tv Bloomberg Best Bloomberg January 13, 2017 8:00pm-9:01pm EST
>> coming up on bloomberg best, the stories that shape the week in business around the world. trump transition rolls on as he president-elect meets the press, and hearings heat up on capitol hill. place is n put into basically trust donald. >> he's not moving where he needs to move. contentious is an understatement. >> brexit worries bring down the pound. china causes global concerns a bumpy re seeing is road. the game could change for drug companies. leaders tell us what they are expecting. >> at the end of the day it's bout what value is being generated for the patient.
we have to be careful not to the bath aby with water. >> and more political pressure, explain how they plan to steer forward. >> we have more in common with administration and the we have at ect than odds. >> eventually good paying jobs helps my business. straight ahead on bloomberg best." hello and welcome. this is "bloomberg best." of the most eview important business news and analyst from bloomberg television from around the world. let's start with a day by day look. on monday the spotlight fell on once again with
volatility. $41 lugged by another billion last month as the yen tumbles. tools. have >> how much more willing can they let these reserves drain? they h, you can see that are using -- they have acnothinged that in the reserve they did use their foreign exchange pile to ind of defend the currency but they are also increasing the capital controls so you can probably expect more capital controls so they don't have to much of the reserves going forward. you can only go so far on both fronts, right? >> without hurting confidence. >> right. let's look at the numbers. the reserves pile fell by billion u.s. dollars. it's getting down to that three trillion threshold. trillion in june 2014. 10 innovate quarters now, the dwindled. >> the pboc defending that $3 line?ion >> well, finally china only has
$3 trillion. been talking about this nefficiency of four trillion or reserve and ridiculous developing country financing -- [inaudible] down.ow it's i think from long run trend this is a good news. measures ect further to contain the capital outflows? >> i think the market is respond, so from that point of view, i don't they will go further on that. >> china's reinflation stories gets a lift again. cpi study about producer prices overshooting. >> it was just a few months ago like yesterday we were
talking about continued persistent deflation at the now four te but straight months of inflation, faster than expected as well. he main reasons, commodities rallied. oil and iron ore and other commodities are up. don't make too much of these numbers. grabbing eadline higher expectations, but keep in mind a year ago prices were down same.ost the so over a two-year period actually prices are unchanged, so what looks like a big re-flation is not the beginning rising inflation, inflation, rising price pressures. >> the flurry of confirmation today on icked off capitol hill beginning with jeff sessions, the nominee for attorney general. hearing and it got off on a rocky start. give us your highlight. you most surprised by in today's hearing? contentious is an understatement. several protestors interrupting senator jeff sessions hearing here on capitol hill to lead the of justice.
>> i put the question to spokeswoman flores about whether or not sessions would weigh in on the at&t time deal and what she told me is he would defer that to the the assistant attorney general at doj with regards to acquisitions and mergers section of doj. so, you know, if you're in the you're community, and watching today's hearing, the takeaway is that sessions will critical of this deal or of other mergers and president-elect trump has been, and the facts that i heard from the spokeswoman that sessions did all in k to trump at their meetings about time warner at&t specifically. >> president-elect donald trump ending the first news conference president-elect. the first news conference he's given in almost 170 days. takeaway as your main from the news conference? >> this news conference was originally promised about a to be specifically
focused on president-elect's conflicts of interest in his big ess and that was a takeaway from this, was he finally addressed that. that was one big takeaway. was just on russia, that he did acknowledge really for was irst time that russia responsible for hacking the dnc. >> what do you make of the plan laid out by the lawyer that said, you know, he wasn't going to basically have anything to do with the trump organization? into place they put is basically trust donald and trust donald's judgment. none of the en steps that trump's predecessors in the white house have taken to ake sure the president is insulated from conflicts of interest, an actual blind trust divest. of assets that could create conflicts. >> he's not moving where he needs to move. that is, we need to have him divest. he needs to get rid of his and he needs ests to put them in what's called a blind trust. > so you don't buy when it his attorney just said it would be
