tv Bloomberg Best Bloomberg January 14, 2017 8:00am-9:01am EST
♪ >> coming up on "bloomberg best ," the stories that shaped the week in business around the world. the president-elect meets the press. hearings heat up on capitol hill. >> the plan at this point is just to trust donald. >> he is not moving where he needs to move. >> contention is an understatement. chinanomic news from causes global concern. >> i think you are seeing a bumpy road. politics might be about to change the game for drug companies. leaders in the industry tell us what they are expecting. >> at the end of the day come up
more value is being generated for the patient. we have to be careful about not losing the baby with the bathwater, and that is innovation. tell us about their plan to move forward. >> we have more in common with the president-elect and the incoming administration and we have at odds. at odds.e have >> that is all ahead on "bloomberg best." ♪ michael: hello and welcome. i am michael mckee. this is "bloomberg best." bloombergy review of television from around the world. let's start with a day by day look at the top headlines. on monday, the spotlight fell on china contending once again with volatility. reserves slump i another
$41 billion last month. toiously, they were able defend, but how much more willing to navy to let the reserves drain? ing to let the reserves drain? >> they are increasing capital control, so they are not likely to drink the reserves as much going forward. still, there is only so far you can go on both fronts. the reserve piles fell by billion in.4 december. it is getting down to that $3 trillion threshold. ofwas $4 trillion in june 2016. the piles have continued to dwindle. >> you see it saddling that $3
trillion line. down from 4 trillion, so -- ive been talking about think for the long-run trend, this is good news. >> do you expect further measures to contain the capital outflow? >> from my point of view, i do not think it will go further. china's reflation story gets cpi consumer as prices are overshooting. >> yes, it seems like yesterday we were talking about continued deflation, but now we have had four months of continued inflation faster than expected. the main reason is the commodities rally. iron ore and other commodities
are up. of these make too much numbers, but keep in mind that a year ago prices were down by almost the same. the a two-year period, prices are unchanged. so, it is not necessarily the beginning of hyperinflation or rising inflation and price pressures. ♪ >> a flurry of confirmation hearings kicked off today on capitol hill beginning with jeff sessions the nomination for attorney general. it was a contentious hearing that got off to a rocky start. give us some of your headlights. >> contentious is an understatement. several protesters interrupted senator jeff sessions hearing on capitol hill. i put the question to jeff sessions spokeswoman about whether or not he would weigh in on the at&t and time warner deal. she said that she would be for that to the leaders of the assistant attorney general with
regards to leading up to the acquisitions and mergers section of the doj. if you are in the business immunity, the take -- community, the take away is that sessions will not be as critical of the steel and other mergers and acquisitions as president elect donald trump has been. i have heard that he did not speak with donald trump at all about at&t and time warner specifically. >> president elect donald trump ending his first news conference as president-elect. his first news conference in almost 170 days. >> what was your main take away? promised about a month ago to be specifically focused on his conflicts of interest in his business. that was a big take away. he did finally address that. the other was russia. for thewledged, really
first time, that russia was responsible for hacking the dnc. of thisdo you make statement that he does not want anything to do with the trump organization? >> the plan really is to trust donald and to trust donald judgment. they have taken it none of the steps that his predecessors had taken to make sure that he is insulated from conflicts of interest. a blind trust and investment of assets -- investment -- divestment of assets. >> we need to have him divest. he needs to put his is missed interest in a blind trust. >> what is your response? >> it is not impractical. people do this all the time. >> pharmaceutical and biotech stocks took a dive after donald trump commented on their pricing methods earlier in the day.
