♪ welcome to bloomberg. first word news. these are the stories we are following. falling for a ninth straight day. on friday thatid an interest rate hike is likely in the coming months. japanese shares rising, china retreating. the yen sinking to a one-month low. japanese shares set for their highest close in may. a sales tax increase will probably be delayed.
that growth stalling in april, and weakness in private consumption increasing the likelihood of that delay. quit.o of noble group has accepted theaid it resignation, with william randall and jeff frase replacing him. plunge 60% of her questions about accounting practices dogging the company. wang jianlin is offering to buy a hong kongatize listed property unit. wang jianlin told china central television that the unit is substantially undervalued and must proceed with the privatization. closed in the u.s. and u.k. today for memorial day.
let's check in on markets in this part of the world. we are in the middle of the trading session and asia. topix up. nikkei 225 up by over 1%. at the moment. swinging between gains and losses. take a look at the fx space, the out,g dollar story playing continuing to talk up the expectation of an imminent rate hike by the fed. 4/10 of a percent to the upside for the dollar index, that is what dollar-yen is looking like. falling the most in a month.
taking a look at oil, a retreat when it comes to brent, failing to hold above $50. stay with bloomberg. coming up next is "bloomberg best." ♪ ♪ david: coming up on "bloomberg best," the stories that shaped the week in business around the world. could the chemistry be right for the bayer-monsanto merger? >> i have rarely seen such a friendly rejection from the target company. david: does deutsche bank deserve more credit for its comeback efforts? >> it's offering results have been in decline the past couple of quarters. david: has greece turned the corner in its debt debacle? >> we still have to work that out. david: high-profile leaders share high-level insights in the week's best interviews. >> i have confidence that the regulators want this to be a level playing field. >> we can expect turbulence in the financial markets.
david: preparations for shanghai disneyland. david: it is all straight ahead on "bloomberg best." ♪ david: hello and welcome, i am david gura. this is "bloomberg best," the your weekly review of the most important analysis of business news and interviews from around the world. twooposal to merge chemical companies took over the headlines. shery: bayer is proposing a blockbuster deal that would create the largest supply of farm chemicals and genetically modified seed. bayer wants to buy monsanto for $62 billion in cash. that represents a 20% premium. it would be the biggest takeover ever by a german company. francine: if monsanto actually
rejects the offer, are you ready or do you have a capacity to increase the offer? werner: we are totally convinced about the attractiveness of our offer. it is a 37% premium over and above the effective share price as of may 9. that is a strong testimony as to the value proposition of monsanto shareholders. it is also in line with the transactions and attempted transactions we have seen in the past. we are fully convinced that it is a highly effective offer for monsanto's board. also, for their shareholders to consider. francine: is it your best offer? or just your first? werner: the best and strong offer. we are waiting for the offer from the shareholders of monsanto. >> $106 is the monsanto share price. that tells us investors are not convinced? aaron: they are not. there is a lot of concern that investors will come back and say they are not convinced. david: the current offer of $122
a share is inadequate. there is a statement out today that says the current proposal does not adequately address and provide reassurance for some of the potential financing and regulation risks related to this. francine: do we intimate they are prepared to pay a price? aaron: i have rarely seen such a friendly rejection from the target company. on the one hand, it says it undervalued, there are risks but , it says it respects bayer and sees the rationale for the deal. so it has very obviously invited to them with a higher price. obviously bayer has to ask itself if we are going to stretch the balance sheet, do we want to raise more equity, sell assets? i think, if i had to guess, bayer does not table the first offer first, so i think that there is room to bump. scarlet: the dow up more than 200 points, u.s. stocks close near the best level of the session, joining a rally we saw in european markets. if you break the s&p 500 into 24
industry groups, everyone climbed. the worst performer was energy. that still game .5%. gained .5%. alix: it feels like a risk-on day. we had the home sales that were killer, but oliver pointed out before we got to air it started overnight. it is hard to find a specific catalyst. oliver: definitely helps when you open the day with european indexes across the board, on the other side of the pond, trading at standard deviations two times as high as they normally close. so a huge risk on day does help. and you had some company-specific news. a good day from apple again. nice to see that back in the mix. overall, great day for biggest day in three months. >> and new home sales -- killer. really amazing new home sales. the concern is whether it will be paid back down the road. but that helps with risk on momentum. matt: greece's creditors have reached an agreement that will allow the release of 10.3 billion euros of aid. they have also committed to
taking steps to relieve the nation's 321 billion euro debt. after an 11 hour meeting of european finance ministers, the international monetary fund softened its stance. what will be the political impact of this? ian: there were three main headlines really last night. there was the deal on the payout of 10.3 billion euros to greece. there was also an agreement to look at debt relief in the future. details are still to come. we have to work that out. and also, the imf gave a commitment it would continue to participate in the greek rescue. that is important for germany, particularly going into the federal elections next year. so the political impact will be some respect for alexis tsipras, the prime minister of greece. in germany, some certainty for angela merkel going into those elections. but more than anything, some sense of calm, sense of debt relief has been pushed until
2018. guy: i'm looking for details and struggling to find them. this feels all too reminiscent of where we have been before. ian: it does. what is particularly reminiscent of all we have seen in the greek saga the last five or six years or so is this in principle agreement to keep everybody happy, but in the end, nobody is happy and it all blows up again? so yes. there are options on debt relief after that is when the bailout 2018. program finishes. but there are no concrete measures. guy: brent crude back above $50 a barrel for the first time in more than six months. a drop in u.s. stockpiles spurring the latest rise. along with domestic options in oil-producing nations -- canada, nigeria, etc. talk about the exact reason it is above $50 a barrel and why it could go higher. tracy: the catalyst the stockpile data from the u.s. showing a much higher than expected cut in stockpiles, something like 4 million
