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tv   Bloomberg Best  Bloomberg  April 2, 2017 5:00pm-6:01pm EDT

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♪ erik: coming up on "bloomberg best," the stories that shaped the week in business around the world. the u.k. triggers article 50. it is t minus two years until brexit. >> this is an historic moment. >> there is no reason to pretend that this is a happy day. erik: a mammoth merger clears a major hurdle. samsung rolls out a sleek new phone. president trump rolls back climate change rules. >> this is about coal, coal, coal. erik: energy executives are pumped for the future, and italy's finance minister insists the banks are back on track. >> now we find a solution within
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the european rule context. erik: insight into what's ahead for the fed. >> now with the time to be thinking about how we normalize more quickly. >> a few hikes this year seems reasonable? >> this is not an environment where the data is screaming you have to move. >> we could get more this year. erik: it is all straight ahead on "bloomberg best." ♪ erik: hello and welcome. i'm erik schatzker. this is open "bloomberg best," your weekly review of the most important business news, analysis and interviews from bloomberg television around the world. this was the week prime minister theresa may promised to trigger article 50. starting britain on its long and potentially painful breakup of the european union. but on monday, a multinational merger took an important step forward. >> the european union approved
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the proposed $77 billion merger of dow chemical and dupont, saying the companies have addressed their concerns with their commitment to divest businesses. what sort of concessions did the companies have to make to get the stamp of approval from the e.u.? >> the concessions are pretty big. dupont is selling most of its global pesticides business and its r&d business. dow is selling petrochemical as well. and the r&d angle is a surprise. it is quite extensive. the european commission explained it was concerned with innovation in the market. there are few companies that can discover a drug, discover a product, and a chemical, and bring it all the way to regulatory approval into the markets. for that reason, they would like to see someone else take over the sort of role that dupont has when the merger goes through. pres. trump: with today's executive action, i am taking historic steps to lift the restrictions on american energy,
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to reverse government intrusion, and to cancel job-killing regulations. [applause] >> the bottom line -- this is about coal, coal, coal. he previously campaigned promising to resend some of these federal actions. working-class voters he was able to attract, this is a big win for that industry. they lobbied heavily against the obama administration and have gotten some results with donald trump. the long-term trend running against coal and its use for power generation are still there, with or without the clean power plant. utilities are looking to natural gas and to renewables. not just because they are cleaner, but because they are increasingly cheaper than coal. so, you got those currents that coal is fighting against. those headwinds will not be changing here. mark: britain will pay nothing like the amount of money e.u. officials say the country needs
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to a good. this comments come after the eu president says the country's bill to leave is about $62 billion. >> that will be an early flashpoint in these talks, which theresa may is set to trigger tomorrow. one of the few things europeans said is the sum of money they feel they are owed. theresa may can use the letter to open up a discussion about how you get to a number, certainly the numbers talked about so far. a short shift in london. >> the scottish parliament call -- has backed a call for a second independence referendum. remember, the last one did narrowly fail, but now scottish lawmakers voted 69-59 for a second independence referendum. u.k goverment say that will be no negotiations with scotland over a referendum, the focus is on brexit talks. >> theresa may has not said when she would, but it is clear she doesn't want it on this side of
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brexit. the government burden, trying to negotiate brexit and the referrendum same time, is one challenge to many. >> it has been a 44 year marriage. let the divorce begin. the prime minister placed the signature on its department. britain will leave the european union. there are many lines drawn in the sand. theresa may: this is an historic moment for which there can be no turning back. britain is leaving the european union. >> a celebration for some, disappointment for others. a historic moment for which they can be no turning back. the prime minister saying no longer members of the single market after the two-year process. taking an ambitious trade deal. no real news, but guaranteeing the rights of e.u. citizens within the united kingdom.
