>> coming up, the stories that shaped the week business around the world. a big deal makes headlines well another megamerger makes progress. we will bring you up to speed and fed watchers everywhere have their eyes trained on jackson hole. >> it's time to move. >> there's a cost to having read this low for this long. >> i don't take the committee is risking a lot by being cautious. >> another busy week of earnings reports. >> there so much opportunity in

the pipeline. >> every region was up this quarter. >> are going to make sure our balance sheet is bulletproof. minds sharepra's cutting-edge insights on the markets. we are in a low return world. the are the three most important things to remember. reveals hisock latest shortselling target. >> there's a chance it's about to lose half of its revenue. >> it's all straight ahead on bloomberg best. hello and welcome. this is bloomberg best, your review of the most important business news and interviews from bloomberg television around the world.

throughout the week, investor attention focused firmly on friday awaiting federal reserve chair janet yellen's's each fascist speech. on monday, a stir. >> a rate hike is still on the table for 2016. fisher said we are close to our targets looking ahead. i expect gdp to have as investment recovery diminishes. what did you hear one he spoke yesterday? >> i describe it as more a slightly ill tempered down. >> do you think a rate hike is on the table? >> without question the should be considering a rate hike. the economic conditions in the u.s. without question.

the real question is how can the global economy cope with this. this is something the fed historically has not looked. a rate hike it make any difference to the binge we have seen in the credit market? >> we see today as we look across markets that central banks are becoming key to these asset markets. we think a surprise hike would have a negative impact. is the time a charm? stanford bernstein saying the number the buyer has to it is $135 a share. they are talking to each other about a potential price. the deal getting approved by u.s. regulators yesterday putting the heat on a potential buyer deal. >> the guy who really got this moving is huge grant.

he made a run at syngenta and that didn't work out but he showed he knew there needed to be more consolidation. so he can push back on the strategic concept of bringing two big agriculture -- >> because he made it. >> 1.5 years ago, he was arguing news is what needed -- he was arguing this is what needed to be done. want more at to monsanto because there are a lot of regulatory issues. glencore reported a 66% drop in the first half profit. this is a bite. those are the banner headlines that standout. >> that is exactly what people will be paying attention to today. the real surprise is they are talking about reinstating the dividend.

the other big story is how much progress they have been a blue to -- able to make in cutting that. you saw the deals coming out of all struggle to sell gold assets. that speaks to how much they have been able to sell in an effort to stabilize the balance sheet. >> it's a very good performance from the marketing business. predicted.they good recovery on the mining side of things. good"t so good on oil is -- but not so good on oil and gas. a hit on hedging activities. this has drawn the headline numbers down into a loss but the underlying business doing well. i think it's quite a nice report. entering new territory as research firm as letting against

the financial strength of st. jude medical. this as the company comes in the middle of the takeover. >> i.d. believe the stock is poised to fall? >> we think there's a good chance is about to lose half of its revenue for two years or longer. this would be due to device recalls. >> you found a security flaw. >> we were made aware of it. we were approached by a group of cyber security researchers that have been doing a study on the largest manufacturers of implantable cardiac devices. what they found with saint jude devices stop them. this appears to be a company that for years has put profits before patients when it comes to cyber security and we think it's

important to make sure users are notified of the risk and to hold them publicly accountable. >> st. jude medical it may saying it takes the security of its devices seriously. they do say they will remain vigilant to the increasing those seeking of unlawful access to certain data. the ceo denying the vulnerability. how seriously should we take it? >> we spoke to the cyber security company that did the research and their findings track with the discoveries we have written about. the sub story is the sequence of events that led to his information. it was the cyber security firm in miami that was doing research on these devices and brought the information to carson. from there, formulated this

hypothesis. it's totally unprecedented in the cyber security space. >> tell us how you would make money off of passing on information to muddy waters? do you make money regardless of whether muddy waters goes through? >> are you paid a fee? >> we have pick on a fee basis and as consultants and our is connected to his investment. >> markets and economists on standby as we get set for janet yellen's speech. the formal topic is a run -- is aroundcy monetary policy. many looking for clues for the central bank to raise rates. >> janet yellen doesn't put a timetable on it but says the economic data has improve and

quote the case for an increase in the federal funds rate has strengthened. it is the most optimistic and direct janet yellen has been about interest rates in quite some time. the labor market has improved she says and inflation is still subject to the transitory effect of energy. she goes on to caution the outlook is uncertain and policy is not on a preset course. -- she calls disturbances in headwinds continue to buffer the economy. run, she addsr forecast shows the federal funds rate challenge -- settling at about 3% in the higher run, higher than most people on wall street would put it.

