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tv   Bloomberg Best  Bloomberg  November 15, 2015 1:00pm-2:01pm EST

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♪ >> coming up on "bloomberg best, the stories that shape the week in business around the world. a megamerger creates a beer behemoth, alibaba has its best alibaba has its best day ever, and the booming art market could be heading for a bus. from the eu to the gdp, it has been a volatile week and politics. >> people say, where did alibaba come from? alix: and a peak at some revealing charts, this is "bloomberg best."
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♪ alix: hello, i am alix steel and welcome to "bloomberg best." in weekly review of the most important news coverage, analysis, and in-depth journalism from bloomberg television fell global network. our stories begin with news of banking implications around the globe. >> federal prosecutors are calling this the largest theft of consumer data in history. prosecutors named suspected hackers for the first time and directly linked them to a cyber attack against j.p. morgan last year. joining us is a chief security and ourat trend micro correspondent who covers white-collar crime. let me start with you. what are the ramifications? >> he used a word i call very apt, breathtaking. this was a crime syndicate, much like the mob of old.
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it was hacking into financial institutions and financial publications to collect all kinds of consumer data. including securities manipulation. >> do we have any idea of how they were able to track them down? >> they were being investigated individually. the early ones included e*trade being investigated out of atlanta. at some point, they said that like something else we were investigating at jpmorgan. he came to new york and was consolidated. and a group of smart fbi and prosecutors managed to hone in on the group. very complicated. it had tentacles around the world. there was an israeli component. servers were in egypt. money was going through cyprus and swiss banks. it has many layers.
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>> yesterday, my colleague sat down with the chief executive of bank of america and asked him how it affects his company. here is what he had to say. >> we get hit on occasion. more than rarely. in terms of the indictment, one of the things i see going forward is the cooperation between the institutions and government has to move forward so we can find the people and take care of it. ask just abouto what brian moynihan was saying. how strong is that? could it be stronger? why is moynahan so reluctant to say how much he has been targeted? where companies still so secretive about how big of a concern this is? >> financial institutions need to worry about preserving trust and their institutions. the sector has greater collaborations with the u.s.
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government and the european government vis-à-vis these types of attacks. the problem here is that these hackers behind this campaign are not behind bars now. they are still walking free behind the iron curtain. manus: beer, beer, we want more beer. let's begin with a megadeal. snb miller, your shares are up. they made a formal offer to buy the company for $107 billion. the merger will make the industry's biggest ever deal. let's get more details with ryan. ryan, this is a relatively complicated agreement. it has taken a number of years to get there. ryan: it certainly has. eight weeksexactly
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ever sab miller came out saying they intend to make an offer for it. executives and shareholders started disappearing from meetings prompting speculation. you can go all the way back to last year when sab miller failed to buy heineken. it was a real defense to prevent its acquisition. it has taking the merger talk. snb is already the second-largest brewer. i like how the economists put it, together, they will be rhemoth,th -- bee absolutely massive. it will be in the top 10 of companies with 30% of the world's for the beer markets. one in three pints will come from this combined entity if it goes through. obviously the combined entity , would have a footprint that extends throughout the world. it is easy to understand why this took a while. it is easy to understand in terms of regulatory hurdles, there are many too clear, o- many too clear -- many t
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clear, particularly in china and the united states. they don't expect the completion until the second half of next year. him mark: china on 11 week highs today. we have news about beijing to buy new shell. it came amid that equity route, -- it came amid a volatile time. what is going on here exactly? >> it came amid that $5 trillion equity route. since the at the rebound, it looks like authorities in china and beijing, a bit more confident. they have announced that by the end of the year, ipo's will resume. there will be rule changes to make it easier for investors and make it easier for companies listing. making it easier for the markets over all. take a look at what is happening. swinging between gains and
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losses. the chinese markets doing well. the shanghai composite are key gainers. these new share offerings come as the security regulatory commission deems the market is healthy enough after the $5 trillion rout in the summer to sustain new listings. individual investors will see some changes that will reduce the amount of cash that bidders need for ipo's. that is one thing to watch. foreign investors not convinced. you have seen foreign funds pulling money out of these equities. they are not convinced of this rally we have seen has legs. there have been some notable
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predictions that this market could see a big drop by the end of the year, or at the start of next year. a roller coaster ride indeed. there is this larger issue of valuations. how chinese companies list on the a share market are valued. the valuations are 23 times earnings generally. that is the level that these stocks have been priced at. that guarantees games on the first day. it is a true reflection of where the market will be headed. we'll see if they come up with some tangible rule changes. that is what foreign investors will be watching us china resumes ipo's. ♪
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♪ alix: welcome back to bloomberg best. i'm alix steel. we continue our review of the top stories from the trading week with a day of record-setting sales for alibaba. >> the 11th of november turned out pretty well for china. alibaba's singles day promotion rewrote the record books underlying evidence that consumerism is the new growth drivers.
