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tv   Bloomberg Best  Bloomberg  August 21, 2016 6:00am-7:01am EDT

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♪ scarlet: coming up on "bloomberg best," the stories that shape the week of business around the world. japan's economy is stuck in neutral. the quest to produce a self driving car accelerates. the fed debates when to take the brakes off rates. >> the minutes reveal what appear to be a growing and increasingly frustrated contingent of fed officials. scarlet: another week of learning from earnings. companies release their quarterly results. >> we are now continuing our cost-cutting. >> what we are working on now is how do we evolve our offerings to our customers. scarlet: investors and economists share provocative insights on the week's best
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interviews. >> the market with the euro is not adjusting well. >> i don't think there are any winners in what is going to be the world's most expensive divorce proceeding. >> it is an accumulation of evidence that monetary policy is pretty ineffective. >> the practicality of helicopter money is zero. scarlet: it is all straight ahead on "bloomberg best." ♪ scarlet: hello and welcome. i am scarlet fu. this is "bloomberg best." your weekly review of the best the most important business news , analysis, and interviews from bloomberg television across the world. let's start with a look at the top headlines. monday began with disappointing data from japan. >> the japanese economy grew less than expected. business spending contracted a second straight quarter.
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i think it was 0.2% growth, well shy of the analyst thinking. what other standouts are for you here? >> a gloomy, cloudy morning here in tokyo and these numbers won't help. the big takeaway, net exports were a drag on growth. as you mentioned, cap x fell for the second straight quarter. what we are seeing now is the strong yen is hurting demand from overseas. the demographic drag coming from an aging and shrinking population is zapping demand. we're kind of getting hit on both fronts. it puts the onus on prime minister abe to prevent a recession later in the year. >> how might the prime minister respond to these numbers? he could accentuate the positive and talk about nominal gdp coming up bang in line. that does not get him out of his hole. >> think about japan's potential
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growth rate. it is low. to have two consecutive quarters of any kind of growth is certainly not the worst thing. there is some talk of mr. abe looking at some kind of wage increase target so i think we will look to see if he puts his where ha money where his mouth s and comes up with some sort of tax incentive to motivate japanese companies to lift wages by some kind of meaningful amount. >> post brexit hard data, import costs surging, input costs jumping. that is the story and the date of this morning it seems. >> that number up 4.3%, to a no surprise given what we have seen post brexit and the pound, promising that we are getting these kind of inflation reads. the bank of england expects inflation now to reach its 2% target. much faster than it originally anticipated. the question is, will the banks look through this number?
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if the pound gets any kind of stabilization from here, and many predict it will still decline, then the bank could look through it as a one-off hit. the base effect story coming through and the bank can look through it and maybe cut rates for the from here. maybe the pound goes down more. >> the ppi at .6% but it was that that put the cut among the pigeon, ending a 32 months period of decline. what does this tell us about inflation prospects? headline inflation prospects going forward? >> experts are sometimes right. what is going on right now is really textbook economics. we have depreciation of currency, which is triggered by uncertainty after the vote plus the reaction by the bank of england. the depreciation is generating this pipeline inflation. both input and output actually through imports. it means that the bank of
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england would probably have to write letters to the chancellor in just a few months explaining that. >> there is a battle over rates raging inside the federal reserve. that is the clear take away from the minutes of the july 27 federal open market committee meeting just released here at the fed moments ago. the minutes reveal what appears to be a growing and increasingly frustrated contingent of fed officials who believe the bank needs to raise rates now or very soon. >> the minutes said, "members generally agreed that before taking another step in removing monetary accommodation it was prudent to accumulate more data." a number of members want to see nflation rise to 2% what is the number one thing you say we learn from these minutes?
