ukraine sends armored vehicles and artillery to retake buildings. angela merkel and president obama find common ground in confronting russia. >> pfizer ups its bid for astrazeneca. bayer is in exclusive talks to buy merck's consumer business. morning, everybody. you are watching "the pulse."

i'm guy johnson. >> and i am francine lacqua. coming up, a bloomberg exclusive. we speak with the south african finance minister as a nation sets to go to the holes. >> the army in ukraine has become an operation to retake ovyansk. pressure is reporting that two helicopters have been shut down and one pilot killed. down and oneshot pilot killed. heather, can you give us the latest on the situation, vis-a-vis the offensive? day.re protests on labor the situation here has become increasingly tense, as you mentioned. there was an antiterrorist operation by ukrainian forces to slovyansk. we have had

two statements, one from the interior ministry saying this operation started about 4:30 a.m. today. they have circled the town, taking control of nine roadblocks as interior minister and the head of the national guard and the defense minister are on the spot there. they are demanding the release of hostages as of yesterday. they have released two, but there are still 15 more, including the eight international monitors from the osce. what is not clear at this point is what happened to the helicopter. there's been a statement from the defense ministry saying a helicopter was on patrol. it is not clear if it was part of this operation, but with the ministry is saying is that this shows that whoever shut this

down, they're dealing with professionally armed groups rather than amateur protesters. sayeather, would be fair to that the real battle for control of the ukrainian territory is now underway? to have any sense of how russia might respond? this fliesiously somewhat in the face of what vladimir putin said during his phone call with german chancellor angela merkel that he amended that ukraine pull back region.rom the eastern that is completely going against what he said. we are waiting for any response from the russian side. it is second day of public holiday there today. there are no scheduled appearances by putin after erall of the soviet celebrations on red square.

lavrov may put out a statement on the situation. >> heather harris, our executive editor for bloomberg news for europe and africa. >> the threat of ukraine's breakup is the subject that will andg angela merkel president obama closer together. it is been her first visit to the american capital in three years. hans nichols joins us now. he is covered a number of white house administrations and correspondence there. it is a really interesting morning for this conversation between these two leaders to be taking place. an offensive taking place in eastern ukraine. outin has yet ton yes ♪ ♪ respond. >> president obama will be looking to angela merkel for information. all the times they

speak, but it appears they are in fairly close contact. what is remarkable about the readout that we have from the conversation yesterday between vladimir putin and angela merkel is that putin is making the demands. he is calling on merkel. that gives you an indication of how strong he thinks his hand actually is. when you look at what the u.s. and ae you have tried to do with the economy in russia, targeted sanctions. -- ♪ ♪ round list of people. it is unclear whether the sanctions as a right now are having that much effect on the economy in russia. what obama and merkel are going to be doing his present a unified front. a few days ago merkel was more towards her european side. maybe not pressing for stronger

sanctions purchase clearly moved towards obama's side. they're going to try to figure out some sort of way to increase the pressure but also keep merkel line of communication open with vladimir putin. up fromhere to pick it here. it seems that angela merkel is the main conduit between the u.s. and the european union and vladimir putin. it also means that the scandal about the nsa is taking a back step. it has strained relationships between the u.s. and germany in the past. >> the snowden spy stuff really poisoned relationships. it is going to be on the back burner, but it will be raised. that won't dominate the conversation. there will be a little bit of talk about getting these trade talks back in order. merkel is meeting with companies in the states as well. for the most part, i think they

have four hours of talk scheduled. this is going to be about ukraine's and how you unify and make sure that the u.s. and the eu are on the same page and how you can convince the russians the errors of their ways. >> hans, we will leave it there. correspondent,al hans nichols. >> pharma frenzy friday. uprazeneca's vid is going -- bid is going up. does seem, we were talking about consolidation. this is about drawing battle about right? this is every large pharmaceutical company trying to take a chunk of the business. >> what you have here is the king of the megamerger. they have done these deals

before. destruction isue a big moot point. at the moment, what they're saying is they will a 50 quit on the table and are prepared to pay for astra. that is one of the big defense points. interestingly, they played a bit of a spoiler in the game. they said if anybody else comes and makes a bit, we might lower our offer. the rate of thinking is to get this deal through. you need to billion dollars with the synergies. those left to come from sweden or the u.s.. to gety not the u.k., them through. >> am stunned they would lower their offer if someone came in. >> i think it is a bit of an academic discussion. it doesn't look like anyone else is coming in. glaxosmithkline have already ruled themselves out. that would've been the made in britain solution.

there's a lot of concern westminster about this deal and what it could mean for research and development in the u.k.. the name you do occasionally is more and their realm of fantasy. absolutely anything is possible. everyone is in deal mode. >> are we going to hear many more deals in the pharma sector and the next couple of weeks and months? >> i think we are getting a domino effect. it wouldn't be an exaggeration to say that it will be started off with this glaxosmithkline novartis eli lilly four-way deal. certainly, when you talk to people who know bayer really brands likeve coppertone, claritin allergy medication, they really need this just in the game. part of the deal was a joint venture in consumer products between novartis and glaxo which is going to be very strong.

you have one of the situations were chief executives are looking over the shoulders and wondering, if i don't make a deal, am i going to be in trouble? is a gn of weakness for the pharma sector, not a sign of strength. can i proceeded from that angle? termshink it depends, in of what each is getting out of the deal. this pfizer going to get pipelined? they had $240 worth of deals and they have produced three blockbuster drugs. like a position of weakness to me. >> yeah, that to me would sound pretty weak. deal them as stronger position? the industry needs to do something. >> so you're saying, oh, my competitors buying.

