Detroit Goes Bankrupt: Surveillance (7/19)

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July 19 (Bloomberg) -- On today's "Bloomberg Surveillance," Tom Keene, Sara Eisen and Scarlet Fu bring insight on the state of the market getting you ready for the day ahead.

Stocks fall after google disappoints.

The g 20 finance ministers meeting kicks off in moscow.

He calls on europe to do more.

Europe does need to look at what it can do to get the engine of growth moving again.

The world needs europe to grow.

Vivendi has rejected an offer for its music division from japan's softbank.

A new low for motor city . detroit files the largest municipal bankruptcy in u.s. history.

? it is 6:00 here in london.

Bloomberg reporters are standing by across the world.

Ryan chilcote this in moscow at the g 20. we are joined from hong kong.

There is a bid for vivendi music group which has been rejected by the french music company.

We will also learn more and what we may expect from today's statement from vodafone.

Let's get some of the news ahead of the g 20 finance ministers meeting.

They will be reviewing the state of the world economy.

Europe remains a major concern.

Before he headed to the meeting and russia, jack lew spoke to our chief washington correspondent about his goals for the meeting.

Europe does need to look at what he can do to get the engine of growth moving again.

The world needs europe to grow.

We have been making the case for some of the emerging economies, china in particular, that they need to go through the internal reforms.

These have been friendly conversations.

I think we have a common interest in a world where there is growth so that we can have the benefits within our borders and across our borders.

We have seen job creation, those of the types of conversations that look forward to having.

Squats what are the sort of steps that the u.s. would like to see?

-- what are the sort of steps that the u.s. would like to see?

We like a fiscal policy that is decisive and would help to get the engine of the economy moving.

Monetary policies have been affected.

If you look at the world for years ago and the world now, very different.

Four years ago, the world book that the united states and the financial crisis and there was a lot of explaining to do on how that happened.

We are growing not as fast as we would like, but definitely in the right direction.

In spite of its noise, the resilience of our political system has led to policies that have been effective.

We still have more work to do.

We are at a place now where the example of the united states is a good one.

We are at a position of strength.

We still have seven percent growth.

The projection was that wall street economists are looking at the second quarter may be under one percent.

Can we be offering that much advice to the europeans?

If we look at the u.s. economy, we are relentlessly focused on people looking for work in this country.

The fact that we have made enormous progress does not mean that we are all the way there.

Look at our core economy.

It is growing in the neighborhood of 2%. it looks like it might be growing faster at the end of the year.

This was a year with tremendous headwinds.

We had a payroll tax cut that went away.

We had spending cuts that the effect.

Notwithstanding those very strong headwinds from government policies, some of them intentional, some of them unintentional.

The core economy is growing at two percent.

If you look at europe, two percent is far beyond their expectations and the headwinds will not be there next year, so we should be doing better as we get to the end of the year and the beginning of next year.

For more on the finance ministers meeting today, let's go to ryan chilcote who is in moscow.

Exactly when is the u.s. federal reserve going to begin reducing monetary stimulus and to what extent, that is an issue that everybody has been discussing.

When is that bond buying program going to be scaled back?

It appears it will be one of the major themes that this is g 20 summit.

We sat down for an exquisite interview with the finance mentor minister of south korea.

There must be much discussion about the timing extent and possible impact on the market.

Although the unwinding win signify normalization of the unconventional monetary policy, on the other hand, we must be mindful of the possible impact it would have on financial markets.

And the real economies of the emerging economies and developing countries.

Ben bernanke, the man everyone wants to talk to, will not be here.

His number two will be here.

She will be leading those discussions.

One other interesting thing from that interview, he did not go after the japanese for the weakening of the yen.

Going into the last g 20 summit, everybody thought that currency wars would be a big theme.

The big topic here is exactly what is ben bernanke going to do and as a group , the other 19 countries, how can they deal with it?

So, quantitative easing will be one of the topics being discussed.

To what extent is the news flow coming out of russia going to be an issue?

Probably not a huge issue but nonetheless very interesting.

The delegates arrived to a massive protest right outside of their hotel.

Most of them are staying at the ritz-carlton.

There was hundreds of protesters out on the streets in central moscow.

To protest a domestic issue in russia, the jailing of an opposition figure.

He was just sentenced to five years for embezzlement.

They say that he is a corruption crusader, that he is not guilty of anything.

They were out there in large numbers.

The leader of the imf was watching this and asking questions.

When you think about the g 20 and the finance ministers, maybe politics does not get too much into an issue.

Russia will host the g 20 heads of state in september.

Before that, they would like a bilateral summit with the u.s.. issues like mr.

Snowden in the transit zone, those are definitely irritants with the russia's relationship with the rest of the world.

There will be plenty more from ryan during the program, we will bring you the leading voices in moscow, the leading finance minister will be joining ryan.

It will be joined by the french finance minister, that is on the move.

That is a first on bloomberg.

Ryan will be speaking with the secretary-general.

That will be at 10 dirty -- that will be at 10:30. what is going on at google.

Why are they failing to live up to expectations?

Those are pretty high.

They posted a 33% increase in sales.

This fell short of the analyst expectations.

It is all about monetizing mobile.

You would think that google is a step ahead of the game.

It is making us use the search engines more.

In fact, the number of paid clicks, the time that you and i are going on to adverts is up by quarter.

It is getting cheaper and cheaper for companies to advertise.

Cost per click is changing.