barrels. as well as you point out we have production outages in venezuela, nigerian turmoil, and lingering effects from wildfires in canada. all of those one-offs seemed to be combining to give oil a bit of a spur at the moment. you have to wonder how much further that rally can go ahead of the opec meeting next week. in fact bloomberg is reporting , today that in the pre-opec meeting, there was no discussion from opec officials of a possible production cut. at least from the gulf side, we are seeing a continuation of the strategy of maintaining market share. david: now we want to go to japan, where world leaders tangled over how to push the global economy toward growth. there was some language in the communiqué saying we need to get growth going, but they did not go as far as prime minister abe wanted them to go. is he satisfied with this result? yvonne: he says no. continue tol
talk about this lehman crisis even after the fact that the g7 didn't buy it. he could not get that language into the communiqué. instead, we heard leaders declare in this document that they have strengthened their resilience is in their economies to avoid falling into a crisis. we did see the g7 try to fix this coordination, but trying to get that recipe on boosting growth, that remains tangled over geopolitical tensions. david: they did not get the language of crisis in, but in the 11th hour, they added the language about the u.k.'s referendum about leaving the european union. what happened with that? there was an earlier draft that language. yvonne: that is right, and prime minister david cameron really got the last effort to get that line into that communiqué. they added a line that says brexit is a serious risk to the global economy. it was a good weekend for the prime minister. he was able to get support from the g7 when it came to china's steel overcapacity issues.
the g7 saying they will tackle this excess, which has been fueled by government subsidies and support. not singling out china, but the references seemed to point to it. jonathan: as the data drops in the united states, gdp annualized quarter on quarter, the previous 0.5 revised to 0.8. the survey was looking for something firmer. but an upward provision nonetheless. carl: this is important news which lowers the hurdle for what is required for the next couple of quarters to hit the fed's full-year growth target of 2.2%. now we need to average 2.7% for the remaining quarters of the year. that makes it a little easier to hit that mark and at the margin helps them stay on track for major activity, but i doubt at the june meeting. david: what will janet yellen and the fed be looking at in june? is it consumer spending? carl: three indicators.
♪ david: this is "bloomberg best," i am david gura. let's continue our global tour of the week's top is news stories. deutsche bank has been ensuring investors it is in the midst of a turnaround. tuesday, that journey took an unexpected turn. david: moody's downgraded deutsche bank, and it has ceo john cryan speaking his mind this morning. mr. cryan came out fairly radically after this downgrade, matt. emphatically after this downgrade, matt. matt: john cryan saying he thought it was ridiculous for moody's to downgrade their debt just two steps above junk because, in his words, they have enough capital to pay their debt four times over. >> does mr. cryan have a point? the bank has never had as much
capital. they could easily repay their debt many times over. is that a valid argument? peter: the rating action was about the increased headwinds the bank is facing in terms of operating environment, and its operating results have been in decline for the past couple of quarters. so that is what drove our rating change. mark: what is the biggest challenge, then, for deutsche bank in achieving this big turnaround? peter: the turnaround has many elements to it. it has been a very disciplined execution by the new management team. what they are trying to do is to change the balance of the earnings mix of the bank. they are trying to strengthen the balance sheet. they are trying to revitalize the technology platform. they are trying to do all of these things, and all of these things, if they were achieved, we think would actually be credit positive. but they are challenging to achieve them all. shery: yahoo! having its award space since early january, falling 5%. telecom giant at&t is said to be interested in buying the company's internet business. why did at&t come back into the
game? we had heard earlier it was dropping its bid. alex: we don't know if we were fed misinformation or if at&t has sort of changed its mind about yahoo! look, at&t and verizon are both at the point where there is only so much they can do, at least u.s.-wise, from an m&a standpoints. they cannot buy another wireless network. regulators will not allow them to. they cannot buy another cable network. regulators will not allow them to. so the digital aspects like yahoo!, it is probably somewhat appealing. you can make a small bet and develop something down the road that is appealing to your wireless customers. francine: let's go to vietnam, where boeing has won an order for 100 planes from vietjet, the country's only private airline. the deal is worth $3 billion. vietjet is an airbus customer.
it had multibillion options to buy single aisles. what incentives were offered for you to switch? dinesh: it's not a switch. they are looking at the value of the maxairplane, called 200, which is 370 max. this was launched by ryanair, and clearly that airplane has 197 seats. they saw the economic stuff that airplanes, and they realized this is the best economic any airplane can have in the world. thereby they have growth profitability. with that particular importance, and they are kind of a low carrier in vietnam right now, and they have ambition to go into other parts of asia. they want to do a major order, and that is why they order 100 airplanes. toyota is investing in uber to explore a ridesharing partnership. toyota financial services corporation and mirai creation
investment limited are joining together to make a strategic investment in the company. it will include toyota leasing special fleet vehicles to uber. >> the auto industry is being assaulted by all kinds of technological change. maybe the least of those is this concept of ridesharing, but it has really taken off. it has changed the way rental cars operate, the way taxis operate. it is a big part of the global fleet. it may change the way people choose to drive or choose one to own a car or not to. nobody wants to get left out. toyota has a lot of money. it is very easy for them to make an investment, kind of get there toe in the water and see what is there for them to learn. guy: the unicredit ceo federico ghizzoni has agreed to step down after only six years at the helm of the bank after losing the support of investors and share price capital as well. do they have to raise money? jonathan: they certainly need more capital.