>> they are getting away with murder. still doubt that he had the power to move the market, he has surprised everyone at that press conference by saying that the pharmaceutical companies have been getting away with "murder." it absolutely destroyed the nasdaq pharmaceutical and biotechnical index. they thought that donald trump coming in was going to be friendly to drugmakers. hillary clinton and bernie sanders for the ones going after the industry. not the case. donald trump is a populist. >> meanwhile, rex tillerson continues to testify about his nomination to be secretary of state. >> the issue of russia and the u.s. policy under a trump white house has continued to,. i think what we are noticing is that rex tillerson is looking to win over the support of
republicans like senator john mccain and senator lindsey graham. the republicans who remain skeptical of his ties to russia. i would also note that rex tillerson, unlike donald trump, said that he actually supports the transpacific partnership, but that he would want to take a good look at it and possibly reform it. that is a departure from donald trump's position. >> the biggest decline ever in fiat chrysler shares. ledge dieselto a cheating and trying to avoid the clean air act violations. >> we compare this with the volkswagen story. these allegations are covering around 4000 vehicles. >> it is smaller, but that does not mean it could not do a lot
of damage if fiat chrysler ends up being guilty. they are saying the devices they have in their did not achieve. the will continue to fight this and work with the epa. there are some specific things that need to be looked at before you can determine what kind of financial impact it will have on fiat chrysler. what the epa is saying is that there are a devices on these --icles -- software devices that the company did not disclose. able offense, but if they did not cheat then it would be much smaller in terms of fines. it would have to be known whether or not fiat chrysler cheated. we just do not know right now. defending itself and saying there is no wrongdoing here. ♪ >> three of the major banks are out with orderly results this morning. bank of america missing estimates.
andorgan's profit beating up 31%. wells fargo falling by 0.4%. >> if you were to give us one headline that summarizes the most important point, what would it be? >> the most important thing i have seen this morning is from bank of america. going into this earnings season, the stock has had a huge run. investors are looking for a sign of optimism. i think that is a signal of america -- signal from bank of america to the future. it tends to be in more volatile item. it tends to set the runway going into next year. there are more questions than answers come up because there is so much we do not know as far as regulation, tax policy, interest rates. that is going to be the main drivers behind the stock. >> we have had the donald trump rally that fueled the next leg up on bank stocks. which bank is in the best
position to capture that story? you have jp morgan on one side, and you have bank of america ready to take advantage of the yield curve. >> if you look at the key metric, jp morgan and wells fargo are still leading. wells fargo despite all of that trouble. these banks still are earning relatively higher r.o.e. still ahead, the eu competition commission you liberated over to huge multinational mergers. we discussed some of the issues on their plate in 2017. also, the hot button issue of drug pricing. we will hear from top ceos from pharmaceutical companies. plus more headlines trump the week in business. alibaba makes a big bet on bricks and mortar. >> they see a big chance here with some retailers they have
♪ michael: this is "bloomberg best ." i am michael mckee. theinue our global tour of week's top business stories. theresa may is apparent to negotiate britain's exit from the european union. also, the anticipation of a hard brexit continue to have an impact on the pound. >> theresa may has signaled that immigration is one of the priorities in the brexit negotiation. she said that she will be able to have control of their borders and loss, but she does not want that to affect your -- great britain businesses to trade with the eu. >> the sterling is looking
really negative this morning. it has kind of been a double low in the past couple of weeks since the recovery from the flash crash. we are seeing the bloomberg pound index is breaking its clean, upward trend since the flash crash. that is even more negative because there is a lot of dollar uncertainty lately. it is looking quite bad after theresa may's comments. japanese drugmaker cicada pharmaceutical will expand its footprint in america. it is a $4.6 million deal the company is expecting to close by the end of february. math that through the it took to get to $24 a share on a stock that was trading at $13 and >> if you just -- at $13. productu just look
byproduct, we look at how much the product is. >> this is the lung cancer product. >> we believe it can be the best in class. worth $1e it can be billion a year. that is how the math works. if you believe the product has this potential, then you can price it. alibaba has one of their biggest business figures as the latest to roll up to trump tower. he is to create a million new jobs in the u.s. over the next five years. what else do we know? >> we know that his promise to create one million new jobs is that -- is based on the assumption that they are going to attract new businesses onto the alibaba platform. if they can each create one job, then they delivered the one million jobs. if you think about it, a lot of them are likely already doing the selling to alibaba.
