tv Bloomberg Best Bloomberg April 9, 2017 5:00pm-6:01pm EDT
♪ >> coming up on "bloomberg best," the stories that shaped the week around the world. xi comed face-to-face. headlines abound in jamie dimon's letter to shareholders. >> the bank is preparing for a hard brexit. >> we will find a way to improve -- improve and increase our commercial relations. >> jack lew speaks his mind in another exclusive. >> i think it would be a big mistake to do an expensive tax cut.
global, perspective from investment leaders on where in the world you should put your money. >> european growth looks soggy over the next 18 months. >> when the fed has taken the foot off the accelerator, or slammed on the brakes, somebody has gone through the windshield. >> it is all next on "bloomberg best." ♪ david: hello and welcome. i am david gura. this is "bloomberg best." your weekly review of business news, analysis, and interviews from bloomberg television. let's look at the top headlines. on monday, political turmoil in south africa continued to undermine confidence in that nation's economy. >> president jacob zuma may face a no confidence motion.
the rand is lower. >> some top officials are speaking out against the cabinet cabinet --y shovel, reshuffle, saying he did not consult them, and speaking out against the firing of the former finance minister. does seem as though it is critical as to whether this motion of no confidence will succeed or not. >> do you think he should step down? >> yes, i do. the highest court in the land has judged him to have breached oath of office. that makes it difficult for him to command respect which would rally and unite various sections of the south african population. >> s&p has cut south africa to
junk, outlook negative. political risk front and center with growing pressure on jacob zuma to resign. >> we are concerned about the impact on the fiscal and economic story. it puts policy continuity at risk. there is an increased likelihood -- an increased likelihood that economic growth and fiscal outcomes could suffer. richmond fed president jeffrey lacker resigning today. this comes six months earlier than his planned retirement. it comes after he disclosed his role on a information leak 2012 related to federal deliberations. he says "i regret that in this instance i cross the line to confirming information that should have remained confidential. in 2012, my conduct was inconsistent with those confidentiality policies." >> he is saying he is not the leaker. he was presented with information by the analyst and he is saying he should have ended the conversation then and
the risk is by not doing that that it infers the information was correct. it is a nuance, but a significant one. >> it is a serious breach of information. very highly valuable sensitive information was given to analysts on wall street, who passed it along to clients who may have made money from it. i would say there is more to come. ♪ >> the fed released minutes from its march meeting earlier this afternoon and it shows the fed favors plans to shrink the balance sheet later this year. the minutes indicate their general attitude on rate hikes for 2017, "for dissipate -- most participants anticipated a gradual increase in the federal funds rate would continue and judged it change -- judge that a change to the committees reinvestment policy would be appropriate this -- this year. what is your big takeaway? >> the markets were looking for the possible start of the balance sheet unwinding, q4 or next year. the minutes provide that guidance of it being pushed into
2017. if we are sticking to three rate hikes and getting a balance sheet unwind, that is like another rate hike almost into 2017, some behavior and maybe too much push from the fed. you can see the reaction in equities and treasury yields. >> how do you calculate how many hikes the federal reserve will deliver in 2018 on a good day, never mind them talking about normalizing the balance sheet. >> the context is obvious. slowly going to raise rates and then address their balance sheet. for years since the great recession, we have had the fed as a tailwind for the stock market. they will turn it around and eventually become a headwind. that is what investors need to know. >> president trump is about to open a high stakes summit with china's president sheesh and
jinping at his mar-a-lago resort in florida. we have a lot on the agenda, north korea, tensions over trade, hanging over the meeting between the world's two largest economies. >> they have been saying they are proud to have both president xi jinping and china's first lady in town at mar-a-lago. tomorrow looking ahead, that is when the hard stuff comes. for example, they will talk about u.s. jobs and the export of u.s. jobs to china. one other thing is the trade surplus that china has with the united states. it totals $347 billion in 2016. when they get to the substantive talks tomorrow, donald trump will be trying to figure out how he can get china to buy more u.s. goods and services. >> we do have breaking news crossing the bloomberg. there have been u.s. missiles launched against targets in syria. pres. trump: tonight i ordered a targeted military strike on the
airfield in syria from where the chemical attack was launched. >> to be honest, this does not change the balance of power in syria. it was a targeted strike. they knew the assets they wanted to get. they warned russia it was going to happen. the next steps will be crucial. this has catapulted tensions between the u.s. and russia to the highest that they have been since trump took the presidency. where do they go? do they ramp them up more? with the visit to moscow to next week, is it a potential point to deescalate? >> 180,000 is your estimate for payrolls. that was in the bloomberg survey, 235,000 is in the previous report from d.c.. how do you spin this one? just 98,000 jobs were created.