one of the issues it faces is when you are trading at four times global growth, it is diluted. there was a lot of things they can do, spin off assets, relieve some of the capital pressure. unicredit is second to only santander as the lowest capital big bank across the eurozone. it has 40 billion of our un-provision performing loans. it is the biggest. emily: hp enterprise shares are surging in extended trading. this is half of the old hewlett-packard still run by ceo meg whitman and focuses on servers and storage for corporate customers. the company announced it is spinning off its troubled corporate services business and merging with computer sciences corp. was this expected? anand: no, but it makes sense. to focus -- have one part of the entity focus on hardware predominantly networking, , storage, and servers, and then finding a way to exit the services business to a company that focuses on exactly that
portion of the business. it is a good strategy. it refocuses the company into a smaller piece of the pie. again, the risk here is that you have an extremely small pie you are focusing on, one that is on hardware, predominately selling to corporate i.t. systems. so, will that be the long-term revenue growth area for hpe? that remains to be seen. but in the near term, the deal makes sense. shery: microsoft is making as many as 1,850 job cuts while taking a $950 million impairment and restructuring charge. give us a sense of where these cuts are coming from, and what this tells us about the new strategy. cory: one of the things it tells us is that the $9.5 billion acquisition of nokia by steve ballmer, one of the last big deals, was a disaster.
write-down last year, another $1 billion down now. it shows that decision at the time, which was controversial, was a mistake. a very expensive one. it shows you the company is focused on the things they do differently and focused on the things they do well, and focusing very much on offering software on the cloud, where they have their powerful franchises, both on the operating side and microsoft office. thinking about the cloud, thinking about bringing micro users to the office 365 platform and the microsoft azure platform, which they think will be the future of this business. >> shares in alibaba close more than 6% lower in new york after the company revealed the sec is looking into its accounting practices. that information was disclosed in its annual report filing. alibaba is being investigated -- for what? rosalind: the sec is looking into consolidation policies. it has asked alibaba about more information on its delivery
network, and has also asked for information of about operating data for a single day. single day is a shopping extravaganza. once a year. it was in november last year. it brought in something like $40 billion. oppenheimer co. says the single day issue could be related to some confusion over alibaba's definition of gmv -- growth merchandising volume. there was this total transaction. it is possible that it doesn't remove some transactions which later turned out to be fake. it is possible 20% or 30% of transactions could be inflated as sellers buy their own products to boost their own sales rankings essentially. , but sec does not think it is too much of an issue, it thinks alibaba is trying to become more transparent. alibaba is cooperating. and the sec says just because it requests information does not mean anything is wrong. ♪
a roundup begins with a u.s. builder many see as a bellwether for the luxury housing market. scarlet: toll brothers ceo doug yearley has been frustrated by the decline in his stock price. today, the stock is having its best day since 2013 after earnings beat estimates. let's see what the numbers on the luxury builder show in the numbers don't lie. first, we discuss stocks. even with the bounceback, toll brothers is down 12% in 2016. over the past year, it trailed the broader market and its peers. today's results lessened some investor concerns, saying the luxury market remains a strong and conjunction labor costs are easing. tolls revenue had plunged during the u.s. housing crisis. it slowed again after bouncing back from the housing crisis. revenue this quarter increased 31%. analysts estimate toll's revenue may regain 30% for the full year. california is a key market for toll. it represents 12% of its revenue the last quarter. its purchase of chapelle homes
in that instant scale state. the northeast corridor, historically the center of toll's business, but the land has fewer opportunities and rings fourth overall. toll has diversified beyond the single-family home. it now makes up two thirds of all offshore closings versus 91% in the year 2000. the strategy is paying off today with stocks gaining 8%. angie: sony is enjoying another positive session, the stock rising the most in a month -- 5.84% higher. that follows an overnight jump on wall street as investors shrug off weak profit outlook and take the long term view. why are investors ignoring this really dreadful profit forecast? yvonne: it seems like the earthquake impact forecast for sony is a hiccup. that is the view of analysts out there. if you look at the restructuring sony has undergone with its tv and handset business, a lot of them say, hey, they are already over the hump.
the company showing more resilience than we know. but keep in mind, it was a pretty ugly annual forecast. it basically ruins the hopes sony was going to have its most profitable year in nearly two decades. net income expected to fall 46% to $727 million. that is nearly two thirds what analysts were expecting, and operating profit was also a miss. if you take a look at the quake impact and do the math, it seems like this could cost sony $1 billion when it comes to damages, repairs, as well as sales lost from the time they had to shut down their facilities. has forecast earnings growth will slow this year even as profits jump.
europe's largest discount airlines expected to rise 40% after a 33% surge in march. that is as airlines cut ticket prices to entice people wary after recent terror attacks to fly. you are guiding the market lower, so how weak is pricing going to be as we go through 2017? >> the primary key driver of the next 12 months will be lower oil. we just reported $1.2 billion in profit when we were hedged at $90 a barrel. oil prices are falling. the overriding theme is weaker pricing. we are seeing the first half of the year, up to september, we expect prices to fall by about 7%. that is a combination of three things. ryanair's own strong growth across europe, opening new bases, new markets. you have the impact of competitors, responding with the benefit of lower oil prices. and then the terrorist activities. the events in brussels, paris, and the egyptair incident this
weekend. and then you have the repeated air traffic control strikes in mainly france which is causing a , lot of cancellation of high-yielding passengers we cannot replace. >> shares of best buy plunging after a forecast that trailed analysts' estimates. best buy also announcing the departure of the cfo sharon mccollam effective after the june meeting. >> the cfo, why do markets care so much? >> she came in after the current ceo joined at the end of 2012, and she basically gave the turnaround a lot of credibility. she came out and said we would cut $1 billion in cost. they back it up and did that. that has been the best part of this turnaround. they cut costs, sold off foreign divisions. now it is a matter of sales again. alix: in terms of growth, it was a store within a store concept, like the samsung store in a best buy, that was going to be one of their growth drivers going forward. where are they in the actual growth turnaround plans?
