tv Bloomberg Best Bloomberg April 1, 2018 4:00am-5:00am EDT
abigail: coming up on bloomberg best, the stories that shaped the weekend business around the world. global stocks with investors around the world. emergency powers coming into play. there is this drama unfolding in markets. >> facebook follow continues as pressure continues on facebook ceo mark zuckerberg. >> congress came back and said, uh, you are the right person. >> tesla tumbles on financial concerns, and autonomous driving faces a gut check in the auto show. >> there is a lot of speculation. we should be cautious.
>> nothing is more important to us than safety and the brand itself. >> the way that we rolled technology builds confidence and consumers alike. >> around the world the u.s. stands with allies in getting russian diplomat the boot. kim jong-un pays a surprise visit to china, while the u.s. and china tangle over trade. >> i think if it keeps going, this could be very disturbed. >> i hope the temperature can be taken far down on both sides. >> we could have an impact on global gdp. >> imf managing director christine lagarde tells europe to get it together in the capital market. director lagarde: they came to a close accountability, but is still short of what is needed. host: it is all straight ahead on "bloomberg best." ♪
abigail: hello and welcome. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. let's start with the day by day look at the top headlines. the week began with western allies uniting to punish russia for a nerve agent attack on a former spy in the u.k. >> the west clamping down on russia in a coordinated response to the alleged chemical attack in the u.k. earlier. the european council president donald tusk said 14 countries would expel russian diplomats. >> the white house retaliating for the poisoning of a former russian spy in britain, ordering 60 russian diplomats to leave leave the u.s. within seven days and closing the russia-u.s. seattle consulate. >> the russians have been looking for cooperation, and what they got is expulsion.
i think the kremlin will respond in kind. at the same time, it has lost a bit more hope they can find a way to work with donald trump after so much hope was expressed after mr. trump's election. host: there is no shortage of superlatives for the game today. the s&p 500 making its biggest one-day gain since august 2015. you have u.s. stocks rebounding sharply from their biggest weekly selloff in two years. >> to a certain degree, what happened last week was the trade issues and broadening of trade. it was not just steel and aluminum tariffs, it was the fear this would become more significant. it became to the point people were suggesting donald trump was no longer pro-growth, pro-business, but part of the problem. that narrative changed. then the headlines changed, the chinese are willing to work with americans on tariffs.
>> asian stocks following the united states. that certainly is the trend we've got here. remember those words from steve mnuchin, the u.s. trade secretary, he was hopeful a deal could be reached with china? now we understand president trump is trying to get the chinese to reduce tariffs on imports, carving out the financial services industry. this is starting to look more like "the art of the deal." >> global equities are higher after u.s. indices surged back from the biggest weekly rout in two years. >> we have had two pullsback so far this year. i think equities can go higher before we get the next pullback. >> stocks lower into the close. the nasdaq down nearly 3%, whipping back from the gains we saw yesterday. a volatile day.
10 year yields declining as the risk off rally continues. >> there was the big stock selloff and come back, but today felt different. critical yield levels, 2.8%, the 10 year broke. i think that was the last straw for people who are traditionally risk off investors. it is just capitulating to the volatility we have seen. headlines about trade war, emergency powers coming into play, between that and the tech selloff, all this drama emerging in markets. >> around noon, the nasdaq started to tick lower, leading to the worst day for the nasdaq and nasdaq 100 cents february. that stands out because last week the nasdaq 500 had his worst day since 2015, but none on a daily basis, none of those days were as bad as today. the sellers are out. it makes yesterday's rebound rally look like a dead cat.
>> mark zuckerberg decided it is time to face the congressional music. the facebook ceo will appear before the u.s. house energy and commerce committee to answer on facebook's role in the cambridge analytica scandal. this according to a congressional official familiar with the plans. his decision to appear before congress has not helped facebook stock, which dropped by as much as 4% trading tuesday, on top of the $90 billion loss facebook has seen since the scandal broke. what do we know about his appearance, and what will he say? >> we know zuckerberg has come to terms that he will do this. he said last week, if i am the right person to answer these questions, i will do it. congress came back and said, uh, you are the right person -- we want to hear from from you. >> no one could blame asian markets for playing follow the loser overnight. rish, it has been interesting. you look at the effective breakdown, it is tech that leads
losses, even though the tech selloff in the u.s. session was a company specific story. >> news around shortselling on twitter, ongoing concerns about facebook and nvidia adding concern to technology. that is spreading globally. >> once again, technology leading the way, but this case, leading the way up and down, all over the place. the nasdaq off by 9/10 of 1%. a mixed bag across sectors. >> you look at trading action today, you told me the curve would bull flatten, the 10 year yield going down, and the kbw bank index would hold up but still tech stocks selling off,it speaks to how much localized this is in a re-rating of tech. >> russia will expel 60 u.s.
