♪ coming up, the stories that have shaped the week in business around the world. the bank of england setting a post brexit direction while japan has another fiscal aero -- >> the shakespearean tragedy of abe. number, whatobs message will send the feds? >> what is not holding up is business investment. >> and all eyes on earnings this week. >> a great quarter across the board. >> it is reshaping the earnings

mix >>. yields job, rc phase ends -- are safe havens turning into risky business? >> they are starting to buy things may have not bought. >> it is all ahead on "bloomberg best." >> hello, welcome. i am angie lau. this is bloomberg best, the weekly review of the most important business news and interviews from bloomberg television around the world. angie: looking at top headlines, the merger uniting two of the largest companies. ♪ chinaig new deal in today, the ridesharing company uber'ss agreed to buy

chinese subsidiary. tell us about how this will work. >> based on the announcement, our understanding is that didi will form a new entity valued at $35 million and both will become minority shareholders, and also the founders will become, they will sit on each other's boards. this is a combination of a battle that has been lasting for more than a year. >> this outcome is something that is a win-win for both companies. didi is worth more today because sharesdeal and also uber are worth more because of the deal. -- solar citycity falling, the price lower than what was initially offered in the biggest deal to date.

tesla goes do a lot of cash and a solar city needs cash flow. is this a wise decision for them to get together? >> there was a big question on that from analysts, how they will fund all of it for a big companies. elon musk laid out his master plan last week, it is calling for a grand business requiring money over a long. period of time. and that is a question he has not answered, how he will get it all done when both companies are burning cash and have big plans. angie: japan's economic stemless plan will increase -- stimulus plan will increase spending this year. >> they are calling it a 28 trillion yen stimulus package, but it is not. the markets are disappointing.

spent$74 billion will be and they say it will address the democratic challenges -- demographic challenges, getting women into the workforce, high-speed rail and cruises ship support. a lot of the money will go to small businesses and brexit relief. japan, dountry like we need to change the metrics and a look at other figures and data points for this economy? >> in some ways, that is the shakespearean tragedy of abe. can two guys undertaking a massive inflation ever, combat the forces that have been at work for decades, people looking for economics relief. they are at a crossroads. >> earnings from standard chartered, let's start with

hpsc. let's talk about the buyback as far as the session from today is concerned. >> that is the big thing that investors appreciated from the bank today. they have been concerned about the capital generation and return of this institution as it faces headwinds that we talked about, the low interest rates are squeezing down on the profitability, whether they are able to come up fast enough. announcing that they will be selling the brazil unit, and that will allow them to carry out the buyback they announced the f -- announced this afternoon. an aging story, so are we now starting to see some light coming with the big restructuring of the bank? 45%oth banks reporting drops in earnings on the year

and the year basis for the half-year and that is really negative. but hopefully, we are turning the cycles for these institutions as they are cutting costs and generating capital from disposing of loans. standard chartered, operationally, they are doing the best they can in a difficult world. quarterng a second profit, but with dashcam the french bank reach their targets? behind this for the big three in france? >> many investors saying that this is encouraging. the reason for loans are improving. and actually, they are keeping up and they are delivering, quarter after quarter.

♪ >> the bank of england cut rates, they expanded qe by 60 billion pounds, the majority of it at this point expects a rate cut by the end of the year and they voted 9-0 to cut the rates. >> too much, too little, or about right? or a little too low. i give them credit, they did a multifaceted policy, they did the rate cuts that they needed to do. they are a little too optimistic, assuming too much benefit from what they have done. if they think they will not end recession, but they did get it broadly right. continuesk of england to stand ready to take whatever action is needed to achieve its objectives for monetary stability, as the u.k. adjusts

to a new reality and moves forward to seize new opportunities outside the european union. >> why was there and a society -- there a necessity for the boe to do this, because obviously they needed a sledgehammer? >> the duration of the slowdown coming following brexit, the case is that this could be a mild recession type environment, so it makes sense to act as quickly as possible. and to overdeliver. can now cross over to julie hyman in washington dc. >> 255,000, the addition of payrolls in july. 217,000 of those in the private sector. and 4.9% for the unemployment rate, higher than estimated.