impractical to have a blind trust? that? your response to >> it's not impractical. people do this all the time. biotech ceutical and stocks took a dive when donald trump commented on the industry's drug pricing methods earlier today. they are getting away with murder. >> if you had any doubt that donald trump still had the -- have the power to move markets anymore, in the span of a couple of seconds he surprised at this press conference and said that the pharmaceutical industry has been with murder an promising to have the u.s. government negotiate prices on behalf of consumers. it just absolutely destroyed the nasdaq. biotech index, the index of big the pharmaceutical index, as they reacted, they thought trump would be friendly to drugmakers, hillary clinton and sanders were the ones going after the industry. pro-business ke a kind of guy. it's not the case. he's a populist. meanwhile on capitol hill tillerson continues to testify before the senate foreign elations committee on his
nomination to be secretary of state, in the trump administration. of russia and the u.s. policy under a trump white up e has continued to come and i think what we're noticing tillerson is ex looking to win over the support of republicans like senator john mccain as well as senator graham the type of republicans who, uite frankly, are a little bit skeptical of tillerson a's ties to russia. i would also note that tillerson on capitol said ill today that he actually supports the transpacific partnership and would want to perhaps ok at it and reform it but that's different from trump who said he would oppose it. decline ever in fiat chrysler shares listed in milan. to have alleged diesel cheating by fiat chrysler. notified them of clear air act violations. hares fell as much as 16%,
barely above that now. >> compare this with the volkswagen story. allegations are covering around 104,000 vehicles. >> it's much smaller but that mean it couldn't do a lot of damage if fiat chrysler ends up being guilty on this one. saying that the devices they have in there did not cheat. they are going to fight this. they are going to continue to work with the epa. there are some very specific known that need to be before you can really look at how big of a financial impact this would have on fiat chrysler. the epa is not seeing these defeat device that is basically test.d emissions what they are saying is there were eight devices on these their software devices that the company didn't disclose. that is a fineable offense, not isclosing those devices but if they didn't cheat, then they wouldn't necessarily have to be replaced in people's vehicles, fines would be much smaller so before you start to look at this as something on the of volkswagen's $24 billion cost it has to be known whether or not fiat chrysler and we just don't know
right now, and the company is certainly defending themselves there is no at wrongdoing here. >> three of the major banks out quarterly results this morning. banc of america revenue missing estimates but fixed trading was up by 12%. j. perform moving profit 31%, wells fargo falling 5.4%. >> looking at these three sets going ings, if you were to give us one headline that you think summarizes the most important point what would it be? >> i think the most important thing that i have seen this morning is the share repurchase from banc of america. going into this earnings season, the stocks have had a huge run. investors are looking for signs optimism. i think that's a signal from banc of america towards the future. fourth quarter numbers, everyone is focusing one of at tends to be the more volatile items, setting the run rate going into next year, there are more questions answers just because there is so much we don't know with regard to regulation, tax policy interest rates and those
really the key drivers, not just few 17 but over the next years. >> we have an inflation story that began last summer. rally, ad the trump that's fueled the next leg up in bank stocks as well. which bank is better set to capture that story because there to me, the more nimble j.p. morgan on the one banc of america with this huge deposit base ready to take advantage of the yield curve. which is it on balance? if you look at the overall, return on equity, that's the key metric. j.p. moving and wells fargo still leading. wells fargo despite all the on bles, a lot of focus their sales culture and going banks but still these earning relatively higher. "bloomberg ad on best," deliberating over two mergers.inational discussing some of the regulatory decisions in 2017. plus more on the hot-button issue of drug pricing. s of the world's top
>> this is bloomberg best. ckee.ichael m let's continue our story. in the uk where prime minister may is preparing to negotiate britain's exit from the e.u. and this week a so-called hard brexit appeared to have an pound.on the >> theresa may has signaled the regaining control of immigration are the brexit priorities even if it means leaving singling markets. "we rime minister said, will be able to have control of our borders, control of our
the best we still want possible deal for uk companies to be able to trade in and ithin the e.u." >> we want to go straight to talk.berg and >> it's looking negative technically. only has cable broken that been t at 122 which had like a double low in the last couple of weeks since the recovery after the flash crash we're seeing hat the bloomberg pound indexes also ward ng its clean nice upward trend that it had since the flash crash. that's even more negative. there is a dollar uncertainty. after may's bad comments. >> japanese drugmaker takata its aceutical will expand footprint. a $4.6 billion deal that it of cts to close by the end february. the biggest move since 2003. if you would ough
