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tv   Bloomberg Best 2016 EMEA Year in Review  Bloomberg  November 27, 2016 6:00am-7:01am EST

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>> coming up on "bloomberg best," the stories that shaped the year in business in europe, the middle east, and africa. the brexit referendum took center stage. >> markets are pricing in we are staying in. >> prospects for u.k. outside the e.u. are incredibly bright. >> people understand that the decision with seismic consequences. francine: to the still uncertain aftermath. >> how do you regret taking back control of your life? >> the economic consequences of brexit will be more severe. >> this government is a
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pro-business government. francine: the financial sector suffered considerable pain. >> the sentiment is bad, evaluation is bad, and the results are really bad. >> there needs to be a cultural change. it is completely unacceptable. francine: why europe's central bank tried to ease the region into growth. >> this has changed from an external effects game to a truly domestic demand. francine: it was a year of turmoil in turkey, a year of ups and downs for oil, and controversy and regulation and transformation for saudi arabia. >> we are talking about the biggest economic shakeup since the kingdom was founded in 1932. francine: join us for a look back at 2016 on "bloomberg best." ♪ francine: hello and welcome. francine lacqua.
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welcome to this special edition of "bloomberg best." we will review the most important business review and analysis in europe, the middle east, and africa we brought to to you on bloomberg television in 2016. we start with one of the biggest stories this year, brexit. as soon as britain announced it would hold the june 23 referendum on european union membership, markets reacted and a fierce debate began. >> prime minister david cameron answering questions from lawmakers in the house of commons. he's been making a case for staying in the european union. >> is the brexit risk premium exaggerated? >> it seems to be a serious risk. it is not a central case, but we have been arguing for many months now investors need to take notice. >> obviously this has really enhanced uncertainty, and it will have a big impact on the market. and mark carney already recognized that today and said they are going to make plans. >> the chancellor outlined the
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budget for great britain. he revised down the growth forecast and warned of economic risk of leaving the european union. >> it had a whiff of preelection budget because it is a prereferendum budget. mark: the central bank voted unanimously to keep rates unchanged and highlighted uncertainty around the so-called brexit. >> this is the first time that the bank as a whole has expressed an opinion about how this will affect the economy. >> markets are pricing in that we are staying in currency markets certainly. there could be extreme volatility if we vote to come out. >> i do believe we have a big i believe that people understand it's a decision with seismic consequences, particularly economic consequences, and i cannot believe that people will shuffle this one off. although i do think there is a large number of british people
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who are still struggling to come to terms with what it's all about and find the claims and counterclaims confusing. ve campaigne lea lying to the british public of the risks staying in the eu? the prospects for the k outside the care -- thebly bright prospects for the u.k. outside the eu are incredibly bright. the risks of staying in our incredibly serious. >> we have had four budgets the last year and everyone of them the forecast have been wrong. why on earth would there be a recession? francine: investors pull out money. this is what the government -- i'm not making this up. this is what the government has to do. this is what mark carney is pointing to. >> a nice impartial man. francine: do you think david cameron regrets calling referendum? him think some close to
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regret it could i think he thinks it is something at the deal with and i have some sympathy with that. >> they are set to leave the eu following a vote on the membership june 23 next week. which number shouldn't we believe and which numbers shouldn't we? >> it seems pretty clear the numbers have made toward leaving . we are now looking in the internet polls around 48.5 to remain and 51.5 for leave. sonata large movement but clearly there. francine: the u.k. still digesting the news of the labor mp joel cox. both sides of the brexit debate suspended a second day. how much do we know when the campaign will resume? >> at the moment we don't know. both campaigns have taken to the sidelines today. the imf has delayed the report on brexit until tonight. a couple of polls do today are pushed into tomorrow. francine: the pound surges and
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campaigning resumes as we enter the final days ahead of the referendum coul. forecasterses and have been more confident the remain will be the case in the polls but the last 48 hours the remain camp does seem to have turned back a bit of momentum against them last week. on june 23, bk voted to leave the european union and shock some of the world others and rattled currency of financial markets. look at how bloomberg television cover this landmark event in global business. >> we are waking up to a whole new reality. it is brexit. >> these guys have been trading since 8:00 p.m. last night and and they started to see ticks down and cable and futures and ticks down and u.s. futures. admin that, and accelerated at 2:00 a.m. after it started coming out that the leave camp was getting more than the remain . >> financials will be absolutely
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front and center this morning. >> david cameron is making an announcement he will not depart straight away but the next three months. i'm trying to work out which is the more significant event, the fact that article 51 not be traded instantly but three months before the next prime minister does it. francine: stocks are plunging and the pound at a 45 year low and break away from the 50 and a little bit of reach race meant having to do with the safety blanket of the central bank and it is a brutal move for banks and homebuilders. i want to show you banks because we are seeing losses we have not seen since the financial crisis. if you look at the volatility, we have not seen it since at least 2008. >> they were trying to the leverage a lot of the clients . the problem is that most investors were wrong going into this. guessing and bedding and investing in the fact that the remain camp would win.