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he is here with some big numbers. zeb: big numbers indeed. my goodness. by midday yesterday, they had passed through last year's record of $9 billion. by the end of it, there were 2 million delivery men on the road bringing those goods. the final tally, $14.3 billion in sales. it is started off with this star-studded variety show. kevin spacey, daniel craig from the james bond film. what is significant is that the chinese consumer is powering ahead in a time of the chinese economy slowing down. it really shows the rotation from the old economy to the new economy in china as the government tries to power the consumer, and power the
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consumer, and they have responded. the are looking at going global. listen to what jack had to say. jack ma: 11/11 the next five years, we may be in tokyo, paris, maybe new york. we hope that 11/11 is a great day for every consumer and small business. for every business in the internet age. >> it was touted as a successful first visit. >> good morning. >> good morning to you. you will >> our business is extremely strong. we have been there in one way or another. 70 or 80 years. we are the eighth largest market. we have 15,000 people there. we will have $600 million of revenue there. we are 50% of the market there. >> how they could it be? >> india is under branded.
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$1.6 billion in revenue. in india, 50%, only 600 million. it's extremely strong, extremely attractive. if you look at the 25 year forecast for population and gdp growth, india will be the third-largest world economy and it will have the largest economy by population. it clearly is full of promise. i tend to believe that in a 200 year blip in history, in the 19th century, they were 50% of gdp. we are bullish on india. they are the last brick standing. russia is in trouble. brazil is not good for the next three or four years. china, i am a raging bull. having said that, there are
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going to be bumps. india is growing at the moment at 10%. another strong month in october. october was extremely strong. it should have been because october last year was weak. in that month, india was strong. china was strong actually. a little bit counter of what we saw early in the year. india, i hope the strength will continue. the bric's, they were a virtue and have become a bit of a vice. reporters always say, are you still keen on these markets? the answer is yes. the future depends on the success of india. we have a vested interest. >> it was a record night for a chinese billionaire paid more than $170 million for a painting.
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$490 million worth of art sold. it was built a mixed night. there are concerns that the booming art market may have peaked. >> $200,000. $500,000. ramy: gavels are pounding at new york's top auction houses. >> let's try another one of $12 million. ramy: the outcome may can do more on moscow. this summer's global financial turmoil, tempering tastes of international buyers. >> you won't see the kind of depth of buying from chinese, brazilian collectors over the last five years. >> all that energy sucked out of the room. >> the season's first option --
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auction came in at the low end of estimates. $377 million. some of the shares sank 6%. that means auction houses have to work harder to tempt sellers to part with their art. >> it is a dance to the death. >> a guarantee is a top weapon. the seller gets to walk away with a promise whether the arch -- art sells. another weapon is curating a sale around a single masterwork. >> the seller agreed to part with its work on the condition of doing a special option around it. auction all around it. [applause] >> the event was a success. reclining nude beat the presale. there are factors that auction
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houses can't control, like at the macrolevel. janet yellen impacts the art markets. >> you have a perfect storm right now. you have individuals who have tremendous amounts of excess cash. you have low interest rates. >> but the era of cheap money may soon end. with that, the power to buy art sets on futures on pricing in nearly 70% chance of a december interest rate hike. >> if i was a seller, i would sell now. >> do you think you're in a bubble? >> mixed sales could be a sign that the bubble will deflate into 2016. ♪
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♪ alix: welcome back to "bloomberg best." it has been an eventful week around the world. we start in europe where british prime minister david cameron is seeking to redefine the relationship between the u.k. and the eu. >> front and center, david cameron sets down his demand on european union membership. it is going to happen midmorning.
