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tv   Bloomberg Best  Bloomberg  February 28, 2016 11:00am-12:01pm EST

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♪ bloomberg asked, the stories that broke around the world. donald trump stays on a primary when he streak. from the frontiers of innovation congress, we have the insight on the leading edge of technology and investment. is5g is exciting, but it for-five years away. vonnie: and, our roster of high-profile guest is headlined by bill and melinda gates.
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plus, a vivid new perspective on the future of peak oil. all straight ahead on bloomberg best. ♪ vonnie: hello. welcome to bloomberg best. a look at the most important business news, analysis, and interviews from bloomberg television around the world. let's begin with the a by day look at the top headlines. with the june train third date now set for a referendum vote on ..k. membership >> u.k. prime minister david cameron answering questions from lawmakers in the house of
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commons. cameron has been making the case for staying in the european union. the london mayor says he will campaign for the so-called brexit. does it really matter how many people moved over to the boys just inside -- boris johnson side? >> he is one of the most recognizable politicians in the u.k. >> we have a chart that shows the odds of the risk of a brexit. >> there does seem to be a very big risk of a brexit. ,otentially raising the risk because of boris johnson, focuses attention on this. as far as having a referendum
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date, this issue becomes a lot more tradable than it was. >> the possibility of a so-called brexit continues to weigh on the pound today. says thisf london requires planning. >> this will have a large impact on the market. this is obviously a global event, and might well have an impact on global financial markets. this has raised uncertainty. >> six month ago, we were talking about the possibility of a rate hike. hike isseems like a totally off the table for this year, but the probability of a cut now has risen, about way to percent for december. what will be see first? 2016, perhaps a
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relatively short order, we will see rate cuts. in the u.k., there is more room to maneuver. they can move without going into the negative. that was the talk today. the market probably has it right. >> another big win for donald trump. he went the nevada caucus with 46% of the vote, topping marco rubio and ted cruz with more than 20 percentage points. >> this is a big win for donald trump. not just because it is three states in a row, but the margin of victory is just massive. if you add up the second and third place, they do not match donald trump's numbers, added together. superare headed to tuesday, a massive day, candy moment and be stopped? ?- can the momentum be stopped
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>> that is the big question. ted cruz is leading in texas, his home state. it would be a big state for him to lose, a firewall, so to speak. ted cruz has been investing a lot in the south be a donald trump, this is his territory. some other candidates will try to cherry pick candidates here and there. the real question is whether or sweep ald trump could majority of these states. if he does, the question is, how do you stop him, can you stop him, and where? day inas been an epic the battle of encryption. apple's adjusting the fbi is overstepping its authority in demanding to unlock an iphone of
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one of the san bernardino shooters. it is about one phone and stopping terrorists. what he make of apple's response that it is not about terrorism? >> apple has had a pretty good response. one, it is an unreasonable burden to comply. they suggested will take 2-4 weeks and 6-10 engineers to write the code that the fbi is requesting. second, they suggest it firstges on their amendment rights. they don't want to write code for something they don't believe in. they have a strong case. the justice battle did not take this battle if they did not think they have a strong case as well. shared among people , as much as is executed on the computer. it is almost like you are talking to other programmers and
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to the computer. >> is the privacy argument enough to carry here? view.s not, in my in reality, we see privacy all cede privacy all the time. we find itself in a situation where privacy has to be ceded because of our safety. >> we are just getting started with the g-20 in china. china says they have multiple ies to downsize risk. he was beginning this, showing he was catering to a mostly international audience. a few things. realnow there is a need -- rates are on their way up. the real debate though, and what
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was not answered, was how they plan to do that. we are in the situation in china where capital outflows are getting is activated -- exacerbated. onalso made a point speculation that there is absolutely no basis, whatsoever. you look at the fundamentals of the chinese economy, and no .asis for a persistent decline that also speaks all used to what they are now using to turn .ff, if you will all the speculation that they further. it has gotten very extensive. it has been a massive draw down. people need to come out and manage expectations. vonnie: later on bloomberg us, tech leaders tell us what is on the rise for smartphones.
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and, u.s. secretary treasury says we are not in a moment of economic crisis. next, more news in a week in business with big companies facing big questions. ♪
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♪ vonnie: welcome back to bloomberg best. let's go around the world with a major companyhe news. banking and commodity firms have been hit especially hard this season. it appears their struggles are far from over. hsbc, down today. they posted their first quarterly loss in more than five years. shares were up more than 5.5%, why should we have this loss? suffering, along with asian economies.