>> it has been tough, because they have done a lot of stuff to make the store better. they have the samsung stores, the apple store within the stores, but the product cycle has gone against him for about two years now. >> marks and spencer reported full-year results, beating estimates. retailers ceo also unveiled a new plan to boost clothing and home business by reducing price provisions and refreshing styles more often. i was drawn to one of the lines about the need to focus on older holder returns. what does that mean for shareholders in the context of what you have done previously, buybacks and the like? >> what we announced is we are continuing the program of shareholder returns. we announced last year we are moving to an ongoing program of returns. that is continuing with the announcement of special dividends at 75 million pounds for the first half of the year. we are a strong cash regenerative business. we will invest in growth, as we
said, but are capital expenditure is likely to be 40 million pounds next year, which will generate surface capital, and we are committed to sharing that with shareholders. >> shares at hp are climbing this morning after reporting 11% decline in second-quarter revenue. the company, which focuses on the consumer market, was spun off from hewlett-packard enterprises in november. i say declining sales, but they did beat estimates, which is why the stock may be up. >> there was a hint of the restructuring that has been going on since 2001, but we are reaching an end. they actually started the new company with restructuring programs. it is crazy restructuring, so they are giving non-gap numbers, they beat that non-gap number , but the gap number -- look, they are 11% year-over-year. they have always been tied to printing and pc's. pc's are a disaster right now, but the printing is unfolding right now. we've seen a 15% decline year-over-year printing. this is a bad sign, because that has been the bread and butter
first word news. gold falling for the ninth day, the longest losing strength in a year. the dollar strengthening against all major peers. japanese shares rising today while china retreats. treasury bills note and bonds are close worldwide today. the yen sinking to one-month lows, japanese shares at their highest close since may. the prime minister said a sales tax increase would probably be delayed. japan retail sales stalled in privateeakness in consumption, increasing the likelihood of the delay. wang jianlin offering $4.4 privatize its hong kong listed property unit.
listingso relocate that have been under the spotlight after china regulators voiced concerns that such transactions could flood the market. the united nations says 700 migrants dead over the past week , with thousands of other saved by coast guard and other ships. the number is the worst since april last year as calm her weather encourages more people to cross from north africa. 100 people are thought to have drowned when one boat capsized and sank last wednesday, the incident captured on camera by the italian navy. markets in the u.s. and u.k. closed. asia.g is underway and let's head over to hong kong and shanghai to take a look at how these markets are doing. by 1% to the nikkei
225 up by 1% as well. giving up earlier gains. the weaker yen is coming into play. the dollar index putting on more gains as the rally continues. we are also getting quite a bit of weakness when it comes to the chinese yuan. headed for its biggest monthly loss since the august devaluation of last year. we are also seeing oil give up some of those gains. brent falling under $50 a barrel , but marginal gains when it comes to new york traded crude. stay with bloomberg. up next is "bloomberg best." ♪
david: this is "bloomberg best," i am david gura. it is time to replay some of the week's best interviews on bloomberg television. we start with erik schatzker sitting down with janice capital's bill gross. who made it very clear when he expects the fed to raise interest rates. bill: i think the move in june. i think that because of the second quarter is looking decent. it is a 2% to 3% type of quarter. it is a come back from the first quarter, and jobs will probably be adequate in terms of growth. the dollar has gone down instead of up. the stock market is close to its peak. for all of those reasons, this is their time, if ever, to move. i think janet yellen is more dovish than some of the governors and presidents, but there are presidents and
governors -- bullard, edwards, williams, who i think are beginning to understand what we just talked about in terms of effect of low interest rates on the savings pool. erik: and kaplan as well from the dallas fed, arguing the same thing. >> i think so. >> that the fed, sooner than later has to make a move. bill: right. >> those are the arguments in favor of a hike in june. what, if any, arguments do you find persuasive against a hike in june? bill: it is the question of trying to answer what the appropriate neutral interest rate is. so some would argue that where we are now, close to zero, and where other central banks are, in many cases negative, is the appropriate rate in a situation where aggregate demand and global demand is insufficient, which has really been a
condition for 10, 15, 20 years. erik: and that holds some water with you? bill: oh, it does. ♪ david: where do you think rates should be at this juncture? alan: if we lived in an abstract environment where we did not have to worry about the past, i would say at this juncture, we would like to see interest rates 2.5%, 3% -- in the abstract. but there is a past history. we are starting this tightening cycle, if you want to call it that, by the fed from 15 basis points, or something like that. and the last thing we americans would want our central-bank to do, and fortunately the last thing the central bank wants to do, is bang the economy over the head with a huge amount of monetary tightening. it is not going to do that. it will go really slowly. francine: what will it take for investors to rewrite european banking stocks? [laughter]
jes: i think a view that we now have predictability in how regulators will deal with bangs going forward, that is probably the most important thing. we need to believe we are at least at the beginning of the end of the regulatory environment for european banks going forward. i think we need to believe we are at the beginning of the end of the conduct issues, whether it is rmbs in the united states, whether it is ppi in the u.k., there needs to be a sense that we have a vision to some predictability around the bottom line results of banks. >> on regulation, do you think it is a level playing field between u.s. banks and yourselves? jes: i think the regulators have an enormously difficult task of re-regulating this complex banking industry. i know they have a goal, try to make it a level playing field between home countries and host