The change is falling from six percent.

It is so much cheaper to have an advertisement on a smart phone than on a pc.

We will get more smartphones, it is meaning that this will be crimping the revenue of the likes of google.

Larry page thinks that we have so many opportunities in the market.

It is really hard to get real.

There have been so many expectations.

This is going to be able to make up for the retraction and the loss in revenue that we are getting.

What are they doing to turn things around?

You can manage locations.

They can track the performance of the ad campaigns.

This will hopefully boost revenue.

They are checking more of the services.

They have improved the android operating system.

At the moment, it is not turning around quick enough.

Thank you.

The latest on the technology giants in the u.s. and their reporting season.

Softbank made a bid for visiting the university.

Softbank has been reacting to that news, that story.

It makes the borrowing costs higher.

There is also the risk of default.

This is eight and half billion for the universal music is missed.

Again, clearly, the rejection measures, it would make much harder to finance.

We had a report on bloomberg thomas the shares are little bit lower.

That is the big news of the day, it is about the nikkei falling.

Of course, the voting was tries the average on that fall.

That might be increasing taxes sooner rather than later.

Run us through what is at stake this weekend.

They are expecting a landslide victory.

That is a crucial thing to look out for.

There is the majority in the lower house.

This is the first majority led government since 2007. they have really pushed through the reforms.

They are looking for fiscal stimulus and structural form.

One of those could be the japan sales tax.

There is 10% in 2015. this is looking into a big landslide to help those reforms.

That is what he wants, he doesn't get it.

Increasing sales tax, that is one way to get inflation.

Thank you very much.

Our reporter discussing vodafone ahead of the numbers that are due out.

We are expecting a further slowdown.

It will weigh on revenue.

We are looking at a drop of 3.6%. you have two more moving stories.

Number one, the 45 % stake in verizon.

At the moment, this is a 7.7 billion euro bid on the table for germany.

I will give you all the details in about an hours time.

. we will take a break here.

We are digging into the g 20 and moscow.

Find out why our next guest says it is just -- ? ? ask microsoft missed estimates in a back a decade.

The company was heard by a $900 million write-down of surface tablet inventory.

Softbank got its way with sprint but it missed out on another takeover target.

They made an offer for universal music.

It was turned down by the universal french owner.

It was made three months ago but was rejected because the thing the thought that the music company is central to their strategy.

Htc is down by more than 6%. they're poised for the lowest close since 2005. they expect more downside surprises from htc.

Welcome back to "countdown." the g 20 meeting kicks off in moscow today but what will achieve?

Joining us now is the senior economist at ehrenberg.

It is a cliche to call it a talking shop.

The g 20 does actually gathered together significant leaders , decision-makers from around the world.

Adding a few more countries does not really focus it very much.

Clearly, they can achieve things.

It is not like an eu summit or the summit or actual decisions are taken.

This is really about exchanging views.

Of course, there are some really interesting topics out there.

We might get some sort of commitment.

Typically, these things and in a statement.

Might we get some sort of commitment from the u.s. and china.

To show that they care about their neighbors, that they are conducting them mindful of others.

That would be the most positive outcome that we could have.

A statement where the chinese recognize that they are not just an independent country out there and they are not depending on them saying that they are changing our economy but that is the best word.

Internalizing the potential effect on other countries.

It cannot really mean anything.

If they do say they care about everybody else.

They probably do because there are these feedback loops.

It would be similar to what we had with the statement from the g 20 on the currency wars.

But the fact that everyone said that there is no currency war be assured markets that we were not going to see some sort of climax.

Banking regulation.

Will this focus on europe and the absence so far of a single banking regulator or what about china and the fact they have a shadow banking system.

There are different top six in the region and everyone will be pressuring each other to stick to the agreements made in basel and so on.

There are also a few countries which are not at the table, especially the tax havens which will take some of the blame.

Everyone will say, it is not that we sit around the table, but there are these that are undermining the process.

Tax evasion, which plays a big role, will probably play some role at the g-20. we have mentioned the debate about quantitative easing and how that might feature as a subject.

When are you thinking that this will be tapered?

Ben bernanke this week not seeming very keen to commit to a timetable.

Are you expecting something later in the year?

We think it depends on the data.

So far, it is not bad.

We had a warning shot with the housing data.

There is that risk.

In september, you will have a more concrete announcement.

In october, they might announce the actual decrease.

When ben bernanke for started talking about tapering back in may, and had a big impact on emerging markets.

That is why they would probably be discussing this topic.

Will we see this again?

Has the story by then have run its course?

There is the discussion, this is overblown and the sense that it is the actual tapering.

You can expect a modest measure tapering in october.

However, there is the risk that these things become kind of a self-fulfilling prophecy, people start looking around which country is really dependent on the hot money from elsewhere.

This does depend on chinese demand.

Where do these things come together to form a crisis.

There's is the potential for other countries.

I think it is mostly present.

We will take a short break on the program.

When we come back, we will get his views on euro zone growth.

That is one topic that will be at the center of discussions and moscow.

Stay with us.

? ? so, the g 20 is assembling in moscow.

The u.s. treasury secretary is about european growth.

He is calling on europe to kick start the engine.

What can europe do?

You would suspect that it would be some sort of big stimulus program called the ecb.

The european way at the moment looks at the structural reforms.

This is on the weight of a mess the demand.

This is out of the recession.

The americans would have this swift recovery which would generate demand and with the americans allowed to rebalance their expenses.

