tv Bloomberg Best Bloomberg September 17, 2016 8:00am-9:01am EDT
>> the stories that shaped the weekend business around the world. a report on oil says the glut will persist. it a smart phone giant dials of damage control. it the boe keeps rates on hold for now. >> i liked that they got the frankation in first ramy: talk about serious challenges. >> we need energy. >> it goes in the category of you can't win them all. ramy: leaders gear up for the next phrase of brexit. thereon't mind getting
ducks in a row. >> we will reserve our right to oppose. ramy: decision day approaches for the fed. of everyone has an opinion. it >> i can't see a case for a tightening. ofthis has been a topic almost numbing boredom to me. ramy: it's all straight ahead on "bloomberg best." hello and welcome. test --"bloomberg best," from bloomberg television around the world. let's look at the top headlines. when federal reserve governor speak, people listen. she had the financial world on
the edge of its seat. >> she kept a debit tone in her mark -- remarks today. she's a progress continues in the u.s. but the bank would be wise to continue to keep politics lose. >> she has a dovish reputation. she is concerned about the labor market and international concerns. what do you make of her speech and where we stand in regard to the upcoming meetings? >> they were in line with our expirations, even more dovish. she talked about patience and a caution. we think that the data has cleared the hurdle for us for a september hike. there is a strengthening consumer spending and large rebound in the labor market momentum. the concern is inflation.
some corners of the committee. the data has cleared the hurdle. fed doesn't, the move unless the markets have been priced in. the slate of communications in recent weeks against a south -- softer data backdrop. market just to move the to the prospect of a rate hike? >> it's odd to say they are surprising markets with this speech. they are not fine with surprising on the decision. rate hikesof their of happened when market probability has been 70% or higher. they would have to want to surprise markets at this point and time. agency ofernational for energy says the glut in the oil market will work into late
next year. they predicted the market would return to equilibrium this year. >> this year, it's push back into late 2017. thehat has changed is outlook for global oil demand. that has cut back quite significantly for the current quarter. they revised growth down from about 1.3 million barrels a day to 800,000 a day. that's based on preliminary data. markets pushed the backing to the oversupply at least until the middle of 2017. forecast fored its next year. they predicted an increase in out but. -- output. >> both of them have actually flip their forecast.
one showed balance returning in the current quarter to one that shows balance being put up for 12 months. they come at it from different directions. the ia comes at it from lowering the demand forecast. opposite at it in the direction by raising the forecast of non-opec output. they have clinched a deal to take over monsanto. for $56 billion. it's the largest foreign takeover by a german company. the largestte supplier of seeds and pesticides. you willel confident do what's needed to get this deal through? regulatorye challenges that have been discussed intensively as part of our negotiations. had a very large
teams of our own people and a trust counsel looking into it. we looked at a jointly to assess how big the regulatory challenges like beat. in a way, we are blessed because this combination is one that is highly complementary and has for the size of the transaction a very low overlap. that is our assessment. we are looking forward to engaging with the regulatory agencies. we are going to have to file. we are preparing ourselves in order to address regulatory concerns. >> happy thursday. we begin with breaking news from the bank of england. >> rates remain unchanged. the asset purchase program remains on hold.
this is back in line with expectations of everyone. the key line here is the majority of the monetary policy committee is expecting a rate cut if the august outlook is confirmed. do you think it will be confirmed? >> that is a tough one. we see some resilience in the last few days. the early surveys done by the bank agents and others say they expect to start to cut back on investment and jobs. probably we will start to see stuff coming in the hard data. i like the fact that the mpc got his retaliation in first. it did not do anything until october 08 in the great recession. the economy entered recession in april 08. this is good news. part of the good news is people see the bank active.
