♪ vonnie: coming up, the stories that shaped the week in business around the world. equity sore will bond yields drop. the boe resists a rate cut and earnings seasons begin with banks in the spotlight. >> it is a case of no news is good news. erik: a new prime minister in britain. >> we will form a new role for ourselves in the world. >> it does not sound like she is a proponent of austerity. >> what she is saying is well, well done. you have won.

you fix it. erik: exclusive perspective on what a brexit means for business. >> what it means for people and decide what countries will require a complete reassessment to the model go with forward erik:. from highflying deals to augmented reality, straight ahead on "bloomberg best." ♪ erik: hello. welcome. i am erik schatzker. this is "bloomberg best." your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. let's start with a day by day look at the headlines. many investors had thursday and friday circled on the calendar waiting for bank earnings. the week began with equity

markets on an unexpected tear. washe previous record close 2130.8. we messed that on friday. we have blown through today at 2137. 2137ve blown through the intraday high. it doesn't matter where you look, we have beat it. here is something weird. higher rates on government securities. most days we see lower risk. the two-year yield up. 10-year 1.43. i feel like there would be excitement about the new highs. because we see yields grinding lower, it feels like people are very nervous about what the market is really telling us. >> when you see the 10 year yield spike up seven points quickly, they can move quickly.

really reverse the whole thesis you had going in. >> every said will -- every fed scrutinized. with the s&p 500, the great jobs report on friday, it makes you wonder do we deserve to keep rates this low indefinitely? it could be a self-defeating rally. 600. check out the stoxx 19 industry groups, 16 up, three down, rising for the fourth consecutive day, longest winning stretch since july 1. >> the ftse has developed the most, up 5.4%. that is the case on the risk-adjusted return basis taking into account price swings. >> it is also global markets rallying into their fourth day. i want to look into my terminal. i have a chart showing japanese stocks. 2-daypics had the biggest

jump since february, one of the broadest in months. brand-new records for the s&p 500, dow jones industrial average, the dow. raking through. to may 15hrough the high. an all-time high. >> big gains. >> into uncharted territory on the s&p. can we go higher? >> we will go higher. we are looking at a very modest earnings environment. 3% to 4% per year. with volatility down, companies doing a great job of managing cash. we will see multiples push higher and stocks rising the way they has been in the last few weeks. >> britain's prime minister pulling up to 10 downing street.

59 years old, this country's second woman in the job. margaret thatcher was first. you can see her stepping out on alongside her husband, phillip, a banker in the u.k. financial district. important moment in our country's history. following the referendum we face a time of great national change. i know, because we are great britain, we will rise to the challenge. as we leave the european union we will forge a bold, new, positive role for ourselves and the world. we will make britain a country that works not for a privileged few, but for everyone of us. in her speech, it was fascinating she spoke directly to those who she said were disenfranchised, looking for work. she gave a clear mission statement.

>> it doesn't sound like she is a huge proponent of austerity and budget cutting, spending cuts -- which this country has been through a lot of for six years. i think some of this is she knows the referendum, though it was about the u.k.'s membership in the european union, was about more. it was an antiestablishment vote against london, against privilege, against you leaders on. . think -- against eliteism i think what we are seeing is her attempts to address that in addition to saying -- though she did not talk about it -- you will get your exit from the european union, but i hear you -- this is what she was channeling -- i hear what you're saying about social justice. >> breaking news from the bank of england. 0.5%. a slim majority expecting a rate cut. 0.25.o

it did not happen. rates unchanged at 0.5%. they stay where they have in. the purchase program remains at 375 billion pounds. the headline for me is unchanged. >> they are saying we don't have enough them are mentioned to make a decision at this stage. some suggest at the beginning of august we could see a rate cut. it was 8.1. that speaks for itself. >> was at the bank of england back, what stop them from pulling the trigger? .> the communications thing the three-week wait until august is not very long. it gives them a chance to explain why they are cutting, how much they are cutting, they have new forecasts. it will help them explain their actions. >> you expect the rates to come down and zero eventually. does it happen all at once? >> there was only one member