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>> there is no reason to pretend that this is a happy day. what we should stress today is as for now, nothing has changed. >> the work starts now. we are starting to see are some of the battle lines by be drawn. in her letter, theresa may talked about wanting to simultaneously negotiate, not just the withdrawal, but also the free trade pact with the e.u. when britain does exit the e.u. but donald tusk talked about getting an orderly withdrawal. we are seeing already that the you might want to focus on the u.k.'s exit while the u.k. was to work on the free trade pact simultaneously. >> one particular aspect of her speech and of her letter that is frustrated and annoyed a lot of the import negotiators in europe, and this is an implicit threat to withhold security cooperation with the rest of europe issue doesn't get the
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free trade deal she wants. we are already getting a taste of the kind of buffeting and push back that theresa may is going to get over the next two years. >> david davis, as i speak, introducing the plan for brexit. that white paper on legislating the united kingdom's withdrawal from the european union. jamie dimon at jpmorgan, what you doing? >> reporting today that jpmorgan is the looking at buying another office building in dublin. so that is certainly one option they can do. they could also expand at some of the other european cities. i think you will see a bigger presence from the u.s. banks on the continent. >> what we have seen so far is banks making plans to kind of sending a small cohort at first and then see of the negotiations play out. >> lloyd's of london plans to open a european union hub in brussels following brexit. the insurance market founded in the british capital in 1688 expect the office of the
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-- to be operational at the beginning of 2019. >> we had a contingency plan before the referendum. as soon as a result came through, we began to put the flesh onto it. he rapidly concluded the right solution for lloyd's was to form a subsidiary of the lloyds market onshore e.u. i believe london will remain the financial center for lloyds. but obviously, if you look at other parts of the financial services sector, they have slightly different criteria at work. i think you will see some transfer. but i still think that london will remain a very powerful financial center. jon: theresa may will have a year to work on the sweeping trade deal she wants. >> the e.u. came out playing hardball with the u.k., saying we will not negotiate a free
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trade agreement with you want to you come to an agreement on some of these issues. having said that, there were glimmers of an overture. if you look at the language that donald tusk used, it talks about we will talk to you about your free-trade agreement if we see sufficient progress on these key issues like the bill. he did not actually say everything needs to be wrapped up, signed, sealed and delivered before free trade. >> we heard there will not be any bilateral talks, which is not much of a surprise. but also that there cannot be talks with specific sectors because again they came back to that issue of no cherry picking if you're not in the single market. >> these are the two big issues for the e.u. one that they want to be unified and want to have a unified front going into these talks.
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they are trying very hard to maintain that. over the last nine months, since the brexit referendum they have done a really good job, again some people's expectations of maintaining that unity. and now that the clock is started ticking, and that theresa may has triggered the negotiations, the two-year window is there and the leverage switches to the e.u. side. they are able to control the agenda and they are able to say when the meetings are going to happen. erik: we will have much more on brexit and the european economy as open "bloomberg best" -- as "bloomberg best" continues. credit suisse ceo talks about his bank's contingency plans and its balance sheet. plus, four fed presidents share insight into the pace of rate hikes in the year ahead. up next, more of the week's top business stories, including china's tencent taking a stake in tesla. >> they are charting their plan to take ownership of this world of connected electric vehicles in the future.
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erik: this is bloomberg. ♪
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♪ erik: this is "bloomberg best." i'm erik schatzker. let's continue our tour of the week's top business stories with news from the middle east where oil-producing nations met to discuss the efficacy of output limits. >> opec members and independent oil producers are to consider extending curves on output, saying more time is needed to drain the global oil glut. >> opec's secretary-general sees a high level of compliance with the cuts. >> from all indications, we expect to see a very, very high level of conformity in the subsequent months. and this will inform the decision on the duration.
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>> this was never going to be a meeting about extending the cuts. it would be about compliance and specifically they are impressed with the levels of compliance. they are calling it conformity. what i think they have done is they have called for recommendations in terms of what to do going forward. the other thing i need to point out is the reality of the inventory. there is a lot out there. the latest figures in terms of the rigs underscore that once again. >> qatar plans on investing 5 billion pounds into the u.k. over the next 3-5 years, taking its total commitment to about 40 -- $40 billion. the country's finance minister told bloomberg that qatar and other gulf states will push for a post-brexit free trade agreement with the u.k. >> most of our investments are very much long-term investments. we are now looking at a short-term upside or downside. that's how we would like to carry on in our investments. >> the context of the story is quite an important one because
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it shows that the sterling equilibrium for medium-term exchange rates, the terms of trade between the u.k. the rest of the world through the exchange rate, will very much dependent on the kindness of strangers to finance the u.k.'s large current account deficit. >> ford is now revealing its investment plans that the president tweeted about this morning. ford planning to invest $1.2 billion in three michigan facilities. this is something that had been discussed and agreed upon with the auto workers several years ago. it is now fleshing out. >> how many net new jobs will there be? >> 3600 jobs in the michigan assembly plant that will be protected by this as we move the
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focus production elsewhere. >> would you be making this decision if the president had not indicated they would be reviewing the fuel efficiency standards? >> yes, because he made these commitments in 2015 to the uaw in the contract negotiations. >> a cash boost for tesla, the 5% stake in the company. part of a round of investments that the company announced they will borrow and raise debt and sell stock. good of a partnership in the future? they do have consideration in the future depending on how the ties develop. what the heck is tencent thinking? >> they have a process with a look for the best, highest growing companies and make an investment, to have a far-reaching portfolio. they invested in didi, lyft, a bunch of map ai technology companies.
