>> coming up on bloomberg best, the stories that shaped the week in business around the world. italy's prime minister steps down. the ecb adjusts qe. china's stock markets open a little wider. a few trump tweets make news. >> we have seen the offshore yuan lower since these tweets. >> we don't know what the backstory here is. >> it has been a monster month for market since donald trump's election. investors tell us what they expect when he takes office. >> the consensus will be good for some markets and bad for others. >> i'm looking for a 2% economy. not a 3-4% economy.

>> may be the dollar shouldn't be as strong as it is now. curves oilec production but they're hoping to do better. it is all straight ahead on bloomberg best. hello and welcome. i'm scarlet fu. this is bloomberg best, your review of the most important business news and interviews from bloomberg television around the world. let's start with a look at the top headlines. the week began with change at the top in italy after voters rejected their prime minister's proposal for political reform. >> the prime minister says that he would quit in the early morning after losing the referendum.

>> i think the expectation that the result of this referendum would have a disruptive impact on italy and possibly on the eurozone, were grossly exaggerated. it was not comparable to the brexit or even to the vote in the united states, which signaled much more fundamental political change. >> what would you be asking of the new government of italy? >> that the new government must continue the process of reform. we have significant public debt. it is in a difficult situation like 2011. today, 20% is in

the international investors so it is not so huge. but we have to continue the process of reform and to add a reform on the recovery, that absolutely must be completed. >> donald trump turning up the heat on boeing. in a tweet donald trump said oeing is building a brand-new 747 air force one for future presidents. costs are out of control. more than $4 billion. cancel order." why did he tweet this? where did this number come from? >> i am not sure where the $4 billion came from. where this may have come from, why this spring to mind could be a washington post article published last night that talked about $125 billion worth of administrative waste at the pentagon, a large portion of a defense budget. i think this is interesting.

donald trump, he is returning to the campaign discussion he had about getting rid of waste at the pentagon. it won't just be boeing in the crosshairs on that. there is a whole defense establishment and other programs that could be saved. scarlet: softbank visited the trump tower today. ceop has tweeted that the has agreed to invest $50 billion in the u.s. towards businesses and 50,000 new jobs. he made a comment about how he would never have done this if the trump to get not one the election. >> we don't have a lot of the details. he pointed to deregulation is being behind this. we do not really know for sure what the whole back story is.

he's trying to say that the act's that he is taken will create new jobs in the economy. he is going to show cause and effect. >> big stories out of the banking sector today. the eu was fined. a total of $521 million for collusion. the banks conspired to break the arrival rate. more costs cuts are coming. alleging to cut $1 billion in expenses. how many times will he have to adjust his turnaround plan? this is number two. >> he laid it out in 2015 and came back in march with aggressive cuts. he said the markets are not cooperating with push to increase revenue. you're going to have to be more aggressive. >> will he have more focus on cost costs than worrying about revenue growth?

which is difficult in this market? >> he had some skepticism from the outset when they laid out this plan a year ago. some said these look very optimistic. you are seeing the bank come back on those and walked those back a little bit. >> we had headlines there is a settlement in the fixing probe. how do they measure up with what is expected? >> the fines are not the biggest we have seen but they certainly are of reasonable size. the banks have said that they may appeal these. they may fight these. jpmorgan and credit agricole, their statement were stronger given the hsbc fine was lower. this may not be the end of the story. there may be some appeals. scarlet: the ecb is leaving it a far as it range unchanged.

it is also leaving its refinancing rate unchanged at 0%. the ecb will buy $80 billion of euros until march. david: and then they cut it to 60 and keep going. alix: ecb does say the outlook becomes less favorable, they will increase the programs. is this a dovish take? or a hawkish views? >> good question. 60 is less than 80. i see this as tapering to the extent that it is open-ended if there is some dovish elements to it. they have put in language in there to increase the run rate, increase the duration. clearly, mario draghi has turned the qe towards the exit by cutting the run rate down. i see it more as a hawkish move, confidence on their side that they are reaching a goal.

