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tv   Bloomberg Best  Bloomberg  February 21, 2016 6:00am-7:01am EST

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the proceeding was a paid >> coming up, the stories that should the business world around the world. a production freeze interrupts the oil route, but for how long. fed weighs in with its latest set of minutes. >> they said let's wait and see what happens. >> earnings seasons continues one pay -- with pain for some and others joy. and european banks cope with an ongoing nightmare . >> it's hard to see it getting
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worse. >> the biggest names in business you from the hips. >> this is a litmus test because i'm worried about the future of american democracy. >> they are scaring the hell out of people. plus, conversations with highflying executives at the singapore airshow. it is all straight ahead on "bloomberg best." shery: hello, i'm shery ahn. welcome to "bloomberg best." let's begin with it day by day review of the week's top headlines. on monday, trading resumed in china following the lunar new year holiday amid new concerns over the stability of the yuan. the day's dramatic headlines
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with china dominating the news. he broke his long silence. what th did he say? >> he had officials come forward and not say we are disengaged from the currency valuation. the fact that he said it all is quite interesting. toshould add some clarity investors. the key messages that we're not going to push the currency down just to restore export competitiveness. expect volatility along way. we can only take it at his word. there is essential message coming from china that is not about devaluation. >> that is what a lot of asset manager said. the fact that he sent anything at all is a sign of support. >> we are just getting this quote. there was this senior banker that said that this core set of
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data that we got today on the trade front, his data does not make too much sense for china to maintain a strong currency. say data suggest that they would uan. a weaker yo >> they decided the freeze in the meeting less than our government we have an agreement to freeze production between saudi and russia and two other opec countries. what does it mean. ? the markets were disappointed because they wanted a cut. >> they thought it was too much work for the first meeting of these two countries, at least publicly in a month. if you think of where we were only three months ago and where we are today, it is a massive sea change in the situation. three months ago, saudi arabia and russia were fighting for market share. the odd was trying to undercut moscow. moscow is trying to do the same in china. were fighting a proxy war in syria.
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today in doha, the ministers of both countries really reached a preliminary agreement. i think that is quite significant. >> they have a floor and a price that they do not want the fresh hold to be below that of $30? marketr time to tell the that if you try to bring the price below $30, it will come with actions from us. we are only beginning to understand what's going on behind the scenes. the fed released the minutes from its january meeting an hour ago. policymakersal expressed concern at the falling commodity prices, the route of risks toarkets posing the economy could joining us is mike mckee. reticence on the part of the fed to say what the risks are. do you read any more understanding out of this
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document on where they see the risks are and whether the balance is negative or positive? aree know where the risks from the fed minutes, but we don't know how big the risks are or whether they will ask him come to pass. remember this was back in january. and s been a month could janet yellen has already testified on capitol hill. fed officials were trying to understand the falling oil prices. it was all at a time when consumer spending was hanging in and the labor market was remaining strong. in general, the minutes say that many saw those developments as increasing the downside risks to the economy although they really had no framework for how bad those risks would be. here's the key quote -- a number of participants noted "the large magnitude of changing financial conditions was difficult to reconcile with income
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information on u.s. economic development." if things were so bad, why was the data coming in the labor market in particular? they did not know. as you said, they punted and said, let's wait and see what happens. >> walmart stock is following today's session, dropping 5% at one point, nearly wiping out at skins for 2016. the world's largest retailer dropping its forecast. walmart is the biggest laggard in the dow today. >> investors can ask themselves, so no growth next year when you knock out currency? we do live in a world of currency so you have a spectre in currency. why on walmart at this point? the stock have been doing really great this year. people looked at it as a flight to safety . this in the sums and that shoppers would trade down to walmart, but there has been minimum wage increases. today was a bit of a reminder
