay. it is netflix. it is time warner. it is microsoft. it is everyone. they want to see them spend as
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long as they still by the vision. what they like in the numbers is the fact that people are willing to go premium with amazon. 53% uptick in those buying amazon prime. not only do you get the video content, you get your deliveries quicker. they don't mind when jeff bezos is saying i want to invest in getting the package is there farther. i want to invest in drones, in content. woody allen and the like. this is an interesting area. they are going to separate that type of the business. it is amazon web services. it has become a juggernaut in cloud computing for consumers. they have never actually showed us how profitable it was. it was shoved into other stories. now, they say, so important is this business for us, we are going to separate the numbers out. investors will look at how profitable. >> this is a common theme, big
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tech companies looking to invest productively so they can stay ahead of the game. they don't get disrupted after they are disrupted. google is another case in point. >> google as well. that is why perhaps we saw a lackluster set of numbers from google. we saw sales rising, up 7%, but not as much as analysts hoped for. profit up 41%. these numbers not hitting expectations. the worry is that we are starting to see advertisers go to the competition. facebook yahoo!, managing to make market share. in the mobile area, google hasn't managed to weather the move that well. not only are they seeing advertisers go to facebook, but also google can't charge as much as it did online on its pc adverts. you see the amount they charge per advert dropping about 3%.
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investors are worried about what google is doing in terms of mobile. google is promising still to invest. it is looking at driverless cars and the like. it is looking to expand its business, looking at cloud computing too. this is a really interesting area, how much they continue to woo over investors. just a put it in context operating expenses up 35%. but about $7 billion. apple spends less than that and profits were more than five times google. >> caroline, thank you very much indeed. we are going to take a break. coming up, 2015 is the year of the election in europe. the votes are being cast on national issues and europe itself. as spain targets a series of style then, we look at the intersection of elections and economics in europe.
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we will be back later. see you in a moment. ♪
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>> welcome back to "the pulse" live from london. spain's economy expanded in the fourth quarter. for more on how this will play into elections in the country, we are joined by roderigo from madrid. we are watching the polls, how
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does the gdp story play into this? >> it is an interesting question. it was born out of these movements that were complaining out of frustration with the economy and how things were going the lack of employment the economic stalemate and what we are seeing now is that as the economy starts recovering, unemployment rates are dropping. there is a big question mark about how much support these parties that build their power on fighting against these problems will lose or how they will capitalize on this change in fate of the spanish economy. it is a big question mark and an interesting one. >> if sarah reza gets what it wants -- syriza gets what it wants in greece, how does that change the equation?
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>> they have shown that they are kindred spirits. they were chosen as the head of their party last year. soyriza's leaders were elected, and were on stage with the new prime minister in greece , showing that they work together. there is a very parallel story there and people are paying a lot of attention to it. r -- syriza getting what it wants will give a boost. if they are not getting what they are asking, it could backfire as well. >> is the run-up to the election gains traction, one of the political pundits -- is this election still anybody's? is podemas still seen as the
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front runner? what is the inside track coming out of madrid? >> podemas has been ahead in surveys and polls for several months. however, in the last two big polls, there's been a spoilage for the ruling party. there is a slight change in the windsm\, but it is still very much open. that is where the big question appears. as to whether podemas is losing its surprise factor, with the elections still 10 months away the question is, how will they be able to reverse that? how will they avoid from losing more of the surprise factor they had? >> ok. i think it is all fascinating. we are going to draw some lines between the dots.