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>> the most interesting thing was there is a letter disagreement at the fed over whether to raise rates or not. a lot are in agreement that there is little risk inflation is about to run away from them. he saw in the minutes there was a split over whether to raise the rates because are getting closer to full or employment. the hawks want to reflect that , but even most of them agreed a strengthening labor market will not put a lot of upward pressure on inflation. that kind of gives more credence to the ideas we are seeing pop up in the minutes more now that a littleshould wait longer until we see inflation rising on a sustained basis. that kind of reduces the urgency to feel like you need to hike at this past meeting or the next meeting, for example. >> wal-mart reporting earnings at $1.07, higher than estimates. also boosting its full-year earnings forecast in part due to an improvement in u.s. stores. a stable consumer on that end. the comp sale numbers, 1.6%.
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david, this is the eighth straight quarter of comp sales moving higher. >> same-store sales are up, up in revenue, what jumped out? >> a pretty solid quarter for walmart. part of that is expectations have been really low for the company over a year now. good increase in traffic to their u.s. stores. a good increase in online sales. those are up about 12% after we've seen lower numbers. it looks good online, in u.s., and even international. there are only two markets outside the u.s. that did not do well. the u.k., a lot of issues with the pound and competitions there. china was also relatively weak because of cutbacks in government spending. >> clearly, the efforts they have made in store with labor and technology, they are helping to drive traffic and it is working. you have evidence. at the same time, you have a
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competitor, target, not doing quite as well. it makes an easy contrast. investors say one is taking share and one is not. it puts pressure on the rest of the space. walmart has been increasing price investment. that is driving pressure in all the discounters now. >> let's get back to the u.k. economy. so far this week, we have seen data on consumer prices and jobs. today we got retail sales that surged 1.4% in july as british consumers seemed to shrug off any brexit anxiety. >> i think this week has been quite a surprise from the point of view of the analyst who thought this hard data arrival in july. we saw inflation higher than expected, which is obviously good for the pound. you saw unemployment data are better than expected. he saw retail sales better than expected. the start of the week, the
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expectation that would be a poor week had gotten into the mindset that brexit will be bad. and very quickly, bad. as some of the data gives a little light, we see the pound going up as a response. >> oil is on a trend up. it is in a bowl -- bull market after having been in a bear market just three weeks ago. during this program, we have had two different viewpoints about why it is in a bull market. the saudi's are talking about freezes and the other is fundamentalist. what does your reporting indicate? >> it is a little bit of both. the market is short. we were actually in a bear market three weeks ago. we have had a complete turnaround. lots of people, including the saudi's most important, have started talking about a production freeze. that shows a degree of unity or perhaps the beginning of a sign of unity within opec. one opec is unified, they can
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move the oil market. a lot of the people that were short got out of those positions. we have this rapid rise up and we are back in a bull market . we've had something that worth $1 trillion of trade in futures on brent and wci. this is happening with heavy trading, so it's quite serious. we are still around $50 a barrel. nowhere near where we were previously. scarlet: plenty more to come. carl icahn explained how he is seeing eye to i with aig's management. some illustrious economists tell us why central bank policies seem to be falling short. highlights from another week of earnings reports, and major progress towards the dream of a self driving car. this is bloomberg. ♪
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♪ scarlet: this is "bloomberg best." i am scarlet fu. let's continue our global tour of the world's top business stories from a bloomberg scoop from monday. a well-known tech company may be
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preparing to go public. >> dropbox is considering making the big leap into the public markets. executives met to discuss the possibility of going public. that's as soon as 2017. this is according to people familiar with the matter, who say the file storage company wanted to discuss the feasibility of a listing and get a sense of the valuation it could fetch from investors. what do you know about the discussions they have had? >> valuation is going to be top of mind here. when it comes to whether or not they want to move forward. basically, management brought advisers in to say if we did this in 2017, what would it look like and what would public market investors want to give us? you have to remember with the backdrop of ipo's this year, we have seen a pullback in how much investors are willing to give these companies when it comes to valuation. if the company is not profitable, if they do not have a clear path to getting there, these are things that have prompted public market investors
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to push down on what they are willing to give in an ipo. >> our morning must-read. brought to us courtesy of the sec, 13 f filings that give us a look at some big investments bought and sold. a few things jumped out. one of them was financials. >> jeff took a stake in morgan stanley, valued about $1.25 billion. a 2% stake, 38 million shares. absolutely, it is rare to see an activist in a bank because banks are so big and regulated and you have to get government approval in order to buy back or dividend. >> netflix has been hot for some time. we have the tiger people coming out of it. >> absolutely. chase coleman, tiger global is out. so is julian robertson. chase is julian's protege.