the math that it took? at product by k product, as well as the promisingyou say, how this product is. product. promising >> the lung cancer drug? >> lung cancer drug. we believe it can be the best in class, we believe it can be so that's billion, the math work. >>product. >> the lung you can justify the. latest big business figure to roll up to trump tower in manhattan. the president-elect, discussing u.s. china ties. creating a million new jobs in the u.s. over the next five years. promised to donald trump for creating a million
jobs is based on the assumption they are going to track one million small businesses, brands, on to the platform and if each of them can create one then that brings it -- >>. [inaudible] think about it maybe a lot of them are already doing now, what we ight know is they are selling 7,000 brands that selling on the platform. come into direct competition with ebay which has 10 million sellers so there will a lot of overlap in the space. > it's making a big bet on brick and mortar. the e-commerce giant is looking to buy out department store for as much as $2.6 billion. physical alibaba's holding in retail. growth beyond a slowing online business. market is muchil more fragmented and much less the u.s. market and they see an opportunity here with a couple of retailers that try to e invested in to bring some of their know how, customer experience, and some of frankly to bear on the retail sector that hasn't
been operating so well. remember the back drop here, slowing quitey is a bit. chinese government is trying to shift from an export driven conomy to more of a consumer driven economy. so there is an appetite here for trying to cater more to consumers and give them more of kind of choices that you the u.s. n, say, retail space. assets in two n deals, a big first step in the drugmaker's quest to bring in ease its debt burden. the story, is it still all about the debt load? >> it absolutely is. they announced $2 billion worth of sales. sitting on $30 billion worth of debt. that will come due over the next several years. it eases things but it's a sign of good things to come probably problem is o, the over. it certainly in the right direction. valuations at the they are getting, pretty positive. they are selling this casscer asset for more than they paid worry, which is the big that they would be doing fire
they are selling some dermatology assets which are their main business. they are selling those at what people say is a good valuation. all in all pretty good news, as goingt to what's probably proce long asset sales process. >> almost twice its market value. this is twice as much as they tried to raise. there.w what happened is it going to be a smooth process when this gets to the markets? > certainly there is quite a bit of optimism on the part of he c.e.o., who told reporters he is indeed quite confident that they will be able to get that. we also had some comments from investment funds that were present at the assembly today. it is a different story compared needed the funding to survive.
still a profitable bank and it this to bolster its capital buffer since it's an systemic bank this at's what it needs money for. >> amazon says it plans to higher a hundred thousand people across the united states over the next 18 months. the announcement comes amid pressure on the technology sector by president-elect donald trump to create jobs. amazon is creating a hundred thousand jobs over 18 months. how many jobs does it typically create, say in 12 months? >> in the past five years, amazon has created 150,000 jobs in the u.s. so this is a pretty massive jump. a hundred thousand jobs as you said in the next 18 months. but if you really look at it surprising that that amazon -- >> they also lose jobs over the course of 18 months? and they are also growing so massively and so fast. they are expanding into hardware. trying to get more into groceries and apparel. they are trying to deliver goods faster to people, opening many must fulfillment centers and all
require a huge ramp up in work force so it's fromoo much of a departure what we're expecting. after y. lee is back home 22 hours of questioning, as a uspect in korea's undue influence scandal a prosecution spokesman said he enied most of the allegations, and that the investigation will now be widened. a this has certainly been jayficult period of time for y. lee. appeared at 9:30 entering the prosecutor's office. briefly. surrounded by reporters and activists and cameras and he was asked about. this he briefly apologized for and then y's behavior he went in. as you say, he spent 22 hours answering questions. he was held overnight. he was released about 7:30 this morning local time. the prosecutors have also been
questioning other executives at samsung. at least three that we know at this point. on monday, they questioned samsung overnight. last night they questioned another one. digging deep into these allegations to try to figure out exactly what samsung's role has influence s broader pedaling scandal in south korea hat's already led to the impeachment of the president there.