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they are charting their plan to take ownership of world of connected electric vehicles. they are not the only players. baidu has been investing heavily. so has alibaba who recently struck a partnership with one of china's biggest auto manufacturers. they are slated to come up with a connected car the future. it does not come is that much of a surprise. >> shares of general motors are up today after its rejected a proposal from greenlight capital. david einhorn split the stocks into two classes. >> with the thesis is is that people buy g.m. for the earnings stream because it had very good profits. some people buy for the dividend because the price is pretty low. he considers it a depressed stock. there is a good dividend yield on it. why not give investors the choice to either buy a dividend stock or buy a regular stock? take advantage of share buybacks, that kind of thing. once you have these two instruments, you are greater value on lock because people can buy what they want. gm does that the evidence that splitting the stock in this way, it's almost unprecedented, will
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pop the stock. it could hurt their credit rating because it would guarantee a dividend. >> samsung is trying to move on from the pr nightmare. this last major product rollout in a flashy new york unveiling earlier today, the company showed off a brand-new flashy smartphone. it is been a rough few months for samsung. we had the exploding smartphone. now we have the heir apparent caught up in the corruption scandal. ok, can one phone really turn all of this around? >> i think one phone is a very important first step to hitting this turned around. but we should not look at the phone itself because it is a beautiful phone, an elegant device. but if you look at the past several months, look at what samsung has done. a very thorough investigation. an eight-point process they are
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very comfortable with in terms of quality control. it is a strong first step for samsung. >> toshiba says its annual loss could be more than double to $9 billion. that is if the u.s. nuclear unit files for bankruptcy. what does this mean for the company? >> this is great. westinghouse was able to file for bankruptcy in choosing chapter 11 as a way of filing for bankruptcy because this actually helps quantify the financial liabilities for toshiba. and in a way, removing a lot of the uncertainties and overhangs about the future of this nuclear project. also, for the customers of westinghouse. >> i think the market is very smart. it is clearly understanding the fact that most of the overhang is removed. that is why the stock price is reacting positively today. >> conoco phillips' shares are surging after they unloaded shares in an oil sands venture in a $13 billion transaction. >> the opec decision is a good
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one. the inventory overhang is still there. we see were coming back in the independents in north america. we see a lot of volatility in the price. what does it take to win in that kind of world, which is a great portfolio that we know we have. a lot of possibility. a strong balance sheet. we are telling investors here is a place you can invest in oil with a lot of predictability. we will perform to the cycles and is what we intend to do because the cycles are getting closer together. >> the south african president jacob zuma has fired his finance minister and eight other cabinet members in a late-night move that threatens to split the party. the finance minister was replaced by a candidate who has no financial or business experience. the past five days have seen the rand lose more than eight -- 8% against the dollar, but the credit is at risk. >> the gupta family linked to
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the president, jacob zuma, in a court that against him, but they wanted him to intervene into a bank court case where the banks had closed off the accounts of the gupta family. that is one political motivation in itself. but jacob zuma and gordon have been at loggerheads when he was reappointed to his portfolio as finance minister was reappointed to his portfolio at that time. that has been the feature ever since december 2015. ♪
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♪ erik: welcome back to "bloomberg best." i'm erik schatzker. credit suisse held at asian investment conference in hong kong this week. and the ceos sat down with bloomberg's yvonne man for an exclusive interview.
