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tv   Bloomberg Best  Bloomberg  September 1, 2018 7:00am-8:00am EDT

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>> coming up on "bloomberg best," the stories that shaped the week in business around the world. north american trade talks moving forward, one partner at a time. president trump: we're going to call it the united states mexico trade agreement. >> canada cannot be seen catering to u.s. demands. >> can always make the trade deal stronger. you can always modernize it. >> president trump has plenty to say in an exclusive interview with bloomberg news. president trump: the european union is almost as bad as china, just smaller. >> tesla's plans to go private take a u-turn.
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toyota makes a big bet on uber. >> it is saying uber is worth more than tesla and these big tech companies. >> in switzerland, leaders in finance speak on the news of the week. >> some countries in the past used currency manipulation to be more competitive. >> plus, if you are seeking insight, who better to listen to than warren buffett? >> we keep buying as long as we find something attractive to us. an attractive business at a reasonable price. >> it is all ahead on "bloomberg best." ♪ >> hello and welcome. this is "bloomberg best," your
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weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. the week began with nafta negotiations as the u.s. and mexico laid the groundwork for a larger deal. >> president trump saying he will terminate nafta and sign a new trade accord with mexico. president trump: we're going to call it the united states mexico trade agreement. we will get rid of the name nafta. has a bad connotation. the u.s. was hurt very badly by nafta. >> nafta is not dead. this is a breakthrough in a general sense with mexico. they still have to get canada to sign onto it. there is a lot of progress that needs to be made in order to do that. administration officials have walked back toward the president said. the two agreements reached with mexico, 75% of auto content has
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to be made in the u.s. or mexico, presumably canada if they sign on. that is up from 62.5%. they are changing the ways they calculate that. it won't be this automatic change. then sunset agreement. instead of the administration demand to end it after five years, it is a 16 year agreement. they still have to deal with canada, a dispute resolution ,and dairy, two big issues. >> president trump is googling himself today after he said "only shows the viewing of fake news media." googled responded they do not bias results toward any political ideology.
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>> like the president's twitter attacks, we can't totally ignore them, because he is the president. there is a germ of truth and not truth. it is true google and facebook posts quarter results based on algorithms that are secret. those algorithms have bias, but not in the way the president says. in general, it is good there is more scrutiny on these companies. i don't think there is much to the idea that they are stifling conservative points of view. >> the u.s. is pressuring canada to join an updated nafta agreement friday. >> mexico has made some significant concessions, which will be really good for canadian workers.
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on that basis, we are optimistic about having very good productive conversations this week. >> canning the -- canada cannot be seen to be caving to u.s. demands. there is a sense they are being bullied into this agreement, and they don't like the tension between trump and trudeau. i believe in order to get a political win, canada will need some concession from the u.s. that's the big question right now. what can they take back to canadians that is worth giving up on their side? >> president trump wants to impose additional tariffs on $200 billion worth of chinese imports as soon as next week. why next week maybe the d-day for these tariffs. >> we have been talking about
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this all summer. president trump has made it no secret he wants to put pressure on beijing. the big deadline next week is expiring of a public comment period on this list of 6000 products worth some $200 billion he would like to slap a 25% tariff on. that's the trigger point. word is he does not want to wait around. he wants to move quickly on this. >> today the president of the united states conducted a wide-ranging oval office interview with bloomberg news. among the topics discussed, and capital gains tax break, the wto, tech and google and facebook, the president's feelings about fed chair jerome powell and his embattled attorney general jeff sessions.
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>> he is combative, confident. he he radiates a confidence not everyone agrees with, but he feels he is winning the biggest battles. he is not done thinking of new ideas. he wants to rewrite trade rules around the world. president trump: i would say the wto was the single worst trade deal ever made. if they don't shape up, i would withdraw from the wto. >> he was particularly bellicose on europe. the fact that he immediately rejected the offer from the europeans to go to zero tariffs on cars was interesting. he said that was not good enough, i want a much broader deal than that. president trump: the european union is almost as bad as china, just smaller. >> the overall impression of someone feels the world is going in his direction. for better or worse, that is the president america has at the moment.