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they had to unravel this. we are talking about margin calls and stop order setting off and everything was down this on morning. is steering the ship of the markets and it is mark carney. 2008-2013, he ran the central bank of canada. many said he was responsible for canada avoiding many disruptions others had. the phrase he used the bank of england will not hesitate to take action, a quarter of a trillion pounds is available. francine: this is pounds. you can see how it was crushing the financial crisis. i know banks are not systemic and there's a safety blanket for central banks, but you can see the movement and panic of traders analyzing the results at the 30 a.m.. -- 3:30 a.m.. this is chaos. does it feel as bad as 2008? >> it is difficult understand
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why a lot of smart money was betting on remain when the result is substantially in favor of brexit. i'm not surprised by the fx market this morning. know european leaders are crisis mode after this vote and they are locking themselves in emergency meetings probably across the region. will this lead to a more fractured europe? >> the exit is the worst possible scenario. i believe honestly much worse for the u.k. than for the european union. >> is this the beginning of the end of the e.u.? >> there's no doubt. i've been warning about this for many years now that the european union is in a state of disintegration. it is a monumental event in u.k. history, breaking 40 years of integration into the eu project. >> this will not change fundamentally the special relationship between the united
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states and great britain. >> it is a terrible outcome in all respects. it did not have to happen. francine: that was just the initial moment of europe's new reality. later in the program, we will look at how the brexit story has played out since both economically and politically. when uncertainty was the dominant theme, we will retrace the roller coaster fortunes of oil markets and look at the volatility and instability in turkey. but coming up next, 2016 battered many european banks. our review continues. this is bloomberg. ♪
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francine: officials have agreed to to create a fund to support the banks and it is hoped to tackle 360 billion euro in bad debt italian banks are carrying. >> it is going to address the
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two fundamental issues hitting the italian banking system right now. the need by some banks to raise capital and to try to reduce the level of nonperforming notes. alix: italy said to consider capital injection. italy wants to save the banks and the e.u. has ruled you may not be able to do that. >> jpmorgan said the italian banking issues are political and not financial. is this a realistic assessment? >> i'm sure it is to some extent, but you have the constitutional vote coming up at the end of the year and he needs this deal to be in place, and against that you have the fact the state aid is impossible under the e.u. laws. francine: the struggles of italian banks were one aspect of a very difficult year for the european financial industry. there were some bright spots, but overall much more pain than gain. let's look back at some of the
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most challenging moments for some of europe's biggest banks. slumpedche bank shares yesterday after it became the biggest lender in four years to reassure investors that it has enough cash to pay debts. francine: it was triggered by a note that question deutsche bank's ability to pay cocoa bonds. it is a type of debt that if things go badly that they convert into shares. >> i think this is more about cash than the bank running into genuine financial difficulty. it was a matter of did they have the cash flow to pay them and that is why they got the note to calm investors because i was getting calls from people, saying are they going to raise more capital? >> credit suisse has announced it is targeting cost savings of 1.7 billion swiss francs cutting an additional 2,000 jobs. credit suisse is one of a number
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of banks struggling to boost profits. >> were you surprised by your illiquid positions? >> yes. >> when did you find out? >> january. >> why was it not clear before? >> it was not clear to me or my c.f.o. who said it on the record and to many people inside the bank. that is where i said it. there needs to be a cultural change. it is completely on acceptable. francine: what will it take for investors to rerate european banking stocks? >> i think a view that we now have predictability in how the regulators will deal with banks going forward. that is probably the most important thing. we need to believe we are at least at the beginning of the end of the regulatory environment for european banks going forward. francine: deutsche bank says second quarter profit was almost wiped out and deutschebank set aside money to cut jobs. >> sentiment is bad and evaluation is really bad and results are bad, so we were expecting some pain because there is a restructuring and turnaround and it is painful but
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the rewards in terms of capital and balance sheet strength are not there. mark: shares of b.n.p. pair and credit suisse and lloyds all falling after announcing cost cuts. why did the shares decline? >> it was a tale of lowered expectations and they beat slightly against the lowered expectations, but certainly there is still issues across the board. credit suisse r.o.e. was 1%. lloyd's under 10%. >> deutsche bank says it won't pay the $14 billion sought by the justice department to settle in investigations into the firm sale of mortgage-backed securities triple what estimated could be a worst case. the 14 billion they have been asked, we are not going to be certain of an outcome until we are there. >> that the settlement ends up anywhere close to the 14 billion, that is not great for georgia's capital position.