that voted for rate cut. he is the most dovish member. i am not sure they will do the 50 basis points we expect in one go in august, but i think we will get at least 25, and a bigger move like 40 points or 50 points. another option is for them to do more qe, more purchases, mostly tilts, but also corporate bonds. jpmorgan, and the big banking story today, setting the bar high for bank earnings this quarter. the biggest u.s. bank by assets said revenue increased 3%, loan growth at higher rates also, giving the bank a boost. >> we saw strong results in the , which revenue, mines helped with the revenue, as you referenced. jpmorgan is always viewed as a

strong risk manager. in also times, this is the stock investors want to own. we saw proof of that today. >> mortgages, that was some thing they were able to bring up, as well as deposits on the retail side. investment baking, fixed and equities trading, everything was great. >> our top stories, terror returns. france extended the state of emergency. of the security forces after a bastille day at attack in nice, at least 80 people were killed. >> a truck loaded with weapons drove for more than a mile along the boulevard pact with holiday revelers. its seventh terror attack in 18-months. >> they have all of the conditions to remain the center of european terrorism, the european terrorist threat. it is gaining critical mass who are vulnerable

to radicalization to attack france. i think the conditions for that are not changed. populistt a time when pressure is increasing in europe, increasing, asking itself what it is that the political contract of europe -- a dangerous combination. aimsthink that one of the of terrorism such as this is political instability. that is something europe has in spades at the moment. no longer a geographically contained problem. it is all over the world and we are seeing more of it. we will see more of it, because individuals are inspired by these articles of hatred that come out, and by social media. the french have extended their emergency. they are much more vigilant than most other countries, but it still does not prevent these things. erik: still ahead on "bloomberg

best" we dig deeper into global politics. theresa may is just one of several world leaders with a fresh mandate to meet ongoing economic challenges. coming up, war of the week's business highlights, including the aftermath of amazon's prime day. this is bloomberg. ♪

♪ erik: this is "bloomberg best." i am erik schatzker. let's continue our global tour of the top business stories. in the new frontier of augmented reality, with the debut of nintendo's pokemon go. >> pokemon go. it is sweeping the nation. this revolutionary smartphone

cap has soared to the top of download charts. nintendo stock has skyrocketed >>. how viral this game has gotten is insane. you will see multitudes of people playing this game. what is it mean for the company down the road when the fever dies off? >> it has been tough for nintendo. they're seen as not being able to keep up with the changes in the gaming industry. now, investors are saying this is just the tip of the ip iceberg. pokemon has such pool that they more hits by capitalizing on their franchises. the potential is enormous. that is why we are seeing insane skyrockets in its stock price. company'ss lifted the market value by $7.1 billion. you canmium model means

buy an app purchases. how will this translate, how nintendo hopes it will translate, into money. in casinos in vegas, the advantaged players are card counters. you can buy your way in to the club as you play pokemon go. you download for free. then they are looking at a lot of people to download and benefit from the bug. >> there has been a change at the top of burberry. the joint ceo and creative director will step down as ceo and be chief creative officer. they handed the creator of the selling brand to join bailey at the helm of the company. >> i have led the search for marco. quite ato our board while ago about all of the opportunities in identifying the opportunities that we had ahead of us. that i wanted to address this

skills we needed in order to execute on those. i certainly did not start out a search looking for a ceo. the more that i met people, and when i first finally met with marco, and started talking about a partnership, it felt that i would love to get more go into the company. it evolved from there. owning amc entertainment, they have agreed to buy another cinema for 1.2 billion dollars. the deal will be the biggest u.k. take over since the brexit vote. what is it mean for amc? >> if there's some trajectory of being a world beater. it is controlled by wanda. they have been taking over car might in the u.s., the fourth biggest, marching them together to become the world's biggest operator. shares were too low. now, there is a new bid that is

looking like it is a done deal. it is expected to close at the end of the year. amc is back on track. >> what is it mean for wanda? wanda hasirman of said for some time that he wants to control 20% of the global movie market by 2020. he is clearly doing that through the cinema business. prime day. amazon says worldwide orders climbed 60% over last year. the video streaming fire tv stake was a hot seller. the best-selling gadget that tripled last year's sales of in-home devices. the numbers contradict the preliminary estimates from tuesday, suggesting sales were flat. how big of a success do you think it was? >> the results were in line with expectations. 60% growth.