98,000 jobs in march. the unemployment rate falls to 4.5%, the lowest since may 2007. >> i would not extrapolate this to say it is a weak job report. the three-month average, we are on the 78,000, probably setting around 150 thousand -- 150,000 eventually. wage growth was unexpected, so this tells you the economy is gradually transitioning from job creation to higher wages, and it is in line with the gradual recovery we have experienced for a number of years now. >> overall, we are pleased. when you look at the unemployment number going down, both the 4.7% number going down and the u6 number coming down by .3%, then you put on top of that what we know is coming with the jobs being created by the companies we have talked to and moving
manufacturing back to the united states, we are excited about what is going on in the future here. david: still ahead as we review the week, exclusive conversations with the president of argentina and jack lew. plus, sheila patel sees investors searching for emerging markets. coming up, top business headlines. would you believe teslas market cap blew past forward this week? >> any good week? news on tesla send their shareholders grasping. ♪
>> the h-1b visa application process has opened despite president trump's plan to reform the program further that he says undermines american workers. new guidelines were issued late friday that require additional information for computer programmers applying. are you still expecting it to be oversubscribed? >> yes, because we were expecting tougher rules out of the new administration. we have not seen that. without knowing what could come in the future i would expect a , lot of -- a lot of technology companies will use this window to fight for as many as they can. >> when we talk about tech employees in silicon valley, who exactly will be hurt by this? >> you could see a tightening, particularly for the outsourcing companies. it would reduce their use of these work visas, and that may leave more for american
technology companies. the idea when it was set up three decades ago was to bring in workers from overseas that companies could not find in the u.s., and it may go back to more of that original intent of the program. >> tesla's shares shot up 5% today after the carmaker reported deliveries that exceeded analysts estimates. tesla's market value is $2.7 billion more than ford motor company. how is this possible? david: you have tesla saying their sales were 25,000 in the quarter, a few hundred more than they said, but any good news sends shareholders into rapture, particularly those bullish on the stock. on the other side, you have the detroit makers and all the established automakers that were
showing a march trend for sales that was softer. it says we are at peak auto. we are not going to see a lot of growth. there are more incentives to keep sales going. inventories are rising. it's not a bad market, but it is is sort of headed south and tesla has growth still. >> let's turn to the latest on credit suisse, facing a tax evasion and money laundering investigation that could involve thousands of account holders. who exactly is being targeted, and is credit suisse cooperating? >> the evidence suggests that as of now the bank is not the , target in this investigation. this is about account holders, individuals, who may have held accounts with credit suisse and there might be money laundering involved. the bank said it is looking into the matter and pledged that if we find wrongdoing that they
will take measures against it. >> in a letter to shareholders, jpmorgan ceo jamie dimon address concerns about europe and brexit negotiations and factors causing damage to the u.s. what did he have to say about brexit? it is something that has been front of mind for him and other banking ceos in the last several months. what did he say about how the process is unfolding in what he hopes to see at the uk's sit down to the table with the european union? >> he said the bank is preparing for a hard brexit, which most banks are, which would mean the loss of passporting and having to adjust their businesses to serve eu clients. he said he is not expecting a lot of job movement in next two years, but after that, they will face pressure from the eu to move things into the trading block and not do everything from london. >> jamie dimon said government and pose capital requirements are holding back lending, and relaxing them could spur
economic growth. minneapolis federal reserve president neel kashkari responded, saying those assertions are false. >> i know jamie dimon and like him. when he says things i believe are incorrect, it is our responsibility to speak out. the fact is too big to fail has , not been solved. the biggest banks are still too big to fail. the american people and congress need to know that. we have offered and potential solutions in the form of substantially higher capital requirements. >> the white house economic adviser wants to take banking to -- the old days. the goldman sachs president said he would like to separate banks, consumer lending businesses from its investment banking effectively bringing back the , depression era glass-steagall act. >> the bloomberg story set everyone was surprised. but he has had a long career as
