quirks coming up, the stories that shaped the week in business around the world. big banks headline a week for corporate earnings, but do their big beats adept where turnaround? >> i think we will have to get .nother quarter of data >> from saudi bonds to russian oil to italian banks. to the latest data from china. we will move through all the moving the markets. >> that gives policymakers a bit of wiggle room. plus, conversations with barclays' jeff daly, bank of

america's michael moynahan, and michael dell. >> consumers are spending and we feel good about the u.s. ofwe've see plenty opportunity organically to consolidate. >> it's all straight ahead on "bloomberg best." hello and welcome. "bloomberg best," your mosty review of the important business news and analysis from around the world. several investment banks released earnings this week and with the sector coming off a string of lackluster quarters, investors watched anxiously as bank of america reported on monday. bank of america in the spotlight

reporting earnings that beat estimates. revenue from their fixed income trading business was also better onn expected, up by 39% year year. >> you saw them post better-than-expected bond-treating revenue, similar citi,t you saw at jpm and but given that they are not as big in the macro products which were such a hit in the corner, this was may be a surprise to the upside given the results. >> is it turned around for banks? we are seeing a pattern. they were out of the business and they seem to be surging back. >> i think we will need to get .nother quarter of data it has been good for one or two months. certainly, this is more than that. this is the best it has been in a while, but i think investors will want to see a couple quarters of sustainability on

this front. alix: goldman sachs reporting a 37% rise in profit from bond trading. >> the bank i-49 percent their fixedm trading unit. put into context how important fixed income is to goldman. >> it has been known for a long time is a bond trading shop. they have a lot of money they take from equities as well. it is something where they really need that kind of revenue, and you really cannot discount anything where they have a bad quarter for bond trading and a bad quarter overall. fixed income trading of 49%, which is huge for them. and's,than-expected better than competitors.

>> what you saw a glimpse of this quarter was a little more client activity, people positioning around their views on rates, credit, and you had better quarter on mortgage, better quarter on credit, better quarter on rates. that could go a long way for goldman. china's economy remains stable in the third quarter, paving the way for policies which could rain and on excess credit. -- which could reign in excess credit. policymakers gives a bit of wiggle room, space to tackle those debt problems and some of theeign in credit that has been pumped into the system to shore up growth.

>> china's policymakers have a little bit of time in which they can start making some of the changes which are needed to prop up stability in the financial sector and to rebalance the economy away from the state and enterprises and towards a larger role for the private sector. the question headed into the fourth quarter is how much progress they will be able to painfulthose needed reforms. >> morgan stanley reporting third-quarter earnings that beat estimates as fixed income trading revenue almost tripled. stanley as a look across the board, great things all around. fixed trading, equities trading, everything to do with revenue. all the things looking really good. investment banking, too, which is a really important business as well as wealth management which is a good beat overall, but if you delve into numbers a little bit further, i was looking earlier in the bank is

not at the target it wants to be in return on equity. 9% to 11% as the target, and they came in at 8.7%. a little bit better than last quarter but still something they need to do better on. >> as we await this rate decision, the immediate estimate is for rates to remain unchanged and they come through right now unchanged. the deposit rate stays at -40. no big surprise. the summary is as follows -- no change on interest rates. no change to qa. scheduled to go to march 2017 or in the word of president druggie, beyond -- in the words of president draghi. they did not discuss the qe horizon at all. they did not discuss tapering of quantitative easing and the market wondering what they actually did discuss.