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she asked how the bank is bracing for the uncertainties of brexit. >> for us, credit suisse, our presence in london is quite old and quite large. we are engaged in a significant restructuring. we also have quite a few in europe. we opened an investment center in a new center in dublin. which can be used will be transfer a lot of activity. we also have an office in luxembourg. we have options depending on how brexit plays out. yvonne: you have seen other banks like goldman sachs starting some other contingency plans. they are moving jobs to other european cities. what do you think credit suisse will have? >> we have a plan to restructure london. a year ago we had 9200 people in london. that is down to about 6000. this is a massive restructuring.
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our ultimate plan is to get below 5000. those plans are not much affected by brexit, so those are what we have been in amending. yvonne: is there something else you are looking for in terms of clarity? you want to learn more about passporting rights or how negotiations are going? >> passporting is an issue. we want to see how the negotiations are going to play out. but in the reality, the european union is a major global economy and will continue to be. as a bank, we had been in operation since 1848. you can imagine we have operated under many political and regulatory regimes. we will continue to do that and address whatever the final answer is. yvonne: there been a report about your capital options and plans right now. what can you tell us about those plans with ford? are you looking at selling the stock as an alternative? >> the first thing i like to say
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is, in a funny way, it is a positive thing that is taken place. when we started in 2015, we said october we need $9 billion to $11 billion in capital. we set out to be fundamentally four things. grow profitably, produce cost, strength in the capital position, and build a legacy. if you look at the progress we have made in 12 months, generated a lot of growth, $20 billion in u.s. assets, reducing cost by $1.9 billion, the target is $1.4 billion. we exceeded our target. we hit our targets. capital, 2% in mid-2015. plaintiff 2016 at 12.4 legacy, the doj issue. we reduced the sru by 39% in one year. it is been a busy 12 months with a lot of progress.
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the ipo was a capital backstop. now we have made much progress that we can consider other options. that is all the data i can give you. >> i you talking about capital rates of the moment? >> we are just considering options. we have been a lot of reporting in the media. we have been very clear in results that the ipo was an option. the operation was continuing. ♪ erik: still ahead on "bloomberg best," more of the week's top interviews. four fed presidents look ahead as investors try to connect the dots. plus, italy's finance ministers is the worst is over for his nation's banks. and energy ceos see a lot to like in a policy orders of donald trump. >> i say we thrived in the obama administration really in spite
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of the obama administration. erik: this is bloomberg. ♪ live-stream your favorite sport
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at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. the biggest week wow, watchathon has netflix? hey, drop a beat... [ beatboxing throughout ] show me orange is the new black. wait, no bloodline. how about bojack? luke cage. oh, dj tanner. maybe show me lilyhammer. mmm, show me last chance u. on second thought, maybe pompidou. narcos, fearless, cooked, the crown. marco polo, lost & found. grace and frankie, hemlock grove.
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season one of... show me house of cards. xfinity watchathon week starts april 3. get unlimited access to all of netflix and more, free with xfinity on demand. ♪ erik: this is "bloomberg best." i'm erik schatzker. brexit is hardly the only challenge facing the european union. populist parties are taking aim at its solidarity. greece's debt remains a stubborn problem. and there is italy, whose political and financial institutions have struggled to maintain stability. italy's finance minister joined bloomberg television this week for an exclusive interview with francine lacqua. he painted a hopeful picture. >> the problem with the banks is being solved in the sense that are still some critical points, but now we find the solution within a european rules context.
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and in full agreement with european institutions to address those problems, which have the legacy of a prolonged and deep recession in the economy. francine: what is the one thing people worry about? investors are asking, testing euro and the italian political system. how do you reassure them? >> the italian political system has produced better results the -- than expected and recognized. the government has been in office for more than 1000 days, which makes it the sixth longest-serving government, in which reforms have been introduced and are beginning to bear fruit. that is political stability, not instability. we are looking forward to the next elections in 12 months' time. i'm confident this strategy of reform which has been the hallmark of the government will continue. francine: do you think the five-star movement has a chance of getting into power? >> the five-star movement is nowadays leading the polls, but we will see what happens. francine: the debt was the big
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promise you made to europe. >> the five-star movement is facing the challenge of government. not just protest. this is the big challenge of populist movements all over europe, to do things and not just to say no to things. francine: minister, i hear a lot of investors asking whether italy is the weakest link within europe. >> i know they asked that question. my answer is this is not the case for a number of reasons. one of which, italy has strong fundamentals. it is recovering from the recession. it is growing again. reforms are paying off. of course, there is a huge debt, but the debt is finally stabilized and we are beginning to go down as a next year. this is a major turnaround with respect to the previous 10-15 years in the country. we are back to employment levels which are at a pre-crisis level. we are back to normal and to a better future.
