tv Bloomberg Best Bloomberg September 18, 2016 5:00pm-6:01pm EDT
ramy: coming up on "bloomberg best," the stories that shaped the week in business around the world. a report on oil says the glut will persist. a smartphone giant dials up damage control. a megamerger may finally be signed and sealed, and the boe keeps rates on hold for now. >> i liked that they got the retaliation in first. ramy: frank talks about serious challenges. >> we need roads, trains, ports, energy. >> it goes in the category of you can't win them all. ramy: u.k. and eu leaders gear up for the next phrase of brexit. >> the negotiation, when it will start, will be global. >> i don't mind the government spending a few months getting its ducks in a row, getting ready.
>> we will reserve our right to oppose. ramy: plus, decision day approaches for the fed. everyone has an opinion. >> i cannot see any case at all for a tightening. >> this has been a topic of almost numbing boredom to me. ramy: it's all straight ahead on "bloomberg best." hello and welcome. i'm ramy inocencio. this is "bloomberg best," your weekly review of the most important interviews and analysis from bloomberg television around the world. let's kick it off with a day by day look at the top headlines. when federal reserve governors speak, people listen. on monday, lael brainard in chicago had the financial world on the edge of its seat. >> federal reserve member lael
brainard, keeping a dovish tone in her remarks today. she said economic progress continues in the u.s., that the bank would be wise to continue to keep politics lives. 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? >> i would say her comments were in line with our expectations, even a bit more dovish. she made a more forceful argument for patience and caution, in light of what other fomc members have said. we think that the data has cleared the hurdle for a september hike. there is strengthening consumer spending and a very large rebound in the labor market momentum since midyear. the concern is inflation, among some corners of the committee.
it has evolved, along with their forecast. i think the data has cleared the hurdle. the problem is, the markets are not pricing it. historically, the fed doesn't move unless the markets have been priced in. the vast slate of fomc communications in recent weeks against a softer data backdrop has not been enough to move probabilities higher. >> it's just to move the market to the prospect of a rate hike? >> it may seem odd to say they are fine with surprising markets with a speech or an article, but they are not fine with surprising on the decision. but historically, nearly all of their rate hikes have happened when market probability has been 70% or higher. they would have to want to surprise markets at this point in time. >> the international energy agency has reversed course on an oil glut. the iea says the oil glut will persist into late next year. just last month, they predicted the market would return to equilibrium this year.
mark: at one moment, it ends this year. now it is pushed back into late 2017. what changed? >> what has changed is the outlook for global oil demand. they have cut that quite significantly, particularly for the current quarter. they revised growth down from about 1.2, 1.3 million barrels a day to as little as 800,000 a day. that's based on preliminary data for july and august. and that has pushed the market back into oversupply, at least until the middle of 2017. mark: and it comes after opec yesterday flipped its forecast for rival supplies next year, predicting this increase in output from outside the group. two reports together that are fairly bearish. >> both of them have actually flipped their forecast. one that showed balance
returning in the current quarter, to one that shows balance now being put off for 12 months. interestingly, they come at it from different directions. the iea comes at it from lowering the demand forecast. opec came at it in the opposite direction, by raising its forecast of non-opec output. vonnie: it took four bids, but bayer clinched a deal to take over monsanto. the deal is valued at $56 billion, making it the biggest merger this year, and also the largest foreign takeover by a german company. if it is approved, it will create the largest supplier of seeds and pesticides. >> you feel confident you will do whatever is needed to get this deal through? >> as you may assume, regulatory challenges have been discussed very intensively as part of our negotiations, but also beyond. we have both had very large teams of our own people and an
antitrust counsel looking into it. we looked at it jointly to assess how big the regulatory challenges might be. in a way, we are really 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 in all countries we are going to have to file. we are preparing ourselves in order to address regulatory concerns. so we can serve up what is needed to get our transaction and the combination of our business to the finish line. >> happy thursday. we begin with that breaking news from the bank of england. john: rates remain unchanged. an all-time low of .25%. the asset protection program remains in line at -- this is bang 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 the august outlook will be confirmed? >> obviously that is a tough one. we have seen some resilience in the last few days. the early surveys done by the bank agents and others from firms 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 its retaliation in first. it did not do anything until october 2008 in the great recession. looking back, the economy entered recession in april 2008. this is good news. part of the good news is people see the bank active. the concern is we will see
