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tv   Bloomberg Best  Bloomberg  June 12, 2016 5:00pm-6:01pm EDT

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up on bloomberg best. the stories that shape so weekend business around the world. shareholders get another dose of bad news. the ecb stimulus program enters uncharted territory. transformation nation. saudi arabia steps up its economic makeover. tensions swell in the brexit battle. arguments for and against. >> leaving the european union would be a terrible idea. what data it will drive next
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week's favorite rate decision? the changes in the federal reserve spankings has been about global events. >> as i assess the situation i prepared to be generous. >> the big issues of the week. the best interviews. >> i'd vote for just about any human being against hillary clinton. making disney branded films in china. -- itall straight ahead is all straight ahead on bloomberg best. ♪ this is bloomberg best. your weekly review of the most important business news and analysis and interviews from bloomberg television and around the world. by daytart with the day
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look at the top headlines. on monday in philadelphia janet yellen gave a speech about the u.s. economy and monetary policy. with the next fed meeting on interest rates coming up in days investors were hanging on her every word. janet yellen: i continue to believe that it will be importance to reduce the amount of monetary policy accommodation. makeflation continues to progress toward its objective. we want to spread out what our possibilities are. it does mean that june is off the table. in order to have that be a
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realistic possibility. july could be on the table. she is thinking that the economy is getting better. the frame of reference is that the economy deserves a higher rate. the unanswered questions that she posed today. shares of valeant are plunging after their sales forecast came out. he tries to reassure shareholders that he could stabilize the company. there is some uncertainty on things that needs to get done. so that they would not be any overstatements in what we're trying to accomplish. >> investors reacted very negatively to that. despite what papa is saying which is trying to be reasonable here. there are a lot of new red flags
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raised on the call. i think investors started to get this feeling some things that something else comes up came up on the call and the guidance they provided put them pretty close to their governments on the issue of whether they will be compliant with their debt agreements, it has reared its ugly head again. no matter what they try to do, it has only been a month and he is not been able to show a new valeant to wall street. david: hillary clinton has become the first woman to run as the presidential candidate of a major u.s. political party. it feels like this is over. bernie sanders did not get the memo. >> and i start night for hillary clinton last night and an historic night for the usa she became and declare yourself the presumptive democratic nominee, the first female from a major political party. bernie sanders did not get the memo, vowing to fight on through next week at through the primary
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in d.c.. the math is the math and hillary clinton emerged with pledged delegates and has won a majority of states and the population and she is now the candidate the democratic party will have to rally around. we saw a different donald trump last night on teleprompter and he was scripted and he did not express remorse from his controversial remarks about it judge who was overseeing it private lawsuit who he said may be unfair due to his make -- hispanic heritage. an olive branch to the republican party. this is a brutal cycle between deeply personal attacks. david: let's go back to brussels. what are you hearing from the economic form?
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matt: they are talking about this stage two of european integration, trying to make the european monetary union tighter. obviously, it comes at a time when there is a vote in britain to exit the european union. that is the issue being discussed over and over again. on the other hand, mario draghi was here. they listened to what he had to say. >> there are many understandable political reasons to delay structural reforms but there are few, very few good economic ones. the cost of delay is simply too high. matt: he is talking about the completion of the single market in want to get the uncertainty faced by firms doing business or trying to do business when they don't know what will happen as far as brexit or tax laws.
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he says that gives them less ability to move the inflation needle. he said policymakers need to join a because it makes their measures less able to achieve the goals they want. it is nothing new. central bankers always ask for fiscal help. >> the russian government bonds issued that the rush in government bonds is not changing. michael: we are seeing record lows in most countries around the world. the search for yield and what do you get? the potential for disaster gets bigger and bigger. the job report, you're buying treasuries and disappointing job numbers. you are buying to say place to
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park your cash until you know what will happen. with everybody moving into the bond market, short term papers becoming more expensive and harder to get so investors are being pushed out on the yield curve and we see the impact of longer-term bonds. investors are concerned. said this good and very badly, like a supernova. >> part of this has to come partly from brexit, could this be another crisis that people are getting ready for this potentially binary move? the markets were not prepared for it and now they are getting prepared but it raises the question of how low they can go and at one point is the lack of income than investors were are receiving from fixed income investment stymieing their ability and willingness to invest in riskier assets?