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jpmorgan had a note yesterday anything over 4 billion would need additional litigation reserves an additional capital. the european central bank also went through an eventful year as the economies remained sluggish despite a massive sting is program launched in 2015. to2016, the ecb continue refine its policy toolkit in an effort to get growth going. jonathan: the ecb has cut all that's interest rates. qe has been boosted to 80 billion euros a month. they've also increased the assets available to buy to include non-bank corporate debt. >> the way i read it is the following. in the last few months or years so, it has been an ethics game. it is about seeing if you can weaken the currency and it's
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changing, number one, thereby nonfinancial corporate. so they're going straight out to help that sector. and really importantly, they are now making money and even may be negative rates for banks to borrow so long as they are like. it has changed from internal ethics game to a truly domestic demand lending game. david: the european central bank has plunged into the corporate bond market. according to people familiar with the matter, some of the initial purchases very from several european utility companies to ab inbev. jonathan: it leaves all three main interest rates unchanged and all asset purchase program unchanged. the bank isghi says ready, willing, and able to act in the aftermath of the brexit vote. what signal would it send to markets if mario draghi had announced changes? >> i think if you had announced something more meaningful, that
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would have suggested that the impact of the k decision to the leave the eu was already being felt in the european economy. you rate decision comes down in line with expectations, read and financing rate is zero, and deposit rate -40 basis points, and marginal facility is unchanged at 0.25%. the ecb says qe will run throughout march of 2015 or beyond. what do you make of that? >> the fact there is little volatility in the market is allowing him breathing space. he wants to keep his powder dry. jonathan: as we await this ecb rate decision, the major estimate is for rates to remain unchanged and a company unchanged with a deposit rate -40 and margin lending activity staying at 0.25%. no big surprise. what they did not discuss is the extension of qe beyond march. they didn't discuss that horizon at all.
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they did not discuss tapering or quantitative easing, leaving the market wondering what did they discuss and that in that meeting? >> despite headline inflation picking up, because of the contribution from energy surprises, there is no convincing evidence that underlying inflation is on an upswing could that is the bottom line. go back to the mission. my main take away is nothing at this stage. we will wait for the forecast and projections. december is where we are going to discuss. our 2016 coming up in year in review, turkey has been a financial and political hotspot. we will revisit of all tall year and visit with the president. -- a volatile year and visit with the president. this is bloomberg. ♪
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francine: once again europe wakes up to the threat of
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terrorism and once again in belgium and we have to try to understand the scope of what we understand are coordinated attacks and how big this network is. >> this is really the first large-scale terrorist attack, the largest terrorist attack that has taken place in this country since the second world war. >> our top story terror returns. france extended a state of emergency and will deploy 10,000 members of their security forces after bastille day attack in nice killed at least 80 people. >> france has all those conditions to remain the center of european terrorism the european terrorist threat. it is going to get to a critical mass among people who are vulnerable to radicalization to attack france now and i think that is the conditions for that are not likely to change. francine: somber memories with violence in brussels and nice underscoring instability.