this is the danger? ,> i think if you go very macro there are two issues. one is the patent cliff. a lot of these big companies have drugs that are going off patent in the next years. that means revenue might go from zeroat deal to virtually as they lose the ip protection on those technologies. that is number one. number two, most of the easy stuff has been found by now. if you're trying to come up with new molecules, they need to be quite novel. of research,lot perhaps a very long regulatory process. be about a billion dollars in investment to bring a drug from early-stage research to the market. now, this is more like 5 billion. you can see with the advantages of scale become very clear in this industry. >> this is one of the biggest concerns. we look at pfizer and their actions in the duties, they and knocked off

nearly $5 billion. what is good for them from a market position in terms of making acquisitions actually contracts the number of available growth and development discoveries. industry,d for the doesn't necessarily help anyone around this table. >> that is something we have to keep an eye on. iq so much, manus cranny and matt campbell. raise payrollers by the largest amount in five months. fendi has opened the doors of its new london flagship store. we're looking at the latest trends in luxury. people are becoming more

selective on that what they buy. quality and buy they like to make a beautiful choice. brands have a beautiful choice. >> you don't want to miss bloomberg's inside fendi. you take you inside the luxury bag maker and of its london flagship store opening. >> rbs shares are rallying. the bank avoided additional costs for consumer compensation. to has been scaling back provide profits after the biggest annual loss financial crisis of 2013. >> chancellor angela merkel and president barack obama find common ground in confronting russia. we'll tell you what you need to know about merkel's fist trip -- first trip to the white house in three years. ♪

>> good morning, everybody. welcome back. you're watching "the pulse" live from london. angela merkel is in washington dc. it is are we first trip to the white house in three years. joinede insight, we are by the chief economist at

berenberg bank. germany finds itself in an interesting position. from an economic point of view, business leaders generally are not favorable and not disposed towards further sanctions against russia. from a german economic point of view, how much of a case can they make, and how persuasive will they be when they talk to angela merkel? >> they can make virtually no case against sanctions. the german economy is humming very nicely. if sanctions against russia take of german growth, that is bad for a few businesses. their leaders are speaking out, but it is not bad for the economy. look at all the german data. the economy can take a minor hit. a spike in energy prices, if you can't get enough gas, is that something we should be concerned about? >> that is true. a complete disruption of russian energy exports would be a

serious problem for a while for europe, including germany. having said that, russian finances -- russia finances one third of its budget, one third of its war effort through selling energy to the west. the one economy which really could not afford that is russia. and russia would hit the rocks much before western europe would feel a serious pinch from the disruption of energy. about how for sanctions could go. you say it would be a very limited effect if we were to see sanctions being up to from here. does that give merkel a freer hand when she goes to talk to the white house? at the moment she sounds cautious. business is acquiring the down a bit on the issue of sanctions. is your sense as you start to work through what is happening that we are going to see further sanctions imposed? >> merkel is cautious by nature.

that is probably the right thing to do in a conflict like this. having said that, she is moving. she is trying to send a somewhat clear message to russia. if russia goes further than it has, there will be a steeper price to be paid. i think the right approach would likely take the form of financial sanctions and a few limited trade sanctions, which would do very little damage to western europe, but could do serious damage to russian business. is not the sole spokesperson for germany. she is a conduit for the u.s. and also for the european union. she is the closest link that everyone has. in that role, she needs to think of everyone's objectives not only germany's and germany's interest. yes, but look at her. she seems to be moving

cautiously but moving in line with events. you could say she is trying her best to actually live up to that role which she never asked for, to be a key person in what looks like a conflict to between the west and russia, almost a bit like the old cold war. >> does what is happening in ukraine bring america and germany closer together? clearly, there have been sources of tension recently, issues of mobile phones and things like that, that will cause disagreements. will this generate more momentum towards -- they are going to talk about trade talks as part of this conversation. she will be talking to various people. could this be a net positive, the closing of this gap between germany and united states? >> under an external threat, the family tends to move closer together.

rediscovering that it actually does share some values, despite the occasional bad phone hacking scandal and the like. indeed, from a political point of view, we now seem to have a very clear opportunity. the political leaders could tell the trade negotiators, forget about the details, just get the deal done. the political momentum at the moment to do something jointly is strong. also, we discussed the potential costs to western europe of losses and trade to russia. if we could have more trade with the u.s., that would be the perfect offset. in deed, this is the time to get the trade talks moving. we saw pictures of the former erhard schroeder partying with vladimir putin earlier this week. does that put the chancellor in a difficult position? >> well, she won her election campaign against him. i don't think schroeder

embarrassing himself is a big problem for merkel. >> the chief exhibit economist -- the chief economist at berenberg. >> still to come, a bloomberg exclusive area real estate to south africa's finance minister after they get set to go to the polls next week. ♪

>> let's get you back up to speed with some of the company news you need to know about. >> audi posted record sales in the u.s. for the month of april. the volkswagen unit was helped by its entry in the under $30,000 luxury car market. hotels aretinental the worlds largest provider of hotel accommodations. the beat analyst expectations say it will distribute $750 million to shareholders in a special dividend. >> let's check on the european markets. jonathan ferro has the latest. >> thank you very much, francine. this is what european equity

market trading looks like 90 minutes into the session. 40 down by a third of one percent. on the macro side of things is u.s. jobs. 218,000 jobs are added on the month. every month we do this, what is it matter this month? it matters because you cannot blame the weather anymore. than we take it to the u.k.. the pound popping to a dollars $21.69. u.k. pmi construction data. you're not familiar with the data, anything under 50 is expansion and anything over 60 is pretty dam good. david bloom of hsbc looking for -- $41.50.50 big is the fx impact going to be?

it might not be as big as you think. i will be polite about that. still to come. distilling the prophet. what is it take to make it in the boutique is ms.? we will find out in a moment. -- in the boutique business? we will find out in a moment. ♪

. .

welcome back to "the pulse" live in london. i am francine lacqua. >> i am guy johnson. these are the top headlines. begun ane's army has process to overtake the city of slovyansk. putin is urging ukraine to withdraw its forces from the east. >> the crisis in ukraine is dominating the agenda for president obama and chancellor

merkel meeting in washington today. a white house spokesman says er over the nsa surveillance program will not complicate a joint effort to address the situation and ukraine. >> rbs shares are rallying. profit tripling. been combining divisions, scaling back the investment bank and cutting jobs to revive profit after its biggest annual loss since the financial crisis in 2013. >> but good details on the numbers. details on theme numbers. manus cranny joins us for more. the markets have to be impressed that we have missed it this time around. that is as far as we can take this. >> you are absolutely correct. the underlying work done by stephen hester who left the bank, many people are saying that the kitchen sinked the numbers at christmas time. to a certain extent what we have got is a jumping off point.

