♪ coming up on "bloomberg best" , the stories that shaped the week in business around the world. thickens, more to come. >> they took a small step beyond being data dependent. >> the oil outlook brightens the outlook for food. the gardenchange in goldman sachs. >> goldman sachs is making this move from a position of strength. >> donald trump's unconventional picks. you are going to be president, you should have the best people sitting around the

table. the sharpest minds in business share insights on the markets. probably more comfortable with shorter duration assets. i think the worries are in chinese credit growth. there is over exuberance about how well people are doing. >> it is all straight ahead on "bloomberg best". ♪ >> hello and welcome. this is "bloomberg best". day by day with a look at the top headlines. the week began on a note of optimism for oil. opec has sealed its first output cuts with independent producers in 15 years.

to reducesters agreed output by one point 2 million barrels a day, and saudi arabia has signaled it is ready to cut promising a reduction of 450,000 barrels per day. non-opecd other nations pledge to cut production by 558,000 by january. the situation is different when we go country by country, but i was pleased to see so many companies respond. >> i think the big highlight, two highlights, one was russia and non-opec producers committing to reduce production. some of the reductions in production were happening in any case because of natural declines. highlight, other big

and the unexpected one, was saudi arabia saying it is ready to cut reduction and go below 10 million barrels a day. they are not saying they will do it, but they are prepared to do it. >> i am a cynic. looking to 2017 and beyond, why would this agreement work? none of them previously had worked. the only way it will work is if the saudis are determined and will take a great deal of pain, a disproportionate amount of pain, and i am not convinced they will do that. >> they want more for their oil. they have said they will carry out what they say they will do. , and the cut supply price of oil will, up. you will be at $60 a barrel within 30 days. reportedly president-elect donald trump is close to naming his secretary of state, and the front runner comes from the world of big oil. yesterday mr. trump tweeted the

following. what you make of this possible nomination? is it likely? and what would it mean for state? >> he knows the details of the places he operates. he has run a big organization. he has met globally with leaders. all that is to the good. that said, he does not have the public sector experience. if you remember what happened from paul o'neill, it's not exactly a bureaucratic success. tillerson, the foundation shaken quake with this nomination. >> when we saw michael jordan go from basketball to baseball, he

can be great in one area, and necessarily in another. >> mr. tillerson has relationships with mr. putin that we want to know more about. i certainly want someone as secretary of state who has experience in the global area of diplomacy. mr. tillerson brings is this experience. he does not bring diplomatic or government expense that would be very helpful. surprise, the target range for federal funds moves up a quarter percentage point to between 50 and 75 basis points. the real news is the movement and the dot plot. 1.4% next year, which would mean three rate hikes in 2017, not two. >> do you buy into three rate

increases? toif inflation continues move higher, because the short-term real rate won't increase much, if at all. i would doubt the ability of any the fed, to raise interest rates three times a ,ear for the next several years because the global economy and the u.s. economy is relatively highly levered, and housing will begin to reflect that. the fed took a small step beyond being just data dependent. back this notion of high pressure, some people said are we not just seeing a slightly higher expectation for rate hikes, but in addition, this could be a fed that could be tighter than otherwise. it wasn't the statement, it was the press conference. as expected, the bank of

england keeping its key interest .ate at 25 basis points also keeping its purchase plan at 435 billion pounds, the vote was 9-0, so a unanimous vote. >> this illustrates the dilemma mr. carney faces. they expect inflation and slower growth. >> that boe made this shift from an easing bias to a neutral stance, basically saying they have a limited tolerance. since that november meeting, trade weighted sterling has risen 6.5 percent, and the boe acknowledged that and said that game could mean less of an overshoot above its 2% target. that does not mean it's willing to look through inflation. >> yesterday, bloomberg reported verizon was taking a hard

look at its deal for yahoo!. it was looking at taking $1 billion off the purchase price. is that realistic? they might want to get out of the deal and go looking for bigger game. >> the hacking scandal is a real problem for yahoo!. givething else, it will zon a chance to come back to the table and looked long and hard at yahoo! and whether yahoo! is doing any decline in their user base, which would drive profitability and value for the company. it might be difficult for veri zon to walk away. more likely, they will come back renegotiate the deal, including price. >> take us through the options at this point. >> the most likely is they extract their pound of flesh and reduce the price.