slowing of the data. it's early days yet. it takes a while to measure it. so, my suspicion is we will see some weakening in the data, as the majority of members on the committee are saying. >> deutsche bank says it won't pay the $14 billion sought by the u.s. justice department to settle an investigation into the firm's sale of residential mortgage-backed securities. that is more than triple what some analysts estimated it could be. >> the $14 billion they are being asked to pay -- they are rebuffing for the time being. we are not going to be certain of an outcome until we are there. i guess investors will be looking at the kind of metrics that were applied to other banks that have settled similar cases. those indicate a fine of a much smaller magnitude. investors and analysts at this juncture --
but of course, we won't know that until they reach that agreement. >> if the settlement is close to the $14 billion, that's not great for deutsche's capital position. jpmorgan had a note yesterday that anything over $4 billion would need additional litigation reserves and capital. >> does the amount go down from here? they start negotiating with deutsche bank? >> they are taking a hard stance. they will not pay anything close to 14. the other banks have not had to do this in public. the other banks have had these negotiations, but they have not had to put up public statements saying we will not be anywhere close to there. it will be interesting how that changes the dynamic. i think you will definitely see it lower than 14, anything above four being an issue. that's a big gap. ramy: we will have much more on european politics later in the show, including exclusive interviews with eu and u.k.
leaders on the path ahead and what that bodes for business. plus, more fed talk in advance of week's critical meeting. but first, more of the biggest stories, and we dive into technology. samsung is taking a lot of heat over its exploding phones. now the south korean giant is taking big steps to defend their brand. this is bloomberg. ♪
ramy: this is "bloomberg best." i'm ramy inocencio. our global tour of the week's tops business stories keeps going, with not one but two stories that made news on monday, and for very different reasons -- one came together and one fell apart. mark: add another megamerger to the m&a graveyard. industrial gas giant linde has called off a deal.
why have these talks fallen apart? >> it's funny. on paper, they are saying there were issues of governance. but digging behind the scenes, sources are saying there were a variety of issues. one of them was, what kind of responsibilities would linde have in munich? there are always these political back-and-forth, with jobs, investments. it sounds like some of the labor reps were pushing back because they wanted to secure more operations in munich. >> another two companies agreed to merge. is this overall good for the industry? does this mean we are facing more years of downtrodden prices? >> i think it means it is good for the companies. by combining these two players, they are going to be able to cut out costs and get more purchasing power. they have talked about saving up to $500 million per year. that's why people like this deal. >> far from perfect. that is how the volkswagen ceo
described the carmaker's position before the emissions cheating scandal. >> in an exclusive interview, he told bloomberg there were profitability issues and overinvestment. >> there is still some skepticism, and certainly delivering results is critical, even without the crisis. there were strong results in the past. we were far from perfect. we had profitability issues. even without diesel, we are very honest about the shortcomings. >> how are they planning to get out of this crisis? >> i think there are two main initiatives here. one is a reorganization of the company to remove decision-making bottlenecks in the headquarters. they have already started to shift responsibilities from the headquarters to the individual brands and different regions. the other is the point he referred to in the interview.
it's the issue of overspending. especially the volkswagen brand. >> let's take a look at samsung recouping some of its losses on the market there in seoul. and of course, on the heels of its biggest plunge in years. they are trying to regain control of the phone recall crisis by giving the heir apparent a bigger role. >> co-vice chairman has been nominated to the board and will become more involved in strategic decision-making. he is been helping run samsung since his father had a heart attack in 2014. he is considered more globally minded and has been credited with partnerships with apple and google. now samsung is surging today, but only after suffering the biggest two-day decline since 2008, after u.s. regulators and the company cautioned users to power down their note 7s, amid reports that the batteries catch fire while recharging.