a trader, and at goldman, mostly as a broker. its history as a full bank holding company is relatively short since 2008. if you think of the trade mentality, imagine that by spitting up banks, -- splitting up banks goldman might have an , advantage given its exposure to investment banking. it might not be so crazy to see what why he would not be opposed to that idea. >> what we are worried about is the one size fits all regulation. we have these massive sets of regulations built to regulate banks as if they were equal. if we come up with the modern glass-steagall, we can tailor regulations, and that would allow banks to lend more aggressively to small and medium-sized companies. >> let's focus on france, a television debate gave a platform to all 11 hopefuls last -- last night, but allowed room
for fiery exchanges between the two favorites. >> we need to put in place protectionism -- protectionism because we cannot accept we are in competition with products that don't respect the same norms. >> nationalism is war. i come from a region filled with cemeteries, and i don't want to go back to that side of the black line. >> a postdebate poll showed far left candidate outperformed expectations. >> everyone turn their fire on marine le pen. from both sides. she was attacked by those who want france to stay connected with europe. there were two candidates much there were two candidates much further to the right than her, minor candidates, who attacked her for being soft, saying they are the real ones in favor of frexit. it was not a great night for her. emmanuelle macron managed to
avoid any mistakes. he was not in the line of fire that much. yes you would have to say that , he came out on top last night. of pinero bread -- an bread surging after it was agreed to be bought. it is a much bigger premium. >> it is a huge price. we knew it was going to command a high price, 19 times is astronomical, so puts it in line with popeyes, louisiana kitchen that was bought by the owners of burger king. it is expensive, but it is a huge brand with enormous presence across the country. they have paid to get access to that.
>> white house chief data just -- strategist steve bannon has left the national security council, been removed rather in a shakeup today. why now? why has he been removed now? >> this was an exclusive by jennifer jacobs, the chief strategist to president trump has been removed from the national security council. this comes just two months in which general h.r. mcmaster has taken over as national security adviser. one of the first hires that general mcmaster did was bring over deana powell as his deputy to the national security council. former goldman sachs executive, and was previously working in the administration
for first daughter ivanka trump, so what you are seeing is a restructuring of president trump's inner circle. we should underscore that steve bannon still does have significant influence on a host of policy areas, including infrastructure and politics. >> samsung reported higher than expected profit. strong sales of chips and displays. shares have been on a tear, up 16%, close to record highs, and this is all despite the bribery scandal and the exploding phone note 7 debacle. >> what is important to look at is the profitability of the company, all-time high profits in the first order, those are up meaningfully, and that is powered by the strength and components, particularly memory, and that is the most important thing for the stock, the earning power of the company, and surprising everyone to the upside at the moment. >> the senate has confirmed neil
gorsuch to the u.s. supreme court, 54-45. neil gorsuch will be the next supreme court justice. it was all just a formality, yet the senate needed to have that vote this morning. >> that's right. everyone knew this would happen. yesterday senate republicans a historic rule change and remove the 60 vote threshold for nominations for the first time in american history. the senate advanced the nomination to a final vote with a simple majority of 51 votes. the supreme court confirmation is a huge win for conservatives. going back to their base, saying we did something. it is a big win for president trump who had a troubled start to his presidency and has not gotten any major legislation done. ♪
best." this week, my colleague erik schatzker travel to argentina for an exclusive interview with president mauricio macri. argentina has a cordial relationship with united states, but now mauricio macri must establish ties with the new administration. he asked them what will be on the agenda. >> discussing about the future relations between both countries. when we talked on the phone he , believes that we have started with the obama administration. it is the base. we should believe we have a space to deepen relations and find out ways of mutual benefit and future cooperations. erik: he is a protectionist. you are a free trader. >> i would not say i am a free
trader. i believe in globalization. i believe we can find ways to increase relations between argentina and the states a lot, because we have very weak relations. erik: where does argentina fit in an america first foreign policy? >> first, in spite of relations between argentina and the states, we have to talk -- erik: so you need to have a united front? >> we need because we are members, so we will work together on future relations. i expect we will find a way to improve and increase our commercial relations together with any other space of cooperation. for example, against drug trafficking, against terrorism in favor of peace. there are many ways we can cooperate.