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erik: u.s. energy companies were in the spotlight this week as shale drilling continues to shape up oil markets, and the trump administration takes steps to roll back industry regulations. bloomberg's alix steel spoke with several top ceos at the annual scotia howard wheel energy conference. >> what's the number one regulation you need to see rolled back? >> our role in the permian basin is important as a leader. we take environmental stewardship responsibilities seriously. what this is emblematic of is the decision to roll back some of the prior rules promulgated and give us a test aforethought towards those. the idea of creating a sustainable model going forward, regarding emissions controls, and so on. on one hand it has solved environmental issues. on the other hand it's not as
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onerous as administrative cumbersome to the industry. >> at the heart of this is waste management. you use a lot of water in your fracking and yet you dispose of that water. it has been blamed for earthquakes, especially in oklahoma. that's at the heart of this. how does that affect you? >> if you look at the midland basin area, it has not proven to be a big issue by virtue of the tectonics in the industry, but it's a major concern. i think what this amounts to is, it will be incumbent on the industry going forward domestically to clean up the water, recycle water, and reuse it. >> you don't need regulation to do that? >> precisely. >> shale producers went gangbusters under president obama, so what was it that was so urgent some for you guys that you feel like you're more clarity on over the next four years? >> i say we actually thrived in the obama administration, really, in spite of the obama administration. the regulations were continuing to build on us.
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the port that to the point where we built regulatory department that had to expand. the overreach we are experiencing the regulatory side of the government, so the fact that we see that starting to dissipate, and we basically have some new leadership in the epa, i think we're actually seeing where this is going to be a much better climate overall for companies like continental. >> so do you wind up putting more to work, because of that? >> there is definitely in anticipation that we have a government that is at least supporting our actions as opposed to giving us as a bit of a liability at times. it seems to be the way it was when oil and gas was a liability. we see it as a strength. president trump definitely sees it as a strength. >> one of the complaints about certain areas is you are hamstrung. you do not have the takeaway capacity. but now, you have the dakota access pipeline coming in.
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how does it change your ability for market share for bakken oil? >> we will have more takeaway capacity and production in the basin. the opportunity for not what we expect is having the differentials come down. we expect it could have an impact on differentials by as much as two dollars, and maybe a bit more over time. we are very pleased it is there. when you think about it, there are refiners on that pipe and not really as many producers. you have a different dynamic. you have refiners who will be pulling barrels out of the basin as opposed to producers trying to get their barrels down the pipe. anytime you have access to market and improved market conditions, it will help encourage more investment. >> warby parker has become a start-up success story. founder neil blumenthal recounts the company's journey in this edition of "small to big."
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>> we were able to start warby parker with $120,000. that enabled us to build a website, get some support. and purchase our initial inventory. i remember the launch vividly. february 2010. we made it live, february 15. we didn't tell our friends and family because we did note the -- did not know if the website would work. the orders started pouring in. we hit the first-year sales target in three weeks. sold out of our top 15 styles in four weeks. and accumulated a waiting list of over 20,000 people. we had to start cutting class because we were full-time students. we were getting our mba's. it was crisis management. we had orders coming in and didn't have enough inventory to fulfill those orders. we had think about communication strategy. the customer service policy. we would just profusely apologize but also explain to people what was going on.
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we just launched and didn't expect to have this much demand. and when you tell people the details, they can have patience and they can understand and sympathize. brands build relationship with customers much like the way humans build relationship with other humans. that's through vulnerability. our first store was actually my apartment. we laid out the glasses on the dining room table. that was our first foray into learning about the brick-and-mortar world. we did a pop-up. bought an old yellow school bus and turned it into a mobile store. we went over 15 cities across the country. in each city, we would be in roughly three locations. they would tell you which intersection was best for us. suddenly we had a roadmap for where to open a store. we now have 46 stores.