the first profit since the crisis began. $1.2 billion. that is up from $400 million. the markets division is one of those ones where you would see more pay come through later in the year. markets are up at the markets division, costs are down. but investigations and regulation are going to be the dominant forces. the one thing that stood out for me on a couple of telephone calls yesterday was her should have been a big restructuring charge. it did not come through in these numbers. theye were saying 700, and are building capital. that is critically important. the one thing investors want to know because the government, rbs did a deal to buy out the government's ability in terms of dividends, so capital is building. get ready for restructuring later in the year. staff costs are down and impairments. this is a story of impairments. this time the slasher -- this time last her, the impairments were at one million pounds. >> talk more about ulster bank.

also turned around. >> that has been one of the most painful stories for rbs. in the republic of ireland terms of the heavy lending. you have the first profit since 2009. loan losses are down by 80%. that is the driver. we were told at the end of the summer what we are going to do. saysirish independent" they may sell the business or ipo it. the key issue is what will they do with the u.s. business. in the fourth quarter of this year there will do something. that could unleash dividends 2015. >> thank you very much, indeed. our markets editor manus cranny. >> now, it is all about jobs today. unemployment figures from the euro zone are out in less than a half an hour. we get the u.s. later. jon ferro joins us.

what are we expecting in the u.s.? >> the headline number is 218,000. i think we are more grown-up. we look at a whole range of indicators. i will use a bit of a housing analysis and compared the labor market to a buyers market. so you have lots of people looking for too few jobs. the employer is the buyer. he can offer them what he likes. what you want to see today is want to see wages go up. wages is the magic number. not just for the fed but for the bank of england as well. it is an indicator the slack has been reduced. look at the underemployed and look at wages. this one is quite vague. i will tell you why -- this one is quite big. you can no longer blame the weather. >> i am from the u.k. i can blame the weather for everything. look, we are very good at tracking the data. we always have convictions. we always talk to analysts and make sure we know what is going on. not enough.

>> it is not enough. i agree. most economists would agree this is a guessing game every month. it is a very important number. at bloomberg, we are using a twitter guess. #nspguesses. that data will be collated and we can do twitter versus the street. twitter looking for 211,000 we also have eurozone numbers out later. i do not think that this matters for the ecb. it is not in their mandate. 11.9%. that is what we're looking for. we have hardly had any improvement in this number. it is only just off the record high. that is how dire it isi in in te labor market. underneath that, 25% spain. the youthth of 50 for unemployment.

>> a bit of slack in the eurozone. >> quite a lot. is time for a bloomberg exclusive. south africa closed polls next week and the country's finance minister seems sure the ruling afc will retain power. we sat down with bloomberg. the advantage of an institution like the african national congress which will win majorityelection, by a means that there is a annuity, means there is transparency and relative certainty involved in what we intend to do. we have a record of translating election manifestoes. thethe commitment to national development plan into business plans for government departments. >> experts have warned the south africa's growth potential is hampered by the fact that we have very little policy for entrepreneurship. do you agree? >> we have to make a greater investment, which we are clear

about in terms of increasing the entrepreneurial levels within our society, increasing the oring, incubation of small businesses. there are fascinating examples of what good things are happening. what we need to do in south africa is to raise the scale in which they are happening an order that they make a bigger impact. >> south africa is the second largest economy in africa. relative to what nigeria is expecting. nigeria is the biggest economy right now. do you think we will fall behind the rest of the continent? >> growth numbers do not tell the whole story. it is about what historically you have established as your economic base. it is about the sophistication of business interest, if you can economy.hat, in one's but also the sophistication of the enterprises we have. while the number itself might suggest one set of issues. looks at the economic

infrastructure and capabilities of south african firms and the manner in which they have penetrated the african continent financialining, services, telecommunications, south africa is in a league of its own. >> will you remain in his position after elections? >> i will arrange an apartment with the president. you can ask him that russian. >>-- you can ask him that question. tonobody expects the anc lose this election, but it is about how big the majority actually is. what are people saying? what is the story? >> we know the anc is accustomed to getting around 55% of the votes and even higher. some are talking about something below 60%. this is because the african national congress is losing popularity. it has been for some time. it has been manifested in the way people have been responding on the ground. when you look at the strike

action, people protesting against the lack of service delivery. alone in therikes first quarter. put that aside, and you have 70,000 people which are currently on strike in the latin sector. -- platinum sector. the signal that we given government is that people are not happy with the wages, not happy with the inequality on the ground. yes, the minister talks about sophistication of our financial institutions and we are number is, but the inequality gap what will push south africa behind and possibly even add pressure to the an popc popularity -- popularity. >> south africa's growth rates are dragging the region. one of the biggest forces is entrepreneurship. the nation has yet to capitalize on this. >> absolutely. it has not. this is one of the questions i posed to the minister. he was talking about policies

put in place to sure that -- to ensure that entrepreneurship grows. we are falling behind the rest of the country. you see private equity fund springing up across the continent. not really focusing on south africa. this is because the policy is not right. one of the biggest critics of says southplaner who africa is moving towards becoming a failed state if it does not focus on entrepreneurs because this is what is driving the rest of the continent and this is why south africa is growing at 2.7% in sub-saharan african is growing at 5.4%. >> thank you very much indeed. joining us from bloomberg tv africa. >> coming up next, as we had to break, a russian official has reportedly just said that ukraine's latest major offensive a geneva hopes of deal.

we will monitor the crisis in ukraine on "the pulse." ♪

>> good morning. welcome back. you're watching "the pulse." it is friday. anything about this week's installment of the entrepreneurs making it, the london distillery company is the capital first whisky distillery in 100 years.

there is a catch. it has not officially made any yet. anna edwards went to check it out. ♪ >> this is the first whisky maker in london for more than a century. the londonby darren, distillery company as part of a wider trend towards craft brewing in the u.k. but it takes three years and a day for whisky to become whisky. this is not ready appeared in the meantime, the money comes from another spirit with more obvious london connections. >> we launched. gin.lk about the you have taken somebody else's business plan. >> what actually happened as we were building the space, and we found through an image that we sent was a business perspective for another london distillery company. and it was a tournament called ralph dodd. he did not succeed in his plans.

when we dug into what he was and he is responsible for foxhole bridge and all of the other projects around london. we felt he needed attribute. he deserved it. >> the distillers sits alongside a gallery space and the street kitchen in this old victorian dairy which is becoming creative hub in south london. as a start up, it was financed by a wide range of sources from high net worth individuals to crowd funding. what did it take to stand out? >> originally with those platforms a lot of people were duehey were not doing diligence and we were being very conservative and trying to give a good amount of equity for investment. i think that is what was attractive for the people who came to us. >> the company cares about ingredients, from organic ball carrier juniper to historic barley varieties from the southwest of england but it is the honey that gives the gin its floral flavors.