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thank you very much indeed for your time. let me show you what euro-dollar is doing. in a moment, we are going to italy. we are talking to somebody from the five-star movement. then we will go and talk a little more about greece later in the program. there's euro-dollar. see you in a moment. ♪
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>> welcome back. before the break, we were talking about what is happening in madrid. podemas' possibility of forming the next government in spain. let's go to rome. we've got a story developing as we watched to see who will be the country's next president. it also comes at a time where we are watching to see how the anti-bailout movement around europe gathers momentum. syriza obviously the story dominating the headlines after it took power in greece. let's carry on the conversation. let's go to rome and discuss the presidential story and what is happening with this movement around the euro. maria joins us now. she is a lawmaker with italy's five-star movement. good morning to you. the first question that everybody is asking around
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europe at the moment is, how does the story between five-star commissaries are podenasmmas work together? what is the five-star view of series a? >> first of all, thank you for inviting me here. it is a pleasure. i have to say that tsipras demonstrates the failure of european policies. the euro as a currency is not for our well-being. that is what we saw in greece. we agree with some points with podemas and with syriza. at this point, to cut the fiscal compact, to see eurobonds -- there must be a sort of that sharing into europe. europe has to come back to be in solidarity with all countries
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not just in the favor of businessmen. we will see if there are some common points. we will go together to see this point, to achieve this point. >> do you think mr. renzi agrees with you as well? do you think mr. renzi agrees that we need a change in the way europe approaches the financial crisis? do you think he has some common points with syriza as well? >> basically what tsipras did was to block the sale of the port and block the sale of the energy company. i think it is going against the memorandum which was signed in the last government. i think it is going to the right direction. we will see what is going to happen next. i do believe there is just one choice. if tsipras wants to achieve his
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program, seea an exit strategy from the euro. that is the only possibility. >> you think the only option is to exit? he says he doesn't want to do that. he says he wants to change the system from within. is that not a more pragmatic way of approaching the story? >> it is a pragmatic way, but we have to see if it is going to -- if europe is going to accept his renegotiation. we have to see about that. we do believe there is no ideology left. we have to talk and we have to work for the people for the european people. we are just spokesman of the citizens. what we are doing is to actually fight in order to come back to a solidarity view of life. that's what we are doing. our problem in italy is the
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corruption. that's what is really important. we really need to improve, and also to fight against corruption. i just want to say that two days ago, 117 people have been arrested in a mafia trial just in my region. there were politicians involved there were businessmen involved there were journalists involved. mr. renzi says he wants to fight against corruption. perfect. we haven't seen in parliament one blow against corruption. that's the first point we have to carry on. >> can i ask you a couple quick questions -- first of all, if syriza gets what it wants and is able to renegotiate its debt and make changes to its relationship with the rest of the eurozone, do you think that would be a message to italy that it can do the same, would five-star drop its view that italy needs to
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leave the eurozone? >> well, of course there would be a really message. we want like other movements to view the european regulation of agreements. we want to review those. we want to see a debt sharing like i was saying before. we need to do a change. we cannot afford this austerity anymore. this austerity is killing us basically. >> let's leave austerity to one side. i want to ask you a couple questions on the president. is there any circumstance in which the five-star movement would back mr. renzi's candidate? >> well, i'm going to tell you how we approached the presidency vote. basically, we asked mr. renzi --
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mr. renzi said he didn't want to give us any names. we went to the parliamentarians from the democratic party and asked the name. yesterday, the citizens had the possibility to vote online for the presidency. our name -- this is an example of direct democracy. it never happened in history. we will see in the next days -- one thing is for sure. if we have to support a name from mr. renzi, this will be voted by the people, by the italian citizens. we are just spokesmen. italian citizens will have the possibility to tell us what we have to vote. >> do you think he is -- in that circumstance, do you think people will be looking at him as a possibility? >> again, as i said before, i'm
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a spokesman. spokeswoman. spokesperson. the citizens will have to decide. of course, we want a president who is superpartis and we will see the figure of mr. renzi's name. but the citizens will decide. >> do you think it should be a woman that gets the job? i know you are only a mouthpiece, but would it be good to have a woman in this top job? >> they asked me already. for me, the most important thing is that she is going to be an honest person, a person super partis who doesn't sign any decree that they see.