three x growth for third-party sales. you do math. they never give you the exact numbers. they probably did a billion in gross sales and 5 million in net cells. a year ago it was 400 million. that was probably in line with gross expectations. the stock did not cap up on the news because the expect haitians were there. -- expectations were there. a gap between the third-party advisers and what amazon is saying? >> i expect some of it has to do with third-party access. they could not see traffic because some of it was captured at amazon. a separate story, and a good one, shows us our ability to appear into amazon is more limited than we thought. straight line to tech ipo success? theooks that way for line,

japanese messaging company that went public today. the biggest technology ipo this year. can this excitement be sustained? >> markets like taiwan, japan, indonesia, the top market is sticky. that is what we see investor interest momentum going and to the listing. the question is if that's can continue. there is scarcity, being one of ipofew and biggest tech this year. when it comes to u.s. investors, they can be tackle when it comes -- can be fickle when it comes to social platforms. can they expand in asia, as they said, and do they have opportunities in other markets, like the u.s., where they don't have the penetration other apps do. raised $1 billion in the ipo, what will you do with the money? >> first of all, obviously, we are very happy.

it is a great responsibility at the same time. most of all, we're going to focus on investing and expanding our services. citi and wells fargo reported falling profits for the second quarter. citi, what did you take from their earnings report? and jph respect tociti morgan, no news is good news. in testers were worried about the effect of the brexit. the first quarter saw increase in credit losses. there was a little bit for you about consumer credit. what we saw was none of those things where a big problem. citi navigated the quarter well on the trading side. investment bank and revenue was

down. consumer credit performed well around the world, the u.s., asia, and latin america. credit quality is improving. for citi the rate environment has not then as big of a head wind as we would have expected. erik: wells fargo is the driver in earnings. disappointing this time. what was the problem? >> wells fargo is more interest-rate sensitive. they placed a bigger bet than other banks on rising rates. also, they did not rose loans deposits as much as jpmorgan. looking at the jp results, they were strong in terms of gaining on the balance sheet. there was an expectation that wells results would be similar. a slight disappointment, i would say. ♪

♪ erik: you are watching "bloomberg best."

i'm erik schatzker. it has been a momentous week in global politics. the transfer of power from david cameron to theresa may ended three weeks of limbo for the united kingdom. the leadership inherits difficult decisions, starting with the formation of a new cabinet. >> we have just learned that philip hammond is the former secretary of this country, he has been appointed chancellor of financeequer, britain's minister. he has been in parliament for 20 years. he was the defense secretary before he was foreign secretary. this country's finance minister will have a big role in the negotiation for the european union. he is well suited. at least in terms of his background. he was foreign secretary. he knows many leaders of eu countries. it will be crucial for the

chancellor of the exchequer to maintain access to the single market. johnson is back. how did that happen? >> a few days ago, if you would've asked what boris johnson would have done now, everyone out here would have been scratching their heads. it was as if he had been wiped out of the political landscape in the u.k. he is foreign secretary. interesting to see in the cabinet theresa may is putting together you have brexit tearses andra meiners. andra --eers and remainers. czar, what areit his credentials? of thean for leadership party in the middle to thousands. in 2008 he forced a by election

and his own constituency because he was concerned about civil liberties. we have a little about his article 50.ering he wrote an article in the u.k. about that. he seems to be on the same page as theresa may. he has talked about doing quick trade deals. that is interesting. he sees paris free trading with europe as a possibility. davis, which also applies to liam fox, he is always been along those lines. boris johnson as well. they are from the liberal and. they are all people who one of the main reasons of ditching thinkls was that they that britain can survive well as an independent, free trading nation. the problem is there are true groups of people. one who like the liberal, open britain. the what other lot who want no

more globalization or immigration. the second group is more prominent. , someting the brexiteers say it is shrewd and -- is shrewd in case it is not possible for the nation. >> it is machiavelli and. n. machiavellia he is very able and very good. he has thought about these issues. he will be determined to make a great success of it. of the brexit, the extrication of britain from the european union. that will be the acid test of at least the first term of theresa may premiership. is it a safemond, pair of hands? >> i think it is. i do not think he will be any surprises. i do not think he will be a