We have the german elections coming up.

What difference will that make, depending on who wins.

For us, it is a nonevent.

They will continue the current policies.

This would make them slightly more generous.

Keep in the eurozone together, demanding these reforms is in the german national interest.

Are we going to get these bonds at the election?

One party has it in the program which is extremely unlikely.

Thank you for joining us.

Coming up, we go from lithuania to get the latest on the imf chief panelist.

Why do they still want to join?

Stay with us and find out.

Once the symbol of american industrial might, detroit has become the biggest u.s. city to file for bankruptcy.

The u.s. carmaking capital has been hit by decades of declines and is now has paid the bill is a dollars owed to bondholders.

Jack lew says the u.s. economy is in example of a successful recovery.

U.s. fiscal policy is decisive.

The resilience of our political system has led to policies that have been affected.

We are in a place now where the example of the u.s. is actually good one.

The edward snowden whistleblower scandal might threaten a plan summit between president obama and president cute and -- president cute and putin.

He says that he will still meet with him before he goes to st.

Petersburg.

Lithuania is the next country in join to join the euro.

Christine lagarde has been the country this week.

We are joined by the bank of lithuania chairman of the board.

Thank you very much for coming to talk to us.

Lithuania has made staggering efforts.

What still remains to be done for the economy?

We want very huge structural reforms.

After the global financial crisis in 2000 eight -- 2008. we made some changes to our economical structure.

Now, we are one of the most growing economies in the eu.

In 2009, it was about 15%. for next year, between three and four.

They can be outperforming.

It collects joining the eurozone, it would be a logical contingency of our monetary policy.

You have the u.s. dollar and from 2002, and national currency is pledged to europe.

Of course, lower borrowing costs, those three factors , the main factor, the main outlets for the loans.

Other baltic countries have joined the euro and will do so before lithuania joins.

What lessons have been learned about how best to do this, what the criteria should be.

What are you expecting?

The baltic region is a very interesting region.

The countries have small open economies.

Inflation is the main criteria which will make some problems with for fulfillment.

We are exporting the economy.

In other baltic countries, it depends on the international prices.

The price of gas, the price for foodstuff.

Now we have the window to fulfill inflation.

We have the experience of estonia.

We have experience of lafayette.

How technical it is to prepare for the introduction.

In the world of central banking, the forward guidance it seems to be the new trend.

What do you think of foreign guidance?

I don't think there will be big changes.

What we see now in the national markets, we see that things have changed.

You can some positive trends.

The situation , i do not expect big changes.

Thank you very much for joining us.

The chairman of the bank of lithuania.

The japanese prime minister is set to win a crucial election on sunday.

This would give him control of both houses of parliament.

Victory would give shinzo abe more power as he tries to revive the struggling economy.

This is largely seen to be a landslide victory for the liberal democratic hardy leaving the factions fractured.

They are set to win more than 65 of the 121 house seats up for grabs.

Added to the 59 seats it has in the and consisted house of the chamber, it will have a majority for the first time since 2007. winning the election could be the easy part but the hard part comes after the election.

I would like to ask the administration to take further steps to rejuvenate the corporate sector are.

It could be done by lowering the corporate tax.

He has to persuade bureaucrats that they were against any tax cuts.

The party is with the reform plan.

Roxie will have to make sure that everyone stays on the side.

The problem is that a lot of those are strongly represented.

The chances of them succeeding on the third arrow are pretty tough.

This lies with the nationalistic agenda.

There has been recurring incidences of chinese official vessels and others are approaching or roaming around the waters.

The situation surrounding our and securities becomes increasingly tough.

Or will he or won't he visit the shrine?

If he does, i think relationships in east asia will become even more difficult.

China is one of japan's key economic partners.

Success effectively has the prime minister and political blank check.

The japanese future depends on how wisely he catches it.

Fourth-quarter profit at the world's largest software maker, microsoft, missed estimates.

They had to write down the value of their surface business which was released in october.

The biggest missed by most in a decade.

Profits fell from one percent . analysts were expecting a rise in profit.

Clearly, a big underestimation there from microsoft.

It is largely all down to what is affecting most of these big companies which is mobile.

They are not managing to get ahead of the game.

Intel yesterday struggling with mobile.

Because we are not buying pc's anymore.

They do the same kind of functions as a computer would but they are far cheaper.

There's is less demand for windows, office.

Pc sales are down 20% in the second quarter according to the cfo of microsoft.

This move to mobile, they are building the surface tablet.

Their first foray into making computers ever and they are not selling.

They're having to cut the prices.

There is no margin, there is no profitability.

Unless you are the first one in.

They're trying to play catch-up to the likes of apple.

900,000 went in the last two quarters each.

That is hardly anything.

They are trying to tackle this, aren't they?

The reorganization last week was designed to set up a business that is more made for this decade rather than the last.

They know they have been slow into the game but they are trying to turn it around.

This is the biggest organization since 2002. they are trying to realign themselves and focus on devices and services rather than on software.

Overall, we have seen them shifting.

They are focusing on the new hardware.

They are streamlining the management.

The cfo has said that we know we have to do better, particularly in mobile devices.

She says it will be a long time before they can offset declines in pc sales with that position and tablets.

A seven percent decline.

It is up 33%. operating expenses will be reduced.

This is a company that is having to invest in capital expenditure and it's got to get ahead of the curve at the moment.

Thank you very much.

The latest on another tech titan.

