♪ >> coming up on "bloomberg best" the stories that shaped to the week in business around the world. three big banks celebrate earnings. is the sector turning a quarter? >> in most cases, it was not down as much as expected. >> a raft of tech companies releasing results, and 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.

>> donald is such a good listener. 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 across the banks is that 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 stable, despite pressure on margins. we saw loan growth that j.p. morgan. we saw growth at wells fargo, perhaps not as much as some.

that is the hope for analysts and investors, that they can offset some of the pressure through the loan growth. >> goldman sachs, posting second-quarter's also beat on the top and bottom lines. a 74% increase in profits. analysts focus on cost-cutting. it is not really that big of a 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

positive, presumably? >> yes, very much so. the fixed income was very nice compared to estimates. compared to some banks, the rise was not as good at goldman at 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 bond trading exceeding estimates. $.79 last year, $.75 per share, beating or cast of -- $.60 per share. >> everything seemed great. fixed trading was really great, and they have then paring back that business. 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. i would say overall, it wasn't a 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. >> the ecb 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? >> if he would 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. the ip will be acquired by another party. verizon previously offered between 3.7 billion dollars and $4 billion. this is a dramatic escalation. >> assuming it goes ahead and verizon gets yahoo! assets, what will an aol corporation be able to do then yahoo! was able to do on its own. it has been failing, losing market shares. >> aol 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." let's get to the global tour of the week. record-setting virtuous of a british chip designer by japanese telecommunications company. >> a 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? >> he has had a long and 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. >> do use the things changing at pimco in a big way with this talent acquisition? >> many roman -- manny roman has 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. >> unilever is scooping up 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, whiche denies. he will be succeeded by rupert murdoch. generally sanguine about this. fox news is 20% to 25% of 21st century profits. is rupert murdoch, not a lot is 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 question mark >> the core is 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. >> truck makers paying eu 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 into guidelines in order to calculate the fine. i think it was justified with this high amount. >> shares under severe pressure

after the airbag makers say they routinely manipulated testing data. what prompted this? >> lawsuits prompted it. the faulty parts have led to the fatalities. there has been a wide range of lawsuits against the company. 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 word 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 movement 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? -- the incumbent ceo has been aware of it for a decade. >> 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? >> that will be the hard thing. what the attorneys general 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. >> people familiar with the

matter say a manager at hsbc was arrested in new york for his role in a conspiracy to rig currency benchmarks. >> mark johnson, the head of 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. >> the malaysian government has 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 do we know? >> 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 cigna and 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. anthem/cigna, that is injured 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. >> netflix plunging 15% on disappointing earnings. so cyber growth dropped.

the ceo says 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. >> ibm beating estimates despite its 17th straight quarter of revenue decline. the big bet on watson may 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 4 quarters and into the future. the other segments continued to post weak 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. this is erickson, competing with nokia. they say the negative trends from the first quarter intensified.

they are taking further actions, initiating cost-cutting and targeting. >> why 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. during 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. >> are you said to remain at 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. the cloud platform doubled 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 growth of pc's, the window' as 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 challenges around pc's and how to grow the enterprise software business that they call dynamics. >> sap reported second-quarter results topping analysts estimates. operating profit was $1.52 billion. th 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. what is interesting about grexit specifically, just like the greek debt crisis, the china grows issue, our software continues to be resilient in choppy waters, because business executive start thinking about customers, channel strategies, inventory levels, supply chains, financials, and real-time data to make 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. you have a beat on the top and bottom line. earnings coming in $1.86 per

share and revenue, a staggering $42.4 billion. >> he wanted to raise earnings. that is what they have done. six dollars per share is the forecast. raising guidance, too. >> 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. it just is not moving the needle on the stock because people are looking to uber and tesla for the future of autos. >> what should we be looking at? >> results in the second quarter driven by outstanding performance in north america. another record quarter for north america, $3.6 billion in profit. 12.1% margins. continued strength in china.

million 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. >> general electric posted>> ged second-quarter profits that beat estimates. they want to focus on equipment manufacturing. they're betting on duke and aviation. they are also building stock. the stock is down 2% in free market. net profit of 313%. revenue up 2%. what is the issue? >> investors are feeling out how to interpret earnings this morning. they beat expectations on both profit and revenue. that was helped in part by a of the their sell

appliances business this quarter. you have a decline in orders. they finally got out of being a too big to fail financial quarter,on during the and that will free up capital. investors are waiting to see what exactly is going to happen. >> coming up on "bloomberg best" evaluating donald trump. bloomberg digs into his financial worth, and 2 titans weigh in on his potential. tom keene's conversation with christine lagarde. this is bloomberg. ♪

