♪ >> coming up on "bloomberg best" the stories that shaped to the week in business around the world. celebratebanks earnings. is the sector turning a quarter? cases, it was not down as much as expected. >> it could be rough sailing for some ceos. >> will you stay to see it through? >> donald trump is officially the choice for the presidency. why big names in business are choosing to back him. >> people do not want political dialogue, they want action.

>> businesspeople listen and learn. that is all we do. >> christine lagarde has advice for the u.k. in the european union. ,> it is worth being together and it is the future. how turmoil in turkey is taking its toll on the market. that is all straight ahead on "bloomberg best." ♪ >> hello. welcome. this is "bloomberg best" your weekly review of the most important business news, analysis, and interviews. let's kick it off with a day by day look at the top headlines in a week that saw three of the world's most prominent ranks report quarterly earnings. -- prominent banks report quarterly earnings. >> bank of america beat analysts

estimates. second quarter profits fell by 21% year-over-year. what stuck out for you? >> well, what stuck out for you is thathe banks interest margins coming in worse than expected, credit is solid. no one is talking about the fact that energy credit is stabilizing. that has been the focus. what analysts are focusing on is the consumer side. the trends are good. we are seeing reserve increases. there is talk about underwriting. the bottom line where he is we know that rates will be lower for longer. pressure will continue there. is the credit cycle going to turn? >> what about the growth side? the net interest margins -- where is growth going to come from? >> they are arguing that they will keep net interest income onble, despite pressure margins. we saw loan growth that j.p. morgan. we saw growth at wells fargo,

perhaps not as much as some. for analystsope and investors, that they can offset some of the pressure through the loan growth. sachs, posting second-quarter's also beat on the top and bottom lines. a 74% increase in profits. analysts focus on cost-cutting. a is not really that big of deal, how many percentage points cut their percentage points by? >> i think it is. when you have net in come in the weld with low interest rates, you have to look at expenses here they become more important than they would otherwise. if we had a rise in revenues, we would not be as concerned with the expense cutting. we have not had a rise in revenues. >> most reliant on trading. with the bond trading gains that really helped to boost the profit. investigators saying --

investors seeing this as a prophet? >> it was very nice compared to estimates. compared to some banks, the rise at goldman atd some of the others. bank of america included. we are watching that in terms of thinking about goldman's market share. >> morgan stanley posting a prophet that eat analysts estimates. management from up estimate and exceedingng estimates. $.79 last year, $.75 per share, -- $.60r cast of per share. >> what was the biggest negative in the report? >> the biggest negative's compensation costs. and was expected $3.8 billion. they came in at over $4 billion.

as we know, at the end of december morgan stanley announced plans to cut 1200 workers, 25% of the trading staff. analysts thought that we would say that compensation cost come down a little. it didn't quite as much as they thought. >> have heard from all six major u.s. banks. what were the common themes >>? rings were not as bad as expected. estimates have been ratcheted down dramatically. awould say overall, it wasn't good quarter. in most cases profit revenue was down, just not down as much as expected. fixed income looked good. trading was strong. the question is if that is sustainable. leaves all three main interest rate unchanged. the asset program also unchanged at 80 billion euros every month. >> we expect them to remain at

present over lower levels for an extended time. well past the horizon of our net assets processes. >> mario draghi says the central bank is ready, willing, and able to act in the aftermath of the brexit vote and what signal wouldn't send to markets and mario draghi had announced changes? have announced something more meaningful, that would suggest the impact of the u.k. decision to leave the eu was already being felt. that is not the case yet. what little data we have, in the u k and the eurozone, it is pointing at things turning out relatively ok in the short-term. that is consistent with the ecb. the telecom giant verizon is nearing a deal to buy yahoo! for $5 billion.

what is the price tag signifying? will verizon by everything yahoo! has, or only portions? >> we do not know the real estate. verizon will not find the ip. there is no deal formally done. that will probably happen over the day and maybe the weekend. we hear the price tag is closer to 5 billion dollars and $4 billion. somewhere in the upper $4 billion range. likely considering where things shake out. acquiredll be by another party. verizon previously offered andeen 3.7 billion dollars $4 billion. this is a dramatic escalation. goes ahead and verizon gets yahoo! assets, what be ableaol corporation to do then yahoo! was able to do on its own. it has been failing, losing

market shares. will add market technology that can be partnered with yahoo! ad technology. it is about taking the cost out of yahoo!, as it is pairing it with aol and coming up with strategic benefits. there are a lot of operational synergies, job cuts, and you can expect verizon will go through yahoo! and cut the fat in essence. that is what the transaction is all about. >> coming up, the earnings drumbeat continues with the reports from technology companies. plus, looking at a turbulent week for the turkish economy. next, more business headlines from mergers, acquisitions, lawsuits, and investigations. this is bloomberg. ♪