the are 7000 brands that are selling on their platform. they might come into direct competition with ebay. it is -- there is going to be a lot of overlap in that space. is making a big that on bricks and mortar. they are leading the charge to buy out a retail chain. it would add to their versioning hold on physical retail. hold on physical retail. >> they see an opportunity here with a couple of retailers they have invested in to try and bring in some of their know-how and customer experience and on the retailbear segment that has not been operating so well. the chinese economy is not -- is slowing of it. the chinese government is trying to ship to a more consumer driven economy.
so, there is more of a direction here to cater to consumers and give them more choice than they might typically see in a u.s. retail space. >> they are selling $4.1 billion in assets in two deals. their many moves to try in ease the debt burden. is it all about the debt load? >> they have announced about $2 trillion worth of sales, and they are sitting at about $30 million in debt. this eases things. good sign of a things to come for investors. it is certainly in the right direction. if you look at the valuations, they are selling this cancer asset for more than they have paid for which was a big worry that they were going to be doing fire sales. they still have their main business of dermatology products that they are selling at a good valuation as well. i think it is a good start to what is likely to be a good,
long asset sales process and volume -- at valium. >> almost twice its market value for this turnaround. this is twice of much as monte dei paschi trying to raise. we know what happened there. is this going to be a smooth process when it gets to the markets? >> there is certainly quite a bit of optimism on the part from the ceo who has told reporters that he is quite confident it will be able to get back. we have heard confidence from some of the investment funds that were at the assembly today. comparedifferent story to monte dei paschi who needed that funding to survive. it is still a profitable bank, and it needs to bolster its capital buffers. it is a so-called systemic bank, and that is what it needs it money for. ♪
>> amazon says it plans to hire 100,000 people in the united states over the next 18 months. pressure on the technology company from donald trump to create jobs. how much that's how many jobs today typically create in 12 months -- how many jobs today typically create in 12 months? >> it is a kind of massive jump in the next 18 months. if you really look at it, it is not all that surprising. what they also lose jobs over the course of 18 months. -- >> they also lose jobs over the course of 18 months. >> they are also trying to expand more into hardware. they want to get out there goods faster to customers. this is all part of a huge ramp up in workforce. it is not too much of a departure from what we have been expecting. ♪ heir is back home
after 22 hours of questioning in the ongoing scandal. the spoke -- they spokesperson said he denied it most of the allegations. >> this is a difficult time for the company itself. he appeared yesterday morning at about 9:30 entering the prosecutor's office. he stopped briefly and was surrounded by reporters and activists. he was asked about this, and he briefly apologized for the companies the hader. he then went in -- behavior. he then went in and answered questions for about 22 hours. prosecutors have also been questioning other executives at samsung. at least three that we know about at this point. last night, they questioned another. they are digging deep into these allegations to try and figure beenhat samsung's role has
♪ michael: welcome back to "bloomberg best." i and michael mckee. competition commissioner does not shy away from going after big companies. does look at apple and google. she is now looking at two agrochemical megamergers. she discussed the mergers with david gura. that: let me ask you about down to merger. -- dow-dupont merger. overis the concern continued competition in the agrochemical space?