the other thing is to create some sort of legal entity where they can put aol and yahoo! into that entity to try create a around an unbelievable amount of liability. you don't know how big the infection is here. this is pretty ugly. program, we dig deeper into donald trump's nominees. will their business credentials translate to success in washington? a new task force addresses the financial risk of climate change. up next, more of the weeks top business news with an italian bank taking bold steps to put itself on sounder footing. >> this is a comprehensive plan to make the bank leaner and maybe meaner. >> this is bloomberg. ♪

.> this is "bloomberg best" let's continue our global tour of the weeks top business stories in italy, where a major bank unveiled a plan to boost profitability. >> italy's weakest bank has announced plans to raise 13 billion euros and cutting jobs by 2019. why does the bank need to do this? we have been tracking the woes the time banking sector extensively. >> we have seen asset sales announced yesterday, with , soredit selling pioneer that is the asset sale front.

they were also tried down to write down a lot of nonperforming loans, increase their coverage ratio on nonperforming loans, letting go of 6500 positions in the bank, jobs tods to 14,000 net be terminated, so this is a comprehensive plan to try and make the bank leaner and maybe meaner. >> talk to me about the capital. where is that going? >> it will quickly disappear. they laid out 2.2 billion euros in charges in the fourth corner. a lot of that is provisions for bad loans. they're trying to get a number of loans off their books, so they are writing goes down. this capital will be used up pretty quickly. it is to reset the bank, get a lot of the bad stuff off the table, and start over with growth. promotedn sachs has harvey sorts and david solomon

as copresidents to replace gary cohen. at the same time, it is steady as she goes, isn't it? >> goldman sachs making this move from a position of strength. their mantra from early in the decade was live to fight another day. goldman sachs's revenues have not grown, but they have preserve the franchise. the key to the franchise is serving clients well. you have two co-ceos, one that has done a lot with clients, david solomon, and the other doing a lot with the trading side, harvey schwartz. >> is this a great time to take over? odey've come off a lean peri where they have weathered well. the only place to go is down? >> this is a fantastic time.

now we think revenues grow, and we increased our estimates since election to over 15%, and we think the stock price hits an all-time high over the next six-12 months. great time to take over. redstone with the true or of the two companies. as the merger plans dissolved. ahead.s full steam >> i guess it is a bit of surprise. do moonves was reluctant to a deal because he wanted assurances that he was going to control or have control of the the sumner redstone, the family. he wanted to know he could run these combined companies, which are big and would need a lot of work. our sense was that she was reluctant. the reason this announcement

came out today was she and her lawyers and her side want to make it look like they were out front. >> you have these dueling visions. what is his vision? what happens to paramount? >> the two main things is he will have to clean it up, so there will be some restructuring and job cuts, and he will push more into international viewing, a place where they might be owed to boost themselves in return profitability, but both companies feel pretty good where they are. japanese companies have seen their stock drop today after being targeted by short-sellers. a pretty active session, what has been happening? >> an interesting morning in tokyo in terms of activist short-sellers. we had a report by a local researcher just 30 minutes

before the market opened on a large, but not maybe too well known company called smc corporation, questioning the accounting, the outlook, the auditor. about an hour later, we saw a report on the japanese company, and he's gone quite big , a blue-chip japanese company run by a billionaire. again questioning accounting and asking whether the organic growth is really there for the company, and that stock fell quite a lot. not as much as the other one, but almost 6%, then trimmed the losses by 2%. alphabet announcing it is separating its self driving car business into a new unit within the alphabet family. krafcik made the

announcement. how does this change things for the self driving car unit? >> they will probably have a commercial product soon. they have been talking about graduating, a term they use for a stand-alone business. some of the delay is that out of bed is still trying to figure out the logistics and what it is like to build out the stand-alone companies. tatts soared after a consortium offered as much is $5.5 billion for a takeover. what are the details? >> this has been brought by the pacific consortium, 30% share andmorgan stanley, kkr, macquarie group taking up 10%. they are offering $40 to $45 per