although what we look at the average inflation rate, they are forecasting to 2014. i really see this as backing away a little bit from there 2% target. 1.5% is the new 2%. david the ecb has refused : italian bank's request for time. shares plunged on the news. >> the question is why? >> the ecb did not see any advantage in asking for more time. the recapitalization plan has in the cards for a long time. private investors have not stepped up. there is not a huge likelihood that someone will step in and the next 20 days given the instability there is right now in italy. >> the government is continuing a decree law for the rescue of the bank. shares of the bank tumbling

today. >> the italian government, this caretaker government is moving quite rapidly after the decision by the ecb not to grant the bank additional time to put together this capital increase. they are trying to put together a decree that would have to be approved by the italian government. that would essentially provide a rescue for the bank. we do have a lot of details yet. bondholders are going to be effected. presumably the government strategy is to soften the potential blow for retail investors. some have claimed they were not providing sufficient information to make investment choices in the past buying securities. we don't know the mechanism

italy is going to use to try and engineer this rescue. scarlet: still ahead. much more on global politics, and markets seem to like the prospect of a donald trump presidency. prominent investors tell us how much they think the honeymoon will last. vladimir putin cut say oil deal -- cuts an oil deal. >> starting to chip away at this notion that russia is isolated. scarlet: this is bloomberg. ♪

scarlet: this is "bloomberg best." let's continue our global tour of the top business stories with another tweet from donald trump that struck a nerve in beijing. >> donald trump has taken on china via social media hitting back on criticism of his decision to take a phone call

from the president of taiwan. >> he has been hitting a of the devaluation of the yuan,, taxes and the south china sea. we have seen the offshore yuan versus the dollar traded lower since the tweet. the question really is whether this is more empty rhetoric from donald trump or if it confirms that he is going to be taking a more confrontational line with china. >> the word is he is not president yet and that perhaps he has been badly advised. they are doing everything to take this out. >> does this so the need for donald trump to nominate a secretary of state as soon as possible who can advise him and explain his thinking? >> i think yes on the one hand. people are keen for him to appoint the secretary of state.

then the question is even if you did get an articulate secretary of state, to what extent could you believe what the secretary of state says? >> you have the trade widening in october. -$42.6 billion. in fact the september revision was revised slightly better at 36.2 billion. the trade deficit continuing to widen. >> there is an escalation between china and the trump administration. china came up more powerfully. is this escalating? >> they are feeling each other out like two boxers. we were talking about how donald trump had the whole idea whether they were manipulating currency

backwards, look at what happened in the trade data today. trade balance with china is lower on a year-over-year basis. this is the first time in many years this has happened. we are starting to see trade balance go in the other direction. the american people have that in their mind. it's a good move for him. economically, it doesn't square with the facts right now. >> the stock link connecting hong kong here giving foreign investors more than 800 chinese stocks. >> from a foreign investors perspective, it is the story of growth. if we look at next year's growth expectations, we are expecting on average 20% versus shanghai. that drives the momentum.

there is a smaller cap. >> the most significant changes the removal of the overall quota. that quota initially was put there because there was a pilot and not a clear certainty as to whether it would work, whether it would create unintended consequences. the removal of the quota is the manifestation of a great confidence this program is going to be great not only for investors but allow the risk management to work. >> potentially challenging and moved by u.s. health-care giant johnson & johnson to acquire europe's largest firm. why would they would be stepping in now?