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shown a lot of slowing down. iter a certain risk control, actually cannot expand as aggressively as planned. when i spoke to the ceo, he said they are slowing a job higher program in china by two years, and also will not put the $100 billion of assets into the country as they planned. what we are saying is ambitions to expand in china checked by the macro environment. it is looking like he will have to find a plan b. >> we had plans announced in june -- is plan b more cuts? >> plan b very well may be more cuts. curiously, the only
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division ii report an increase in fourth-quarter profit was the investment bank. it is a rare case in europe of the investment bank propping up the results of the consumer and what the visions -- consumer and wealth divisions. tas shares have taken a dive. boost growth.lps half a billion in terms of a share buyback. why not a dividend? >> because of the losses we have had for the last few years, we don't have a huge amount of frank creditsts -- . after returning the cash to
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shareholders, we felt that buyback was the most efficient way to do that. dhp reporting cutting dividends. >> what are they doing to counter the downturn? >> in a nutshell, share and spend less. they have pared back spending by about 20%. it is believed that the dividend. they are joining a lot of companies saying, with this kind of commodity cycle, we cannot guarantee greater dividends. >> how can you cut expenses when 90% of your delta on your income statement is price changing commodities? how much more fat is there to cut? >> we have done an outstanding job cutting costs.
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we have had productivity gains for the last three years. we think that will continue to be an important factor. $2are cutting another billion of productivity gain. when you're in the space of 30% reductions in price, you cannot make up for that. that is the reality of a cyclical industry. >> time inc. is not interested in possibility buying yahoo 's core business. ,nd now competing with verizon and others. how would this work? >> when one company spins off assets -- in this case, yahoo! -- it merges it in a stock for stock deal with the company that is smaller than it. time is well size for this to go
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through. it would be a tax-free transaction, which would be of some benefit to yahoo!. inc.think is a struggling company. you have putting these two companies together would be a mistake. joined now from the london stock exchange by richard solomon. good morning. billion.gone for $1.5 why the extra size? >> we have not sold our intercontinental in paris and hong kong. the prospects look good. we have increased our regular dividend by 10%.
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as you said, we are returning 1.5 billion dollars to shareholders, which in total would make about $12 billion since we became an independent business. .> honda announcing a shakeup a year after the carmaker replace its chief executive. in, who is out? from a pressres conference in tokyo. he is trying to put his stamp. a management- eight leave.see a chart wea look at have on the bloomberg, it shows underperformed compared with peers.
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it has fallen since april 2013, compare that to the blue line, that is toyota. >> shares of j.p. morgan are trading down this morning. yesterday, j.p. morgan investment bank told investment is itself in investment revenue was down 20% this year so far. >> it is a tough environment. you have low rates, though stocks, low capital markets. the expectation for earnings this year are pushed up to next year, and pushed out a year further. it is delayed. that is the bad news. jamie? did you asked jamie >> my question is what is good about being a big bank chuckled
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the public still dislikes big banks. >> his answer? 787 is a safe airline. i thought he should have elaborated on that more, and given us a better answer. .> shares have tumbled what went wrong? materialn saying new information has become available from sharp. most companies have said nothing else. the point of contention is something called contingent liabilities, costs related to potential restructuring and layoffs.
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at this point, without knowing more, what those liabilities are, it is hard to say if there is a major roadblock for the field. ♪
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♪ you are watching bloomberg best. the mobile world in barcelona this week was the showcase for a dozen new gadgets. it was also an industry summit, featuring text most influential leaders, including mark zuckerberg, who publicly backed apple in its dispute over privacy with u.s. authorities. sensitive subjects being debated by mark zuckerberg, primarily, his own wealth. remember what he has given
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away, why not a foundation? he also discussed disappointment that india has banned the accident to free pas basics. still -- notably, the shift to video, 360 video, and what is needed. he needs them to stop being competitive. we talked to jason taylor, the head of infrastructure for facebook. >> building infrastructure is fundamentally hard to do. solves theator problem, then share it through this project, the odds of their neighbor, maybe one of their competitors hitting the same bottleneck are probably low. the idea or particular solution will probably find a home somewhere else over the globe.