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that there are still issues with this company. this company is not growing. why have your money and walmart rather than amazon? >> as e-commerce continues to decline, someone will have to answer to that with a percent growth in the fourth quarter. what are they doing with that? markets are slowing like in the u.k. where there is increased competition there. there's always some reason. amazon fourth quarter retail sales were up 20%. it's something they have to do. they have to spend in that area and it's really expensive. they spent almost a billion dollars last year online and will, spend a billion dollars more this year. >> there's breaking news today. yahoo!'s board has formed an independent committee to explore it strategic options. it is separating its alibaba essential to maximizing value. it's an independent board
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independent of marissa mayer. >> they want to show the markets that they are taking very seriously this desire for them to find a buyer. the concern was that marissa mayer and management were on two separate pages. concern for the buyer is that marissa and management were not behind the idea of the sale. they are committed to working on yahoo!. what the board need to show is that we really want to make this thing work. >> two days ago, they were shutting down some of their verticals. they were laying off people and shoving offices. the board might think, we want you to think about selling it instead of retooling it. >> if you are thinking of selling it, the best way to do a cell is not we are desperate. it is to say we have other options and an alternative to negotiated agreement could. . isn't that a thing to think about? >> she has to think about morale around the staff. you have retain people to run a
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business. the matter where marissa goes when the deal goes down, you need people to keep the trains running. aboutre you're talking closing up shop and ending up in the hands of private equity or verizon or whoever it is, the more people are like, what are we doing here? later in the program, we will focus on two sectors that were very much in the news this week for different reasons. there is plenty of optimism around global aviation at the singapore airshow. the outlook is not so sunny for european banks. coming up on "bloomberg best," a roundup of company news from around the world. ♪
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shery: welcome back to "bloomberg best." the commodities crunch forces and mining giant to scale back
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while an upstart weiler list carrier promises to keep growing. -- wireless carrier promises to keep growing. those are just a couple of the interesting stories we cover this week on bloomberg television. here's a look back on a busy five days. >> a watershed moment in the long simmering debate between silicon valley and washington. a court orderting to help investigators unlock the iphone of one of the shooters in the san bernardino terrorist attack. tim cook framed as a chilling attack on civil liberties. what do we know now and how does this play out? >> the government has come to apple with a court order, trying to compel them to give them the ability to unlock an iphone. apple is pushing back. there is no sign that any side is going to stand down. this will be a legal case that will play out for a while. >> i think apple should resist the order. it would set a precedent. it would mean that fbi could go to apple and demand that apple
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unlocked any phone the matter what operating system it had. it would go to apple and say, if you can give us access to phones, how about computers? and then it would go to other providers and demand the same thing. there's a lot at stake. >> you disagree. explain your position here. >> i think apple should participate in a controlled way. i do not agree with giving ess to technology as my two cohorts have stated. given the situations we are dealing with today, i think apple should participate directly in the process. that would require the government to change the rules as it relates to how they investigate situations and who is involved in that, but i do think apple should be directly involved in that and not have to be compelled to give up the keys to the kingdom, if you will. softbank is surging up nearly 14% after saying it is ready to up its share price.
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this could be worth almost $4.5 billion coul how doe. how does this compare to pass purchases as well as others? >> this is by far the largest buyback in softbank's history. it would be worth about 14% of the company. the bank's biggest rival in japan has announced a 350 could forn by that shareholders, this cannot come soon enough. the stock was clobbered this year, falling before the buyback announcement. sum put the value below the of the values of a chair holdings which includes sprint, alibaba, super cell, as well as yahoo! japan. they will not borrow more money to pay for the buybacks. it's really good news because the company is already $100 billion in debt.