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ramy: later, we will take a deeper dive into the fed rate decision with an interview with the atlanta fed resin and a look at employment data that may give the committee a jolt next up. we go to europe with stimulus from the ecb and a new level of intensity or the brexit debate. ♪
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ramy: this is bloomberg best. we continue in the euro zone where ecb president mario draghi has embarked on a new kind of expansion to stimulus. david: for the first time today, the ecb has plunged into the corporate on the market. they have invested in european utility companies and inbev. has the market priced in this
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purchase? >> i think some of it, when the program was announced, there was discussion about the ecb having enough hans to buy and econ 101 and supply rose to meet demand and a lot of is coming from u.s. companies with european operating subsidiaries. this could be a case of by the room or sell the news. we will wait and see how much ecb buying occurs. >> what do we know about what the ecb is buying? >> the ecb has been buying corporate hans. the most interesting is they have been buying bonds from volkswagen. this tells us that the ecb does not mind that they will eventually be paying damages. >> what is the impact of all of
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>> we see the yields across the board and they are below 1%. investors are loving corporate debt now. francine: there's an aim to curb public debt. you read through the announcement, what was most significant? >> i think it is the debt portion of this announcement. it's a grand bargain for a society of people which is taking a nation with nearly 80% work for the government and increasing the debt load to 30% which will create a huge liquid market in the middle east.
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the other big piece was about the non-oil revenue and trying to break that link between the deal in saudi arabia in oil but they are talking about non-oil revenue going from 163 billion to 500 billion and bring in public/private partnerships. this is reform. the debt load is one issue and going from 45% of the nation employed by the government to 40% employed by the nation, cutting subsidies and boosting nonoil revenue is the key to this deal. >> samsung maybe looking to beat apple in the bendable smartphone market. it is considering two new models with bendable screens, including one that folds in half.
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>> samsung is looking at these very interesting new display is that you can bend them fold and put into your pocket. they would be smaller in your handbag or jacket pocket. they are doing this because they can. they developed their screen technology invest a lot of money and are working on these new oled screens that have more capability than they had in the past. samsung competes with apple and smart phones and this may be a way to draw in additional consumers for these kind of phones. they make screens that they sell to other smartphone makers so they may be marketing to the rest of the world that other smart phone makers can use these in the future. ramy: the most popular mobile app in china is on -- in japan is on pace to grow the most. >> it's really interesting, if you think back, why are they looking at an ipo now especially
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when tech ipo's have not been doing well globally. management is anxious to get the show on the road and raise some funds and push for growth. what is behind it is probably linux has a compelling story to tell. it has about 200 and 50 million users but makes money off of them through popular stickers and ads. the story that management will tell is that line can make money and with more investment, they can probably be one of the world's most profitable messaging apps.
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vonnie: fiat has discarded discussing a deal with ridesharing uber. uber is holding other conversations with other carmakers. sergio marchionne has been dying to do deals with detroit. >> yes, it's part of the new strategy of sergio marchionne. he got a deal with google first on the self driving cars. then he wanted to make a new partnership with other tech giants. he had initial contact with amazon. he is quite active in this field.
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>> a day of decisions in the asia-pacific with a surprise rate cut by the boj. >> this was unexpected. >> everyone but goldman sachs did not get it right. they were the sole forecaster but others were saying it was only a matter of time. there were some indications of this with the bond yields which fell to a record low. they thought easing would come up and continue. there is no clear trend in this recovery right now. >> he also said uncertainty to the country has grown fast. the benchmark rate is at a record low of 1.25%.
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>> in another move to cut costs, ubs is cutting management positions in the u.s. >> essentially, ubs is changing the way it pays financial advisors in the u.s. to reward the more for staying with the bank longer. they also announced a plan to reduce the amount of financial advisors they recruit from competitors by 40%. this comes after ubs has beefed up a number of advisors when credit wes left world management division in the u.s. fair coming off of recruiting heavily last year but they are also cutting some jobs mainly in the middle to senior management levels including some on home offices in new york and new jersey. this is a response to the increased competition and wealth management in the u.s.. as we see a rise in technology more brokers leaving big banks
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to set up their own firms.
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ramy: you are watching bloomberg best. on june 23, the u.k. hold a referendum on whether to stay or leave the european union. the so-called brexit. the election is tightening and that rates of the intensity of the date right hero bloomberg television. >> i don't know but i inc. it will be very close. certainly, i very much hope that the people of britain will vote on the 23rd of june to leave the european union.