she goes on to say that this point, we need those tools going forward although she says the fed is not at this moment studying the idea of a higher inflation or nominal gdp. matt: we have much more from jackson hole a little later in the program and interviews with several significant figures. and we hear from howard marks on the hunt for yield and dig into some surprisingly sunny home reports. ready for a test love that can hit ludicrous speed ridiculously quickly. this is bloomberg. ♪

this is bloomberg best.

i'm matt miller. let's continue our global tour of the week's top is the story starting with a major acquisition by one of the world largest pharmaceutical companies. you've got pfizer clinching the purchase, valuing the company of about $14 billion. this gives pfizer a block west are cancer treatment already approved for sale in the u.s. >> the one who kicked it off wwas sanna p. , youu are saying that p are in a bit of the distress. you are way off on your expectation of violations and pfizer came in and blew them out the door. pfizer has mentioned it's looking to split up at some point. does this purchase make that more or less likely? >> one of the interesting things

about pfizer is they are so big that even when they go out and doing almost $14 billion deal, there are analyst saying this doesn't really move the needle for them. another crisis on the horizon for volkswagen. following an unprecedented , thete with suppliers carmaker has to halt production of its most popular models. talk to us about what is going down. >> to have shut down production -- they have shut down production of the gulf. unusual. volkswagen is known for squeezing suppliers and it seems like they have gone too far with this one supplier and the damage could be as much as 100 billion a week. >> shares of europe's largest automaker rising after it

negotiated through the night to reach a deal with a supplier. work had been halted for a most a week. what did the deal look like? >> details are sketchy so far. all we know for sure is deliveries of those parts are being restarted and they will be resumed in the coming days so production can restart. , this action won't sit well with volkswagen named they will likely seek second suppliers for these types of parts. investors in tokyo having to deal with a new whale. a $1.3 billion government pension fund has become the main shareholder of the to be she and more than 100 other companies. >> the fund is huge to say the

least. they own about 5.8% of japan's stock market and they are a top 10 shareholder in about 99% of japan's biggest companies. take a look at this chart. not of the 500 companies, you can see they are the top owner of 121 firms. what does this mean for individual companies? as the fund has billions of theyrs worth of shares, more than double their holdings. >> let's move to turkey central-bank, moving to add more stimulus to its economy. it cut the overnight lending rate for six months. matching the estimate of economists.

take us through the market reaction. the initial reaction was a bit higher. there was some relief that the central bank did not move on with the higher than expected rate cut. >> any sign of what will come next? many analysts expect anything to keep cutting rates as long as the global environment permits. the central bank look to be taking advantage of that environment to keep cutting rates. >> elon musk than thing up the tellingdel s and x, investors to expect new versions with powerful batteries that can cover up to 315 miles on a

single charge. to sportsappealing car enthusiast, saying the new models will accelerate to 60 in 2.5 seconds. >> in terms of technological advancement, what he spoke about today is marginal. there is some significant marketing news. he can say he has the first car that can go over 300 miles on a single charge and brad that the model as will be the fastest car in the world that you can buy at retail. >> south africa's finance minister says he won't obey a police order to present himself for questioning. robert gordon was summoned in connection with allegations of the authorization of a special investigation unit. he has tonight any wrongdoing. more ground after the announcements. what should we take from this is squaring off?

>> the finance minister made it clear he wants to carry on with his job to focus on the mandate of steering the economy through difficult times. was expected to make an address in the evening and he did. what we do know is to other officials implicated have presented themselves to the police as requested this morning but as to where the financial minister will be called in again, we are watching closely to see how that develops today. saysvestment veteran helicopter money will be japan's next big monetary experiment. >> they are going to be much more circumspect and they will

probably wait until the yen action.90 before taking >> the last time the yen reached 90 was in 2012. >> i don't think this is a decision the doj can take lightly and i don't think that will happen in september. what will happen in september is say it isll want to out of ammunition. i will expect them to indeed talk up some easing or possibly deliver something. but i think the boj would need to be in panic mode and for that, we probably need the dollar yen to be well below 100. >> my linens stock up this morning -- my land stock up this morning.