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 combined. >> central savings bank of china is seeking more than $8 billion in a hong kong ipo. it would make it the biggest this year. what do we know so far? is seeking more than $8 billion >> first of all, this is not a household name to you and i. it is not one of the big four or five -- >> it is huge, though. >> it is huge. it services half of the chinese population. they have 505 million clients in china. it has got something like over 40,000 branches. the terms of the deal, they are looking to raise $8.1 billion. it could be the largest ipo of
the year. 12.1 billion shares are on offer from between four and five dollars apiece. investors are trying to buy some of the stock. that is about 76% of the total. in terms of the schedule, we're looking at pricing by september 20 and trading by september 28. >> late last week, we learned that wells fargo fired 5300 people and paid $185 million in fines. employees were meeting sales goals by creating over 2 million fake accounts. the aftermath has dragged its ceo in front of congress next week. jpmorgan is now the largest u.s. bank after wells fargo lost $15 billion of market capital. this is not the first time there has been this sort of scandal in a large american bank. how does it stack up?
>> the thing investors and analysts are thinking about is this is the first time for him. it has really been described to us as a preeminent retail banker in the u.s., someone who has this halo effect around him and this is the first time he is joining ranks with his wall street colleagues. people like jamie dimon. this is the first time he has been caught in the same sort of water. >> has he accepted responsibility for this? >> not exactly. he did a media tour yesterday. he kept saying we. there 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. maybe he will do that when he gets down in washington. >> there is good news and bad news when you look at investors in italy's indebted bank.
you know it well now. the good news is, it has a new chief executive, a former cfo of the bank, marco morelli. the bad news, they are now without a chairman. >> it's a revolving door. we have mr. morelli on his way in and the chairman on his way out. 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. morelli, the former cfo at the bank, is 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. shares continued to rise in thursday trading. the iphone 7 is off to a faster sales start than usual. in the meantime, apple's competition may be easing. samsung is officially recalling about one million galaxy note 7 phones, after the consumer product safety commission found they could catch fire from a battery flaw. >> they handed apple a gift as the new iphone was launching. iphone and samsung, particularly in developed markets, 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. and again, that is coming at the perfect time for apple, coming off this nine months of unprecedented declining iphone sales.
ramy: welcome back. i'm ramy inocencio. under the new president, argentina has started to institute ambitious financial reforms. this week, the government invited business leaders to buenos aires to see the impact of those changes. bloombergs erik schatzker was there. in his exclusive interview, he asked the president how he plans to solve the chronic economic problems. >> you have accomplished much. you have settled with the holdouts, for example. you removed some trade barriers. you have liberalized the foreign exchange regime. and many other things, very important steps. as you point out, it's not quite
enough. you are seeking to do more. i want to know what more you can do practically, realistically. what can you accomplish? what is within sight? >> we are working hard to continue reducing taxes. we have launched the most important infrastructure program in our history. there is another opportunity there for the most important companies around the world. we need roads, trains, ports, energy, pipelines. we are starting to build them. because to increase our production, we have to connect such a huge country like argentina. we are working close with the leaders of the country, political leaders, unions, political leaders, unions, companies, to work under productivity programs. how can we reduce costs? how can argentina come back to be competitive? we are all working on that idea.
improving our ways of production, improving our education system. >> what is your top priority? something you hope to achieve in the next six months? what is at the top of your list? >> i have three main objectives -- reduce poverty. >> i am talking about policy. what can you do? you can't eliminate poverty in six months. >> that will take decades. i expect that within one decade, we will finish with poverty in argentina. >> that is 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. it is coming out of a very severe crisis and is our principal partner. this is another priority. >> one critical test of your credibility, let's say, and your ability to execute is the budget. argentina's deficit last year was 5.4% of gdp. the primary deficit, enormous. you promised to lower it. >> 4.8% this year. >> what about next year? >> we want to go around 4%. we have to go naturally, because 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, reducing inflation. we are cutting down inflation. we have reduced it to half of what it used to be. we are going to continue working to reach one-digit inflation in two years. we will cut the deficit. ramy: straight ahead, more compelling conversations with leaders in business and politics, including bob dudley and marc benioff. and controversial brexit advocate nigel farage.