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>> president trump says he is optimistic a deal will be reached by today's deadline. canadian officials are raising serious doubts. >> we are committed to speaking for canada to a good deal for canada, not just any deal. we are very good, as canadians, at finding win-win compromises. at the end of the day, we will only sign a deal that is good for canada. >> you have to read into the pessimism, the body line which in her statement, the idea that they keep having to stand up for canada's interests suggests they have reached a point they are not going to get any more ground on. if they can reach a deal today -- it looks a little bit darker right now. >> this is an artificial deadline. this is the president wanting to send congress a notice he will
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sign the treaty before pena nato -- nieto leaves office september 1. the artificial deadline may be making this a little harder. >> the ongoing negotiations with canada are not complete, and we continue to negotiate with the united states. so that is why we are coming back next wednesday, and we are going to continue talking until we reach a good deal. >> the canadian minister does not want to look like they are being railroaded into a deal. they are coming back next wednesday. a source told me a deal this week was always a long shot. today was good news they are still coming back next week to talk. ramy: still ahead as we review the week on "bloomberg best,"
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high-level trade talks from mexico's economy minister and u.s. commerce secretary wilbur ross. plus an exclusive interview with the head of thailand central bank. and a conversation with warren buffett. leaders in italy say they won't support the eu's next budget. >> the eu is a place where things are negotiated slowly, but they want action right now. ramy: this is bloomberg. ♪
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ramy: this is "bloomberg best." let's continue our global tour of the week's top business headlines with new twists in the ongoing negotiations with exit.
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>> the u.k. and european union pushing back the deadline for a brexit deal. both sides aim to finalize the divorce terms by mid-november the latest. it's another indication negotiators are struggling to make progress, despite the u.k.'s assurance to speed up talks. what are the reasons this deadline is being pushed back? >> the reason both sides are not able to agree on a divorce deal is northern ireland. they have a commitment between southern and northern ireland, and they can't seem to make it work. they were supposed to agree something at the june counsel, and now looks like they will not be able to agree the october counsel. they may need a special summit to make that work. >> what is being seen as a policy term, the chinese central bank strengthened the interest rate as pboc banks have resumed use of the countercyclical factor in the pricing of its yuan reference rate. talk about why this is the second.
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>> this is significant. >> the u.s. has been accusing china of deliberately pushing the currency down. the stories have already made it more difficult to short the yuan. now they have come out with is very technical measure. what it does it makes it harder for the u.s. to push currency down. the lost in the past three months seems to be the tolerance level. it may be no further from here. >> the u.s. department of agriculture announced u.s. farmers will receive $4.7 billion of initial farm aid. who is the biggest winner and loser in the agricultural sector? >> the agricultural sector would tell you there are no winners.
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you have $3.6 billion going to soybean producers. every statement i have seen so far is, you can give pork $290 million of direct aid and $559 million dollars of government purchases, you can give money to corn, wheat, dairy -- none of it matches the economic losses farmers are facing today. you would say, on paper, these are the winners of the package, but most of the commodities are feeling like losers as the trade war goes on. >> in the u.s., second quarterly gdp data coming up above estimates. >> a good news story on gdp this morning. we saw a revision upwards of 4.2% from the previously reported 4.1%. that is on the back of a really solid intellectual property investment.
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as you see companies investing in software, that could lead to productivity gains and make growth more sustainable. we got a first rate on corporate profits, which was the biggest we got a first read on today, they popped 7.7% which was the biggest gain, so all good news. >> italy will start the process of opposing the eu's next budget and the decision comes after the member states fail to follow through on a deal reached in june. why are they trying to block this deal? >> the problem is the government has been dealing with the migrant situation for years, and they feel abandoned. we have a populist governments which is trying to change things, they want to show that they are tougher.