proposed merger. amidst this consolidation in the agrichemical space what need to happen to satisfy you that fair competition will continue? as you say it's a very concentrated sector already. what we're looking at is very obvious, that farmers still need to have choice. so these are the things that we're looking at. outcome of the merger is still very open. the hearing just today. >> pursuing merger, you've been that.ng into you prize the investigation. what have you learned here in months?t couple of >> first of all, even though these companies are in similar overlapping markets, the mergers are very different in comes to re when it what markets they address and what are the merging companies. chemchina is very much focused on the chinese market. wants to mprove,
improve the products if their market. degree degree there is a of innovation in how to make that happen also in the chinese market. that ay be the one thing they have in common with the du course, ger where, of innovation is a very important thing as well. >> let me ask you about a few companies. you'll be looking at cases. what does the bank and italian show to you ve to give you the sense here that its plan is a good one? >> well, it is as it's been before. obliged to see a restructuring plan that will llow for a viable bank on the other side of the recapitalization, and here, of the detail that counts. how it actually spells out. we'll start working on that -- probably it will take a months or maybe
slightly more before the restructuring plan is in place. because obviously, it's of the management of the bank. raised concerns about deutsche bank and the london stock exchange. what are your concerns about in that particular space, about competition in the exchange space? market where you have very high barriers to entry. competition is very important in order to make sure ont you get the right prices a number of different products. also, when it comes to clearing. we're in discussions now with the companies and it still seen what will be this case. of >> our review of the week "bloomberg best" with compelling interviews from the j.p. morgan health conference.
discussing political challenges buffeting their business model and politics was top of mind at detroit as w in automakers respond to pressure from president-elect donald trump. road they negotiate the ahead? we're very proud of the fact strategy is to build. >> we have a strategy to much as production as we can. >> this is bloomberg. with the xfinity tv app,
only xfinity gives you more to stream to any screen. download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. ♪ .> this is "bloomberg best" i am michael mckee. president elected donald trump put drug companies on notice to expect new pricing regulations.
spoke with ar number executives at the health care conference in san francisco. there was still a general expectation that 2017 would bring big changes for the industry. ♪ we generally believe the u.s. health care system will continue to reward true innovation. there is so much that still needs to be done in medical research, especially oncology and neurology, so we have an optimistic view. erik: an optimistic view because you think what is going to happen? been discussion about the pricing environment in the u.s., in other countries. is natural.ion
people are talking about how to best use resources in health care. we believe that novel medicines are usually a very, very good way of investment in health. erik: the price for so many drugs, the price setters are the benefit managers. managersacy benefit are not going to reward you on innovation. >> the system has existed for a couple of decades already. business is about, and yes, negotiating price, but at the end of the day, it is what value is generated for the patient, and the u.s. health care systems is better than others. pricingkind of drug environment do expect from the trump administration? >> the issue of pricing will be
central to the debate. we need to achieve a price that represents value provided. i think it is very clear in my view that we have to be careful not to lose the baby with the bathwater, and that is innovation. the best way is to make sure that in the totality the price of non-innovative drugs, generics, are made in such a way that they become accessible and the price of innovation recognized for the value it provides. erik: do you think the trump administration and the republican congress will take a lighter approach than the democrats did? >> i don't think so. we had the same conversation. people want transparency and to understand what is happening, and frankly, we are blaming the pharmaceutical industry. the system is not operating
properly and terms of providing value for innovation, and remember we have to -- you pointing your finger at the pharmacy benefit managers there? >> everybody. system needs to be transparently reviewed and adjusted. the environment here is different than europe. do you have any hope that we will begin to see indication-based pricing and some of the major european countries like germany and france? when? >> we are doing it today. we have doing this with our cancer medicine. we have indication-based pricing in italy. erik: i'm thinking germany or france. >> we do some work at the hospital level in france. we haveerland,
combination-based pricing, where we look for those patients that need more than one medicine for their treatment course. we price those medicines as a pair or a triplet. there are more than 20 countries in europe today to instigate these systems. in the next five years -- erik: it will take that long, five years? >> it is happening today. more and more countries will be adopting it. calpers, the, largest pension fund lowered its assumed rate of return from 7.5% to 7%. the funds chief investment officer told erik schatzker that it has a strategy by overseeing assets with in-house managers. space ina difficult the stock markets to be an