>> i think they discuss where we are, progress, a couple of interesting points -- growth, you still see downside risk. i think that's what they discussed. and inflation, as a reminder to put the discussion into context. what did they say? inflation picking up because of from energy prices. there's no convincing evidence that underlying inflation is on an upswing. that is the bottom line. go back to the mission. my main take away is nothing at this stage will wait for the forecast, for the projections. december is when we are going to have to discuss. >> the eu summit is wrapping in brussels, divisions clearly taking shape among eu leaders. christian freeman said it looked

like the trade agreement with the eu has collapsed, calling it impossible. let's start with canada. what is going on? >> this is a small vision of belgium. 3.5 million people, smaller event new jersey, and that is blocking the canadian trade deal with the eu a few minutes ago, we learned the canadian trade minister has decided to walk out, calling the trade deal impossible, saying that it is clear that the eu at the moment is not capable of negotiating agreement with a country that actually has european values such as canada. >> what about brexit and theresa may? did she sound optimistic that a deal could get done? >> obviously, the sale of the canadian trade deal at the moment is a bit of a warning for theresa may because that puts a

what kind of on trade deal she will be able to negotiate. >> am optimistic that we can achieve a trade deal. i think a deal that is right for the u.k. could also be right for canada. show,later in the earnings reports for a number of key tech companies in the spotlight. we also sat down this week with two of the world's most powerful ceo's. bank of america's brian moynihan tech titan michael dell. apple is putting the brakes on its project to develop a self driving car. this is bloomberg. ♪

best."his is "bloomberg i'm alix steel. have beenbanks calling for consolidation and on monday, a long-awaited merger finally went through. >> shareholders and italian have backed the merger. the deal marks the nation's andest in almost a decade

lands a big win for the prime minister, matteo renzi. >> it was the first merger in almost a decade. if the deal had not gone through, it would not have been a vote of confidence in italy's banking industry, which is already suffering under the weight of more than 300 billion euros of bad loans. i think it was the bare minimum needed to restore some confidence in this industry right now. how frail are italy's banks? and if we do not have resolution for the other banks, do you think the share price will suffer as a result of investors also discounting you guys? approval think our last saturday was very important, not only for our banks, but for our shareholders,

to show a signal to foreign investors that it is possible to have consolidation and growth in italy, also without having resolution, soldiers opened the transaction will go ahead with a ce, and if thisen can be sold in the next few months, i'm sure investors will come back to italy and try to invest in a sector which now has really a tangible book value which is very, very low. >> russia's biggest listed .efinery spinning into india they are buying sro oil for $13 billion. >> $13 billion is the contraction that russia's largest listed oil producer along with a consortium of in.stors is investing

it is a big one for them. they are deleveraging their books. india is, of course, emerging as an important oil producer and consumer in this region. it is expected to surpass japan as the third largest oil producer in the region. alix: now to a bloomberg exclusive. apple is dramatically scaling back its ambitions to take on detroit. >> the apple ceo gave the team of engineers permission to build a car, going straight after detroit and tesla and other carmakers. after some struggles internally, there has been a change of direction. apple has put on hold plans to build a car and is focusing on an underlying self driving system that it could potentially market to other producers.

>> where do you think they would put this technology? could they work with ward, for example? >> it is possible. fallnd of next year around 2017, apple is going to decide what to do, evaluate the progress of the platform, and i think over the next few years, we will see which carmakers apple is choosing to partner with, if any. in for inflation came the month of september delivering an upside surprise, surging to the highest level in almost teetered years and fueled by a plunging pound. does it change the calculus for the bank of england? >> i don't think it should. you have seen two chunks here. a based effect from lower oil costs, but you have also seen a closingn clothing -- costs. that is a temporary timing

effect. we have had some weird weather, so there's not an enormous amount of news for the bank of england. inflation set to rise and the with -- for months to come. >> saudi arabia is going on a sale's spree. the kingdom planning to raise 17.5 billion dollars as it tries to shore up its battered finances. this is according to people with knowledge of the offering. saudi arabia receiving bids for as much as $67 billion, beating argentina plus $16.5 billion sale in april. >> i think important to know that during the roadshow phase of this sale, saudi arabia went to the u.s. and london. that is how confident the kingdom was when securing a sizable backstop for this issue