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they are reacting more violently, they want action right now, so they are saying things that are much stronger than what we have seen in the past. argentina'sng economy right now, asking the imf to speed up bailout payments. is it good news for investors because they are getting the money faster or is this bad news because it raises uncertainty over what is happening in the economy there? >> argentina is pulling out all of the stops to try to restore investor confidence and public confidence in the economy. up anys meant to clear doubts that argentina could not cover any of its payments this year or next year. argentina says it has enough capital with imf the deal without issuing more debt. down 40% this year, that
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is the worst selloff in emerging so a lot of economic turmoil and we have a recession coming this year. this was to help alleviate some of the pain economically. >> a record low prompting argentine makers to raise the nation's benchmark interest rate to 6%. we were expecting the central bank in argentina to hold rates steady, but no, they have to move and tell us whether investors are thinking about the latest central bank decision. >> there is a crisis of confidence in argentina. investors and the public want to see a clearer strategy from the government about how they plan to cut the fiscal deficit, how they plan to reach their fiscal deficit target, and today's reaction was an emergency measure by the federal bank to defend the peso. in nigeria are
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costing a wireless carrier dearly. in $.1 billion that the bank said was inappropriately repatriated. what about the central bank's decision, does that have an impact here? >> yes. has been oneso far of confusion, they are not clear what is happening. the group's ceo in south africa said this morning on an investment call that it was very strange that mtn was being penalized for this. it,the people affected by the banks that helps them repatriate the funds are also affected. they are all in talks. saying that trump it is inappropriate for national -- south korea,
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argentina, and brazil. >> these tariffs on steel and aluminum was the start of the very hawkish period in trade policy. the administration says the terroris -- tariffs are still necessary. in the case of steel, these are not small exemptions. you have brazil, argentina, and they contributed about a quarter of u.s. steel imports. what we see is a material you think of these eximport restrictions. it is willing to include cars among u.s. goods that could be imported duty-free.
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trade commissioner today saying the eu would be willing to go to zero tari ffs on automobiles in a trade negotiation. something that began under the obama administration, andtransatlantic trade investment partnership, it was a trade being negotiated up until donald trump it when he came into office. it would have seen the tariffs on cars go to zero on both sides. we aree the quotes, willing to bring down even our car tariffs to zero if the u.s. does the same. on u.s. has 25% tariffs light trucks and suvs. the u.s. would have a lot to give up, automakers may not be interested in doing that but it has given shares of european automakers a pop. it does not appear to be
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something to new and does not appear to be something the administration is embracing. have trump: tariffs, they barriers up to our cars, they will take the barriers down and charge is no tax but it is not good enough. they will always sell cars. the consumer habits are to buying their cars and not our cars. ♪
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♪ welcome back to "bloomberg est." this week passed bloomberg's david westin at opportunity to sit down with conversation with warren buffett. the legendary investor had plenty of insights to share.
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>> the stock market is really on a record. you have always drawn the distinction between price and value. are we seeing a run-up in value or price? >> values gain from year to year. youou own a business and use a portion of your earnings to build a business, you're going to have something to return year after year. market builds in value underlying value from year to year. bought my first stock when the dow was just under 100 when i was 11 years old, look at where it is now. >> one of the things you take a look as the total value of the stock market compared to gdp. if you look at paragraph, it is at the high point. it is the highest it has been.
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is this a better time to be fearful rather than greedy? >> i am buying stocks. i am buying them because i think they're going to be worth quite a bit more money 10 years or 20 years right now and i do not know if they are going to go up or down next week or next month. i know they are good businesses. in relation, you have to measure and your alternative is a fixed income and you get 3.02% for 30 year. would you rather invest and a company that is earning 15% to 20% on their investment capital and compound at a 3% bond? >> there are some stocks that are good bargains. on the market is that this high, values of gone up. you are sitting on a a lot of cash. don't we have to have more fear in the marketplace before you are deploying the cash? >> i do not love it for the
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country as a whole, but that creates prices that make me want to show out the money as fast as i can, but we have been shoveling out money anyway. it is not as attractive as when i was buying into thousand 8, 2009. 1974 was the best year for buying securities in my lifetime. that will happen from time to time. you cannot sit around and wait for it. you are never going to catch the bottom anyway. as wep buying as long find something that is attractive. an attractive business, i still keep buying. >> coming up on "bloomberg best," we die back into the business news from earnings from china's biggest bank and the snake the cap. iphone that will be launching in the fall. first, more compelling conversation.