>> there is a wonderful phrase. you and i were chatting about it, ticking time bombs in europe. from the broader perspective, where are the ticking time bombs? is it banks? is it leverage? is it those debt-laden companies? >> right, when i said this, i was referring to the companies that have been piling a 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, it is what made it interesting to us and still remains, is investors in europe aren't doing the hard work of
trying to dig into those financial statements and understanding the economic realities that lie beneath. meanwhile, companies are borrowing at extremely cheap rates. and these pressures just build up until one day, they become a problem. ramy: that was a legendary short-seller carson block speaking his mind to manus cranny. that was at the ubs family office summit in zurich. some prominent ceos also spoke frankly with us this week. let's begin with marc benioff of salesforce, who sat down with brad stone for an exclusive interview at the tech crunch disrupt conference in san francisco. brad: you've made $4 billion in acquisitions recently. why has salesforce been so acquisitive? how are you trying to position the company for the future? marc: we only buy a company when two things happen. it has to be a great company with great entrepreneurs and great technology, 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 started to happen that opened the door. the biggest thing is we got a phone call that demandware had an offer from another major software company. were we going to be part of that process? and we said yes. we love those guys. we love the e-commerce cloud. this is an amazing product used by so many of our customers already. the technology is just incredible, so we knew that was the right fit for us. brad: we want to talk about one of the deals you didn't do, which was linked in. you guys looked at it. microsoft acquired the company. going back, would you do anything differently? marc: i would do everything differently, but that goes in the category of you can't win them all. that is especially true when we are going up against microsoft, which has all the power and all
the money and all the resources and that monopolistic control. we gave it our best shot. we did not win and we wish them the best. brad: i want to bring up oracle. what does that deal do to them? are they a stronger competitor now? marc: i don't think so. i think oracle is making a desperation move to boost their cloud revenue. now they're going to boost cloud revenue and try to make his $10 billion goal. he still may not be able to make it, you know. erik: you've been among the most active among oil majors in green lighting new projects this year. are you done? or are you considering anything else? >> no, we have some more. erik: what are you thinking about? >> there is a big project in the gulf of mexico we are looking at. there is potential for gas offshore in india.
as a company, we are going to move more to natural gas and away from oil. part of that is the long transition we are going to see to low-carbon energy. we've got a lot of opportunities and the time is right. the cycles have been very low. the costs of some of these projects have come down the wide half. now is the time to sanction them. erik: will you greenlight mexico and india this year? >> very possible for india. we will have to evaluate mexico. it is obviously a great company that's looking for partners. we have sanctioned a very big project in indonesia for gas in asia. we have a whole series of these this year. we have to be very selective about our capital. we're not spending on things we don't think are really highly prospective. erik: drilling activity is picking up again in the united states. what impact is that going to have on oil prices? >> look at the supply and demand
balances. in our view, they are just about at the balance point right now. it is like the high tide mark. the price is a little volatile. i think we are in balance. i can see the price 50 for the rest of the year. then in 2017, a little above that, in the 50's. but there have been more than a trillion dollars of projects canceled or deferred in the industry. 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. ramy: global tax regulation has been a burning issue since european officials through a huge penalty at apple for its tax dealings in ireland. this week, francine lacqua spoke with the regulator whose commission made that decision. she asked about other u.s. tech companies that could be under scrutiny.
francine: the commissioner is also looking at online platforms. do you see antitrust problems in the way companies like google or uber operate? >> we have a number of google cases, actually three by now. because in europe, you are more than welcome to be successful and grow, and we will applaud you all the way. but the thing is, if you start to misuse your dominant position to prevent others from having the same fight for success, then we get concerned. that is the example of the google case. we think google is misusing the dominant position to promote itself, to stay where they are, and not to allow for others to compete with them in a fair way. francine: what about uber? >> uber is in between things. we are looking at it with my colleague for transportation and my colleague responsible for single markets. on the one hand, it's great innovation.
it is a better use of resources. on the other hand, there are issues comparing with sort of traditional transportation, taxis, that kind of thing. and of course, its taxes are being paid. francine: you're looking at the facebook whatsapp merger. you will soon look at microsoft. are social platforms a concern? >> our concern is if competition 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. facebook, because they are so dominant, is this being used to minimize your rights when it comes to privacy? i think it will be very interesting for everyone to follow and get the results of this inquiry. because it is a gray zone. the germans are looking at it
ramy: you're watching "bloomberg best." i'm ramy inocencio. britain's future was a topic of crucial interest to businesses and investors, and it was a central topic of discussion at the meetings of the european parliament and the eu council. when will negotiations begin? what conditions will be set? it's all uncharted territory. this week, we spoke with several key players in the exit process. francine lacqua caught up with nigel farage, former uk independence party leader, who remains a member of the european parliament. francine: you managed to push brexit through. any regrets? nigel: none. how can you regret taking back control of your own life?