share. that is $5.5 billion. they would sell their wagering and gaming business. get cash and would a stake in that new business. to consortium will hang on the lotteries part of that business, which generates two thirds of revenue. leave the bedthat made by catabcorp. >> it's not as appealing now. there are two bids on the table and illustrates how attractive the spaces. billionaire rupert murdoch may finally get what he has wanted for years, complete

control of sky. 21st century fox has agreed to take over the european broadcaster for $14.6 billion. what is going on? >> i don't think anybody would expect it at this time. going forward, fox would need to get 75% of the rest of the shareholders to approve the deal , and we reported a couple of days ago that they are open to bumping if they have to. fox would prefer to get the deal done at the offer they made, but they are open to bumping, and they might need to. not several dollars or pounds, i just think you will see a 2%, 3%, 4% bump if necessary. nofi in talks to buy a swiss drugmaker. they say a deal could be announced as early as next week. this news after j&j walked away from talks. i have a chart here that shows

how a number of drugmakers have elion for years. does it look like this potential deal has the material to perhaps be successful finally? >> it sounds like the negotiations are very advanced. excited to get this deal done. agreement,y reach an anything is still possible. the management is demanding. they almost reached an agreement with the j&j. let's see what happens with sao nofi. ♪

watching "bloomberg

best". a climate change task force set in motion by g-20 leaders released its recommendations this week, designed to address financial risk due to climate change. that on aies can use voluntary basis. the task force is chaired by michael bloomberg, the founder and majority owner of bloomberg. he was joined by mark carney in an exclusive interview with bloomberg's francine lacqua. >> g-20 leaders asked for this task force. they ask the private sector to find a solution. michael has led the work of the private sector. the expectation is voluntary adoption. you had $3 trillion in private .apital

you have $20 trillion today endorsing these recommendations of private capital, so it's that demand. this is filling the demand to help make the market worth more. >> capitalism will make this work because the investors, the employees, and the customers of companies want to know what they are doing from an environmental perspective. they want social investing or impact investing or what ever you care about, if they are going to make bets, they have to have information, so it would be difficult for companies to say i will not contribute. the implication is, what you hiding? >> the election of donald trump means less sympathy to this kind of guidance. does it impact? hard to argue that trump can cut back what the federal government in america has been doing to address the

possibility of real serious climate change. they have done nothing, almost nothing. president has tried a handful of things, but they sickly all efforts to reduce greenhouse gases, there has in enormous progress. we have a chance of making our 2021 goals. in spite of federal governments and state governments. it has been done at the city government level, but mainly by the private sector, companies and individuals who have adjusted their behavior to try to minimize climate damage and adjusted their business models and their living models as well to what happens in the worst case. >> the new administration can not deter companies? >> they can make it worse i suppose, but you were not bring back coal jobs. the world is stopping burning .oal

you can subsidize the coal industry, but not the since you will get people to turn around. if you live downwind from a coal-fired power plant, your kids and you right now are having your body damaged, and people are starting to realize that. the same thing has happened with smoking, sugar drinks. thanublic is a lot smarter i think elected officials have given them credit. they read about this stuff and some sense tokes behave in a slightly different way, modify our behavior to protect ourselves. >> still ahead on "bloomberg best", president elect donald trump is stocking his cabinet with ceos, and many nominees have ties to big oil. we explore the pros and cons of this approach. next, the state of the markets from some very heavy hitters. they are not sugarcoating what they see. place, lowas a sad growth, a broken banking system.