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>> when people fear competitor -- >> this is bloomberg. ♪
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♪ this is "bloomberg best." week saw progress towards renegotiation of the trade relationship between the u.s., mexico, and canada. let's revisit some of bloomberg television's interviews from officials from the nafta , starting with wilbur ross who spoke about new rules that would affect the auto industry. >> one of the most important economic issues that was solved in the deal with mexico is increasing both the nafta contents and hopefully the american content of the automobile industry.
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are the largest single source of the valid trade deficit with mexico. we think that will help mexico sness back from southeast asia and we hope it will help the u.s. to do the same because now, somewhere between 40 and 45% of the conten t of key components has to be from countries where the wages are $16 an hour or more. wages are mexico's nothing like that nor are they in southeast asia. the provision that directly benefits the u.s. and of canada comes in, more or less what health canada because their wages our similar to ours. nowhe president said that is not a time to negotiate trade relations with china and you have reiterated that.
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why is this not the time and when will be the time? >> we do not have an exact date be the timeill but you are aware that the two delegations met last week, there was no substantial breakthrough that came from that session at all. that is one indicator that it is not necessarily the right time. secondly, as you know, the united states is scheduled to impose tariffs on quite a lot comingoduct from china in here and i think the president is interested to see the impact of those moves have on the potential negotiations. the new proposition is that 40% of the content is made in i high wage -- in a high wage
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zone, above $60 an hour. -- $16 an hour. 70% of case of mexico, the car experts can meet that new rule with some effort from here to the first of january of 2020. the 30% remaining, we have given certainty that in that they rule,ted the new they will basically never pay more. that is obviously something that will immediately have the following effects, protect the production capacities, comes that are they expansion of the rates happening, and create space for growth ahead of us. the majorityu that of experts of today will keep the new rules and keep exports and growing in the mexican
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economy. mnuchinit secretary mean when he said there was a strong currency protection chapter? >> these new agreements, and remember this is not the first time that we have discussed this , the idea is not necessarily something that happens in north america. some countries in the past used currency manipulation to be more competitive. these understandings that we are doing is that we should send a signal to all of the regions in the world that north america will not tolerate currency manipulation to attract trade. >> we are looking at the long term. and othersdeal is about a generation from now. we are setting the table for the next generation of canadians. we believe traders, in our interest to establish these relationships around the world, and we are doing it for a
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long time in the future. >> you yourself have suggested that progress can be made, what progress? >> we know what the issues are. we need stability, we need predictability, we want investors to know that when they are making that deal with canada under these rules, those rules are going to be around for a while. make a trade deal better. you can always make it stronger and to modernize it created we came in to these discussions with that objective. i am hopeful that we will come up on the other end with a stronger deal for all three countries. thailand is one of many countries watching the global trade developments closely. the governor of the ties central said protectionism is a gross risk for his country.