this is where this project has gone wrong. what we signed up to 40 years ago, which my parents voted for, was to work closely with our neighbors, to have tariff-free trade. that all makes sense. this has evolved into a full political union, whose laws overrule our laws. what we said in brexit is very clear. we are not against europe. we do believe in making our own own laws and our own parliament. the key thing, and what was the greatest democratic exercise in the united kingdom, we have voted to leave this political union. that is the key. francine: it could take five or six years, maybe 10 years to leave the eu. that's a lot of uncertainty for the market. nigel: well, there is no reason why it should do that. under the treaties, established here in the eu, we give notice to leave -- francine: you don't have lawmakers in the u.k. that can deal with brexit right now. they are still recruiting. nigel: i'm afraid that's right. all of our talent in whitehall and our civil service has been stressed out.
we've got to recruit people. i don't mind the government spending a few months getting its ducks in a row, getting ready to start this process. i hope what you will see is article 50 triggered, probably in january, and we will be out of this in two years. >> can you see a situation where you could see yourself voting against article 50, if you thought parliament did not know enough about what you are stepping into? >> we will reserve our right to oppose, not that we don't respect the result of the referendum. obviously we do. but i want to set out those lines, that we maintain, crucially, market access and rights, which i did not say the first part -- membership in the european investment bank, we think that is important. these things are all actually quite possible, hence we are looking very closely at the norwegian model as well as talks with other countries. because there are many who want to have a relationship with the
european union who maybe are not members, but still want to develop it. there is still a big possibility. >> there won't be an off-the-shelf solution. it will be something bespoke. you were talking about using somebody else's model. >> it's learning the lessons from norway, not using the model, and maybe we can learn a great deal from norway. there is a successful situation. they have a strong democratic tradition. they have a huge and very effective welfare state and health service. so, the model of their socially-based economy is not that different from what we talk about in the labour party. >> we are waiting for the british government to form its own opinion and to raise article 50 and then start this negotiation.
which in a positive spirit, we regret the british people chose that. we know great britain will be important as a european partner. great britain will be a european country. no more in the eu, but european. what we've got to do for defense, we need to have that cooperation. >> commissioner, would you be open to a transactional deal, for the banks between the u.k. and eu to bridge that gap between when they leave and when a trade deal is put in place? >> we have so many agreements of all kinds that create that union, to get out of it will be very complex. it will be very difficult. and for us, it makes a package. >> how easy will you try to make this for the u.k.? i speak to ceo's on a daily basis in london who have to make daily choices.
>> this negotiation will go on for, i don't know how long. maybe two years. >> and not longer? >> it should last two years at most, which is quite a long time already, but which is also necessary because of the complexity of the challenges. what must be clear is as long as these negotiations have not ended, great britain is a member of the european union with full rights and duties. ramy: next week, the federal open market committee holds its september meeting. there is a low probability of a rate hike. passions are definitely high when economists and financial professionals debate the fed's next move. this is a taste of the conversation to get you ready for next week. >> i think the fomc keeps looking for excuses not to raise rates. and they did that at every
meeting all year. stan fisher in jackson hole had the same message. the time has come to start tightening. the people who don't want to tighten just don't see the adverse consequences of running with zero rates along the curve. >> let's talk about the consequences. where do you stand on that? where are they right now? >> there are two things. one is the inflation pressure. there is no doubt inflation is rising. if you look at core cpi, which is not the fed's chosen number, but it is up 2.2%. a year ago, it was something like 1.7%. it is beginning to tighten because the labor markets are tight and the product markets are tight. >> as a practical matter, you are the fomc, it's been a long time where you have really low rates. we really have not had a problem with inflation -- 2.2% inflation historically is not a problem.
isn't it rational they see that as an asymmetric risk? if they raise and they really hurt the economy, they will be blamed for it. >> absolutely. so they don't want to take the risk. but that is a political risk for them. at some point, they have to do what they are there to do. i think their strategy is to keep rates very low. even if they raise rates by 25, 50, 75 basis points over the next 12 months, rates are still going to be exceptionally low. there is going to be upward pressure on inflation. i think they are heading intentionally for a higher rate of inflation, so once they have gotten to an inflation rate of 3% or 3.5%, that's when they can jack up the short-term rates. why do they want to do that? so that if the economy turns down, they can cut those rates. right now, they've got no ability to lower rates if the economy goes soft.
