tv Bloomberg Best Bloomberg July 20, 2018 10:00pm-11:00pm EDT
>> coming up on "bloomberg best" the stories that shaped the week. friends or foes? the lines blur as a trump putin summit. we don't know exact late what was said between the two in that more than two hour sit down. >> you can't sit there with the president of russia and not more strongly defend the united states. aery: wall street takes into >> the secession played out so inelegantly. record-setting a fine on google and comcast. it's chase at fox.
noted, very little about the biggest issues chasing wall street. >> pretensions could mean trouble for investors. >> clients are worsening the whole foundation of international investing and that is the foundation of double investigation. >> donald trump's campaign manager claims of the media slanted against his candidate. >> their employees have i.s.. they go into every line of code they write and everything they do. shery: all straight ahead on "bloomberg best" ♪ shery: hello and welcome, i'm shery ahn. fromis "bloomberg best" bloomberg television around the world. the week again but they summit beating and finland between
donald trump and vladimir putin. after it concluded, the reaction was decidedly mixed. ♪ >> a good start in helsinki, that is how president trump described his meeting with vladimir putin, but numbers of his own party have different words for it, shameful, disgraceful, bizarre. president trump sparked a republican/after suggesting he equally trust vladimir putin and the intelligence agency. >> dan coats came to me and said they think it is russian. i have president putin who says it is not russia. >> we don't know what was said in the more than two hour sit down between the two parrot that was just between them and their translators. in the public press conference, we had pretty interesting statements. putin admitted he wanted president trump to went the 2016 election.
president trump had harsher witticism for the mueller probe and he did for putin and russia. >> he did not back off the u.s. opposition to the pipeline, that he has been critical of with european allies and the relationship with russia. nor did he suggest there would be any easing of the sanctions for crimea. the u.s. position is that that was wrongly annexed. >> bank of america eating profit surge by the banks consumer unit which boasted its highest revenue in more than eight years. >> it's all about interest rates, absolutely. people were worried about the flattening of the yield curve. they are showing they are able to make money. they are showing they are investing to gain shares. for bank of america, they also said they would invest hundreds of millions of dollars into
digital banking. people are reacting pretty well to that today, even though net interest income is shy of expectations. ♪ shery: if you look at shares of goldman sachs, they are slumping today after the bank reported earnings in expensive. this comes as goldman officially announces david solomon will be taking over as ceo in october, ending the 12 year run. >> with lloyd blankfein pushed out of goldman sachs? >> that's the overwhelming sense. why? the secession played out so in elegantly. they've been struggling in some areas. commodities and fixed income more broadly. it is overcapitalize dan hasn't been able to grow revenue. sense thats a goldman needs to reinvent that business and more broadly reinvents the firm. lloyd blankfein having been
there for 12 years in the eyes of some people on the board and at his age, may have run out of ideas for how to accelerate growth at goldman sachs and transform the firm as vast as some people feel it needs to be done. ♪ >> federal reserve chairman jay powell making it clear to congress he wants to stay in his lane. his message may have come with a caveat. jay powell is said gradual rate hikes will continue for now. with is mostly concerned the economy and not making way for the markets. he noted very little about the biggest issues facing wall street and didn't say much about the yield curve other band they are watching it. a lot of talk about ranking regulation. the new bill that passed earlier this year that likened some regulation on smaller banks, powell said they are trying to implement that as quickly and carefully as possible. he took hints from elizabeth warren and other popular democrats for the stress test they conducted this year in
