♪ >> coming up on "bloomberg best," the stories that shape the week in business around the world. the central focus is on central banks, the bank of japan, the fed, the bank of england, all set directions that move markets. >> that is a big change from where we were in december. >> we will track this week's political moves from beijing was -- to westminster to washington. >> there will be a fight taking place outside of the senate with outside groups. >> the best of the weeks a list interviews. heads of companies to heads of state. >> we had a massive stimulus package. >> it is all straight ahead on

"bloomberg best." ♪ >> welcome and hello. i am alix steel. this is "bloomberg best." a weekly review of interviews , analysis, and business news from bloomberg television around the world. it has been a momentous week for monetary policy with rate decision from the bank of japan, the u.s. federal reserve, and the bank of england. on monday, the top headline was disappointing data from china. >> the latest data from china likely to get more pressure on the leadership as they try to meet this year's growth target by 6.5%. industrial output and retail sales slowed. >> industrial output rising just 5.4%.

that is below estimates and that suggest sluggishness in demand , from abroad. factory deflation is persistent now for some 48 consecutive months. retail sales is a key barometer for the government for consumption trends. it climbed 10.2%. that missed the 11% of forecast of economists surveyed by bloomberg news. >> we are also seeing pressure on the currency. understand that it was projected as a sense of calm at this annual press conference on saturday. what message is he trying to send? no rush to buy u.s. dollars. >> he did say that. he is saying china's economy is steady as she goes. he says excess of policy stimulus is not necessary to achieve that growth target i mentioned. he says as long as there is no big financial turmoil, they will

keep its prudent monetary policy with a slight easing bias. >> the bank of japan today held its new benchmark interest rate unchanged at -.1% despite risks to growth. economists served by bloomberg see additional easing coming into japan later this year. john ripley used a term i have not heard, fiscal evasion. have we reached the limits of fiscal evasion from the ucb last week and now the bank of japan? >> japan has become a testing for the rest of the world. they are the people who keep trying this stuff end up not doing it that well. they did not manage to get their economy going despite a very

long time of qe because the government is not do enough. i don't sense a railway that real way that this is going in the right direction despite current affairs. >> the longer it goes on, the longer it get part of it. it just goes to show how deeply embedded lowflation is in that economy because the outcome of that is not set to be any real wage hikes. it looks like a tight labor market. is time a big issue jet go >> time is a big issue. that is the one place where it hits retail sales. the one awful possibility of japan is deflation. if you keep on thinking something will be cheaper, then you are more likely to keep your hands in your pocket. >> no change in interest rates, clearly, scarlet. equally important, the feds scaled back its planned for rate hikes through the end of the year. policymakers expect to raise the fed fund's targets by one half of a percentage point.

that is a big change from where we were in december, just three months ago when fed policymakers anticipated a full point of increases through the end of 2016. this ase seeing somewhat dovish meeting. we have the dot plot. the fed has taken out two rate increases from what we saw down. it has moved down to basis 90 points at the end of the year which would imply two rate increases. that comes down from 1.4% to almost 1.5% in december. then they lose another 50 basis points in 2017 to 1.9%. in 2018, 3%. >> the bank of england, rate decisions, they voted

unanimously to keep rates unchanged and highlighted uncertainty around the so-called brexit. is that the big take away? the uncertainty that they highlighted. >> this is certainly the first time that the bank as a whole has expressed an opinion about how this will affect the economy, so we have had mark carney express a view, but this is the first time we had seen it in the official minutes. yes, it is a big thing. >> the bank of england is quite similar to the fed in its outlook. the domestic economy is looking fine, the external economy is not looking so good. >> domestically, they are saying up.ation should tick >> where are we on rates?

with the uncertainty surrounding the referendum, what are the projections for the first hike? i know we did a survey yesterday, which they talked about interest rate cuts. >> that was interesting. there was no mention of a cut. last month, we had carney saying that the bank had room to loosen. we also had another official who said it would not take much to vote for a cut. is pricing in a chance of a cut, and showing the chances have risen, the bank does not want to go there yet. >> let's get back to this breaking story. european leaders have reached a deal with turkey on a refugee crisis. ryan chilcote has been covering the story. give us the details. >> what this does for the european union is a game changer potentially.