the concern is we will see slowing of the ada. it's early days yet. it takes a while to measure it. my suspicion is we will see some weakening in the ada -- data. won'ttsche bank says it pay the 14 billiards -- $14 billion. that is triple what some analysts said it could be. >> they are rebuffing for the time being. we are not going to be certain of an outcome until we are there. investors will be looking at the kind of metrics that were applied to other banks in similar cases. those would indicate a much smaller fine. analysts at this
we won't know that until they reached at agreement. >> if the settlement is close to the $14 billion, that's not great for deutsche banks capital position. anything over $4 billion would the meeting additional litigation and capital. >> does the amount go down from here? >> they are taking a hard stance. the other banks of not had to do this in public. the other banks of had these negotiations. they have not had to put up public statements saying we will not be anywhere close to there. it will be interesting to see how that closes the dynamic and i think you will see it lower than 14. anything above for being an issue, that's a big gap. we will have much more in
-- talks for an apartment to mark >> sources are saying there were a variety of issues. one of them was what responsibility with a have in munich? there are always these political back-and-forth spirit it sounds like some of the labor reps were pushing back because they wanted to secure more operations in munich here in -- munich. overall good for the industry? does this mean we are facing more years of downtrodden prices? >> it's good for the companies. by combining these two players, they will cut out costs and get more purchasing power. they save up $500 million year. that's why people like this deal. volkswagen ceo described
their position before the emissions cheating scandal. there werebloomberg profitability issues and overinvestment. >> there is still some a ,kepticism and it's critical even without the crisis. there were strong results in the past. we were far from perfect. we had profitability issues. verywithout diesel, we are honest about the shortcomings. >> how are they planning to get out of this crisis? there are two main initiatives. one is a reorganization of the company. they have already started to shift responsibilities from the headquarters to the individual brands and regions. the other is the point he
referred to in the interview. it's the issue of overspending. samsung take a look at recouping some of their investment. regaine trying to control of the phone recall crisis by giving him a bigger role. >> co. vice chairman has been nominated to the board and will become more involved in the to strategic decision-making. he is been helping run samsung since his father had a heart attack. he is considered more globally minded and has been credited with partnerships with apple and google. they are surging today. they suffer the biggest two-day decline since 2008. regulators and the company cautioned users to power down their note sevens.
the batteries catch fire. the losses need to be put into perspective. samsung makes $175 billion a year. even after the loss in market value, samsung was still worth more than several korean firms can bind. china is speaking $8 billion in hong kong. it would make it the biggest this year. but the we know so far? household namea to you and i. it is huge. it services half of the chinese population. have 505 million clients in china. if the largest bank in china. there are over 40,000 branches. the details, they are looking to
raise $8.1 billion. it could be the largest ipo of the year. investors are trying to buy some of the stock. is about 76% of the total. we're looking at pricing by september 20 and trading by september 28. >> wells fargo and fired 5300 people in pain $185 million in fines. employees were meeting sales goals by creating over 2 million fake accounts. the aftermath has grabbed its ceo in front of congress next week. largest u.s.ow the bank. this is not the first time there has been this sort of scandal in
a large american bank. >> the thing investors are thinking about is this is the first time. it's been described to us as a preeminent retail anchor. the have a halo affect around him and this is the first time he is joining ranks with his wall street colleagues. dimon, this isie the first time he is been caught in the same sort of water. >> has he accepted responsibility for this? >> not exactly. he did immediate tour yesterday. he cups they we. the was very much of a we involved. i'm not sure he is there. we've seen jamie dimon say this was my fault. i'm not sure he will do that. there is good news and bad
news when you look at investors in italy's indebted bank. you know it well now. there is a new chief executive, a new cfo of the bank. they are now without a chairman. >> it's a revolving door. we have mr. morelli on his way in. that was a bit of a surprise. if you remember, he was a strong supporter of the previous ceo. he came out with a strong defense when he came under fire and said basically he should remain in that position. the rest as we know, things change. he was forced out. bank iser cfo at the now in charge with the rescue plan for this bank. apple is headed for its first
weekly gain of 10% or more in three years. the share continues to rise in thursday trading it. the iphone 7 is off to a faster sales start them usual. calling -- isew 7s.lling galaxy note >> they handed apple a gift as the new iphone was launching. they are in development like united states. they trade-off market share. you have to think that the iphone 7 line is going to pick up some market share from samsung because of the hangover from this battery issue and from the recall. that's coming from the perfect time for apple, coming off this nine months of unprecedented
ramy: welcome back. under the new president, argentina has instituted ambitious financial reforms. the government invited business leaders to buenos aires to see the impact of those changes. erik schatzker was there. he asked how he plans to solve the chronic economic problems. have accomplished much. you have settled with the holdouts. you removed some trade barriers. you have liberalized the foreign exchange regime.