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he also said he is not feeling the immediate pressure to hike rates. 2019 rate hike is not going to happen because it is still too early? >> we have to evaluate a number of factors. >> what is the biggest concern for you right now -- it is the strength of the thai currency that could be a hindrance for exporters? >> that is also a concern. if you look at the nominal change, the currency -- normally it would move in currencies, and ,hat has left some investors
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and we are not quite comfortable . that is also resulted in the tightening go the domestic liquidity condition, but also concerns with other risk factors that we have to keep our eyes on. the recovery of the tourism theor from the incidents in south which has resulted in a confidence in chinese investors so we saw a drop in tourism activity in the past month or so. but the trade protections is something that would to keep our eyes on. -- the need for thailand to increase the policy rate is not as imminent as other emerging markets. now to another bloomberg ceo in china this week and set down with a
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bloomberg reporter. >> well-managed economies are safe. --re is no emerging economies that have a current account surface but their public funds are in order, do not run of fiscal deficit, and have a significant return are safe. pedron from com poor economies to well-managed economies. they had a significant current account balance problem and that makes them vulnerable. it is not because they are emerging markets. it is important to manage the fiscal situation responsibly. it is important to have significant reserves and you will find it a lot
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emerging-market economies are in that position. the current pressures are on turkey and brazil. i was in argentina does go months ago -- i was in argentina o, and it is clear that argentina has two chal lenges, but to extend that to emerging markets is simple. >> in terms of the contagion from turkey in particular? >> i do not believe it will be material contagion overtime. in the short-term, there is always a stronger, spontaneous reaction, but it is not justified. >> the impacts on european banks? >> it is manageable. banks are in a much different situation than they were back then bring -- back then.
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i am very positive in the medium long-term on turkey. ♪
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♪ this is "bloomberg best t." tesla resolved the question of whether it would follow through on a plan of whether to go private, the answer for now, is no. made a dramatic u-turn on his controversial attempt to take tesla private. musk wrote a blog post that the electric carmaker would remain public. he wrote, i knew the process of going private would be challenging but it is clear that are be more time-consuming and distracting than initially
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anticipated. after considering these factors, i met with the tesla board of directors and let them know that i believe the better path is to remain public. is it something that investors and analysts can easily forget or is tesla going to be plagued by uncertainty? >> there will be some issues surrounding musk. i believe he will be fined. i believe he will be able to keep the ceo role, but this was an issue of that process and elon's oldand frustration of dealing that motivated him to send a tweet in the first place. world's most valuable company, offering three new models this all. what can we expect? >> three new models, an update
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to the iphone x, plus a larger een,l with the 6.5 inch scr plus another phone over six inches screen wives that is going to be lower cost that is going to be a hot seller -- is going to be a hot seller. many of the higher end features, it is going to be a big boom for apple, it will come in multiple that i amuff anticipating is going to be a big deal for the consumer. is making a $5.5 million bets on uber. million uber a $72.2 valuation. >> all of the car companies want
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to get in this space. what is surprising is that big of a valuation. ist is saying that uber worth way more than tesla and the major car companies. when you have service revenue without owning the cars, you can print money on a business like that and that is where they think it is going. a car, it is an icon, it is a roller coaster, it is james bond's car brand. totish carmaker aston martin list on the london stock exchange. valuation is going to be key. [laughter] >> if you look south to ferrari , they took the ticker race. we shall see. we will get some details on september 20, but they came out with a chunky statement saying
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yes, we want to float, revenue is up, earnings are up, unit rails are up, so all of those things combined, they feel that now is the time to do this. they looked at harare that has had an incredible run on the start market -- they look at ferrari that is had an incredible run on the stock market. >> your earnings jumped to a record and that was rebounding crude prices that brought oil and gas to breaking even. >> the refining good number equates to 33% in the first half. that is at the base of the much higher oil price. workefining business, oil is a raw material. whenever the oil price gets higher and the refining market will get squeezed. in terms ofood job
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cost control and in terms of fuel upgrades, so investors have a warm response to their performance in the first half. big box bust. the third quarter forecasts missed. >> it is a ritual now on best buy earnings day. the guidance does not to go where investors are hoping and they get the jitters about how well it is going to be able to hold up and it matched against amazon. >> tiffany is shining bright. the company reported sales and raised its media forecasts. >> they've been doing well over the last two quarters. they have seen a resurgence in sales particularly with the local consumer, so that has been great and gives them confidence that they are marketing, their