>> each postcode in london have flavor profiles. >> what should you drink your gin with? >> white chocolate with cartman is incredible. the gin we developed to be both visible and mixable. we are taking a whisky twist on gin. it is up -- a 50%. 50% alcohol content is not for the faint hearted but with all of those organic ingredients, botanicals and honey, i convince myself it was almost a health food. wow. that's much easier to drink than i thought it would be. >> a h ealth food. that's our line as well. >> we took it for breakfast. whisky becoming a little bit more micro around the world. and a massive industry in

emerging asian. attractinghisky investors attention on a production site as well as the consumption side. but is the beverage a hit with the crowds? of course it is. malcolm mullen is the director of soho whisky club and members bar. look, what do you think about guys that are now doing this? i guess it takes the industry back to its roots. i guess that is something that is anathema in an industry that is dominated by large corporations li. >> i wish them the best of luck. it is a very long-term project. it will take years to get established. there is already one english distillery going for six years now. still not a major player as far as we're concerned the marketplace. it was interesting when they first opened it, the first

production batch. it's a hard call. houses,ur soho whisky dbq will go for higher end, the ones that are more expensive -- do people go for the higher-end, the ones that are more expensive? what is the most expensive whisky? >> the most expensive is 1000 pounds a shot. >> wow. >> very, very few. normally the price range sort of by the shot, 6.95 to 20 pounds. >> you think whisky, you think scotland. you may think kentucky as well. let's talk about scotland for now. bit. a little is that a problem that you cannot simply make these products outside of what is a core constituency up in scotland? you can make gin in london. that works fantastically. >> the japanese have succeeded. we recently sold japanese whisky for 11,500 pounds. it would not -- it wouulld have

been unheard of before. it is a supply issue. it does not have to be from scotland. it does have to be quality. it does have to have a track record. it needs to age. three years as a baby. >> this is very recent. consumers are getting more educated and want to try different taste which is why they want to try japanese whisky . five or six years ago it was unheard of. >> a lot more in the press. consumers are very educated. there is a lot on twitter. a lot of people talking. when you talk about collecting things, some of these bloggers know what is going on before we do. you can always tell when you get a phone call when they say, how much of this case have you got? the sort of customers forget, it's blitz. -it- it splits. people who are collecting, people who are gifting and people who want to try something

different. the move away from the standup whisky they have had. and they might want to -- want some advice on trading up. findinglking to people, what they're looking for, and pointing them in the right direction. >> what are people drinking at the moment? what flavors other looking for? a big, robust one or something softer? what are people going for? >> when people come to us they are looking for something unique, the single cask rather than a batch cask. it really does split. a lot of people like these heavily sherried whisky, dark, full, sweet. on the other side, you get people who like the smoky ones. that divides into various groups. any get people you get the spectrum. especially the very heavily peated onese. . there are levels now that people -- that are unheard of years ago.

that is crazy bystanders 10 years ago. >> is the industry going to carry on investing? you have micro distilleries coming up. that tells me an awful lot about the way the industry is looking at the moment, the level of interest and the level of specialization will go up. dr joe says it will invest -- diageo says it will invest -- >> huge amounts. we have been this -- we have been to this before. if you go back 18 years, there was a whisky -- the people who do not have the backing will be in problems. it is very cyclical. if the far east is not take up the slack -- >> japanese whisky bubble. >> think you for joining us. the director of soho whisky cl ub. let's get our pulse number, 22,000 pounds. that is how much the peekaboo bag can sell for. that is the top of the range. the luxury purse maker has created a men's version. the new bond street flagship

store. we'll hear why men's accessory is the big new thing. i am not sure guy johnson is sold on it yet. >> i will stick with the whisky. ♪

>> such a building. a major brand statement.

so we are very happy. london,s luxury in one of the coolest cities in the world. ceo speakingendi's to us at the open of its new bond street shop. the 21-year-old model is designing a customized version of the peekaboo handbag. fendi has created a men's version of the product. the new man bag. >> in your new store on new bond street, we have a full floor dedicated to men. >> the first time. >> this will be the new trend. men wanting to buy more accessories. >> quite advanced into the trench. represents more than 20% of each luxury company. we are up behind that. we need to catch up. we are coming to london.

>> peekaboo. this is like the revival of the "man bag." >> peekaboo is releasing a bag as an icon. in a bag, you can buy with an incredible finishing and end stitching, crocodile inside, a metallic face and real silver. all of that with the extreme luxury of owning a bag. guy is not impressed because he does not understand why a man bag would be called peekaboo. in all seriousness, we moved the name of the bag to one side. the highest growing market in terms of when you look at a fashion luxury group that has men and women. it's the men's. >> i cannot deny that.

a peekaboo handbag. we have a fendi special coming up this weekend. we will take a break. we will see you on the other side. ♪

>> a major offensive. ukraine sends armored vehicles to retake a pro-separatist stronghold. russia says the move kills any hope of a geneva deal. >> united we stand. chancellor angela merkel and president barack obama find common ground and confronting russia. it is her first trip to white house in three years. >> a bid for astrazeneca. while bayer enters exclusive talks to buy merck's consumer business.