which morgan stanley and goldman sachs came up short but were allowed to pay out dividends anyway. like hepoint, it looks satisfied most of the critics on capitol hill without doing anything to upset financial markets. ♪ >> a rare oval office about face, president trump reversing course after intense outcry on capitol hill including rob some usual loyalist. he walked back some of his comments in helsinki. he now says he accepts his vision by dekes -- he excepts u.s.onclusion by the intelligence agencies. >> he was being given a message that you can't and there with present russia and not more strongly defended the united states. quellswill see if this some of the outburst and opposition, but it was definitely as close as we get to
a public apology from president trump. ♪ morgan stanley beating expectations on the top and bottom line and reporting stronger than expected trading and asked income revenue as well. they just smashed it. >> yes, they did. you started with trading but i would like to start with the blowout in investment banking. you will see from the results that they blew it out of the park there. field4% in the new stocks category. in the bond deals category, plus that was over expectations for them to be negative in those areas. trading was really great. increased 14%, driven by the strong morgan stanley franchise. by.oogle find a global record for antitrust
penalties are >> it's a big wind. you want serious behavior changes. when it cited percent of the market, will it really make the market? >> the differences now, we have a choice. those to produce who -- we can choose, if i would like to put and other operating system for those who search rivals to google? a chance to get to us as consumers to show their product. >> she did not actually say how google has to adhere to the ruling, she said that this is what you are doing wrong, you will face if i'm come and let you fix it. it's about the contracts. it will be new phones sold going forward. if you already have an android phone, it doesn't affected at all. the new ones shipped, they have not done an agreement with the
smartphone maker that they have to install the suite of google apps. not until the next innovation of owns the comes out this year or next year. ♪ a dailyboc set reference rates for the yuan weaker than the dollar. china is willing to tolerate greater volatility. >> what we are seeing now is politically motivated. there are sending signals to america that they need to backup on the terror of spirit there is a trade were going on and america is being brutally beaten in this. >> the mood music is different this time around compared to 2015 and 2016. the authorities still have very firm capital controls in place. there is no sense of panic in terms of getting money out of the country. this is coming at a convenient time for china. the economy is slowing and they are facing a trade were. it could create a cushion for
growth going forward. ♪ like,cast waves the white bowing out of the battle for fox entertainment. instead onocus winning sky. >> will disney do the same thing cede sky?-- is there a quid pro quo? disney has said they want the sky asset and comcast is very much in that business. it does strategically make or sense, but disney has said they want to be closer to the customer and have direct billing relationships with the customer. that is something sky provides. it is still a tossup whether disney will stay in this or not your it. ♪ >> the fed under fire from the oval office. president trump taking aim at the federal chair that he appointed, resizing jay powell's race -- rate increases. tracking, saying he is
not interfering at that he respects the independence of the u.s. central bank. does it matter that the central -- that the president said this? >> the reason he doesn't talk about the fed is not about politeness or tradition, it is -- it can backfire are two reasons. people start to feel the fed is owing to kowtow to the president and allow the economy to grow too fast, interest rates will rise. the bond vigilantes will kick in and the rates will rise, which is what the president is not what. or, the fed will they show its independence it will preemptively raise rates, either way the president is shooting himself in the foot. ♪ >> president trump ratcheting up tensions with foreign countries and the u.s. federal reserve banks. tweeting this, the european union and others have been the nebula in currencies and interest rates lower will the u.s. is raising rates.