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that is important. also, super partis meeting that actually he or she prepares the constitution. personally, i don't care if it is a man or a woman. a woman would be really interesting and nice. it would be the first time in italian history. for may, the basic thing is honesty and super partis. >> ok, maria, we will leave it there. thank you very much indeed. as you can see at the bottom of the screen, we are flashing news on alibaba. caroline hyde has been running through the details. cracks we already had one record-breaking ipo. we could get another in 2016. this is the finance arm of alibaba. it does mobile transactions, transactions via the internet and we look at this. by 2016, this particular unit
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could be spun off with an initial share sale. they are looking at a private placement first. according to people familiar they already approached certain funds in china. they have been invited to partake in the private placement. they are looking at potentially privately placing shares and then looking to the market for an ipo in 2016. interestingly, the chinese market. perhaps this wouldn't be like alibaba went to the united states. this looks like a share sale in china. >> i wonder if that is to ameliorate the chinese authorities. two and a certain extent, this was expected. >> certainly, there's lots of things within the prospectus that show how much money should be given to alibaba. alibaba could get at least $9.4 billion if alipay has an
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initial share sale. >> caroline hyde. those listening on bloomberg video, the first word is up next. for our viewers, it is a second hour of "the pulse." we are talking telecom tussle and super bowl ads. see you in a moment. ♪ :
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>> ahead of the euro group they meet with the new greek government. landing a deal. qatar buys a nearly 10% stake in i.a.g. another i.p.o. for alibaba, its finance arm which runs china's biggest commerce payment business plans to go public. good morning to our viewers in europe and evening in asia and those waking up in the united
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states. this is "pulse" in london and we have breaking news out of the eurozone. it sis not great breaking news if uryou are mario dragi. we have a negative report more than the market was negative .6. it was anticipating .5 but to be honest the euro which sold off into the number has bounced since it has been delivered so you are seeing a little bit of a move through on the up side. you have unemployment rates which is coming through as well. the seasonably adjusted december number is 11.4% and november un unrevised at 11.5%. a little bit of a dip maybe at the margin in terms of what we are seeing on the unemployment number. the core number setting a new record low i think that is the
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headline. january inflation number matching the record low from july of 2007. what does hanz think of them? >> they were negative 0.6 isn't surprising when you look at the two preliminary numbers. yesterday we had germany. even germany was negative 0.5 expectation was there for negative 0.2. spain disappoint theeddisappointed. so the idea it is down a little more do not tell us that much new. a lot of it is energy prices it is either down 6, 9 or 12% month on month from last year so the german sergeant sanction unchanged and we need to look at what energy prices are doing to increase consumer spending. they want to see more data on that. in some ways it is surprising
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and bad news. now that we have quantitative easing and size of it i expect this will be more important talking about when is quantitative easing in europe going to end and by this number no time soon. guy? >> yes, they are going to get it back to the mandate which is close to 2%. they are a mile away from that right now. in some ways yes, it gives us a sense of the duration but as you say we've already had the remedy to the cause which is this number so in many ways we have had the news out. that has been done and dullessted. >> the more important numbers are quantitative easing in march. this time in april, end of april we get the first march reading and see whether the 45 billion in sovereign didn't and purchasing another 15 billion in a.d.s.'s what that will effect.
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this will potentially replace the tphraupnonfarm payroll number as the one that could potentially move markets. it seems like nonfarm payroll data are not as important as the tapers are taking place. there number will perhaps be more crucial once we can weigh it against what is happening with quantitative easing out of frankfurt. >> what is your perception in betterrlin of the political dimension of this? >> it hasn't changed. these numbers will not change political perception. that is oil prices lowering will make consumers richer and more spending and mini stimulus and, two, regardless of what inflation does or deflation germany and the rest of europe needs to balance their books. in is a two-part prong. balance the books and do the structural reform. very little will move that even among the s.p.d. which is the
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coalition, the junior partner they seem on board with the merkel balanced budget goals. >> are people talking about the second round effect on wages because that seems to be what central bankers are talking about. if you see the weak inflation numbers translating into lower pay round that will make the central bankers nervous. is that embedding these figures into the real economy >> we will have to see when we dig into unemployment if there is any upward pressure on wages, hours worked per week. it seems like we are a couple of weeks if not months from that conversation taking place in berlin berlin. i don't doubt it is starting to take place on trading floors but the idea that there is not upward pressure on wages hasn't sunk in here in germany in because people may feel a little richer because energy prices are
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lower. >> it will be interesting to see if companies use that as an use to not raise wages. thank you. we have an action-packed hour. we learned that alibaba is planning another i.p.o. this time its finance arm. we will bring in lieu lu lunch clinic. how did we learn this is happening and what do we need to take away from this? >> we just learned from our sources that alibaba is planning for an i.p.i. for the financial arm next year. the company is talking to chinese fund right now and they are getting evaluation as much as 50 billion currently. they are planning to tkodo part of placement shares before i.p.o. and the company has said in the
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past before they want to list in china and we have reconfirmed that dame -- that detail. but they are not ruling out a dual listing at this point. >> is there any line that i can draw between that decision to list in china and recent criticism of the company from the authorities, do you think? >> the plan to list their financial arm came much earlier. they have made it public that they want to list there unit of their financial arm eventually in china as early as in november last year. also, the reason for them to list in china has to do with restrictions regulations in china because finance is still considered a key sector to the state economy and that is why having chinese investors is very important when you consider these kinds of i.p.o.'s.