viewers ing to our europe. good evening to those in asia and a warm welcome to those just waking up in the united states. i am guy johnson. >> i'm francine lacqua. thhiis is "the pulse" live from london. a bloomberg exclusive. we speak to south africa's finance minister is the nation gets set to head to the polls. >> ukraine's army has begun an operation to take the city in an area of pro-separatist forces. run forces is reporting that two helicopters have been shut down and one pilot has been killed. russia says this move by ukrainian forces killed in last hope of a geneva deal. joining us on the phone from kiev is the executive editor for bloomberg news. heather, what can you tell us about the latest situation? >> yes, as you just mentioned, the latest news is that putin -- a statement to some

of the russian media saying that this kills any chance of revising the geneva accord which aimed at the escalating attentions and eastern ukraine. and that russia has sent an envoy down to southeast ukraine yesterday to stop talks on the release of the national monitors from the lsce. since this anti-terror operation was launched by ukraine at 4:30 local time, they see those chances to resolve this peacefully have now failed. and they are blaming ukraine for reviving tensions there. >> it seems the crisis is deepening quite quickly. how crucial are the next couple of days going to be? >> i think they will be absolutely crucial. the ukrainian ministries are saying they have circled slovy

town of ah is a hundred 20,000 people and taking control of roadblocks and that the interior minister and the head of the national guard are there. th tin question is, how will pu responds, especially after he said in a phone call with angela merkel that one of his demand is that ukraine pull back troops from the east. putin is being apprised of the situation and today, i imagine we would see more statements probably also from the foreign ministry in russia later on how they are going to respond to this. you forer, thank joining us. we will cross to her live throughout the day. on the ground in kiev. >> that threat of ukraine's

writeup is bringing chancellor merkel and president obama closer together. merkel is an washington, d.c. right now for the first trip to the american capital in three years. hans nichols has covered several administrations as our white house course on. merkel is playing a pivotal role. she has a relationship with putin. they speak russian with each other on regular phone calls. how is the u.s. going to harness the relationship. how does the relationship between berlin and washington worked? >> a quick correction. i think they speak russian. i think russian is their native time when pruden and merkel. speak what obama wants from this relationship, this dynamic between angela merkel and vladimir putin, he wants intelligence. merkel is in much closer touch with putin. she talks to him more frequently, longer. she had might have a better sense and what direction he might be heading next. is first part of this

intelligence gathering by president obama. he also wants to move her closer, or as white house officials would tell you, create this space for her to bring the european union further along on further additional sanctions if warranted. you have seen the u.s. put a great deal of emphasis, a great premium on having a unified force between the eu and u.s. on sanctions. they have timed a lot of their announcements. the goal here is to really have sanctions that are strong but also unified. and there will be a question of what more can you do? at a certain point, german businesses could be affected. that is why president obama needs to run a lot of these ideas through angela merkel. not so much to get her sign off , but to get her by and for them to be stronger. >> at the same time, we will have spoken to an analyst albert berg. -- of baremburg. she has brokered things in the past. she is the main glue that holds the eu summits because she finds

consensus. ok, people can protest the role that history has given them, right? and that may be what angela merkel is doing. germany is in the center. she grew up in the east. she is fluent in russian. have a putin relationship. when she was growing up in the east, there was the three orientation towards looking towards the east. she can protest that. angela merkel is a remarkable politician. she is also fairly remarkable about complaining about some of the challenges she has sometimes. she seems world wary. but she always seems to pull through. she seems to be quite successful. just ask any of her opponents on the german political lashing. >> she has been doing pretty well for herself. thank u very much. hans nichols with the latest. it is the first time the chancellor goes to the white house in three years. >> let's move on. let's get back to corporate news. are upping bid, they

their bid. with isn' in talks merck. our markets editor. why do you speculate ahead to up the offer? >> they came in at 50 pounds. they have sweetened the cash element which was one of the chairman's concerns. they sweetened the deal. it'll be interesting to see what the institution shareholders do. is this the final price? they put a very bizarre close. if anybody else comes in to counter a bid, we may consider lowering our offer. from everything i'm hearing, actually it does not look like there's many other takers for this asset at the moment. i could be completely wrong. none of us know. these are running fast and furious.

think the only conceivable reason i can see for doing something like that is to discourage the target from getting someone else in as a stalking horse to drive up the price. if you take the view, and it seems to be the consensus, there probably is no white knight. that sanofi is in fact very unlikely to make a bid. then this is a hypothetical discussion anyway. the more interesting question over the next couple days will be how does astrazeneca respond to this 50 pound a share offer. pretty early in the game. the smart money would be on another rejection, but we have to wait to find out for sure, of course. >> how important is government support? >> very important. even though they cannot block this deal. what we have got here this morning is very much a two frontal assault. one to shareholders. but it is a dear mr. cameron letter. i shouted to you in the

newsroom. i communicated vocally loudly across the newsroom. very "pretty woman." cameron, we want to be part of the fabric of the united kingdom. that is very much a dear mr. cameron letter. you know. >> so, overall, we think it is too soon to understand whether this will be put to bed. it was a nice bloomberg scoop. this has now been confirmed. we have 283, 4, 5 days for shareholder reaction to the price-- we have to wait 3, 4, 5 days for shareholder reaction. >> it may be tuesday before we begin to get more of a sense of where things are settling. if you look at some of the analyst. people trying to nail down where pfizer can infect put this away. away.fact put this

punchy.60 which sounds the consensus seems to be more to the mid to lower 50's. we are at the low-end. >> are u.s. companies able to gain an advantage because this is the money they can take home and get tax or they can spend here? does that give them a leg up versus their european peers? there seems to be a theme running through these conversations we're having at the moment. >> it does make the math very different for american companies. in the case of pfizer, there is a texan version where they would move their domicile to the u.k. which is a very --hospitable. they may be able to get away with paying more. >> it is ironic. >> we need to be careful with that argument overall. spending $100 billion because you do not want to repatriate profits is stretching it. >> you let it kick around and bank accounts or you can take it home and get tax. >> there is no way you're going

to the board and say, i had a great idea. and doo pop $100 billion a deal overseas to avoid the tax. it could provoke - it will save you money to invest. it gives you money to make it sit there and do nothing. they want a rate of return on this. >> then you should bring everybody in the s&p 500 and say do not invest overseas. >> do invest overseas. >> i'm sure people are doing it. it depends on how much you lose on it. we will see much more consolidation. in the next couple weeks, the battlegrounds are drawn between these big pharmaceutical companies. >> we are getting to a point of a chain reaction and pharama land. having been kicked off by this very complex -- four way asset s wap that brought in eli lilly. then you are seeing this knock on effect. whichen in the u.s.

valley and is trying to buy. and you haveceo, not made a big deal yet, you have to be pretty nervous. >> you'll be forced to buy at the top of the market. valuations are going higher and your the last man to try and do it. where are you? do you pay the top of the market? >> this is the fear of missing out. >> pho-mo. >> the technical term. >> i'm more on the parties than the acquisitions. matt campbell and manus cranny, thank you. >> coming up, united we stand. chancellor merkel and president obama find common ground in confronting russia. we will tell you what you need to know about merkel's first trip to the white house in three years. ♪