countries and european banks, european banks, and asian banks. it will not be perfect, it is not perfect today. but i have confidence the regulators want this to be a level playing field, and they will make the course corrections as we go to allow that to happen. francine: we are a month away from the brexit, the u.k. referendum. do you feel that there is a discount on barclays, because you are in the whirlwind of possible brexit concerns? jes: i think for sure, the markets are being impacted by the uncertainty of this vote. it is a historic vote, for sure. as our chairman, john mcfarlane, has said in his letter, our view that the best thing for customers and clients in the u.k., if they vote to stay, part of the european union. but as we get closer to that date, the uncertainty will impact financial markets. james: the chinese economy is a $10 trillion economy. it is the second-largest economy in the world. it is growing apparently larger last year at 6.9%, whether that
is right or not. it is certainly growing at a rate demonstrably faster than the rest of the world. the third largest economy in the world, japan, has negative growth. fourth-largest is germany at 1%. and the u.s., the largest, is 2%. day.will take 6% plus any percentagewise, yes, it is slowing. china accounts for 35% of global growth. >> how about the unvarnished view on china? former fitch ratings analyst had an interview out on bloomberg, saying the debt problem at the banks is far worse than anyone is reporting. upwards of 22% of outstanding credit, she says, in the chinese banking system will go npl, nonperforming, by the end of the needing trillions of dollars in bailout. james: they are big numbers they are throwing around. clearly, npl's are likely to rise from where they are. but the chinese economy is a complex, enormously complicated
set of things going on, moving from an export led economy to a domestic demand economy, moving from a savings economy, consumer savings, to consumption. all of these changes are not going to happen without some bumps. sure, npl's are going up in the banks, no question about that. but the four big chinese banks are tremendous earnings engines at the same time. >> as a regulator, are the european banks prepared in case of a leave vote? vitor: yeah, we think so. banks are aware of the risks that exist. many have hedged as much as they can against those risks. and judging by the mounds of exposure that we identified out there, yes, banks will be resilient to such a hypothesis. nevertheless, if it happens, we
will have for a while negative impact. >> how negative do you expect that to be? vitor: very difficult. it depends on many unpredictable reactions of economic actors in markets. certainly, one can expect some turbulence in financial markets during that period of time. >> even more turbulence than we have seen the last six months? vitor: well, that turbulence that was quite significant at the beginning of the year has subsided, so we will see. very difficult to really predict the degree of the effect that will be produced by such an event. certainly i hope will not materialize. rishaad: it is next month that sees the june 23 referendum in britain on whether to stay in the european union. which way would you like that to go, and why?
richard: we have tens of thousands of employees in britain. i would be devastated if we were to pull out -- pull out of europe. it has been wonderful, i think, for europe to have britain part as part of europe. it would be wonderful for britain to be a part of europe. i am old enough to remember the days before we were a part of europe. if i wanted to export my products to europe, i had to pay a 35% tax. if i wanted to import products from europe, i had to pay a 35% tax. and the bureaucracy of all these things going on, we could not take employees from europe. we could not go work in europe, we could not live in europe.
♪ david: you are watching "bloomberg best," i am david gura. government actions moved markets this week. legislation to address address puerto rico's debt, cabinet reorganization in turkey, and the megadeal in saudi arabia all had implications for investors. let's look back at the top stories linking economics with politics. mark: breaking news out of turkey. mehmet simsek has retained his post as a deputy prime minister. simin demokan, give us the details, why is this so important? simin: the prime minister binali yildirim just announced his new cabinet. as you said, investors were waiting to see if the deputy prime minister of economy was in or out? we just learned he is in. he has been named the deputy prime minister. he is extremely liked by investors and the markets. he used to be an economy minister and the finance
minister. this is welcome news. markets in turkey have had havoc played havoc over the past months. the lira has strengthened and the stock market is up. >> turkish assets maybe. but i have been looking at turkish lira and the vault, and dollar-lira is ticking higher. and the uncertainty, the source is politics. where do we go from here? does the president continue to try to consolidate power away from the prime minister's power to the president? simin: 100%. that is the prime minister's now main mission. and he has been saying this. he is saying he will change the constitution to a presidential system. this is exactly what the president wants. and loyalists to the president , which the new prime minister delgates is, are saying this is his number one mission. they will be following this through 100% and trying to change the constitution so that
the president's grip on power becomes more tighter. shery: congress took a big step, striking a deal with the white house to help rescue puerto rico from its $70 billion debt crisis. this piece of legislation faces some major hurdles this week as congressional leaders work out the details and disagreements. david: july 1, the big deadline on the horizon. what is the likelihood a bill will get to the president's desk before then? rob: it will be tight. it is possible to do it, but the significant issue is if we can have this bill passed through the house, maybe through the senate or close to being passed in the senate, it would give the market an understanding of what will happen. i think they can take some consolation in that and the plan accordingly. david: how does this bill respect the priority of the claims of the bond market? what specifically in this bill will do that? rob: the goal of having this oversight board is to make sure we bring financial order to the island so everyone gets paid