♪ >> this is "bloomberg best."

global tour ofe the week. record-setting virtuous of a british chip designer by japanese telecommunications company. record 32 billion dollar deal. was it brexit bargain-hunting? >> they surprised everyone. arm does not fit inside softbank in any shape or form. it is not something that softbank had and it is a complementary acquisition. arm is a solid and good acquisition. they will let it run independently. the decisions will stay in the u.k.. a steady cash flow, cash generation business. softbank's their biggest deal with sprint, $21 billion in 2013 or sprint, and it hasn't turned out well. they need a steady cash generation business, and they

hope arm will be that. >> pimco turns to the hedge fund world to get a new ceo. who is the man, and why go to the hedge fund world if you are pimco? ande has had a long successful career in the hedge fund industry. he came in as the ceo of man group. he started as ceo in 2013. and you saw assets increased by 1/3 through acquisitions and the share price doubled in two years. it was a company under pressure, and he did a great job taking it to the next level. pimco is a different beast from man group. he will now be tasked with replicating that, and taking this company, restoring it to some of its former glory. use the things changing at pimco in a big way with this talent acquisition?

hasany roman -- manny roman expertise in bonds, which is what pimco specializes in, but he has more than that. the question is if this will see pimco move into new things. he is a proponent of computer-driven trading. upunilever is scooping dollar shave club, getting a bigger piece of the fast-growing men's grooming business. according to bloomberg business sources, it is north of $1 billion. it is a direct consumer model for an established razor brand and is on track to post $2 billion in sales. >> it is a wonderful addition to the unilever family. there's a $30 billion male grooming market. shaving is by far the number one market. this is a subscription model, which is interesting.

more shopping goes through different channels that is based on shaving and male grooming. we think this acquisition is strategic. >> he is not in, he is out as head of fox news channel following sexual harassment allegations, which he denies. he will be succeeded by rupert murdoch. generally sanguine about this. 25% of 21st20% to century profits. isrupert murdoch, not a lot expected to change? >> most investors do not think there will be much of a hit. it is 25% of total cash flow, it is important. they are dominant player. near term, not much of an issue, particularly going into an election year where audiences will be big. >> the demographic average age is 65. is this the high water mark re ision mark >> the colo

extremely profitable, but any new leader has to develop new business. >> it weaken disconcerting news. a slew of headlines involving lawsuits, investigations and that rounds of our coverage on bloomberg television. paying euakers regulators a record 3.2 billion dollar fine for fixing prices over 14 years. >> it is a big fine. we're talking about a very damaging cartel. it lasted for 14 years. it affected all of the european economic areas. these are very important vehicles for the entire european economy. these are the elements that go guidelines in order to calculate the fine. i think it was justified with this high amount. >> shares under severe pressure

they the airbag makers say routinely manipulated testing data. >> lawsuits prompted it. the faulty parts have led to the tablet use. there has been a wide range of the company.nst part of the response was to hire a professional to do an audit of the company. they discovered takata manipulated data by partly adjusting it to make it look like the performance of their parts looks more consistent. they basically reduced the variability of the responses to testing. the auditor used was to make it look prettier. this is basically manipulating the data. something that will definitely come back to haunt the company.

>> another key corporate .ovement is volkswagen it has been down facing fresh allegations from the u.s. state officials. the claims include emissions cheating went on longer than the company acknowledged. the incumbent ceo has been aware of it for 8 decades. these allegations are coming up it late? >> they are. that is why it is a blow to volkswagen. they thought they were through the worst of it. they got the u.s. settlement out of the way. now, they are blindsided a u.s. attorneys generals which are leveling serious allegations. >> what is the tactic vw has to play? >> but the attorney general's are after is fixing environmental damage and the legal damage the cars did -- they are after retribution. that is a different scenario than they faced before.