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zuckerberg, yesterday, really trying to get operators and equipment makers to push forward on 5g. where are you on the 5g spectrum? you have a new initiative, working with many of the players. >> we are. we are working on the technology, the processing capability to support 5g. we think, as we look at the future, the so-called internet of things, 2020, it will require different technology. we want to make sure we can provide that, not only on the wallet,, like a mobile cars, but also the infrastructure to facilitate that. >> also, investment is needed to get to the end goal, whatever 5g is. we don't have the exact whatmendations that on or if
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is 5g. >> mark talked about having a common platform to provide the ability of moving massive efficient data in an manner. >> are you worried about the saturation point we are seeing in the high-end? >> not at all. the smartphone really just began seven-eight years ago. we're not worried about that. .e're still seeing growth we're still seeing innovation. from my perspective, it is still growing. what is exciting about it is really what is behind the galas. what innovation will be is what is behind it, what drives it, and how we solve problems for customers. >> when you say the still growing, are you still seeing
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demand at the same pace? >> same pace, different discussion. we are still seeing demand. really everywhere. everyone wants a smart phone. >> already, you are envisioning 5g in th as the next way you ani can get our download speed even higher. facebook is calling for everyone to work together, to share their learnings. you agree what facebook is pushing for? broadband to be everywhere. 5g is exciting, but it is 4-5 years away. is let'so 5g for us maximize what we have today. what we have today is pretty awesome. >> what side of size of market
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do we think we are going to be getting? heavy done much theorizing in terms of the scale of opportunity here? >> 50 billion is the number last year in processes. it is 75 billion, or maybe more, now. many report cards of how big this will be. certainly, a big market that will bring new businesses and new business models. >> talk to us about the security element. >> i have just been talking about security in iot. cyber security, a big theme at the moment. with iot, when they start getting deployed, you are talking about security and a different way. the good news is now is the time to do it. if we let it be deployed,
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and try to fix security later, that will be a big problem. we are working on some of the low level building blocks to allow software to be built on top of the hardware. >> pick a picture for me, in the next few years. you are already investing in driver assist, helping to part, helping find car parking spaces. >> we will probably see by the end of the decade somebody will introduce a fully autonomous vehicle. >> will it be you? >> a man may not be. we need to define what an autonomous vehicle is. there are different levels. we are trying to come out with is when the driver does not have to take control in a defined area.
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we want to make sure it is true to our brand. our brand has been about accessibility. here? wins out is that you, google, apple? did they become your competition ? >> our view is we want to continue to be a leader in this area. it is interesting. we are not only a leader in the core business, cars and trucks, but a leader in semi-autonomous features. features that will keep you in lane, adapter speed -- adapt your speed on the highway. we are a leader there. we are tripling our investment in those lane, adapter semi-auts features. at the same time, we are investing in autonomous vehicles. as we do that, we will work with a lot of different partners. our clear goal is that we are a leader in the space. when it makes sense to work with others, we will.
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when it makes sense to work on our own, we will. vonnie: coming up, the best interviews of the week here at some straight talk on brexit. and, bill and melinda gates and what company still need to learn. ♪
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♪ >> welcome back to bloomberg best. among this week's top interviews, u.s. treasury secretary frankly assessing the economic backdrop to the g-20 summit. discuss melinda gates their foundations annual letters. american business and its potential. >> i see in the tech sector, amazing innovation.
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i see in the health sector, fantastic innovation, stem cells, genetic. the energy sector real opportunities for breakthroughs where we can understand the basic physics of materials and catalysts. >> it is interesting you say that. you look at energy and we keep on hoping for this thing to come through and one reason why you call for a miracle is that all the things we keep on hoping -- opening are really going to change. energy seems to be an exception. >> ironically for the climate challenge, hydrocarbon has been the most innovative. now that you have demand, the cost reduction work that are going about all the inputs they have makes the bar tougher for the clean solution to come along. the cousinheaper and
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i see so many paths to get an energy solution, the chance that we do in the breakthroughs is very high. that is an optimistic view but it is based on my view of the science. >> you have long-term views and you take long-term action. are you concerned the rest of the world has fallen into short-termism? >> one of the reasons we keep trying to push to really promote the idea is that if you don't, you are going to have acute crises. that is not just because of conflict. it is because people cannot find economic opportunity in their own area. if we make the right long-term investments, people want to stay can getey are if they their kids into a great education system. we feel like you always have to focus on the long-term because
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it is important. >> you to live your life that way. -- and ceos today can't because they have shareholders and activists banging down their door and regular americans don't have the money to make long-term decisions and politicians don't. where you look down the road 10 or 20 years, you build the institution that will help you. the united states is the m3 of the world -- envy of the world. biology, any of those areas -- continuing to drive that forward, that is why the economy is someone that are off then most of the others. >> it is unacceptable to target exchange rates to gain unfair
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advantage outside of your country. -- the question of who gets more of the existing pie. as i talked to my counterparts, they want to be clear that is not a direction that we of the world community can go in. i'm hoping this g-20 reinforces that. >> business leaders say the problem is a demand problem at this point. do you hope the agreement coming out of g-20 actually does have specifics about how global command -- demand could be stimulated? >> it is a matter of time before we see countries make specific commitments that have been marked by real crisis. this is not a moment of crisis. this is a moment where you have got real economy is doing better than markets think in some cases.