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tiger management. tiger global cut about a $2 billion stake in it. there was a boost in amazon and a boost in facebook while a lot of hedge fund managers did go out of netflix and google. >> warren buffett is doubling down on apple. >> he is. 55% boost in his stake. shares fell 12% in the second quarter so he took advantage of a dip. revenue is supposed to decline for the first time this year since 2001. that is where a lot of the bearishness is coming from. at the same time, they are coming out with a new phone in the fall and that should boost sales. >> big investment banks with their european headquarters in london could start the process of moving jobs from the u.k. within weeks of the government triggering brexit. that is according to people briefed on the plans. it is frustration with top bankers and top ceos that the u.k. negotiators still think they have access to the single
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market without giving in to a free movement of people. >> right. the u.k. government needed to take this time to try to convince banks they had a plan to keep passporting, and a very reasonable one. the banks don't feel like that has happened. there still seems to be a feeling from the government that they can get everything without giving up much of anything. banks are concerned by that. because the process of moving people is going to take between 18 months and two years, all of the logistics, they need to act quickly once brexit is triggered if they want to have people in place when the two-year negotiating period is up. you are talking thousands of jobs across the sector. that is a meaningful amount. >> ford putting more fuel behind its technology bet. the automaker will make
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additional investments in ridesharing and autonomous vehicles, and are doubling the size of their workforce at the silicon valley tech center. ford hopes to have a fully autonomous vehicle by 2021. >> you are doubling your workforce in silicon valley, investing in technology companies to get you there. this suggests a more go it alone approach when it comes to self driving cars. why take that route? >> we are asking ourselves three important questions when it comes to the development of autonomous vehicles. one is where do we want to play? second is how do we want to win? and third is the capabilities. when you look at autonomous vehicles, we have been at this for over 10 years. we have a lot of engineering know-how, but as you can see from some of the partnering we are doing with some of these great technical partners we have said in some cases we cannot do it all ourselves. we are partnering with companies to allow us to realize the vision of getting fully autonomous vehicles on the road. >> uber is taking a step forward on the race for self driving
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cars. starting later this month, the ridesharing company will allow customers in pittsburgh to hail autonomous vehicles from the smartphones. tell us what is going on in pittsburgh. >> big news in the world of driverless cars. uber has embarked on this crazy research project that everybody thought would take decades, and they are trying to launch it right now. it is very exciting and in some ways leaps them ahead of google and tesla. google is still seen as the leader in terms of technology. >> how did they get there so fast? was it google that was saying this is years and years away? >> i think it still is. it is important to know that cars in pittsburgh will have safety drivers and copilots. i rode in one and it is interesting. someone is taking notes while you are driving around. one thing they have done that is interesting and really aggressive is they just bought a company, auto, a driverless trucking company.
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it sounds kind of weird, but it may be the biggest deal that has happened in the space yet. we think it was about $680 million and are still incentives, so it could get bigger. >> china losing that grip on domestic stock markets. while also lifting restrictions on assets and debating leadership has often -- will remove total quotas through its two links with hong kong. what are the key takeaways? >> the stock link will start in about four months and give inestors access to any stock the composite, as well as some small and mid-cap technology shares. china's securities regulator won't impose an aggregate quota. that total cap will be scrapped for the existing shanghai link, limited access to china's domestic markets for foreigners was the key reason that msci did not add mainland shares to its global benchmark in the latest
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review. the opening of the stock link potentially takes china's quest a step forward. >> taking stakes at barty telecom in touch for the equivalent of $1.8 billion. tell us more about these deals. >> they announced it would acquire a bigger stake in in touch and it would spend about $1.8 billion on the transaction. it is going to acquire the shares from temasek and with that, it hopes to increase its presence in both thailand, india, and africa, where it has a presence. talking about india's reliance, are they about to disrupt the current state of the market? >> we not clear when it will come into the market but it is imminent. they have spent about $22 billion.