We will talk about football after the break.

We will look at some of the new man in charge of some the biggest clubs in europe.

Stay with us.

? time for today's company news.

The inquiry into the dreamliner fire has recommended that a suspect locator beacon should be disabled on all 747s. they stop short of blaming the device for the blaze.

Boeing says the locator can be removed quickly and that the fleet will not be idle for long.

Michael dell has another week to round up votes for his proposed buyout.

He says he has no plans to sweeten his bid.

The board has pushed the shareholder vote that was scheduled for yesterday out to july 24. china has widened its investigation after allegations of economic crime at glaxosmithkline.

Used to be says her chinese operations were visited by local authorities.

They say that all drugmakers are receiving this.

Let's talk about football, shall we?

The bloomberg sports contributor is here to look at the coaches and players at the european clubs.

Let's start with real madrid.

The new man in charge there.

What's -- -- has had a wonderful career.

Chelsea fans are very fond of him.

A perfect coach.

As ever, there are issues.

Then spoke about the issues about the big clubs in england.

He has made some big signings, hasn't he?

Yes he has.

There is an awful lot of money.

This will be the new rate holding midfielder.

An interesting player that they sold, he had a buyback course in his country.

This is interesting for real majority.

This is the other big money.

There are only with one main and that says to me he might be brilliant.

What is interesting is that real has gone a certain way.

They have young spanish talent him a they are looking to build teams that way.

Maybe learning from the way that barcelona is doing things.

He has written although and the strikeforce.

No one is quite sure where.

This is not necessarily his best.

They have got to make up the 15 point cap with barcelona.

He's trying to solve it.

Under pressure from the start.

Under huge pressure.

He is world cup winner, a great player.

He was suspended because of a head but he was not first choice.

He almost got the job by default.

Monaco has spent 200 million over the summer.

That is one of the issues he will face.

A huge issue because everyone thought that they would win the next titles.

There is a huge amount of startup.

Real madrid wanting him, manchester united wanted him.

They have managed to get him for huge huge money.

It is incredible.

France is setting the spending standard.

The great coach and player from barcelona, the two-time champion league winner.

He will be the third in our triumvirate of managers.

He is under different pressure.

Bayern won the league very comfortably.

This is one of the best players in germany last year.

He signed before that champions league final.

This is a player that was developed.

He will pass the ball very effectively.

Kirchhoff, they love and go and get those type of players.

There will be a mix of established stars and new -- they all do it.

They come and do a great job.

How do you follow that.

Scoring goals will be interesting.

That is one of the transfers has been robert levin dorsey.

This will be all about mario.

He will get at least one more.

Where are they looking?

One of the most intriguing ones is luis suarez.

We seem to be getting closer and closer to arsenal.

They said he is only worth 25 million, he is not worth what you want for him.

They will not spend too much.

We will see what happens with that.

The pressure builds.

We will take a break on the program.

We will tell you why david cameron is declaring war on traditional general men's clubs.

-- traditional gentlemen's clubs.

? time for a look at our top picks from today's newspapers.

Caroline hyde has joined us on the set.

Our sports contributor is also here.

Let's get a lesson in german history.

I always love these comments, this time it is on the german sphere of history jeopardizes europe's future.

Germany is imposing some rules to avoid a repeat of the third reich, hitler, and so on.

It is an american professor.

He must know how these things work.

I think there is some truth here.

The german experience, it is a lesson.

This is to not do it again.

That is why they keep the eurozone together.

I think a lot of this is fear mongering.

There are a lot of positive things in german history to be learned for the rest of europe as well as there are many positive things for germany.

The factions still have a bearing on european policy.

The german finance minister visits greece.

That is mentioned here.

The fact that germany is insisting on these rules.

You have to live by them.

This does play a role here.

He has also drawn a parallel between what the uk did in the first and second world war.

Now, seeing germany , this is a legacy as well.

I think that this is the sport situation from the wonderful ian poulter.

The phil mickelson and ian poulter of criticizing the course.

Lucky enough to be there on wednesday.

It is great fun.

He had it really well yesterday.

This is in the weather.

It is so dry and hard.

It is lightning quick and it is borderline.

You always want the best player to win, not the luckiest.

This is the argument.

Most players said it was fine.

He says the 18th is so ridiculous is that it needs a windmill.

I have played courses like that.

You say that they were enjoying the experience.

Thank you for giving me that particular title.

I was there on wednesday.

Some of them seem to understand the goals.

On a serious note, it is nonsensical.

It really is.

I find it shameful.

It does link into the story.

Cameron declaring war on gentlemen's clubs.

This has been sparked by the controversy by a club's unwillingness to allow women in he has set aside family tradition of to move with the times and he has left them.

There is one club in london where they iron your newspapers and plunge coins into boiling water to disinfect them.

Which one is that?

Mine is about the end of term.

As the pressure of find a teacher a present.

At the moment, a survey suggests that more than half of all parent have gift cards -- bought gift cards for their children's teachers.

In them, cousins, tickets, and a handbag.

-- in them, pheasants.

Asian technology stocks fall.

Jack lew talks exclusively to bloomberg as the g 20 finance ministers meeting kicks off in moscow today.

He calls on europe to do more.

We made a point at these meetings that europe, does not need to look at what it can do to get growth moving again.

The world needs europe to grow.

Numbers from vodafone.

Analysts looking for further head -- hence about what it may do.

A warm welcome back.

We are just getting breaking sales numbers.