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it is right we should become a self governing democracy with a global perspective it is the best thing for the economy. >> i think that is disappointing that there has been this focus on what's been called the blue on blue war. what would be better is if we had a proper discussion about what i post brexit u.k. would look like. the lead campaign has done nothing to help us understand what kind of training arrangement we would have or what relationship we would have a single market and what happens with the 2 million british people living outside the u.k.. it has become a false debate. i call it only half a referendum. mark: prime minister david cameron said the leave campaign is resorting to total untrue untruths to leap into the dark. is the leave campaign lying to the public?
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>> my view is that the prospects for the u.k. outside the eu are incredibly bright and the risk of staying and it are incredibly serious. far from the suggestion that it's a leap into the unknown, the u.k. is the world's fifth against economy and 83% of the world's economies are outside the european union. the eu is a declining trading bloc in its economies are almost all going backwards or stagnating. the u.k. exports to the eu have flatline for 10 years. the single market for services which is not completed. the commission admits it is not completed and here we are stuck in an eu trading area which is not succeeding and negotiating with the rest of the world.
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if we leave, we can negotiate free-trade opportunities and it will be so much brighter for the u.k. >> do you think david cameron regrets calling for the referendum? > i think he probably doesn't. he knows it something you have to deal with and i have some sympathy with that. this is welling up inside and within britain. 40 years without any kind of vote on something that matters to many people. i disagree. >> one of the ironies of the prime minister's decision has been, until february 19, he had
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to pretend he may campaign to leave the european union. the impact on the economy, trade, investment, jobs, collective security, whole host of reasons. it begs the question if brexit is a bad option and i agree that it is a bad option, why has he brought forward the possibility? francin: he promised it. >> he is desperately campaigning against the proposition, the possibility he comes through on his promise. matt: you have written a piece on how you think historians would view this and 300 living historians have signed a letter supporting the remain camped here. the history of europe, you say relies on this or the trade history of europe relies on the eu staying intact. >> there are two arguments for europe, pour remaining.
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i was a skeptic about monetary unionizing in many aspects of the european integration but written's membership of the eu is a good thing not only economically. most of the arguments have been economic since the campaign began. the overwhelming majority has said it would be in economic disaster to leave. the historian argument goes beyond that. it says think about the european history and how extraordinarily violent and conflict written -- ridden it has been until recent times. you cannot attribute the whole story of european peace to nato. i think that is why i have come down firmly on the side of remain. i think if the eu unravels and briggs it would begin that, the long-term prospect to europe are quite troubling.
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francine: we had this report that new trade deals may cost 50 billion euros question mark why take the risk? >> these ludicrous government reports have been wrong. you have had 4 budgets the last year and every one of them have been wrong. francine: investors pull out money. this is what mark carney is pointed to. >> a nice impartial man there. we had it with the euro. we were told nissan pulled out and now they run the most efficient car plant in western europe. i just don't buy this. people buy products because they have good value and are the right price and that will carry on.
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mark: how damaging to the eu project couldn't eu -- a u.k. vote to leave the eu be? willoughby the first of many dominoes to fall of that happens? >> i don't think so. that would mean a quick reaction from the european leaders. in the short term, there will be an impact in that impact will not be a nice one. if it happens and somehow i expect them to happen, but if it happens, it will definitely need a quick reaction. europe is sitting on top of a pile of a large number of issues to deal with and i hope it
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triggers european leaders to advance in those discussions. tony blair: i think we will remain. we got to be concerned about that. i do believe that we have people do understand the seismic consequences of what is happening. i can't believe that people will i think we'll get a substantially higher percentage than many expect.