diplomats from its consulate in st. petersburg. >> this is a reciprocal action. we saw the u.s. kick out 60 russian diplomat's out of the u.s., and russia responding in kind. there are now something like 20 countries with sanctions against russia for what happened in the u.k. you see this sort of broad-based response. a couple of interesting points, the president and this white house wanted to take credit for helping bring other countries on board in solidarity with the u.k. that could mark some degree of a shift as to how willing the president is to push back on russia. >> we've got some last-minute gyrations in the final hour of trading, with the indexes peaking around 3:00 p.m. nasdaq closing up 1.6%, still the best performer for the day.
>> bonds have repriced. volatility is repriced. earnings remain very strong. valuations have come down. i see the risk reward to u.s. equity a lot better than three months ago. abigail: still ahead, as we review the week on "bloomberg best," an exclusive conversation with imf managing director christine lagarde, and why she is urging european countries to spur further integration. director lagarde: many elements are there already, access to the entire markets, but they need to go a little bit further. abigail: first, more of the week's top business headlines. will restructuring at the top solve deutsche bank's problems? all that and more coming up. this is bloomberg. ♪
abigail: this is "bloomberg best." let's continue our global tour of the week's business story with china shaking up the oil futures market. rishaad: the global oil market getting a bit of a shakeup, china futures as the world's largest oil consumers. offering yuan denominated contracts to be bought and sold. it is a first for chinese commodities. the question we are asking, does is mean china will get a bigger say in pricing? >> this is a massive win for china, but very much a long-term one. we can't expect this to implicate features in the market in the short-term horizon. i am not even talking about weeks, saying the next few months or first year or so. it helps validate the yuan as a up and coming, serious currency.
indirectly, it will helps chinese bond market. it helps the entire financial system in china. it is a very big win. they have taken a long time to get there. they want to wait to the right moment, until they have full support from the gcc countries. they have now got that. this is big news, even though it is very long-term. >> deutsche bank may be prepared to replace its top chairman, holding talks with potential chief executive candidates, according to people with knowledge on the matter. >> why do they want to replace john cryan? he is in the middle of this apparently new turnaround push, at least he told me when i spoke to him last in frankfurt, it is taking hold. >> there are many voices saying cryan is not the right guy, some saying he is the right guy. lets strip that down. he stabilized the bank, and that is no small feat. a lot of people worried about deutsche bank running against a
wall two years ago. he's dealing with legal issues, bringing down costs, those are all good things. but can he return this big tanker to growth? >> major moves at deutsche bank. sources say the biggest lender is conducting a review of its investment bank that could lead to cuts across its trading businesses. >> they are drilling down into the business to see, where are we still competitive? one of the focus points is the u.s., where they are facing strong u.s. rivals. the question is, do they still the capability to compete with them. can we invest money to catch up with them, or will we simply scale back? rishaad: the latest poll by a japanese news network shows prime minister shinzo abe's approval rating has fallen to 32.6% over the past month.
his disapproval rating has risen by 13 points, to just shy of 55%. behind is a scandal over public land and a fraction of its value to a nationalist school operator with links to his wife. >> you are talking about a former finance official who also rose to the head of the national tax office. he oversaw this questionable land deal that documents were forged, words used by the prime minister, that according to the finance ministry, removed the names of the prime minister, of the minister's wife, who was to be an honorary principal of that elementary, and also remove the name of the finance minister.