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that marked the year in politics around the world. one nation that faced many crises of instability in 2016 was turkey. political upheaval came to a head in july with an attempted coup against the erdogan government, sending currencies and credit markets reeling. here's a look back at turkey's turbulent year. turkey's prime minister is expected to step down this month after losing a power struggle with president recep tayyip erdogan. the tussle at the top has seen turkey stock market plummet. how worrying should this be for investors? erdogan madect with investors is unraveling a little. he promised them stable economic management, and they have been relatively happy in the policy makers. in return investors have turned a blind eye to some of his geopolitical adventures in that part of the world and we are
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seeing part of that contract coming undone. >> we have breaking news out of turkey, reports of shots fired and helicopters flying overhead. the country's prime minister saying that was because of an uprising in the army ranks that was being quelled. the prime minister saying it has been thwarted or is in the process of being thwarted but it is not a coup. >> many people are saying this is erdogan's chance to galvanize power, even more so in a presidential system. >> that is what erdogan has wanted for a few years now and he changes the parliament from a parliamentary system to a presidential system where he is the dominant person. he holds the lever of hours in his hand. >> is turkey and trouble right now? >> know, given the level of uncertainty. >> more repercussions in turkey following the failed coup. s&p has downgraded its rating on the country to double b from double b plus.
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s&p also cut its outlook for negative.-5 >> erdogan taking further action chairing a three-month state of emergency. what is it like to invest in places with the rule of law? doesn't that apply to turkey? >> it applies to the extent the government wants to apply it at this francine: let's move to point. turkey's central bank which is moving to add more stimulus to its economy. it cut the overnight lending rate for a six months by 25 basis points to 8.5%. >> many analysts expect them to keep cutting rates as long as the global environment permits. >> earlier today the central bank cut interest rates. are you happier with the current level of interest rate? >> i see it as a study, careful, and balanced cut.
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because it is not right to make sudden moves up or down that could contain some violence that could create a tremor in the economy. but i believe it will be beneficial to continue this steadily. and right now, this new administration of the central bank, since they took office, they have been carrying out the cuts, taking into consideration especially the interest rate policies of the government. and i think this is an important signal, especially for investors. on oure: still to come "bloomberg best" year in review, we head to the middle east. guy johnson follows the drama of opec and markets as well as saudi arabia's vision 2013 overhaul to move the kingdom away from its dependence on oil. plus, much more on the repercussions of brexit and
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bloomberg's exclusive interview with vladimir putin. >> despite the criticism of our western partners, we are developing -- >> this is bloomberg. ♪ . wow, x1 has netflix?
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. ♪ >> welcome back to this special edition of "bloomberg best: year in review" in business across europe, the middle east and africa. i am guy johnson. let's focus now on the middle east. the year began with optimism that the oil market would rebalance by the middle of 2016 and early on producers found themselves facing a supply glut and price plunge. >> more than 100 million wiped off the 61 company bloomberg world oil and gas index as it hits the lowest level in more than a decade. wti crude at 12-year low.
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>> investors close to throwing in the towel? hedge funds have cut their bullish bet to the lowest in -- since 2010. are we close to that point or not? >> we are starting to see the conditions for a bottom. but we are not there yet. >> what kind of oil price do you need to break even? >> at 60 we can balance the books effectively. >> if you had to put your money on a number. >> hopefully we don't. >> the price at the end of the year would be what? >> 48. you can come back and kill me because i'm sure i will be wrong. francine: the energy ministers of saudi arabia and russia agreed to freeze oil production in a meeting. the markets were disappointed. >> the market wanted a cap that was probably too much to ask for the first meeting of these two countries publicly in a month. >> the meeting of top oil producers ended with failed agreement. no deal. we are seeing crude and brent tumbling this morning.
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>> what happened in doha and are we ever going to have an agreement between the two countries? who is going to give in first? >> cartels require a degree of trust and there are many things between saudi arabia and iran but trust probably would not figure on the list. >> brent crude about $50 a barrel, dropping u.s. stockpile spurring the latest with the domestic drops. >> the catalyst seems to be the stockpile data we got from the u.s. showing a much higher than expected cut in stockpiles something like 4 million barrels. however you have to wonder how much further that rally can go ahead of the opec meeting next week. seems at least from the gulf side we are seeing a continuation of the strategy of maintaining market share. >> wti brent falling today and opec oil ministers failing to agree to an output limit. >> one thing they agreed on is new secretary general.