Let's get to our reporter for details.

The world's second-largest wireless company, first quarter group service revenue found by 3.5% last quarter.

A drop of 3.6. it is a slightly better than posted, better than forecast number.

But it is a contraction.

They still say they are getting strong revenue growth.

The story is always a slow down in europe.

Let's talk a little bit about the m&a sound of this business.

Verizon, the u.s. is in.

They have a 45% take in the business.

They will buy that back and the difficulty is is this is half of vote of the -- vodafone.

This is 7.7 billion euro bid on the table for germany's largest cable operator.

The telecoms market in germany is europe's a guest.

They want to give those customers 8.5 million paying households.

It is about the monthly bill purse housel -- per household.

Thank you.

More from john later in the program.

G 20 finance ministers meeting in russia today to tackle some of the most pressing issues to face the world economy.

Our reporter is there covering it live.

He joins us now with an exclusive interview.

Hello.

We have got the finance minister of italy with us.

A very special guest, the director general of the bank for a while.

Just about three not just three months now, representing italy at the g 20 summit.

Thank you for joining us.

Let's talk about the italian economy quickly.

When will we get a turnaround in the italian economy.

The central bank sees risk to the economy.

We expect the economy to turn around between the second and third quarters.

From this point of view, there is a consensus with the imf with the european commission, when we took office in may, we were after repeated political crisis, stalemate, which affected the sentiment of investors.

The measures we have taken since we took office to stimulate the economy, while consolidating progress in the fiscal consolidation area, our changing on a mentally business -- fundamentally business climate.

We have hard data that points to the recovery already in june.

We expect the recovery to pick up momentum as we move forward.

You can appreciate italy has been in recession for nine quarters.

The government has been saying recovery is coming and it has not.

What data can you point to two in -- to convince investors to believe you?

There are data in may and june, after many quarters.

We have positive data from returns of taxes, which have also been declined for month.

In june, they showed an increase, which indicate -- indicates recovery consumption.

Also, survey data from household confidence pointing in the upward direction.

These are things the market already knows about.

Yes.

We are anticipating there will be a powerful effect from the program of accelerated payment , which was a feature due to the fast political crisis.

This is 40 billion euros over the next 12 months.

We have already started paying close to $5 billion in july.

This will eventually have an impact tom also ref nice by the central bank of italy, at least half of one percent as far as gdp.

Talk about public financing.

Debt is 130% to gdp.

Are you still completely ruling out the possibility of selling government states?

Now, we have announced as one of the key strategic initiatives, the accelerated scheme, which involves real estate.

The state owns a lot lot of real estate holdings.

Also, we are considering the possibility of using our participation in state growth companies.

We are considering this.

There are a number of issues to be addressed from this point of view because the companies are profitable and give dividends to the budget.

We are to consider the possibility of tanks to use this for a debt reduction scheme.

There are a number of ideas we are taking into account.

When might we see a stake sale in this?

As i said, i am not ruling out this kind of initiative.

We are now considering the program in more general terms.

Before the end of the year, i hope we can make clear what we are concretely envisioning in the overall strategy of accelerating the debt reduction scheme.

How concerned are you that an ever decreasing amount of italian debt is held by foreigners?

Is that a risk?

The less government debt foreigners hold, theoretically, the less they care about the fate of italy.

I think apart from some volatility, the share of foreign holders of italian debt has been more or less constant.

It has been declining during the crisis.

I think we look at the outcome of the auction of the government paper and we see the foreign participation remains considerable.

It is an element of discipline, which plays an important role in volatility.

On the whole, i think we are consistent in making our debt program to be holy acceptable to market participants.

And we are satisfied with the results we achieved so part -- so far.

I want to speak to you about shadow lending.

You just said you thought traditional bank lending was not doing the trick for the italian economy and there was room for shadow banking.

Did you have a figure in mind , size and scope, of what it might mean for italian companies?

We are confronted i a european problem , to lending, is not functioning very well in europe as a whole.

In italy, a traditionally banking system dependent, we are suffering or hats more than others and we are considering a number of measures.

We have made the government guarantees and are operating with the european investment bank and our longer-term credit institutions to revive remediation chart chart.

In a recent seminar, we also consider the possibility -- we normally consider part of the shadow banking system.

Hedge funds?

It is our credit funds which have a huge amount of liquidity at their disposal and could use it for lending.

They were led to be brought into some form of regulation until we move into using this as a tool formally.

We wanted to show openness from a regular point of view and a fiscal point of view.

We need to consider tax incentives in order to make them more supportive.

I have 10 seconds.

How concerned are you and how big of a topic will it be, the scaling back of monetary demand this and its effects on the rest of the world?

It will be an issue for discussion.

I think the market reaction to what ben bernanke announced was exaggerated and we had to correct it.

I think probably the issue was a little more volatility.

On the whole, i think we are all convinced the central banks will provide the quiddity as long as needed to get out of this prolonged crisis.

So much to discuss and we will have to leave it there for now.

It has been a pleasure.

They are talking about the outlook for italy.

Still saying a recovery is coming for the italian economy.

I will talk about shadow banking and the discussion that will take place here and the u.s. exit from monetary spending and what it means for the rest of the world.

Thank you for that with the italian finance and economy minister.

Stay tuned for more interviews in moscow.

One will be "on the move at 8:00 london time.

Later, ryan will be speaking with the secretary general at 10:30 london time.