the dollar gets stronger and stronger with each passing day, taking away our big competitive edge. as usual, not a level playing field. >> he wants the dollar lower. i don't think anybody believes donald trump is steeped into the mechanisms of currency markets. that is dangerous. other nations, if they take action race on what they think is strategy may cause miscalculations. things can barrel out of hand. it is a dangerous inc. he is doing, that ultimately he wants to see the dollar lower. ♪ shery: still ahead as we review the week on "bloomberg best" in exclusive conversation plus aviation executives talk about trade at the air show and, coming up the earnings drumbeat continues and a big miss for net legs is among the biggest
shery: this is "bloomberg best" and i'm shery ahn. earnings season kicks into high gear this week. and deutsche bank won't release results until next week, they expect profit to beat estimates by a large margin. it sent shares soaring and took pressure off the bank's new ceo. ♪ >> says the news we have been waiting for. they need to move quickly. is the timeline sped up for deutsche bank or can he take a more responsible path up to 2020? >> are still a lot of pressure
on him despite the share of the search today. trading at very low rises. it was about 12 euros when he took over in april. he is still overseeing a decline in share price and investors are still demanding a quick return to profitability. there is still a lot of pressure on him to perform and maybe certainly reach the target he unveiled. ♪ >> netflix shares have plunged after the opening posted disappointing subscriber growth numbers for the second order purchase repeat worried -- should we be worried? netflix,en invested in having not sold yesterday, you're doing great? >> its one quarter they missed. they set a number they have the. that is the natural flow of things. equally, they missed by million subscribers. that's a big number. given the netflix, they can't make the argument -- they sort of say they can move subscriber
numbers in the direction they want. you can >> unilever expects sales growth to ounce back after missing analyst estimates in the first half. >> the second half of the year we do believe there is a bit more pricing come in because it is at the low side. i will obviously help. we have facing of initiatives coming in the second half. we think of the guidance we have given to the markets to be between 3% and i percent range. ♪ >> j&j shares up after second quarter was solid. the company did give full-year guidance below median analyst. to a stronger dollar, is that a trade were effect and how does that affect other parts of the business going forward? >> it is not attributable to the
trade war at all. it is the impact and macro impact that we manage on operational sales performance. looking across our business, our performance was very balanced no matter what region you specifically look at. 9% outsidey, we grew the u.s. 8% so very strong in terms of tariffs were impact on our business right now. animal at this point. -- minimal at this point. >> and exhilarating business in the second quarter, the german software giant and a fitted from increased spending on business products. then a period of time where there is uncertainty, companies are turning to software providers like sap to help them weather the storms more and have greater
transparency to her see that from the results with our strong growth in the cloud business up 40% as well as the stronger resilient court license business we have which was up 3% as well. from that perspective, we believe we will do well for the remainder of the year despite any uncertainties that the macro environment might bring to us. eye on net income for the second quarter, 3.8% above estimate. just how good could this year be? there are a lot of bright spots here. we can see underlined income now improving. we have worked really hard on. cost,tinue to deliver on the credit quality, capital, and compliance. the key elements of delivering on our in place. i think we continue. >> microsoft reported strong
fourth-quarter sales as the cloud fueled turnaround kept on going. sales and profit got a boost from customers signing up for more internet aced storage, processing, and office software. talk to us about the cloud. it looks like everything firing on all cylinders. >> absolutely. applications, on premise products, so we are seeing enterprise text bending is strong -- enterprise tech s pending is strong. you could say broad-based id spending and microsoft group 15% in constant currency, that is two times the total software market. these guys -- they know what they're doing. had strongered demand for aviation and health care equipment. that helped boost results.
what was your biggest take away? decent cleanlike a quarter, which is not always the case with ge so there was some sigh of relief there. they didn't cut numbers which is uprising. the have only done $.35 and first half and are looking at over a dollar for the year. cost reduction, stability and power, that didn't happen yet. health care and aviation will just keep carrying them. >> the big point to focus on is cash flow. on that front, ge cut its annual guidance for 2018 because they came up short in the second quarter. inking at -1.4 billion adjusted cash flow for the first half of the year. ge tends to be back and waited when it comes to producing cash flow. sets up a steep hurdle for it to clear in the back half of the year and that is exactly the situation they found themselves in last year when ceo john flannery had to cut evidence.