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that is a positive. they have been bickering about that for four years and decided that is muhammad the nigerian front-runner. francine: cutting the estimate of oil oversupply seeing the markets balance in 2017 and cut the estimate of oil oversupply. >> our plan is conservative. we talking 40 this year and 50 next year. david: oil is on a trend up. it was a bear market three weeks ago. it was incredibly short and we have had a complete turnaround. what has happened? lots of people including the saudis are talking about a production freeze. >> saudi arabia and russia have agreed to ensure oil market stability for the leaders of the two biggest crude producers stopped short of
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offering detailed proposals. >> they need to cooperate to have stability. what it will come down to is iran because the russian president made it clear that iran should be exempt from an agreement until it reaches its pre-sanctions level of output. francine: opec agreed to cut production for the first time in eight years. >> it is opec managing the market and opec it is a surprise and very big change for the oil market. mark: the world energy congress getting under way in istanbul and vladimir putin says he is willing to consider freezing or even cutting oil output in cooperation with opec. >> resilience of non-opec supply has been a headache for opec. they had to bring russia to the table to carve something out. david: in the past when opec has been effective it is because of saudi arabia. they have driven it. do they still have the wherewithal and power and influence to drive a deal? >> it is a two-way street. it is not clear-cut how it will play out but there's no question saudi arabia can't survive on
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$50 oil. guy: against there back drop of crude's uncertain future the kingdom of saudi arabia began a sweeping transformation of the economy with programs and reforms called vision 2030. the ultimate goal to reduce dependence on oil and stimulate domestic and foreign investment and diversify revenue. the first hints of the plan began to surface in late january. >> saudi arabia is considering an i.p.o. of the saudi oil company. they have ruled out selling reserves. >> one option is selling off a stake in the downstream operation that is code in the oil industry for refining. the other would be selling a stake in the parent company. both options still on the table. >> saudi arabia has big plans to deal with declining price of
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oil. create a two trillion dollar mega fund. in an exclusive sitdown with the crown prince we got the details on how saudi arabia wants to evolve its economy. >> he has an obsession about moving the saudi economy away from oil and basing it around something new. this $2 trillion fund into which aramco will go. it is an amazing thing. it is enough to buy google, microsoft and the alphabet lot of them. warren buffet. and they would still have change to spare. >> what is the latest on the
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i.p.o.? >> it seems to be going forward. there's been a lot of skepticism about whether the saudis are for real about this. they are bringing in jpmorgan what seems to be the lead banker on this and underwriter and michael klein a longtime energy and industry banker, investment banker at citigroup for a long time. >> this is a strong team and more evidence that the saudis are serious about doing this. probably before the end of 2017. mark: all eyes on saudi arabia officials unveiling a blueprint diversifying the economy of the country. >> we are talking about the biggest economic shake-up since the kingdom was founded in 1932. they will list the country's oil company and take that money and drive sovereign wealth funds to use to diversify away from oil. they will roll back subsidies an increase taxes. francine: saudi arabia has approved a plan to cut public sector wages and subsidies by 2020. future,of its post-oil the strategy aims to curb public debt which the kingdom sees surging to 30% of g.d.p. from less than 8% now. >> the nuts and bolts two
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numbers 7.7 and 30% and debt load and 45% of the nation employed by the government to 40% employed by the nation. cutting subsidies and boosting the non-oil revenue. that is the key to this deal. >> saudi arabia will hold investor meetings in london, los angeles, boston and new york today as it prepares the first foray into the international bond market. >> saudi arabia is the largest economy in the middle east planning to come to market with $10 billion to $15 billion making it the largest bond issue from the middle east ever after qatar's 9 billion. mark: saudi arabia is going on a sales spree to raise $17.5 million to shore up the finances after the slide according to people with knowledge of the offering. saudi receiving bids for as much as $67 billion beating argentina's $60.5 billion in april. >> the bond issuance is very
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much like an i.p.o. of saudi aramco because the economy is based on oil. this is the first step and aggressive step into diversifying outside of the oil space and the bonds themselves are really just sort of a faint for saudi a feint aramco that they will go to in order to increase their capitalization or recapitalization of oil asset. guy: up next on "bloomberg best: year in review" the thorny business of regulating e.u. competition and complex task of steering the u.k. toward and actual brexit. >> identification of the goal and time line would be helpful. >> this is bloomberg. ♪
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♪ >> the european union took another shot at a tech shot over the android software saying google's restricted contract with makers of tablets and phones. >> we are seeing the european commission looking at google and could order them to change things. they can and have ordered microsoft and intel a huge amount of fines and we have seen billions. >> truck makers agree it pay eu regulators a record $3.2 billion fine for fixing prices over 14 years. >> it is a very big fine but we are talking about a very damaging cartel. mark: the european competition commission has ordered apple to pay a record tax bill. how is ireland responding and how is apple responding? >> there is a massive shock here around this figure.