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it has really been an important part of warby parker's growth. we founded warby parker to create a company that would do good in the world. at the very beginning we committed to distribute a pair of glasses for every pair we sold. we now distribute several million pairs of glasses to people around the world. we believed in aggressive but sustainable growth. there was this mentality of move fast and break things. we believe in moving fast, but but move fast deliberately, and when you break things, make sure it is not catastrophic by staying focused everything -- and reducing complexity as much as possible. you can grow faster, longer. we're trying to build a company that will be around for the next 100 years. ♪
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♪ erik: you are watching
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"bloomberg best." i'm erik schatzker. after raising interest rates in december and again in march, janet yellen and the foc are open to more monetary tightening in 2017. how many hikes may be coming, and when? bloomberg television interviewed four federal reserve presidents on the further path ahead for the fed. >> it was pretty continuous that the data had been quite good. the december sep had a nice forecast, and ratifying the forecast made me feel better about going ahead with the rate increase in march. i still think that one of the larger uncertainties is if inflation would get to 2% sustainably in the u.s. i don't want to get out ahead of these rate increases. i thought it was perfectly acceptable to get one in in march.
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>> the consensus was for three rate moves this year. is the economy behaving in a way that it would justify that in your mind? >> i think it might. that is the media sep for this year. to the extent i gained more confidence in the forecast i have, that would be a good indicator i could perhaps support three. two might be the right number if there's a little bit more uncertainty. if there are any modest concerns about whether or not we really can get that. things really take off if we get continued strong growth and inflation. we could get this year. four >> i know somewhere on your body you have tattooed the words "every meeting is live." is may really a live meeting? you just moved, you normally want to see the results of a move, and how it affect the economy. it is not a press conference meeting.
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should markets look maybe further out? >> well, you are right. many of my colleagues have used this phrase, and i have used it myself. an upcoming meeting seems live. when you have an immediate funds rate increase of three for this year. we just did one in march. we are going to get two in, if that takes place over the course of a year. i would not be expecting it to be at the upcoming meeting. i would have to see an awful lot of data. we talk about the circumstances. we also talk about strategy for our balance sheet and other things in order to make sure we are ready for policy being normalized. i would be surprised if the upcoming meeting had that type of decision. that is what the three this year looks like. >> you say four rate hikes need to be on the agenda this year and that should be the fed's expectation. why? >> over the last year, the
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perception has been that at every meeting we're attending to -- we were on tinderhooks waiting to see how the data comes in. when the economy was far from full employment and very far from our 2% inflation target, that may have been a little more appropriate. now we are close to full employment, and arguably we are at full employment with 4.7% on the unemployment rate. we are just a tad below the 2% inflation target. now it is time to the thinking about how we normalize a little bit more quickly. >> one interest raise in 2015, one in 2016, and now four in 2017. that's a much more aggressive move, a much bigger move. even if it is just four, is -- does it add a bit of a risk to the economy? >> four in one year would be less than what we did in the last period coming out of the recession. at that time we were raising at every single meeting. it is twice as fast. relative to that, this is much
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more gradual, even if we get it every other meeting. i view four over the course of this year, and we have already done one, as being gradual. i would say we have been gradual up to now. once a year in december is a very gradual pace, but as we get to full employment, up close to the 2% inflation target, we don't need to make up much more ground. that would indicate we have to raise rates a little bit more quickly to make sure we don't overshoot everyone. in my own view, the economy is likely to be strong enough and growing fast enough that it would be consistent with raising rates roughly every other meeting. that would get us to the point where we still would have an unemployment rate more than likely, a little bit below what i think is below full employment at 4.7%. and likely at 2% inflation. though there are many forecasters forecasting we will be a little above 2% by the total pce measure. >> trying to predict what's going to happen based on what i
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say today. i don't think that is very relevant. look what happened in 2016. in the fall of 2015, the median consensus was four hikes in 2016 and we did one. 2017, going into the year, the median is three. so far, we have done one. i think where the foc is, at a reasonable place, a couple of more hikes seems reasonable. if the economy is stronger than we expect, we can do more. if it is weaker, we can do less. >> what tells you it is time to raise rates? it took a long time to convince wall street you would move in march primarily because people say nothing really changed between december and march. >> the fact was, nothing really changed. the economy was on the same trajectory, drawing above-trend and generating steady job gains. we have been trying to communicate to people on the -- if the economy stand on that trajectory we would be moving gradually from monetary policy accommodation. the march move was consistent