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you have a future that could be influenced very much by the kinds of policies describing. the idea is how do you avoid having things go to a place that you don't want them to go? that is a different conversation from what you do in the middle of a full-blown crisis. the only time you see communiques with that kind of detail is once you have gotten beyond the point. i am hopeful the conversation i am describing actually lives. >> can you take off the biggest risks to suitability -- stability in europe. >> a multitude of factors. ific reforms,pec this low interest environment for budgetary consideration, and
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enthusiasm has somehow vanished over the past. -- operates more longer-term. they are more related to demographic that they are also there. one at the european level, the multitudes of decisions that can influence positively the long-term growth rates. creation of the single market for digital products but also the capital market. most importantly is the framework, consistent framework for our union. which consists of one monetary policy combined with 19 independent fiscal policies. i want to ask you first about
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brexit. a group of ceos said it would be a bad thing for euros and a bad thing for european business. >> when david cameron opened the pandora's box of the referendum, he made a huge mistake. we are seeing today the result of that mistake. i am in favor of the u.k. inside europe, provided they are playing the game of the union. more today, they are much selfish and it is breaking down the eu with a lot of people wanting each one to have different stages. is u.k. willsult have a very specific state,
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there is no eu because of them, i would prefer they go on their own and it will be much worse for them than for the european union. .> talk of the brexit you have been vocal about this in the past, much in favor of staying. how are you feeling about that right now? how do you gain this out over the next few months as the rhetoric heats up? >> it is going to be a close call. it was looking much more likely that the vote would be to stay boris and toore the arena. boris is an incredibly charismatic human being. he is an incredible self promoter. the risk for the camp that wants to stay in is that boris galvanizes the leave camp.
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youcts as a figurehead and end up with a population voting like an x factor for the exciting boris, not thinking about the tragedy it would be for europe and the u.k. -- if the u.k. left the eu. >> how much does it affect ipo's and m&a leading up to it. >> the same way the u.s. election will affect. it is a very scary year. the risk that the u.k. leaves the european union. you have a u.s. election where trump is continuing to defy expectations and people in europe have no idea what that would bring. pen.ance, the rise of the you have got a tremendous political uncertainty. the only place that seems certain is russia with putin.
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watching you are bloomberg best. in cape town bloomberg hosted the africa business and economic summit bringing game changers from across the african continent with ceos, investors, and policymakers from around the world. the opportunities and challenges for investment and growth in africa. africa andpioned barclays business here when you were ceo of the bank. possible thatt is come tuesday we will find out that barclays is exiting all or part of its investments in africa.
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simple question. will barclays regret that move? >> i know barclays business in africa very well. i know it from the time i was there, i don't know anything about an announcement on tuesday. i also respect it as a competitor of that business now. is a terrifica platform. 11 countries, nine or 10 of those countries, partly -- barclays has done well getting synergies from clients and product. thatredit card technology was developed in the u.k. has come to africa as an example. they have done a terrific job of connecting corporate in the u.s. and u.k. who have businesses in africa here. >> you make this sound like a business they want to keep? >> what you have to ask is what
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is the problem you are trying to solve? or globalbal bank bank head cornering -- headquartered in u.k. the proper thing? owninglobal and operations in the emerging markets brought capital synergies. the best model is a regional model and not a global model. the issues our cleat space around their african ownership is the regulatory requirement to 62% economic ownership. it is a tax on the global balance sheet. some of the impact, i think the last time i saw barclays earnings, it was a pretty good standalone business. >> what people talk about when they talk about investing in africa is not just the need or capital but capital to be deployed in a way that is
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sustainable and promotes the growth of communities and governments. how do you balance the need and obligation to do that with another need, which is that of a littering a return to your shareholders? >> this is a great story about africa. if you look at what we can get investment, at there we are looking at a gross return of over 20%. even if you were just down to 5% youeciation of currency, have to say that that's still after all expenses, a return that is well into double digits. >> so you are looking at healthy
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double-digit returns. >> you have to be a patient investor. ge has tripled its revenue in africa since 2011 from a billion dollars to more than three and a half billion. >> i hope so. that would be the goal. i would say again, i would say maybe double. that would be hopeful. the goal is to continue to build a backlog that we deliver on in the next 3-4 years. hopefully in the 3-5 kind of range. power is the big one. power right now, when i first got here our oil and gas business was our biggest business. it still is but percentagewise it is getting less than the other businesses. there is a tremendous demand. health care is another huge one for us and then rail.