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i do think is a large number of british people who are coming to terms with what is all about the five terms confusing there is a relatively small group of people who care absolutely passionately. it is a debate that concerns the whole country. ramy: remember, bloomberg customers can follow all of the brexit polls by using the terminal function brex . up next, the biggest business stories with interviews from jack lew, mary barra, bob iger, and more when "bloomberg best" continues. ♪
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ramy: this is "bloomberg best." i am ramy inocencio. let's begin with david westin's exclusive conversation with general motors ceo mary barra. david: it must frustrate you a bit that the stock prices have kept up. mary: there is an industry effect going on right now. a lot of people, specifically in the u.s. market, a large percentage of our profits are made, there is a big question of are we at peak, or are we heading for a trough? another issue is what is happening with sharing and autonomous. people are seeing it is a cyclical business, and as we come out of the cycle, what will be different? we are really disciplined, and we have been talking to investors to make sure they
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understand that we are well prepared. it is a very different general motors, and the fundamentals are strong. we understand we are a cyclical business, and we are prepared for it, but we are doing things to get rid of the bottom of the cycle by having businesses like gmf and onstar, to have a profit generation model rather than the core business that fluctuates with the size of the industry. david: what about the possibility of a downtown, and what do you make sure that gm can weather the storm? mary: we make sure we maintain a breakeven of a $10 million market. making sure we have a breakeven point at that level i think is very important. david: what do you make of the global reaction, the market
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reaction to what we saw over the last few months? investors overreacting? sec. lew: first of all, what i think the world saw was something that was confusing and not well communicated, and it gave rise to fear that china's economy was in a much weaker place than it actually appears to be or was perceived by policymakers to be. china's economy is not as interconnected to the global financial system as the u.s. or the european economy. david: that will surprise some people to hear. sec. lew: what is interconnected as the flows of purchases, imports/exports. if you are developing an emerging market of raw materials to china, and you see rates dropping even faster than it is, that has a huge impact on what you think the future looks like.
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one of the two largest economies in the world, china becomes more adept at communicating its policy, path, and analysis of its own economy because the world and markets are hanging on what china thinks is going to be the next step in its economy in so many ways. bob: in terms of what is going on in china that works to our advantage, clearly moving from a manufacturing to a more service economy is very important.
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we benefit by that, but we also contribute to it. one of the reasons why we got the permission to do this is the nature of the business, the number of the jobs that we create in the service sector. tom: we heard that you might be looking for a firm to produce movies. is that true? bob: we have a lot of development activity right now. to make movies, disney branded films in china. tom: are you able to tell us which partners you have been looking at in china? bob: i am not able to -- only because i'm not 100% certain on what we're focused on, but we are very far along on this process, including developing ideas, concepts for film, identifying talent already to actually make those films.
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tom: can you give us a timeline? bob: shortly. [laughter] tom: within the year? bob: we will not have a movie released within a year, but with any year, we'll have a movie in production. ryan: what if prices stay where they are or, dare i say, trained lower? what is your strategy? ben: that is a good question because nobody knows where it is going to go. they can say great recovery so far, they can say oil can go go higher in terms of fundamentals, but we do not know when that will happen. looking at oil prices, we have to manage our financial framework, we have to balance our financial framework.
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we have very important levers that we can pull in order to do that. we will have to continue to pull that hard. actually, low oil prices a great opportunity. at the end of the year, i want to get to a level of $40 billion of operating cost, which is potentially lower than shale alone, but now with bg in it. lower capital investment levels, we will today be announcing that the plan to run our capital investment program, $25 billion to $30 billion, but today's oil prices are trending to the bottom, if it stays below $50, there is lower leverage in there as well. betty: are you going to bat? jack: i will vote for donald trump. betty: you will be. jack: it is not a question. i will vote for just about any human being other than hillary clinton in this election.
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betty: what will you do to support him? jack: i am not a big money guy. i have never been. we will see. i mean, obviously i wish he would speak less about things like judges in indiana. anybody can beat hillary clinton, but we are trying not to with some of these statements. erik: when the bear market and credit comes, if that is what is coming, what is it going to look like? 2002, 1998? howard: it will not look like 2008. there was a collapse of a bubble, and there was a panic. there is no reason for a panic. we started to get there in january. a lot of things were going wrong -- oil, china, and growth in general.
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that turned people negative, and that gave us opportunity, but there was no path. erik: so it will look like -- howard: 1990, 2002, and 2008 were all panic of some degree. erik: quick question for you, howard -- it always takes a trigger. could the trigger be the brexit? howard: it could be, but i think it is unlikely. anybody who thinks that the brexit has sweeping negative ramifications for the u.s. economy and credit worthiness i think is off the mark. ♪
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ramy: you are watching "bloomberg best." i am ramy inocencio. the federal open market committee meets next week. most economists surveyed by bloomberg doubt that the fed will raise rates. chair janet yellen said hikes are coming but left the timing they. what impact will the decision have on global markets? we got insight from insiders and experts all week on bloomberg television. dennis: i think the combination of the jobs report on friday and the brexit consideration justified patients, but i am speaking only for myself. i do not know how the meeting will come out, the committee could arrive at a decision to increase the fed funds rate, but as i assess the situation currently, i am prepared to be patient.