>> welcome back. you are watching "the pulse." let's talk about the currency markets. i will throw in bond markets for good measure. we are trading at 1.3862. a bird told me early on if we get north of 1.40, they could take us up to 1.45 quickly. you will hear it -- see a very unhappy mario draghi. this relates back to the euro -dollar story. the european bond markets. the 10 year spanish government

bond is back at three percent. earlier on it went to below 3%. we have not seen that for quite some time. the compression of spreads, decompression of asset levels in europe is amazing, absolutely amazing. we will bring to some. this is where we stand -- bewi ldering to some. the gilt trading at 3 bits. nevertheless, we are seeing quite a lot of action around europe. it is going to be fascinating to see if the safe haven flows. if it had something to do with the expectation of q.e. >> yeah, people are still half-and-half. half of investors believe that. half don't. let's get back to angela merkel's u.s. visit. the key themes. trade negotiations, security issues, and the crisis in

ukraine. for more on what we can expect, we are joined by the senior vice president of -- intelligence in berlin. great to have you. merkel is in a position where she is the pivot point between the eu, president putin and barack obama. is this something she wanted or is it something that vladimir putin, who's putting her in that position? vladimir putin or barack obama? >> well, i think it is actually germany's central position economically and politically in europe that has developed over the last 20 or 30 years which is putting her into this position. we know that germany has close trade and economic links with russia. germany's clinical influence within europe and the western alliance has been growing over the last decades, and especially over the last couple of years in the context of the eurozone crisis. it is the structural patterns merkele putting angela

into the center position in the ukrainian crisis. >> how would you sum up angela merkel's attitude towards mr. putin? kgb officer.mer she grew up in eastern europe your she speaks russian. he's big german. howard -- he speaks german. how was doing cancel -- how would you encapsulate their relationship? >> the language capabilities and so on, that certainly helps, no doubt about that. in the end, again, it is a structural question, leaving merkel and putin aside. russia is around the corner. you have to relate to it if you want to ensure peaceful relations in central and eastern europe. if you want to ensure that economic and trade flows continue in central and eastern europe and between germany and russia. so i think, these personal

relations they can somehow relate on a personal level, that might help. in the end, it is crucial for germany to play a central role here and to work towards mediation approach in this crisis, leaving aside the personal dimension between merkel and putin. >> you say it helps. my point would maybe be that it does not help. it almost ended the relationship, the fact that she has history with him and the way he operates before he went into politics. does that make her more nervous of putin, more cautious? is that something president obama could use to his advantage? >> i would not think so. again, the key point here is that germany has economic interests in maintaining ties with russia. if you think of the energy challenge in germany, oil imports, gas imports coming from russia. at the same time german exports have been growing at a fantastic rate to rush over the last couple years.

couple he last years. will german government have to work towards a negotiated approach towards russia. there is a very different strategic -- that sets germany apart from the u.s. there is a very pragmatic german approach to what central and eastern europe, knowing that there is no way around finding a solution that respects the fact that there are substantial russian interests at stake as well in that region. >> we understand the various power plays. the political powers that play. but talks was a little bit about when you see what is happening on the ground and the crisis in ukraine deepening significant way, we now understand there could be a full-blown territorial control crisis in the next couple days for ukraine . what can angela merkel achieve? >> well, i think, you know, the

germans have been clear from the onset of this crisis that if push comes to some in the west decides unanimously to move towards this -- outright economic sectoral sanctions against russia, germany's loyalty to the western alliance will be the defining factor here. having said that, in the meantime, merkel and the foreign minister will try to continue to hold back the west from escalating at this point to level three sanctions. end, itaid, in the depends on the situation on the ground in eastern ukraine. the germans have made it clear that even from their perspective, outright military action i russia in -- by russia in eastern ukraine would be something that would push the western alliance beyond their line toward level three sanctions. would get very complicated for pose such anp

escalation. that has been clear from the onset of the crisis. >> think you for joining us today. joining us from berlin -- thank you. >> fendi's latest must-have. we will speak with its ceo about his hopes for the luxury company's new man bag. ♪

>> welcome back to "the pulse" live on luber tv and streaming on the ipad and bloomberg.com. andiveo on bloomberg tv streaming on the ipad and bloomberg.com. >> things are starting to escalate in the ukraine story, rebels. of the this is the dollar-ruble. keep an eye on those currency markets and especially dollar-ruble. on the equity markets story, european manufacturing, the number speed preliminary r eadings. greece. greece. what you got is a reading, the fifth expansion in a row. in the united kingdom, construction declining. it is coming in at its weakest level. i should correct itself.

in six months. of the way.data out in terms of the united states of america, there is only one number. jon ferro is over with his hashtag, but we will be able to see those guesses. s&p futures. non farm payrolls. ings commit. earn those will be the drivers. >> manus cranny with the latest on markets. >> let's take you to the pulse number. 22,000 pounds. that is how much fendi's famous peekaboo bank can sell for. the luxury purse maker has created a men's version. the bags are on sale at fendi's new flagship store in london. after the break, we will find out more about this. we will talk to fendi's. ceo >> we also talked about russian sanctions. warren worksp,

wonders. we reached -- we meet the dedicated super fan who has written a request for warren buffett himself. ♪

>> welcome back to "the pulse" live from london. i'm francine lacqua. >> i'm guy johnson. >> u.s. employees probably boosted payrolls in april the most of five months. economists predict the u.s. added 218,000 jobs last month after a gain of 192,000 in march. >> ukraine will top the agenda for president obama and chancellor merkel's meeting. over the nsaer

surveillance program will not complicate the joint effort to address the situation. >> in a phone call to angela merkel, vladimir putin urged ukraine to withdraw forces from the east. in the last hour, one of his spokesmen said ukraine's latest offensive has killed off any geneva all chances of a deal. >> ryan chilcote joins us. he has been tracking the action throughout the morning. an offensive started first thing around dawn. the situation has escalated quickly this morning. >> when the russian president spokesman says that ukraine's military action destroys any chance of the geneva deal being resurrected, that is something to take note of. really worth deconstructing. the geneva deal was reached a couple weeks ago. the whole idea was to de-escalate the crisis. as far as ukraine, the u.s. and the european union are concerned, it was already dead. that is why they introduced the sanctions.