>> this is bloomberg. ♪

vonnie: welcome back to "bloomberg best". i'm vonnie quinn. with new political leadership in the u.s. and the effects of brexit, it is pivotal for period for economies and financial markets, so what should investors expect? it is a topic we examined in a number of interviews this week on bloomberg television. starting with jonathan gray. >> tell me what you expect from the trump administration. >> i think there is going to be a business focus, a push to accelerate growth. i think we will see a reduction of taxes, corporate and individual taxes.

i think we will see fiscal stimulus around infrastructure, and i definitely think you will see a pullback of regulatory issues, and i think when you look at that, that is likely to lead to higher growth going forward. the challenge for investors is what does it mean around the deficits, what does it mean around inflation, interest rates? the same question when you think about trade. so, you see it playing out in the stock market today. the stock market is enthused about the growth story, but in the bond market, people are getting nervous about inflation and interest rates. erik: how has this changed the calculus, if you will, inside the meetings where you and your colleagues and others at blackstone make these investment decisions? what are you doing differently today than 6-8 weeks ago?

jonathan: we had been in the lower for longer environment, low rates, low growth, low inflation. we were beginning to see a tick up in terms of wages. generally, that had been the base case when you are deploying capital. if growth is higher and interest rates are higher, it does have an impact. in real estate in particular, you say i am probably more comfortable with shorter duration assets, apartments and hotels. i am a little more nervous about least a 20 year government office building. erik: rising cash flows, but

also the potential to charge higher rents? jonathan: exactly. it is beyond that. it is what will the energy sector look like. we have seen the banks rally because they may not face the same restrictions as before. i don't think anybody has a crystal ball, but a lot of us will be focusing on this as we look forward on how to deploy capital. >> what is the tenor in the last four weeks since the election? >> we have seen a significant pickup in volumes in equities and also a rotation. the rotation has been out of defensives into cyclicals. we have seen some energy companies, and we have seen some infrastructure, companies that people think will have an infrastructure angle.

>> is there a notion that energy policy will be so different that it will change demand? >> a lot of expectations about the president-elect and his policies, regulations, financial services, pharmaceutical companies, energy companies, and people are re-rating them. the selloff in fang stocks. one of the other characterizations when you look at the s&p and the 50-basis-point difference. the initial speculation was maybe trump would go after social media, tax amazon, or regulate netflix and youtube. >> technology traded down, but it was rational initially. if you look at companies, technology companies have the highest percentage of foreign

trade in terms of exports, so when you look at potentially trump coming in and having a protectionist policy, there was some fear over retaliation in other areas, so a lot of the big global tech companies got hit. there is a lot of anticipation about the large private technology companies coming in 2017. if you think about the size of those companies and ipo's, investors are thinking about positioning. >> what is the biggest risk to 2017? is it monetary policy does not deliver or is it a crunch time in the banking sector? >> the way monetary policy is evolving is working. i think we are in a gentle tightening phase, even the ecb reducing the amount of qe somewhat. on the whole, that is quite good from a banking perspective because the yield curve is rising.

as you have a positive sloping yield curve, banking is a difficult business. i think the worries are elsewhere. i think the worries are still in chinese credit growth. i was in beijing last week. things are still moving forward. there is growth in the economy, but at the expense of a large expansion of credit, something we have to keep an eye on. >> on china, what is your biggest concern? you have this trinity, renminbi going down, outflows accelerating, and reserves going down, how do you fix this? >> the chinese are taking various measures to reduce the outflows, whether preventing people from using their credit cards in hong kong or whatever. there are micro measures going on, but in due course, we are going to have to acknowledge that credit is too high, and they will probably have to raise

rates. >> two of your rivals, j.p. morgan and bank of america , last week indicated they were having a solid quarter in trading. how are things going for morgan stanley? >> things are going fine. i think there is over exuberance about how people are doing. if you look at the underlying flows, yes, they have picked up, particularly since the election. is only marginally up on the year. we are getting a share of that, particularly fixed income, but i don't think this is a significant pickup in activity. >> you returned from europe. what did you pick up there? >> europe is a sad place, low growth, broken banking system. the essential point about continental europe is 80% of lending in continental europe is inverse the u.s., where we have vibrant capital markets. where banks are not capitalized

or have not gotten rid of nonperforming loans, they are a drain on liquidity for the economy. there is some real sense of resolve, particularly in italy, to resolve the banking issues. mps is being discussed. clients want to buy into the sector now. they see a way ahead. you are seeing a repair of the bank balance sheets. the downside is that probably because of brexit you won't see development from capital markets for a while. >> what worries you now about brexit? >> just the uncertainty. you can model almost every option that you think might happen. the sooner there is some clarity and direction of travel and what the ambition is means you can discard some options and prosecute other ones.