back, whether they are obligation bonds or tax bonds or the pensions. we are not picking winners and losers. everyone has to be made whole. this is the path for to do it. there has to be an orderly process, and this creates a federally processed accomplishment. it will work, but we have to do it as quickly as possible. alix: general electric will take part in a $3 billion investment in saudi arabia that has nothing to do with oil. it is all about of the saudi plan to diversify the economy. ge will invest in water, aviation, digital, and other projects. by 2020, the company will double its saudi workforce to 4000 people. john: let me say how important it is for governments like saudi arabia to be clear with their vision for 2030. just like in china you have a , series of five-year plans. we are now in the 13th one. it gives companies like ours and
investors clarity and an agenda they can focus on. the saudis have done the same thing. we think it is fit for purpose for us. they are talking about diversifying the economy. that's what we can help them do. they are talking about expanding their health-care capabilities. we can help there. and human capital development. creating higher skilled labor force that can do different things. these are all in our sweet spot. now let's start with what disney hopes will be the happiest place in mainland china. the disneyland theme park opens its gates on june 16, and right now, the company's training to people that will translate the magic to customers. tom mackenzie gives us the inside look. tom: niu tianlong is one of about 1000 performers being put through their paces before disney throws open the doors on its most ambitious venture to
date, shanghai disneyland. niu tianlong: i feel proud and honored when i tell people i work for disney. tom: the action sequences come naturally to tianlong. he trained in martial arts. it is playing to the crowd that daunts him. niu tianlong: the challenge is not really about the stunts, it's about the interaction with the audience and how to make people happy. that is the most difficult thing. tom: pirates are something of a theme in shanghai disney, and all that swashbuckling can be physically demanding. yu liang: we have a lot of performances every day. we need strength to keep us going. we need at least 30 minutes of training a day to keep up with the physical fitness. tom: yu liang plays a hapless love interest in a "pirates of the caribbean" spin off, and she has no plans to leave any time soon. yu liang: from the very first day i joined disney, i have been very ambitious. i want to work here for at least 10 years or maybe 20 years or even longer. tom: across the park, they are
getting ready for another curtain raiser. ♪ tom: we are on stage at "the lion king" in shanghai. the highest grossing musical of all time. they are counting down the first ever fully mandarin version to an audience of 1200 people. li weiling is already a celebrity in china after appearing in tv singing competitions. she plays nala, simba's long time friend and wife to be. she is the female lead. how do you feel about playing such an important role in such a huge production in china? li weiling: this is my first time taking part in such a big production and to be a lead actress in a really important role. so i feel really proud, but at the same time, it is a big challenge. ♪ i never thought i would be able to be a part of disney and perform as nala in "the lion king."
and not only that, i also get to perform it in chinese. tom: some have doubts about whether disney will be able to get these performers up to scratch. many of the actors had only a hazy idea of the company's films. but if these guys are anything to go by, they have a good stab at getting it right. ♪
as you will >>. l compared the expected return on the equity market and compare that with a 10 year yield on government bonds. onwe have 30,000 functions the bloomberg and we enjoy showing you our favorites on bloomberg television. here is a function you will find useful. quic go. here is a quick take from this week. putinthe year 2000 and has become the president of russia. after a decade of post-soviet humiliation, he starts
reasserting his country on the world stage. the timing is convenient. boostings are soaring, living standards across the country. eight years later, he has to leave the presidency. and by 2012, putin becomes president again. now though, following international sanctions provoked by russia's intervention in ukraine, living standards are falling, putting his appeal to the test. this is the situation. putin is all about strength and it is a strong man image that has helped retain his leadership. you can see it in his vast publicity stunts, whether it be competing in martial arts, riding horseback, or having his erkel, who isela m not the biggest fan of dogs. one of the only times he has shown softness was at his presidential victory railing in
2012. and here comes the argument. putin is being tested by an economy that is tanking. russia is facing its longest recession in two decades with real gdp falling by 3.7% in 2015. meanwhile, he is holding onto his former kgw tough man image at home. abroad though, he is tried playing the role of a diplomat. after starting a campaign in syria to support his ally, he is now working with the u.s. to reach a settlement there. he is also announced a partial military pullback from the country. the question now is, how will putin be remembered? as his diplomatic what's ability, or as the unyielding leader who hurt russia when his economy could least afford it? >> that was one of the many quic takes you can find on the
>> welcome to bloomberg. let's take a look at the first word news. we will get straight to gold, which has fallen for the last day in a row, the longest losing streak in a year. the dollar strengthens after janet yellen said on friday that an interest rate hike is likely in the coming months. japanese shares rose, while chinese shares retreated. the yen versus the dollar. japanese shares are at their highest levels since may. a tax increase will probably be
delayed. this underscored weakness in private consumption and increasing the likelihood of a delay. the ceo has quit. the company says it has accepted the use of his resignation. noble shares have plunged from 60% in the last year with questions about the investments during the commodities crunch. ringese billionaire is offe $4.4 billion to buy out and privatize a hong kong listed privacy unit. to shanghaie deals have been under the spotlight after china stopped regulating. there were concerns that this could flood the market.
the market is closed in the u.s. and u.k. today. but trading is very much underway here in the asian session. let's take a look at how japan is fairing. a little better for the nikkei 225. that weaker yen is helping a japanese exporters. shanghai is flat after switching between gains and losses. lowestn is fixed at its since february of 2011. this is the biggest monthly decline since the august evaluation of last year. the stocks have climb .4% on the hang seng. the dollar strength is continuing and we hear from yellen that a rate hike might be imminent.