turkey has agreed to accept refugees and migrants that have already made the journey from turkey to the european union. they will begin sending refugees and migrants back to turkey as early as this sunday. beyond that, turkey is saying it will work harder to stop the flow of refugees from turkey to greece in the european union so we don't get into this problem. in exchange for that, turkey gets some other things it was looking for, maybe not to the extent. it gets the additional 3 billion euros they were seeking. as compensation for dealing with the refugee crisis. it gets a promise that there will be more of an effort to help turkey get the eu membership to turkey off the ground, and finally, there will

be an effort to expedite visa free travel for turks who want to get to the european union. turkey would like to see that by june. the eu is saying as long as you meet all of the criteria we have for you, we are happy to see that. >> later in the show, we will have more reaction to the weak' elements in central-bank policy with insights from bill gross and former fed chief alan greenspan. coming up, a review of the week's biggest company news including valeant's worst day ever. ♪

♪ alix: welcome back to "bloomberg best." i'm alix steel. shares of valeant pharmaceuticals fell 60%.

major investors lost $5 billion. let's look back at italian's -- at valeant's terrible tuesday. >> the drugmaker cut its forecast lower than what they predicted in december. what have we learned? >> this is one of the craziest things. they put out guidance earlier saying their main measures was going to be $6.2 billion. then they said, oh, it is actually $6 billion. they corrected their own guidance.ours after issu the stock is almost -- this is going very badly. >> what does that say about mike pearson?

when he came back into the company, they do not come out with numbers because he said, we are not ready. here they are, boom, a big mistake yet again. who is checking the spelling over there? >> i am at a loss for words. mike peterson reassured everybody and in the time he has been on the telephone with analysts, the stocks fell more percentage points. things are getting weird. >> the approaching square coming out, saying the vice chairman is going to be on the board. they still say the underlying business franchises are worth multiples of what the current market price is now. when you hear things like that, how do you interpret that? >> i can interpret it that he is wrong and has been wrong. he is a very astute investor. but he has been wrong. the business model that they adjusted to when they built this company in the past several years is gone.

the capital for them as high. their leverage is massive. the products they look to grow have been going down, not up. alix: other companies took aggressive steps in keep growing. two giants merged. >> star word shares are moving. bid.received updated -- a the $76 per share bid started at my $.9 billion. >> wow! i was shocked. this is three months after blackstone closed on the acquisition of strategic. i thought, this is a nether

example of chinese companies making inroads into the -- this is another example of chinese companies making inroads. they are putting $20 billion almost into the united states, hotels, real estate in the country. >> estate in the country. -- why does marriott not have this locked up? >> it will be challenging. >> is there a breakup fee? >> $400 million. that is what marriott would get from starwood. that eases the pain a little bit. they will spend the next couple of weeks with their bankers and lawyers, trying to figure out if they can top it, but it is an all cash offer and a big jump , from what marriott was offering a couple of months ago. >> insurance has seen a jump in

profits. the volatility in chinese markets. the second-largest insurer shows profit jumping. total investment income doubled while written premiums jumped to 19%. what was the key driver? >> in 2015, they achieved a significant growth across all businesses. in particular, you just mentioned premium increased to 20%. besides that, we had a good year on internet finances, would be the key related in terms of new customers, users, and the gradually migrate them to our financial customers. >> three times a charm.

deutsche bank has agreed to merge a third time. a deal has been attempted. if it goes through the merger , would create one of the largest exchanges in the world. a lot of people said a merger of equals. what does that look like? for the people who do not think this exist, what you tell them? >> it is true it is a merger of equals. we both recognize an appreciate each other's strengths. the management team, the board have come together to develop the strengths and this is what we have done and delivered. >> damon west end can to my desk and look at how profitable it was. how do explain to shareholders this is not a dilution of earnings? >> i think the business sits between the companies are complementary. that is one. and the growth that they have driven all the last few years is deeply impressive.

that has resulted in multiple expansion, which is impressive and overall, a trajectory of growth in its globally diversified businesses, which is very attractive. >> why is deutsche the perfect fit for the lse group? -- wouldd argue it is continental exchange would be a better fit. >> i am 100% behind the transaction because it brings together two companies that are already having a global presence, but whose portfolio products every highly complementary. it would offer very significant revelatory capital and market. it would bring together to highly complementary index products, leadership position in the u.s. and europe, in china together with highly branded euro stocks.

