♪ betty liu: coming up, the story that shaped the week in business around the world. from a landmark change in china's currency status, we have the bottom line on the top lobal headlines. will recap a week of corporate shakeups and a possible breakup. and we hear some big names in politics and business speak their mind. >> the u.s. tax system is noncompetitive in a global sense. >> all that and more. this is "bloomberg best." ♪

betty: hello. i'm betty liu. welcome to "bloomberg best." an in-depth report of news around the world. let's begin with a day by day review of the week's top stories. starting on monday, when the imf welcome the chinese urrency. >> the inclusion of the rmb is recognition of the significant reforms, which have been conducted. of the significant opening up of the chinese economy, of the financial, more market-driven principles that are being used by the chinese authorities going forward. >> short-term it doesn't mean a lot. to put things in perspective, you're looking at the total llocation of $318 billion.

that is roughly 6% of the daily trading volume in total foreign exchange. >> just 6%. > and one third of global gdp, less than 1% of total trade. it is a drop in the bucket. it is much more of a sychological effect. >> is that significant? >> i don't think so. it is symbolically important for china because to me it is an officially an endorsement of what china has achieved in terms of financial market. and a formal recognition of a very important role played by china in terms of global trade. betty lui: michael plath, the founder of bluecrest capital, urrently running $8 billion, made an official announcement, they will be returning all client money. he will instead focus on managing his own wealth and that

of his partners. i want to bring in the whole team here. let's take you back three years. blue crest was a $36 billion fund. on track to be one of the largest head -- hedge funds in the world. >> they made it one of the arger funds. i think it is a sign of the big change that we have seen in the capital markets. morgan stanley cut as much as a quarter of their fixed income jobs. michael platt comes from the fixed income world. things have changed a lot. >> what i am wondering, tim, you are a structuring guy. you do with a lot of hedge funds, right freedom -- funds, right? >> distressed hedge >> i don't think you can say everyone feels this way or that way but big on wall street is not as popular as it used to be. all of these people are stuck in a regulatory buying. it is a tough market to be

investing. i think a lot of people, and i had friends do it, say, i would rather invest it the way i want to invest it not talk to lps or, all over the world trying to get money and just enjoy the active investing and make as much money for themselves. >> we would likely end up having to tighten policy relatively abruptly to keep the economy rom significantly overshooting both of our goals. uch an abrupt tightening would risk disrupting financial markets, and perhaps even inadvertently push the economy nto recession. >> she came out and said the fed is ready to move the economy, ready for a rate increase. we have a strong enough economy

in terms of job creation and in terms that we should get faster inflation once we stop seeing the downward pressure from oil prices. both of those things should fade in 2016. she warned if they wait too long we could see market disruptions, bubbles form. so the fed, it was all but guarantee that unless something happens between now and the 16th of december they will raise rates. >> 74% chance probability of a move there. the consensus seems to be leading that way. >> that could go up significantly. people will say this is going to happen. they are leaving wiggle room. you will never get to 100%. the fed has convinced the market at this point that a rate increase is coming. they have got what they wanted and the need to keep them there for the next two days.

>> so, we have to do more. let me say this very clearly. we are doing more because it works. not because it fails. we want to consolidate something that is a success. >> we got the cut, we got the extension. we didn't get the expansion we helped. we need to add in market technical. we saw a rally leading into this in the u.s. dollar. seeing that reverse, a lot of that is profit-taking. the expectations around mario draghi are no different from the expectations we often see from the fomc and often disappoint. we have to factor in the trading happening, not necessarily long-term. >> there is a big squeeze happening here. we have to factor in the ecb credibility. they guided these markets to expect something big. he told us to look at three things on the asset purchase program. besides, the composition, and

the duration. they have widen the asset pool, they have extended the generation. on the size of the purchase program, they did nothing. for the market that is a big disappointment. maybe even won 10 in a couple of weeks. the 10 basis point move, that is significant. markets disappointed, the top one for a lot of people will be overpromised, under delivered. >> we are 30 seconds away from he jobs numbers. >> i was talking about how we have become a service-based economy. we have the same number of manufacturing jobs today as 1941. >> wow! >> we saw a decline in the payroll number in august and september. this number is big. what is it? >> 211,000.