Stay with us . we will take a short break.

Up next, the world against maker of snuff and we will explain what that is.

Stay with us.

Time for today's company news.

Microsoft missed estimates by the biggest margin in a decade.

It shrink the pcs that run windows software.

A write-down of inventory.

Softbank got its way with sprint but missed out on another takeover target.

Softbank made an eight point $5 billion for universal music but was turned down by the universal french owner and the report -- it was rejected because they thought the music company was essential to their strategy.

And, a gradual turnaround in the second half of the year.

Also, strong sales growth in the same time.

It missed targets but sales were better than expected.

Welcome back.

Let's bring you up-to-date with other breaking news, swedish match.

This is the biggest maker of snuff.

That is how you say it.

I said it wrong -- before the break.

In terms of the numbers they are giving us, sales came in against ineptness -- estimate -- in line with expectations.

They are revising their outlook and they say they see higher sales and operating profits.

They see scandinavian snuff , volume growth.

That is how they describe those particular markets.

Let's get to david tweed, who has more details on how you say these products.

The main product rhymes with news.

It is like a moist teabag.

You put it underneath your top lip and it releases nicotine into the body, which is why it is considered by some to be a better alternative to smoking, although, and this is very controversial, the product is being banned in the european union since 1992 because the world health organization said it is potentially cancer- causing.

They have been trying to get the european union to lift the ban , which is why they have been focusing on u.s. markets where their products are illegal and it is making a big effort to get into the u.s. market.

In april, they said they would try to get into as many as 17,000 to 20,000 u.s. stores.

In april, it was only present in 13,000. it is making a good effort to get into the market.

The problem is, in the u.s., people are used to a drive snuff, -- a drive snuff, and they spit.

This is spitting tobacco.

It will have to overcome this entrenched product in the united states to move their own product.

The other thing about this company, which i thought was interesting, which was last week, the uk newspaper said there could potentially be a takeover party to any company trying to get into nontobacco products.

Other ways of getting nicotine into the system, nothing came of that but the shares rose for the day of that report for a year.

They are up about nine percent.

Interesting to see how they open today.

Thank you.

David announcing the product names.

Thank you very much for that, david tweed in berlin.

Google shares took a hit.

We will see why the company says the transition to new devices is to blame.

Stay with us.

Incredible.

The pool was as large as the ocean.

The beach was perfect.

We were still raving about the service.

? welcome back.

7:00 21 in england.

Google fell after the company's second-quarter results missed estimates.

Let's ring in caroline hyde.

It is a question of how the company did and how high the x occasions were to start with.

Profit rising 16%. many would feel that is good results.

But it did miss expectations in sales and profit.

It is all about mobile, monetizing mobile for google.

In many ways, google is a leader in terms of tablets and smartphones.

They have one operating system.

Android.

They have been able to foretell this transition about how you make money from this.

And, the key business line is advertising in terms of the search engine.

The amount they charge for a smart phone is a lot less than what they charge for pc.

40% less.

It is not the cost to google but the road cost to advertisers.

It is the revenue for google.

The amount of clicks are rising.

We are clicking on these a quarter more.

It rises 23%, that is how much more they saw a click rise.

The cost per click, the amount they charge advertisers each one, that is down six percent, double wes estimates had been.

We are all -- we are all using them more.

Therefore , the monetization gap, the mobile monetization gap, is not working.

More people online, hence they are offering the android operating system for free, more searches, more revenue, not the more revenue.

The company making the point they are investing in ways business can help customers to reach clients, or you and i, on mobile devices, they are investing on this business.

And they are hoping they can charge more.

They will be more targeted.

Mutuals have been rolled out to these clients, marketers, to reach the mobile.

They hope it will boost the average rice.

They will manage the times at which you can advertise and also to track the performance of a certain ad campaign.

You get feedback and that would and so much more information to the companies.

They hope they can charge more.

Also, they are helping track you and i and have more advertisers rather than an apt developer.

Improving the android operating system as well.

A concern of the smart phone market is android.

Also, the foray into mobile directly.

They will be launching a new product, improving the experience.

Therefore, having more people using the internet they hope will encourage more advertisers to advertise mobile and pay up for it.

This is the big business.

They are investing in future and mobile ads area these things take time to bring the changes out.

Also, to bring out these new innovations.

The share rices are up 29% almost 30% year to date largely on these hopes of google glasses and the new motorola.

They take times.

-- time.

There are a lot of big opportunities in the market, and it is hard to make them real and get them to billions of people.

It is a different thing to turn these ideas into reality and practice.

Thank you very much.

Caroline hyde is joining us with the latest on google.

We will take a short break.

Still to come, we saw the work of the world amos architect.

And next mission is opening in london showcasing his work area we will be talking to the mp after the break about this.

Our weekly cultural discussion.

That will be up after a very short break.

? these are bloomberg's top headlines.

Once the symbol of american industrial might, detroit has he come the biggest u.s. city to file for bankers -- bankruptcy.

It is too poor to pay the billions of dollars owed.

Class the reality is even the casual observer has to under stand for some time now that detroit simply was not on sustainable footing , continuing to borrow and not pay it bills on time, continuing a deepening solvents he.

$18 billion.

The edwards noted whistleblower scandal may stress the planned summit between president obama and president putin.

Less than two months to go before president obama and president putin would meet, they have refused to confirm they will need for the g 20. rupert murdoch has told politicians they used -- he used the wrong adjective when he described the latest -- the police investigation into hacking a disgrace.