>> oracle shares popping as much as 4% in after-hours trading. down 3% year-over-year. analysts have suggested by -- had expected $9.3 billion. >> the good news is the fast past business which is their application in their platform and cloud. scorching growth. the margins did disappoint people. emily: how does that compare to the big names? dell, hp, microsoft. >> it is doing better, but a part of that trend moving away from legacy software. oracle has a report saying they

been badn that -- for a long time. look at revenue growth, topline revenue growth, you can see a trend that you see with other companies. that is their legacy business of software they sell by the pile, but the revenue growth over all is not growing anymore. when you look at the cloud result, which is what pat was referring to, the cloud is growing at a fantastic pace. they are taking on the biggest cloud software vendors and adding significant customers. >> talk about what is happening with rio at the head of copper and coal. it came out of the blue. >> it is not a huge surprise. sam walters took over after the ceo had to resign. he is 66 years old now and said he did not want to do the job for more than three years now. mark: what has he done?

>> he has relentlessly focused on costs. it looks in much better shape. mark: he has outperformed his sector peers. >> in relative terms, he has done a very good job if you look at the share prices. he has outperformed hp, glencore. >> does the strategy change? >> what is interesting about the new guy, rio is very much an idol company. the question investors will be asking is does this signal a shift to more copper? ♪

♪ alix: you are watching

"bloomberg best." i'm alix steel. for the third consecutive week, multiple u.s. state health -- states held presidential primaries. on wednesday, president obama unveiled his nomination to fulfill the supreme court vacancy and combine that with regional elections in germany, but it day in the u k, and the close of the national people's congress in china. it all adds up into an exceptionally busy week in politics. >> overdriven chancellor's refugee policy, as the democratic party failed to capture two western state in regional elections. >> it is hard to underscore how disastrous this is. the decline that they have had in key states. it is all anyone is talking about. what you see of the map is where you see the christian democrats holding on in the east. look at that blue state. 4% unemployment rate. by all accounts, things should be going well.

that is really the birthplace of the cdu. they also did not win back the other eastern states. this is a right-wing party that initially sat on itself in opposition to the euro. now they have gone ahead and moved to the right, especially on the refugee question. voters are unhappy. there has not been any indication from local that she merkel that she is going to change her tactic and stick with her refugee policy regardless of how unpopular it is. there are no obvious challenges to her and her own party. >> what other chances of politics springing surprises? i am thinking of three major risks. donald trump at the white house. andu.k. leaving the eu, angela merkel out the power --

out of power. >> i think the last of the three is the least likely. i am most worried about the possibility -- i hope i am wrong on this. the populism would lead one to think there is more strength than the polls have shown so far. in terms of our elections, i have been wrong every inch of the way over last six months, so my predictions are no better than anyone else's. i don't know who is going to be the republican nominee now, much less the president of the united states. >> donald trump did not get the sleep see wanted. but he won three of the five states. it was enough to knock marco rubio out of the race. what happens to his money? >> his supporters will be very

up for grabs, especially his money. ted cruz is saying i am an open tent. rubio is an establishment favorite. it is not a great fit. it is hard to see if those people will move to ted cruz, or to donald trump. >> on the democratic side, hillary has 400 plus more delegates than bernie sanders. what happens for her to win over the independents? >> she had a great night last night. we are watching to see if ohio. for her, it was really a big night of delegates, which is what it is all about. she has the game firmly on her side. vonnie: are the chances of a contested republican convention

rising? >> it remains high in ted cruz and john kasich continue to plug off delegates. that is a huge risk of the republican party, not only for the cycle, but for years to come. >> journalists asking the chinese premier a question. this is the annual news briefing at the national people's conference. he has been fairly candid about growth prospects. talking about a weak global economy effecting what is going on with his country. he says "we see both difficulties and hopes in the economy. we will push ahead." he says, there is severe overcapacity in some sectors and he also says, there is much room for china to boost industrialization and urbanization. the most of the big cities --

urbanization has been a big push up premiere. nonetheless he minutes, he also -- in the last few minutes he , also touched on the u.s. presidential campaign season saying the u.s. presidential election will not effect u.s./china ties, but also added the campaign right now is "eye-catching." mark: the chancellor in the u.k. outlined the budget for great britain and revise the growth forecasts and warns of the risk of leaving the european union. >> corporation tax. also, imposing a sugar tax in on sweet drinks. >> it was a politically astute budget. it had a lot of popular things

in it and one or two unpopular. spending and tax cuts. i was delighted he says he can stick to his plan of implementing the budget deficit. that is important indeed. that was good. he says he will finance these goodies by unspecified savings in government departments and a blitz on tax evasion. i wish him luck. >> we will see if the devil could be in the details. a lot of debate. the g20 were talking about how we need to see more fiscal spending to stop the global economy from slowing. this chancellor has made a habit or virtue of sticking to his austerity drive. is he on the right track?