that was the number for last month. the unemployment rate at 5.7%. where do those gains come from? 211,000. construction jobs rising the most since january 2014. adding 28,000 health care, and food services and retail strong. >> for more, we're here with peter. tell us what you are focused on? tell us what you are focused on. peter: i woke the broad measure of under and climate in the economy. discourage workers, people working part-time. people with jobs would like to work more. it is a broadest measure of slack in the labor market. it got more slack actually. we were happy when the number ot back under 10%. but in november, it ticked up from 9.8 to 9.9%. these are the numbers janet

yellen pays a lot of attention to. the 5%, we want pay attention to that, but the numbers that show the back in 2004, 2 thousand five, we were at 8%. then it trended very nicely down. we are still above the levels of slack we had before the recession. that shows that the labor market has not completely healed. >> we will dig deeper into the impact of the announcement and more reaction to the u.s. jobs report as bloomberg best continues. ♪

♪ betty: welcome back to "bloomberg best." i am betty liu. it remains to be seen how the ecb's interest rate, decision, and economic numbers will affect the market. this week, we discussed the possibilities. >> all the different measures the ecb announced what was the most significant? >> it was not the thing that they announce, it was the thing they didn't announce. an additional amount of bond buying each month. they are extending stimulus by six months.

they will buy a larger told a number of bonds. they are not going to buy more ach month. markets were really focused on that, thinking that you to be done to get the stimulus they are looking for. a lot of people were betting you would have a weaker euro. a bit short trade today. a big squeeze hurting euro traders. as the euro goes up by significant amount over 108 on this news, it is at 105 when the press conference started. a lot of disappointment, super mario does his first. -- does his first face plant. into this meeting they have been consistent about elegraphing. what you think it says about the ecb governing council? >> that is a very interesting question. they are 19 countries now in the eurozone.

too many to have everybody vote. they are taking turns. they rotate the voters. they do it on a meeting by meeting basis. unlike the fed which does on a year-by-year basis. the germans were allies. they have been less enthusiastic about additional stimulus, and that may have heard mario draghi. -- that may have hurt there may ario draghi. have been push back as part of a compromise to do with a dead, cutting the deposit rate should have some effect. and extending stimulus should have some affect. he didn't get as much as he would want. >> they cut it by 10 basis points. it was already negative. a goes further into negative territory.

there is no clarity right now, whether the ecb could cut that once again in the future. will the have an effect? >> we are working on a theory, not reality. the fed pays banks to leave money at the fed. the same thing happens in europe. they are charging banks with the ecb. they figure that will make the banks take money away from the ecb, take the money away and push it out into the economy and lend it. they will not see gains in lending. we'll have more pressure and squeeze profit margins. they will have to do something. but so far, there hasn't been enough of an effect. where you are seeing the bond market, traders keep bedding that they may move lower. >> right. >> and they push down rates. the ecb changes a moving target. in this case because he disappointed, yields have gone back up. we could see possibly a positive impact. it is quite a take a while to play out.

betty liu: we are going to take you to bloomberg radio where our eam is speaking. >> this is in train now. >> they are certainly set to go and something i have been encouraging for a while. it not because of the fact that wages are increasing. wages were up .2%. there is no pressure from the tandpoint of wages but the fed is ready to go. i think because of concerns on the real economy, and it is an interesting experiment over the next three months or so. as they shift to a new policy in terms of determining the fed rate. using the excess reserves in terms of an interest rate.