shery: you're watching "bloomberg best" and i'm shery ahn. blackrock recorded second quarter earnings that the estimates. they saw out those and's lowering inflows into his exchange traded funds. interview, they are seeing a shift in client if your. >> we saw clients worldwide confused saw clients as to what direction the markets will go. >> us is what they're telling you? >> absolutely. clients are questioning the whole foundation of international invest and that is
the foundation of globalization. start entering the conversation about trade and tariffs, we are seeing clients pull back a little bit. we are waiting to see how does this play out? the back drop is we have very strong earnings. first quarter represented we saw strong earnings threat the s&p. we believe we will see strong earnings in the second order. we are growing at a rate of $800 billion worth of stock repurchases. a record amount of everyday -- of m&a. we are shrinking equities and markets are essentially unchanged. >> does that surprise you? >> absolutely. if you asked me if we would have record amount of m&a and earnings and stock repurchases, i would have said the market would be up 10 to 12%. markets are essentially flat. if you strip out --
>> it would be more like 3100? >> yes. more importantly if you strip out the seven major tech stocks, the breath is really poor. let's go deep into the flows, , the overalllows macro number doesn't tell you what was going on. we saw a lot of churn in the index business. that is where we saw outflows. $13 billion of outflows in that area. out ofinvestors pull what i would say emerging markets and other areas. i need to remind you, cash for the first time since 2008 is earning you a return. you are earning two plus -- >> you could pause and earned money. wait. can afford to this is a huge change in the marketplace in the last nine years. people have forgotten about that.
you are earning 2.5% on a money market fund, similar to the five-year treasury. you could pause. by the way, equities are not up 2.5% so you could be earning money in cash and pausing. let me get back to the flow. >> should people be pausing? does that seem like a wise, smart thing to do right now? horizon isds if your the next five years it is good to's. if you're focusing on retirement, you should never pause, you should continue to invest. the defense on the time of horizon. ♪ shery: coming up on "bloomberg best" more of the weeks top business stories. the sec questions a media merger and japan signs of trade deal with the eu. plus more of the weeks compelling conversations. donald trump's 2020 campaign manager speaks exclusive the with bloomberg and says social media didn't put social media in
>> welcome back to "bloomberg best." leaders in global aviation came together this week at the international airshow. following, airbus, and other manufacturers announced major deals with airlines, and u.k. prime minister theresa may stopped by to update the industry on her brexit proposal. guy johnson was there, and he spoke with several top executives, starting with boeing ceo, who talks about the impact of trade tensions on aerospace. ♪ >> growth is great, aerospace is growing. it's enabled by positive trade policy.
some of the things that have been done by the administration in terms of tax reform, regulatory reform have added momentum. we are concerned about the discussions around trade, and our aerospace business thrives on free and open global trade. we're going to find solutions as alternative tariff discussions. it's an important topic. >> when you talk to the white house, when you talk to the president, what kind of feedback do you get? are you being listened to? what is he saying? >> we definitely have a seat at the table. it's important that businesses' voices are being heard. global trade is a complex topic, and we understand there are challenges around the world. i go back to the idea that aerospace is something that contributes to growth in multiple countries around the world. if you look at things like the u.s.-china trade relationship, for example, china needs the lift capacity of aerospace, it's fueling economic growth in china. in the u.s., aerospace is the biggest trade surplus generator.
last year, an $80 billion trade surplus, a lot of the generated by bubbling. -- by boeing. aerospace is uniquely suited to help economies around the world. ♪ >> we think it continues -- that the factory obeys in the u.s., in europe, in asia, and in china. a very interdependent supply chain. we buy in the u.s., we sell in the u.s. in terms of production size in the united states. we want to believe we can keep going in that direction. nations as aeople, business, but more than a business. we contribute to an international level. >> your supply chain is critical to what you do. i don't have to tell you that. are they starting to feel some of the pressure coming through? is there a worry about aluminum,
about someone getting the stuff they need? how much attention are you paying to the supply chain? >> there is tension in the supply chain due to growth in the production rate. rate,l that this preparing the next step, we suffer from tensions. it goes into production capacity. it's otu of growth that we like to manage. ♪ >> our number one priority from the brexit negotiations was retaining our membership in the european aviation safety agency. it's based here in europe, and we have a significant role and insurance and that european agency, and for us, remaining part of it is crucial to our future competitiveness. >> airbus and other voices over the last few weeks ahv have been
heard. airbus in particular was all over the front page in terms of its concern surrounding the direction of travel that britain was taking. why did it take so long for the industry to step up and make its voice heard, or is it waiting for that critical point? i would say that we have been making those points very clearly, very concisely, and very politely. certainly privately during the last 18 months. i think what we saw with not just airbus, but a range of industrial players, was a public statement for their concerns, were pushing the key decisions around that future relationship, recognizing the regulatory common roll block, and recognizing that we need the free trade area to ensure that as the european industry, we are