>> what we are looking at is the very obvious -- farmers still need to have choice. these are the things we are looking at. the outcome of the merger is still very open. we have the hearing just today. >> a chinese company is looking at a possible merger as well. what have you learned over the past couple of months? >> even though these companies are in similar or overlapping markets, the mergers are very different in their nature when it comes to the markets they address and the companies that are merging. in china, it is very much focused on the chinese market. they want to improve the products in the market. to that degree, there is a question of innovation and how to make that happen in the chinese market. that might be the one thing they have in common with the dow
-dupont merger where innovation is an important thing as well. -- what does that bank in the italian government have to show you to prove their plan is a good one? we are obliged to see a restructuring plan that will on theor a viable bank other side of the recapitalization. here, of course, it is the detail that counts. that,l start working on and it will probably take a couple of months or maybe slightly more before the restructuring plan is in place. obviously, it is the main work of the management of the bank. david: in the exchange space, i know you have raised concerns
about deutsche voice and the london stock exchange. what is your concern about that competition in the exchange space? x it is a market where you have very high barriers of entry -- >> it is a market where you had very high barriers of entry, but it is important that you get the right prices on a number of different products. we are in discussions now with the companies. it still remains to be seen what will be the outcome of this case. ♪ michael: i'll review of the week "ontinues on "bloomberg best with compelling interviews from the jp morgan health care conference. possible issues with their models. also, how do they negotiate the road ahead with donald trump. >> we are very proud that our
pricing regulations. earlier in the week, erik schatzker spoke with a number of our mystical executives at the jp morgan health care conference in san francisco. while the president elect not yet fired his shot across about, there was still a general -- ow, there was still a general expectation that we 17 would bring changes for the 2017 will bring changes for the industry. >> there is so much still that needs to be done in medical research. especially in areas such as oncology and urology -- virology . we have an optimistic view. there has been discussing about the pricing environment in the united states. the pricing environment in other countries. this discussion is natural.
people are talking about how to best use resources in health care. we believe that global medicines are a very, very good way of investing in health. >> the price setter for some many drugs in the american markets are the pharmaceutical managers. >> that is a competitive system. managersarmaceutical are two pressure you -- are supposed to pressure you on pricing. >> is is what business is about. you are negotiating price in the marketplace. at the end of the day, it is about what value is being generated for the patient. is u.s. health care system one of the ones that is better than others. >> what kind of drug pricing environment do you expect from the trunk administration? --
trump administration? >> i think the issue of pricing will be central to the debate. we need pricing that really represents the value of items. i think it is 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 to do it in my view is to make sure that the price of non-innovative drugs, generics are made in such a way that they become accessible. that the price of innovation be recognized for the value it provides. >> do you think the trump administration will take a lighter pros to -- approach to drug pricing? >> i think it is a bipartisan concern. last year, we saw pricing grow. people want transparency. they want to understand what is happening. frankly, they are blaming the
pharmaceutical companies, but the system is not working properly in being able to provide value for both once weon -- remember, discover a job we have to give it to the public in a few years. >> who are you pointing your finger at? >> everybody. i think the entire system needs to be transparently reviewed and readjusted. ♪ >> the environment here is really different from the environment in europe. you have any hope that we will begin to see indication based pricing in some of the major european countries like germany and france? >> we have been working at this for five years with our cancer medication. we have been innovation team today in italy. >> i am aching of elsewhere -- thinking of elsewhere -- germany and france. >> we do some work now at the hospital level in france. in switzerland, we have
accommodation based pricing. at pricing does medicines as a pair or a triplet. >> there are more than 20 countries in europe today that are ready to instigate the systems. i think in the next five years -- >> it is going to take that long? >> no, it is happening today. in the next five years, more and more companies -- countries will be adopting it without a doubt. >> one of the largest retention funds in the united states lowered its rate of annual return from 7.5% to 7%. this week i'm a chief -- the fund's chief investment officer says they also have a strategy to reduce fees. space ina difficult the stock market to be an active
investor. they are very efficient. just about aht huge majority of our assets internal. we are very proud to have over 70% of the portfolio managed internally. most of that is in our public asset classes of stocks and bonds. much of that in the stock portfolio is index oriented. 30% of the portfolio is pursuing various active strategies. >> let us go back to that question them. -- what percentage would you prefer in-house? >> 75% or 80%. >> that is bringing in billions of dollars. >> it is a big deal. that 70% we have in-house currently -- we pay for basis points for that talent. we have done very well in the