earnings alsoly increasing. >> it is a solid report, the kind of report i hoped for when i was working at the white house. reasons,n the economic a concern, but given that the work week went up, that is less of a concern. and the only weakness was in mining, which is not surprising. >> lastly, some disappointing gdp numbers. that is a trend in the u.s. how can you account for the jobs growth on the one hand, and this in the other? us thatdp number tells the household is fine. now we have strong job creation, higher wages, more hours worked, so the consumption side of the economy is holding up. what is not holding up is

business investment, and we have had an increase in inventory. so this is about the corporate sector, this is about risk being taken and the household risk up here. >> still to come, is that a president -- the fed president says, do not rule out a september rate hike. and we will sort through more of the week's earnings reports. and oil going into bear territory. advice and analysis ahead. this is bloomberg. ♪

♪ angie: this is "bloomberg best." our global tour of the week's top stories continues in asia, where conglomerate growing

larger is preparing to share assets. they unveiled their plan. ♪ >> one of the country's most takeover hungry groups is scaling back. they are now focused on getting leaner. >> in a year that is turning out to be a banner year for chinese institutions, they are going against the tide. many deals announced by groups since 2010 and we are really looking at them unwind on that. disposalsaying that are up for grabs. we do not know what or when, but they said that we will be getting more details before 2017. the ceo said this is all about ratings, going from being a buyer of assets to becoming a

seller. >> on the consolidated balance sheets, we have about 40 billion in assets that can be sold, which will be available. if market conditions are good, we can sell. >> there are rumors that perhaps you would dispose of a steelmaker? >> there are many ways to dispose of assets. reducing stakes is also sells -- sales. >> the australian central-bank bringing rates to an all-time low. they are combating unemployment. give me a sense of where they left to do? is not really going anywhere. >> it has fallen below the target and if they are focusing on the underlying measure, it is 1.5% year on year. they have cut interest rates

again today and they cut in may. and to try to stimulate the inflation, but as you say, we have underemployment so we need more growth for it to happen. we do not think that they will cut again this year. they think this will be enough for the moment. the rhetoric will now shift to watching for the impact of the basis points on the economy and how much effect it will have on inflation. and looking further out, the question is, will they have to cut more? >> oil trading, $40 a barrel this morning and it fell into a bear market this morning. when you look at the price of oil, the market was meant to stabilize, supply and demand meant to be more stable by the end of the year. now we are back in oversupply. >> what is going on is quite seasonal. when you look at last year, between the july contract in

late june and the september lostact in late august, we on wti. to $49 ae close barrel. the high point on the demand season, now we are settling around $38. >> you are confident this is a seasonal pattern. in fact, in our view we are looking at oil to be back in the $50 plus range by the end of the year. so we view this as a buying opportunity. tumbling at the moment, the largest exchange happening at the moment, they say that they are being hacked. what else do we know at this point? >> a lot of jitters this money. they said that there was a security breach, we see this

come down a lot. 13% of bitcoin-- down over the last few days. some have had their bitcoin stolen. said that the u.s. dollar deposits are not impacted , so really it is only if you kept it at the exchange that you were impacted. china dominates bitcoin, overnighted percent is traded in the chinese want -- yuan. it is a big player in the bitcoin community. this is a pretty big hack. italian trading today, samsung wants to buy the auto parts division of the company. it is valued at $3 billion, so fiat want to--

sell the business? quite clear, they have an obsession on making the targets, one of the most important targets being from going to $5 billion in debt to $4 billion cash. it will help a lot, if you sell it for $3 billion, then you get really close to the target. why samsung is interested? it is all about tech companies and car companies coming together. we heard that they are critically interested in a unit and theighting business connectivity business. it looks like they both have an interest in this field. house approving the creation of a national sales tax, a decade after it was first proposed trade many say this is

it -- it trades. many say this is a game changer. parliamentseen the approved unanimously yesterday. this is conference of reform. from a political standpoint, this is a big win for the prime minister and the government. >> how is the business community reacting so far? delighted.e been this is something we have been waiting for for a very long time. there are two outstanding issues, the date and the way. ♪

♪ angie: you are watching "bloomberg best." this week has been chock-full of

earnings reports with companies morninging wins and mrs.. >> pfizer with help from the growing line of arthritis drugs, while revenue was up, there was a downturn in sales. take us through the complicated story print over all, it sounded -- complicated story. overall, it sounded good. for older people, it is a big blockbuster for pfizer. it had really strong sales in the last few quarters and all of a sudden there is a major downturn in the second quarter. they attribute this to the pent-up demand in the u.s. be that as it may, when you are talking about several hundred million dollars of sales, this is significant. it is a big mess.