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>> they are appealing it because we don't accept that the irish authorities did anything improper or illegal. >> ireland has 140,000 employed by u.s. tech companies. the risk is those jobs start to be put at risk and ceases to be the automatic place where american companies might go. >> an unusual moment u.s. saying it doesn't want to collect and ireland doesn't want to collect and e.u. saying you better do it. >> in europe you are more than welcome to be successful to grow to be big 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 success then we get concerned. guy: 2016 has been busy year for guy: 2016 has been busy year for
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the e.u. competition commission and with political populace movement reshaping trade the commission will play a significant role in 2017. now back to brexit. after the sudden shock of the referendum investors and policy makers found themselves in uncharted territory. here is a look at some of the market action and ensuing reaction from the second half of the year. jonathan: june 27, 1985, that is how long you have to go back to find sterling at these levels a fresh 31-year low on the cable rate at 129.80. >> funds frozen and investors seek to dump real estate holdings in the wake of the brexit photo.
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-- in the wake of the u.k. brexit vote. three have suspended trading in at least 5.7 billion pounds. >> the panic is spreading. you have more than half of the real estate fund in the u.k. by value frozen in four days. it is incredible. >> how much will commercial property assets drop? can it touch the 2007-2008 level? >> i don't think so. we are in a very different environment. >> britain's prime minister is pulling up to 10 downing street her future home. she is 59 and the second woman to be in the job. margaret thatcher was the first. the former foreign secretary has been appointed chancellor of the exchequer, the finance minister and he's been in the parliament in the u.k. the last good 20 years. francine: i'm guessing florence johnson is back. how did that happen? >> a few days ago if you asked what boris johnson will do i think everybody outside of 10 downing street would have been scratching their head yet he is the foreign secretary. >> the new brexit czar david davis. >> it applies and always been along those lines. boris johnson as well. they are all from the liberal
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end of the brexit movement and that they are all people who one of the main reasons of ditching brussels was they wanted to think britain could survivor as an independent nation. >> what is the path you can take to assist prime minister may to move the united kingdom forward in their negotiations with brussels and europe? >> clarity of intent. rapidity of execution. identification of the goal and time line would be very helpful. jonathan: the bank of england cut rates to 0.25 and expanded q.e. by 60 billion pounds. they will buy corporate bonds. mark: why would they overdeliver because it brought out the sledgehammer. >> the economic outlook has deteriorated and a central case is it could be a mild recession type of environment so it makes sense to act as quickly as possible and as they have done today to overdeliver. jonathan: import cost jumping
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and that is the story in the data this morning. >> unsurprising that number up 3.4% and no surprise given what we have seen post the brexit and pound plummeting. >> so far this week we have seen data on consumer prices and jobs and today we got retail sales that surged 1.4% in july as british consumers seem to shrug off the brexit anxiety. >> it has gotten in the mindset and they thought would be quickly bad and we see the pound going up. mark: the u.k. p.m.i. released we have gone from 47.4 from 52.9. >> i just don't know whether i have learned anything. that tells me the effect of the referendum will come through as a result of long period of uncertainty why we hash out a deal and we should not expect anything that happens in the first
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three or four months to tell us anything about anything. >> you managed to push brexit through. any regrets? >> no, none. how can you regret taking back control of your own life? francine: we are hearing that it could take five or six years, 10 years to leave the e.u. that is a lot of uncertainty for the markets. >> there's no reason it should do that. >> can you see a reason to vote against the triggering of article 50 if you didn't know enough what you are stepping into? >> we would reserve our position and rights to oppose. not that we don't respect the result of the referendum. we do. but i want to set out those lines that we maintain market access. >> my raw view is we should be ending up with a softer brexit than a harder brexit and economic consequences of a harder brexit will be more severe. >> the pound is down to a 31-year low as they brace for a hard brexit.