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>> caroline, give us a sense of the relationship between the two businessis? >> it is an affiliate arm. we know is an e-commerce giant and basically hooks up buyers and sellers more mom and pop shops people who make things in their home and can sell them across the world. this is a payment arm and is able to do the transactions. the scale is pretty phenomenal when you take into consideration what alipay and the like is doing. it has 800 million registered users. it has 119 million on the mobile so you are able to pay for certain goods by your mobile. 45 million transactions a day. it is expanding globally. they are pushing into u.s. and russia. you can make transactions in 100 countries already. there is a very strong unit. no wonder it is garnering potential overall market value of $50 billion and could sell
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off certain shares. interestingly, alibaba which was spun out of alibaba several years ago much to yahoo's shock and horror because it seemed they did it without their consultation but they spun it out and it was thought that they could sell shares t. is written into the prospectus for alibaba when they had a record making sale in september they would get money if there ever happened and we understand alibaba could get $9.4 billion if alipay or its agent finance if they do sell shares. so it could be an uptick for alibaba but their involvement will always continue. it says that overall they will get the perpetual right to about 38% of the finance arm's pretax earnings. >> caroline, tank you. thanks to lulu chen. our breaking story of the
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morning alibaba to spin often the financing arm. what else is only our radar? google reports a disappointing q-4 revenue. rose nearly 7% to 14.5 billion. sales and profits below sphaeutsdz. google facing increasing competition from facebook and mobile advertising space. amazon better than expected posting a profit of 45 cents a share easily beating the project the 18 krpbtscents a share. ♪ british telecom has increase in third quarter. saw the broad band business boosted as they won new customers with free access to espn channel and said it will start testing the broad band technology with speeds up to 500 megabits a second to most of the u.k. within a decade. it is looking to move into
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mobile and to buy e.e. and we will have more in a few minutes. looking at an airplane to buy qatar has bought a 9.9% stake in i.a.g. trying to increase ties with the one world alliance and said it was delighted that qatar as a shareholder. now still ahead we will get back to the telecom story. the pay giant adding mobile services bundled packages. how will that ramp up competition in there rapidly changing sector? we have the b.t. numbers and great panel assembled to talk about this story. ♪
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>> welcome back to "pulse." we are live from bloomberg's european headquarters in london. b.t. posts results showing the continuing allure of its sports offering bringing in new customers. but there is no update on the e.e. transaction. what did we learn and what do we need to know and how is this sector changing? we will get details with caroline hyde.
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sport still proving to be a winner despite the numbers? >> seem many want to tune into rugby that b.t. sports and espn offer. only 18 months has b.t. in the tv sector. it is pulling in more customers. the way you get in is buying b.t. broadband and you have an array to digest. 119,000 is what they brought in the last quarter a net number. they have 2.7 million people on their broadband. the question is next month we have to learn how much they will fork out for premier league rights and we understand there will be a battle between b.t. sports and sky and how much will we see the prices elevate to get a hand on some of these keys of matches. that is a big question mark. it is a company that is changing. we know it is 169 years old.
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british telecom it was known. it has gone broad band and television and the new era is mobile and they are releasing numbers about how they see the broad pwapbld going. broadband technology 500 megabits per second. that is how fast they will be able to deliver to most of the u.k. in a decade. >> thank you, caroline. a lot to still play for here if you will excuse the pun. premier football league rights shortly and that is something everybody is talking about. let's welcome our panel, our media analyst and the director for multi-play and media c.c.s. insights. good morning. 2015 looks like it will be an incredible year. i remember away saw that as a
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sector and 2015 could be the year we realize it as a possibility. how much change are we expecting? b.t. kicked it off. what happens next? >> if you look at sort of you are absolutely right, things are moving very rapidly in the space. if you look at what is driving it there is a realization of the money out there for consumers is limited so if you maximize the share you have to offer people the most services. b.t. made the move into mobile. we will see what it does in terms of premier league rights and whether it is more aggressive than last time. so what do the other players do within the market. if you are sky you announce the deal but it is only for 2016. b.t.'s mobile offer will be this year. is sky being left behind the curve? what does vodafone to do? doesn't have a pay tv network.