-- miss. it is catching some people off guard them a this morning. $838 million,-- just below the estimates. the adjusted operating profit, million,s in at $344 so that is ahead of the operating profit for the one-time items. so we have the revenue on the block, that is a beat. so the questec, the impact of terror -- so the question, the impact of terror and what is happening in turkey, can you hold on to this outlook in the face of a tough trading averment. is a a tough -- is it a tough trading environment, tell us. >> we have had some tragic incidents, something

unfortunately we have had to deal with in our industry. but people continued to travel. markets, thest u.s. and china, we had our biggest growth. we have gone up with dividends by 9%. so the balance across brands and geographies demonstrate our strengths. with their- etna latest results, beating estimates with profit and revenue. says they -- humana will be selling some profits. they are a great to sell assets. do you think it is enough to appease the doj? >> there are 364 markets that they say are noncompetitive. we have added almost 100 more markets to make sure that

whatever the competitor results with the company, working in the medical space, that they are a sustainable competitor over the long run and become number six in the region as a result of this. >> aig is gaining extended trade after announcing a buyback and is second quarter job -- peter hancock has been selling assets and is slashing jobs after three straight quarter losses. joined this year, after are doing the insurer was too big to succeed. >> where was it that he's exceeded the most -- that you succeeded the most? >> we are focusing on core markets. as we do that, we have been able to reduce costs, which led to an improvement.

growthas been tremendous in our private client business, double-digit growth. and that is in an area where the risk expertise is very valuable. with the mix of business we have today, it is better with the earnings then it was one year ago. so when i look at where we are growing and where we are cutting back, it is reshaping the earnings mix to a more sustainable mix. >> reporting its worst profits since 2004. the second-biggest mining company, looking at what they announced. it is tied to world growth. estimates,ed world cut to $.45 . their idea in february, reflecting this.

it was a boring result, unfortunately. >> when you see these figures, do you have to change strategy, do you need to be more aggressive, how do you take it forward? >> today is more about the man than the numbers. >> one is about the assets, we have a lot of options. and also about preferments. we want compelling returns in the long term. targets for the coming years. targets and direct forave lower cost targets 2017 and we are on track. warner's second-quarter earnings topping estimates. they also announced a 10% stake

in google, making a stronger competitor for netflix and amazon. what is just thinking -- jeff thinking? >> he gets paid a lot of money by the cable networks and he gets a lot of revenue from that side of the business, but he needs to recognize that people are consuming content in different ways. they are getting it more and more over the internet and now he is putting his chips on the table in putting a stake in hulu, because it continues to grow and they need to have a seat at that table. >> investors shrugging off a big quarterly miss from tesla, the battery maker posting a loss in their shares much wider than what was estimated. sales rose from a year ago, but also mess -- missed on

estimates. they say that they are still on track to deliver 50,000 cars in the second half of the fiscal year. >> if you really invest in it, it is long-term. for me, i look at the fundamentals anyway and i do not think that a miss or 2 will really shake the confidence of the people that believe in the long-term vision as elon musk laid out. what is important, there is 18 months before the model three comes out. everybody acknowledges, that is going to be the tipping point. if you believe in elon musk, that is where you are looking at the bullishness. the issue is credibility and i think that the earnings reports are in opportunity to become more transparent and build accountability in the company. that is an opportunity that they are missing. ♪

>> shares of square popping as much as 10%, but they are also reporting a loss in shares. they had an adjusted revenue of $170 million and the increased the yearly outlook. >> the numbers were pretty good across the board, a very good quarter for square. they were able to beat estimates. not only did they grow the core of their transactions, but they also had a very important data and software line come out and that number is important for the analysts and investors, because they see the high-margin business as the future driver of >> i think we had a great quarter across the board appeared whether it was our top line growth -- we are going to continue to grow at eight rapid pace -- a rapid pace.

combining that with the big profitability milestone is what goes hand-in-hand with that growth. we are showing we can growth but with profitable characteristics. corporate earnings offer a snapshot of market conditions. coming up, more perspective on the big picture of global economics and finance. robert kaplan, brian moynihan and bill gross all shared their insights on bloomberg television this week. we will visit those conversations and a deeper into the bond market. this is bloomberg. ♪