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he is due to publish where he is going to send to the president. four key areas. the toughest of which is going to be tighter welfare rules. that may be resisted by the countries in eastern europe. let's get to the details how it will be received. our brussels chief is standing by. we have been waiting. this is the start of the guns being fired in a process that could take a while and may produce results by the end of the year. >> that is the hope. the hope is that at the next eu meeting in brussels, they make some good progress on the negotiations with the u.k., with cameron, over the demand of renegotiation of the u.k.'s relationship with the eu.
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they have talked about it in october. they asked cameron to put it in writing. they want the demands in writing. that is supposed to come today. other leaders are going to be looking at the details to see exactly how far cameron is going to push it in terms of how to renegotiate how the u.k. fits in with the eu. >> does this require treaty change? >> they hope not to go to treaty change. the way that it sounds, what cameron has said about what he is thinking in terms of welfare payments, eligibility, and migrants coming into the u.k., that is technically illegal under the treaty as they stand now. if they push for with something like that, i think you are going to have to see some kind of treaty change. >> now to a handshake that took seven years to create. leaders of china and taiwan met face-to-face for the first time since the civil war. singapore was host of the historic meeting. good morning.
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>> you can call it a handshake that painted a thousand words. something you thought possible. china has never acknowledged the -- taiwan's right to rule itself. the conflict considered one of the biggest of the last century. they had a 15 minute closed door meeting. he found the talks to be pragmatic, there's a former -- very straightforward, stressed the need for more dialogue. interesting to note that there were no national flags. both referred to each other as mr. as opposed to president. and they went dutch, they split the bill for dinner after that meeting. it shows how delicate the protocol balance really is.
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>> maybe we are a step closer to a possible reunification? >> there are really two sides of the coin. it could be seen as a step closer for reunification. the meeting is more symbolic than significant. it was two months before the general elections. he is trailing way behind opposition's leader. this meeting was intended to shake up the race to choose a successor. public opinion polls show most taiwanese prefer the current state of relations with china. they reject reunification. reunification is just an idea is -- if not a pipe dream. mark: joining us, paul ryan.
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i want to cover a lot of policy stuff. first, guantanamo bay. the coequal branch has spoken once again and said guantánamo should not be closed. those prisoners should not be moved to the united states. administration is being vague. you have been critical on him using executive action. what is the message about whether they should use executive action? representative ryan: he can't, he doesn't have the authority. we passed a bill of 390 votes , well over a enough to override a veto. the senate today passed this bill with 90 votes over -- will -- well over what is needed for a veto. language is very clear that he cannot transfer the prisoners. this was language put in the defense bill by democrats in the early part of the obama administration. >> law is law. -- mark: so what if he says, mr. speaker, i am trying to fulfill a campaign promise? representative ryan: law is law.
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it is just that clear. betty: the president has written touting the benefits of the transpacific partnership. i want to read you one part. he says that companies that sell their goods around the world tend to grow faster, hire more employees, and pay higher salaries than companies that don't. on average, exports supported jobs pay up to 18% more than other jobs. what is your view on that? >> it stands to reason in the sense that a lot of the things that are not traded like haircuts aren't of high-value. you are exporting sophisticated things. high technology, for example. i don't find it surprising. full disclosure, i haven't read the tpp. neither have you. it is enormously long. [laughter] it is a long and complicated deal.