in the asian market. >> here is what a saudi arabia, and abu dhabi had to play -- pay . abu dhabi only issue 10-year, the saudi arabia for 30 years, 235 basis points over benchmark. >> this bond issuance is very ipo because the economy itself is based on oil. this is a first step in a very aggressive step into thersifying outside of oil's, and bonds themselves are forly just sort of a feint the ipo that the saudi's will ultimately go to to increase their capitalization or recapitalization of their oil assets. >> we are getting yahoo! earnings right now popping across the bloomberg here. third-quarter adjusted eps was $.20. we were looking for $.14. it looks like the eps number, the bottom line figure beating

analyst estimates. this is all very interesting, yahoo! earnings, but do not really matter that much. is only thing that matters is if yahoo! still wants to pay for the company's web access. they recently came out with a bombshell that 500 million databases were hacked -- or a database was hacked with 500 million customers' information. wantshink verizon still to buy, but they want to know what they are buying. the question is -- is this hacking a material adverse change to the company such that it would require them to walk away from the deal or give them the action to renegotiate the terms of the deal. lawyers are hashing it out. >> does the hacking incident provide verizon with a pretext to walk away? >> the real question when the lawyers get together, is this

hacking issue and the disclosure of a material adverse change to the business such that it would affect the value of the transaction? >> elon musk is on the road to autonomy, at least he says he is. he announced last night he plans to equip all new tesla cars with the hardware needed for full self driving capacity, so he will put a lot of cameras in these cars, as i understand it. >> that's right, going from one camera per car facing out to now eight of them. he says basically every car is going to have a supercomputer on board able to make whatever it is -- 40 trillion decisions is second. he is adding all this cost, all this hardware and software and development expense into these cars that you cannot use. most of us are not allowed to let our card to the driving for us in most of america or most of the world. >> how does he pay for that? does he raise prices on the cars

he is trying to cut prices on? >> we'll see. when he says they might not need more capital this quarter, presumably he already knew that he was undertaking this and adding these expenses, so again, possibly a positive sign. >> bloomberg news is reporting that senior executives at at&t and time warner have in meeting in recent weeks discussing various strategies including a possible merger. this is according to people familiar with the matter who declined to be named. >> how far along are we in these talks? >> pretty early. no banks have been hired yet. chalk this up to senior executives figuring out the art of the possible here. a full acquisition would be a very large deal, although for at&t standards, certainly not something that would be seen as too large.

but directv not too long ago and this is in the same general ballpark, but i think they are thinking through options, and one of them is a full on acquisition. arehat type of valuations these assets getting? six times even to -- six times bit, 10, 12 -- six times ebi tda, 10, 12? >> more like six. ♪

alix: welcome back to "bloomberg best." the u.s. shaving industry has undergone plenty of disruption in the past few years. gillette still dominates in retail sales, but online sales now account for about 10% of the market. that's one reason unilever bought dollar shave club for $1 billion a few months ago. other young companies are growing fast as the landscape shifts. one of them is the subject of this week cost small to big. brandfelt like the big shaving had forgotten about the customer. aroundad this vision really changing the experience of shaving for guys everywhere. we make our own product, razors, razor blades, shave gel, and we deliver them to people at

amazing value. , theted harry's first thing we realized was we had to make amazing razor blades. without how hard could it be? we could not have been more wrong, so we spent the next six months trying to figure out everything about razors, how they are made, where they are made and what the magic is in a great blade. we launched in a partnership and right after we launched, we realized two things -- one is we had ideas to make them even better in the second was we were going to have to make even more. at that point, we put together a vision to buy the factory. we are now the only truly integrated -- the only truly vertically integrated company in shaving. reallyt has been complicated, we count our lucky

stars every day that we get to be a company that takes feedback and drives it into making better products for them. when we were learning everything , we launched a barbershop in new york. it is only two chairs, small, intimate, and we have amazing barbers. we believe we should innovate the way that our customers want. get to know somebody really well and he are sitting in your barber chair for 30 minutes and you are talking to them. in shaving, there's one large company. it is gillette. they essentially control the entire market. we do not know if we are going to be the biggest shaving company in the market someday or not. we are still a baby. we want to build a brand that is around for a long time. if that is a stand-alone public company or private company, we do not know. what we are committed to doing

is find a structure that helps us achieve our vision for the long-term. alix: still to come, companies around the world reporting earnings this week. we sort through the numbers and dig into what they mean for the market. next, some of the week's best interviews, featuring exclusive conversations with him -- with brian moynahan and michael dell. >> your time horizon is very different. >> this is bloomberg. ♪