for clients, staff, they've can begin to plan their affairs and it can be business as usual. the sooner we get to clarity -- >> what kind of clarity? for example, a buffer. we know mark carney was working on some transitional agreement. would that be the most helpful thing for banks? >> when you think of the regulatory reforms we have been through, when the reforms are finalized, there is two years of implementation so people can collect information and present it, so it is difficult to think that something as significant as changing the relationship with europe that you can say on day zero we are moving from that system, and on day one you can accommodate everything that has changed within your system and so on, so there has to be some

period of transition, and again, in terms of the planning, if there isn't a belief that there will be some transition, you have to plan for the fact that there might be none. ♪

>> you are watching "bloomberg best". donald trump put forward donald trump put forward several key cabinet nominations this week. he is building a team with considerable expertise in business, but not in government. let's look back at some of the choices he made this week, and the vigorous debate. >> trump's cabinet is starting to look more like a board room. rex tillerson is a likely secretary of state nomination. nuchin has already been

named for treasury secretary. wilbur ross, commerce secretary. have you ever seen anything like this with this injection of senior business leadership in washington? >> there is no doubt that it is a different group of people coming in to run the government. we will see what happens. i do know many of these people. they are successful business people. being successful in business does not mean you will be successful in government. sometimes they do well, and sometimes they don't do as well. >> you have the cabinet looking like a c suite, the corporate tax rate will be lower. they will do well. is that the correct linkage? >> in the euphoria postelection, everyone is happy for who won the election.

when you start picking people who you think have done really well in the business sector but they look like they will do really well in government. you just don't know. when i worked in the carter administration several hundred years ago, carter had a democratic congress and we thought we would get all these things through congress. it turned out the democrats in congress had their own ideas. this time, i think the republicans in congress may have their own ideas as well. times have we heard someone say i'm going to blow up d.c. and change things? someone comes along and says i'm going to create an administration like an all-star c suite, do you see this as a positive? >> it is hard to see it as a negative. there were a lot of people who were career politicians in the past administration, organizing, nothing to do with job creation . or furthermore, look at people in charge of defense, they did

not have military backgrounds , per se. doesn't it make sense to have someone in charge of the nsa or other organization to have spent their career in security? linda mcmahon is the head of sba. she took a small business and made it really successful. >> you are talking about wwe. >> it created jobs, entertainment industry, but here is a woman who was successful in the private sector, tried to run for senate, but could not win. but now is in a position where she can help create jobs for small business, which is important to growth, as you know. david: it is coming together. rick perry considered friendly to the oil industry will be nominated as energy secretary. >> big oil is dominating this, whether strategy or coincidence, but it is pretty amazing how many people from the energy sector are going to run this government.

>> you have the most senior u.s. now going to be the most senior u.s. diplomats, and people will ask what that means for u.s. foreign-policy. you have these other appointments, mostly taxes, an oil-rich state. you have rick perry at energy, the former attorney general of oklahoma at the epa. people are asking what that means for the u.s. oil and gas industry. >> we probably have some problems we need to fix. these guys probably understand those problems. maybe what we are talking about is changed regulation. >> there will be alot of regulatory change, that is for sure. they back coal production, want to see pipelines built. i think it will be a much more friendly environment for the oil

and gas industry. the real question will rex tillerson's experience at exxon , especially in russia, translate into a changed relationship with russia for the u.s.? alix: the rhetoric is that all of a sudden you will get land opening up, new regulations for oil, oil flooding the markets in the u.s. is that the correct story ge? >> i don't think that is. what we have in the united states is that oil markets are driven by supply and demand, as opposed to opec that might make a decision on cutting supply because they are national producers and have the ability to control it. here in the united states, you have producers who are responding specifically because they can make a profit or not. >> if we see less regulation, less onerous climate regulation, will they change their longer-term business plan and model on those things? >> no, because what they are

fundamentally looking at over the longer term is what kind of profitability do they have. if regulation is imposing significant costs that affects their competitiveness, that could be an issue. today, for example, the area of production most likely to come back into production quickly is more unconventional production, shale gas, shale oil, particularly because ironically the decision by opec and non-opec producers to cut supply, which is going to bring the price of oil back into a range where the average price of production is once again competitive. >> the cabinet will test the theory. sauceeos have some magic that they can put into government. jonathan: give me an example of why it is so much more difficult.