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they intend to spend some more money and they will go in with ford generation services. since they are spending so much money, everyone is expecting a big price war in the market. t-mobile is moving to shake up the wireless industry, announcing it is switching to an unlimited only plan for new customers. >> how are you going to make this unique? >> we are eliminating forever data plans and going all in on unlimited. it is a monthly subscription to the internet. unlimited calls, unlimited text, unlimited high-speed data, unlimited video streaming at standard definition, and a family of four gets that for $40 a line. we want to eliminate for the whole industry data plans. if somebody else has figured out how to join us, bring it in. >> that someone else is sprint. i mean, they announced today they are going to be offering pretty much the same thing for a family of four, $160. is this going to come down to a price war?
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>> sprint has their own issues with their balance sheet and with their network not being invested in. i think the group you want to talk about as it relates to this is verizon. i know that is probably the sprint is thinking about as well. not only would never give customers unlimited, they can't. their network was built six years ago before instagram and snapchat when netflix still mailed you dvds, and it is for calls. they are not capable. we have twice the capacity per customer that they do and a much more modern, twice as new network. we have been building to this date for three years. ♪
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♪ scarlet: you are watching
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"bloomberg best." i am scarlet fu. earnings season is in the home stretch. let's take a look back at the most significant quarterly reports. starting with a record loss for a commodities giant. >> bhp, the largest mining company has reported an 81% drop in full-year profit. is this rock-bottom, is this as bad as it gets? >> that is the consensus. the numbers we are getting this earnings season could represent the trough. we have seen a rebound in the share prices, up 40%. there is optimism in some pockets. generally overall it has been quite a dark two to three years for these companies. >> is the worst over from an earning and dividends perspective? is that the message for investors today? >> for a while. we live in an uncertain world. i think it is important to put those numbers in perspective. the majority of the statutory loss was caused by the right turns we had to take for the
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disaster, for the valuations of our u.s. shale business and some taxation matters. into the confidential year, we are looking at a 12% reduction in costs, a 4% uptick in volume, which combined will release further operational productivity gains of $1.8 billion. so we are now in a place where we are continuing almost accelerating in our cost-cutting while our prices have stabilized and kicked up a bit. >> $1.45 billion is the revenue number. a dividend of 3.1 cents if you are a shareholder. copper makes up 83% of overall sales. they see production for the year way down going into the second half. in the face of what has been a tough market, are you seeing light at the end of the copper tunnel?
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>> i think we are. i think prices have been down for quite a while. but i think we have been making a significant improvement in terms of rebasing our costs and focusing on profit. we are seeing that reflected in the numbers we have released. we have a good set of numbers. our numbers of 571 million are up a few percentage points over last year despite the lower price, prices down almost 20%. that is the result of the hard work on the cost side. >> home depot second quarter earnings matched analyst estimates as profits rose 9% while americans spend more money fixing their homes. the company boosted its earnings forecast by four cents. >> we would characterize this as an in-line quarter. it did slow sequentially but that was fully expected. the first quarter was benefited from some abnormally warm weather in the spring.