fixed income and local equity portfolio with attracting talent. i am very proud of the teams we have here in sacramento. michael: now let us head to the ubs greater china conference in shanghai. banks is in the talks to increase their foothold on the mainland. they talk about risk and opportunity in china. >> what you see as the key risk or key challenges for 2017? >> the first one is the leadership change we are going to see in terms of policy priorities we are going to see. the current administration and central-bank leadership has been in control rather long. remember the central bank governor was there when i joined in 2004, and he is still there today. the chinese monetary policy has
followed a very steady path. they want to open up and become part of the international community. it is now part of the special growing rights of the imf and that requires china to be part of the international community. >> given what we have seen on the capital control, the yuan has taken a big step back, hasn't it? >> i think you see that these processes are not smooth. never a straight line. thingsre periods when move more easy, and there are periods when things move in a more rocky way. when there is a large amount of uncertainty rising -- just look at the united states, it could mean a totally different policy for china. it is the risk for u.s.-chinese relationships and global evaluations. at the -- i think you are seeing
more risk in the global economy then you have seen in the past years. in the past, clinical risk was an emerging market political risk was an emerging -- political risk was an emerging market factor, and now it is a market factor. ♪ >> tom mackenzie also spoke exclusively with the head of the china infrastructure bank, and the impact on capital controls. >> chinese debt is basically domestic debt. china does not have external debt at a high level. it is easy to handle. i believe growth can solve some of these problems, and the chinese government will be able
to address all of these issues. what is most important is to chinaure that we in adhere to the fundamental issue of restructuring and addressed some of the structural issues. >> on the issue of capital control that we have seen rolled out in the past you months, does it suggest that the imf was premature in including the currency in their basket? >> it is my reading that the chinese government would adhere keep theinciple and chinese currency. increasingly, in an currency -- currency in the basket. still, i believe that some measure is necessary.
♪ >> fiat chrysler is getting more than 2% right now. the company has announced it will invest $1 billion in making three new jeep models in the u.s. they say they are going to spend the billion dollars through 2020. ford is going to cancel a $1.6 billion investment in mexico, and saved some of the jobs it would have lost in the u.s.. are these carmakers doing donald trump's bidding or are they just throwing him a bone? >> at think there is currently a competition of announcements in
who will invest in what in the u.s. most of it has been committed before. we know if you're chrysler a lot of money on cheap in particular. p inyone -- on jee particular. everyone just want to come out and make the announcement that they are building in the u.s. >> the forecast has been raised to $6.50 a share. a buy back of those shares. >> they had been talking about global auto sales tapering off in the u.s. market -- and the u.s. market next year basically being a flat. they are saying that their retail sales and revenue is going to be better. they are saying they are going to be able to grow profit even as the global auto market and local economies are sputtering along a little bit. >> volkswagen has agreed to plead guilty to the missions
cheating scandal. they will pay $4.3 billion in penalties. announceds also charges against five individuals. this is a glee clears the deck for them in terms of -- this basically clears the deck for them in the united states in terms of the missions cheating scandal. -- emissions cheating scandal. the focus will now shift now to the individuals charged. infar as volkswagen's future the states, it will not be able to sell their diesel vehicles -- or at least they said they would be unlikely to be selling them anytime soon. ♪ busyel: it was another week in the automobile industry which has been under pressure recently from donald trump to increase more jobs in the united states. donald trump did not appear at the north american auto show in
detroit to make his case in person, but david westin was there. he spoke with several ceos on donald trump's impact on their business. look forward to this new administration, what are you anticipating or planning for? >> i think there is a lot of opportunity. we have more in common with the incoming administration than we had at odds. there looking to strengthen country. we provide over 100,000 very good, well-paying jobs. we are also looking for some regulatory reform and streamlining. those are all things that will improve our business and allow us to reinvest. david: so there is opportunity for you? >> i believe there is. people need to understand this is a very complex business. the full vehicle built in michigan, and another vehicle is
also built in michigan -- those are decisions that were based -- made a few years ago. david: it is also complex in terms of the supply chain. you think -- what are your interests in trade as far as a cross border tax? --h that helped or hurt gm would that help or hurt gm? >> it depends. our strategy that we are proud of is to build where we sell. highest u.s. content of all the manufacturers. we had a lot of jobs here, and we are going to look to make sure that it recognizes the significant investments we have already made in the country with the jobs we are providing. david: what is your view on the donald trump administration as they come in and formulate their
trade policy? >> i have a good relationship with him. i spoke with him last week about our plan here in michigan. he is very interested in all of the things we are interested in. taxes, trade, currency regulations, all of the things that affect the u.s. economy. we are very interested in what his policy will be. to write the were ticket right now for an atmosphere that would be helpful to the auto industry, what would you ask the administration? >> one thing he has already done is in point an outstanding -- outstanding transportation commissioner. we are going to need a partner in government to make all this happen. i am very pleased she is the choice. david: do you agree with the trade subject from the transition team?