the volume got turned up, the company backed down. how under thing is this? -- howell andlook there are seeing is this? >> it doesn't look good. there when i many drugmakers coming under fire for raising their drug prices so high that a affordpeople cannot them. they reacted fairly quickly and offered patients some assistance in trying to afford the high prices for this epipen. investors were afraid my when -- mylan might take a hit and prices would have to come down so they won't beginning as much revenue but ultimately, no one i spoke to thought they would be irreparably harmed from this. bloomberg news learned uber

said to have lost $1.2 billion in the first half of the year after turning a profit in the u.s. in the first quarter. >> we are in uncharted territory. even if you look back to the biggest excesses of the.com bubble, amazon lost a little over $1 billion a so it looks like you will surpass that. uber has been spending hugely on driver subsidies in the u.s. but mostly overseas. good news is they just made a deal with their largest competitor in china that will .llow them to exit the market people familiar with their finances are telling us in the second half of the year we will not see those losses. >> over command and extraordinarily high valuation in the private market. how does the market justify these continued high valuations? >> market share. cooper has 85% of the u.s. market and people think this is

a big industry. it is growing really fast. huge growth but also huge expenses.

matt: you are watching bloomberg best. let's turn to the latest installment of our small to big terry. not every company we profile follows a straight line to success. there can be serious setbacks like a global financial crisis. factory 360 has had quite a ride opening 2007. the ceo tells the tale. factory 360 is a marketing . -- agency.

i have been working for a number of years and corporate america. entrepreneurial itch to go out on my own. in fall 2007, i got a bonus and thought it's now or never. the first year was great. people taking meetings with us, small projects. then september of 2008 happened in the whole collapse. it was like building a boat in the eye of a hurricane. we were forced to be creative with less and make it into more. by 2010, we could see something was shifting and things were starting to loosen up. we really have found a niche within silicon valley and the tech center. we worked with paypal, ebay. silicon valley lived online,

operated online and people came to them. they are no longer growing online, they have to go off-line to grow online. we have had to really compete with so many other industries for great talent. for us to keep running our business, we are constantly recruiting. we have ads on so many different verticals all the time. to meet who is out there and we want them to meet us. it has worked well in that is part of our secret sauce. we went from two employees to 45 employees. we opened an office in san francisco in 2014 and we have billings $200,000 in to over $10 million. we would like to double our revenue in the next five years and we would look to open more

offices in broaden our international presence. this industry continues to grow and we see a lot of upside. matt: still to come, powered marks on the challenges of investing in a low return world and conversations from jackson hole with the latest on what's said leaders are thinking and highlights from the weeks's earning reports including a pleasant surprise from best buy. this is bloomberg. ♪

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>> we started the year off quite strongly and there was a slight slowing down towards the brexit mode -- vote. trading has been robust and we see numbers up 20%. >> is not in the path of the

country and market for away from this business? >> it certainly not reflective of this. nonetheless, we haven't seen any real change in buyer behavior. the lenders are keen to lend. matt: shares of the biggest u.s. luxury homebuilder. >> every region for us was up this quarter. we had 18% growth in the third quarter. we had 23% growth in the deposits for the first three weeks and it's nationwide. and the overall environment

is pretty supportive. compare and contrast these strains with the booms we have seen in the past. >> we are in a strong, solid, improving real estate market. not easy.oney is builders are not building too much inventory. we don't have wires coming in who are investors. so solid steady, market but this doesn't compare to the market of the mid to thousands that was completely overheated and had bad fundamentals. the nation's largest presidential developer saw a decline in income and an ongoing ownership battle. >> first half, up 10% on the rising property rebound in china. up 49%. that is kind of offsetting the negative impact of the

shareholder struggle. >> the management was not pleased with this. even the chairman at one point said the stake is unwelcome. you have ever granted increasing its stake and they are arrival. we don't know what their intentions are. shares in blue scope steel higher after the minor reported forecast for 2017. reported underlying net profit at 220 two million dollars, below estimates. >> is the steel market out of

the woods or are people thinking we will see another slump in china? >> i think there is still too much supply in the world. that is what we will make sure our balance sheet is bulletproof . we have taken $327 million. besthas moved us into the cost competitive steelmakers. we have a future there that is somewhat insulated from the global steel industry but i think it will be facing challenges going forward. and big hit from weak oil prices. profit in malaysia state-owned in thecompany fell 96% second quarter. is there still a light at the end of the tunnel? >> no light yet. they are looking at a gloomy outlook given that they will be

oversupply and a slow demand for oil. >> best buy up 19% today. the largest he was electronics retailer reported earnings that boosted confidence after years of sluggish growth. profits will over what was expected. >> maybe expectations. they had projections for this quarter. in raised small gain a profit outlook for the year. best buy basically said the overall electronics market is somewhat weakened a lot of the categories are down. >> are we seeing the beginnings of a turnaround here?