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is there a combination between vodafone and sky or vodafone and possibly virgin media. a variety of things are happening. the landscape is almost certain that the landscape at the end of 2015 will be different than the start. >> best guess? >> everyone is jostling for position. we predicted b.t. would buy e.e. and hutchinson telefonica. we predicted sky would launch mobile. next is vodafone buys sky. >> when? >> this year. it is extremely complementary. >> how does that fit? >> vodafone doesn't offer six line services but plans to offer six-land services. how do uyou compete with b.t. and sky? you need a subscribe are base. so it makes sense to buy sky and
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tkpweufrpls gives you the broad pwafrpbd base and is complementary in germany and italy. >> he is right you can see a strong rationale for vodafone buying sky. fantastic. you could arc there is rationale for vodafone teaming up with liberty global and virgin media. there are other possibilities. one possibility is does b.t. look at something like i.t.v. because an excellent fit. you could see b.t. has committed to going down the broadcasting route. it is hard to grow that organically. you have to buy in skills. you have b.t. with the folks on the infrastructure and you have i.t.v. with the focus on content and broadcasting.
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>> and big historical pool of material to work with. >> of content as well. it would be a perfect fit. >> you cannot pay for everything though. when i talk to telecom executives one thing they say is -- i was talking to the orange boss and he said we are not going to play this game because we want to win and invest in case and content at the same time? >> one of the biggest challenges that is being faced with the premier league rights auction the consensus is it looks like they are going to sppbtd more. the biggest thing for b.f. is through monetize it. it is unsustainable to continue giving away b.t. sport and they need to address engagement so they need to win more packages to be able to get people more
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engaged in b.t. sport. >> one of the things as well that is missed with sky is the premier league in terms of how important sky is or how important the premier league is to sky. it is not just the expertise although we asked sky sports subscribers and around half with turn to b.t. if b.t. won the majority of rights or it was an aggressive price point. but there are ancillary revenues that are talked about but the profit standpoint is a high margin. clubs high margin for sky and football is the bedrock there. if you are b.t., if you are looking at that time from a b.t. standpoint and this comes once every couple of years and you want to deliver what you would think is a significant blow on sky, what you would do is bid very aggressively for the rights. now, last time i think the
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premier league was concerned about the fact that b.t. was a new entrant, didn't have experience, broadcasting the games, there was always this risk that things with perhaps mess up. i think b.t. sport has been judged to be a success generally speaking. there are ups and downs -- >> they delivered. >> they delivered. that is the key thing and it didn't come across as amateur or anything like that. from a premier league standpoint i think they will be a lot more comfortable with -- if b.t. did bid the most granting them the majority of the rights. >> short sky. >> we are of sky. you have concern over the premier league rights auction. there are question marks over the pay tv model in general and question marks about b.t. and how aggressive it is toward sky in the future the r. then you have issues do we have transmission revenues get introduced in the u.k. market
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so. there are a number of pressures. having said, that final word, it is an extremely good company and time and time again its demise has been predicted and they have come out the other side. >> sky cannot afford to lose its current package and b.t. needs more. the other question is will we see any new entrants. >> where does this leave the new entrants, new arrivals the core ones and netflixes? >> netflix is a completely separate argument and its arrival certainly allowed the other telecom operators to invest helpful in fiber broad pwarpbld so we have seen a trend toward multi-play and consumers are demanding better packages and convenience. in terms of new entrants of the rights of sports that is a challenge because one thrpbg is
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making the rights but you need to have the production and marketing and everything else with it and it is a challenge to enter that market. >> i would say if you get somebody coming in what sky do not isn't do not want b.t. taking a majority of the rights. it can only monetize them if it has access to sky's channel. >> fellas, thank you. we are just getting started. ♪
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>> 69.82 the russian rate decision is coming up after it break.