♪ >> donald trump has not been shy in saying what he should be our next president. one of the reasons is that the businesses he has built and the

way he accumulated wealth. bloomberg news looked at how wealthy mr. trump really is. ps just written a piece out on the bloomberg. caleb, what have you found? >> 12 months later, his net worth has gone up $3 billion. to $3 billion, less than the $10 billion that he claims. that is what we can account for. you incomfortable are these numbers? there is a fair amount of appraisal and estimation. >> exactly. you never know what a building will go for unless it actually sells. some of the trophy resort properties, you could expect someone with a healthy premium above the revenue the businesses are generating just for the sake of owning them. financeumbers basis, a basis, we feel confident about the range. >> his properties are worth

more, he has also borrowed a fair amount. >> he has a $170 million loan against the new hotel and washington, d.c. he is renovating the old post office, a few blocks from the white house. it is expected to open in time for the election in november. howo you get a sense of much liquidity he has? so far that he needs to help fund his own campaign, how much cash can he reach quickly? >> using the high-end end of the disclosed ranges, about $170 million of assets that he could liquidate immediately. greatumbly and fully accept your nomination for the presidency of the united states. >> it is official. donald trump formally secured the republican nomination for

the u.s. presidency. 2 business leaders spoke on his behalf and interviews with bloomberg. what would donald trump, as president, be able to do with unconventional monetary policy? >> to sit down and say when you have deficit financing, we do not have the gold standard, we are printing money. do we go back to the gold standard? no. no one knows what that means. you have central bankers that have quantitative easing that no one understands. everyone says we get it, banks are too big to fail. you build them out and my wages are less than interest on the banks. a problem.at it is what should he do about quantitative easing? the tax code? the federal debt? these are issues you need to identify. >> what he needs to do is system.the old

you cannot be effective at bureaucracy unless you crack it. the bureaucracy would tell you it you need them and you have to move slowly. we are dying. the hospital bed. we have social inequality. the division between blacks and pulleys. the police will save you want to solve it, solving yourself, and then we will have civil disorder. look at what is happening around the world, with turkey and the brexit. people do not want political dialogue. they want action. you step into the middle of the fray and you break it up. >> other business leaders have expressed worries about trump. you are the quintessential businessman who have lived the american dream. you do due diligence on every deal, and trump is the old deal for the u.s.. talk us through the due diligence you did. >> a lot of people have not seen

the side that i see. the fact that donald is such a good listener. business people listen and learn. that is all we do. he is one of the best at that. he demonstrated that so many .imes to me i'm involved with a trump leadership council and all of the business people that were a part of that. he has demonstrated that he knows so much about all of the sectors that cross the entire economy. he has demonstrated, also, that he will listen and learn everything that he needs to know to go forward. >> part of that is listening to you. trump called you the king of energy. there are reports you could be considered to be the next energy secretary the united states. would you take it? >> nothing has been talked about.

honored ifi would be that was offered, but i have not given any thought to that. this week, imf managing director christine lagarde sat down with tom keene for an interview. madame lagarde shared her thoughts on the u.k.'s uncertain future in the european union. >> after the success of the brexit referendum, what can you take to assist prime minister may to move the united kingdom forward in their negotiations with europe? >> there has been significant in the macro economic situation of great britain over the last five years. we have seen it clearly move from a 10% fiscal deficit to lf of that now.

my recommendation is to really reduce the level of uncertainty, identify clearly what the goals timeline, andthe as philipp armen said, understand that it will take time. it will require understanding on both sides in order to eliminate the trade uncertain the, the regulatory uncertainty, the passport uncertainty -- there is a whole range of issues which need to be addressed. which have brought european countries together, and from which clearly the united kingdom has indicated it's intention to withdraw. it has rapidity of institution, the goal and the timeline would be helpful. what youu pleased have seen out of european

leaders? you go in a few days to g20 leaders? are you pleased with the messages from chancellor merkel and others in europe? >> for the moment, they haven't not, and deliberately so, decided to lay out the terms, the space, and the maneuvering that they want to offer or expect from their partner. there has to be certainty about the timeline. 2-years which will be triggered by article 50, which has not been invoked, will open a time.d period of i understand why they do not want to put their cards on the table yet. if the united kingdom moves in the direction of clarity of purpose, transparency, and indication of timeline, the europeans should respond. my hope, as a european, is that

european leaders will find the strength and determination to bring about some structural reforms, changes, that deliver values to the europeans that demonstrate it is worth being together. it is the future. ♪