how much harder is it? >> you could take over almost any major company today with a relatively small team and you have the board with you, and you can make changes in that company. in government, it is different. you go into these agencies because so much of it is directed by the policies of congress and the oversight by congress despite the fact the republicans control all that, unless they have something else, the congress will roll over and yo agree with everything he proposes and every limitation on them vis-a-vis these agencies. they implement the policies and the laws the commerce and the president agreed to. that is the difficult challenge for these people who are used to going into a company like wilbur ross taking over a company that is distressed and being able to

make fundamental change quickly. it is not the way it works. >> if you were going to be a president, you should have the best people sitting around the table. i think it is a mistake for the american public to constantly be told if you work for an oil company, a bank, that that automatically makes you bad. you want the best team. i think it is a good thing because a lot of these people who are patriots who want to help the country, they are not going to help their company. they will not try to help their former company. these are people with deep knowledge who will hopefully do a great job. >> do you think now when you look at that shift in terms of wall street that this is a bit of a reset moment for the industry more broadly in terms of what the american people are expecting or likely to see? >> i think it is a reset moment for business in retreat. -- how business is going to be treated. 145 million people work in america, 125 million work for private enterprise, 20 million work for government. we hold them in high regard, firemen, sanitation, police, and teachers.

if you did not have the 125, you could pay for the other 20. best you could not pay for the other 20. i think business is a huge positive development for society, and for years it has been beaten down, so i think it is a good reset. ♪

on with the bloomberg screen, a >> i am just taking a quick look at what is going on with the bloomberg screen, a function that is an old favorite of mine, the hs function, i'm buying the bloomberg dollar index and selling the euro index. if i take it down to a one-day trade, the spread is blowing out. >> there are 30,000 functions on the bloomberg, and we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorites?

here is another function you will find useful. quic for fast insight into timely topics. this week plus quick -- this is on quick take driverless cars. >> the thought of cars without drivers is both exciting and terrifying. there is now little doubt that robots will one day be behind the wheel, hope for the elderly, disabled, and bad drivers. car companies like bmw are pouring billions into developing vehicles that use sensors to react to traffic and people. luxury lines have already added features like hands-free driving and self parking cars. a driverless feature is so appealing that it is not just automakers. google has logged over 2 million miles testing its cars. the guys who make iphones are

involved, too. it is also a technology that saves lives. >> driving accidents are the number one cause of death. >> currently, driver error is blamed and 94% of crashes. globally, 1.2 million people die every year on the roads. here is the argument. this speed of invention is overtaking the ability to regulate. the first car capable of talking to each other will be driving soon, but the rules of the road have yet to be finalized. the current crop of so-called semiautonomous vehicles being tested came under scrutiny after a fatal tesla accident. there is also an ethical dilemma. the question of liability can also disrupt the insurance industry. the big automakers see a changing dynamic between vehicles and human.

they see fleets of autonomous pods replacing the family car in the driveway, reducing pollution, easing traffic, and saving lives along the way. vonnie: that was just one of the many quic takes on the bloomberg. you can also find them on bloomberg.com with all the latest business news and analysis, 24 hours a day. that is all for "bloomberg best" this week. thank you for watching. this is bloomberg. ♪

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♪ mr. buffett: he said, what do i do with this money? i said, investing it is about assigning the right use for the -- assigning yourself the right story. i did not want to go to college. i want omaha, i thought -- i had $175,000. i thought that was all i would need to live the rest of my life. david: did you ever run into that guy again? mr. buffett: he needs protection now. david: when you had your first annual meeting, how many showed up at that? >> we had 12. david: any advice to a young investor who would like to emulate you? >> would you fix your tie, please? david: most people would not recognize me if my tie was fixed. let's leave it this way. ♪