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we trade this morning around 127. how much lower could we go? >> it will be a bumpy ride. investors are getting spooked. >> they listened to may's speech and heard a voice that sounded more critical of business than pretty much anything we have heard a long time. is this a government that is antibusiness? >> absolutely not. it is a pro business government and supportive of open markets, free markets open economies, free trade. and -- but we have a problem of -- and not just british problem -- it is a developed world problem of in keeping out populations engaged and supportive of our market capitalism economic model. mark: we await the u.k. numbers. it is the biggest piece of economic data since brexit since
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the day after brexit. whoa, a bit of a surprise. to the up side. the economy continues to surprise growing by .5%. francine: breaking news, last six minutes u.k. must hold for starting the two-year countdown brexit rolled a panel of judges -- so ruled a panel of judges setting up a confrontation at the supreme court. this is significant but we could end up with a situation where it is a harder brexit. >> could lead to a harder brexit and they could be straddled with this and teresa may could push it to parpliament. francine: what does that mean? mayhem for the markets? >> it is more uncertainty. >> the chancellor of the exchequer has been on his feet.
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short statement, the big headline number out of this is downgraded expectations for growth next year. this didn't feel like the big stimulating budget many predicted they would need post brexit. >> we are not talking about a economy in recession. the strength of the u.k. economy much better than many economists predicted would be the case after the brexit vote but that was just the brexit vote and not brexit. we are still looking ahead to march of next year which is when we are expected to see article 50 triggered. ♪
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♪ >> a new report says world leaders, criminals and celebrities used shell companies to hide wealth. according to a journalist at least two billion dollars in transactions involved people and companies linked to vladimir putin. they say it comes from files from a law firm in panama.
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>> that will get you close. it is 11.5 million from the fourth largest offshore law firm. >> i never read anything related to mr. putin directly. he was never involved. sorry to say. >> in english. [laughter] guy: in europe the middle east and africa 2016 was a year in which the unexpected seemed to happen as a matter of routine. let's wrap up our review of the year with a conversation with one of the world's most unpredictable political figures. in september bloomberg editor in chief john micklethwait sat down for an exclusive interview with the russian president vladimir putin. john: have you yet decided if you will run in the presidential election of 2018?
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mr. putin: we will have the parliamentary election and hold election to see the result. but after this it will be another in almost two years so it is too early to speak about this. in the rapidly changing world it is damaging to talk about this. we need to work to make sure plans we set ourselves are completed. we want to develop the country and increase the country's defensive capabilities. depending on the solutions to the tasks then we can see how to organize the presidential election campaign in 2018 and who should take part. i haven't yet made a decision for myself. john: do you think russia is getting easier to run or harder?
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putin: it depends on when. nicholas ii had a terrible time? john: in your time has it gotten more difficult? putin: i think it is more complicated because despite all the criticism about western partners we are developing processes of domestic democracy these elections will be significant and improve this year. there is a practical dimension. we now see the united russia party and the people are asking what is going on, what happened? it is a proactive election campaign and they are taking part. they are all in the media and
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newspapers. what do they have to offer? they all criticize authority. they meanwhile don't say how to make things better. there shallow views are fairly realistic and sometimes totally unfeasible. then they look great on the television and criticize and pour scorn on the ruling party but i don't think they are ready to take responsibility for taking some necessary but ultimately unpopular decisions. guy: that concludes our special edition of "bloomberg best: year in review" in europe, middle east and africa. you can find more stories and analysis and interviews in 2016 on bloomberg.com and all the latest business news 24 hours a day. thanks for watching. i'm guy johnson.
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this is bloomberg. ♪
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announcer: from our studios in new york city, this is "charlie rose." charlie: bill gates is here. he is the microsoft cofounder and cochair of the bill and melinda gates foundation. his latest mission is to invest his way out of our climate change challenge. he has gathered investors to put billions into clean energy research and development. the group is known as the breakthrough coalition. it includes jeff bezos and jack ma. they commit government to double funding.

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