erik: there are many ways you can compete as well. america wants some of the same export markets you want. >> that happens always. we focus first on areas which we can be complementary, then to compete, there is always time, no? david: we have more exclusive interviews ahead. i went one-on-one with jack lew. -- she was the president of obama's treasury secretary. that she was the president of obama's treasury secretary. we gathered a wealth of intelligence about sectors and market trends. we will revisit some of those conversations. up next, frank talks with some prominent ceos. peabody is back from bankruptcy, so is the company banking on trump's promises to bring back coal? >> we think there are inherent
[ engine revs ] [ screams ] [ shouting ] brace yourself! this is crazy! [ tires screeching ] whoo! boom baby! rated pg-13. [ screams ] did you know slow internet can actually hold your business back? say goodbye to slow downloads, slow backups, slow everything. comcast business offers blazing fast and reliable internet that's over 6 times faster than slow internet from the phone company. say hello to internet speeds up to 250 mbps. and add phone and tv for only $34.90 more a month.
call today. comcast business. built for business. ♪ david: this is "bloomberg best," i'm david gura. a number of prominent ceo's spoke with bloomberg television this week. let's begin our roundup with aol's ken armstrong. they prepare to absorb yahoo's internet assets. how is it going? exactly how is this merger going to work? the main question i always ask, can you run up against your old shop of google and facebook? somebody will have to take them on it some point. >> first, let me start with verizon. verizon has a long-term strategy in the media space. we were the first acquisition they did.
yahoo! was the next one. we are going to touch over a billion consumers. i think we are in a very good position to launch what is a large house of trusted brands in the digital space. we are focusing on a business model on brand advertising. i have done advertising for 20 years. i was at google for 10 years. i see an open lane in the space of advertising. that is where we are going. alix: is marissa mayer going with you? >> right now, all of the executive seniors are planning all the executive outcomes that will come in terms of leadership, which will announce in q2. marissa will stay through the next phase. you can expect half the executive team to be from yahoo!. >> talking about bringing back coal mining jobs, you employ 6700 around the world. how many more coal mining jobs can you create around the united states?
>> the actions of the administration today that we have seen -- and we have seen bold and sweeping statements, the actions we have seen have been targeted protecting jobs. we are currently recruiting across our operations in the united states, but i also believe that the foundations have been laid to enable clear signals to occur around the generation environment, to either delay, defer, or turn around, but we see about 50 gigawatts of planned capacity in the next five years. that is coming off line. if we can get exports of coal going forward, that would be future increases. > we think there are inherent benefits with coal, its scalability, affordability, and reliability. >> the coal market has been shrinking in the u.s. for over five years, and the president makes some remarks and science
and executive order board -- signs an executive order you. does that change the demand for coal? >> i think we have seen 2017 being higher than 2016, that is the way the current projections are. that is largely a story of natural gas. i think the competitive environment for coal is much better today than it was a year ago. >> there is no more global industry than the aerospace industry. our supply chain is completely global, has been for years. the customers we sell to our airline customers. their job is to fly people on a global basis and the passenger'' job to promote global trade and international business. we are totally intertwined. in the case of airbus, around 40% of our airplanes come from the usa. airbus is the largest export customer for the u.s. aerospace
industry. our competitor boeing, about 40% of their aircraft come from global suppliers. from japan, italy, canada, the u.k., the global aerospace industry is very intertwined and it is going to be difficult to unwind that. >> do you see more pressure coming from this administration to source components locally? >> we are not sure yet. we have not seen that pressure. we assumed we would be seeing that pressure. we have not seen that pressure yet. >> if that pressure does come, what will you do on the margin side? will you just suck it up or do you have to do something on cost? >> we are not ready to take a smaller margin. we are always adjusting our cost , whether it is due to this or the natural state of our business, but we are always looking to be more cost competitive and encourage our supply chains to do the same. >> would you be willing to source components in the united states in exchange for no back tax? >> we already source from the united states. >> would you be willing to source more?