active investor. they are very efficient. we have brought a huge majority of our assets internal. we are very proud to have over 70% of the calpers portfolio, most of that is in public asset classes, stocks, bonds. much of that is index oriented, but 30% is pursuing active strategies. 70% now. if you had your druthers, calpers would manage what percent in-house? >> 75%, 80%. ,rik: that is bringing billions a multibillion-dollar decision. >> it is a big deal. the 70% in-house currently, we pay four basis points. we have done very well in the fixed income and global equities
portfolio with attracting talent , very proud of the teams we have here in sacramento. let's head to the ubs greater china conference and shanghai, where the chairman confirm banks are in talks with partners to increase its footprint on the mainland. he talked with tom mackenzie about risk and opportunity in china. for what is the key risk china for 2017? >> the leadership change we will , and the policy priorities we will see formulated. the current administration and current central bank leadership has been in control long. he is the longest-serving central bank governor. the chinese monetary policy is
following a steady course of opening up, becoming a member of the international community. the renminbi is part of the special rights of the imf, and that requires china to become part of the international community. tom: was that the right decision or premature by the imf? >> i think what you will see is that these processes are never smooth and straight line. there are always setbacks. there are things to go easy and when things moving in a rocky way. a large number of political uncertainties materializing. , ayou look at the u.s. totally different china policy is a risk for u.s.-chinese relationship and for global economic relationships. you are seeing a bumpy road and more political risks in recent will shakethat
economics more than in the past. in the past, political risks were an emerging market feature. now they have become a country feature. look at brexit, the european .lections ahead we are facing political uncertainties, and they impact on the economy, financial markets, and processes. tom mackenzie also spoke exclusively with the president of the china-led asian infrastructure bank about china's debt load and the impact of capital controls. basically debt is domestic debt. china does not have external debt at high levels, so it is easier to handle. ofelieve growth consult some these problems, and china's government will be able to address these issues step by
step. what is most important is to make sure that we and china go ahead, adhering to the fundamental issue of restructuring and to address some of the structural issues. on the question of capital controls in the last few months, was the imf premature in including the yuan in its sdr basket? >> in my view, the chinese government would adhere to the keep chinese currency as a global currency. think currency in a basket. money thatth the flows in and out, some measures to address these issues in my view probably is necessary. will stabilize
>> ice fiat chrysler gaining more than 2%. it will invest more than $1 billion making three new jeep models in the u.s. they will spend that through 2020. ford will cancel a $1.6 billion investment and mexico and save some jobs in the u.s.. are these carmakers doing trumps bidding or throwing him a bone here? >> there is currently a competition of announcements,
who will invest what in the u.s.. most of it has been committed before. fiat chrysler is spending a lot money on jeep. everyone wants to come out and make an announcement that they are spending money in the states. ♪ breaking news general motors, up 5% thanks to forecasts raised in 2017. a buyback of $5 billion worth of shares. >> analysts have been talking about global auto sales tapering off for sinking in the u.s. market next year, at west flat, and gm thinks the market will be much better and are saying their retail sales and revenue will be better. they are saying they will be grow profit as some economies are sputtering along a little bit. volkswagen has agreed to plead guilty in the united states to the admissions
cheating scandal, paying $4.3 billion in penalties. prosecutors announced charges against five individuals in germany. how does the settlement leave volkswagen? >> it clears the deck in terms of u.s. regulatory disputes over this diesel emissions cheating scandal. the focus in that regard now will shift to the individuals that have been charged. futures of volkswagen's in the states, they will not be able to sell their diesel vehicles, or at least they said they are unlikely to be selling them anytime soon. it was another busy week in the automobile industry, under pressure recently from president-elect donald trump to create investment and more jobs in the united states. trump did not appear to make his case in person, but bloomberg's
weston was there. he talked to several ceos about trumps impact on their business. are you anticipating from this new administration and planning for? >> there is a lot of opportunity. we have more in common than we have at odds. we are looking to strengthen the country, strengthen business performance. provider of jobs with over 100,000 really good paying jobs, and looking for some regulatory streamlining. he has made statements about the tax, so that will improve our business and allow us to reinvest. david: there is opportunity there for you? >> there is. this is a complex business with long lead times. olt and traverse are
built in lansing, michigan. we need to understand how investment is made, but look for opportunities. david: parts cross borders and come back in, assembly done youplace else, what do anticipate in terms of trade and if there were things like a cross-border tax, would it help or hurt gm? early.s too i would be speculating. it depends on how the rules are put together. of our strategy to build over 70% of the vehicles we sell in the u.s. are built here. we are the highest u.s. content of all the manufacturers, so we have a lot of jobs here and look to make sure it recognizes the significant investment we have made in this country and the jobs that we are providing. of abouts your view the trump administration as they formulate their trade policy? good relationship.