>> this is a movement. this is a movement. there'never been anything like this. >> the trump campaignm: does tho connect with wall street or can he go it alone? funny, people talk about wall street and i would say wall street doesn't exist. what exists now are financial services firms. most of the traditional firms are all now banks.

banks and other financial institutions. there's a lot of people in the private equity world that are supporting donald trump. a lot of finance people understand his view of the economy. month come up from 50 million last month to 80 million this month. 64 million of the 80 million was in smalle dollar contributions. this just goes to show what we've been saying all along. there's a lot of ground support out there. from money in politics to monetary policy, friday's u.s. jobs report gave the federal reserve rush stated to consider it in plotting out -- to consider in plotting out a rate path. market seems to be increasingly pessimistic about the likelihood of as many rate cuts as possibly the fed has been signaling.

are they being overly complacent? >> are they being overly complacent? i think time will tell. our next meeting with the fed is not until september. we will have more data releases between now and then. it is too soon to jump to definitive conclusion. we will have to see as the economy unfolds. >> given the uncertainty building up to the november election, is it right that most 20%,t watchers now, about are now factoring in any kind of rate hike in september? is it right that it is really unlikely in september given the data leading up to the november election? >> i think september is very much on the table. we will have to see how events unfold.

it is too soon to jump to conclusion on that. one of the things i've learned as a central banker, you have to be patient. we have time to make a judgment between now and the remaining. -- september meeting. >> the health of italian banks continues to be a topic of debate. week, the head of italy's largest bank spoke candidly about the challenges facing the sector and some possible solutions. tom: i think most people in american finance are baffled by the lack of synergy and mergers of italian another national banks in europe. -- and other national banks in europe. when will we see a modern mergers discussion among european banks? >> to work on synergies between

european banks, you have to talk about the possibility to reduce costs between different banks in different countries. it is difficult to have synergies between banks of different countries. otherwise, we have to sell the story of increasing revenues. it is difficult to say you can raise revenues between spanish and german banks. it can happen only in line with weakness. tom: are there too many banks in europe? are there too many banks in italy? >> absolutely. in my view, there are too many banks. within the countries, you can exploit synergies. if you want to make a merger, you have to create value for

shareholders. really coste synergies. we will see a lot of consolidation within countries in italy, also in spain and other countries. let's stay on the subject of banking. minutes after the bank of england announced a rate cut on thursday, bank of america's ceo spoke exclusively on bloomberg about the impact of financial uncertainty in britain and europe after brexit. >> let's start with the bank of england. bank: how does this affect of america and its business in europe? brian: in europe, we have a business dealing with large companies and investors -- if you go to the heart of it, you

have an economy which is bigger than california but not a lot bigger in the context of the world. it needs help and governor committee isnetary trying to help it continue to grow with a surprise from brexit causing concern about whether it can. david: let's talk about brexit. , for both england and europe, what do you see right now at the effects of brexit? ryan: it was a surprise it went that way. people are still adjusting to that. ,rom personal disappointment to now we have to figure out what's going to happen. mornings went through the roof. -- volumes went through the roof. no one knows what the rules will be. we are trying to keep everybody called down. d down.e

this is a bit unprecedented. until that becomes clear come all you can do now is a let's take three or four scenarios and try to plan against them. ♪

>> you are watching>> "bloomberg have." bond yields touched all-time lows. what is causing yields to bottom out and how should investors react? bill gross says he is staying away from sovereign debt. position in ans interview with scarlet fu. you don't believe in

pricing, you've given up on markets. with years of central-bank distortion behind us, how do you go about determining the value of real assets versus financial assets? bill: it is difficult and your point is correct. the markets have been financial iced and they have been pushed higher in terms of pricing and lower in terms of yields. pay to fightesn't the fed or to fight central banks. when we get to the point of negative interest rates or low levels that we have now, you should at least begin to think the other way. so, what do you buy? you don't buy what the central banks are buying, that's bonds. you start to buy things they haven't bought. they haven't bought a lot of gold. they bought some. they haven't bought real estate. you want to begin to look at the other side of the stream, so to

speak, in order to find something that is relatively cheap as opposed to exorbitantly expensive. ultimately, i would say that because yields are at negative in many countries and even in the u.s., relatively low, a bond investor should because just because, in japan, for example, in the past week, and investor has lost eight or nine years of in the space of a 25 basis point increase. do you blame janet yellen and the other central bankers of the world for this miss pricing of assets? bill: i do. they follow the old models. the taylor rule and phillips curve models that are 20, 30, 40 years ancient.