they said russia was not observing the deal, complying. so they hacked it. russia, at least rhetorically, did not say was that. now they are saying it is dead, demeans the russians do not feel compelled to de-escalate the crisis as the accord calls. the second interesting thing in that statement is this reference to ukrainian military action. we do have some kind of ukrainian action, military slovyensk,he city of an industrial city. this is the first large ukrainian offensive to take back one area being held i the separatists. -- by the separatists. we have one helicopter shot out of the sky. one pilot killed and one pilot captured. all of this on video. the sources of the video being verified using how antiaircraft guns, russian antiaircraft guns that the ukrainians they were operated by foreign military

personnel, which is their coded way of saying russian forces. eyansk is forget, slov where the observers have been held for a week. this is a sensitive situation. >> the crisis is deepening. there is now effectively a battle for control of the ukrainian territory or some ukrainian territories. how quickly can this actually escalate? >> extremely quickly. you pointed out before you came to me and said, angela merkel was talking to president putin. had to pulld ukraine its forces back from the easternmost part of the country. which would look like they have not done. that happened to be in a phone call and initiated by angela merkel by the german chancellor to win president putin's support for freeing the observers. ironic. how quickly can they go? extremely quickly. willis become, and i do not have the answer, a reason -- will t

a reason for russian intervention, direct intervention of russian forces in the east of the country which we have not seen. we know from president putin after crimea, that despite the fact he said there were no russian forces on the ground, in fact there were. he came out and said, i was lying to you. in fact there were russian forces. the question here will be -- does russia feel compelled to act behind, corruption veloso or thepro-russian militia, or spokesman says the geneva deal is dead, does russia feel like they can go inw ith russian forces? if russian forces going to eastern ukraine, that could be a rapidly developing situation and very serious very quickly. >> they do so much. ryan chilcote with the latest on ukraine. in 25 minutes, it is "surveillance" with tom keene. given the pictures we have seen from ukraine. given the fact that angela

merkel is in washington to talk to president obama. a big chunk of the show will be dedicated to the escalating crisis. >> we will look at ukraine. it is decidedly a moving target. all since 1:00 a.m. new york time. the chancellor in washington. we will be addressing that through the show. we will be focused as well on jobs day. alan krueger will join us at 7:00. the professor from princeton, the recent chairman of the president's council of economic advisers. his perspective as we look for better job numbers. tom will join us as well. he really links wages and hours worked together. so we will give you some particular perspective on the job economy today. >> yes, exactly what are we expecting today from the job economy and how closely will the fed be watching it given what we heard from janet yellen? >> that is a really important question. i would say the number is a migration up, with a revision up

as well. you mentioned 218,000. 5,000 a few days ago. there is a lot of movement around the. the media overplays a single point estimate. there is an up feel to the whisper as we go to a: 30 this morning. >> they do so much. tom keene with "surveillance." >> last night, fendi opened the doors of its new london flagship store on bond street. the stars were out in full first. there were people like naomi campbell there and there was also somebody called francine lacqua. >> you are so kind. i need to pay you after the show. cara levine was also there, the 21-year-old famous model. voted model of the year. the company has created a men's version of the product. we spoke to the ceo about demand -- because of the sanctions on

russia. and we spoke to him about the new man bag. store, you have a whole floor dedicated to men. >> that is the first time. >> this means that this will be the new trend, men wanted to buy more accessories? >> i think we are quite advanced into the trend because men's business represents 20% of each luxury company. we are behind that. we have to catch up. what better occasion than coming to london? >> i'm fascinated by the peekaboos. the shoes. this is like the revival of the "it" man bag. >> peekaboo is an icon. it's just for women. we launched that for men because we believe it is -- you can buy stitching, crocodile inside. the metallic face israel si --

is real silver. an extreme luxury of owning a bag. >> now, for more on fendi and men's fashion trends, let's bring in a managing director. ofuaught up with the ceo fendi yesterday. there is little bit of saturation on the market. the chinese are not consuming as much. you have these creators of wealth, because the valuations are huge and the fashion and luxury sector. how do you gain new customers? with men's accessories? >> men is the big growth area. there are degrees of it. in asia, for example, men have been the red winners. -- bread winners. almost half the business and china goes to men. the degrees of culture here. are theo-saxon world

furthest behind. it is a stigma to carry a man bag. it is changing. southern europe, a slightly different picture. france, italy, spain, men are more fashion forward. asians carried far fewer of these biases. half of the consumption there tends to come from men. the company is clever about that. there is a new segment in the market. it is becoming cool for younger people to carry men's accessories. we think about the world today. people looking for jobs. i think it pays to look better and look younger. and cosmetics companies, luxury goods, they are all going after this market. >> we learned this morning you should not try to make these products to feminine. this is a peekaboo bag we are talking about here. >> i think a peekaboo bag is very much still a niche product. in the upper extremes of luxury,

some of that is the norm. when you're talking about making this a mass opportunity to wish you can make a lot of money, particularly things like cosmetics, for example, men's skincare is a fantastic homeru n, because men want to look younger. men's makeup, for example, is much more of a stretch. >> we called it guyliner, which made me nervous when i was reading the notes. guy nervous. he probably likes the bag. how do you market to men differently? yesterday, we are saying it is playful but it is a bag that has to be masculine still. it is going to be difficult for these companies to capitalize on these new demands if they do not get the marketing absolutely right? a wrong name or either something that most men do not identify with. > i think so. you have to be a little bit careful that you do not go too much towards the way of

femininity. the lines are blurring. zara brings as much fashion, as much change to its men's lines as women. men have no problem going to a different floor in the same store, even though zara eusebio women shop. be ale like- zara used to women's shop. ralph lauren. you see lots more color. you are evolving that message because younger men are more open to this more universal messaging. i do think there are certain lines you do not cross, such as to my mind, still things like make up, which are harder. >> you talk about the fact that men will not to appear around the block for the latest handbag. i slightly disagree with that. you walk into an apple store store when they are selling a new iphone. there are men queuing around the block. a handbag for your data.