as you point out, it's not quite enough. i want to know what more you can do practically, realistically. what is within sight? reducere working hard to taxes. launched the most important infrastructure program in our history. there is another opportunity there for the most important companies around the world. we need energy, pipelines. we are starting to build them. in order to increase our production, we have to connect such a huge country. working close with the leaders of the country, political leaders, unions, companies to work for productivity programs. how can we reduce cost? how can
we be competitive? we are all working in that idea. improving our ways of production. improving our education system. >> what is your top priority? what is at the top of her list? >> the top of my list is three main objectives. reduce poverty. >> what can you do. you can't eliminate poverty in six months. >> that will take decades. that's an ambitious goal. let's go back to the six months. >> we are working hard to continue building strategic alliance with different countries around the world. we have one with china. we are working with japan,
korea. we are working with the european union. we have exchanged our first proposals. we are working with brazil. they are our principal partner. this is another priority. one critical test of your credibility and your ability to execute is the budget. argentina's deficit last year was 5.4% of gdp. it's enormous. you promised to lower it. >> 4.8 this year. >> what about next year? >> we want to go around 4%.
socially, we cannot assume to go another way. we have to accept that this has been a disaster in terms of increasing the deficit in the last 10 years. everybody has to understand that. we have to do it step by step. we are committed and we are going to fulfill that commitment of reducing every year. we are cutting down inflation. we are reducing it to half of what it used to be. we will cut the deficit. more compelling conversations with leaders in business and politics, including bob dudley and mark any off.
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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. we are talking about ticking time bombs in europe. where are the ticking time bombs? 0%?these the >> i was referring to the companies that have been piling lot of debt on the balance sheet on the back of financially engineered statements. that is still the case. i think one of the major issues in europe, what made it interesting to us is investors
in europe aren't doing the hard work of trying to dig into those financial statements and understand the economic reality that lies beneath. companies are borrowing an extremely cheap rates. untilpressures build up one day, they become a problem. that was carson block speaking his mind to manus cranny. spokerominent ceos also with us this week. let's begin with marc benioff of salesforce. he set down with brad stone for an exclusive interview. made $4 billion in acquisitions recently. why have you been so quick? >> we only by a company when two
things happen. it has to be a great company with great tech allergy and the price has to be right. coming into this fiscal year, i did not think we would buy any companies at all. it wasn't part of our business plan. a series of things happen that opened the door. the biggest thing is we got a phone call that demand where had offer from another company. for we going to be part of that process. we said yes. this is an amazing product used by so many of our customers already. the technology is incredible. we knew that was the right fit for us. >> microsoft acquired linkedin. would you do anything differently? >> that goes in the category of you can't win them all. that's especially true we are
going up against microsoft which is all the power and all the money in all the resources and that monopolistic control. we gave it our best shot. we did not win and we wish them the best. up oracle.o bring to them? that deal due >> i think they are making a desperation move to boost their cloud revenue. to boost cloudng revenue and make their $10 billion goal. he still may not be able to make it. >> you've been among the most active among oil majors in green lighting new projects this year. are you done? >> we have some more. thee is a big project in gulf of mexico we are looking
at. there is potential for gas offshore in india. we are going to move more to natural gas and away from oil. part of that is the long transition. we've got a lot of opportunities any time is right. the cycles have been very low. the costs have come down i half. now is the time to sanction them. >> will you greenlight mexico in india this year? >> very possible for india. we will have to evaluate mexico. it's a great company that's looking for partners. we have sanctioned a very big project in indonesia. we have to be very selective about our capital. we're not spending on things we don't think our highly respected. >> what impact is that going to have on oil prices?