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>> we know that growth is slowing, we know that fundamentals are deteriorating and fiscal budgets -- south africa's included -- are under a tremendous amount of pressure. how much riskier does that make it for banks? at how we were running our businesses before something like the global financial crisis, you take the banking system that came through this crisis without any banks required to be bailed out, we have got a very strong banking system going into choppy waters. >> so you continue to deploy capital but that is not the case for many foreign investors in the case of south africa. the same can be said for many other countries in the region. what does that mean? more railways, more ports, more water. >> it makes it harder to finance
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the growth on the african continent. hopefully, at the time investors start taking money out of these geographies, that creates opportunities for other investors to come in. it hastake south africa, depreciated by 25% against the dollar. but if you look at it measured against purchasing power parity, it is undervalued. if you take a long-term view it is always traded back over time. ♪
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♪ vonnie: this week, a new animated web series makes its debut on examines the biggest
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transformations in human history that have not happened quite yet. the first, the oil glut we are experiencing now and how it could create a demand for electric cars. >> the world is running out of oil. ideaast that was the behind the peak oil hypothesis that, dated economic thinking for decades. with fracking and oil samples, there is a lot more oil than we once thought. the old peak oil theory and happening. what is instead of running out of oil we just stopped eyeing the stuff? billion gase guzzling cars on the road and only 1/10 of 1% of them has a plug. but don't be show sure -- so sure.
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early refrigerators and color tvs. growth starts out slowly at first and when the product starts to connect, we have lift off. the market gets saturated and growth tapers off. electricg s curves for cars is difficult because we are making assumptions about demand for a type of vehicle that does not even exist yet. an electric range of at least 200-300 miles. in the next few years, tesla, nissan, and chevy plan to start selling long-range electric cars in the $30,000 range. tech companies are investing billions on dozens of new models in the next four years. by 2020 these will be faster, safer, and cheaper than gasoline counterparts. that seems like the point when the s-curve goes vertical. to start and oil crashed you
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don't need to replace all the cars on the road today. you just need to reduce demand enough to cause a glut of unwanted oil. consider the oil crash of 2014. -- caused by too much supply. are electrical vehicles able to displace that much on the demand side it should also glut. tesla's building factories going inm about -- two 500,000 2020. let's assume that other carmakers maintain their current combined market share for plug-ins. if each electric vehicle displaces 15 barrels a year, here is the impact. we had our benchmark of 2 million barrels of oil a day displaced as early as 2023. that is an oil crisis. it is just the beginning. not at all unreasonable to
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assume that by 2040 nearly half the world's new cars will have a plug. you are skeptical. the price of an electric cars has to come down and there aren't enough gas charging stations for convenient long-distance road trips. and indialike china are still going to choose gasoline and diesel. but imagine a future where the rumbling streets fall silent with electric engines. what if global demand for oil starts to fall? i first by trickle and then in a rush. trillions in new energy will be one. the power of nations. that is the promise of new peak oil. it may be coming sooner than you think. you can always find more stories like these as well is the latest business news from around the world at that is all for this edition of bloomberg best.
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base for watching bloomberg television. ♪
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♪ emily: he got his start in west philadelphia. working for the fresh prince himself, and later biggie, and p. diddy. his breakthrough came in 2007, when he met a woman the world would come to know as lady gaga. troy carter helped take gaga from unknown to multiplatinum, then broadened his job title from talent manager to tech investor, betting on spotify and uber. but his own path to hollywood was unexpected, coming from a tough neighborhood, with a father who did time for murder. proof, he says, you write your own future. joining me today on "studio 1.0," founder and ceo of atom factory, troy rt


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