it seemed like johnson & johnson was far along in the process to buy it. >> we think that is still the case. we report this kind of thing 10 days ago. we think those companies are in discussions. other potential buyers are lying out around the edges, trying to figure out if there is potentially for it to fall apart. >> let's talk about money. who can pay more? what is the knockout figure? >> it's a good question. i don't know there is a knockout figure. because they present this unusual set of circumstances. is it about money? is it something completely different? him getting to keep a portion of

rmb? or maybe he decides i'm going to keep this company. no one is going to buy it for any price. >> the u.s. high court upheld a insider trading decision. the ruling will make it easier for prosecutors to bring cases against people on wall street. let's start with what the court decided. >> the issue was whether somebody can be convicted of insider trading when the insider didn't do anything of value for it. if the insider was just getting it to a friend or relative as a gift. that was enough to support a trading conviction. the supreme court said yes it is. >> what does this mean for regulators? >> it won't revive any cases where courts have thrown out convictions such as in the newman case. it puts the law back to where a lot of people thought it was in one key aspect. revive the help

crackdown. >> at&t defenses companies $85 billion deal for time warner. he says it will challenge cable and hasten the development of five g networks. he testified on competition. >> for your constituents we believe the benefits are substantial. and straightforward. >> what power does the subcommittee have? >> they could raise concerns the regulators might get into but this is more of a show. it is a little theater. i don't think anyone believes this is going to get blocked despite what donald trump said in october that he's going to block this deal. i've talked to the bankers and lawyers. i talked to the investors. none of them really feel like this is going to get blocked. it is a 80-90% likelihood it is going to go through. that is how they view this. >> china's exports rebounded in

november. up.nd held >> and surprise numbers. the one to focus on is 0.1%. that is the export number increase in november year on year. the reason it is important is because it compares to a drop of 7.3% the previous month in october. that 0.1% is looking very healthy indeed. >> it is a sign the global economy is healing. we have had a weeks time for industrial production. china stands at the center of the factory systems. it is a sign that things are looking better. >> russia sells $11 billion stake in its largest oil producer to glencore. vladimir putin went on tv to tout the deal as one of the largest acquisitions in the oil and gas sector in the world in 2016.

>> what is in it for russia? what is in it for glencore? >> in terms of glencore, this is a company that was founded on this kind of trading. it was a big forte in recent years. this is a big signal for glencore that it owns russian oil. for russia itself it is a huge win for them in terms of getting big international names into the sector. it gives a foreign exchange the point they have to sell off a special vehicle so it won't destabilize the ruble. it is starting to chip away at this notion that russia is isolated. these are big names to have on its side. ♪

scarlet: this is bloomberg best. i'm scarlet fu. oil prices began week after opec members made a deal to curb production. the rally stalled. there were doubts nations will agree to the cots. the challenges ahead in exclusive interviews at the most influential summit in abu dhabi. >> if oil prices continue to decline with opec, will they asked again? >> it is too early to answer

that question. i think it will be enough to achieve the market balance. if we move 1.8 million barrels per day i don't think the market will stay at the average of the 2016. if we truly achieve the 1.8. we are very confident. >> if you look at the track record, it has been very accurate. >> i think historically we have not done what we have done. opec's position to leave the market, to balance. and react when the market is about to balance, this is a new phenomenon. we are looking at a new world. a new dynamic. >> you probably don't really want to deal with this scenario. you make this move, demand is weaker.

shale recovers faster and oil comes back down. does opec flex its muscle further? and follow with a further cut? >> hard to predict. six months outlook position, let's see what happens. nothing too dramatic is going to happen in six months. >> given what has happened in november. >> in terms of real effect, you're going to have some of that. if all of us work on the focus, cutting the volume and the pricing, we will get there. it is not as predictable as it used to be. we are going to keep watching the envelope as we go. >> what is that going to do to your outlook? for the first half of 2017? around $25? >> we are hoping to do better. tore hoping to get closer

$60 around quarter one. opec is committed to the cause they have committed. scarlet: coming up, a look back at an eventful week in global politics. plus renowned investors look ahead to a donald trump presidency and what it could mean to global markets. >> the three industries you would expect immediate reaction would be the financial sector, the defense sector, and the bioscience sector. >> this is bloomberg. ♪

♪ >> i understand that donald trump's transition team has requested that you and the president-elect hold a conversation shortly. when will that happen and what do you expect to talk to him about?