and using reverse repose. they are going to use that -- they are going to need three onths. >> please address how janet yellen can avoid international mediocrities including the problems mario draghi has. >> the fed has backed off of their qe 12 months ago. mario draghi's policy statement yesterday was quite interesting. he gave the market most of what they wanted. he did give them quantitative easing for six more months. it seems like a very eminent type of forward statement. but the market had a sense that the amount wasn't increased, perhaps the ecb is the last bastion of quantitative easing and monetary policy. >> right. i want to cut in. this is an incredibly important question. how many billions of dollars did

ou lose yesterday? >> oh no, i made money yesterday. lots of calls, from five and enure german points. i think the u.s. is in a better position with their yield relative to germany and the eu. to be fair, $60 billion a month has been extended by six months and 18 months to go. that is a trillion euros to go. that puts their balance sheets close to 4 trillion euro's relative to the fed's balance sheet of 4 trillion euro's. it is a lot of firepower eft. it pays to be careful when a central bank employees a martingale strategy, double up

to catch up. ♪

♪ betty: you are watching "bloomberg best." am betty liu. among headlines, several stood out including the yahoo! board may sell the core internet business. and a gloomy forecast for commodities for mining company ceo. let's start with a story that involved companies operating on three continents. cars. november auto sales were strong in america. it played out differently in asia and europe. >> auto sales have been rolling out today. we heard from volkswagen. u.s. sales tumbling more than 24%. other automakers did better. fiat chrysler reported a 3% jump in sales. the industry has said to log its best november yet. joining us now is matt iller. go behind the surface

numbers. this is about trucks and uvs. match: it is pointed in the case of ford. the volume was down 11%. truck volume was up 18%. they are selling fewer cars and more trucks. trucks on the big high-margin products. betty: who is winning and losing? matt: everybody is winning except for volkswagen. hey are in so much trouble because of the diesel cheating. it is very robust. toyota did great. nissan did well. hyundai was in a funk earlier in the year, they are doing it with the crossover utility vehicles

that everyone likes so much. with some of the new ones, like hyundai with the santa fe, they are making some inroads. nissan, and toyota is in the transition on the rav4. what they were selling last month for the old ones at some pretty attractive prices. they really put it to ford and honda. a great month, up by 30 plus percent. those were the big winners. >> the shares are trading lower after the german carmaker revealed u.s. sales fell by a quarter last month on the back of the emissions scandal. standing by, when we talk about this story, the chief executive has been speaking to stern magazine. what did he have to say? >> we have him saying he things it will take several years to get to the bottom of this. he has given an updated schedule on when volkswagen will release their strategy. what we had last night is a bit

of the preview. the chairman of the holding company that controls volkswagen. he said he will do whatever it takes. he said, i will personally do my point. he wants to stand with the workers. the workers council wants a clear, ironclad commitment that there will not be job losses, or job cuts. >> another dramatic chapter, the company's board begins meeting today to stop the bleeding. one possibility is scrapping alibaba, and selling the core internet business. joining me, a fairly significant position in yahoo!, with me in the studio, om malik of true ventures. you have not been shy about your feelings about marissa mayer and yahoo!. and criticism. what do you think now?

>> yahoo! losses relevance a long time ago. consumer internet companies are very much social logical and demographic places. generations move on from those products are they become irrelevant. yahoo! is relevance is the question here. from my standpoint what are they -- from my standpoint, i am not surprised things didn't work. there is not a single must use product that yahoo!. >> not a single must use product since google. as a yahoo! investor, how do you espond to that radio >> i don't disagree. we are big fans and investors as well. his point is right on. we are investors because the

market is valuing an asset that we see value in at zero. zero is usually a good price to pay for something. we invested early in alibaba. we cleared the alibaba stake. they are worth a lot of money, $43 billion collectively. that leaves the current core business worth zero. so, we like the yahoo! stub and we think the private equity guys will come in and buy that asset and do what should have been done a number of years ago, have more of my financial engineering approach, a dealmaking approach o that business. i agree with the point that obsolete technology, even more than disruptive technology is a problem in the valley today. ♪ >> samsung is giving its mobile business a makeover. many a new smartphone boss. the company is on pace for its lowest profit in five years. -- four years. a second straight annual

decline. joining us to discuss, cory johnson joining us from san francisco. walk us through the changes we have seen. corey: the change is a result of what is going on. if we look over the performance of that business over the last couple of years, you see a really dramatic decline of the success, of the high-end for samsung and galaxy phones. the also make a lot of low in the phones -- low-end phones. on a profit basis the high-end phones haven't been the last two years. >> a lot of people thought that it would be much more extensive. that the reshuffling would have seen a lot more players changed around. >> right. it is not just consumer electronics. they have an interest in so much more.