how do i make that, because technology, you can get your head around it from a man's point of view. you can see how many get on board with it. how to someone like fendi take has story that apple and turn it into something that will work for them? >> this electronics legacy from men will not change. even now you think about in the endless sex in world, and i would say there are -- there is a difference between america and the u.k. and asia, where you will see men frequenting luxury stores. in the west to have this habit, i go to the mall with my family. i get -- i go to best buy. it will be a long time before men go to the mall to buy clothes. it really comes down to product. as agents become a bigger piece of the pie, i think you are already seeing that there are

standalone men stores. coach, for example. luxury has been quite good because they've had much more of a balance between male and female consumers. lauren.s brands, ralph >> you walk down regent street, j. crew. different entrances for the men's and women's stores. they link up inside. is that the way you do it? >> absolutely. men do not want their clothes against women's, but they are now comfortable shopping in a similar environment. the days are gone when you had to be miles away from each other. >> you guys and you are to school for school. thank you so much. needing your own entrance to buy your suits. we will leave that one there. coming up this weekend, catch up on our inside fendi special. we will take you inside the luxury bag maker on the week of its london store opening. ♪

>> welcome back. you are watching "the pulse." it is time for another exclusive. we have been speaking to south africa's finance minister. ation repairsn to go to the polls. he said done with bloomberg tv. having the advantage of an

institution like the african national congress which will win the next election and by a significant majority, means that there is policy continuity, means that there is transparency and relative certainty about what we intend to do. we have a record of translating the election manifestoes and a commitment to the national development plan into business plans for government departments as well. the one thing you will get is continuity. secondly, the focus areas -- infrastructure to increase the economy on thee one hand. on the other hand, to remove some of the key concerns our economy faces. those are now well documented and understood. we understand what we have got to do is deliver upon them. thirdly, make the linkages with african continent, even tighter than they are. morehe business sector

than its part. if we could collaborate with our neighbors and beyond and increasing infrastructure investor, not just in south africa but on the conmen, and the next 10 years we see a different prospect both for the content and our own economy. >> we are joined live from johannesburg. how concerned is the minister about the 14 week strike in the platinum sector? >> we have got 70,000 miners on strike. it is affecting three of the biggest mining companies, costing them $1.5 billion. when i spoke to him about how concerned he is, he says it will not have an impact on economic growth and he says that it will be solved soon. strike in south africa has become more aggressive. we're seeing across the board, not only within the corporate sector but also coming to service delivery. he is saying that the platinum mining strike is of concern, but the solution will be soon.

he believes the resolution for any future strike action will not take as long as this. this is a three-month strike. fund inional monetary the meantime has downgraded south africa's growth scenario for this year saying they will only grow by 2.3%. he says growth will remain at 2.7%. on the other end, do not forget that the stirike action we are seeing, the 70,000 workers on strike, the anc starting to lose popularity. we have seen noon unions come to the fore as -- we are seeing new unions come to the fore as well. >> now, from johannesburg to new york. it is job stay in america. later, we will get the most important indicator in the most important economy in the world, at least for now. michael mckee says the good news is this month's it's not. >> it's not the most important

indicator because for the past six months we have much of the jobs report to tell us whether america's economic slump was weather related or a real problem. has ahing we have learned ready answer that question and said what we might get today is an indication of just how strong the economy would have been without the weather. wall street certainly leaning strong with a median forecast of created in april. those updating their forecast in recent days have come in higher. unemployment forecast to fall. hour worked steady. there are upside risks as well, given the strength of the monthly earnings reports we got this week. all that price into the market. only a big drop today we get investors attention, guy. >> michael, how is it -- how likely is it that we will get a disappointing number? >> sure, business confidence does not match up with consumer

confidence. there is a a confidence interval and the jobs figures which means statistically anything from is possible.5,000 the weight of all the other reports suggest that it would have to be a significantly odd situation for it to come in worse than forecast today. >> there has always been hype about this number. is that about to change? >> no. jobs are something everybody can relate to. they are at the heart of the economy. more people working, making more means more spending. it is a simple thing to follow. we have to remember one month never makes a trend. barring some shock, the fed does not care today. tapering is on track. they want to wait six months after that before considering a rate move. there is no real knock on implication to today's numbers. >> they do so much. -- thank you so much. some breaking news and corporate this is on the

pfizer-astrazeneca deal. astrazeneca rejecting the deal s an adequate -- as inadequate. they said it is not good enough for us to start talking. >> seen at the bottom end of the range at 50. they are expected pfizer to have to pay for this business. they were expecting numbers of 60 or higher. we will get more on this one come back. see you in a moment. ♪

>> in the last few minutes we had breaking news from astrazeneca. the board has rejected pfizer's rapunzel. -- p[roroposal. nice price but a people were expecting more. manus cranny is checking -- the tracking the story. >> they came out with a note earlier this week, 60 pounds. 50 pounds is the offer at the moment. we were talking. one of the lines is astrazeneca continues to invest in research. this is the critical point in this deal. the last time pfizer did a major $50 million inped research away. there is concern over the pipeline. >> they are playing politics. >> at what point do your institution shareholders capitulate and accepted pfizer goes hostile, at what stage do

your shareholders accept a higher offer and say the board is not looking after your interest? >> it is difficult to understand if it is on the money or something on the pipeline. if you look at the share price, how much are reading into this? it was higher after this morning. they offered $50. .5%>s now down they are not taking this is astrazeneca asking for higher price. this is a merger in jeopardy? >> it's certainly got all of the hallmarks of going full blown as were aggressive move by pfizer. they tried to be nice to curry favor politically. in london this week. this is got all the hallmarks of something very hostile. >> astrazeneca saying that the pfizer deal will pose a serious risk. it depends on what game they're playing. it is too early to say. that is it for "the pulse." >> "surveillance" is up next.

it is a bank holiday in london but it will be a busy day with job numbers. tom keene will take it over from us. ♪ . .

>> this is "bloomberg surveillance." forces fight back. russia's of the geneva accord is dead. on monday announced a deal come

on friday raised the offer. astrazeneca rejects the offer. and it is job stay as america moves on from a long, cold winter. good morning, everyone. this is "bloomberg surveillance." we're live from our world headquarters in new york. it is friday, may second. i am tom keene. joining me scarlet fu and adam johnson on this job today. a lot of news flow. stay with us, but let's get our morning breeze, here is adam johnson. >> overnight, mixed economic data in europe. u.k. weakest pace in eight months, however, euro area manufacturing, i will get it out, the fastest pace in three months. they mix to read. on employment held steady, 11.8%. we get our unemployment rate at age: 30. that is the big number we are for this morning as well as change in nonfarm payrolls. estimated