familiar with the matter say a manager at hsbc was arrested in new york for his role in a conspiracy to rig currency benchmarks. ofmark johnson, the head global effects at hsbc was flying into jfk. he was apprehended and arrested. we are expecting charges. it will be wire fraud. it is related to the forex currency investigation. the department of justice has been working on it for four years. what will happen, we are not sure. that is still up in the air. government hasn been pledging to cooperate with lawful investigations as they seek $1 billion in assets linked to the embattled state fund. they denied having assets in the u.s.. what is new? >> what we know is what we had from the malaysian government. they say they will fully

cooperate. that of wrongdoing is proven, the law will be enforced. one minister pointed out that any claim must be treated with caution. it must follow due legal process. all of the reaction, after u.s. prosecutors said they will take action to seize assets worth $1 billion -- civil lawsuits have been filed. prosecutors say that billions misappropriated from 2009 to 2015. >> the u.s. government willing to stop 2 big takeovers in the health care industry. they filed antitrust lawsuits against anthem's acquisition of the takeover of humana. they would consolidate the five big companies into 3. >> they say both would harm innovation and competition. the aetna humana deal would affect the medicare advantage market in particular.

is injureda, that and sold to employers as well as other regional markets. >> this could tie things up in the court for months or years? >> essene companies come out and say, humana and cigna, said this is looking at 2017. cigna is questioning whether the deal can get done at all. ♪

♪ >> you are watching "bloomberg best". earnings season is in full swing. companies rolling out quarterly results. tech firms catching the lion's share of investor attention. plunging 15% on

disappointing earnings. so cyber growth dropped. it is due to price increases, not market saturation. is that the reason? >> we know that they lowered the cost of marketing, at the same time they raised prices last quarter. we can see the u.s. subscriber growth fell to 0.3% sequentially. my model goes to 2012. that is the lowest ever reported . they are spending so much, being forced to raise prices because content costs are getting out of control. their $12 billion in off content cost, that is raising prices, and that is causing new subscriber growth to slow. beating estimates despite its 17th straight quarter of revenue decline. watson may on finally be paying off. revenue, including the

artificial intelligence platform, rose 3.5 percent, the first growth since the revamp. >> this is a quarter for ibm. this treaty jake impairments group, that includes watson, the cloud business,, the business of ibm, posted growth. one of the interesting parts, although it is 38% now, the revenue growth of this group has been declining year on year. something to watch over the last the future.nd into the other segments continued to number on a cost currency basis and as reported basis. the hardware segment is a thorn in ibm's back, if you may. the bloomberg intelligence view is that it is a mad quarter. >> let's go to scandinavia. withis erickson, competing nokia.

they say the negative trends from the first quarter intensified. they are taking further actions, initiating cost-cutting and targeting. is the ericsson ceo so pressured by ambassadors? he is trying to rebalance ericsson. net sales missed what the markets actually expected. he will be under more pressure today? >> i think he will. he has been with the company as ceo for 6.5 years now. ring that time, he has not delivered much of a share price gain. it is basically flat during his tenure. there have been rumblings over the past year. essentially, he is under pressure to deliver better and more cost cuts to the company. it is a very competitive market. to remain atid ericsson? are you fearful that institution

shareholders could harry you from your position? >> we are doing lots of transformation. changing the corporate structure. we are on the forefront of 5g. >> will you stay to see it through? >> i think my job is to continue . that is what i'm focused on. >> microsoft flying high on the cloud hear the company reported fourth-quarter profits topping analysts estimates. fourth quarter coming in up to percent from the same quarter last year. the ceo's aggressive push is booming revenue. doubledd platform revenue this quarter. where do you see the bright spots, and where do you see challenges? >> microsoft is doing well shifting from paid on premises software to using cloud services. it is a big shift to go from private stuff to using shared

stuff that gives you better value and a different experience. the challenges are, as mentioned, the flatlining of the ' asth of pc's, the window revenue is up. the decline of the phone business. they admitted they cannot easily take the nokia acquisition and bump into being a big player in phones.we are seeing continued progression in microsoft's ambitions and the and howes around pc's to grow the enterprise software business that they call dynamics. reported second-quarter results topping analysts estimates. operating profit was $1.52 billion. forecast was $1.4 billion. they hope to close more software deals despite political turmoil in europe. you say despite the widespread concerns, there is no affect

from the brexit vote. is that because there was not enough time to react? do you expect the third-quarter to feel pain? >> we see a robust and ever increasing pipeline for technology. grexit interesting about specifically, just like the greek debt crisis, the china grows issue, our software continues to be resilient in choppy waters, because business aboutive start thinking customers, channel strategies, inventory levels, supply chains, financials, and real-time data smart decisions. our new architecture is in the center of helping them solve those problems, which is why we tend to be resilient. >> the g.m. -- the highlight is they are boosting their full year earnings. earnings coming in $1.86 per