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it will withdraw its cash holdings as well as asset sales for the acquisition. >> bangalore has posted a $5.6 billion loss. -- aan bass of whole massive overhaul to regulations. what are investors convinced about the strategy update we have seen this morning. ? ? . >> this plan they are outlining is quite ambitious. more interestingly, they are actually talking about it complete exit from both commodities. they want to focus on consumer driven materials that will benefit from long-term growth trends. i think a lot of investors applaud that because they're looking for those two commodities and that is much worse than other commodities we are talking about. >> some might call this a fire sale. is that your description? >> it's a matter of stripping us
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back to the core, rebuilding the base, and making sure that we are fit to go forward in the positive and most strongest way we can. we have been making changes over the last 10 years that have been incremental. i think it was time for a bold step out. we have been working on that strategy over the last couple of years and i think in this market, the opportunity is there for reset and start with a very different looking portfolio and making some bold moves. bond sales are seeing their slow start to a year since 2005. today is a special day for debt sales. apple and other tech companies are leading resurgence is after assets were frozen. >> that opened after being virtually frozen for two weeks. there is concern over global turmoil and growth and they're finally seeing the safest and most respected companies come to market -- apple, comcast, ibm. these of the fortress balance sheet tech companies coming out
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with really big issuances saying, you know what? let's take advantage. yields are still pretty lovw. >> you can only get a mortgage if you don't need one. >> what is apple needing more money for? dow $38 billion in cash. -- they have $38 billion in cash available to them. they have $78 billion in annual revenue. their death is miniscule in the scheme of things. they are just piling it on in my mind. there has been all but closure of capital markets to high-risk companies. that process. the pace of high-yield bond issuances that the slowest since 2003 for this year. yet you are seeing this issuance of safer debt for what? apple made buyback shares. people will give the money and the tech industry is in the tory
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asleep fickle. people are really not getting paid all that much. but this is perceived as safety. groupon shares searching for a second straight day after a significant investment by alibaba. the stock has jumped 82% in just two days. the shares are down about 50% over the last 12 months. why in the world can alibaba do for groupon that justifies a huge stock jump like this? >> it is what groupon can do for alibaba. for alibaba, then there is a strategical and tactical imperative. jack ma famously said the company founded in 1999, he wants it to be around for three centuries. that is how he sees entry in the u.s. market as a long-term imperative. he is planting seeds. box, lists, snapchat -- these are seeds he has planted in order to learn about the u.s. market and see what it's about. when the invasion is ready, he will be prepared. >> how optimistic are you for
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groupon's long-term future? >> it is not going to zero because alibaba texas state and there's a value to knowing that if you were thinking of betting against groupon. reported rising profit and predicted as many as 3.4 million new subscribers for this year. itdarrell issa you crushed -- dare i say you crushed up. what are you doing inside this company? >> shery we we added 3.8 million customers and we had 30% of the past growth in industry. t-mobile added 3.5 million postpaid phones subscribers. at&t and verizon and sprint -- -269,000. >> are you making money doing it? you started this price war so it's great for consumers, but
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how about you? >> the model is working. what does that mean? subscriber growth is leading to revenue growth. service revenue is up 11.7% year-over-year. weaker even on that growth. the cash flow was up 800% year-over-year so the model is working. we are doing it by solving customer pain points. it sounds cliche but the un- carrier solves pain points and fixing what was a stupid, broken, arrogant industry for the most important thing in most people's lives. ♪
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shery: you are watching "bloomberg best." last week, troubles at deutsche bank raised serious questions about the health of one of
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europe's largest financial institutions. this week, the discussion brought in. is there a crisis brewing in european banking? it's a topic that sparked a big debate on bloomberg television. >> since the fall of lehman brothers, eight of europe's tickets banks have amassed layoffs and paid billions in legal penalties and lost hundreds of billions in market value. writtenobinson has about what he calls europe's banking nightmare. define a banking crisis if you could and is this one? it certainly feels nerve-racking covering this on a day-to-day basis. a bankingek felt like crisis. you saw tempers and plunges in stock prices at credit suisse. 10% plunges in stock prices at credit suisse. you saw a lot of fear in the market. i would argue that that is kind
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of the short-term feel. the was last recruit in long term, what we are releasing is the next chapter in a transformation of this industry. i like to look back to last may 21 when deutsche bank to 40olders come up percent of them basically gave a vote of no-confidence to the ceos of the time. the strategy of trying to preserve the core of your investment bank in the way that it existed even before and immediately after the crash, that's just not going to work in this environment anymore. there's something more radical that has to be done. that is what the market was basically saying to european banks at the time. >> we have seen some of the leadership changes to reflect that certainly could >. >> the restructuring seemed to go on and on. this is like mark three for deutsche bank or mark two for credit suisse. investors are out of patience. we have to get a planted
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know it's probably going to take years to execute this plan. so you have that process going on. and then of course, when china slows down in august and market start to get to her that starts fueling the fire. >> what has been crafted by regulators in this potential crisis? onare dealing with changes the markets post lehman brothers and the crash? the banks were clearly kicking and screaming about dodd-frank an impact that would have. >> they got rid of their toxic assets they wanted -- day one. rulesd-frank imposed the and regulations and they got back in business and the universal bank seems to be alive and well in the u.s. earnings.p. morgan's last year. they were record earnings last
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year. >> it's hard to see it getting worse. >> a lot of the reality about banks is known. the fact that we still have further contagion risks to come. we have a situation where banks are having to pay to deposit money to the ecb. they also charge more to lend to their customers, which is just the amount of customers borrowing. i think you're going to see npl's, which are already much higher than they should be and are going to get worse. shock comingential from market events. i keep on going about these financial mass destruction weapons. they're going to see something occurred there initially and there's a good chance we will bonds kick him could that will generate and that wave of negativity. at the end of the first quarter, we will see a lot of the holders of these bonds to wake up to the reality that they are no longer priced at par. some of them are down into the
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70's. they have to sell them. you have a wave of selling hitting the market and that will contagion and impact bank prices further. is this a time to step in and by thanks? uy banks? no, it's not. wait. now is thet is coupon going to be honored? clearly, deutsche bank proven the other day that there liquidity coverage ratios were massive liquidity. seehe short-term, i do not it because we are nowhere near the triggers. >> martin wolf writing in the financial times, talking about the banking sector c. people worry about these high leverage an extremely complex bonds and they are right to do so. the banking sector has been duly
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red or unduly so? >> unduly so. martin says correctly that the financial cetaceans are complex animals. erik nielsen, the banking sector has been battered. unduly so or rightly so? erik: unduly so, but there is barely smoke if there is no fire. i think the issue here is that as martin says correctly in the "ft," financial institutions are complex animals, and we have been burdened by a whole lot of new cost from survey, regulation. the natural change we have to go through and what have you, and then we have a flat yield curve.