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this is more typical of what you will find at this state of the cycle. we are in the middle stages of the home improvement cycle and it is going to last for a while. 5.4% growth based on the u.s. is a good number. >> we got about an hour and a half ago the earnings report from target, which was a mixed bag. >> they were able to beat expectations in part because of cost-cutting. when you look at same-store sales, a key figure investors look for, they were down 1.1%. this is the first time same-store sales have fallen at target in about two years. the ceo told investors, don't expect it to get better in the second half of the year. he expects sales down as much as 2%. so the consumer might be feeling more confident, they might be spending some, but when it comes to true brick-and-mortar retail and companies like target, we are not seeing it
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come up in the numbers. >> we also got some numbers from lowe's. what do they tell us about where the consumer is now? >> another mixed bag. home depot had great numbers yesterday, up about 9%. they see consumers investing in their home. they still feel their home is an asset. which says something about the strength of the housing market. lowe's comes out today, a disappointment. they are not able to capture that tailwind of spending coming from consumers. there is the market of winners and losers right now. not every retailer will be succeeding because the consumer, while still spending, is still modest and spending and very targeted ways. >> -- posted profits that plunged 82%, to sing estimates. asia's largest airline was battered by losses from jet fuel hedges. passenger yields fell from competition from chinese airlines. >> yields are declining. jet fuel hedges are mounting. how do you reverse this massive
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slide in earnings? >> the big issue is that we are facing quite a soft world economic environment. we see the china restructuring going on. everywhere we are seeing strong u.s. dollars vis-a-vis other currencies, so the market is a bit challenging, not just in the u.s. and europe. travel demand,, is very much related to gdp growth. we are seeing less demand for travel. we are seeing a customer trading down from a long-haul flight to a short-haul flight so the demand of travel is slowing down. we hope it is a short-term issue rather than a long-term one.
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>> tencent recent splurge for content has paid off in the second quarter. users.of new it is all about entertainment. >> tencent is about buying intellectual property rights. things like games, gaming. things which have potential and they also have exclusive streaming rights. gaming remains an area of strength. it is buying and a lot of this content. the question is how long can they continue spending like this. good results though, beaten projections in all but one
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quarter. >> one other mover this morning as cisco, the company reported fourth-quarter sales that declined 2% from a year earlier in a quote, challenging macro environment. the company said it would cut 5500 jobs. give me a sense of where you are on that transition and how this potential layoff fits into that. >> if you normalize out the set top box business we sold six or seven years ago, i mean months ago, our revenues were up 2% and we had record earnings per share of 9%. as we look at the transition we are going through as a company, the first thing we have to 75% ofr is that almost the resources our software engineers and have been for a long time. what we're working on is how do we evolve our offers to our customers.
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more as a service, more as a subscription, and the data point i gave for the fourth quarter in a row that we provided this information, deferred revenue balance from software and subscription services was up 33%. we are making that transition and i'm pleased with where we are. >> straight ahead on "bloomberg best," the week's top interviews. this is bloomberg. ♪
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♪ >> this is "bloomberg best." i'm scarlet fu. upomberg television caught prominentof the most
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investors this week. in just a moment, you will hear the thoughts on the u.s. real estate market and steve wynn's thoughts on macau. let's start with the legendary carl icahn, who has been an outspoken activist on aig's board of directors. >> you've gone to battle with many a ceo over the years and i'm thinking of last year, when you called for the breakup of aig. aig came back with another plan, and today they continue to execute on that plan, selling united guarantee for $3.5 billion. >> i'm proud of him for that. i really think he and i see eye to eye on what they should be doing at aig. i supported him recently when a few people were wanting me to go to battle. i think he takes it very seriously, i'm hopeful he will do a lot more of this. now there's a company that
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should do buybacks. as they get more cash, the stock is so cheap related to what they can buy it for, and they do have that money around and there's no machinery they can buy. you know, aig does not buy machinery. there is a company that should do buybacks. i can't say every company should do it. i do believe hopefully peter should do buybacks. i'm not wearing the hat of being on the board. >> if you give a miner a dollar and he can borrow for nothing to dig you a hole, what's the story for the housing market? >> i think the thesis is identical.