>> for a long time, the story has been they have a good quarter or a bad quarter and microsoft is really paying off in that they offer a better assortment. we are starting to see what the ceo said is best buy's emerging growth story come to fruition here. >> shares are higher after the full-yearrecord profit in a first dividend in five years. the turnaround continues. now, he has years been pushing the transformation strategy. we have a record profit today up 57%. 1.5 3 billion.it , a wage freeze, 5000 jobs were cut, it all added $1.6 billion.s of

there were questions circulating about whether the ceo would keep his job. we are singing a different tune today. >> and actually very excited about the future because there is so much opportunity in the pipeline with the delivery of the 77's that continue to expansion of jets start in asia. with the use of big data, the board and the shareholders want me to continue in the job continuing this role. >> shares of hb inc. are lower in after-hours trading down 5.5%. this is the side of the company formerly known as hewlett-packard. quarter beat estimates.

was a miss. how bad was it? >> i feel the quality of the numbers were mixed. there was a lot of cost-cutting driven boost. there was a lot of inventory reshuffle in the channel. i thought execution is getting better and they are focusing on the right things but q3 was good and q4 guidance was weak. there's a lot of messiness near-term as that shuffles out.

>> you are watching bloomberg best. i'm matt miller. three current concerns the keep investors up at night, shrinking bond yields and the future of

finance in europe after the brexit. we had fascinating conversations on the topics. let's begin with poetry capitals -- poetry capitals. >> it's very challenging today. we are in a low return world. those are the three most important words to remember. and how do you go about doing their business in a low return world? you can settle for a low return with safety or pursue a high return. how do you get a high return in a low return world and you have to take significant risk? >> are you comfortable taking that risk? >> i'm a professional. i have been doing this for 38 years and what we have done in the last five years if we have up -- is we have operated under a mantra is move forward with

caution. that means more caution than usual. up our caution, or selectivity, things in short supply we have increased. is willing to sacrifice potential return in order to exercise this caution? >> we have a safer than average portfolio, which means if everything goes normally, we will make a lower return than the average but that is the price you pay for having a safer than average portfolio, which we think is important at this time. one way you can prepare for the future today is by increasing the representation of caution in your portfolio. the creditook at market now, is there anything that is attractive on an absolute or relative basis?

>> high yield is attractive on a relative basis. i'm confident you will outperform high grades. that is attractive in relative terms. there is nothing which is absolutely cheap. there are no bargains. there is nothing being given away for less than its intrinsic value. you have unique insight because you are a banker but also an economist. are you uneasy negative rates? >> i guess you will search quite a long way to find a banker enthusiastic about negative interest rates. either ande the idea i'm afraid going back to our conversation, i personally am in favor of trying to lift over inflation weel of target, because my concern is negative interest rate set of

all kinds of perverse incentives in society. people hold excess cash and they also mean the central bank is not really in control. once you reach the lower band, you don't know how the economy will respond and we are pushing on a piece of string through the banking system. what i think we need to learn from this is we probably got used to trying to target an inflation rate that is so low that for a large time of the cycle, you found yourself out of control and that is what i don't like. any possibility that the u.k. retains access to the single markets while curbing immigration? >> i don't think so. we have made it very clear. the most important coins, free movement of goods and workers and freedom to provide services and free movement.

you can have but only if you are a member. has voted the u.k. for brexit, there will be definite changes. example, a big change, this will be something that is nonnegotiable, the banking passport. a bank willing to operate in europe has to stay in the eu and cannot stay in england. that means some of the banks have to move the headquarters from london to maybe frankfurt for dublin. do you think these banks will move to frankfurt warm berlin instead of dublin? dublin has a massive advantage of language. >> we are happy to receive them in frankfurt or bolin of course. u.k. s very bad for we don't need to discuss it

because it's unfortunate that in the bankaving market and london will suffer. head to this's week's gathering of economic and monetary policy leaders in jackson hole. we heard by janet yellen had to say in her speech at the symposium. bloomberg sat down with other federal reserve officials to discuss economic conditions and policy prospects. >> i look at where we are with the job market when i look at inflation and are forecast for that, i think it's time to move. where it will look pretty september meeting we will have to wait and see. >> when you are looking at inflation in the job market, are you a believer in the for lives curve? -- for live curve? -- phillips curve? >> i think we are beginning to see that.

