david: coming up on "bloomberg best," the stories that she the year in american -- shaped the year in america. >> if i don't get donald trump, i will get hillary clinton. >> he's not going to change. david: a presidential race like that in history with a business leader in the white house. >> it's going to be a business friendly administration. david: the markets wait for the fed to move, not always patiently. get off of the idea of lower interest rates pushing economic growth. david: there's plenty reaction

to the biggest deal. changingame transaction. >> roaracle is making a desperation move to boost cloud revenue. david: weirded money move and why? -- where did money move and why? >> etf's are sharpening volatility. >> we see a flight to quality. we are in a low return world. i am not protecting calamity, but i'm sitting on a lot of cash right now. david: join us for a look back at 2016, straight ahead on "bloomberg best." hello, i'm david westin, and welcome to a special edition of "bloomberg best." we review the most important business analysis and review for

2016. one of the globally significant events of the year was the u.s. presidential election. we kick off the year in review. >> let's turn to the race for the white house and the results of super tuesday. on the democratic side, hillary clinton jumped out to a big lead in the delegate count after winning seven states, compared to four states for bernie sanders. donald trump takes a cruz, andtly over ted the question is, how do the strategies change now heading into the winner take all zone? >> the strategies change pretty radically. we expect a donald trump to do well, and he did. marco rubio had a rough night. the establishment is now left with this option of do we start to think about getting behind donald trump, or do we have

sitting senators and lawmakers and governor saying hold on a second, this is what the republican party represents -- this isn't what the republican party represents. >> hillary clinton kenseth back and start to plan ahead to november. that's her advantage. >> is beneficial in that she can try a lot of different strategies. she has more breathing room. won in michigan. does this stress the ability of his to win across very different areas, across distinctly different demographics? >> he has won in a lot of different areas with a broad coalition of support. >> the surprise decision by ted cruz to bow out of the race. >> there's only one key take away that obviously clear. even before ted cruz decided to drop out, i thought that was ,retty clear when trump won

he's on a glide path to get to the 1237 delegates. >> and does donald trump heal the rifts -- how does donald trump heal the rifts in the republic and party? >> it's difficult. the people around him recognize that there is a lot of mending to do. >> you have been for the outspoken about donald trump. don't we need to know what is going to change? >> i understand the question, and i, too have some doubts. i also know if i don't get donald trump, not knowing change , i'm going to get hillary clinton. she already told you i'm going to shut down all the coal mines and get rid off of -- get off of fossil fuels. the most stupid statement on energy either heard. clinton becoming the first woman to run as

presidential candidate of a major u.s. political party. >> and historic night for hillary clinton, and historic night for the u.s. ,he won a majority of states and is now the candidate the democratic party is going to have to rally around. on the donald trump side, we saw a very different donald trump last night. we saw donald trump on teleprompter, we saw scripted donald trump. we did see a man that was on the leash and making perhaps this all of branch to the republican establishment in a campaign cycle that we look to be vicious and a brutal cycle with deeply personal attacks between both of them against each other. >> do you think donald trump is good for the republican party? >> i wish he would speak less about judges in indiana. i wish we wouldn't -- anybody could beat hillary clinton. we are trying not to. donald trump: i humbly and gratefully accept your nomination. for the presidency of the united states.

>> what should you do about quantitative easing and the tax code? what should you do about the federal debt? >> he needs to shatter the old system. you cannot effective urography less you crack it. it is a bureaucracy will tell you that you need them and you need to move slowly. you can't move smoke -- slowly. hillary clinton: when there are no ceilings, the sky's the limit. >> the democratic party in 2016 has done a very good job of trying to get to the actual concerns of broad-based american people. upon taking: office, i will issue a temporary moratorium on new agency regulation. >> on top of halting new financial regulations, trump would lower the top individual tax rate to 33%. he would cut corporate taxes from 35% to 15%. >> are we going to get numbers who say this is how much this

will cost? >> down the line, there will be scoring, but i'm skeptical of how accurate that can be. we don't know how dynamic the economy can be. i think we are way underestimating america right now, because we have been so many years in slow growth. growth,peed up the you're going to get more business investments, more tax revenues. it is going to make it easier to the spending reforms that you actually need to get done. hillary clinton: starting on day one, we work with both parties to pass the biggest investment in new, good paying jobs since world war ii. clinton's vision is one of more robust government they that can get his hands dirty in the economy. is there a redistribution all aspect of her proposal? yes. provide more benefits for the lower class. but she's also talking about investing in america. that, in my mind, is a progrowth agenda. >> 40 days until the u.s.