you have shipbuilding, construction, natural services, insurance, and so forth. it was an interesting time where people were expecting more changes. first, it comes in the midst of a power transition. a lot of the other business haven't done well. like shipbuilding and construction, for example. typically, what happens in this rotation of management is the heads of these units that don't do so well typically get moved. ♪ >> i'm seeing the moves in copper. we had a bottom? >> the markets are still searching for the bottom. it is going to be the drivers. supplies going to be some time to work out. before we see what actually happens with that chinese economy. is it a soft landing or something disruptive? e have a market-making event

over the next 30 days. that will see what happens to u.s. interest rates in u.s. dollars these of the other trade currencies. that will be the immediate catalyst i would watch in terms of telling me of all the drivers that are out there, what is guiding us in terms of commodities. >> i'm interested in your perspective. i just want to know, what is the overshoot? >> i think that copper at these prices, 75% of the copper miners are keeping their head above water. >> right. >> a quarter of them are probably not or struggling. in aluminum you have half of the aluminum producers underwater for cash flow perspective. ♪ betty: coming up, some of the week's most interesting conversations including tech talk with the ceos of salesforce and paypal. ♪

betty: welcome back, i'm betty liu. the most influential leaders of the business world share their thoughts on important issues. our roundup of the best interviews with exclusive conversations with mark benioff. >> microsoft seems to have lost its groove. right now everything is about disruption. if you are a mature tech company like microsoft, what would you do? what can they do? >> the world has changed.

ou can see that walking around the streets of new york and talking to our customers. conversations are radically different in this post 2008 world. the most prized commodity is rowth. every coo wants one thing, more growth. they know they are not going to have more growth, they will have something else, an activist shareholder. when they do not have growth, they do not have market capital improvement. this is a serious issue for every one of the major coo's. it does not matter what industry. my advice is simple, let's talk about what is your vision between now and 2020 for your company? what is your vision to connect with your customers in new ways. what is your customer growth trategy?

>> all of these buzzwords, the importance of social, the internet of things, and the valley, they start to feel gimmicky. when you think about the ultimate disruptors, it is activist investors. you are an aberration sky, and an activist gets to tell you what to do? >> in silicon valley we are the dreamer of dreams. >> that is nonsense. that is giving silicon valley too much credit. >> this country is based on the concept of ideas, innovation, that is what we do, that makes the united states great and different. that makes silicon valley great and different from everyone else. what i love about my job is creating value. i have to tell you where the dreams come from. you can be the dreamer of dreams but the dreams come from the customers. the reason i come to new york city or london, or tokyo, or any major city in the world and meet with the customers is to listen. listen deeply to our

customers. >> what changes are you willing to contemplate? >> dodd-frank was a response to the worst financial crisis since the great depression. as a result of the implementation, we have a system that is safer and sounder. i think we have done an enormous amount to reduce the risk of another financial crisis that caused almost inestimable damage to individuals and the economy of the united states. one of the things about that, not one size fits all. regulators have a lot of tools to target what they do, how they do their business so that it is tiered in terms of applying standards that are appropriate by a side institution. we have encouraged regulators to use their regulatory flexibility to the greatest extent they can so they can be sensitive to the differences. >> some of this will require a substantial change, they would