if you are going to go in more shrews -- a worse trade, 40%, does that go to 60% or 70%? >> when we go to source our supply chain we look for the best deal, quality, price, and on-time delivery so we are not prepared to trade that for border adjustability tax. david: another important guest on bloomberg was former u.s. -- on bloomberg this week was former u.s. secretary treasurer jack lew. i sat down with him for his first media interview since leaving his government post. something that came up numerous times on the campaign trail has come up less when the president took office, the issue of currency manipulation. this is something that is the treasury's purview. here you have china with a trade deficit. is that enough to declare china a currency manipulator? how cautiously should the treasury proceed? >> if you look at the criteria,
ones that are generally considered and our part of the treasury's technical process, the key issue is, are they taking actions to drive down the value of their currency to gain unfair advantage? the way you look to measure that, are they intervening in order to devalue their currency? for the last year china has been intervening to prevent the devaluation. to support the r&b. that makes it challenging to look at the current situation and reach a conclusion that there is currency manipulation. clearly, there is a transition underway from a very managed exchange rate to a more market oriented exchange rate, but it is not a pure market oriented exchange rate. right now, the interventions are in the opposite direction from what you look at in terms of measuring manipulation. david: you have a president very keen on implementing tax reforms. the white house is adamant that they are driving the train. how much of that would fall
under treasury department? you have heard the reports that offices are empty, positions are unfilled and names have not been named. how handicapped is the treasury department at this point with going forward with tax reform? >> what you do not have is your policy leaders, your emissaries who can go and represent you the way you would if you had a full complement of deputy secretary, under secretaries, and an assistant secretary for tax policy. it is not a perfect situation, but i think it would be a mistake to think that treasury comes to the tax reform debate without very substantial resources. the question is where the decision-making in the administration will fall and the policy of leadership will be at the treasury department or elsewhere, and within the white house, which camp in the white house will make the recommendations and ultimately shape where the
president goes? they have a lot of support for business tax reform to clear out loopholes, lower rates, but if you want to do something even bigger, we proposed going to 28%, it gets expensive. you have seen congress looking for going to a lower rate particularly the , border , andort or adjustment tax that is problematic for policy and politics. the first question is, how big is it? do they do it on a revenue neutral basis or do they create a big hole in the deficit rate at we are at the point where we ought to be thinking, what do we do when the baby boomers hires are in full force? it would not be good for the economy. it would put an enormous amount of pressure on cutting programs like social security and medicare. i think the right answer is to to -- stick to a paid for approach. i think it can can get to a rate
♪ david: you are watching "bloomberg best." i am david gura. throughout the week, investors and asset managers offered insight into global markets at a moment when fiscal trade and monetary policy seemed to be facing a host of potential inflection points. here are some highlights from those conversations. give me your sense of what is going on in retail right now. >> so retail is a mess, to say the least. from a 10,000 foot view, this trend, these retailers have had declining top line for a number of years. this is not a cyclical issue.
ok? the economy has been good. consumer sentiment is good. unemployment is coming down. oil prices are low. this is a secular issue, a forever trend. when you think about how things will look 10 or 20 years from now, our parents will be dead. our kids will be adults. do you think more people will be shopping online or less? this is the amazon affect and it is here forever. to get along these credits they -- so to get long relief's credits they are trading in the distressed debt role. that is the hallmark of a stable to growing business not a , declining business. we are not long any of this. >> they are overvalued? >> yes, they used to trade at three to four times. >> when we say "they" we mean those that people are familiar with -- neiman marcus, macy's. sears, the list goes on among the larger distressed credits.