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for a bank, ultimately you live off the transformation, borrow short and then live longer. but the curve has been flat for 5, 6 years. guy: the possibility of further negative rates seen as a real possibility. we are bashing the banks at the time we need them to do better work. erik: that is right, and it is a problem. alix: european banks trade for less than their book value, something that typically might be appealing to activist investors, but they are nowhere to be found. lionel, you had an article about this out today. why are activists kind of shunning european banks? lionel: it seems like it would be an attractive trade for them given that you could maybe be involved in push management, make some tough decisions that they have not taken yet. the problem is that we really don't know, or activist investors are not really sure who is in control of the european banks. is it the regulator? is it the european central bank? even if you have directors on board it, are you going to have
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the regulators and other shareholders on board as well? there are so many complexities and difficulties with pushing banks in a particular direction that for now they are staying away. alix: can you compare the activism in u.s. banks versus european banks? lionel: i think there is more activism in the u.s. in general. i think that again, the european issues are far more complex. we have a lot of countries involved, a lot of different national regulators, and a lot of strategic issues that have not been worked out with the same aggressiveness. we have balance sheets that need to be cleaned up, business lines that need to be sorted out, and again, even though you would think this would attract aggressive investors, there are so many unknowns and so many future losses that could hit these banks that activists are, in europe, staying away. alix: part of what we hear when european banks are at risk is "oh, no worries, mario draghi has your back, the ecb will help you, there is a lot of liquidity." but in terms of profitability, mario draghi cannot help them with that. >> your absolutely right. it was fascinating last week on the day deutsche bank was plunging, lloyd blankfein was speaking at a conference, and his words were, the european banks have access to ample amounts of funding, and he was more worried about the counterparts, the suggestion of that, the share price performance. european banks in most cases have got a long, long way to go until they actually get the wave u.s. banks are in.
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as you know, a lot of u.s. banks not earning above their cost of capital at the moment. alix: exactly. what is the next wave of trauma for the european banks? chris: what is the next wave of trauma? difficult to say. i suppose it is whether or not the ecb will take rates down further and there will be more, sort of, soul-searching about what do negative interest rates -- if the ecb as suggested goes down, what does that mean for profitability, and does that have another negative impact? is there any growth out there, which will start -- if you want to alleviate that problem? shery: still ahead, the best interviews of the week. mark cuban on silicon valley, bernie sanders on the supreme court, and the fed president who thinks big banks should be broken up. that is coming up on "bloomberg best." ♪
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♪ shery: welcome back to "bloomberg best." i am shery ahn. it has been a week of controversial conversations on bloomberg television. bernie sanders describes his ideal supreme justice. minnesota fed president neel kashkari explains why he is open to breaking up the biggest u.s. banks. let's begin at the nba all-star weekend where stephanie ruhle went one-on-one with dallas mavericks owner and noted tech disruptor mark cuban. mark: in silicon valley, they are in their own little world. they have insulated themselves, they have lost touch with reality. you've got kids, because they graduate from this school or that school with an idea that they get an $8 million valuation, they raised $2 million, keep 75% of the company -- it is ridiculous. i have been saying it for a long time. stephanie: what is going to happen? mark: they are getting written
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down to nothing. a lot of them are going out of business. literally, if you invest in 95% of the silicon valley's that are coming out or have come out in the last year, the minute you write that check and it clears, you should write it to $0 because that is what it is worth. these companies have no chance. stephanie: no chance? mark: some companies are good, but 95% are done before they started out of silicon valley. 5% will be amazing. stephanie: should more be going public? marc benioff has been outspoken, saying stop avoiding the public market. if you are a good company, if you have a lead, go public, get testing. mark: i have written a blog post saying that exact same thing. i have been a proponent of that for a long time. a couple different things, what is happening in the market right now -- there is a dearth of high-growth companies. now we look at facebook, netflix, google as hypergrowth companies when their hypergrowth is behind them. they are still growing quickly.