overall, i think it is becoming more likely that prime minister abe will have to resign before the end of the year. >> china confirms kim jong-un did indeed travel to beijing this week and met president xi during a four day stop of a pretty secretive trip. what do we know? >> we know kim jong-un and his wife spent four days in beijing, including travel days, so about two days. it is a slow train crossing from north korea into china. it is interesting, because this is what chinese media normally does. they do not reveal the details of such a trip until after kim has returned to pyongyang. at least, that is the protocol
they used with his father. kim jong-un had never been to beijing, at least since he was the leader of north korea, so this is a significant one, because it also gives china a chance to consult with kim jong-un ahead of what is likely to be a summit with president trump sometime in late may. >> we had the very first confirmation from kim that he would be willing to meet with trump. this is weeks after trump himself said he was willing to meet with kim. we have that on the first point. secondly as you mentioned, a suggestion that he is willing to discuss giving up nuclear weapons in these talks with trump, whenever they may occur. that is a very significant step for a country, that about six months ago, says it tested a nuclear weapon.
>> bumpy ride for tesla, and that is understating it. shares down for a second day, at one point falling the most in nearly two years, following a fatal accident involving one of its vehicles. the crash only adds to ceo elon musk's list of challenges. >> investors are looking on tesla's future, not its present, as a ridesharing and mobility autonomous company. if there is a big setback in terms of technology, then that is a real problem for the company long-term. >> once again, tesla urging workers to prove haters wrong. it is pulling out all the stops to hit its production goals. it is giving a limited number of workers an option to work on the crucial number three line. >> they indicated in this email they are not out of pace where they need to be to hit their target. they have some ways to go.
they used this idea of, we have short-sellers doubting us, let's prove them wrong. >> saudi arabia has earned secondary emerging market status. it could attract billions of dollars of investment and help the kindgom's move away from an oil dependent economy. >> this is a recognition by the international investment community for the reforms that the saudi stock exchange have taken in the past 18 months to address the requirements of opening up the saudi stock exchange and pursue a more attractiveness platform for international investors. >> we see the biggest market in the middle east. we announced we are adding q8, adding the saudi market gives a much greater exposure to the
middle east. investors have shown a real interest in this region. >> renault and nissan in talks to merge, creating an automaker traded under one stock. that is according to those with knowledge of the matter. the chairman of both companies is thought to be driving negotiations, and would head up the new combined entity. >> the complicated alliance -- the french government also plays a role, the japanese government. that is the one to watch -- how will the french government respond? will they want to relinquish their stake in renault? does this water down their control? the alliance has always been a little bit lopsided, a little bit skewed. renaults owns the biggest stake, but nissan has traditionally brought in more of the money. there is something that has to be done. by merging them together now, that is the first step to creating a big counterweight.
he has relinquished some authority over nissan to concentrate on the alliance. watch him as the continued strong man in this. renault nissan as a unified company will be a formidable force. >> barclays has agreed to pay $2 billion in civil penalties to settle a u.s. investigation. stephen morris is here, u.k. banking reporter for bloomberg news. waiting to settle this case paid off for barclays, didn't it? >> that is right. most banks fell in line and paid what the department of justice asked them. barclays took a contrarian bet at the end of 2016 -- take us to court, because we don't think we should be paying any more money on this, and it has paid off. we reported in october 2016 that they wanted to cut the penalty to $2 billion, and it paid off. ♪
>> welcome back to "bloomberg best." this week bloomberg sat down exclusively with imf managing director christine lagarde. they met in berlin, where largarde gave a lecture on strengthening the european union. she told francine euro area integration is still short of what is needed. >> why has european integration been so slow? director lagarde: i wouldn't say that. i would say in times of crisis where there is a necessity, they eventually moved very fast. the euro area was clearly incomplete and needed to be strengthened. they put up a firewall. they reinforced the banking system.
i think they came to a close accountability, but it is still short of what is needed. they need more trust. they need more accountability. more to the point, they need to strengthen three things. one is the capital market, two is the banking union, and three is essential capacity that will signal to the rest of the world that they are shoulder to shoulder together, and they will face the next crisis with that rainy fund we are advocating. >> on those three points, the banking union and capital markets union, will we get a real capital markets union and banking union in our lifetime? >> in your lifetime, yes. in mine, probably so. those are the two most likely to happen. capital markets union, i think they are getting very close. i do not think they should set
aim at closing and complete the job only when the bankruptcy law has been harmonized between the member states. that will take a long time. job only when the bankruptcy law my suspicion is they should set a few targets that operate as a common basis, a common platform. many elements are there already, common standardized documents, access to the entire market, but they need to go a little bit further. i think it is particularly the case, given what is happening on the other side of the channel, the fact that brexit is going to happen, whatever the terms afterwards, some of the financing activity is going to move to the continent. i think it is important that the euro area be a joint properly operated capital markets union. banking union might take a bit more time.