>> that is part of the problem. most of these retailers are smaller. you listed the larger ones, but there are about 50 companies that could file for bankruptcy. >> 50 retailers that could file for bankruptcy? >> american apparel is already gone. that's filed twice. it's liquidating. think about companies like rue 21, claire's. these are reasonably sized, but they are not be neiman marcus's -- the neiman marcus's of the world. >> we talk a lot about energy and whether that has been played out, we talk about retail. you are looking at europe in particular. talk to us a little bit why europe and where. >> absolutely. in the european credit space, the 800 pound gorilla is very much in the room, the european central bank. the european central bank was buying $80 billion euros of credit a month, now they are buying %60 -- $60 billion. that is a big move and we are seeing that in the credit face. let's take high-yield, specifically the credit suisse european high-yield index is
about 4.6% but if you take out the u.s. dollar denominated bonds, it is closer to 3.5%. i do not know what you think of withyou think volume high-yield, but to us, that does not sound like high-yield. they almost have to change the name. when you look to the investment-grade space, the european investment-grade index trades less than 1% yield. let's think about that. u.s. 10 year treasuries, 2.3% and change. european corporate, less than 1%. i think on the long side we are looking for opportunities, shorter duration, defense and less correlated things to do. we are looking for smaller and under followed capital structures, and staying idiosyncratic on the long side. on the short side, it feels like there is a lot to do in terms of the technical trade. >> it feels like e.m. is a little bit more stable than developed markets. are you hearing that from investors that they want the yield and a little bit of safety, they will go to e.m. instead? >> a number of investors say
emerging markets feel more stable than developed markets. they are looking for the pickups that e.m. offers. they are saying in many cases em is decoupling from dm. it is not about how much china trades with the u.s. they trade with europe and around asia. it is not what india is doing anywhere else. india is almost purely a domestic story. that is why you see people investing in things like the msci etf, but taking a step back and redeploying that money into more active strategies, because if you look at the indices in e.m. they are backward looking. , when you look at emerging markets the growth -- the growth is an internet, mobile banking, things that are forward-looking. >> in the msci etf, when that winds up moving does it move to specific regions or sectors? how to the allocations happen after that?
>> in some cases, looking at country specific allocations so if they are in more of a broad e.m. allocation, what country do -- countries do i have confidence in? india is one, china, they are cautiously optimistic. i have seen more clients saying they are on a trip to latin america in the next month or two over the last two weeks than i've heard in two years. european growth looks to be pretty soggy over the next 18 months. >> i thought we were getting better pmi, core inflation came off of it so where is the soggy? , >> compared to the u.s. growth rate, which we think will be well above 2%, you will have more subdued growth in europe and this year we are more bearish on the ecb. importantly for the ecb, there
is no inflation. if you look at a place like germany, if you were to get inflation in europe germany , would be the place to see that , the labor market is tight but , the reality is we are not getting any wage gains even in germany. if you go to italy and spain where there is still a lot of labor market slack, you can see how difficult it will be to get inflation. will be to get inflation. without inflation it will be stuck at these low rates and continue the quantitive easing program. have a shell of in germany. is this the rhetoric we are going to see that is not really material change? >> it is not unusual to hear the german contingent. the northern europeans talk about taking off some of this easing but you have to look at the underlying fundamentals. without inflation, i think mario draghi is going to sit there and say we cannot take our foot off the accelerator too soon. i think the quantitative easing
program continues into this year and we will talk about tapering , in 2018 but there will be a lot of all, they did support through 2018. >> last night we saw a real shift from the fed. they are talking about a passive and predictable manner to reduce the balance sheet. how do you interpret a passive and predictive manner at pimco? is there are one reduce that balance sheet? >> i think there is if they go about it very cautiously, phase out the reinvest gradually and do not put the market out cold turkey. i think they are keen to head but i thinkexit, the risks are rising that they are making a hawkish policy mistake. >> the debate this morning on the bloomberg, can they really stick to three hikes and reduce the balance sheet at the end of the year? what do you make of that? is there a potential interruption in the hike half? -- hike path? >> i think they will probably pause after hiking two more
and and will september, probably announce in december they are exiting, reducing the balance sheet. i think you will get a slight pause in the rate hike cycle, but i think they are quite keen to get away from the dreaded zero bound for interest rates. and again, i think this raises some risks because whenever the fed in the past has taken the foot off the accelerator or slammed on the brakes, someone goes through the windshield. >> the biggest whipsaw in equity market yesterday in 14 months. from a risk perspective from the bond, equity, fx perspective, where's the biggest risk from this potential policy mistake by the fed? >> the biggest risk is for the riskiest assets -- equities, high yields because they benefit -- benefit a lot from qe.