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what is happening now is the hypergrowth in private companies is being bought out by private investors, right? i do not know that uber will accelerate their growth. their growth rates are probably going to decline. stephanie: and early investors cannot get out. mark: they are stuck. stephanie: across all of your businesses, when you think about all of your businesses, when you think about what you are most concerned about, what you are worried about, what is it? especially being from detroit. you are in a relatively depressed environment. dan: the biggest concern is the overreaching power of the federal government and the kinds
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of things they are doing today that we have never seen before, at least not in my lifetime. and, you know, it is very disconcerting to businesses. you know, i get calls every day from ceo's, public companies, private companies just with stories that are not even out there of stuff going on. that to me is the biggest concern. also this belief that companies and corporations are evil across the board. shareholders of public companies, shares are owned by pension funds and public unions, this is america. we create wealth through shareholder value. and this concept that some folks are selling, that the american system is evil to me is the biggest concern. stephanie: are we not promoting entrepreneurship as much as we should? dan: to some extent -- stephanie: i mean, is the government? dan: absolutely not, currently. i do not think they believe in it, frankly. >> you raised the subject of the replacement for justice scalia. a few moments ago. you said the other day, anybody who you appointed to replace justice scalia, would have to be an opponent, would be in favor of overturning citizens united. you made that comment the other day. basically the litmus test, essentially, i think, so how is that different from the litmus test that republicans apply, we will only appoint a supreme court justice who is for overturning roe v wade? or has a certain position on affirmative action?
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is there a difference between those kinds of litmus tests? sen. sanders: i'm not a great fan of litmus tests. i could have a supreme court justice read everything i have ever written. that is not what i am saying. what i am saying is this issue of citizens united is so significant, is so fundamental to the future of this country -- this is democracy, and right now, what we are seeing in this campaign are people like the koch brothers, wall street, and other billionaires buying elections, and if we allow them to buy elections, then everything else does not matter because you do not have a democracy. so this is one issue that i am saying yeah, i want my nominee to be loud and clear that he or she would vote to overturn citizens united. it goes without saying that i am pro-choice. not terribly likely that i will be nominating somebody who is anti-choice, etc. but this is a litmus test to me because i'm worried about the future of american democracy. neel: we all remember the crisis, 2007, 2008.
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i was in the middle of it running the t.a.r.p. program. we hated that. we hated that we had to bail out the banks. i think americans across the political spectrum hated that as well. we see the anger of the american people still today. none of us want to be in that situation again, so dodd-frank was passed very quickly because they wanted to reform the financial system, which i supported. but the more transformational measures were taken off the table, things like breaking up the banks or putting so much capital into the big banks that you turn them into utilities, so they virtually cannot fail. there are a number of other options. here we are six or seven years later, and in my view, we have done some good. the banks are safer, they have more capital, deeper liquidity, but we have not taken the risk of a bailout off of the table. if a number of banks run into trouble at the same time, policy makers would be forced to bail them out. stephanie: you never take risk out of the system. maybe you take it out of banks' hands, but somebody will be left holding the bag. it is those investors who have risky assets. and it is insurance companies with 401(k)s.