>> let's talk about brexit. are you hopeful that banks like yourself will have access to the eu market? it needed0 recognized to re-regulate the banking industry globally, and it has done a lot of that, and it has been a heavy lift by everyone since the financial crisis, but the other important thing they said was let's not re-regulate the banks and create barriers to the free flow of capital, if it's the flow of capital from singapore to china or paris to london or vice versa.

i think the european union, the u.k., and the rest of the major financial centers will stay connected to this let's let capital flow freely and not put protectionist barriers. there will be some changes that we will have to adapt to, but the fundamental global financial market including the u.k. and the european union i think will be preserved. >> speaking of the u.k. economy, we saw inflation double last month. what do you expect the bank of england to do in the coming months and into 2017? >> our credit card and debit card picks up about 50% to 60% during the day. consumer spending has grown 4% plus during the last year, which is a pretty robust number. i think the reduction by the bank of england was the right thing.

inrclays' ceo singapore. barclays is expected to report third-quarter earnings next week, but this week, bank of america chairman and ceo brian moynihan saw his bank beat expectations on third-quarter profit, but the environment for large financial institutions remains challenging. he discussed the state of banking in an exclusive interview with our erik schatzker. quick revenue has been dropping -- >> revenue has been dropping. the only way to boost profit is by cutting costs. where are we now? have we bottomed, or is there still further to drop? >> if you think about us coming off the highs of the revenue basis and the highs and activity, we have probably bottomed.

it is really driving incremental revenue growth. you can only grow so fast. taking a paper process, replace you with digital, and that can go on for a long time. the 20 billion a year we took did not really move the cost structure. now it is very incremental. >> the economy does remain a question mark. client behavior, particularly loan demand, can be a leading indicator. what is it telling you about the outlook right now? >> the u.s. economy is driven by consumers. other countries are trying to consumers and our customer base are spending 5% more than they spent this year to date than last year. >> does that tell you the

economic growth environment we have been stuck in is going to accelerate? >> the other question is what is going on with companies and things like that. our experts fueled this great platform out here. higher.r, they were the estimate is pretty much on par to how we are growing now. we do not see disruption in that, but you do not see the s yet that will drive growth rates. it is just taking time, and that's fine. the economy is growing, consumers are spending, and we feel good about the u.s. erik schatzker also travel to austin, texas, this week for an exclusive interview with the technology's ceo, asking

plans inell if he had mind, and he framed his answer in dramatic terms. a if you think about this as play, act i was to go private in 2013, right? act two is the combination of vmware. bmc's >> we have a few ideas. we are focused on dell, emc, and vmware. we see plenty of opportunity organically to consolidate. we're going to continue to make acquisitions, and alliances and partnerships are also important. have our program where

we are investing in hundreds of are 24, 36,s that 48 months out in terms of the future. >> you have the desire, clearly, but also the financial flexibility and capacity to do these things? >> we do, yes. >> you >> we love being private. >> that's right. buying dmc is clearly a risk for a company. i'm wondering, what about now. risks do you look forward to taking that your competitors can't? as a privately controlled company, it is very different. reimagine your business.

years, decades. what your real priorities are. that as dell, we had some pretty outstanding results area i am talking about cash flow, by the way. thisthe market share at point, we grew our share. very strong cash flows. -- then it brings up a lot of time and allows you to have a much different perspective.

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vonnie: let you -- >> let's get back to earnings. netflix shares surging 20%. millionany added 3.4 thanks to stranger things and narcos. add 1000they will hours of original programming next year. at what point does it just get too expensive?

