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tv   Bloomberg Best  Bloomberg  March 31, 2017 8:00pm-9:01pm EDT

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>> coming up on "bloomberg best ," the stories that shaped the week in business around the world. the u.k. triggers article 50, d-two years to brexit. years to brexit. -- samsung rolls out a sleek new phone. president trump rolls back climate change rules. u.s. energy executives are pumped for the future. italy's finance minister insists the country's banks are back on track. >> we find the solution within a
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european ruled context. >> inside insight into what is ahead for the fed. >> we have to think about how we normalize more quickly. >> a couple more hikes seems reasonable. >> this is not the environment where the data is streaming where you have to move. >> it is all straight ahead on "bloomberg best." ♪ hello and welcome. youris "bloomberg best," weekly review of the most important business 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 with the european union. monday, a multinational merger took an important step forward. ♪ approvedropean union
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the proposed $77 billion merger of dow chemical and dupont, saying it's commitment to divest businesses have addressed concerns. what sort of concessions did the companies have to make to get a stamp of approval from the eu? >> the concessions are pretty bank. dupont is selling most of its global pesticides business and r&d business. dow is selling its petrochemical overlap as well. rmb was a bit of a surprise because it is quite expensive. the european commission explained it was concerned about innovation in this market. there are a few companies that can discover a chemical and bring it all the way to regulatory approval and market. for that reason they would like to see someone else take over that role that dupont has when the merger goes through. ♪ trump: with today's
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executive action i'm taking historic steps to lift restrictions on american energy, reverse government intrusion and cancel job killing regulations. [applause] >> bottom line, this is all about coal. he previously campaigned promising to rescind these federal actions in several key votersfor working-class he was able to attract. they lobbied heavily against the obama administration. they seem to have results with president trump. >> the long-term trend running against coal is still there with or without the clean power plan. utilities are looking toward natural gas and renewables, not just because they are cleaner, but increasingly cheaper than coal. you have those currents coal is fighting against. those headwinds won't be changing. >> david davis says britain will
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pay nothing like the amount of money eu officials says the country needs to exit. this after the eu says the --ntry's bill will be about >> one of the few things the europeans said they will act on is this sum of money they feel they are owned. there is some suggest an theresa may could open up a discussion going to the number. certainly the numbers talked about -- >> scottish parliament backed a call for a second independence referendum. the last one narrowly fell. they have voted for a second independence referendum. the u.k. government says there will be no negotiations with scotland for the referendum. >> theresa may has made clear she won't count this as a second referendum now.
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she has not said when she went. it is clear she said she doesn't want it on this side of brexit. the burden of the government negotiating brexit and fighting a referendum would be one challenge too many. >> it has been eight 44 year marriage. let the divorce begin. will leave the european union. there are many lines drawn in the sand as the united kingdom moves to monologue and negotiation. >> this is a historic moment from which there can be no turning back. britain is leaving the european union. >> celebration for some, disappointment for others. a historic moment from which there can be no turning back. the prime minister saying no numbers of a single -- no longer members of a single market.