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so it is not evaporating -- it is going to someone else. neel: i agree. but it needs to be distributed in a way that it is safe. in the late 1980's, 1000 little savings and loans failed in the crisis. that was terrible for those firms, but there was no crash. in the tech boom in the late 1990's, we had the crash, devastating for silicon valley, but no risk of an economic collapse. that is where we need to be. howard: volatility is normal, fits of volatility. i wrote a memo recently where i talked about my friend, sandy, the airline pilot who describes his job as hours of boredom punctuated by moments of terror. and that is the description of the investor's job. stephanie: hours of boredom punctuated by moments of terror. that is how you describe investor life? howard: i think that is right. and this is one of the last six weeks in the stock market have been one of those moments of terror, but it is normal. the reasons are not quite normal. i mean, we have kind of one-off.
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i think people have gotten used to dealing with normal economic cycles -- recession, recovery, etc., but we have now kind of cosmic issues that people do not have any experience with and do not know how. china, oil, rates, terrorism are just four examples. stephanie: is the fear exaggerated or punctuated by the presidential election? when you see donald trump up there, dare i say, putting fear in the u.s. economy, really speaking in such declarative statements about the state we are in, does that affect the market? howard: i cannot tell you
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definitively because i do not have any research on the subject, but i would guess so. they are scaring the hell out of people. donald says the chinese are killing us. the mexicans are killing us, the japanese are killing us, but we are going to get the jobs back. then the others compete to be equally fearful and dramatic, they cannot -- it is very hard for them to compete with him by saying no, the latest information from the commerce department says -- they do not want to hear that. ♪
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♪ shery: you are watching "bloomberg best." i am shery ahn. this week, the singapore airshow brought together the biggest players in the aviation industry from top airline executives to manufacturing ceo's. my colleagues haslinda amin and stephen engle were there to cover the state of the business from every angle. haslinda: airlines enjoyed the most profitable year ever in 2015 and the iata, the international air transport
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association, expects further gains. the iata chief tony tyler joins us this morning. wow, such optimism, tony. how solid is the recovery and profitability? tony: we are forecasting airline profits globally for the year, at $36 billion. it is up $33 billion over last year. that forecast was made last december, and we will be updating it in june. a lot will happen between december and june. the fuel price coming down obviously has a large part to play in that. sunanda: the economic scenario is different as well. china is going down. why isn't china a risk to the aviation sector? tony: you are right, china's economy is slowing down, although in fact air travel within and to and from china is not slowing so much because the economy is reshaping itself, restructuring itself, and consumers are spending a bit more so than they are are spending on travel.
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we are not seeing reduction in china as such a big factor at the moment. fabrice: i think we are firm. which is, the book to bill will be a good one. we will continue to consolidate a backlog of 6800 aircraft. stephen: we see the low-cost carriers in this part of the world, what are you seeing? fabrice: many people talk about it, but we do not see it. the reality is we have never had such happy customers, so profitable, so it is true as well that the segment is very dynamic, so there is a lot of growth. there is a big fight or so among some competitors.
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so all in all, i can confirm that we see the growth and for a simple reason. asia-pacific accounts now for 40% of our deliveries, so this is the area of growth, and it will continue, except if everything collapses, but this is not the prediction. haslinda: malaysia airlines undergoing a massive restructuring, falling is that comprises, taken private because of massive losses amounting to more than $1 billion. a 30% cut in operations. they have already cut most of the european group. christoph: we are refocusing on emerging economies, strong gdp growth and also creating new relationships between malaysia and those countries, the most prominent being china. that has now been changed. no more cuts to be expected. we will change our network each and every year, like every airline.
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we simply did not have enough work for all the people we employed, so that was very unfortunate, but also that is over. we have reached our final headcount numbers. haslinda: how does it look in asia? what are the prospects? john: it is an enormous market for us. over the course of the next 20 years globally, we expect about 350 aircraft in space, 25% of that is going to come from asia pacific, including china. so it is an enormous opportunity for us. today, we have 20 customers in 11 countries with over 200 aircraft flying in the region. but we have a lot more work to do in this region.
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a big operation here in singapore. a big operation in beijing. so we are committed to the region we want to grow here. haslinda: committed to the region, but you are going to face increasing competition. i know you love competition, but china's kovac as well as japan's mitsubishi aircraft trying to get into the space you are in. you have dominated this for a long time, but competition is heating up. >> in the case specifically of those two competitors, they book and where we are. mrj is at the low end. part of our view on competition is we take them all seriously whether they come from russia, japan, or china. there is no arrogance or hubris in embraer when we think about our competitors. what we can do to address the competition is try to improve our offering on a consistent basis. haslinda: congratulations on the orders. amounting to about $1 billion. yugo: thank you very much. we are very happy. haslinda: so your orders so far from japan, the u.s. -- how about the rest of asia? what are you doing to gain? >> we actually have one customer in asia. asia is the most expanding region, and we are sitting, doing our best to sell mrj in this region, and we feel it very strong potential. haslinda: how do you view the competition, because you have to break the duopoly. dominated by andrea from iba. are you prepared for that? can you do it?