they fail to realize that low interest rates have produced and in balance in the real economy -- an inbalance in the real economy. low as they are now, these business models will perimetered at the and ultimately affect the real economy in terms of investment going forward. for the pastthat several years but i don't think the fed has recognized it. >> how sustainable is this? profits are declining, you have growth slowing, stimulus efforts that are not working and are running out of steam -- how long can this last? >> at the same time, it is hard to see what could reverse it. the only thing people point to is inflation or at some country decides not to pay back their or creatergive it

some engineering that creates a technical problem. countries, the global sovereign yields index -- is that right? should the average yield be 0.5 percentage points. you have spain borrowing to have a government, which could borrow at 1%. >> now, to the u.s. bond market where volatility appears to be vanishing. check out this chart. a measure of expected price showings in treasuries have sinced to the lowest 2014. >> when you look at the rate

complex on a global basis, certainly the u.s. has higher rates than anyone else out there. aat's what is making it floor. it's about what is the relative value out there in the financials services complex? where does the u.s. fit? at a 150 yield come i don't think it's incredibly attractive. the fed does want to move. the question is, not if, but when. they have the bias to raise rates. worried are you about the distortions that are taking place as a result of ultra-loose monetary policy worldwide? >> the crowding out effect by and its counterparties to central banks is significant. they are buying most of the assets that are out there, which is really distorting yields to record lows, which is creating

another issue as well. credit spreads are incredibly tight because of that. not only do you have low interest rates, but you have low credit spreads. as this unwinds, that could be a significant problem for central banks in the world. betty: japanese bonds that why have investors turned on the market? >> let's start with a pivot. i love this quote out of tokyo today. insane because the market is worried about this boj easing. how far will it go? -.3 -- aown to almost

lot of bonds lower around the world. spectrumss the yield come across the yield curve in japan. curve, look how that moved right up. -- why hashappened it happened? has the boj reached its limits? there are fewer bonds to buy. not week, the boj did increase its bond buying. they left their negative key rate unchanged. jon: guilt yields across the board -- what does this mean for your business? record low yields across the curve and a flat curve as well? >> the issue in the context of

banking -- we take the positives and make loans, 900 billion of those. floor, itave a becomes less valuable. it would be easier -- that doesn't mean you aren't hitting the returns. it would be easier if rates were higher. we pay nothing to the customer other than provide great services to them and we pay nothing if rates are higher. if rates go up 100 basis points come our company make $7.5 billion more in the next 12 months. we don't sit around and wait for that, though. ♪

> i have a new function for bloomberg terminal users that just went live this week. , i've type in any equity got tesla typed up here, you can after that equity for the key insights, or a quick view of the most important little tidbits of the company. about 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television and maybe they will become your favorites, too. go will take you to our -- will take you to our quick takes.

this weeks will take you to our quick take on the zika virus. >> this is the main mosquito that carries zika. helping easy-going vaccine could take years for it right now, officials can only control mosquitoes. firstka virus was notified and uganda in 1947 and was thought to only cause moderate flulike symptoms. brazil had seen a 24 increase in babies -- 20 fold increase in babies born with abnormally small heads. the spread of zika from brazil to other countries has been rapid. in july, officials identified the first cases of local mosquito borne zika transmission in the u.s.

moves to new areas when the mosquitoes hitch a ride on travelers or cargo or, more often, when patients affected in one place go to a new territory and are bit by mosquitoes there. it can also be transmitted by sexual contact. for those who do get sick, the illness is not usually severe and last about a week. some zika affected countries are an increase in a nerve disorder that can cause paralysis. right now, the main way to stop zika is to use traditional methods to stop the skied us. -- stop mosquitoes. use genetically modified bugs. opponents fear unknown

consequences. y is in itsogical infancy. ultimately, authorities will need better weapons against the bugs. that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com. along with all the other business news and analysis, 24 hours a day. they give for watching. -- thank you for watching. this is bloomberg. ♪

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