great reforming chancellor, but he will be a safe pair of hands. the foreignnson secretary, osborne is not even in the cabinet. what are your top three shockers? >> those will do. continuesson was, and to be, the big surprise. it is an interesting choice. i would not have been surprised if she had given him nothing. his leadership campaign lou up on the launchpad. she could have done is said to all of the brexiteers who had similarly difficult launches, you have had your shot. i hear. i've going to fix it. instead, what she said is, well, well done. you won. you fix it. >> in australia and japan this week, incumbent leaders appeared to string to their legislative

positions. remains to be seen if the political gains will trans late into more momentum for dragging economies. >> us rally in stocks for gains on monday after malcolm turnbull claims election victory more than one week after the polls closed. the votes are still being counted. the result looks clear now. it does. the australian electoral commission is not going to declare a final tally until july 15, when the deadline closes for postal votes. the government has been returned with a slim majority. if we look at the ruling: shannon, their leading in 76 seats, the opposition labor party on 69. the government may get to 77 seats. >> putting australia on negative credit watch last week. it made headlines. it seems the market shrugged it off.

>> compared to the rest of the world, australia looks good. u.k. had ad downgrade, they still like those bonds. look at japan, they have negative yields. current tea, equity, bond markets -- all unconcerned. >> swift and both economic measures after winning a convincing victory in the upper house. does the election put abe in a position to move forward with the stimulus plans? >> it certainly puts him in a stronger position, heading for a two thirds majority in the upper house. the question remains, how will he use that majority? past 3.5 years, we have seen a lot of action in terms of the first era of abenomics. has put af japan lot of assets into stimulating

the economy. the government spent quite a lot of. it comes to the third arrow of economic reform. we have to see if he will actually knuckled down and do more in terms of economic reforms. >> there are a lot of calls for fiscal stimulus from abe, including from one of his closest advisers for a ¥20 million boost, 199 billion u.s. dollars. will we get it? lot ofill get a stimulus. will we get ¥20 trillion, i'm not sure. another of the week's geopolitical shocks reverberating through global markets. an international tribunal ruled against china in the dispute with the philippines over control of the south china sea >>. than 80% ofd more the south china sea, it has been ruled nolan lloyd. -- null and void.

they will notar comply with the ruling. smithre is no in your mechanism, no international maritime police force, what is the significance of the ruling beyond that it is a legal ruling? >> it means a lot. maybe not today or tomorrow, but it sets a normative baseline with which the judge claims over the south china sea and elsewhere. itputs china on notice that needs to abide by international law. that this is a case where people around the world are judging it based on its actions, not just what it says. resolve hopes they can this diplomatically through talks. what is the likelihood of that? china will not abide by the ruling. that is the case. is achina would expect now

set of questions for the philippines. it is probably what the of.ippines got a lot did tear tape not want to go very clear. on diplomatic issues. he was elected to address poverty, inequality, and criminality. is to defuse the .risis in the first place they need massive foreign investment in the philippines. that could be the trade-off for the situation. erik: coming up on "bloomberg best" -- the future of business in the u.k. and europe has taken

center stage since the brexit referendum. some of the world's top business leaders told us what they see coming and how they plan to cope . from technology, personal property, insurance, investment thinking. conversations about change. this is bloomberg. ♪

♪ erik: you are watching "bloomberg best." i'm erik schatzker. britain has a new prime minister and cabinet. as the u.k. negotiates its exit from the european union, it is unclear how businesses will be affected. we spoke with high profile business leaders about their grexit concerns -- brexit concerns, and their plan to deal with the changes. let's start with my conversation with the head of the ubs

investment bank. i asked what brexit will need for the thousands of people the employees in the u.k.. need to consider moving a number of employees to a european union country. we would have a base in the u.k., we would still deal with the u.k. in the way that we will today. most bookings from other countries which are not european union-based would not change. the part of the business that is eu business done from london would need to be done from elsewhere. >> we're talking about 5000 people, whom you employee in london. in that scenario, how many are we talking about moving? to tell.difficult it will have a significant impact. a swiss organization which has been part of the eu with plans in place for a long time to follow market developments.