The new chairman said his lawyers were refusing to actively cooperate with investigators.

Murdoch now says he has no basis to question the competence.

In welcome back.

The time in london is now seven 31. this week, our topic of discussion, the world-famous architect who turns 18 next week is the new subject of the royal academy.

He is the architect behind numerous buildings, including the center in paris.

To help me explore his work, the uk minister and creative industries.

Thank you very much for coming to talk to us.

When you look at this expert did -- exposition, it is called inside out, referring to the style of design where we see outside the building.

This is the kind of work you think about when you think about the work of richard rodgers?

It is.

It is the defining late motif, if you like.

His career really took off when he got the commission to build the center in the early 70's. the property center has become renowned for its architect or.

And iconic building in paris.

And in the building in london is the other example.

15 years later.

Again, in a world city like london, with many famous building, this is one of those that stands out.

You see the pipes and so on on the outside of the building.

Yes.

They are visually very distinctive.

A lot of modern architects continue to build buildings that stand out from the crowd.

Do you think there is a danger that form starts to take over from function?

What do you think the balance is right.

Quest that is often a criticism of modern architecture that sometimes the form takes over.

People criticized the lloyd's building as being expensive to maintain.

Use of glass is another thing that sometimes concerns people, particularly in terms of temperatures holding.

There is an element of critique.

I think what rules put in the mix is the fact that the building enjoyed a visit and i hope it enjoys a work in.

People enjoy working in a building so distinctive.

It becomes a marketing tool.

The building is known all over the world.

Centuries of marketing tools for paris.

There is a balance to be struck.

As technology advances, the buildings get better.

Modernist -- modernists are often at odds with traditionalist.

A falling out with prince charles, which has happened on a number of occasions, where do you think that battle has been left in the world of architecture?

Quest there is an artificial divide.

People who like older buildings often feel they are at war with modernists.

A pretty traditional building in central london although inside is modern, but i think the in death there is room for both to come together.

That is something i would like to achieve, where use the hour heritage is not seen as an aspect but as a living and breathing thing that can be updated and modernized and moved with the times.

At the moment, there is a bit of a standoff, i think, between the two areas and it would be good if we could bring them together.

Sometimes, a modernist extension could enhance an older building.

The architects a lot more than recognize they need to sleep away the old in order to make statements about the new.

Really believing in the importance of planning and shared public -- spaces.

This has ramifications far beyond the uk, as witnessed.

Huge urbanization in other parts of the world.

Do you think his legacy stretches beyond these shores?

Yes.

I think it is massively important.

He is the first artifact to give the prestigious lectures in britain.

They are very famous lectures.

He was the first to give them.

They turned into a book, which says it all.

We live in a small planet and our resources are constrained and -- we are in an increasingly urban world.

Planning is as if not more important than architecture and buildings.

We have got to learn to continue to live on a human scale.

The contribution to the debate should be recognized alongside stunning buildings and he should help to create.

An architecture review led by another architect, who made his name in the planning sphere than the building.

We all have to constantly look at how we live in a sustainable environment and use our resources well.

As i a, keep our cities on a human scale.

Back to the event that heritage, in london, one of the people people -- one of the reasons people of london, it is great, green, open spaces.

Richard rodgers was recently asked by a bloomberg news reporter which of his designs was his favorite.

He said his designs are like children and it is difficult to pick a favorite.

If you had to pick one, which one would you go for?

I would probably still go for the lies for their it it was an iconic building in london.

A lot of people coming through in london.

I think it was the first statement of intent.

It is an early building.

It is a more mature richard rodgers at the height of its power.

It is a joy to go to andy very iconic living.

One of the most spectacular buildings not just in london, but in the world.

Says a lot about his approach to architecture and his uncompromising building in the heart of the city.

It is very confident.

It does not bow to its more venerable surroundings.

It makes a great statement.

It is the insurance register of the world.

If i had to choose, i would probably do that.

It probably goes against the spirit that he was saying, to treat his buildings equally.

The first domestic building he built for his parents and wimbledon in south london, which is in the market approaching 3 million pounds.

If any of your viewers want to live there, now is your chance.

That might be the one to go for.

Thank you very much.

The uk minister for culture communications.

I should have asked him if he would.

, perhaps.

The chairman fine minister met his greek counterpart in athens yesterday.

He noticed the progress made on reform.

It is in o½land with more.

One of the key questions everyone has been asking about is the potential for a debt restructuring, a debt write- down by the public sector, who have made loans to greece.

Reese's debt is simply unsustainable, even with efforts the greek government is making.

When there was a new conference, the german fine minister was -- prime minister was asked about whether there could be a potential write-down of greek debt.

It basically would mean germany having to write down its loans to greece with a big hit to the german taxpayer, much like -- much like any other taxpayer.

He said greece has done its implementation and achieved a primary surplus.

If it is done back then, if necessary, other measures will be negotiated.

He did not say what those measures might aid.

He has also opened the door to a potential further program for greece but the point is he has not actually slammed the door on a greek debt write-down.

It is interesting another member of the same party, you remember michael, also has been talking about the possibility or the inevitability that there would be some sort of greek debt write-down in the future.

That was probably the main thing that came out of the visit to athens yesterday.

Just the potential greek write- down.

If greek continues to do what it said it would do going into the future.

Tell us a little bit about mobius and his positive comments about greece.

What his he been saying?

Very interesting.