not at a competitive disadvantage. ♪ >> now let's revisit another bloomberg exclusive. bloomberg technology's emily chang sat down with donald trump's 2020 presidential campaign manager, grabbed our scale. he says that even though spending on targeted facebook 2016, he's notin sure he would repeat the strategy in the next election. ♪ >> some days i wake up and i think that all of them will not play fairly. maybe they decide they want to make it harder to do those things. right now, facebook used to be, we could put out an ad in a few seconds, now it takes a few days. >> and you recently met with -- >> i brought that up as one of the items i was frustrated with. i went straight at them and said this is the kind of change that is biased. understanding how our technology
works, you created a rule which made it more difficult to use it. that's a frustrating standpoint. --on't think in the interim i think right now we have a popular president, more popular than he was on election day, and i think we will see a successful 2020. >> it is ironic that your frustrated by facebook, considering some people believe facebook played a critical role in winning you the election. >> i have been specific that i think facebook was heavily worn. when president trump won, i think facebook was the .1%. if facebook hadn't existed it would have been a lot tougher. facebook has connected the country, different types of backgrounds, and it's doing exactly what it was designed to do, connect us all.
i think facebook also is a liberal company that -- maybe its management isn't but it has, an inherited bias. i can see it today, appear talking to you, california is not eastern kansas. their employees have bias. it goes into every line of code they write and everything they do. that is something they have to try to kill. but i do think facebook, all the companies trying to kill it -- the question you are asking is whether or not they can, and i don't know if they can. i think the inherent bias is significant. it's up to me as a leader in the party, someone running the campaign, to make sure the companies are held accountable, to think of everything they can to kill internal biases. ♪
♪ >> you are watching "bloomberg best." let's return to our global tour of the week's top business stories in china, where the latest gdp data sent out mixed messages about the health of the economy. ♪ >> ratcheted up trade tensions failed to make a significant expansion,ina's even as growth edged lower. gdp rose from the previous year, down slightly from the first quarter. >> we know the economy is slowing down. gbp was never really any surprise. it's more interesting to look on a basis -- we saw industrial output softness for sure, which could be a sign of things to come. interestingly, though, retail sales rebounded. they rebounded from a fairly weak month in may, but at the
same time there is some good demand for communication devices like, which suggests that despite the trade war backdrop, consumer confidence is doing ok. that is certainly not a negative thing going forward. ♪ >> beijing has moved to bar retail investors from investing in what they call risky foreign stocks. the new rules will affect the stock link with hong kong. tell us about the rationale behind these moves from beijing. is there an element of chinese money should support chinese companies? >> with this change will effectively do -- the hang seng index, it is going to include foreign companies, stable securities, and stocks with weighted voting rights. china has essentially said, hey, not so fast. we are not going to include them through the stock link. that will keep chinese money within the china stock ecosystem. stop chinesealso
investors from investing in the likes of xiaomi. ♪ >> sinclair wants to buy tribune sec3 $.9 billion, but the is now questioning the legality, dealing a blow to the merger. the objection, expected to cause a significant delay and create a large regulatory hurdle for the tv station. this is not expected that all. >> sinclair is going to have to restructure some of it. it agreed to divest about 23 of its stations to comply with the 39% ownership cap. what has happened in now is that the fcc is raising issues that some of those divestitures are not cleanly structured. sinclair is going to have to come back with a new proposal, squeaky clean, and present it to the agency. ♪ >> china and the eu are pledging
to work together to defend the global trading system, amid rising concern about protectionism. talk to us about what china and the eu have agreed to do. >> well, we got some substance out of this one-day summit, even if it wasn't groundbreaking. we got the first joint statement since 2015 between the eu and china. they pledged to uphold the multinational trading system and open markets. we also got some movements around its financial investment treaty that they have been working on, both sides agreeing to exchange market access, which moves that forward. >> japan and the eu have signed a trade deal that scraps a wide range of regulatory obstacles between the two economies. the joint statement sends a powerful message against protectionism. they obviously didn't name the u.s. or trump specifically, but it was a pretty pointed emphasis on uniting against u.s. trade policy. >> well, it's true they didn't name trump or specific nations,
but given what is happening globally, it is pretty clear to whom they are sending a message. their staff was very clear, they promote free trade and continue to fight protectionism. >> japa [speaking japanese] >> free trade is very important at a time when protectionism is strong. japan managed to reach an agreement with the eu, and we also led in tpp 11 deals. i understand it is not easy for the u.s. to rejoin the tpp deal, but it is important that the u.s. understands the value of multilateral trade agreements. ♪ >> christmas in july for amazon shoppers. if you can get on the website. amazon suffered an outage yesterday, but it has been smooth shopping since. they seem to have done pretty well, besides those technical failures. >> yeah, it looks like the technical glitches were limited to the first hour or two.