at 6.825 attrading the moment. oil is giving up some of its gains. in the meantime, stay with us for "the best of bloomberg." i'm carol. >> and i'm david. >> this week's issue online and on newsstands now, the republican national identity crisis. >> redefining insider trading. all of that ahead, bloom berg business week. ♪ we are here with the editor in chief, ellen pollock. >> you guys talk about the mr. fix it in the auto industry enough he has to fix mitsubishi. >> he fixed nissan and now at
mitsubishi motors, where they have had this scandal over emissions and whether they stated there standards correctly. he came to fix that. that is because his son is going to invest in mitsubishi motors. >> what makes him so good at doing this time and time again? >> in the picture you have of him, he looks like wolverwine. >> in france they called him "the cost killer," or something like that. he knows how to cut costs. he just knows how to do what he does for less. >> a lot of circles here. no surprise this is subject to a lot of venture capital investment. what else can we take away from this? >> look at the recipients of venture capital and where they went to school. and the most prevalent was
dropping out of school. so, we have a lot of entrepreneurs who are taking the advice of some people in silicon valley, saying, you don't need to go to college. and then not a big surprise, the next most popular school was sanford. >> they are building up all of this student debt. you talk about puerto rico. they have had a lot of problems and a lot of debt, but there is more than needs to be done. >> there is. and i think the problem is, as we say in the story, they don't have an economy. phrathey relied on the amr industry, but them taxa manages no longer exist.
people who live there don't have the same advantages. what is puerto rico going to be able to live on? >> a lot of people have left as well. >> a lot of people have left we haveof the stats there is the rate at which doctors are leaving. and of course, they are all citizens of the u.s. >> no passport needed. the head of the republican national committee is faced with a tough task, uniting his party behind the presumptive nominee, donald trump. >> and there was a lot of speculation on whether the party would b unite behind donald trump. it is his job to figure out if that would happen. >> initially, the worry was that trump would go awol and run a third-party id. all of these professions of loyalty were initially kept to keep trump in the fold. instead, he has essentially locked up the nomination and now
is trying to consolidate the party and it has fallen to the gop establishment class, who had wanted a different nominee, to come together and try to keep everybody on board. >> it is interesting, too. when he came on board, to reshape the republican party certainly after mitt romney lost -- what has changed since he took over until today? >> i think it was a smart vision. after romney lost there were all sorts of recriminations and backstabbings among other.cans blame each and i think he responsibly went out and did a big study on all that had gone wrong. >> the autopsy. >> the so-called republican autopsy. but he also look to see how the party should refashion itself. they said the party needed to resolve and -- needed to
re-soften its tone and make an effort to attract nonwhite voters, women and minorities. the english a lot of republican elected -- the anguish a lot of republican elected officials field to having trump as the nominee is he is sort of a wrecking ball. trump has a very different vision of where he things the republican party should go. >> you sat down with trump in trump tower. >> what interested me was essentially, trump won the nomination doing almost the opposite of what preibus and the republican bigwigs have proposed. i asked trump, how does he envision the party changing? what he told me was he was going to put the trump stamp on the republican party, in the same way he does on buildings. and what we should expect
five years from now is the republican party to be more of a worker's party. he is going to pursue a lot of the things he spoke about on the campaign stage. some of those things, republicans will be fine with. he has put out a list of conservative justices he said he might appoint to lisa print court. other thingse are like building a wall or deporting 11 million people, and renegotiating trade deals, that are not going to fly very well with a lot of conservatives. that is why you have seen a lot of resistance to trump. preibus does reince like donald trump? [laughter] >> you would have to dose him with truth serum, and even then, i am not sure if he would say the truth. trump has been very kind to preibus. two months ago when it looks
like there would be a contested convention, trumps was issuing veiled threats. his tone has changed markedly. a has even given preibus friendly little nickname. he now calls him "mr. switzerland." he says to make peace between trump and the elements of the party that find him of noxious. clearly, you can see what pr eibus stands for and it is not what the republican party is today and it is not what trump stands for. although preibus is being a good soldier to do his best to get republicans back in power. >> how do you explain the jump in redefining the republican party. how did you decide to go with this photo? >> we had a fair amount of time
to shoot him, which is great. and we got a lot of different options. we have some options that were more traditional where you see his face and he was standing on a white wall. eagles, obviously. [laughter] >> red, white, and blue. >> and then we have some options in his office, which is what you would imagine his office to look like, except for the strange ipad pro. he took a phone call and he had a little moment there. we thought it was a very authentic moment of him at work. we had him talk about whether it is weird to have somebody be the cover subject but not actually show his face. in the end, without the moment was so great and spoke to the situation right now with the republican party that it was the right way to go. >> you do, you look at the cover and you realize the frustration going on internally. do you ever think about how the
subject will feel when yo they see it on the newsstand? [laughter] means know, it is by no purposely unflattering. this is something we all experience in our daily lives. >> when you read the story, it explains it perfectly. >> it was a very natural moment. >> some people know who preibus is in some do not. you could disguise the face of bill clinton and that several what would still be known to many people. were you thinking about that as well? >> we were a little bit. seen innot a celebrity a different way. when we have situations like this where it is not immediately recognizable, we take care of it with the wordings. when you did this,
did you try some other things? like, was he standing, or did you guys decide to put him behind his desk? >> personally, when i saw this photo, i thelma with it. -- i+++ we tried a couple of other things, but it fit so well. >> up next, trump redraws the map. >> plus, could janet yellen be replaced by an algorithm. >> and the snapchat account some in hollywood think could be the