The chief executive officer of franklin tebow -- templeton making the point that greece, in his view turned the corner.

You put a note down talking about the opportunity.

Now that greece is stocks change has been downgraded to emerging markets status, that opens up a lot of potential investors.

He said he will not rush out and start dying greek on.

I noticed looking at the ticker of the hellenic exchanges, it has actually taken a five or send stake in the operator of the greek stock exchange, which is a proxy for the greek stock market.

It took a hit after concerns about a potential collapse of the coalition.

There has -- have been other pieces of activity.

They are looking at greece in making money by investing in his.

Another one i might bring to your attention, fairfax financial holdings.

They said on june 19 a spent 154 million euros to increase this.

Your bank operatives to 42% from 19%. this is a commercial property company in greece and they see potential.

Something to watch.

Thank you.

David tweed reporting from berlin.

Up next, a steeper drop in profit than analysts anticipated.

Stay with us.

? time for today's company news.

The world's second-largest wireless carrier reported a drop with almost 1/5 of revenues.

A 7.7 billion euro offer for deutsche land.

Another week to round up votes for his proposed $24.4 billion buyout.

He says he has no plans to sleep in his bid.

China has widened its drug industry investigation after allegations of economic crimes.

A bio pharmaceutical company says its chinese operations were visited by a local authority.

The company said all drugmakers are receiving visits.

Welcome back.

It is 7:00 46 in london -- 7:46. we are joined now with a preview.

Let's take a look at futures here.

Are we catching a little bit of a chill from the technology story?

That is it.

Would we are coming off with gains in the stoxx 600. microsoft, google.

Semiconductors guiding ever so slightly below.

That will hang over the tech center as far as the industry is concerned this morning.

You have mentioned a few stocks in the past hour.

Electrolux, they missed on their net income.

They see a 2014 rebound in europe.

North america will rebound at the same time.

What is interesting is they talk about emerging markets going for growth.

They will go for a 50% exposure but they have an excess -- fx in latin america.

Anything to watch on the vodafone?

Anything they told us that will move shares?

We see the revenue drop and that beat estimates.

Then you dig into the numbers and you just have to look at some of the emerging markets.

Turkey and india are 15 and 14 %, respectively.

I think the next shift of gear for vodafone is the verizon story.

Stocks go unchanged at the moment.

Lvmh?

I have chosen this because there were a couple of comments made by the guy who runs the watch division.

He said as far as watches and jewelry sales are concerned, they are soft on currency basis.

They drop year on year, but chinese customers are spending more in hong kong.

What we have got is an insight into hard luxury.

That is what everyone is talking about this week.

Swatch, brands on the hard luxury side.

We will see how the stock gets caught up.

One percent at the moment.

The chinese were spending when they get to hong kong.

Back to you.

Thank you.

Let's take a look at today's top corporate stories.

We have been through a few of them.

Caroline hyde.

A french media company could rise about two percent on the open.

Softbank actually made a bid for the company.

This was sometime ago but but we did not find out about it then.

We are just finding out about it now.

Those familiar saying and 8.5 elaine dollar it was made for the universal music group.

It is in general reevaluating its own structure and is facing competition in terms of the mobile telecom market.

It also has got a controlling stake in the game maker.

Many strings to its bow, trying to make itself more streamlined and selling off the universal music element.

It was rejected by the french media company.

We know -- softbank , why does it need a music company atco it provides mobile tablets that support content.

If you add more content and your own content in terms of music, that would be a strong offering.

Thank you.

The latest there on softbank . coming up, we will look ahead to the european market open.

The head of trading, we will get his stock picks.

We will be back with those in a few minutes.

? welcome back.

7:52 in london here.

We are minutes away from the start of the european equity trading.

Joining us with a preview, head of trading at tj and partners.

One of your longer-term picks, media term -- medium-term, retailers.

You think they will do well on recovery.

A lot of them have had a sorry time in the past few years.

They are fairly volatile.

They have had structural issues.

They have managed to resolve a lot of those issues, whether it was debt or restructuring the issues and position themselves for how the retail markets are.

It has started to shift away from the store type of business and more toward the online business.

These are recovery.

You see them bounce from their lows.

They could -- they could continue to the upside.

Vodafone, specifically, on your watchlist, what did you make of the sales?

Vodafone, they are receiving a decent dividend from their stake.

They are not performing brilliantly across the board.

They do not see a massive upside in share price.

A lot of the analyst forecasts are coming in.

You would be a biter -- a buyer for vodafone for the relatively less volatile upside.

We are at the start of the european season.

How is it going atco relatively ok.

We expect second- quarter earnings from european companies.

Maybe not what we have seen coming out of the u.s. to beat expectations, the u.s. numbers apart from yesterday.

Microsoft and google.

We are seeing them beat across the board.

We expect that to continue.

I will probably be the catalyst for the markets over the next few weeks or so.

Perhaps m&a. we see it -- we have seen it talked about.

The activity in the last few weeks have gone up then cap -- fantastically.

Unfortunately, sales, but that could come back at some point.

The m&a activity is increasing.

Sitting on plenty of cash at the moment.

They do share buybacks so you can pay increase dividends.

Investors shareholders want to see growth and want to see the board of directors do something a little more dynamic . more m&a. thank you very much.

From tj and partners.

That is it from us.

"on the move" is next.

They will be watching shares.

We will see you on monday.

? .

This text has been automatically generated. It may not be 100% accurate.

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