>> you are watching "bloomberg best." last week, turkey faced a political cataclysm as the president faced a potential coup. they felt repercussions from the crisis. the currency and i gets have been railing since the uprising. we went in detail on bloomberg. lira has recovered half of its lost since the failed coup attempt from friday

triggered the biggest slide since 2008. >> many say this is the president's chance to galvanize power even more in a presidential system. hashat is what erdogan wanted for a few years. he changes from a parliamentary system to a presidential system, where he is the dominant. >> talk to me about the flow of money. that is what we're looking at in terms of currency and the equity market. that is what is at risk, the flight of capital and the current deficit. >> this year, the first five months has been quite strong. you had a return of foreign capital to turkey. as opposed to last year when there was an outflow in the same first five months. the question now is will that continue? this will make a lot of investors nervous. investable right

now? >> i would say no. >> how does this impact european investments? is it discounted to the european investment story? >> not necessarily. we have seen that in the whole crisis. spillover of what happened in syria a long time ago. it plays to the political risk in the market. maybe not at this stage, but if it gets bad. >> the measure of turkish debt risk rose and debt fell after moody's considered it was cutting the country's credit rating to junk and the central bank lowered borrowing costs. we are watching the leader of -- the lira falling 2%, the most among emerging markets worldwide. this consideration of cutting turkey's credit rating, is that

based more on politics or economic fundamentals? question. a very good i think there are two elements. one is political risk, which clearly has been present in turkey for some time. what happened over the last few days, that is the manifestation of the shifting type of political landscape that we have . that has implications on growth potential, implications on the or lack of, economic reform. and also expose countries to potential external shock. >> what do you make of the central bank's decision to slow the pace of rate cuts? does that have impact on your judgment? >> as any central bank in the ofe of turbulent -- turbulence, they have to react quickly.

one thing that helped the todays to absorb the news and yesterday is the fact that they have made announcements over the weekend about maintaining significant liquidity in the banking system to make sure that the market turbulence in the initial stage is contained. >> i want to ask you about turkey and what they have done to stabilize matters after the attempted coup. hasn't done enough? what further impact could we see economically and on financial markets? >> financial markets have been volatile. the other authorities have done theod job of reassuring economy and markets, in particular the central bank has provided ready liquidity to the financial system to prevent it from seizing up. context, the economic

developments will be driven more the political events that occur. the authorities have a reacted promptly to contain the damage. >> more repercussions in turkey following the failed coup. s&p has downgraded the rating to plus. b from double b this has added more pressure to ede turkish lira, which weaken to a record low against the dollar. >> it is a big deal. people are selling assets in country. markets do not like coups and they like purges even less. 's emphasist erdogan is about political control and less about inclusion of investors. is there anything he could say to keep the currency under wraps more? takingident erdogan

action, declaring a three-month state of emergency. investors like to invest in places where they understand the role of law. does that not apply to turkey? >> in the sense of the government wants to apply it at this point. the ministers and erdogan have said this will be limited. it will not affect turkey's democracy. as you can see in the reaction in the markets, investors aren't buying it yet. going towards an environment which is not investment-friendly. where some europeans, large banks and corporate have a serious issue in the future, potentially. ♪

♪ firstt i want to show you

is this function. .t is the trade flow it gives you an idea of where the trade flow is for the and nine at kingdom. top of the agenda, germany. a snapshot of earnings so far. we can highlight how well financials have done. donengs per share have better than the s&p 500 at large. are 30,000 functions on the bloomberg, and we enjoy showing you our favorites. maybe they will become your favorites. this is a quicgo. that will bring you to quick takes for information on timely topics. this examines the issue of independence for scotland. scotland is credited with television, penicillin, --

it is also home for an independence movement that refuses to die. in 2014, the scots got a vote. did they want to break away from england and the united kingdom? 55% voted no, but that was less of a changed more in scottish politics. here is the situation. a large part of the reason why rejected independence was fear. fear jobs were at risk. to their european union would be cut or 20 u.k. voted to leave the eu, overwhelmingly scotland voted to stay. ofscotland sees the prospect being taken out of the eu against our will. i view that as democratically unacceptable. >> necklace storage and --

nicola sturgeon enjoys widespread support. her support exploded after the 2014 referendum. year.hopping 115,000 this in the 2015 general election, seats inon all but 3 one ofliament making it t the largest parties in westminster. is this scotland's independence, finally? here is the argument. nationalists say that the united kingdom scotland voted for 14 years ago is not the same as now. for them, the brexit changes everything. it is the opportunity the movement has been waiting for, though it is less than ideal. >> it is clearly an option on the table, and it is very much

on the table. out toit may have spit be opportunity for another run at independence, it made the .rospect trickier opponents say the economic case for independence is worse now than in 2014. since scotland's economy would be underpinned by plunging crude prices, they say going it alone is too risky. and what would happen to scotland's trade with the u.k., which is far more than those to the eu. even if scotland gets independence, they would need to convince eu member states they are worthy of the club. it is uncertain how empathetic some members would be. they have been battling separatist movements of their own. >> that was one of the many quick takes you can find a deacon find them on bloomberg.com along with

business news and analysis 24-hours a day. that is all for "bloomberg best" this week. thank you for watching. this is bloomberg. ♪

haslinda: hello and welcome to "high flyers." the show that gives you a 360 degree view of business elites. today, we are joined today by one of the world's leading chefs. after opening top restaurants in europe, he moved to the u.s., becoming personal chef