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>> there is no reason to pretend that this is a happy day, neither in brussels nor in london. what we should stress today is that for now, nothing has changed. >> work starts now. we are beginning to see where the battle lines are drawn. theresa may talked about wanting to simultaneously negotiate the withdrawal and free-trade pact with the eu when britain exits. talked more just about getting an orderly withdrawal. we are seeing that the eu might want to just focus on the uk's exit, whereas the u.k. wants to focus on the free trade to simultaneously. >> part of this letter has frustrated many of the important negotiators in europe. this is an implicit threat to withhold security cooperation with the rest of europe if she
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doesn't get the freed trade deal that she wants. we are getting a taste of the kind of push back that theresa may will get for the next two years. making adavis statement to the house of commons introducing the plan for brexit. that white paper legislating on the u.k.'s withdrawal from the european union. what are you doing? >> jp morgan is looking at buying another office building in dublin. that is certainly one option. they could expand in other european cities. certainly you will see a bigger presence from these u.s. banks on the continent. what we have seen so far is banks making plans to send a small cohort at first, then see how the negotiations plant. market in thece british capital in 1688 expects
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the office to be operational at the beginning of 2019. >> we a contingency plan before the referendum. as soon as the result came through, we began to put the flesh onto that. -- rapidlyconclus concluded do onshore on the eu. i personally believe that london will remain the financial sector in europe. it will certainly remain the major financial sector for lloyd 's. obviously if you look at other parts of the financial sector, they have slightly different criteria at work. you will see some transfer. london will remain a powerful financial center. >> the eu signaled theresa may will have just one year to work on the trade deal. expected came out as playing hardball with the u.k.,
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saying they would not renegotiate a free trade agreement until you come to an agreement on these issues. that thet is this bill u.k. owes the eu. having said that, there were glimmers of an overture. if you look at the language that donald tusk used, he basically said, we will talk to you about your free-trade agreement if we can see sufficient progress on these key issues like the bill. everything does not have to be signed sealed and delivered before moving to free trade. >> there won't be bilateral talks with specific nations. there can't be talks with specific sectors. they came back to the issue of no cherry picking if you are not in the single market. >> these are the big issues for the eu. they want to be unified going
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into these talks. they are trying hard to maintain that. over the last nine months since the referendum they have done a good job against expectations of maintaining that unity. now that theresa may has triggered negotiations, the two yaeear window is there and delivered switches to the eu side. they control the agenda and when the meetings are going to happen. erik: we will have much more on brexit and the european economy as "bloomberg best" continues. not one, not two, but four said presidents share insights into rate hikes. in the next, more of top business stories, including china taking a stake in tesla. >> they are planning to take ownership of this world of
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connected electric vehicles in the future. erik: this is bloomberg. ♪
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erik: we will nations discussed -- oil nations discussed output limits. more --s >> the opec secretary general sees a high level of compliance with cuts. >> from all indications we expect a high level of conformity in the subsequent months.
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decision.inform the >> this was never going to be a meeting about extending cuts. specifically they are impressed with the levels of compliance. they have called for recommendations in terms of what to do going forward. immunity is the reality of the inventory. the latest reduced figures, the rigs underscored that once again. >> qatar plans on investing 5 billion pounds in the u.k. over the next 3 to 5 years, taking its total commitment to $40 billion. the finance minister told bloomberg that qatar and other gulf states will push for a post-brexit free-trade agreement with the u.k.. >> we are not looking at short-term upside or downside. that is the way we would like to carry on our investments.
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the exchange rate will depend on the deficit. ford is now revealing its investment plans. the president tweeted this morning, ford lending to invest $1.2 billion in 3 michigan facilities. this is something that had been discussed and agreed upon with the autoworkers several years ago. it is now fleshing out. >> how many net new jobs will it be? >> 130 jobs at an engine plant. 6000 jobs at a michigan assembly plant that will be protected by production elsewhere.
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>> would you be making this decision if the president had and indicated they would be reviewing -- hadn't indicated they would be reviewing fuel efficiency standards? >> yes we would. >> a cash boost for tesla. it is part of a round of investment that the company announced they will borrow. they will raise debt and sell stock. said tencenttner has no plans for preparation with tesla the moment -- cooperation with tesla for the moment. only a 5%10 thinking, stake? >> tencent has a process where they look at the highest fast growing companies and make an investment in it. they have invested in lyft, map ai technologies. they are planning to take ownership of this world of
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connected electric vehicles. they are not the only players on china. alibaba struck a partnership with one of china's biggest auto manufacturers. they are slated to come out with a connected car in the future. it doesn't come up as much of a surprise. >> shares of general motors are up to date. a decision to split the stock into two classes. >> the theory is that some people by gm for the earnings streak, some people buy it for the dividend. he considers it a depressed stock. there is a good dividend yield on it. capture the earnings stream, taken in each of buybacks. you can have greater people unlock so that people can buy exactly what they want. perspective, they