>> he is right and the g-20 is wrong. >> you think so? >> absolutely. certainly in the u.k. context. >> president obama has nominated merrick garland to the u.s. supreme court. he is a judicial moderate who currently serves as chief judge at the d.c. circuit court of appeals. this election sets up a fight with senate republicans who have vowed not to hold hearings on any nominee until after november's presidential election. >> what is his reputation as a judge? >> scrupulously fair, incredibly well prepared. writes opinions with incredible care. focuses on the particular case. he is not someone out to make right statements about the law. he is someone that sides the legal issues placed before him based on the case, based on the law and the facts. >> patrick leahy has tweeted

saying it has been an average of 70 days for the person nominated formally to get appointed. rate the chances of this before memorial day. >> the president has said from the beginning the senate will have pledge of time to see this nomination through, to hold hearings, to have meetings. the senate republicans who control the senate have said they don't see that happening. they don't want to hold meetings. they don't want to do hearings. there will be a fight outside the senate with outside groups on both sides of the aisle, making their argument, taking their argument to the voters and trying to press the senate republicans. at this point, we have not seen any signs the senate republicans will move even though the president says he is nominated a consensus candidate. >> coming up more high-level political conversation with canada's prime minister. plus, more reaction to the trio of central bank decisions. that is also to come on "bloomberg best." ♪

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alix: welcome back to "bloomberg best." i am alix steel. among the most intriguing interviews on bloomberg television this week, a chat with the c.e.o. who led jcpenney's turnaround and blackstone's tony james explains why his company is bullish on energy investing. let's begin with our exclusive conversation with justin trudeau who sat down with john micklethwait. john: a lot of people look at canada's economy. you have a budget next week. they see an economy growing by 1.5% a year. they think it needs stimulus and not long-term spending like infrastructure. your government seems unable to mention the word. >> we had a massive stimulus -- you can say stimulus as many times as you like -- following the recession in 2008-2009. we are talking $80 billion in

debt that we kicked off with. this is much more modest. much more responsible. what we are looking at is not so much trying to jolt the economy into life as trying to lay the groundwork and foundation for better growth, better productivity, over the long-term and not just an instant influx of cash. i think the challenge when you are trying to shovel money out the door is it does not always get spent on the right things. for example, what we have decided on infrastructure spending, which is going to be a massive investment over the next 10 years, the first two years we are going to do the unsexy things governments hate to announce. recapitalization of infrastructure, making upgrades, -- maintenance upgrades, the things you don't get to cut a ribbon and announce a shiny new building on.

restoring signals on subways and things necessary to keep the pace up in terms of transit of people but that don't get the flash, but are desperately needed. that is what we are focusing on in the coming couple of years. and then we get into the bigger, longer term things once we have been able to plan them through. john: how will you pay for all of that? the issue comes up repeatedly, the idea you will need to raise taxes at some point. >> yes, we are aware right now the growth profile of our company is not giving us the -- our country is not giving us the kind of tax revenues we would like. that has been the case over the last 10 years. we have had lower growth and we -- then we should have. the platform i put forward in the election campaign was designed around recognizing our growth is not great and we need to increase growth. the question is how you improve growth rates. do you cut the economy or do you invest in the economy? we think you invest in the economy. you put money in the pockets of

the middle class and create opportunities to grow. >> you mentioned energy. blackstone's patience on energy has proven wise. did you miss the window? >> i hope not. no one has been right about projecting energy prices. when oil prices go up, you will have suddenly a lot of companies that were in the process of cutting back that need capital because they can drill wells profitably. they don't have access to capital. they don't have access to equity. they will need our capital even when prices go up. i think we will have a lot of activity. >> will it be your most active investment this year? >> yes. erik: we thought it would have been last year.