>> i think there's no compelling case of any kind for a rate increase in september. we are looking at an economy where the number of hours people have worked -- total hours in the economy has basically shrunk in the last six months. measures of medium-term and inflation are stable or declining. actual inflation is below the feds 2% target. i can't see any case at all for a tightening. and i worry that the framework the fed is using really isn't a consistent one. they speak of a 2% inflation target. not a 2% ceiling, a 2% inflation target. if you're going to have a 2% target, sometimes you will be
above it and sometimes you will be below it. if you are in your eighth or 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. >> the problem is that the fed is managing the entire yield curve. and so we have rates in the intermediate to long term that are 300 basis points below what they should be. that is causing, in my opinion, all manner of problems in the investing world. >> we hear people talk about bond scarcity. do you feel that? do you see that? has your company actually witnessed that in this market? the issue that there are not enough securities out there for you to buy? >> we have $45 billion in assets. the scarcity issue isn't so important for us.
what is really important for us is the level of interest rate. when i talk about the level of interest rates, it is not that i'm thinking about our insurance company. i am thinking about the entire economy. the fed has embarked on 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 united states and around the world that we have ever had in the past thousands of years. i promise you, the economy isn't the worst it's been those past thousands of years. the fed has gotten themselves into a whole of zero interest rates and they don't know how to get out. >> i think the fed at some point will increase interest rates. this is been a topic of almost numbing boredom to me. [laughter] for years. >> for years?
>> for years. it's going to keep going on for years. you have one small increase in three years. it occupies more head space than almost anything i've heard about. >> do you try not to think about it then? >> i don't think about it much. because i know that the u.s. economy is not particularly strong. central banks, who are aware there is no fiscal cooperation in the united states for years. and so they are the only port of call. they are the only people who can do anything. they know if they miss-play their hand and accidentally 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 fiscally to stimulate the economy. if there are, the fed will have more comfort that it can raise
rates. anyway it goes, i think, the probability the fed does anything aggressive -- 25 basis points, 50 basis points -- is going to affect markets. but it's not going to affect the u.s. economy. ramy: of course, bloomberg will bring you live coverage and analysis of fed chair janet yellen's press conference on wednesday. follow all the developments on television and radio. this is bloomberg. ♪
we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorites, too. here is another function you will find useful. it is quic, which will take you to our quick takes, where you can get important context and insight into timely topics. 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. between economic woes, corruption scandals, and an -- a presidential impeachment, brazil is in a deep crisis. a new president has stepped into the spotlight and promised austerity measures. the question is, will be slow unraveling of the world's fifth most populous country come to a stop? this is the situation. by a vote in the senate, the president was found guilty of bypassing congress to finance government spending.
this paved the way for the vice president to serve out her term before the general election in 2018. but let's take a step back. in order to understand the situation now, you have to understand how it got here. that can't be done without talking about president da silva. a rags to riches story, she was wildly popular and became a symbol of brazil's economic ascent as one of the world's top exporters of commodities such as corn, oil, soybeans, and iron ore. she became the first woman to be elected president of brazil in 2010. during her presidency, global prices for raw materials began dropping. a corruption scandal paralyzed many infrastructure projects. how bad did it get? brazil's economy shrank 3.8% in 2015, the most in a quarter-century. now with her ouster, the president is promising physical austerity to try to right the
ship. but everything hasn't been smooth sailing. the presidency is strained by the massive corruption scandal involving petrobras, the state-run oil company. an investigation revealed a deeply corrupt organization and political system. it unearthed a scheme started a decade ago involving bribery, collusion, and kickbacks implicating petrobras executives and government officials. looking at big picture, there aren't many good guys here. 352 of brazil's 594 members of congress are currently under investigation for serious crimes. brazil's future is uncertain right now, with temer facing a tough task in stitching the country back together again. ramy: that was one of the many quick takes 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 will be all for "bloomberg best."
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