i would not say something that is at our doorstep tomorrow, i would say that it is something we have some time -- but not as much as i would like -- to prepare for. thehe world needs to know implications for london as a financial center, and for the banks that operate there. when you say "significantly" are we saying half of your people? are they going to zurich, frankfurt, paris, madrid? when i say significant people, it would be a significant percentage. i cannot tell you exactly how many. it would be relevant enough for everyone to be concerned that this will require a complete reassessment of the model going forward. >> last week saw nearly $18 billion worth of u.k. funds shutter or gate. we chose a different road.

to mark down the value by 17%, give people time to rethink. how our retention -- redemptios looking? what is next for commercial property exposure? >> on monday last week, we saw a redemptions at 02 million. on two point 5 billion funds. without the worst was over after the brexit vote. then a surprise news in the afternoon that one fund was gating. that of course, caused the panic, selling in the market. you can understand, people taking money out of the property fund and investing in a raid at a 20% discount was quite a good arbitrage. we took a few that one of our obligations was to provide liquidity to our holders. we got a valuation done by our valuer on a stress valuation at

20% to 25% -- which is what we applied. 2007-2008, commercial property down by 40%. 25%.is down by how much will commercial property at its drop, can it touch the 2007-2008 level? >> i don't think so. we are in a different in harmon. 2007-2008 was a liquidity driven crisis. the world is awash with liquidity at the moment. with the pound depreciating, we seeing institutional interest in u.k. property. committed to both the u.k. and to europe. they are fantastic markets for us with fantastic customers. we are going to help them in any way we possibly can. >> we do have to rethink your operation in europe or the u.k.

because of regulations? >> make no mistake, no matter how it unfolds, we will be very .ctive in helping our customers aggressively focused on the market. >> what issues would be on your radar before determining whether you tweak or operations in both markets? >> the things that affect our decisions on markets are availability and people. we have access to quality people? qualityut of university's so that we can build the workforce? we make various decisions on where to how service support and sales operations. we like to bring those operations at close the customers and talent as we can. most of our decisions, when we hire or place development centers, really revolves around access to talent, market, and customers.

>> do you think the doomsday scenario that we heard before the vote took place, do you think they will play out? will have an effect on passports. you have to negotiate all of the exit terms. how long will that take? two years or four years -- who knows. when that happens, no british company can passports. they will have to reemployed people and decide what countries will have to go? ireland, the netherlands -- where? where will they have their headquarters? will all the people leave? i don't think so. >> what about you? >> we have a large operation. we have a new company that passports into europe. we'll have to change that.

i do not think the industry will change that much. of the business is in sterling. the rest is in other currencies. i do not think that will be a big problem, but it will be an will take period that time. the automobile industry and u.k. will be hard-hit. when you get rid of all the treaties, the economic treaties, you will have a lot of problems. >> from business conditions on the ground to big business in the air, conversations from the airshow are coming up next. this is bloomberg. ♪

♪ erik: this is "bloomberg best."

i'm erik schatzker. we are heading to england with this week the world's top aviation executive talk shop and struck deals at the farnborough air show. guy johnson got their thoughts on the industry the impact of brexit. >> tell me what brexit means for your business. >> other than the corn exchange of people, -- the foreign -- upheval,people we have people flying out of fear. more people are not going into the u.k. u.k. because of the lower pound. >> wouldn't this be a golden opportunity to raise stakes? the pound is down. point 24.15 we want to stay at that level. we are long-term investors. we are confident that this relationship tween us and iag

will keep growing and we will keep benefiting from each other's purchasing power. >> you don't see this as an opportunity to raise the stakes? >> at the moment we are not thinking about that. >> are you worried about the un-stability? >> we are not worried or we have full confidence in the british economy and government. andgs will rebound, business will be as usual. this is what i think will happen. >> we do not see the brexit affecting our long-term plans. we have a long-term perspective. we have been in the u.k. for 75-years. we do not see our lands changing. >> the pound continues to fall. things got cheaper. a competitive currency story we need to talk about? >> did you not see currency fluctuations changing the behavior of our customers. in a long-term business like aerospace, local currency