there's always going to be limited inventory, and there will always be disappointed shoppers who miss out on a deal, but this was exaggerated in the first couple hours, where the site was crashing. but we got some data from a company advisor, and it provides pricing software to a lot of clients that sell on amazon. it was able to estimate the sales boost. they said sales were up nearly 90% compared to the first 12 hours from a year ago. so despite the glitch, it is looking like amazon prime day is off to a much better ending than beginning. ♪ issuance ceo brian crutcher is resigning after violating company code of conduct. this is the third chip ceo after intel and rambus who lost his job for these violations. >> yeah, and particularly for texas instruments, which is a low-key, disciplined operator.
this is an unnecessary distraction. and remember, this is a new ceo, and rich templeton was looking to server more than a decade as ceo and for a long time with the company. unnecessary distraction, but it doesn't take away from the investment. ♪ weres. aluminum tariffs meant to protect the industry from foreign competitors, but instead they are taking a bite out of the earnings of alcoa, which lowered its 2018 projections as tariffs are presented. the company says it is a "significant had went." this wasn't supposed to happen. >> no. but there is a fine tradition of coming out with very aggressive tariffs and sanctions, been backtracking quickly when you see it causes the economy to collapse. we saw that before were the tension went after one particular individual, and then
they realized it would have this enormous effect on the rest of the world, and then everyone would suffer as a consequence. and i think -- we are heading down the same path here. ♪ >> political uncertainty in italy is rattling investors. there are reports that the finance minister might be forced to step down, as he disagreed with who would lead a particular bank with the two populist leaders in power. walk us through the events of the last 12 hours. >> well, this morning we came across reports that there were serious differences regarding the finance minister, and then there came a whole bunch of denials, and been a key matter happened. apparently the government has reached agreement on the head of the state lender, th heart of the mattere -- the heart of the matter that we were hearing this morning. it has been up and down all morning and other seems to be some sort of calm returning. ♪ >> president trump continues to criticize the eu over trade.