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>> we are live from bloomberg's headquarters waiting for the raourblgs rate decision. currently 17% and everybody is paying attention to this the ruble rate. nobody punching that much at the moment. we will wait to see what that delivers. it is never actually what it will be. and the decisions of late have come through big surprises. so this is a more formalized process. let's go to brussels. ryan, we are waiting for the
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decision. what are people talking about? >> please jump in my ear when it comes feel the expectation is central bank will keep the key rate at 17%. -- the low-key rate is 15%. >> that is shocking. central bank never ceases to surprise. surprise key rate cut. no one saw that coming but no one saw the idea of them raising rates by 650 basis points the last time either. look, the central bank is under an extraordinary amount of pressure to cut rates. 17% is a lot. it has been in place for a good month and a half and russian companies will tell you it is effectively impossible to do business when the cost of credit by the time it gets through to them is over 20%. it is more than double what it was last year. as you know guy, the problems for the central bank is inflation is in double digits
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and the ruble has sort of been collapsing. so, an interesting move from the central bank. what is going on with the ruble i can't see it? >> i will show you what is happening. it is 370 on the back of this and i will give you some of the commentary coming through. central bank has cut rates due to the changing balance of risks relating to the russian economy. the previous rate increased stabilized c.p.i. expectation as a result of that stabilization we can now see the rate cuts coming through. but what that has definitely done is weaken the ruble and now trading up through 70 on the dollar-ruble rate. >> which is painful for the russian government because people have kind of gotten used to the new normal of ruble moving between 60 and 65 and what we have seen the last week is moving closer to 70 and now
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over 70. for the kremlin it will take a little bit of explaining that this crisis isn't over when it comes to the ruble. clearly they are concerned about the contraction. the central bank in previously forecast the economy could contract by as much as 4.7%. it is difficult to imagine how to generate growth when you have the effective rates out there that companies can borrow at at over 20%. interesting to hear they think that inflation expectations are under control. maybe that is because the price of oil is coming down. that will be a big issue because for the first time in a good 10 or 15 years in russia what you have is income growth not keeping up with inflation. and that is a new sort of political reality as well in russia. obviously russia has had inflation throughout the years but they have had real income growth as well. now president putin has to talk
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to his people who are not earning as much as they are having to pay. >> yes. it is interesting they are talking about -- yes, to back up your point the ruble's depreciation will further affect asset prices because of the currency depreciation but c.p.i. slowing to below 2% by january of 2016. so i assume the fact they think c.p.i. will slow below the 10% is indicative of what is happening with oil. but that will be a huge -- the fact that the ruble is still depreciating means that you are going to have a huge counterweight. so oil prices are coming down but the cost of everything else will presumably be going up significantly. >> yes. certainly for imported goods. whether it is cars that are import the or food because russians still import a huge amount of their food. this is an issue. the problem in russia is simple.
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the two biggest variables affecting the country, the ruble, the economy, are variabilities variables out of their control. that is oil price and sanctions. if there is any certainty in mostcow when you talk to people on the ground they are pretty certain the sanctions are around for a while. certainly the c.f.o.'s i have been talking to they don't think they are going away the next couple of years despite the fact the greeks this week have been making noise in defense of the russians and saying they are not for new sanctions. but the oil price is the big unknown, right? and it makes up almost half of the russian budget. so it is very difficult for them to operate in these circumstances for the central bank. interesting that they have decided to make what i think much will say is a bold move at
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the expense of the ruble right now. >> yes. we have kind of unwound the spike seek the result of that cut but we are still trading around the 70 level. 69.95. we will leave it there. that is on the surprise rate county of the russian a central bank from 17% down to 15%. we will see what else is happening on the markets. a busy session. >> thank you, guy. how can i ignore what the russians have done? i will go straight to the effect chart and bring you the dollar-ruble. 370 up we go and back down just below 70 that is still a record low for the ruble. a cut of 15% to 17% who saw that coming? that is a very high interest rate. they think inflation expectations are stabilized somewhat but 17% was strangling
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that economy. that is the move in the ruble. we go higher for the dollar. that is a weaker russian ruble. he is where, so much to talk about this morning. we get a little busier. euro-dollar. we have the euro drop, move into the inflation area of minus 0.6%. it me the big headline is core inflation. strip out energy and food and alcohol and you get a record low of 0.5% for eurozone core inflation. that argument that low inflation here is only a consequence of low energy prices does that take a big hit when you look at a record low core reading? maybe. euro-dollar comes back up. the other big story bond market greece great yields. germany yields down 0.35 tracking inflation lower. stronger greek bonds as well