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don't think splitting this stock will pop -- it could actually hurt their credit rating because it will guarantee a dividend. >> samsung is trying to move on from the pr nightmare of its last major rollout. in a flash new york unveiling it revealed a flagship smartphone. it has been a rough few months for samsung. the exploding smartphone, then the heir caught up in this corruption scandal. can one phone turn all of this around? >> i think it is an important first step toward his turnaround. we should look at the phone itself. -- should not look at the phone itself. months, past several samsung has done a very thorough investigation. extremely transparent with the process. an eight point process of quality control. when you put that together, a
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strong step for simpson. >> toshiba's annual loss could double to $9 billion as its nuclear unit files for bankruptcy. what does this mean for the company? >> i think this is great. westinghouse was able to file for bankruptcy choosing chapter 11 as a way of filing. this actually helps quantify the financial liabilities for toshiba, and in a way, removing a lot of the uncertainties and overhangs of this nuclear project. also for the customers of westinghouse. >> i think the market is clearly understanding that much of the overhead is removed. that is why the stock price is reacting positively today. >> the opec decision to reduce
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production has been a good one. the inventory overhang is still there. we are coming back with independence in north america. what does it take to win in that kind of a world is a great portfolio, low capital intensity, a strong balance sheet. we are telling investors, here is a place where you can invest in oil. we will perform through the cycles. we think those cycles are getting closer together. >> the south african president jacob zuma has fired his finance minister and 8 other cabinet members that threatens to split the anc party. the replacement has no financial or business experience. the past five days have seen the the dollar.ainst want motivated -- what motivated
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this reshuffle? they wanted gordahn to intervene in a case where the bank had closed accounts. that is one political motivation in itself. n have beenand gordha at heads since the finance ministers was reappointed to his portfolio as finance minister at the time. that has been a future ever since december 2015. ♪
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♪ erik: welcome back to "bloomberg best." credit suisse held its asian investment conference this week.
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we sat down for an exclusive interview. we asked how the bank is preparing for the uncertainties of brexit. >> our dealings with london is quite old and large. we have quite a few holdings in europe. we have a new center in dublin, where we have transferred. we have options depending on how brexit plays out. >> you said that time has stopped a little bit now. you see banks like goldman sachs with a contingency plan. think credit suisse is going to have? had 9200 ago, we people in london. we have taken it down to 6000.
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there was a massive draining in 2016. ou ultimate goalr is to get down to 5000. that is a plan we have been implementing. >> is there something you are looking for in terms of clarity? do you want to see how negotiations are-- >> we want to see how negotiations are going to play out. the european union is a major economic boon in the world, and will continue to be a bed of operations, operating under many political and regulatory regimes. reports of your capital options right now. what can you tell us about those planes to move forward? are you looking at selling stock? >> the first thing i would like
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to say, in a funny way it is a positive thing. when we started in october 2015, we said we would need overtime $9 billion to $11 billion in capital. out to grow profitably, lower cost, and deal with legacy. if you look at the progress we have made in 12 months, we produced costs by $1.9 billion. at 10.2%.e started mid 2015, we were at 12.4%. on legacy, we reduced sru by 39%
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in one year. that inlear about february. it has helped us go through a restructuring period. we have made so much progress that we can consider other options. that is all the data i can give you today. >> are you talking with other banks about capital rates? >> we are considering options. februaryery clear in that the progression was and we will enter the labor market as soon as possible. erik: still ahead on "bloomberg fed presidents look ahead as investors try to connect the dots. italy's finance minister says the worst is over for his country's banks. energy ceos see a lot to like in
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the policies of donald trump. >> i think we have thrived in spite of the obama administration. erik: this is bloomberg. ♪
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♪ this is "bloomberg best." brexit is hardly the only challenge facing the european union. taking aimrties are at its solidarity. recent debt remains a stubborn problem and then there is italy whose political and natural institutions have struggled to maintain stability. the foreign -- the finance minister joined us this week for an exclusive interview with francoise lock while. the problem with the banks is being solved in the sense that there are still some critical
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points but now we find the solution within a european rule context and with full agreement with the european institutions to invest those problems which are a legacy for a long and process -- a long and prolonged recession. investors are asking a lot of questions testing the euro and the italian political system. how do you reassure them? >> investors are asking a lot of questions testing the the political system has produced better-than-expected results. the government has been in office for more than 1000 days. the sixth longest serving government. that is political stability. of course now we the political g elections ine next 12 months time. i am confident that this strategy of reform which has been the hallmark of the renzi government will continue. francine: do you think the five-star movement has a chance power?ing into
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>> it is leading the polls but we will see what happens in the elections. francine: this is one of the big promises that you have pegged to europe. >> the five-star movement is facing the challenge of government. the challenge of populist being phased across europe to do things and not just say no to things. francine: being phased across europe to do things and not just say no to things. francine: minister, i hear a lot of investors asking whether italy is the weakest link in europe. >> i answer is that this is not the case. for a number of reasons one of which italy has strong fundamentals, it is recovering from the recession and growing again. reforms are paying off and of course, there is a huge debt but the debt has finally stabilized and will begin to go down as of next year. this is a major turnaround with previous 10-15