it's beginning to show some movement so i think we should expect that. i don't think we will need to have high interest rates. i don't think we need to cool off the economy by any means but i do think it would be appropriate to begin continuing normalization. >> what is in normal interest rate in this post crisis environment? there are a lot of questions about what is normal today. todayk there is scope that the participants, that terminal rate has been cut in -- coming down. regardless of where you would pegged that today, there is scope to begin to remove accommodation so we are at negative rates today and whether we go back to something that looked normal precrisis or something less, i think we will judge as we move along. >> in june, you flatlined your

forecast. to in interesting numbers since then. two pretty good jobs numbers. gdp tracking the atlanta fed does is looking for a growth of 3.5% on gdp in the third quarter. if you would make your productions right now, would you changed us is it possible the regime change you have been waiting for will unfold? >> the regime we spoke about is the low productivity growth regime and labor productivity growth has only been about one half of 1% over the last several years. that changing near term and another part of the regime is very low. see that changing anytime soon. those are the fundamentals.

brings us to the 63 basis point projection. >> we are seeing more strength in the economy. this trendble if continues even if the regime hasn't changed that the growth numbers will pick up that you will be saying we better debated seriously in september? >> i haven't seen anything and the data that suggests this regime, those factors are really changing in a fundamental way. >> do you think wall street is putting too much pressure on the open market? >> as someone who spent 30 years in the markets, i think take a step pays to back. what i have been saying and others have been saying is probably the anticipated path of rates going forward will be much flatter. we have got a number of persistent headwinds. even no i do think -- even no i

do think in the near term the case for removing accommodation has been strengthened, that's in the context of a slower path of rate increases and for business people and in the markets, the path of rate is just as important or more important than a exactly the exact timing of when the next move is. >> do you think there are distortions in the markets these days? >> i think there is a cost to having rates this low for this one. there are reasons to have rates this low but the cost is it hurts savers. if you have any money in savings, you cannot earn on it. it causes people to take more risk and people that would have one type of asset allocation are pushed to take more risk. it can create and balances. uncertainty, is

there any rush to move? you said recently you could see one or two rate hikes. >> i can see two rate hikes as possible when i look at the calendar. thisve three more meetings year. what i said recently is i can imagine circumstances if we continue to see the economy theormed as it has been, least one this year. none of that is lost in in my thinking -- locked in in my thinking. we have to see how the economy seems to be performing. i don't think the committee is risking a lot by being cautious and gradual. i don't think we are behind the curve in terms of inflation or risking a big financial instability event. the public wars

should understand our cautious and gradual. ♪

>> geeking also going to the bloomberg terminal and look at the function. this is the bloomberg billionaires and text. -- indexed. >> we have created a portfolio on the bloomberg to look at companies that derive revenue from china. that is the white line and they have out performed versus the bloomberg world index. >> there are about 30,000 functions on the bloomberg and we always enjoy show when you are favorites. maybe they will become your favorites as well.

wills another function you find helpful. it will take you to quick takes where you can get important context and fast insight into timely topics. china has been on an unprecedented shopping spree. it took chinese companies for months to break the record for overseas deals set last year. chinese companies now owns such and the the soccer team waldorf-astoria hotel. that deal cleared its biggest hurdle when the committee on foreign investment in the was approved it. globally, u.k. lawmakers have expressed concern over chinese investments. industrial you, the government blocked a seal of the nation's largest auto renter to a chinese led group.

the background. chinese emperors for centuries consider the country self-sufficient and foreign trade opened up after the unlocking of china's borders in 1979. the government has encouraged to recent overseas push due slower economic growth and businesses have an incentive to spend cash sooner rather than later. critics say china should loosen restrictions and give foreign companies the same freedom chinese firms enjoy. easy financing from government-backed banks. some argue chinese investment should be embraced. chinese takeovers could save many american friends from bankruptcy. the was closed more than twice as many deals in 2015. matt: that was just one of the many quick takes you can find on the bloomberg and you can find along withomberg.com

all the latest business news and analysis 24 hours a day. that will be all for bloomberg best this day. think you for watching. i am matt miller. this is a bloomberg. ♪

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