one component where i think all the members are there, and this fiscal backstop, which will be very welcome. where it is going to be more gradual, but i hope it will happen, is on this issue of the common deposit insurance mechanism, where if a bank falls, then the depositors are protected by a mutual fund that is financed and operated by the banks in order to protect depositors. the central fiscal capacity will be more difficult. abigail: coming up on "bloomberg best," conversations on trade and tariffs. weighing in on the threat of trade war. >> the psychological degree of friction right now could be quite serious for markets. >> plus, another exclusive interview, this time with saudi aramco ceo. >> we should be as a company for listing in the second half of 2018.
abigail: you're watching "bloomberg best." i am abigail doolittle. in the days since president trump announced tariffs against china, business leaders have been waiting the consequences of a potential trade war with china. it was a topic throughout the week on bloomberg television. let us start with sergio ermotti. he spoke with us at the china development forum in beijing. >> i think they start to get concerned. i think for the time being, the numbers are modest in respect of the impacts. we see the proliferation of these tensions on a bilateral basis. one will be good for growth 14
geopolitical reasons. so, while at this point in time, we do not see financial markets of being overly impacted by this protectionism waves, although i think if it keeps going on, it it could be very disturbing. >> the market selloff on friday was pretty severe. why wasn't it priced in? this has been flagged by the trump administration? >> at the end of the day, you look at this and how it is difficult to understand the corrections that are coming as a consequence of those announcements. for the time being, we remain constructive on growth. as i said before, we have to pay attention if this government escalates and creates retaliation, particularly if it goes beyond china and the u.s. and starts to touch other countries.
that could become problematic. abigail: former treasury secretary larry summers says the u.s. and china need to dial down the rhetoric amid growing trade tensions. speaking to bloomberg at the china development forum in beijing, he said trade sanctions that have a psychological impact on the market. >> i don't think trade sanctions need to have a large impact on the global economy but does psychological impact could be quite serious for markets. it is both a matter of what actually happens in terms of tariffs and the psychology. i hope the temperature will get taken down on both sides. >> it sounds like you do not the chinese will escalate their countermeasures in this phase. >> i will not handicap what the chinese will do. i hope everyone acts with restraint.
>> do you see this as a shift from the trump administration, or negotiating stance? >> as ronald reagan said of nuclear wars, trade wars can never be won and must never be fought. >> some are wondering how this will factor in. does this change your calculation of how you set policy at this point? >> i don't think the impacts are large enough to affect the fed. >> concerned about trade sanctions between china and the u.s.. as much as 90% of the products move between the two countries. the trade war would affect global gdp. >> for us, trade is absolutely essential. we believe in free and fair trade. if you look at the history, there is no doubt that if you want to create wealth, free trade is an important driver. if you look at the example of the mining business, it is
absolutely essential. we have two key drivers for business. one is gdp, which is going well at this point in time, and the other is trade. let me give you an example. 80%-90% of our product at rio tinto is moving from one country to another. trade is absolutely essential. in light of the recent announcement of last night, if you ask me if i am concerned about this, we are watching this carefully. if we step back, both china and the usa are great trading nations. i am sure they understand the role of trade in terms of creating wealth and standards, and i believe common sense will prevail at the end of the day. i hope those two countries sit down together and work out their differences. are we concerned? the answer is, yes but i still believe common sense will prevail at the end of the day. let us see what happens in the next 45-60 days.