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you know, i think it was confucius who said, a builder will build one money is available. that command and all the other factors is always secondary to is the money available. right now we are seeing very significant additions on the commercial property side. that are likely to have significant impact. certainly we have seen significant increase in the amount of multifamily housing. beingconstruction and likeered in some markets san francisco and new york. we have seen that impact pretty significantly because that was where the first new supply occurred. i suspect we are likely to see it across the country, as more supply of multifamily housing becomes available. i think when you talk about office space, i've been a bear on office space for some time, i see a lot of movement in the office space arena, but i don't see a lot of growth. i continue to see users becoming
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more and more clever and needing less space, therefore less demand. >> talk to us about europe at the moment and particularly post brexit vote britain, have you exited a lot of your investments? >> we sold one of our larger ones. we have the largest railcar leasing company in europe, a company called vtg. doingood company, fine. but we think both the eu and britain will be hurt by the brexit. the most expensive divorce. the 10% drop in sterling
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since brexit offer some opportunities for you, or not? >> on a personal basis, i bought some sterling. we don't speculate in currency in the fonts. the funds always hedge back to dollars. our investors gave us dollars and we want to give them dollars back. on a personal basis, sterling may be getting a little overdone. i don't quite agree with george soros. >> you applied for 280 new gaming tables at the wynn palace and ended up getting 150 altogether. what was your reaction? >> we thought 100 was the minimum, and we planned accordingly and hired accordingly. if you ask a fellow executive that has a hotel that includes gaming room, they will say it's much better to be under spread in games than overspread because no one likes to see a bunch of idle tables.
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>> it seems as if times have changed, the messaging has changed. coming from the government and regulator, they want to clamp down on things a bit more. >> clamping down, the vip has -- the junket has shrunk because the demand went away, the customers want away. i don't think the government took aim at the junket operators. that's not the impression i have. i think the policies of central government in beijing had an effect of reducing consumer spending at the high end, louis vuitton, chanel. gaming fell into that category. >> are we in the recovery? >> good question. i don't know. it is hard to answer that. i think everybody is waiting to
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see what impact that has on the market. the last two places that opened did not cause the market to grow, did they? no. this one, good question. we will get an answer to that in september or october. ♪
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♪ >> you're watching "bloomberg best." i'm scarlet fu. first up, nobel laureate paul krugman who spoke frankly about what he sees as a limited effectiveness of monetary policy. what does the federal reserve really know when it comes to monetary policy and the economic outcome in a low growth, low rate environment? >> really not much, except that i think there is an accumulation of evidence that monetary policy is pretty ineffective.
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we came into this thinking monetary policy at zero rates was ineffective, then along came qe, and along came negative rates. we said oh, there's all these other thing central banks can do, but is not actually doing very much. you have negative rates in europe and they still can't move inflation off. you have massive qe. it looks as if the things that -- we may be going back to square one, which is when we started this discussion 18 years ago, the only thing you could do with it was to credibly promise higher inflation in the longer run that was credibly promise to be responsible, and that only by changing, creating the impression of a regime change that would change what you do, even after recovery, that was the only way monetary policy would get traction. we are kind of most of the way back to that view i would say. >> yesterday we got this note from head of the san francisco fed and he laid out some possibilities for what he's
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rethinking, may be committed to higher inflation or maybe we need more aggressive fiscal stabilizers or and gdp target. this is something i feel people have been talking about for years. the real story is that it's coming from someone so central at the fed. >> a lot of it is history. central banks -- there was blood, sweat, tears, and toiled to get inflation down from 10% to 2%. they all settled on that 2% target. very hard to say, maybe that was set too low. maybe we really need to change this. that is something they have been very reluctant to rethink. the news that anybody at the fed is willing to entertain the notion, but these are not new ideas straight it is who is saying it, not what he's saying. >> you think helicopter money can help in any way?
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across the world. >> helicopter money? to my mind, this is one of the silliest ideas that journalists have come up with. >> whoa, whoa, whoa! [laughter] >> i'm sorry, there are no central bankers -- i'm not doing a donald trump here. it's a fact great no central banker in the world is talking about it great when they asked mario draghi about it at a press conference, he said, we've never talked about it. they keep asking him, what about money.ter -- and he says he never said that. hello!