we had the term premium compressed. investors went out of bonds into higher-yielding assets, into equities, so when the fed reverses that policy, the biggest threat is for equities and high-yield. >> in the bond market, one of the biggest movers has to do with south africa, downgrading the rating to junk. not only dollar denominated debt but local currency debt. this is the market reaction. you can see the jump in yields we saw on that. two schools of thought, too much risk and bank of america says you might want to go in and buy. the situation might not be as bad going forward. you are tentatively buying south africa this morning. >> it is a question of, there will be a time to buy south africa and i think we have to give it a little bit of time to digest. by the way the political , situation is a bit difficult to ascertain at this point. if you can pick up 9% plus in brazil where you know inflation is coming down. it is not abruptly stable political situation, but you are getting an awful lot of yield with inflation coming down.
mexico in the sevens. i would rather take that risk at this point and give south africa a bit of time to play through. >> as you suggest, there is political risk in south africa and mexico and brazil as well. how do you factor that in? is it fully priced he in? do you hedge against it? what you do? --it has to be one of some there are a series of metrics we look at when you evaluate, where do you go into a country or company, and that is a big one in emerging markets particularly. the politics usually is a bigger driver than anything else and you saw that play out in argentina for years, brazil four years, the politics you have got to be acutely focused on policy. you can get spiked moves like you just saw. ♪
>> i am looking at one of my favorite functions on the bloomberg. it's supply chain analysis, and one of the reasons it is so relevant today is that imagination technologies, a u.k.-based company that does chips discovered that apple, which pays them for their chip technology, will no longer be using or licensing their technology. on this function you can see on , the right who a company's biggest customers are, and at the top, apple accounting for over 50% of revenues. david: there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites in the hope they will become your favorite. quic will take you to our quick takes, where you can get important context and fast insight into timely topics. this week explores climate change.
>> 2016 was the hottest year on record and the previous 17 years have been our 16 most scorching. scientists overwhelmingly agree, global warming is the culprit and the carnage is just getting started. extreme weather, wildfire, droughts, and the hits keep coming. what are we doing about it? in 2015, the world took its boldest step yet to stem climate change with a historic accord in paris, but now comes the hard part. nations must change policy and invest huge amounts of money, and it may be without the united states. the world's richest nation and second biggest polluter. >> i am taking historic steps to lift restrictions on american energy, to reverse government intrusion, and to cancel job killing regulation. >> 68 days into his new administration, president trump signed an executive order that
stops just short of withdrawing from the paris agreement. here is the situation. decades in the making, the paris agreement united the united states, china, and other nations in a push to limit fossil fuel usage. that also is a movement to cut greenhouse gases, the emissions that trap heat in the earth's atmosphere. in order to avoid rising disasters the climate models predict. even if all pledges are met, the globe is expected to warm by as much as 3.4 degrees celsius this century, more than the target of well below two degrees. governments will have to offer incentives for clean energy, make emissions more costly, and reduce deforestation. it is estimated that the deal -- will require $13.5 trillion of spending. here is the argument, unlike
past climate pacts, each country set its own paris target and promised to revisit and improve it. the u.s. was primed to play a lead role, but trump's energy independence order encourages increased production of coal, the dirtiest fossil fuel. mr. trump: my administration is putting an end to the war on coal. clean coal, really clean coal. >> the resulting policies make it hard for the u.s. to keep its commitment to reduced emissions. even if trump decides to pull out of the accord, the paris agreement would live on. businesses, cities, and u.s. states such as california are already investing in wind and solar, and taking steps to make it work. mr. trump: i have actually been called an environmentalist, if you can believe that. ♪ david: that was just one of the many quick takes you can find on the bloomberg and also at bloomberg.com, along with all the latest business news and analysis 24 hours a day. that is all for "bloomberg best" this week. thanks for watching. i am david gura. this is bloomberg.
♪ haidi: weak payroll numbers give something else the fed to think about, and the market seems more sustainable. ramy: president trump and president xi hail their meeting in florida despite the threat of north korea. strengthentalks will and help drive forwarded to china. ramy: samsung dials up big numbers with the s8,