they will be absolutely essential in that regard. >> i think, for the international stability of the trading system, it is critical that china stops stealing intellectual property about not only from america, but the rest of the world, and they end the pernicious practice. if a foreign company wants to enter china, it is a minority joint venture. that does not work for long-term corporate growth and earnings. all the president is doing, all president trump is doing is asking for fair and reciprocal trade, free trade, fair and reciprocal so we can have stability in the international trading system. right now, we have massive trade imbalances, driven by unfair and nonreciprocal trade. he is going to change that. >> peter, i'm going to ask you a final question. if you don't answer it, my producer will shout at me and your pr will try to pull you off camera. the chinese -- the united states are going to unveil the tariffs
on the chinese products. what products can we expect in the coming days? >> certainly, the focus of the tariffs are focused on the china 2025 industries. china, in my view, has brazenly released this china 2025 plan that basically told the rest of the world we are going to dominate every emerging industry of the future and therefore for your economies will not have any future. artificial intelligence, robotics, quantum computing -- all of those things. the section 301 on intellectual property theft and forced transfer is specifically designed to address those kinds of things. and i think the world should welcome that. europe is being hammered by the same thing, japan is getting hammered by the same thing. we are trying to add trade peace where we can have a regular free market system where we don't have to worry about things like
that. >> can you give us any clarity on what we are expecting in terms of tariffs on chinese products or restrictions on chinese investments in the united states? >> the purpose of the whole thing is to try to curb the problems we have found with intellectual property rights. forst technology transfers, forced technology transfers, forced licensing, all sorts of problems that are designed to penetrate the intellectual property rights of american high-tech companies. >> are tariffs the answer though, sir? a lot look at this and think the technology they then use is sold within china, and tariffs on the incoming goods will not crack down on what we are seeing. >> i do not think that is quite true.
there are codes and things embedded in high-tech situations that are not that easy to get from the outside or by designing backward from the finished product. if there were, the chinese would not be requiring all of the massive technology licensing and technology transfers that they do. so, the fact that they are doing it speaks for itself. >> what is the message we are trying to send to china at this moment, mr. secretary? is it -- look, the united states is preparing for a possible trade war or we are ratcheting up the pressure, but we want to bring you to the table to do a deal? >> i think it is something quite different from that.
in terms of steel and aluminum tariffs, the message was that we were trying to protect our present-day products. in terms of intellectual property, the message is -- we are trying to protect the future. the intellectual property of today is the important finished product of tomorrow. so, the message is very straightforward. we do not mind competition that is fair and square regardless of where it comes from. we do mind competition that is based on violations of fundamental intellectual property rights. to give you a feeling of how important this is, the u.s. patent and trademark office which is also part of the department of commerce, sometime this summer will issue its 10 millionth patent. there is no country on earth that has ever issued anything remotely like 10 million patents. that is the key to a lot of america's success, is technological leadership. we cannot afford to have that stolen or strong-armed away from us.
he defended plans for the ipo in an exclusive interview with bloomberg's jonathan ferro. >> i think a lot of the questions and the media coverage in the news about the ipo and when it will happen is a lot of demand for the listing of saudi aramco. the data will show when we go on our road show ultimately, we are the most efficient, the most reliable producer. this is a great company that the data will show their performance. >> when i speak to people, they are not talking about when it will happen, they are talking about if it will happen. perhaps the whole ipo will goes into the deep freeze and doesn't
happen at all. >> the company and the government did all of the paperwork to make it a joint stock company effective january 2018. that is an indication that the ipo is ongoing. the preparation by saudi aramco never stopped. we should be as we always say a company ready for listing in the second half of 2018. we are doing a lot of work to prepare the company for listing. making sure that we are ready for listing. >> do you set a set of accounts of u.k. standards already? for the whole company itself? >> the only requirement for listing in terms of auditing --what is required by the listing venues, we will be unveiling all of the necessary documents.
>> it is not your decision ultimately when this will happen. i am trying to understand when it will happen. >> the timing is the government will decide on that. these are complexities and required time. there is a lot of work that is ongoing to evaluate all of that, and decide on timing for the video. abigail: the push for autonomous driving is facing fresh skepticism following the fatal crash of an uber self driving car last week. the themes dominated the conversation at the new york auto show, where we asked car executives about the future of the autonomous vehicle. >> there was the tragic incident in arizona, uber's fatal accident with the autonomous driving story.