that did not prove to be the case. >> we were lucky we did not do much. now we have a lot of dry powder and interesting deals. we've started to make transactions already. we just bought a big interest in the largest north sea field. i think we have made great investments and will just get better. >> do you have an overall revenue target? bloomberg estimates 3% growth a year, it would take 10 years you back to that level should things go well. what level are you targeting? >> the business is different. you go back to 2011, consumers shopped in a different way. for us, we are simply going to create a strategy that will allow customers the way they want to shop. we are not setting a sales target as our goal. we are setting a growth initiative. we want to grow for 2016 between

3% and 4%. we think that is achievable. we want to create a strong, sustainable return. there are a lot of great companies that have revenue less than $20 billion. we are not trying to get to an artificial target. we are trying to create great return for our shareholders and consistent growth year over year. we think we can do that. last year, we grew 4.5%. that was significant. we are targeting 3% to 4% growth in 2016. we have growth projection similar to that for the next two years. stephanie: we have seen retail get slaughtered. your china orders surged. your numbers are great. what do you know that the rest of the retail climate does not? >> it is all about connecting the athlete with the consumer. all athletes, global to everyday athletes like you and i. stephanie: you don't think i am world-class? >> i think you are world-class in a lot of ways.

i'm talking about olympic level. the important part is to connect with the athletes and give them something they need and want. it could be something from a performance standpoint critical for them to perform at the highest level, but also something that aesthetically puts them in the right frame of mind, that they feel good about, that is empowering. stephanie: you said you want your women's business to double in the next five years. are you still on track? >> absolutely. women's business to us is incredibly important. women are more active than ever before. that is not a trend. that is a movement. we expect that to continue and want to lead in that respect. stephanie: when we think about women, we often think of names like lululemon. we have seen you advertise with with mariaties sharapova. >> the women's opportunity for nike is huge. we are excited to be part of leading the effort. >> how has the marriage with

facebook been so far? >> it has been great. we have gone from shaking hands with mark with 60 people too many hundreds of people in two years. we have relocated onto the facebook campus, so the food has improved. we get free ice cream. it really has been great. >> you guys are under a tremendous amount of pressure. expectations are high. that can strain any marriage. how are you dealing with that? >> when we got acquired, it definitely woke everyone up. it was something we knew would happen. it was a moment where mark got up and said vr is the next platform. the world took notice, more than when we had been pioneering as a startup. there are a lot of people in the space. this is what we needed.

it is the best thing for vr. there has to be lots to do and a huge ecosystem of content. the more people investing in vr, the more likely that is to be. >> how involved is mark personally? >> i think he is quite involved. >> how often do you talk? >> given how exciting the space is and how many breakthroughs will come from oculus and in the vr space, mark is really dialed into what we are doing. whenever a president visits, he takes them into the oculus toward box shows them the latest -- toybox and shows them the latest demos. it really is the next big platform. ♪

alix: you are watching "bloomberg best." i am alix steel. this week, the bank of japan held firm on negative rates. the bank of england kept its

benchmark at a record low and the fed has scaled back its rate hike forecast. what does this mean for the world economy? experts brought strong opinions to bloomberg television starting with bill gross. >> does today's press conference amend your portfolio? will you make immediate changes? >> i think to some extent. obviously, it is a more dovish fed. it seems to me stan fisher has been overruled to some extent by janet yellen in terms of the forward policy. i still think it is interesting the market in terms of forward expectations for libor and fed funds only anticipates 30 to 40 basis points a year for the next several years. the fed is to looking at 100. the fed is still way above the market. to the extent the market is lower, to a certain extent treasuries are fully priced at

these levels. >> i am looking at the plot on the bloomberg terminal. you can see the december dots plot and ois curve below that. the big argument was the fed was out of step with the markets. let's go to the current plot and curve. they are chasing their tail. ois is going down because everyone is selling treasuries. is the fed at all connected to what is going on in your world? >> i think to some extent. they are connected to the stock market. the old bernanke put so to speak. perhaps the yellen put is still in effect. if the stock market went down by 5% or 10% tomorrow, the fed would respond. i don't think they are fully responsive to the effects of interest rates zero bound or in negative territory.