-- revenue --nue 4 42 point $4 billion. >> he wanted to raise earnings. that is what they have done. six dollars per share is the forecast. >> we have just gotten these numbers. what is your overall take? is there a problem in these? >> the problem is if the investors look at the numbers and see something they can act on. g.m. has been showing profits for many quarters in a row. this is the fourth time or fifth time they have exceeded estimates. people are looking to uber and tesla for the future of autos. >> what should we be looking at? the second quarter driven by outstanding performance in north america. another record quarter for north america, $3.6 billion in profit.

continued strength in china. point 5 billion dollars in income and strong income margins. profitability in europe. the first prophet we have had since the second quarter of 2011. tremendous work by the entire team. electricl ge wants to focus on equipment manufacturing. the company is betting on businesses such as energy and innovation. the ceo is also building a software unit. take a look at net profit, that was up 313%, revenue up two 2%.en >> they did beat expectations on both profit and revenue. that was helped in part by a gain on their sale of the

appliances business this quarter. you have a decline in orders. they got out of being a too big to fail financial institution during the quarter and that will free up a lot of capital. we are still waiting to see what exactly is going to happen. coming up on "bloomberg best." highlights from tom keene's conversation with christine lagarde. this is bloomberg. ♪

david: donald trump has not been shy in saying why he should be our next president. one reason is the businesses

he's built in the way he circulated his wealth. we've taken a closer look at how about the mr. trump truly is. mr. trump wealthy truly is. >> his net worth has gone up $3 , less than the $10 billion he claims. david: how confident are you in his numbers? >> you never know what a building will go for until it actually sells. assets, theses trophy resort properties, you could expect maybe someone would pay a healthy premium above the revenue is businesses are generating just for the sake of owning them. basis, we are confident in the range we are

in. david: he has also borrowed a fair amount. a wonder to $70 million loan out against the new hotel use building and washington, d.c. -- $170 million loan. it is expected to open in time for the election in november. he needs to fund his own campaign. how much cash can he reads quickly? quickly -- how much cash can he reach quickly? he has about $170 million of assets he could liquidate immediately. >> i humbly and gratefully for theour nomination presidency of the united states. >> it's official. this week, donald trump formally secured the nomination for the

presidency. >> what would the donald trump as president be able to do with unconventional monetary policy? youo sit down and say when have deficit finance, we don't have the gold standard anymore, we are printing money. do we go back to gold? no. but nobody knows what that means. we have a group of central bankers with quantitative easing -- myo one understands wages are less than interest on the debt. >> i want to know what he should do about it. which of you do about the tax code? shatter the old system.

you cannot affect a bureaucracy unless you crack it. the bureaucracy will tell you that you need them and you need to move slowly. we are dying. we are on the hospital bed we , divisionl inequality , civil disorder. let's happening around the world, look what's happening in turkey. people don't want any more political dialogue, they want to see action. step in the middle of the fray and break it up. other business leaders have expressed worries about trump you are the quintessential businessman, you live the american dream, you do your due peeredce on any deal > -- on any deal. >> donald is such a good

listener. business people listen and learn. he is one of the best at that. he has demonstrated that so many times to me. i'm involved with the trump leadership council, all the people that are part of that. about all thech sectors that cross into our economy. he has demonstrated also that he everything and learn he needs to know to move forward. >> trump calls you the king of energy. there are some reports that you could be the next energy secretary of the u.s. if trump wins. would you take it? abouthing has been talked

in that whole area and all. i would be honored if that was offered. i have not given any thought to that at all at this point. director satnaging down with tom keene for exclusive bloomberg interview. she shared her thoughts on the uk's uncertain future in the european union. after the success of the brexit referendum, what is the path you can take to assist to move theer may united kingdom forward in their negotiations with brussels and europe? christine lagarde: there has been significant progress in the macroeconomic situation of great britain over the last five years. we have seen and move from a 10% fiscal deficit to more than half that now.

torecommendation would be reduce the level of uncertainty come identify clearly what the goals are come identify the timeline. said, understand that it will take time, but it will require understanding on both sides in order to eliminate the trade uncertainty, the regulatory uncertainty, the passport uncertainty. there is a whole range of issues which need to be addressed which have brought the european countries together. clarity of intent, identification of both the goal and the timelines would be very helpful. tom: are you pleased with what you see not of european leaders so far?

we're focused on the united kingdom. are you pleased with the messaging from chancellor merkel and others within europe? christine lagarde: for the to lay they have decided out the terms and the space and the maneuvering they all want to offer or expect from their partner. i understand that because there has to be uncertainty about the timeline. the two years which will be trickled by this article 50 -- triggered by this article 50 will lay out the timeline. if the united kingdom moves in the direction of what i hope, indicationarity come of type lancome europeans should respond. -- clarity come indication of

timeline, europeans should respond. you bring about those structural reforms, changes that deliver value to the europeans that will demonstrate it is working together. worth working together. it is the future. ♪

>> you are watching "bloomberg best." last week, turkey faced a political cataclysm as the erd ogan government repelled an attempted coup. we explored on bloomberg. recovered half its loss since the coup.