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most people have to read their way through the small print. betty: they did try to summarize parts of it for the american public. but i agree. do you think it is going to get through congress? >> i would like to bet a significant sum of money on that. however, the small print reads, it is going to be relatively easy for the president's opponents in congress to find things to object to. i can think of two presidents who have been less able to get congress to do their well. i am rather pessimistic on how this is going to fare in congress. anybody, i am talking champagne in anticipation of tpp, it is missing a crucial point. inganybody who is uncork
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champagne in anticipation of tpp, it is missing a crucial point. it still has a huge hurdle to get across in washington, d.c.. >> good to have you on the program. after yesterday's vote, how long will it take to get a new government in place? a lot of power is now in the president's hands. >> that is right. there is no set timing in the constitution for this part of the process, so the president gets to set the timing. he does have wide discretion on what happens next. he has to meet each of the parties before announcing a decision. the socialists say they can form a minority government, but the president cannot appoint the p.m., or allow the p.m. to remain in their capacity. no early elections can be held until say may or june of next year. he has to deal with parliament as it is. ♪
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♪ >> you are watching "bloomberg best". i am alix steel. each week bloomberg tv interviews influential newsmakers. here are some of our favorite interviews this week. >> we are very thankful for the
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united states. without the internet, there would no be alibaba. without the american tourists who come to my city, i would never learn to speak english. so, i think -- people say why doesn't alibaba come to america? when are you going to compete with amazon, ebay. if we go there, we want to help small businesses. we have such a huge demand of china consumers online. every day, today, more than 100 50 million people on the mobile phone shopping on our site. we need good products, unique products, and the usa has a huge potential.
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in five years, i want our team to be thankful to invest in high technology, invest in the startups in the united states, helping them to grow. helping them to grow not only by money, but helping them one day to come into china. it is a huge market. emily: amazon is also going global. they are focusing on india. you are focusing on russia. when do the world's biggest e-commerce companies collide? >> amazon and alibaba have a pretty different model. they buy. they sell. we are a platform. we have 10 million small businesses. we have 10 million big businesses. we believe every company can be amazon. if amazon is a great apple. we are the apple tree.
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we want on our platform, there are lots of companies, cloud computing, using our logistics system, using our payment system, these are the services. we want to enable every company to be e-commerce. we are not an e-commerce company. i don't think amazon and us would compete. we want a lot of people successful like amazon. emily: should amazon be worried? >> i don't know. if they worry, they worry. if they don't worry, they should enjoy it. >> how do you see the media landscape? >> the biggest issue is who is in a good position given where the consumer is going. i believe you follow the consumer. >> you are the opposite of old-fashioned, fyi. >> thank you. the issue the tv guys are facing is that 75% of millennials watch tv down from 95%.
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radio was 93% in 1970, 93% listen today. 93% of millennials listen today. by the way, our ratings are up 10% year over year. our broadcast radio stations that are digital are up more than that. the consumer clearly -- and one of the issues with tv, what is tv? it is changing. it turns out that when you are looking at programs that the networks are retailers of programs. a new retailer showed up, called netflix and others. some people decided that i will buy my program there. i think that has had a big
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impact. they have a lot of levers to pull. they are in the content business. some are making a lot of money on other retailers selling their shows. i'm not holding any benefits for them. on the other hand, radio has always been america's companion. we are sitting next to you in the car. >> we depend on burning fossil feels. i walk around this office, everybody is at a computer. you have your electric cell phone machines there. everything depends on electricity that is produced largely by burning fossil feels. we have an extraordinary contingent in the united states of people who deny climate change. the deny it is the biggest problem facing humankind. so we are not moving fast enough. if all the energy in the u.s. were renewable, we would change the world. the unexploited resource is wind energy off the east coast of the united states. there is enough to power the whole place. canada, u.s., mexico -- >> kathy from minneapolis asks what are your plans for the black swan event, persistent deflation? what about the possible overhang that the game a change? >> great question. part of the reason we are raising capital is to have a balance sheet that allows us to