>> welcome back to "bloomberg businessweek." >> you can find us on the radio on serious xm. >> a boston 1200 boston dc, and bay area 960. >> look at the free publicity donald trump has gotten. >> and what that means for tv executives. we spoke to reporter tim pickens. >> he has that millions of followers and he tweets out something and it is free advertising to millions of people. something, he says
that gets picked up on local news or a cable network tv and it goes viral and we are all talking about it in ways that paid advertising does not break through. he definitely has a strategy of working with the media and he is the master at pulling the s trings. one estimate is that he has received $3 billion worth of free media, which is a staggering amount and far exceeds any of the other republicans in the primary. it really exceeds what the democrats are getting as well. and to break through that, his competitors have to spend a lot of money to try and get the kind of attention he is getting. and it has not been successful. we look at the superpac which backed jeb bush. they spent an estimated $70 million on tv advertising and he did not win. that raises the question of how
candidates are going to do this going forward. are they going to continue spending, or not? >> what are you inclined to think? >> not everybody is donald trump. [laughter] >> we look at a candidate like hillary clinton and she gets a lot of media attention, but she is not leaving anything to chance. a superpac backing her has already reserved $100 million of tv advertising between now and the election. that is a staggering amount and it will only grow. they would argue that the republicans waited too long and it too little to combat trump. you know, also if we look, we can see some hot senate races those executives think candidates are going to have to
spend a lot to get their message out in a hot political season. and perhaps, try to differentiate themselves from the top of the ticket on the republican side, or even on the democratic side. >> the new technology determining how valuable a professional basketball player's shoulder will be. >> and the machines that will soon be running the world banks. >> all of that, head on "bloomberg businessweek." ♪
>> welcome back to "bloomberg businessweek." david: how advances in artificial intelligence could force janet yellen to look for a new job soon. >> this automation is not just being applied to manufacturing anymore. >> machine learning right now is the dominant subfield in artificial intelligence. basically, it refers to the technology that allows a computer to acquire knowledge or skills without being explicitly programmed for that skill. >> i mean, we see amazon and netflix already doing this. they have their algorithms and they are analyzing what we are doing in terms of purchasing. netflix does it with movies, right? >> that is right. when you go on netflix and ask recommendations, it is
using machine learning to make a recommendation as to what kind of movie you would like to see. >> financial firms are doing the same thing in terms of predictability, right? >> yes, there are several hedge funds that are applying machine learning to try to help them make stock picks or other security picks. they tend to not talk a lot about what they are doing. there is a lot of secret sauce involved. >> it is one thing if they are tracking my buying patterns or recommending a book or pattern, but when you are dealing with something like the fed -- the whole idea if this is something that will be able to go through this information and predict what the fed is going to do, that is a giant leap, right? >> it is massively complicated. the world economy is a much more complex system than a group of
customers for a company, or even the stock market. the number of variables that are involved and the uncertainty involved makes it be harder task. but there are computer scientists. i spoke with a very well-known artificial intelligence .t. whoist at m.i believes we are getting very close to the point where the technology will be good enough to match humans. and then, not foo far down the road, to surpass humans. >> the bank of england has played with this already a little bit, right? >> yes, from what i can gather, within the world of central banking -- although central banks are quite shy i have found -- from what i can sense, the bank of england is out in front of other central banks. their chief economist is very keyed in on this topic.
they have set aside a new unit called their advanced analytics unit. they are already building and testing algorithms for solving certain problems, including those within macroeconomic forecasting. they are not using it quite yet to brief their policymakers, so to advise the policymakers, but they are getting their. he thinks that within five years, it will be used, to some extent, helping their policymakers. >> speaking of smart machines, and the magazine is a profile of a company whose technology is being used by the fbi and the nba. >> it is kind of like what you see in a jason bourne movie. a lot of us thought this was already out there. but you cut and paste what you want to find. it could be a phase. it could be a white pickup truck. it could be a logo.
you give it the source material, whatever it is. hours of source material or a game broadcast. and it scans the pixels in a matter of seconds and feeds back the results. >> talk about the guy who is behind this. who is he and how did he come up with this? >> he is a buffalo native who has been doing machine learning stuff since college. he had done a couple of other companies and a started one that codified facial expressions to look for -- actually, signs of deception. that had an advertising is too because now when you look at a video screen at an airport, they know who is looking at it by using this kind of technology. but anyway, he knew from that work that intelligence agencies were buried in surveillance video. and it was not that sophisticated. a lot of times it was people staring at it for hours.
or that they would have this technology that needed whole rooms full of servers to work, just because it is a really complicated process. he set about trying to the blood five it. h-- trying to simplify it. takeows when drones flight. >> you can go through a whole yankee season very quickly. >> yes, within seconds. depending on how data-rich the source is and how many queries you want to do, but it is seconds. i asked him to do a brief search of cnn for "hillary" and "trump." they sent me a clip of them pressing "go" and the results. and they literally just pop up. >> are we at all reluctant to talk about this, when thinking
about the national security implications. >> no, because they developed the technology themselves. they decided to fund themselves until they had a thing they could sell. they don't know exactly what the government is doing with it, but they are at liberty to talk about their technology. i was curious, as this becomes affordable and more widespread, do you want everybody to be able to do this? bigp next, the big, big bi, money is spending. >> plus, the courts redefine insider trading. ♪ okay, ready?