auto groups, industry workers, and foreign governments are condemning his idea of raising duties on cars. hearing warns the administration that tariffs on car imports would hurt the u.s. i understand that the eu was preparing for retaliation. >> they are currently working on a list of american goods that they will retaliate against if the u.s. were to hit the eu with this auto import tariff. the word we are hearing here in brussels is that the size of the retaliation would probably be about 20% of the buying goods that the u.s. has. ♪ >> now let's focus on the start up that is taking the footwear industry to new territory. it makes casual shoes and sneakers from renewable materials like wool entry fiber, and in less than three years, it has sold over one million shares. the company's cofounders told us
about their journey from small to big. ♪ ♪ in france,irst born woolplace -- the idea that could be used, we had to make shoes that were not just comfortable, but good for the environment. it was an idea that seemed obvious that hadn't been explored. we launched the business with one shoe, which a a lot of people told us was not how you launch a shoe brand. we addedd with wool, tree and eucalyptus fiber, which we are really excited about. we are incredibly focused to sell a handful of styles. we have no wholesale release date, which allowed us to put the customer at the center of the business. >> every transaction we have in our business model, we have data
from our consumer, we know what they want. >> the customer interaction, that relationship has allowed us to move really fast, and i think it's a key part. ♪ >> of this thing has grown much faster than we could ever imagine. from a few years ago, joe, myself, and his dog, at his mother-in-law's house. all of a sudden we are north of 100 people. >> from the beginning we realized culture could be a differentiator for us. we invested in it from the beginning and spent a lot of time defining our mission and vision. everyone has been incredibly helpful in attracting talent. a bunch of outsiders with a couple notable exceptions. it has allowed us to attack this industry with completely fresh perspective. i think continuing to invest in that team and making sure our
culture is absolutely a priority for us. ♪ >> we started as a direct to consumer business on an e-commerce platform. we now have 100 employees across two continents. geographies, in canada and australia. we also have two retail locations, one in san francisco, and one in new york. we were able to sell one million pairs of shoes. >> there is revolution going on in the way things are made. customers are starting to demand . >> we focus on making materials that are new, differentiating in expandables. you will see a whole lot more from us, and hopefully we will be popping up around the world. >> it's just the beginning for allbirds. ♪
♪ a function ea go, that can take you through different indexes, earnings results, a report card, if you will. right now we are looking at growth that is 9% over in earnings over the same quarter last year. >> there are about 30,000 functions on the bloomberg, and we always enjoy showing you our favorite on bloomberg television. maybe they will become your favorite. now let's wrap up this week's program with a look at one of china's most fascinating technological initiatives, a drive to create new ways to tackle its pollution problem. our executive editor for greater china explores china's ambitions for a u.s. style shale boom.
♪ >> china needs natural gas. propelled by president xi jingping's pledge, china's natural gas use has skyrocketed. the country is now the world's largest gas importer. the good news, china has more shale gas than anywhere in the world. the problem, how to get it out of the ground. >> the topography is the biggest challenge of all. the others are low-lying plains, and one province is all mountains. you aren't in kansas anymore. essentially, you have to knock off the tops of mountains and bring all these equipments with youessentially, you have to knok off the tops of at the top of t. >> the shale reserves dwarfs the u.s. last year, china produced 9 billion cubic meters. that's nowhere close to the 639 billion cubic meters produced in the u.s. >> in the u.s. model, it's like
a factory. a floodplain, as many wells as you possibly can. >> it helps to meet its increasing gas yield. the chinese government has cut the resource tax on shale by 30%, and currently provides a subsidy that encourages major producers. but there is uncertainty that the policy will continue. >> in terms of the government role, it's pretty backseat. they don't really seem to be doing a great deal, saying it is time for you guys to walk. >> if she'll is going to take off, it will be because of the lessons learned here, in the southwest. it is the largest shale gas plant outside of north america. >> is the flagship shale project. it is very important in terms of trade. china needs to learn how to improve shale gas production. >> china's energy giants are
pouring money into shale. the local governments as shale gas investments will reach 165.4 billion yuan by 2020. leading the charge on the ground, sinopec. >> we will try to expand output in steady ways. our goal is to achieve a capacity of more than 10 billion cubic meters by 2020, and produce more clean energy for the country. >> sinopec is showing signs of progress. by investing in drilling technology, drilling costs have dropped 40% in four years. but it has far to gore before he can claim success. >> it will not carry the aspirations on the shoulders alone. we need to find more fueling's, that is the crucial next step for sinopec. ♪ that will be all for "bloomberg best" this week. you can visit bloomberg.com for
♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." bullish sentiment is growing around bitcoin as the price hold a key level. our investors shaking off worries about safety and regulation? peter teel looks at china for investments as escalating tensions between the world's largest economies. we will bring you where he will expand his portfolio.