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withstand a black swan event. that is the starting point. in financial services, unless you have a strong balance sheet, you don't have a business. you will worry everybody. so we are moving from the bottom of the industry in terms of capital strength to the top. that is very important. we are also very careful about our risks. we have been de-risking and reducing our positions. it is unlikely that there will be a relatively dramatic event. >> dramatic how? >> there has been a long time of low interest rates. it is quite likely that interest rates will rise. there will be impacts in the real economy and the real world. as a financial services company,
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we have to position ourselves defensively. >> there's a lot of speculation at this point borne out by the treasury futures market that there would be a rate hike of 25 basis points. if that happens, what would it do to bank of america's business? >> when you have $500 million of zero interest deposits and loans pre-priced and rates going up, it's a good thing for a bank. that being said, we have positioned the company and rebuilt the earnings stream. we are a highly capitalized company which made $4 billion plus in the last quarter. it would make our life a little easier. ♪
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♪ >> welcome back to "bloomberg best". you can always find fascinating features stories from around the world on bloomberg television and bloomberg.com. our sampling this week begins with a glimpse into the year ahead. bloomberg tech correspondent sam
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grobart visited a facility that could be a solution to the state's persistent drought. sam: this is the pacific ocean. as far as oceans are concerned, it is definitely in my top five. you can swim in it, surf on it, or just stare at it and think about your place in the universe. one thing you might not immediately think to do with the pacific is drink out of it. and yet, in the year 2016, that is exactly what the residents of san diego county will be doing. ♪ >> we are standing at the site of the carlsbad desalination project, the largest desalination facility in the western hemisphere. it will produce up to 54 million gallons a day. that is enough to fill an
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olympic-sized swimming pool every 18 minutes. sam: everyone knows that california has been going through a serious drought. in spite of sitting next to 180 quintillion gallons of water, desalination has never been an obvious solution. plants of this scale are common in israel and saudi arabia, but in the united states there has never been anything like it. would it be fair to say that southern california is facing some of the same challenges in the middle east? >> sure. this is a mediterranean climate. the way that southern california sold their water resource issues historically was to import. that is not as reliable now. >> san diego gets a 64% of its water from the colorado river. the last years have been drought
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years. we like to say that the low hanging fruit is gone. sam: now you need to create new sources of water. >> that is correct. sam: this is where it all happens? >> yes. we are in the reverse osmosis building. this is where we take out the salt. sam: this is how every desalination plant works. you take in seawater, reverse osmosis, then you are left with 50% freshwater, 50% super salty wastewater, which gets dumped back in the ocean. this is also where the whole idea of converting seawater into drinking water runs into trouble. >> reverse osmosis requires a significant amount of pressure. that pressure requires energy.
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we consume between 33 megawatts and 38 megawatts of power. we are the largest power user in san diego county. sam: all that power cost money, and this is why desalination has never worked in the united states. we have always had cheaper water sources available. so the developers of the carlsbad plant have spent $1 billion trying to make it as efficient as it can possibly be. one key part of that efficiency is this room full of orange tubes. >> the salty water that is leaving the plant is still under high pressure. we run that through our energy recovery devices. by doing that, we are able to recover about 40% of the energy used in the plant. sam: mitigating the considerable amount of energy that a plant like this requires.
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>> correct. sam: in spite of this efficiency, desalinating water still costs 30% more than importing it. it means water bills will go up when the plant goes online. generating 54 million gallons of water a day may sound like a lot, but it is only 10% of san diego's water needs. if you ask is desalination the solution to california's water crisis, the answer is, well, no, but it will probably be part of the solution. as climate change makes dry places even drier, we will reach for what ever new water sources are available, even those that seem impractical today. the future of california's drought is uncertain, but one thing is for sure, people will keep looking out at that water and thinking, that could work. ♪
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♪ >> no pain. >> not yet. >> we will increase from week to week the velocity. >> how long does that go on for? >> it depends. ♪ >> any robot has integrated safety that allows for detecting collisions or unintended contact. we need to make sure that certain things are not exceeded. >> [speaking german] ♪ >> this is a robot that is suited for the direct contact to humans. we use this testing to safeguard the robot against serious collision.