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today. down 34 basis points to 9.83%. i can't emphasize the lack of liquid liquidity in the market. 81% of greek debt is held by the official sector. there is literally nothing elsewhere. i said earlier how difficult is it for you to go out there and buy greek debt. he said very difficult. i said if you wanted to sell it how much could you move the market? a sell of 10 or 20 mil could move it up 100 basis points and it will trade a big move off the back. ft-si 100 a little stronger 0.5%. we will see what is happening in europe. london lower, d.a.x. off by .4%. the pweugbig headline russia, gray area, i say gray, the big unknown for the rest of the year. quite a surprise, guy johnson. >> quite a few surprises out there. we have talked about the oil impact that is running through
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the russian economy right now. we have talked about the inflation story here in europe and how that is being affected by oil as well that lower oil price driving rates in terms of inflation rates or disinflation rate to negative 0.6%. and affecting airline. today we have had different news qatar buying a 10% stake of i.a.g. their c.e.o. is delighted to have qatar airways as part of the shareholder base. why are they doing this deal? >> it seems to be tightening the relationship further with i.a.g. and british air ways and iberia. this started with the relationship with willie walsh has with them and they are close in 2013 he encouraged qatar to
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join one world and that was step to tighten the relationship. now it seems they have bought this 10% stake in i.a.g. which is worth about a billion pounds and it fits in a little bit with other things qatar more broughtly does. they have 20% stake in heathrow and herod. it sis not unusual for a qatari company to take takes in other companies. >> down the road we have what has been buying in various businesses. is this a replication or a one off? >> it is definitely something that comes to mind immediately. they have take in berlin. alitalia is most common. i think he will say what they are doing is very different. his relationship with willie walsh and i.a.g. is different.
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but all of these middle eastern carriers are really looking for ways to distinguish themselves. they are all middle east and hubs and have huge expansion plans and they are just trying to figure out a way forward and way to continue forward. >> in is a linebacker -- this is a hub strategy. you have willie potentially bidding for air ling gas to use dublin and transatlantic and you have doha potentially huge new airport there. three big hubs potentially running through there one world alliance. >> absolutely. if terms of i.a.g. and what they might see it is another way for them to tap into asia and that is probably what willie is looking at and he is been if you can't beat them join them camp. he says he's seen the force and power of the middle eastern carriers and decided the best thing to do is work with them
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and specifically work with qatar. he will be looking for ways to expand heathrow maybe through air linglinguas. heathrow is full and qatar would like more flights in there. at this point it is all about getting passengers through these hubs and there is plenty of the transatlantic market and people that want to fly through the middle east. so this is one step further in that direction. >> thank you. we will take a break but up ahead america counts down to the super bowl sunday the biggest day of the year for sports and commercials. advertisers are paying millions for 30-second spots.
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we will discuss whether it is good value for money. ♪
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>> welcome back to "pulse." there are around 100 million americans that will tune in to the super bowl. while most of the focus will be on the game there is a great deal of anticipation for the
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commercials. companies pay huge amounts of money to get people to watch these commercials. they are 30-second shots. -- slots. they cost about $4.5 million. that is quite a lot per second. are they getting a bang for their buck? do they get value? let's try to find out. we've got a branding specialist. he joins us now. this is a huge event. the advertisers seemed to have pulled off a monster stroke creating something almost out fof nothing. >> they will be celebrating in madison avenue this evening because this is the build-up to the greatest bonanza for the advertising industry in america. they created something that the public actually wants which is unheard of. normally people switch off to get a cup of tea or beer when the advertisements come on.
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it is the opposite. they are waiting to see the what coke will do or how they will take on pepsi. it is a big part -- >> how do you deliver value? expectations are incredibly high. how do you approach this >> first you are dealing with half the population of america. virtually half the population of america are watching this one event. it has to become part of the entertainment and it has become as big as the game itself. and the ads are not allowed on unless they are great. that is how powerful the broadcasts have become. if your ad is not any good sorry, it doesn't get on because this is entertainment. >> has it become the story that the social media build-up to it youtube clips, facebook story is almost as important as the playing out f tof the advertisements.