the effects are as such. they affect pension funds, insurance companies, bank net interest margins. basically, finance companies today in terms of the market are doing poorly because they sense interest rates will go up less fast than previously. it is a negative for the finance industry, for pensions, and savers. going forward, they cannot earn as much as they should. >> the first time since the asian and russian crises of the late 1990's, u.s. monetary policy is a focus on the risk to global growth. what is asia signaling to the fed? >> it demonstrates power shifting. once upon a time, the fed would have woken up and the domestic economy would have been a dominant factor in the thinking. now janet yellen looks at what is happening overseas. it is increasingly part of their

mix. asia used to be a great growth driver of emerging markets. that picture is more subdued now. the big part is china. it grew at a 25-year low last year. they are not getting traction. korea is one of the great post-world war ii economic miracles. look at japan swinging in and out of growth and contraction. when you consider that, in have mobile gdp, and increasing heart of global gdp. that is what janet yellen is cautioning. >> central banks are focused on growth. do you agree that is the fundamental problem? what should be done about it? >> it is certainly not the central banks' fundamental problem.

the fundamental problem which confronts central banks is to maintain sound currency. we have gone far from that and we have required central banks to do much of what the fiscal system tends to do. stagnation is a fiscal problem, not a monetary problem. if you look at the data, what you get struck by is the fact productivity growth on average over the last five years for virtually all of the major countries and a number of emerging nations are less than 1%. >> is it a productivity problem they face? >> it is a productivity problem they face. it is ultimately a fiscal problem. they are not all like the united states. the best way of looking at it is in terms of what is being

produced. why is there a shortfall in economic activity? >> why? >> basically because the longer lived assets, those which are the most risky to invest in, have been very significantly curtailed. nonresidential construction and assets of all types have been suppressed. plants and equipment namely. >> do you think janet yellen was trying to move because the rally was getting uncomfortable? >> the central bank is dovish. people are trying to make a connection to the shanghai meeting. did we see an accord here? was it all about to break the u.s. dollar's uptrend? in the short term, there is an element of that. but you have to consider in 1985 where we did see an agreement, the fundamentals were different

to current fundamentals. you have huge output gap differentials. in asia, you have wide output gaps. if you try to coordinate policies in order to keep the u.s. dollar from rising, how long is this going to be in an environment showing higher returns and asia lower returns? >> i know shares go down, people lose money. maybe someone gains on the short. who has lost money when we have seen the yen go 10 big figure since that meeting a couple of weeks ago? who have been the losers of yen strength? >> first of all, you have to think about what a strong yen does to economics. i would say economics this year is a loser. ♪

alix: as we wrap up "bloomberg best," here is a story of innovation for your ears. how do you get movie theater quality at home? they are looking to pump up the volume. >> this young woman from taiwan is meeting with the head of a hollywood giant, lucasfilm's skywalker sound. quite a feat for a medical student turned entrepreneur just two years ago. >> i was watching "transformers." the picture is so huge, the building falling down. everyone is running around, dinosaurs.

it sounded so funny. i was sad about that. >> he is one of the most important in the sound industry and says it will keep the more relevant as more people experience movies outside the theater. >> it is a concern to us if more people are experiencing entertainment on smaller devices. if they cannot hear what we are doing, it is harder to justify doing it in the first place. >> the hollywood sound veteran with seven oscars could not believe his ears. >> what got me excited was the ability it gives people in all sorts of venues, in all sorts of ways, to hear a surround mix. that is exciting. the more people can hear the mix the way it should be, the happier i am. >> the technology is so new only a handful of people have heard it and immediately invested in it. ambidio deciding the deal with disney's skywalker as well. watch our soundman experience their work for the first time.

a scene from "gravity" given the ambidio treatment. we encoded the audio here for you so you can, too. >> as a sound guy, you think it is going to change? >> oh, yeah. definitely. it is like a theater experience on your laptop. alix: if you go to bloomberg.com, you can find a demonstration of ambidio's surroundsound experience as well as the latest business news from around the world 24 hours a day. that will do it for "bloomberg best" this week. i'm alix steel. thank you for watching bloomberg television.

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>> welcome to this edition of the best of "with all due respect." we had another super tuesday. after which, four republican candidates went down to three. president obama nominated judge merrick garland. we begin with the nation dealing with the fallout. we begin by looking out at the day when protests broke out for the show we produce in conjunction with bloomberg