>> it will happen in the next couple of days. the message from my side will be, my dear president-elect, please think about the small and midsized countries of this globe. they need open markets and an open market philosophy based in the wto as an opportunity, and i hope that trump offers at least the opportunity to discuss the needs of the future of economies. i'm looking forward to speaking with him. >> that was switzerland's president speaking with guy johnson about donald trump. we discuss the outlook for

global financial markets in a donald trump presidency. the weeks since have seen a surge in equities and a stronger dollar. bill grosses to the long-term picture doesn't , think the markets are getting everything right when it comes to the longer-term picture. >> what they are getting wrong in the longer term is there are a lot of negatives in terms of anti-globalization policy. many of them are anti-trade to a certain extent. many of them promote a strong dollar, which sounds good, but ultimately puts u.s. corporations at a disadvantage. there are negatives as opposed to positives and all of this, and none of it will come to fruition with 100% probability. >> the devil remains in the details. what would cause the market to reassess and price in the long-term negative effects of that stronger dollar?

what would be the catalyst? >> i don't think anything in the short-term, right? he has not even been sworn in. that takes place in january. i think perhaps some statements by some of his appointees in the cabinet. perhaps something the market interprets negatively in terms of capital, but for the moment, smooth sailing. i would say we sailed upwards in terms of in the green by 5%, 6%, 7%, most stocks in the market, and one could argue that much of the positives have been built in. i think for instance that claims for 3% or 4% real growth are suspicious. the old standard 10-20 years ago is being affected by structural factors that can't be dismissed.

i'm looking for a 2% of economy, not a 3% economy to the extent investors begin to agree with me, then their expectations for profit growth are diminished to some extent. >> the last 5-6 years have been characterized by complete consensus between governments and central banks, within countries and across the globe. everybody has been following the same playbook, the same set of policies, and the mixture of first to brexit, now trump, maybe italy suggests a situation where the consensus might break down. it will be good for some markets, bad for other markets, and we might get a break down in the high correlation and something between and interesting active management environment.

after a long time when it has been hard work. >> when you look at broad asset classes which one would benefit from a breakdown in correlation? >> you have to look at it regionally rather than asset class. clearly if trump comes up with a set of policies that are cutting tax rates aggressively in the u.s., increasing tariffs into the u.s., about getting people to repatriate cash and the u.s., about making it easier for private-sector infrastructure building, i would say that looks sector infrastructure always takes much too long, all of those things would be bullish u.s. equities, steepening in the yield curve, bullish for the u.s. dollar. >> you have an quite positive on the donald trump victory. you are saying he is down to earth and will bring the american economy back to its feet. doesn't it imply a stronger

dollar, even if he goes on a fiscal spending spree. we are at record highs on the bloomberg dollar index. >> in the short-term, the dollar gets stronger, but in the medium-to-longer-term, the heavy spending that he will embark on, and spending not only on infrastructure, but also defense, will result in people starting to think maybe this dollar should not be as strong as it is. we will probably see a weaker dollar. also, remember that one of trumps objective is to help american industry. when does that mean? they have to export. in order to export, you need a competitive dollar. i think down the road we will see a weaker dollar. >> do you think donald trump has overpromised and under delivered? >> well, one person is not

capable of delivering. you have to be able to lead to make that happen. i think the reaction to the markets is first in the united states that it is over. after two years, there is just a relief that it is over, so that is your first reaction. i think the other reaction is giving more freedom to the companies. the three industries where you would expect immediate reaction, financial sector, defense sector, and bio-science sector, and all those have moved a great deal in a few weeks. >> tell me your view and vision

as you travel the world, the next big set piece of change and economies and markets. >> i think the next change here is how are we going to create jobs. in a democracy, if the majority do not feel they have a future, the will be a change in government, so we have a reeducation, a substantial reeducation effort in front of us in making sure people skills match the jobs of the future, and sometimes you get these imbalances. there is in any major industry today in the world that isn't undergoing some disruption, starting with agriculture. >> the media business was a focus of conversation this week. we sat down with chief executives at the ubs global media and communications conference in new york, starting with les moonves of cbs. >> to accomplish everything you would like cbs to accomplish, can you do it without owning some distribution? we have seen how disney is doing it. do you need to have an ownership interest in some of these distribution platforms?