>> look at the supply and demand. i think we are in balance. see the price of 50 for the rest of the year. we will see if that catches up. the key is demand and there is demand growth of over one million barrels a day in china and europe and north america. as long as that demand continues, you will see a tightening of the markets. regulation has been a burning issue sense there was a penalty thrown at apple for its tax dealings in ireland. francine spoke with the regulator whose commission made the decision. u.s. techabout
companies that could be under scrutiny. the commissioner is looking at online platforms. do you see problems in the way google or operate? >> have three cases. in europe you are more than welcome to be successful and grow and we will a pod all the way. if you start to misuse your dominant position to prevent ,thers from having the same then we get concerned. that is the example of the google place. we think they are using their position to stay with ar and not to allow other people to compete with them in a fair way. er.what about ub that withlooking at
my colleague for transportation. on the one hand, it's great innovation. on the other hand, there are issues comparing with ,raditional transportation taxis, that kind of thing. >> you're looking at the facebook whatsapp merger. our social platforms a concern. if competitionis is being closed down. that is the important point. i think one of the things the german authorities are looking at is in the gray zone between competition and privacy. they are so dominant. is this being used to minimize your right when it comes to privacy? i think it will be very interesting for everyone to follow and get the results of this inquiry.
ramy: you're watching bloomberg best. aitain's future was conversation for investors and it was a central topic of discussion at the meetings of the european parliament and the eu council. when will negotiations begin? it's all uncharted territory. we spoke with several key players in the exit process. with nigel farage. >> you managed to push brags it through. any regrets?
>> how can you regret taking back control of your own life. what we signed up to 40 years ago was to work with our neighbors. that all makes sense. that'll make sense. this has evolved into a full political union. what we have said is very clear. we are not against europe. we do believe in making our own parliament. , we have voted to leave this political union. take five or six years, maybe 10 years to leave the eu. that's a lot of uncertainty for the market. >> there is no reason why it should do that. we give notice. >> you don't have lawmakers that can deal with it. >> i'm afraid that's right you
all of our talent has been stressed out. we've got to recruit people i don't wind the government spending a few months getting ready to start this process. article 50ll see is triggered probably in january. we will be out of this in two years. >> can you see a situation where you could see yourself voting against article 50? >> we will reserve our right to oppose, not that we don't respect the result of the referendum. maintain market access. we think that is important. these things are all quite possible. we are looking very closely at the norwegian model as well as
other countries. there are many who want to have a relationship with the european union, who maybe are not members. there is a big possibility. >> there won't be an off-the-shelf solution. usingre talking about somebody else's model. >> it's learning the lessons from norway and maybe we can learn a great deal from norway. express -- successful situation. they have a strong democratic tradition. they have an effective welfare state and health service. the model of their socially-based economy is not that different from what we talk about. we are waiting for the government to form its own
opinion, to raise article 50 and and start this negotiation. regret the british people chose that. we know great britain will be important as a partner. what we've got to do for defense, we have to have that cooperation. >> would you be open to a deal, for the banks between the u.k. and eu to bridge that gap between when they leave and when a trade deal is in place? >> we have some the agreements of all kinds that create that of it will beout very complex. it will be very difficult. how easy will you try to make it for the u.k.?