i talked to him last week when we announced our plant in michigan. interested in the things we are, taxes, trade, currency manipulation, all the things that affect american corporations. it is early days, but i am purged by what i see and terms of the policy potential. david: if you were going to write the ticket for an atmosphere that would be helpful, what would u.s. from the new administration? >> he has already done one thing, appoint a new secretary for the department of transportation. she knows our industry. changing so much with autonomous driving and the technology going in. partner ind a governo government to make this happen. david: do agree with what you have heard coming out from the transition team?
working with them. it is important that they understand our position and where we are. we have been in mexico for over 100 years. that is important for any administration to understand. you made some news last week with this plant in mexico. what is your reaction? >> we do build corollas in the ..s. in mississippi strategically, we made decisions six years ago to realign our manufacturing footprint in the the realignment would move the corolla out of canada and move it down to the plant in mississippi and put it into mexico. this decision was made 5-6 years ago. david: we now have a new president coming in. will it change your plans in investing in mexico at all? >> again, we are a small player
in mexico. , so we comes from mexico are a small player. we were late to move into mexico. we will have to take a look. priorities andhe washington, and i think we agree with the president that we want to make america strong, good jobs, because that allows us to sustain our business into the future. it is difficult to look at mexico as an isolated area. we have been in this country 60 years now, investing $22 billion. over the next five years, we will invest another $10 billion in our plants to make them more competitive, a new headquarters in texas, and autonomous vehicles. do have a new
administration coming in. if you were to talk to mr. trump today and said these are the regulatory changes you would like to see for the auto industry, what would they be? >> everything which has been done and collaboration with the what the-- no matter administration wants, the industry can do a lot of things as long as it is collaborative, as long as we have visibility about what will happen. we can do a lot of things. the only thing we don't like is to be caught by surprise all of a sudden and you need to make a u-turn. david: there have been some tweets and some of your compatriots have woken up to tweets about what they should be doing, especially mexico. do you have a vulnerability and mexico? a strategy to localize production as much as we can. nore is a big thing that carmaker can control, the situation of exchange rates.
the dollar goes up, the peso goes down, so we decided a long time ago to localize production as much is possible. dollars,evenue is an your costs are in dollars. we are following this strategy. what is being asked by the administration, build cars in the nine states that are being sold with united states, we are fine with it. ♪
bond of principles and the pink's term loans outstanding. 2020 is when they have serious money coming due. there are 30,000 functions on the bloomberg, and we enjoy show you our favorites. maybe they will become your favorites? quicis another function, . you can get fast inside to timely topics. here is a take that breaks down brexit. ♪ >> britain and the eu are on course or a messy divorce. june 2016, the u.k. voted to leave the bloc, swayed by arguments that the eu was too expensive and a source of uncontrolled immigration. an independent united kingdom, how about that? from one of the
world's most proper trading blocs jolted markets and sent the pound tumbling. david cameron who campaigned to remain in the eu resign. >> i think the country requires fresh leadership to take it in this direction. >> it is now up to theresa may to chart a course that will have global implications. brexit, and we will make a success of it. >> here is the situation. to begin complex negotiations, make must trigger article 50. eu of aifies the country's intention to withdraw. may said she would do this before march 2017. britain has two years to negotiate the terms of separation, trade and safety standards among them. the terms of the withdrawal requires the backing of the governments and parliament, but establishing new trade
relationships could take longer than five years. if pro-brexit vote was a lash, but can the u.k. strike a deal with the eu to give it control over immigration without damaging the economy. does it have enough clout to negotiate better trade treaties on its own? it good cause global companies to cut investment or leave. no country has ever left the eu before, but the trade deal stuck by norway and switzerland and by canada and turkey may provide a guide to the uk's future. michael: that was just one of picks you can find on bloomberg. along with bloomberg.com. that will be all for "bloomberg best" this week.