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yugo: first of all, we are the newcomer. we have designed aircraft that has quite a huge advantage compared to the existing product. with these strong points, we are convincing our customers to order the next mrj. haslinda: what is your competitive advantage, and how soon can you make inroads? against the business of the business offer from others? yugo: our product is pure consumption. our product will have better consumption by more than 3%, and this will save the fuel costs very much for airline customers. akbar: i do not think it is a good idea for oil prices to be below $50 a barrel. it is not good for the economies of the countries, and it is not good for airlines. yes, it improves the bottom line, but it does not increase the bottom line is much as i would like to because as i said
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earlier, because people travel less, and at the same time, because people are traveling less, we have capacity. there is competition for this capacity, so it is downward pressure on our heels. stephen: how are you hedged? if you say $50 -- akbar: we are hedged only a small amount of fuel, but at a very high price. i hope that i will be able to hedge waiting for the oil price to go it little bit below $30 a barrel for me to take a hedge again for a big amount. stephen: do you expect it to? akbar: you never know. it is fluctuating so much. that we are uncertain of where it is owing to go. either it will go this way or that way, but we hope it will increase because we want businesses to increase. people expect that because of lower oil prices we're going to reduce our fares. yes, we have produced by giving back passengers the fuel surcharge we used to charge, but at the same time they should not
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expect too much reduction in fares, because when the oil price started to rise above $100 and reached nearly $150, we did not increase our fares 150%. and this was encroaching on our heels and on our bottom-line and our margins. ♪
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♪ shery: as we wrap up this edition of "bloomberg best," let's take a look at some of the week's most interesting and entertaining charts. tom: let's go to our single best chart. i did not know what this chart would look like when we made it, but has to do a lot with michael porter's estimate that education matters. going back 25 years, that is the growth in employment of those with a college degree versus
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those with not a single bit of college as well. the starkness of that -- you can see the tensions of 2007 and 2008 -- everybody flattens and rolls over, and the college degrees, professor porter, just pick it right up. prof. porter: skill is tremendously valuable, and the people with skill are doing well in america and other parts of the world. the college degree has been the ticket to that definition of skilled and being educated. brendan: today, we will play the game called guess the european periphery economy. right here, we have got gdp growth. looks reasonable, up at 3.9%. right? anybody would dream about that kind of growth right now. correspondingly, this is the spread of that country's
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sovereign debt against german bund going down, down, good gdp growth, spread goes down, things are looking great. something happens, however. right now for the last two years, that has been rising. someone tell me there is a clue in the colors what european periphery economy is this. stephanie: pink is supposed to give us a clue? brendan: that is red and white, the colors of poland. >> that top one is not white. >> ok, all right. david: this is not stump the judges. brendan: poland's justice party, voted into office, this is where things spike. you have good economic growth, bad political risk. >> so taylor swift wins three grammys, won album of the year for "1989." now for those not in the know, 1989 was the year she was born. so i was thinking, what if you had invested as her parents in various assets the day she was born on december 13, 1989? look what i came up with. they, of course, being americans, would only invest in dollar and u.s. assets. you invest in the s&p 500. you are sitting on returns of 446%. second time, you decide to put your money into gold.
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you are sitting on returns of 190%. the dollar index gives the returns of 2%, and the yield on the 10-year treasury has come from 7.8% to 1.75%. so if you are mr. and mrs. swift, you're not only happy that you produced taylor, but your portfolio of u.s. dollar assets has done remarkably well. well done, mr. and mrs. swift. shery: that is it for "bloomberg best" this week. remember, you can always find the latest business news from around the world at bloomberg.com. i am shery ahn. thank you for watching bloomberg television. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin with politics and the 2016 election. primaries in south carolina and nevada are taking place this weekend and next week. marco rubio the endorsement from governor nikki haley on wednesday. >> i want a president understands they have to bring a conscience back to our republic. ladies and gentlemen, if we elect marco rubio every day will be a great day in america. charlie: donald trump continues

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