>> i don't think so necessarily. we are small when you compare us to disney or comcast. we are a premium content company. our job is to do great content for cbs, showtime, late-night sports, etc. if we do that, they will pay us for what we are offering and we do not need to be in distribution. >> at&t said they needed time warner, so they went and bought the thing. at some point, you have distributors saying we need choose cbs. we don't want to do a license deal. we want to buy you. >> i'm sure there are distributors who want to do that. we are a controlled company, so that is more difficult, but i can imagine people out there, especially when you see at&t paying a lot of money for time warner, that a company like ours would be very valuable in the open market.

>> we have seen a really astonishing surge and subscriptions, principally digital subscriptions, and good news on the print front as well. not just headline audiences, but people willing to pay for the kind of journalism we do, which we think of as accurate, thoughtful, without fear or favor. it >> can you quantify that of would appear that it is growing. that? >> we have seen 10 times as many net subscribers as the same week previous year. overall, we guided the market to 100,000 net subscribers, so more than twice as many as q4 last year, well over 200,000 already and we are nowhere near the end of the quarter.

so a very big surge. >> this comes amidst an overall trend. >> and the rate has been accelerating. normally with the subscription model you would expect an initial growth spurt, followed by plateauing. we have seen an attractive curve where it has been accelerating for two years now, and our belief now knowing what we know and thinking about our opportunity in america and around the world is that we can grow substantially further. i don't think it is unrealistic to imagine 10 million digital subscribers or more. ♪

scarlet co you are watching "bloomberg best". i am scarlet fu. matteo renzi's resignation was one of many important political

developments around the world this week. let's again our roundup in new zealand. >> the new zealand dollar has fallen after the country's prime minister announced his surprise resignation a short time ago. >> why is he quitting? it was a bolt out of the blue. >> he gave a number of reasons. family reasons being one of them. saying it is time to spend time at home. he also says he has nothing left in the tank after eight years, and a good leader knows when it is time to go, and it is time to go. he has a long history of success. he was the former head of global exchange for merrill lynch. he has made one of new zealand's economy one of the fastest in the world and he saw the country through the financial crisis and devastating earthquakes. the new zealand dollar sank on the news, everybody caught by surprise. going out on his own terms and on top.

>> european populism has been an issue across many countries, many different elections. that right-wing populist movement has suffered a setback with austria's next president, a green party backed candidate running as an independent. do you see this as a turning point, a pro-european candidate can win, and maybe it is not all about right-wing populist movement sweeping over the continent? >> no, in short. i think this is a limit to populism in a european state, around memories of the 1930's and 1940's. i think the extreme right wing will struggle to get into power, even in places like austria. >> what about france? >> france is a different story. marine le pen's agenda has

shifted towards social policies, like larger consumer tax giveaways and benefit giveaways. there is a risk that because she has moved away from the more flowery rhetoric and copying some of trump's strategies that she could do very well in the second poll. >> the french prime minister has confirmed he will run for the presidency next year. he will resign as prime minister today in order to prepare for the two-round primary in january. the current presidential front runners are marine le pen and the republican. valls vowed to unite the left. can he? can he unite the left in a way that takes on the right? >> probably not. he cannot unite the hard left. the question is whether he will be the candidate for the socialists. he has a good chance.