>> we are working with them. we think it is important that they understand our position. we have built vehicles for well over 100 years all over the world. in mexico for over 100 years my before nafta or anything else. we think that is important for any administration to understand. david: you made a little bit of news with the present elect last week with the plant in mexico. what is your plan after that? build our cars in mississippi, as well. however, six years ago, we make a decision to realign our development into the u.s.. we would grow out of canada and move closer to the plant in mississippi, and then put it into mexico. this decision was made five or six use ago. david: we now have a new president coming in. does that change your plan at all?
>> we are a relatively small player in mexico. if you look at all of the product made in north america, only 5% comes from mexico. we were late moving into mexico. we will have to take a look. obviously, we understand what the president-elect want to do. we all agree with the president that we want to make america strong. we want to have good paying jobs , and we want to have a good economy. that helps my business i am selling cars in a stronger economy. selling my cars in a stronger economy. we have been in this country for over 60 years now. we have invested $22 billion over that time. the next five years, we are going to invest another $10 billion -- $5 billion in our plants when it comes to economist vehicles. david: we do have a new administration coming in.
trump did talk to donald and were to tell him what changes you want to see for the auto industry, what would they be? >> everything being done in collaboration with the industry, it is much easier to get done. can doinistration whatever it needs as long as there is collaboration, and we have some kind of visibility on what is going to happen. we can do a lot of things. one of the things that have been surprising are some of the tweets coming out of the president-elect. some of your compatriots have woken up to see tweets about what they are doing in mexico. you have a vulnerability there? came up with a business strategy a long time ago to localize production as much as we can.
-- it carries great the blue is on principles. really, 2020 is when they have some serious money coming due. 30,000: there are about functions on the bloomberg. we always like to show you our favorite. maybe it will become your favorite? here is one function you might icgo.useful -- qu it gives you all of our quick takes. here is one from this past week. great britain and the european union are on course for a messy divorce. great britain voted to leave the european union aced on arguments that it was too expensive and a source of uncontrolled immigration. >> we wanted independent united kingdom. >> britain's exit from one of
the world's most powerful trading blocs jolted financial markets and sent the pound tumbling. david cameron resigned. >> 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 inevitably have global applications. >> we are going to make success on this. >> here is the situation. to begin the complex negotiation or exit, that a look at article 50 in the treaty of lisbon that requires formal notification of a country's desire to withdraw. britain will then have two years to negotiate in terms of it separation including unwinding things like trade, financial agreements, and safety standings. it also requires the backing of a majority of european union government. the establishment of trade
relations could take much longer -- perhaps even longer than five years. the exit is that the pre-brexit those was based on -- vote was based on populism and a backlash against the european elite. can they successfully exit the european union without a significant blow to the economy? it is a tricky negotiation for theresa may. it could cause global companies to cut investments or leave. no country has ever left the eu before, but a trade deal that was struck by two countries never a part of the eu may provide a guide. michael: that was just one of many quick takes you can find on the bloomberg. you can also find them on bloomberg.com along with all of the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week.
david: what did your family think? did they say, what is wrong with this man? bill: i was a little strange. david: have you thought about if your life would've been better off with a college degree? bill: i take college courses all the same. david: as far as your relationship with steve jobs -- >> we were both there at the very beginning. david: is that more of a burden than a pleasure, to be the wealthiest man in the world? >> will you fix your time -- your tie please? david: people would not