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years in the country. we are back to employment levels at previous 10-15 years in the country. a precrisis level. back to normal and a better future. u.s. energy companies were in the spotlight this week as shale drilling continues to shake up oil markets and the trump administration takes steps to rollback industry regulations. alix steel spoke with several top ceos at the annual scotia howard we'll energy conference. what is the number one regulation you need to see rolled back? basin role in the permian as a leader. what this is emblematic of is a decision to rollback some of the this is emblematic of is a
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decision to rollback some of the prior rules that have been promulgated and give us a chance to put more thought towards those with the idea of creating a
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♪ erik: you're watching "bloomberg
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best." after raising interest rates in december, and again in march, janet yellen and the fmoc have signaled they are open to more monetary tightening in 2017. but how many hikes might be coming and when? week, bloomberg television interview four federal reserve president's to get their thoughts on the path ahead for the fed. continuous that the data had been quite good, december sep. it also had a nice forecast and even ratifying the forecast made me feel better about going ahead with the rate interest -- great increase in march. i still think that one of the larger uncertainties is whether or not inflation will get up to 2% sustainably in the u.s. and i do not want to get out ahead of the rate increases. that i thought it was perfectly acceptable to get one in, in
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march. consensus was for three rate moves this year. if the economy behaving in such a way that it would justify that? forhat is the median sep this year and to the extent that i gain more confidence in the forecast than i have to much that would be a good indicator that i could perhaps support three. two might be the right number if there is a little more uncertainty. about modest concerns whether or not we are going to get that. and if things really take off, and we get continued strong growth and underlying inflation really picks up, we could get four. >> i know somewhere in your body, you have the words -- .very meeting is live do you want to see the results of a move and how it affects the economy? it is not a press conference meeting. should markets look further out? >> you are right.
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have used colleagues this phrase and i am sure i have used it myself that upcoming meetings seem live. increases of three this year and we just did one in march, we will get two in it that takes place over the course of the year. at the upcoming meeting, i would have to see a lot of data. we go in and talk about the circumstances. strategy forabout our balance sheet and other things in order to make sure that we are ready for policy being normalized. if so, i would be surprised the upcoming meeting had that type of decision. but that is what it looks like this year. four ratee saying hikes in need to be on the agenda this year and that should be the fed expectation. why? >> the reception has been in the
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last year that at every single meeting, we are on a tenterhooks waiting to see how the data comes in. and when the economy was very far from full employment and far from our 2% inflation target, that may have been more appropriate. now we are close to full employment and we are arguably there at 4.7% on the unemployment rate. we are just a tad below the 2% inflation target. now is the time to be thinking about how we normalize more quickly. inone interest rate increase 2015 and one into the six -- in 2016 and four into doesn't thousand 17. a much more aggressive move. is that a bit of a risk to the economy? >> four is much more gradual. four in one year would be less period that we are coming out of it. at that time, we were raising it
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everything on meeting. twice as fast. relative to that, it is much more gradual. the course of this year, and we have already done one, as being gradual. we have been gradual up to now. is aa year in december very gradual pace. as we get the full employment, close to our 2% inflation target, we do not need to make -- we do notound need to make up much more ground. 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 and that would get us to the point where we still would have an unemployment rate within likely a little below what i consider to be full employment at 4.7% and likely at 2% though there are many forecasters now forecasting we will be a bug 2% inflation by the end of the year. trying to predict what is
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going to happen based on what i see today is not relevant. look at what happened in 2016. in the fall of 2015, the median was four hikes. and we did one. 2017, going into the meeting with three and so far we have done one. is ank where the fmoc is reasonable place. a couple more hikes this year seems reasonable. if the economy is stronger, we could do a little more. if it is weaker, we could do less. >> what tells you it is time to raise rates? was hard to convince people that you were going to move in march. >> nothing really changed. the economy was on the same trajectory, going -- growing up a trend. we had to communicate to people that if we stay on that trajectory, we will remove on a remove monetary
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policy. >> would it help considering moving in may? or do you want some time to see if there are changes in the economy from this rate hike? >> i do not think we are at this stage in the cycle where there is great urgency because the economy is growing just a little bit above trend and inflation is still below our target. if you look at the core personal consumption extension. we are running at one and three quarters percent. the economy is clearly not sameeating but at the time, the policy is clearly accommodative and we are close to full employment. it makes sense to gradually take back accommodation. that monetary policy closer to neutral as we go through 2017. >> it is ok to raise rates a
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little bit but i do not think we need a major adjustment at this juncture. thatweek ago, you said three rate hikes this year could be overkill. why overkill? and what will happen? >> this is not an environment where the data is claiming at the fed that you have to move. it is not like inflation is unemployment% or is moving meaningfully -- like i 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 has been the basis of the st. louis fed projection going forward. about -- you said that the fed does not need to be preemptive. key rate once the in 2015, once in 2016, and now it is talking about three in 2017. after a long verio did of none.