in a way, i find it reassuring that at least the sort of leading candidate of the centerleft is a reformer. france seems to be yearning for reform, but the centerleft field seems to be splintered. probably the centerleft does not have much of a chance to make it into the final runoff off of the presidential election anyway. >> german chancellor angela merkel was reelected as the christian democratic union chairwoman. it is a level of support that she has received in her chairmanship. she is in germany today for a national convention. >> it is not a great result for

her. to get less than 90% for the first time since she has been a sitting chancellor, at a time when she has absolutely no opponent, is a very poor result. on the other hand, she is trying to flank out to the right and appease members of her party who are very angry about her decision to let in some of the refugees. she rolled back her open-door immigration policy and went on record as saying she does not think that muslim women should be allowed to wear a full face veil. she talked about corporate tax dodgers the germans have long seen as a problem going to other places to do business. there was that story about the eu telling the irish how to deal with their tax policy. the germans are concerned they are losing a lot of money. the cdu is concerned about a balanced budget. they have had one for three years in a row. one of their pledges is to keep that. it is interesting at a time when

you have negative interest rates to be that worried about a balanced budget. >> there were protests at the u.k. supreme court as judges heard the government's appeal against the lawsuit attempting to force it to pass a new law before britain's exit from the european union. the government, which lost in the lower court last month, wants to avoid that as it tries to start the process by the end of march. >> what are the chances of the supreme court overturning it? >> i think the chances are slim that the supreme court will overturn the high court ruling. >> do we believe them when they say this is a purely legal case? do we believe them? >> yes, the case will be decided on the legality and correct procedure to trigger article 50. tom: how is the prime minister doing? is the honeymoon over? how is she going into the new year?

>> in relation to brexit, i think she has a couple of concerns. until a month ago, the brexit story was entirely hers. she controlled the narrative when she said brexit means brexit and she has the power to trigger article 50. it is likely to change again when the u.k. supreme court rules, so there is a counter narrative building up, how brexit can be achieved. then we have a question of where we end up. it can't be the status quo. there has to be some shifting of ground and compromise, and we don't know as of yet what the compromise will look like. >> south korea's parliament has voted in favor of impeaching president park. what does this mean for the presidency? >> the president park geun-hye has been suspended from duties

and the prime minister takes over as interim leader of the country. park geun-hye has said she respects the voice of the parliament and the people. and she apologized for causing national confusion. the motion goes to the constitutional court, and six out of nine judges need to uproot the motion to go forward. if that happens, presidential elections will be held within 60 days. the whole process could take as much as eight months, but much think it will be shorter than that. if it gets thrown out by the constitutional court, we could see president park geun-hye come back and a swelling of public anger towards park geun-hye and what they see as the close ties between big business and government, and the anger it has fueled in the country.

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>> this is rrg go on the bloomberg. you have bond proxies. they are in the lagging quadrant. they have been prized for defensive features and a dividend payout. investors have not been buying those. anyone not buying cyclicals have probably lost the opportunity at this point. >> we have a function here that shows a possible reaction to the euro, or a range of reactions you could look for in the euro after the ecb decision tomorrow. you can put any asset class into this yellow box here, then see what the range of possible movements will be after the decision.

the green line is the upper bound average over the last year, the red line is the lower bound average over the last year. >> there are 30,000 functions on the bloomberg, and we always enjoy showing you our favorites. here is another function. quic . it will take you to the quick takes where you can get fast insight into timely topics. here is a quick take that explores fake news. ♪

>> a pretty crazy idea. >> that was one of the many quick takes you can find on the bloomberg and on bloomberg.com with business news and analysis 24 hours a day. that was "bloomberg best". thank you for watching.

this is bloomberg. ♪

>> we are starting just like this? >> i don't know. >> when you grew up you do not have a lot of money, was it something you thought about? >> people seem to blame goldman's for more of the sins of wall street more than they blamed anything else. could this be life-threatening? >> it is life-threatening for sure. >> do you think maybe i should step down from ceo and smell the flowers little bit more? >> would you fix your tie, please? >> people would not recognize me if i fixed my tie. i will just leave it this way. all right.