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new marketing initiatives are gaining traction. over to china now and do despite a deleveraging push and a record nationwide surge in bad loans, the country's biggest banks have posted stable earnings growth in the second quarter. what sets the big names apart here? >> the big state owned lenders have been doing well despite hes, weeleveraging pus have gotten results from four of the big five. these are not the blowout numbers, rather stable. thethat is good given beating that the banks have taken over the last few years. the deleveraging push on crackdown has basically pushed businesses. growing commodity trader is
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starting the first day of the rest of its life after shareholders backed a plan.versial rescue it dramatically reduces investor influence. where the investors just ready to say, we want to come out of this with something, we will go along with everything, and did they get a good deal? buthat they got was hope. it was a choice between hope and absolutely nothing. i guess they went for hope. whether that plays out remains to be seen. gone fromny that has a $12 billion market cap down to $100 million. i look at this as a financial collapse of every participant in the financial ecosystem, and i think the singapore regulators really need to step up and do something about it. money managers says it will start paying back investors and close bond funds early next month. it suspended a bond manager tim forced them tot
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freeze that some funds. >> what they have done is say, we are going to start paying out some of those funds that would be liquidated but look closely and to different people are going to get their money back at different times are you about $3 billion of that cash is in came in and domiciled -- cayman domiciled hedge funds. i am sure there is also going to be some boulders looking now for opportunities and think of what exactly is in those less liquid cayman funds and how quickly are they going to have to seller. up --ecom teaming vodafone has not had an easy time in australia and has been a complicated environment for the whole sector for it does this
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improve the outlook? >> they have had coverage issues and what this deal does do, it strong presence and it really to propel them in the australian market. you guys have struggled with coverage, you have struggled with trying to get the market share. thinks anyone is raising the white flag or stepping away from the market, good luck to them. this is bringing together the best of both worlds. the u.k. listed stock is surging the most animals nine years. this after it agreed to sell its coffee chain to coca-cola. doings a cleaner way of the spinoff. allison on a call with
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britain this morning and she was mentioning how coca-cola has approached them in the recent few months. i think that is part of the reason that we have seen the share price reaction we have this morning because it has been a surprise. it is also been a higher sale than others have been expecting. ands an interesting deal with the expectation that it is going to generate more cash flow for geral -- for shareholders. ♪
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♪ can i show you this function on the bloomberg? u.s.ows you the relationship with china, this is clearly the biggest trading relationship with the u.s. has. in second place, canada, third
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place, mexico, underlining the importance of the replacement for nafta. about 30,000 functions on the bloomberg and we also enjoy showing you are favorites on bloomberg television. maybe they will become your favorites, too. go,e's another function, quic it will lead you to our quick takes. here is a quick take from this week. ♪ >> traditionally, investing is always carrying one objective. profit. but aal remains the same growing number of investors want to know they are backing companies that have advanced social and environmental outcomes as well. sustainable investing is getting very popular. a broad definition of the approach reached the $3 trillion in 2016, a 23% increase. >> investors use a lot of different methods to use environmental and social goals.
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low carbon investing, investing in her -- in renewables. >> things like employee diversity and environment impact are harder to quantify. >> they can report whatever they want about sustainability or diversity but it doesn't have to be year to year. >> something that latitude a little far. >> a phenomenon called greenwashing guare they paint something green as you wanted to be but there is not a lot of regulation around those terms right now. a famous example, volkswagen. it is at the top as the most sustainable automaker and and they were kicked out a couple of days later because of the emissions scandal. >> it focuses on screaming out to certain and prizes. south africa's apartheid policy
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sparked one of the biggest movements. investors are likely to hop into records minimize exposure to vulnerabilities. bp had a spike in safety reporting issues, maybe that was a sign that something could of happened. they really pay attention to safety issues. >> sustainable investing has its skeptics. it forces business executives -- >> giving them two different goals gets very tough. ♪ >> that was just one of the many quick takes you can find on the for you and you can also find them on 24 hours a day. that will be all for "bloomberg
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best." think you for watching. this is bloomberg. ♪ xfinity mobile is a new wireless network
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♪ carol: welcome to, "bloomberg businessweek." jason: we're here inside headquarters in new york. carol: what does a chinese superpower it look like? jason: apparently as little as possible to the united states. back here at home, 10 years since the 2008 financial crisis, a learned look at the long-term political effects. and the wall street big winner. carol:


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