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dennis: patient for me means getting beyond the brexit vote. my fundamental view is that the economy remains on a moderate growth track, let us say around 2%, and that it will be sustained for the rest of the year and beyond. so i am not really changing my overall view of the economy just because of the jobs report on friday, however, the weakness of the jobs report is something that i think justifies a little bit more patience.
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it is back to prerecession levels. if you're feeling better about your job prospects, you are more likely to quit and take another job. the good news is, the quit train is a leading indicator. the quits rate goes up and it polls up average hourly earnings. we really started in 2013 and gathered speed into this year, and finally we are getting wages higher. alix: there are lots of questions about what the labor market is going to be doing. job openings in the u.s. rose to 5.78 million in april. that was the highest level since 2000. this points to pretty strong demand in the labor market.
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you got big demand in manufacturing, utilities, trade, and on the downside, things like retail did not see a lot of openings. so that number was a good sign. joe: if you dig into the jolts report, this is a chart going back to 2007. if we zoom in just the last few months, that white line is the total quits percentage, down to 2.0%, and this blue line is construction quits, so industry-specific, it had been 2.4%, now down to 1.7%. the industry-specific one is a lot noisier, obviously, because it is a smaller example size. alix: if you look at -- scarlet: if you look at it specifically, this chart shows the rate of job openings plus available spots. it is now at 3.3%. that is the highest going all the way back to 2000.
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it seems like they will have a hard time finding while a fight workers. they cannot find the people they need. you've got to pay the workers to train them to do that. scarlet: theoretically. joe: you just want to see a takeoff. david: after last week's low employment numbers, today we got jobless claims that showed some positive signs. americans already receiving benefits tumbled to an almost 15-year low. how big a deal is this? william: it seems to me that as we had closer to higher and higher employment, it is a great time to be looking for a job, theoretically.
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i still personally worry about all of the people who sort of dropped out of the labor force because people do not measure, people who have jobs that they love and have been exited out of those jobs and cannot really be trained for new jobs in a workforce where they are hiring.
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david: so what is the exit strategy if you are a central banker? ruchir: what has happened with the fed really is the donor has never been this widely used -- the dollar has never really been used this widely in the world. all of the debt in the world, the share of the dollar, you put all that together, and the dollar has never been this widely used. this is the big disconnect that the world is facing.
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the u.s. economy today is much smaller of a share than it used to be, about 25% of global gdp. but the dollar has never been this omnipresent. that is really what the fed is dealing with out here. ♪
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alix: ma . i charted the deal count and volume over the last five years. take a look at the terminal, and you can see the follow-up we've seen in the last few months. the deal count is just under 5000, it was under 7000 before. scarlet: the function, the blue bars -- and the pink bars show the principal payment. ramy: there are about 30,000
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functions on the bloomberg, and we always enjoy showing your favorite on bloomberg television. here is another function you will find useful. quic . here is this week. >> swelling, public, private debt, heavy industry, and that is just the start. an aging population, environmental deforestation, and corruption, the battle to contend with these corruptions goes over the provinces. from the rich coastal region, no one knows all of this better than chinese leaders. in 2013, china completed a once in a decade transfer of power.
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xi jinping became president. and then this happened. the economy ran out of speed. the shift from exports and manufacturing, services and consumption. it triggered an ethic bust that wiped out $5 trillion and caused the government to intervene. so what happened to embracing markets? here is the argument. on one side, the imf china says the country needs to loosen if it truly seeks economic reform, and on the face of it, chinese leaders agree. the stock market reveals an instinct to shelve those reforms, reining in spiraling debt has become a higher priority. squeeze too hard and the whole
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economy comes down. ramy: and that was just one of the many quick takes you can find on bloomberg. you can also find them on along with all of the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. i am ramy inocencio. thanks for watching bloomberg television. ♪
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emily: this is the best of bloomberg west. we bring you all our top interviews from the week. meg whitman takes stock. she oversaw the sister split at hp. her view on the revamp. bush endorsed hillary clinton. the rise of the machines. a robot revolution is heading for our hospitals. it will replace 80% of what doctors do.


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