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with what we said previously. the economy was performing in line with what we were anticipating. >> does that mean you would consider moving in may, or do you want time to see what happened with this rate increase to see if there are changes in the economy? there was no press conference is -- conference, so mechanically it is a little more difficult. more difficult. >> i don't think we are at this is a great there urgency. the economy is growing just a little bit above trend. inflation is still a little bit below our target. look at the underlying pace of inflation. look at the personal consumption, 1.75%. that tells you there was not this huge rush that we have to tighten monetary policy quickly. the economy is not overheating. at the same time, the policy is accommodating. we are pretty close to full employment. it makes sense to gradually take back accommodations and bring in monetary policy close to neutral. >> it's ok to raise rates, but i don't thing we need a major adjustment at this juncture to
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stay on track and keep our inflationary target. >> you said a week ago that three rate hikes this year could be overkill. why overkill? what's going to happen? >> this is not an environment where the data is screaming at the fed, you have to move. it is not like inflation is threatening 3% or the unemployment rate is moving meaningfully. like i just said, it has hardly moved in the last 18 months. i think you can wait and see in this environment and see how things develop. that is on the basis of the st. louis fed projection is going forward. >> you said the fed does not need to be preemptive. the fed raised the key rate once in 2015, once in 2016, and now it is talking about three rate hikes. five interest rate increases in three years after a long period
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with none. your colleagues argued this is so gradual how could you worry about overkill? how could you worry about being preemptive? >> it is not overkill now, but if you go forward with a lot of rate hikes without the data really perking up more than it has, i would call that into question. again, you have first quarter gdp and tracking estimates below 1%. >> let me pretend i am one of your colleagues. >> we can argue that. >> gdp is not what we really follow, and gdp lacks. >> unemployment is down. the labor market is getting tight. >> it is down three-tenths in the last 18 months. >> is inflation a target? if we wait too long, it will get out of hand. >> inflation is not expected to move far from target. in fact the fed has hit it s goals.
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unemployment is low, inflation is on target what do you want? , we delivered. ♪
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♪ >> a lot of talk about acquisitions. i want to jump on the terminal really quick, and illustrate how difficult it may be for some companies. for example, neiman marcus have looked at a potential buyout, but if you look at their debt distribution, there is a huge pile of debt here. manus: we have run a new function. this is personification of the kindness of strangers. if donald trump is watching, you will not be happy. these countries are in with the -- inwardly investing on a global basis into the u.k. erik: there are about 30,000 functions on the bloomberg. and we always enjoy showing you our favorites on bloomberg television. maybe they will be your
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favorites, too. here is another function you will find useful. quic will lead you to this week's pick. you can get important context and fast insight into topics. here is a quick pick from this week. >> for the first time in history, nasa wants to hand off routine international space station resupply missions to private companies. there is way more at stake than just food and equipment delivery. these space taxi companies will transport astronauts soon, and after that, tourists. here is the situation. these american companies, including elon musk's spacex, are building spacecraft to very -- bring nasa supplies or astronauts to space. >> we have lift off of spacex falcon 9 and dragon. to make space travel realistic, the price needs to come down. these entrepreneurs are counting on two words to cut costs. reusable rockets. until now, booster rockets
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simply burned up upon reentry into earth's atmosphere. musk says having rockets that re-land instead could reduce the cost of a trip a hundred-fold. in 2015, both blue origin and spacex created rockets. musk's reaction, "welcome back baby." since then, spacex has now recovered eight total. three by land, and five by sea. here is the argument. since the space shuttle program ended in 2011, nasa has been focused on mars and the furthest reaches of space. that leaves russia's spacecraft as nasa's only option for sending astronauts into orbit. rides that cost $70 million per seat. some argue private competition will bring down the price, and with it, the cost of space expiration, but there are very real safety concerns. virgin galactic's spaceship 2, designed to hold tourists, crashed on a test flight in 2014, killing the pilot.
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october but for a commercial company, in addition to it being a tragedy, a crash with passengers on board could end space tourism altogether. for now, the only option seems to be russia. ♪ erik: that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching. i'm erik schatzker. this is bloomberg. ♪
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♪ haidi: opec says it has seen progress in rebalancing the oil market. officials in the global glut is slowly draining away. yvonne: president trump has words for china, if you don't start out north korea, america will alone. -- beatinga to be estimates as the countdown to the launch of the new model three in the summer. yvonne: why cryptic messaging apps are becoming a major headache for wall street. haidi: hello from sydney where

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