do you see the regulators putting the brakes, excuse the pun, in the efforts to develop that kind of technology? >> first thing, our sympathies with the tragedy in arizona. the first thing, we do believe in the technology. where everyone is getting lost is they view it as a race. who gets to the moon faster. we do not necessarily view it as a race. we view it as making the car and the automotive environment safer. we have always been ones that expressed caution. there is a lot of pt barnumism, a lot of speculation. at audi, we always test with two engineers, one at the wheel and one in the backseat with the data. you need to work with consumer understanding and with regulators, but it is not a sprint. getting it right is what winning is to us. we think we can and will get it right. >> i think many people share
that view as well. i wonder to what extent many of these developments have had free reign on public roads to develop this technology and whether the legislators will clamp down on that? >> that is what you are seeing in arizona right off the bat. the best thing with regulation is to have absolute transparency. they need to share the data. they need to see the data. the biggest word we keep using is trust. do the regulators trust the technology? does the consumer trust the technology? and of course, can we deliver? that is the ecosystem you are seeing broken up right now. the other thing we need is we believe strongly that you need a federal standard. that will get away from each state coming up with different initiatives. caution is the name of the game. you are talking about people's lives. that is what we have always said, and that is what we will continue to say. >> where is ford right now with respect to autonomous vehicles? waymo has done a deal with
jaguar. do you wish you had done that deal with waymo? >> no, ford is one of the top companies. we have developed in argo in pittsburgh. what is different about ford's technology is the product is based on hybrid technology so we can run the vehicle 20 plus hours a day. that vehicle will be unique for automated use. we are not moving people in the hailing service, but also moving goods. we are working with post-maids and dominoes and lyft. we are in miami right now not only mapping the city, but running the business model with drivers in the car, nonautomated cars operating the services. the drivers cannot leave. they are simulating the av experience. boy, are we learning a lot in miami. >> do you anticipate more regulatory oversight?
>> the accident is really an unfortunate development. the reality is that ford is a 116-year-old company. nothing is more important to us than safety and the brand itself. for example, we have two safety drivers in every one of our argo vehicles. this is important because it is a new technology. we do have to test on public roads and in difficult situations. we are learning a lot and we are taking every precaution we can to protect not only our customers but also pedestrians. >> jaguar land rover making its waves at the new york auto show. it teams up with waymo on an autonomous vehicle project. we are joined by the jaguar land rover chief executive officer. why did you choose waymo?
>> electrification is a prerequisite for modern mobility. this mobility cannot be done in isolation anymore. modern mobility needs partnerships with government, academia, and industries. we are leading in the electrification. and we look for partners who lead in their respective fields. at the end of the day, we are all on the mindset -- share your vision about mobile mobility. wherever two partners are coming together, creating something special, creating something new. >> some might say your choice is unfortunate given the tragic news that we have gotten. does this slow down the rollout of this ride-hailing service that waymo wants to implement? >> not at all.
from my point of view, we are doing everything we can from the side of the car manufacturer. outstanding in this line, outstanding and performance, and delivers everything in the segment of security that you could expect from such a premium car. on the other hand, waymo has the most advanced data, algorithms, and safety and security systems so this would be a very good basis to develop this kind of service in the future. >> chinese consumers in the past, when there were tensions with japan or south korea, they boycotted some of the cars. are you concerned about what a trade war between the u.s. and china could entail for chinese consumers and cadillac?
>> free trade is the growth engine for rising prosperity levels around the globe. in order for free trade to be sustainable, it needs to be based on fair roles of trade. i think that is a universal truth. >> there was a tragic incident involving uber and an autonomous vehicle in tempe, arizona last week. i know general motors is very active in this area. do you expect that will increase the level of regulatory oversight and slow down the process? i know general motors -- this is an important priority for you. >> general motors and cadillac specifically have been very conservative in the rollout of semi-autonomous technology. we fundamentally that beta testing and development is to be done in a controlled environment with the hands of experienced engineers, not in the hands of consumers. if this means that we have a slow learner rollout, then so be it.
we are one of the leading proponents of autonomous capability. given the stature of general motors, we have to be very circumspect, precisely for the reasons you articulate, to ensure the that the way we roll out the technology builds confidence in consumers and regulators alike. ♪ abigail: looking on the
bloomberg which highlights this red versus green. red indicating the price of technology. abigail: there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television. maybe they will become your favor. here is another function you will find useful. quic go. it will take you to our quick takes, where you can give you insight into weekly topics. here is a quick take from this week. ♪ ♪