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of none.a long period your colleagues are arguing that how could the -- how could this be overkill? >> it is not preemptive now but if you go forward with more rate hikes without the data perking up more than it has, i would call that into question. you have first quarter gdp tracking estimates more -- below 1%. >> let me pretend i am one of your colleagues. >> we could argue about that. not what we really follow. and gdp likes and unemployment is down and the labor market is getting tight. >> it is down 0.3% in the last 18 months. >> you have inflation at target and if we wait too long, it will get out of and. >> it is not expected to move very far from target. in fact some of the fed has hit
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its goals. what do you want, man? >> to be delivered. [laughter] ♪
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a lot ofre has been talk about acquisitions. jumping onto the terminal to see how difficult this might be for some companies. for example, neiman marcus. look at their debt distribution, they have a huge pile of debt. >> we have run of -- one of our new functions. donald trump is watching. you will not be happy. >> we have run of -- one of our new functions. these are the countries that are inwardly investing on a global basis into the u.k. are 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television. maybe they will become your
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favorites also. here is another useful function. it will lead you to our quick fix where you can get important content and fast insight into important topics. here is a quick take. ♪ >> for the first time in history, nasa once to hand off the resupply missions to private companies. at stake thanore just food and equipment deliveries. these companies hope to transport astronauts soon and after that, tourists. here is the situation. these four american companies including elon musk's spacex are building spacecraft to carry asset supplies or astronauts into space. >> and we have lift off. tourismke space realistic, the price of these trips needs to come down. entrepreneurs are counting
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on two words to make this happen -- reusable rockets. until now, they would burn up upon reentering -- upon reentering the atmosphere of the earth. 2015, both blue origin and spacex successfully launched rockets. elon musk's reaction? baby."me back, the the argument. since this they shuttle ended in 2011, nasa has been focused on mars and the further regions of space leaving russia's spacecraft as the only option to send astronauts into origin. $70 million per feet. private competition willmars anf bringleaving russia's down the price and with that the cost of space exploration but there are very real safety concerns. virgin galactic's spaceship to
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touristsgned to call to the edge of space crashed killing a pilot. for a commercial company, in addition to being a tragedy, the crash with passengers on board could and space tourism altogether. for now, nasa's only option seems to be russia. that was just one of the many it takes you can find on the bloomberg. you can also find them at -- a lot with all of the latest business news and analysis 24 hours a day. that will be all from "bloomberg best." thank you for watching. i am erik schatzker. this is bloomberg. ♪ >> he uses cutting edge technology to weave together sound design and sculpture.
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>> all of his work operates in a nebulous region between fact and fiction. was complicated for me to declare being an artist. to an artist is using objects. we are interested by ideas. >> i think all of his work operates in a very nebulous region between fact and fiction. >> he is not asking you to understand. >> his work is the opposite of an instagram photograph. he actually takes it three-dimensional.
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announcer: "brilliant ideas," powered by hyundai motors. ♪ >> ♪ i-d-e-a, ideas ♪ narrator: tate modern in the heart of london. at its core is the turbine hall, the most challenging exhibition space in the world. each year, the prestigious hyundai commission allows one artist to take on this vast space and make it their own. this year it is french artist


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