contemplate something that excuse banks under i believe $2 billion in assets from the vocal rule. is that going to be something that will be law-based changes? >> some proposals reflect a desire for clarity, which legislation can provide. i think it is important for regulators to use the flexibility that they have to provide the kind of flexibility hat is needed. something i worry about, in the new legislative debate, is the definition of small means different things to different people. in terms of certain requirements in dodd-frank, suggestions have been made that a $50 billion threshold to be changed from $100 billion to $500 billion as if it is the same thing. they are amongst the largest financial institutions in the world. even when $150 billion are that large. i think we have to be careful not to get into a conversation where we start rolling back the

core protections that have made our system safer and sounder. >> as we look at things like the pfizer proposed deal, how much pressure does this put on other companies to seek a competitive ax rate? now you are competitive against someone who will lower their tax rate substantially. >> it is important for us to focus on as a society. the u.s. tax system is not competitive. we have to come up with a tax system that allows u.s. companies to be in competition globally for talent, and competition for investors, and ip assets to make this industry run. i think that deal should be

something that serves notice to our policymakers, that led american companies feel no choice but to do things like tax inversions to remain competitive lobally. >> what i think is most important is financial health. it is basically teaching people how to manage and move their money in a way that allows them that safety and security that they need in their everyday transaction. most people don't have expenses that are higher than the revenues. what they have is typically a a cash flow issue. medical emergency happens, there is losing jobs temporarily. what i think we need to be able o do is use data and information to get people past those one time hurdles. >> the solution is credit, not savings? >> a combination of both.

when you can use with technology is the ability to show people to o savings. >> i want to ask you first about the tragic event in california and your thoughts about it from a personal point of view and someone who lived there, and your thoughts from a public policy point of view. >> from a personal point of view i have been in that building. i have been many times to san bernardino. it is a community under stress in so many ways. this is an unspeakable tragedy. i cannot imagine the stress the community is going through now. as they contemplate their dead and wounded, and their first responders, it appears more and more likely a terrorist in their midst. >> based on what we know now, do you have thoughts on things related to public policy that you can take a look at? >> i do think it would be helpful if our president and

mrs. clinton would acknowledge islamic extremism and terrorism as a real threat in our homeland instead of immediately talking about gun control. california is a state with some of the strictest gun-control laws in the country. they clearly didn't matter here. i think that would be helpful. >> which foreign policy debate within the republican party do you find most interesting? >> one of the debates going on that i do not find a lightning, is to return to the patriot act, or did we do the right thing? i think that misses the point. as someone who has come from a technology industry, the technology has moved beyond the patriot act. we have levels of encryption that didn't exist even two years ago. rather than having the typical political conversation, is it this bill, what we ought to do is sit down with private sector technology companies in this

country and saying what is the state of the technology today? ♪

betty: world leaders met in paris to discuss environmental issues. ome of the best stories on bloomberg television dealt with those same topics. ere is a sampling. >> scientists almost entirely agree the last few decades have been warmer at the earth surface than any since 1850. the northern hemisphere, it has been enormous on record in the ast hundred years.

- 800 years. at 4%, a decade, the mounting -- that is like losing the size of japan, vietnam, and malaysia and ice every decade. shrinking lashes have also added -- glaceyers have also added to rising sea levels. that rice has been faster than the previous millennia. it doesn't sound too bad, but levels have risen twice as fast in the last 20 years. the un is confident that climate change is responsible for the extension of several species. this is thanks to rapid industrializeation.

just over 20 years, global greenhouse gas emissions have risen 40%. in 1990 the biggest offender was the usa with nearly 17% of the world's omissions. china's ascent as a global power as since the top spot with 22% of the world's emissions. the asian powerhouse gave the green light to 155 call plans this year alone -- coal plants this year alone. time is running out for the world's advanced nations to come to the most important agreement of our time. >> it is a wonderful close to a day here of this meeting of the cities and what they can do bout climate change. it is led by the thoughts by -- of new york. what did you learn today? what was a surprise? >> 400 mayors here from around the world, they all understood we have a problem with pollution, and they are all determined to do something about it. they all said their constituents, demand, that they solve this problem.