>> if i were an investor it is already too in -- expensive. company.eally good i don't think they are a go to the moon company. it is a fortunate company that has grouped itself along with the internet community that has gained value for being grouped with these companies. >> how do you respond to that? >> the question is how do they spend the money. if they just wildly throw it to the market for hours, the whole model will fall apart. we don't need more clutter in a video environment. that is the risk. >> ibm beating analyst for the third quarter. $19.3 billion revenue. the ceo highlighting that ibm is seeing double-digit growth and its strategic imperatives, in other words revenue coming from artificial intelligence, data

analytics, cloud computing, and security. tell us the good and the bad here? >> you have to get this company credit. this company has been on a long-term multiyear transformation. we are now seeing really good progress of that. would people like to have seen a little more revenue growth, absolutely. margins also took a hit. however 40% of the company's , revenue is now associated with strategic imperatives. they are making progress. you can really see that in the numbers. particularly sustained 15% growth, in a nutshell, that is progress. you know they deserve to be , commended for that. >> we are getting numbers coming through. they say down by 10%.

20 million pounds. the headcount was up 2% year on year. >> how does the world look to you right now? >> these results, we had an all-time record in germany, and all-time record in france. europe on the back of not a lot of economic growth is a combination of businesses and people getting on with their lives. and we have always said there is a lot of structural growth opportunity. on the other side of the world, asia-pacific, growth accelerated to 8%. america is looking good. u.k., the daythe after brexit -- >> johnson & johnson raise d its profit forecasts after beating estimates on strong drug sales. what drove this? >> we did have very strong sales growth of 4%, and 5.9% growth as

the products continue. that is very strong. very strong earnings growth at 12.8%. primarily driven by our pharmaceutical business. another exceptional quarter. overall, the breadth of the given positive results and confidence that we will end the year and a nice place. >> intel shares are slipping in after-hours trading. they beat on revenue, but they missed estimates. it may indicate slower pc demand and that manufacturers will again be sitting on a stockpile of chips. >> we are almost a billion dollars up on revenue. the pc segment is the largest piece of our revenue. what we're seeing is market strength particularly in business pcs and customers starting to put a little more inventory in places anticipate

sales in the fourth quarter. in the fourth quarter, we are expecting a kind of normal pc market. we think some of that inventory gets consumed so we have a little below seasonable q4 and a backdrop of a very strong second-half. unicorns dropping more than 80% in the first nine months of the year due to rising costs. >> and trying to keep up with its local rivals. >> why are these costs climbing so fast? >> as you just mentioned, they have to keep up with china mobile. they need to up grade there 4g network to keep subscribers from moving away. they have been successful in getting new subscribers which pushes up the cost for handset subsidies. every time a new subscriber gets a new handset, and so there success in getting subscribers this pushes costs up.

, >> will that pay off? >> yes, it well. one reason they are subsidizing handsets and upgrading their network is so that when users have the new smartphones, they tend to consume more data. this allows them to push up revenue per user. that eventually creates profit. right now they are in the investment states. -- stage. that will pay off. analysts have the profit ready to double next year over what the previous estimate was. so it looks like it will pay off in the future. its revenues cut slowing growth in emerging , markets, pressure in europe. revenue will rise about 3.5% on an organic basis. sales growth for the first nine months of the year came in below analyst estimates. given your new guidance are you , concerned about the health of world growth now than you were six months ago? >> worried about that? it is a low growth deflationary environment low material prices

that stay longer low. that is what is reflected in our figures. what is behind this is that we are growing in volume. that is what we have privileged and this low pricing environment. since we are at the higher end of the industry, that is what matters. the global environment is slow growth for quite a while. we see that it is moving slowly and pricing is going to pick up very slowly. hence our projection for the year. >> microsoft shares going over 6% in extended trading. the windows company releasing better-than-expected results buoyed by demand for cloud-based software and services. they have been investing in data centers and striking partnerships to bolster sales of