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if i contact the robot, it always stops. we have also an integrated proximity sensor in the griper. you can come close to the gripper and it will also stop. if i release my hand, the robot will go back into the intended operation. ♪ >> to support elderly people at the workplace, you need technology like robots, but you can only support them with robots when this type of support is safe. what we have here is a projector is projecting a light curtain around the robot. once the light curtain is interrupted due to a shadow, the robot will stop. the idea is to avoid any contact between a human and a robot. it makes the workplace more
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flexible. it has the advantage that you see where the restricted space is, and where the robot is moving next. the human makes error, a good machine certainly not, but when a human makes an error, it must be achieved so that the robot cannot harm the human. this will is for safeguarding the robot. the floor knows where people are moving and where the objects are located. this kind of floor can be used to establish restricted spaces, especially close to the robot. if i go to these spaces, the robot stops. from the perspective of
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collaboration, collaboration in a highly structured environment, so where trained people are working. this is the first step towards collaboration in a domestic area. with people that are not trained, with robots especially in such environments -- ♪ >> this was the icon it hit that put the district on the map for the rich and stylish. these days, it dancing to a different tune, drawing a crowd that is hungry and ambitious. the government is offering infrastructure and support as a financial hub. now the number of businesses is increasing steadily, rising 12% in the first eight months of 2015.
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>> it is just one of many communal workspaces that have launched. they offer startups and investors a place to develop their business, but also hang out. some critics point out that quantity does not mean quality. >> the number of entrepreneurs as well as government support has increased, but the quality of startups has not improved much. >> park is a venture capitalist. he says many can't grow profit because of the limits of the domestic market. technology and information firms made only 15% of all new businesses launched in august. these are considered key to economic growth as they have the potential to expand overseas. way wearable is a startup with global ambitions. tell us about this. >> show me your hand. >> you can feel a slight vibration.
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what is it telling us? >> that it is dry and you need moisturizer. >> i will. i will get some moisturizer. way assesses the condition of our users skin and environment and offers advice. now big companies are chasing a piece of the action. way says it is getting $26.5 million from major firms. >> i was cautious about cooperating with big firms, but the way they work so far, they are very cooperative and offer good advice. >> many startups remain wary. the huge conglomerates have deep pockets and deeper political connections that can make life difficult for a potential disruptor. still, moon has high hopes and is optimistic about coexisting with korea's more established businesses. ♪
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♪ alix: as we wrap up this edition of "bloomberg best", let's look at some of the charts that underscore the week's most interesting business stories. on this week's "what'd you miss" i interviewed the t-mobile ceo about the new streaming video service. your subscription growth has been crushing the competition, but you have been able to sustain shrinking profit margins because you have been able to sign up so many people. how many do you have to set up right now to offset that they cost of doing streaming video? >> you said shrinking profit margins, our growth and profitability has been huge. >> if you look at your average revenue per user, it is lower than the competition because you are able to sign-up so many subscribers.
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that is ok for you. what happens when you run out of levers to pull? how much more free stuff can you give me? >> what the un-carrier is about is about solving customer pain points. you really think we will run out of room to solve pain points? the most important part is that your questions are relative to verizon and at&t, who are losing customers. they have excess margins and are in a heap of trouble. joe: i will take a look at a chart of portugal. we have some portuguese data out today. as you can see right here, portuguese data quarter on quarter fell to 0%. they were looking for 0.4%, so this is a big disappointment. the other thing in portugal, political strife, stability of the government. so here we have a chart of german-portugal 10 year spreads. it has been inching up higher. it is at its highest level in four months, so uncertain government and weak growth, back to the troubles we have seen in the eurozone.
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>> this is the commodity spectrum. i asked you what will stop the slide? goldman sachs said only a substantial rise in chinese demand is likely to be sufficient to balance the copper and aluminum markets. industrial metals are down to their lowest levels in 5-6 years. the selloff is not confined to industrial metals. look at the bloomberg commodities index, the lowest level since 1999. commodities from the index down by 20%. the worst performer is nickel, 38% lower this year. crude is down 24%. gold isn't even on the chart, it has fallen to a 2010 low. there is only one commodity that has risen, cotton, up by 2.9%. >> that is it for "bloomberg best" this week. remember, you can always get
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more business news at bloomberg.com. i am alix steel. thanks for watching bloomberg television. ♪ . . .
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narrator: the contemporary art world is vibrant and booming as never before. it is a 21st century phenomenon, a global industry in its own right. "brilliant ideas" looks at the artists at the heart of this, artists with a unique power to astonish, challenge, and surprise. in this program, american artist, theaster gates

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