that is why we are here. the one that deserves a lot of credit for bringing them here is ban ki-moon, the head of the united nations secretary-general who said cities are where the people are, where the pollution is, where the solutions are. he wanted us to push the national governments. when the national governments do something, pass a law or have money, it is at the cities where where the execution is. the mayors are being held responsible. >> the idea of measure and disclose. congress doesn't do that. cities are responsible to do that. >> mark carney is the head of the bank of england, a canadian that has a job as the head of the bank of england, has created on behalf of the g-20 an organization which i am lucky enough to head, that is going to collect data on who is doing the

polluting on a comparable basis, nd make it discloseable. once that happens businesses are going to have to clean up their act because they have stockholders who say we don't want to run any risks. stop this pollution or we will value your company less than others. they can turn to governments and say this other city, this other country, people are living longer than us and this is why. i want you to fix this. if you have the data, that is an -- that is enough to get people to act. >> the first signs of a new cotton crop nudging through the rich soil of the liverpool plains. >> the water retention ability of these soils is like no other anywhere. >> this farm sits on the rontline of a battle between australia's potential dining boom and fading mining boom.

underneath the high-quality soil is high-quality coal. china has a license to dig it out. study says it will destroy the water table. >> the miners have been instructed to make good. but you cannot make good with the quantity of water required here. >> the agriculture minister opposes the mine and opposes his own government. he cannot understand how it is economically viable. >> the fact that you have sole esponsibility of an $800 million build, $200 million license that jouled to acquire, $3 million of reclamation work, that would be a hard thing to get across any board. >> and that is an inferred or the cold prices gone from bad to awful and a global commodities route. no one would be interviewed for the story. in a statement, the company said this project is viable regardless of the current cold coal price.

it said as groundwater impact studies, they exceed anything else done in the state of new south wales. china has been spending up, building everything from a new office to a skate park for the locals. it is winning plenty of friends and the local mayor who rejects the idea of the area being a food bowl. >> 70% to 90% of the groundwater used is used to grow cotton. not food. i wear cotton. i don't need it. we understand why people are producing cotton. it is the biggest return on crops.

>> as we wrap up, here is a peek at some of the charts that told

the story of the week in business. >> today i am looking at u.s. manufacturing data. we got the isn report, a survey of manufacturers where they ask how business is doing. it is not that great. this white line fell to its lowest level since the financial crisis, 2009. it has been deteriorating. the yellow line is worse. what is the cost of goods. it is collapsing. if you are worried about deflation, this is one chart you want to look at. the good news, manufacturing is a small and shrinking part of the economy. we'll get services data later this week. it should be a lot stronger. people care about this data because -- when you see these things rolling over with no signs of a bottom people start o worry. >> the r.b.a., the central bank

in australia keeping rates unchanged today. they have been rising highest level since the middle of october while iron ore has been falling. look at the movement. they have been moving in tandem for the last couple of onths. they pretty much move in tandem. australia being in export. this matters with iron or falls. the economy tends to fall with it. australia is rising. expectations for rates hikes are being cut for the first quarter of next year. chill out, that is what the governor told the e-commerce s last week. they were talking about expectations for rate hikes. we have christmas, chill out and come back in february and see what the data says. what janet yellen ever use the term chill out?

if the fed hikes, great. you'll be fastening to see what -- it will be fascinating to see what happens then. >> brian, we looked at two big to bail, the credit rating adjustment yesterday and the fact of the matter is the big banks from the bottom have outperformed the broader s&p 500 as well. will be too big to bail banks do better than good in 2016. >> we think they will. good morning by the way. at the end of the day, at the end of the day we think we have major shift coming with respect to private client investors. that is a pretty profitable and longer-term business for the banks. this downgrade of credit is more noise than anything. the longer-term viability of these banks have never been stronger. i think all of this is headline noise. >> that is it for bloomberg best this week. you can always get more business news around the world at

bloomberg.com. i'm betty liu, thanks for atching. ♪

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