fluctuations don't drive decisions on supply chain. the reagan drive affordability, we try to take advantage of it. >> interest rates are incredibly low. this that offset the cheaper oil price? they can run the planes longer, but they can buy new warplanes. does one offs -- they can buy newer planes. does one offset the other? >> it creates movement around the world. it is advantageous. it encourages additional investment infrastructure, a key enabler for the business. >> the business community as a uncertainty. the fact that there is a new prime minister is good news for everybody. regarding airbus, we are committed to the country. we are disappointed, but we do not expect it will affect our relationship hear as we have

more than 16,000 employees. david cameron confirmed that the u.k. will remain a friendly land in support aerospace. >> expectations are low where demand will be. demand for aircraft, is it falling? 6.5% has increased globally last year. the first six months, another 6% year on year. bullish.t is the airlines need more aircraft faster. this is true. if air not be surprised asia we need more aircraft and we make an announcement today. >> airbus left boeing in the dust on the second day of the airshow. a $26 billion

jetliner deal from air asia to bring the tally from 23 aircraft. through, order coming 12.6 billion. that is the list price. i am assuming you did not pay list price. >> i would not be standing here if i did. >> this is a buyers market? >> i think it is. there are not too many orders --ng around this farm farnborough airshow. we are very happy with what we have done with airbus. there's plenty of liquidity. on the top of that we are disposing our older aircraft, we have cash. we have a leasing company to sell. cash is not the main issue. >> a little further, high interest rates around the world -- >> that is another reason for

buying what we are buying. interest rates are at good pricing. we do not see any pressure intro rate risings. we think the fed will not raise any time soon. >> the brexit story? >> the capitalized on the brexit, the lack of orders, and we went from there. we are happy with all we got. ♪

♪ flow function.f a show shoe etf movement. i have it on all asset classes to look at bonds and stocks >>. this is the bloomberg developed markets.

here, is the equity column, european markets. the european markets have been underperformers. >> i like to look at currencies. i check out the role reversal today. look at the currencies against the dollar. you have the british pound gaining 2% against the dollar. at the bottom, the japanese yen losing 2% against the dollar. >> there are 30,000 functions on the bloomberg. we enjoy showing you our a written on bloomberg television. they be they will become your -- maybe they will become your favorites. to quickll take you takes. the subject of this quick take is the black lives matter movement. ♪

>> i can't breathe. >> and this. >> and this. bullets into him, sir. he was getting his license and registration, sir. >> giving rise to this. >> black lives matter is a ofhtag a rallying cry, and movement at the intersection of race relations and deadly force in america. the u.s. government does not keep an official count of shootings by law enforcement. a washington post tally identified 990 table shootings in 2015. of the 93 unarmed civilians killed, more than 40% were black. despite the fact black people make up 13% of the population. in 1992, los angeles police officers were acquitted over the black cabdriver rodney king.

today, the difference is social media. how did it start? in 2012 trayvon martin was gunned down by george zimmerman, volunteerhood watch who claimed self-defense. the phrasecquittal, black lives matter debuted on twitter and protest rallies. it reemerged a year later when michael brown was shot by ferguson police officer darren wilson. place under the black lives matter banner. 500 people attended. hashtag was used 52,000 times. following the protest march in dallas, the black lives matter movement is spilling over to be an election issue, but not near cut. hillary clinton is in favor of the movement, but has not impressed the movement. protesters interrupted a speech

and one by her husband, former president bill clinton. >> i love protesters, except when they will not -- >> on the other side, donald trump is not in favor either. >> all lives matter. >> trump is critical of the black lives matter protesters and says police are "the most mistreated people in the country." erik: that was one of the many takes on the bloomberg. you can find it at bloomberg.com with news and analysis 24 hours a day. that is all for "bloomberg best" this week. i'm erik schatzker. this is bloomberg. ♪

♪ haslinda: hello and welcome to "high flyers." the show that gives you a 360-degree view of asia's business elite. today we meet a man who has links to enormous but very different industries. his father founded indonesia's oil and gas conglomerate citramas group, but he chose to explore his passion for film. let's meet infinite studios' mike wiluan. in cinema, there is hollywood and bollywood.