microsoft's mean corporate cloud products like office 365. how is the turnaround plan going? >> it looks good. we have seen increasingly improving results on the top line. of course the company continues -- profitprophet machine. we see revenue growth, and revenue is growing at a faster and faster rate. that is exactly where they want to be. making big changes while continuing to have some success with windows and office. >> we're looking at numbers from erickson. we have those numbers coming through. 51.1 billion, net loss of 33.3 million swedish krona. that looks to be a little worse than had been expected. joining the throng of those calling for a new ceo to be found and found quickly for the swedish network equipment maker. >> is the company for sale? >> as far as i know, the company

is not for sale. the company is very strongly supported by long-term owners. we are present in 181 countries. we have lots of great customers. we had a challenging quarter, and we have to manage that in a good way. we will have to do the things we can control, efficiency and cost reduction. >> earnings this morning, ge cutting its 2016 forecast and honeywell posting its first profit drop since 2011. >> where there surprises in the ge numbers for you? >> i don't think there was a big surprise. they lowered organic growth. it was two to 4% for the year. given the decline of the first half, they were not going to make it. so that makes a lot more sense. declines were less worse in oil and gas. but there were not a lot of favorable news. >> i want to touch on honeywell,

the other earnings that came out. they gave us a preview recently. he did not surprise much in the third quarter. they told us what was going to happen. what did we learn? >> we learned they are not getting the volume. as with a lot of companies they , have already done a lot of the restructuring. they have got to have some organic growth to get some bottom-line growth. and it is not happening with most of these companies. ♪

>> fantastic. basically, we have had this monstrous flattening. a great chart. complicated. >> real good, we have a great

function. this is really cool. you can actually see what companies have been issuing for guidance. this is a great way to summarize where those corporate executives are giving projections. and right now they're keeping cards close to the chest. >> a quick plug for the bloomberg terminal. ilb gives you a great look at breaking rates around the world. i have the u.s. here. we are seeing exactly what you're seeing. all of these breakeven rates are below the fed target of 2%. alix: there are about 30,000 functions on the bloomberg. and we always enjoy showing you our favorites. maybe they will become your favorites. here's another function you will find useful. quicgo. it will take you to our quick takes. you can get insight into timely topics. here is a quick take from this week.

philippines's new president is not afraid to insult public leaders. [laughter] >> mr. obama, you're going to go to hell. duterte has made international headlines for his deadly war on crime. >> we will eliminate the druglords once and for all. >> is alleged extrajudicial methods have still outrage. the philippines major military ally for decades, the u.s., relations are strained. the philippines is made up of more than 7000 islands and 100 million people. their economy has grown faster than their major southeast asian neighbors. but the country has high levels of corruption, poverty, and crime. it was duterte's promise to take on the criminals that want him a -- helped him a landslide in the

election. >> i will be a dictator, no doubt about that. i will take on the criminals. criminality, drugs, and corruption in government. >> known as the punisher for his vigilante style of approach, he vowed to stamp them out within one year of being elected as president. 3000 suspected drug dealers were reported killed in his first three months in office. after the u.s., the u.n. and others objected he threatened to , withdraw from the u.n. >> maybe we will have to decide to separate from the united nations. >> and a warning about u.s. interference pushed president obama to stop a meeting with duterte. his critics see him as the biggest menace in the philippines since ferdinand marcos.

>> nobody but nobody. >> matched by a more conciliatory approach to china and russia. he has even discussed the possibility of direct talks with china over territory claims in the south china sea. he called for restraint and sobriety after the philippines won a tribunal ruling against china. what remains to be seen is how high his popularity will remain and how much trash talk the relationship with the u.s. can withstand. alix: 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 latest business news and analysis 24 hours a day. that is all for "bloomberg best" this week.

thank you so much for watching. i am alix steele. this is bloomberg. ♪ ♪

what does your family think? do they think it was something wrong with this young man wanting to do computers? did you ever think your wife life would be better off getting a harvard degree? mr. gates: i am a weird dropout. david: as far as your relationship with steve jobs -- you were the wealthiest man for 20 years more, is that more of a burden than a pleasure? >> would you fix your time, please? -- fix your tie, please?