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because what has become a story is the control beforehand. >> that is the secret. social media has had a huge part. it is so competitive and all the brands are looking for the best way, the newest way, the post original way of getting their brand and their advertisement to get the cut through and that be the one everybody is talking about. they come up with all of these different schemes of teasing or social media leaking little bits of the ad to try to entice the public to watch on the big day. there are all sorts of tricks and social media has had a huge part to play. >> what is the mix in terms of commercials? you have quality tech companies and you have got the normal consumer goods and mobil companies and kim kardashian with a t-mobile advertisement.
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are there particular segments of the market this works well for? >> car companies are falling over themselves. there are five or section with ads. they know they have to be in there because if they are not in there their competitors are in there. i think the only one with exclusivity is anheuser busch. they take about seven 30 second ads for their beer brands. but it is who can be the most exciting most different. >> do you think it actually translates into more cars being sold or more beer being drunk or more minutes being taken on mobile carrier? is that what it is about? or is this brand enhancement rather than product sales? >> i think it is brand enhancement and making a statement we are big enough and powerful enough to be one of the super bowl advertisers. >> have you seen them? >> there are a few of them. i think the kia one is good. there is a lot of good ones but
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the surprises will be sunday. >> how would you approach it? is humor the way to approach it? it is the pitch and you work your way through and it is funny. it is humor the way much of it works? >> humor is a great way. the story line with the final ad is always a great winner, the love triangle. pets are always a winner. >> lots of puppies. >> yes. they are always good. and it is all those sorts of things and bringing that together and getting the communication right in the build-up. >> do you think it carries on being such a big event? does social media take over and be part of the advertising landscape? >> i think it is does. it is the final -- it is the live television event. television still has that ability to pull in that massive audience at one time for a live
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event. so all the other communication tools just build the tension and add to it. but it is the big focus on sunday night that is the real hook. >> nigel for coming to see us. sponsorship and branding specialist. coming up, we will have more on that surprise rate decision from the russian central bank. 2% rate cut 200 basis points moves the ruble award -- around. ♪
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>> welcome back. you are watching "pulse" on bloomberg tv. we are on bloomberg.com. we are watching greece and russia. we will get on the russian central bank decision the cut but first we go to athens where there is critical first meeting with greece's new government later today. athens bureau chief what is on the agenda. how are these two going to talk? >> yes the prime minister and the finance minister are going to lay out their plans to replace the existing bailout agreement with a home-grown growth plan which will be
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shifting the focus from spending cuts and tax increases and austerity measures to measures against tax evasion and corruption. is it going to fly? well every indication points to no. even if greece gets the debt relief that it wants it hrwill still be needing money and the question of who will foot the bill remains to be answered. >> we will watch and look forward to headlines from you later. thank you very much intkaed. that is our athens bureau chief. >> only one bank forecast this and they were looking for a bigger cut but huge surprise. dollar tkarb dollar-ruble 317. we are still 450 basis points higher than november. that was an emergency right.
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15 is enough to keep what is going on to keep this market contained. >> it is interesting. we talk about the peak of inflation coming through maybe in the second quarter and maybe they have done enough to stabilize the situation. you get a sense with the conversation in brussels about further tightening that they may have further problems they need to manage. >> i put this in a global con tblgt how many central banks have eased this week. last month around 10. >> iswith denmark and with what is happening in switzerland there is the old story putting pressure on russia. but in a very different way. >> a lot is going on. >> not too much. keeping us on the job. >> we have really been looking at all of these different stories coming in and how at the change the world. last two weeks changing things quite dramatically.
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we will take the weekend and reconsider and we will be back monday on "pulse" in europe. next i will hand it over it the united states. "bloomberg surveillance" is up next. ♪
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>> in the our russia stuns markets and cuts their key rate. they can confront further sanctions. they are going to act on rampant inflation. ruble continues the plunge and
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the central bank is on its own. costco deploys cash to shareholder and qatar buys a piece of british airlines. forget the hummus and there will be bubbling of desert heat at the greeley house. so many sauces and so little time. this sis "bloomberg surveillance" and aware -- we are live from our buffalo wings headquarters in new york. >> breaking news tom knows how to say that. >> it is a little cute statement. we have a news flow that is extraordinary. let's get started. >> we begin in brussels where the european union government are getting ready to slap russian with more economic sanctions inhinting the

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