icc is have to make choices. >> i don't know how long. maybe two years. it should last two years at most, which is quite a long time already. it is necessary because of the complexity of the challenges. what must be clear is as these negotiations have not ended, they are a member of the european union with full rights and duties. ramy: the open market committee will hold its september meeting. there is a low probability of a rate hike. passions are high when economists and financial professionals debate the next move. this is a taste of the conversation to get you ready for next week. fomc keepsthe looking for excuses not to raise
rates. they did that at every meeting all year. stan fischer had the same message. the time has come to start tightening. the people who don't want to tighten don't see the adverse consequences of ready with zero rate along the curve. >> let's talk about the consequences. where do you stand on that? >> there is inflation pressure. it is rising. cpi, if youat core look at the core cpi, it's up 2.2%. a year ago, it was something like 1.7%. it's starting to tighten because the labor markets are tight and the product markets are tight. you are the f1 see, it's been a long time where you have
really low rates. 2.2% inflation historically is not a problem. isn't this an asymmetric risk? harm theaise and economy they will be blamed for it. >> that is a political risk for them. they have to do with they are there to do. i think their strategy is to keep rates very low. by 75f they raised rates basis points, rates are still going to be exceptionally low. there is going to be upward pression or on inflation. i think they are heading intentionally for a higher rate of inflation so once they've 3.5%, that'sor when they can jack up the short-term rates. it,he economy turns down they can cut those rates. they've got no ability to lower
rates if the economy go soft. there's no compelling case of in kind for a rate increase september. we are looking at an economy where the number of hours people has basically shrunk in the last six months. measures of medium-term and inflation is declining. i can't see any case at all for a tightening. i worry that the framework the fed is using really isn't a consistent one. they speak of a 2% target. in a 2% ceiling, a 2%
target. if you're going to have a two target, sometimes you will be above and sometimes you will be a low. if you're in your ninth year of recovery and the employment rate is in the fours, if that's not the time to be above 2%, i can't imagine when that time would ever be. isthe problem is the fed managing the entire yield curve. the longave rates in end that are 300 basis points. use all manner of problems in the world. >> we hear people talk about bond scarcity. do you see that? have you witnessed that in this market? there are not securities out there for you to buy? >> we have $45 billion in assets.
isn't soity issue important to us. what's important for us is the level of interest rate. when i talk about the level of interest rate it's not about insurance. it's the entire economy. the fed has a policy for the past seven years of zero or near zero interest rates. it hasn't worked. we have the lowest interest rates in the night states and around the world have ever had in the past thousand years. it'sconomy isn't the worst been those past thousands of years. into a is you themselves world of zero interest rates and they can't get out. somee fed will increase at point. this is been a topic of almost numbing boredom to me.
it's going to keep going on for years. you have one small increase in three years. it occupies morehead state's than almost anything i've heard about. i don't think about it much. i know the u.s. economy is not particularly strong. central banks are aware there is no cooperation in the united states for years. only people who can do anything it. they know it famous miss play their hand, if they actually throw the u.s. into recession, this is a disastrous outcome for them. we are going to have a new president. for going to have a new congress and there may be some room to do some things physically to stimulate the economy.
there are, the fed will have more confidence to raise rates. the probability of fed it does anything aggressive and 25 basis points is going to affect markets. it's not going to affect the u.s. economy. bloomberg will bring you live coverage and analysis of the press conference on it wednesday. this is bloomberg. ♪
there are about 30,000 functions on the bloomberg and we enjoy showing us our favorite. this is another function you will find useful. ramy: it will take you to our quick takes were you can get to important context. this is a quick take from this week that explains the complicated political situation in brazil. >> in recent years, brazil has gone through a roller coaster of turmoil. economic woes, corruption scandals, and it is bit. -- an impeachment. the question is where the flow -- slope of rattling come to a stop? this is the situation. senate, the the president was found guilty of bypassing congress to finance
government spending. this paved the way for the price president to serve out her term. step back.a in order to understand the situation now, you have to understand how it got here. that can't be done without talking about da silva. she was wildly popular and became a symbol of brazil's assent. he became first woman to be elected president of brazil in 2010. during her presidency, the low prices began dropping. paralyzedon scandal many infrastructure projects. how bad did he get? the economy shrunk 3.8%. that's the most in a quarter-century. promisingesident is
physical austerity to try to right the ship. everything hasn't been smooth sailing. the presidency is trained by the massive corruption scandal. investigation revealed a deeply corrupt organization. it under a scheme started a decade ago involving bribery, collusion, and kick the -- kickbacks. looking at big picture, that aren't many good guys here. members of congress are currently under investigation for serious crimes. brazil's future is uncertain. ramy: that was one of the many quick takes you can find on the bloomberg. you can also find it at bloomberg.com with all the
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