>> many people saying this is erdogan's chance to galvanize power even more. >> the government has been working hard towards these changes. a parliamentary system to a presidential system where he holds the levers of power in his hand. >> the currency committee equity market, 50 billion dollars came back into turkey in the first five months of this year. that's exactly it. the first five months have been especially strong. you had the return of foreign capital to turkey. as opposed to last year when there was now flow in the same period. the question is whether that will continue or not. >> is turkey investable right

now? >> not at this time, given the level of uncertainty. >> how will this impact european investment? does it at a discount to the european investor story? it is still spillover of what happened in the city it does play into the political risk. but maybe not at this stage. >> a measure of turkish debt signaled it was considering cutting the country's credit rating to junk. at thewatching the lira moment. cuttingsideration about turkey's credit rating, is that

more about politics or economic fundamentals? >> very good question. there's two elements. which hasitical risk, been present in turkey for some time. the manifestation of the very shifting type of political landscape we have. implications on growth potential, the advancements or lack of economic reform and exposed to the countries to external political shock. thehat do you make of bank's decision to slow the rate cuts? they have to react quickly. one thing that helps the markets

to absorb the news today and theyrday is the fact that made some announcements over the maintainingt significant equity in the banking system to make sure that the market turbulence is contained. >> i want to ask you about turkey and what turkey has done to stabilize matters after the attempt to. .- attempted coup what impacts could we see on financial markets? >> financial markets have been somewhat volatile. the central bank, other authorities have done a good job markets -- the providedank has , theue -- in that context

economic developments will be driven more by the political events that occur. the authorities there have reacted promptly and energetically to contain the damage. matt: s&p has downgraded its rating on turkey, lowering it to bb from bb plus. this had even more pressure to the turkish lira which weakened to a record low against the dollar. >> this is a big deal. their financing costs are climbing, people are selling financial assets. >> the president's emphasis right now is on consolidating political control and less on persuading investors. if he columns the political

situation come investors will go with it. >> a three-month state of emergency. turkey?t apply to >> to the extent of the government wants to apply it at this point. the government has come out to say this will be limited, this will not have an effect on turkey's democracy. , investors don't seem to be buying that quite yet. >> you are going towards an environment that is not investor friendly, some european large anks or corporate will have large issue in the future. ♪

>> i want to show you this function here -- it gives you a good idea of where the trade flow is for the united kingdom. top of the agenda is germany. >> a snapshot of the earnings scorecard so far. we can highlight how well the financials have done right here. sales have surprised by 2% and earnings per share have surprised by 6.5%. there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites. here's another one you will find useful. our quick takes where you can get context -- this week's quick take examines the issue of independence in scotland. credited with

giving a television, penicillin -- it is also home to an independence movement that refuses to die. 2014, scott had to decide -- 55% voted no. that was the start of something new. a change in scottish politics. --arge part of the region reason why scotland rejected independence in 2014, fear the economy was not strong enough -- fear ties to the european union would be cut. when the u.k. voted to leave the eu, scotland voted overwhelmingly to stay. >> i regard that as democratically acceptable. that's unacceptable.

-- democratically unacceptable. membership exploded after the referendum. members on the day of the vote to 115,000 the next year. -- the third largest political party. now, brexit has given the call another boom. this going to move scotland to independence. for them, brexit changes everything. this is the opportunity the movement has been waiting for. a second independence referendum is clearly an option on the table.

it is very much on the table. have sped upit may the possibility of another run at independence for scotland, it's also made the prospects far trickier. caseents say the economic for independence is even worse than it was in 2014. the plunging crude prices show that going it alone is too risky. questions remain about what scotland'sn with it will have to convince eu member states it is worthy of joining their class. >> that was just one of the many quick takes you can find on the bloomberg. you can also find them on bloomberg.com, along with all

the latest business news and analysis 24 hours a day. thank you for watching. this is bloomberg. ♪

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