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francine: a little reminder that you probably were saying this about negative rates in january. when governor kuroda was asked that, he said we are not looking at negative rates. the more central bankers say, the more efficient it is when they start using it. >> we can blame central bankers for miscommunication and negative interest rates. but the practicality of helicopter money is zero. >> when you say the euro is a failure, what is the alternative at this point? we don't have an alternative until we break it up great wouldn't that the a systemic and dangerous thing to do? >> it's better than continuing in the current path. if you look what has happened as a result of the euro, the rigidities it has put in, it took away the interest rate and exchange rate mechanism for adjusting, do not put anything in its place. the gdp of europe output, has been well below even the united states. we were in a country from whence the crisis began, we've done a better job in recovering. they are basically stagnant. growth the last couple quarters,
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.3%, .4% -- that is not a good performance. what you have to contrast is continuing that dismal outcome, depressing's in spain and greece and an alternative. of course a divorce will not be easy. but, as i argue in the book, it can be done in a way that is better than the current system. it would still be better if they put into place institutions that would make it work. the question is, will they do that? >> if the euro breaks apart, let's say something happens, they vote in a party that once out of the euro, how many years of pain do we see? is it six years of recession before we get into this world you are talking about? >> the crisis began in 2008. we are in 2016. the market with the euro is not adjusting well. i think the example of countries
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that have a flexible exchange rate like iceland responding to crisis, responded very quickly. a small country. i think we are not talking about six years, i think we are talking about a couple years. ♪
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♪ >> i want to draw viewers attention to a function on the bloomberg, fed allows you to get a plethora of information about the fed. you can see at the bottom of the screen the fomc forecast. on the top left you can see minutes. >> there's a function i use that shows the s&p 500, f a, where it shows where valuations are in the equity market and the thing i stare at quite a bit, looking at where dividend yields are.
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relative to what we are paying for rates. >> there are roughly 30,000 functions on the bloomberg, and we enjoy showing you our favorites. here is one function you will find useful, quic. get important context and fast insights into timely topics. this week's examines the recent turmoil in turkey. >> turkey's president is using a failed military coup to tighten his grip on power. more than 250 people died in a night of street battles and aerial bombardments on the 15th of july, 2016. for turks, revolt is nothing new. the country experienced coups in 1960, 1971, 1980, and the prime minister step down because of
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pressure from the military in 1997. erdogan has been encouraged by the latest. the latest highlights one of turkey's biggest problems, a division tearing the country apart. here's the situation. turkey's political identity echoes its geography. straddling the middle east and europe, it is a nation where east meets west. the father of modern turkey is the military officer who led the nation and the founding of the post ottoman state in 1923. since then, turkish armed forces have played a central role in maintaining the secular, western looking society. the ak party was elected in 2002 with erdogan becoming prime minister the following year. as turkey's most powerful ruler since then, he is molding turkey back into an islamic world power by giving a voice to an underclass of islamic conservatives. many turks love him. the size of the economy nearly tripled in a decade.
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over the last few years, he stifled political debate while fighting accusations of corruption. in 2014 he began purging the police and judiciary, detained journalists, and heightened control. he said those responsible for the latest to attend are followers of an islamic cleric in self-imposed exile in the u.s. that has been denied by him. thens once an ally but became a critic of erdogan's government. erdogan has not been shy about his ambitions, building a 1150 room presidential palace, a complex four times the size of versailles and over 30 times larger than the white house. here's the argument. while erdogan has been announced -- denounced for being increasingly autocratic, he is still admired. he has built hospitals and schools. poorer turks have seen living
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hisdards rise under control. the turkish people have been divided about what they think about the man and charge. turkey has been a member of nato since 1952, but it has not been able to join the eu. loved and loathed by many, erdogan does not look like he has plans to leave power anytime soon. >> that was one of the many quick picks you can find on the bloomberg. you can also find them at bloomberg.com with all the latest business news and analysis 24 hours a day. that does it for "bloomberg best" this week. thanks for watching. i'm scarlet fu. this is bloomberg. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." donald trump continues to attempt to stabilize his campaign, this time with a change in leadership. also named stephen bannon as the campaign's chief executive. -- bnd took a leave of annon took a leave

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