election and last night marked the first of three presidential debates. donald trump wasn't shy to touch on the fed. trump: the fed is doing political by keeping interest rates at this level. >> i think what donald is saying about the fed is that we don't understand it. the fed, by design, was a nontransparent entity. is not on janet yellen, is that the process is not on paper, transparent. that makes it difficult for the world to understand where we're going. >> how do you think clinton versus trump would impact growth in general? whenenever president -- you have a president and you don't know what he is going to say next, that is the ultimate uncertainty. he is not going to change. >> some of the last polls show hillary clinton maintaining a moderately over donald trump.

points,ow gaining 350 u.s. stocks overall gaming 2% with every major industry group in the s&p 500 higher. this is the best one-day performance since march 1. >> financial markets are making it crystal clear, they do not want to see president trump. >> donald trump extending his electoral vote lead. donald trump is poised to become the next president of the united states. >> we're looking at a possibility tonight which is even more extraordinary, he wins pennsylvania but he might also win wisconsin and michigan. the redness of this map is overwhelming. >> trump stuns the world. wisconsin has been called for donald trump, which takes a north of 270. that effectively leaves him as the only candidate standing. david: we returned to the trump transition later in the program, and we look back at an important

battle between government and business in 2016. apple's dispute with the fbi over data privacy. up next, the federal reserve was under a microscope through the year. still, it was often hard to tell the hawks from the doves. >> there is hawks and doves and perhaps a few chickens. david: this is bloomberg. ♪

david: welcome back to "bloomberg best." the 2016 america's year in review. i'm david weston. ofl it the great rate debate 2016. throughout the year, economists and investors argued whether the u.s. economy is strong enough to justify federal reserve rate hike. as the year progressed, the fomc itself came to mind on the issue. let's take -- divided on the issue.

let's take a look at monetary policy. rate remains unchanged, the fed would like you to know that they are watching things. they see what you see, everybody can take a deep breath and stop freaking out. here's the key language to address everybody's concerns. we are closely monitoring global economic conditions and financial development, assessing arab locations for the labor market and inflation, and for the balance of risks. >> take us inside the debate for the fed, and the how. how do you determine for 2016, the when of the rate increases? >> we don't have to do it for times. we don't have to make a decision. we say the results will depend on the development of the economy and will be data dependent. >> no exchange and interest rates. but equally important is the dot plot.

the fed scales back its plan for rate hikes through the end of the year. policymakers now expect to raise the fed funds target by only .5%. i don't even tell you that's a big change from where we were in december. >> it's a more dovish fed. it seems to me that stan fischer has been overruled to some extent by chair yellen in terms of the for policy. -- the forward policy. >> this is still contribute to growth. are they still effective? grexit think we are providing accommodative policy with zero inches rates in the big balance sheet. i do think you want to be edging closer and closer to something of a more normal setting so that you don't get stuck in this zero rate environment. >> the federal open market committee drafted a policy statement with a somewhat hawkish tone, and that is a

surprise. gone is the reference to risks posed by global economic and financial development, which the fed used to explain his decision not to change policies that in march. dois you learn anything to it -- did you learn anything today about what the fed is going to do? >> much ado about nothing. they did downgrade the global condition, i suppose. it didn't mention june, and that's human heart to the long bond in the u.s. by three or four basis points. to the has given heart long bond in the u.s. by three or four basis points. as long as global equity markets are stable. >> what does john williams have to see when he sits down at the table in june to say yes, i'm on board for the rate hike? >> we need to see a continuation of the progress we haven't seen over the last year. seeing underlying measures of

inflation continuing to move up towards 2%. i also want to see continued good job gains and continued signs the economy has good momentum. >> no change in interest rates. i repeat, no change in interest rates. the fed, in a unanimous decision, is holding a core percentage point. what's more important is the outlook. the outlook for rate increases, they are another big shift by the fed to lower for longer. lower for longer, everybody. >> it was cut to 3% from 3.3%. is this an admission that this business cycle we are in right now is different than what we have seen in the past and that interest rates overall will not returned what we think of as normal? >> that is absolutely the case, this is an enormous acknowledgment by the fed. at2012, the longer run. was 4.25. it's now at three. this is what we call the new neutral for monetary policy.

>> minutes away from the fomc july decision, where the federal reserve is expected to leverage traits unchanged. let's go to michael mckee. policy, no change in change in rates, only few changes in the economic assessment. no mention of economic activity overseas or the dollar. and no timeframe for future action. if you are feeling hawkish, there is this. inserted to the second paragraph, a statement noting that near-term risk to the economic outlook have diminished. >>s a pretty good america -- is a pretty good america, but she is central-bank or to the troubled world. what is your counsel for her? >> janet, get off of this fixation of lower interest rates are biting a push for economic growth. >> janet yellen has a message for you. she doesn't put a timetable on it, but she says the economic data has improved and the case for an increase in the federal funds rate has strengthened in recent months.

>> when i look at where we are with the job market, i look at inflation and the forecast for that, i think it is time to move. >> i don't think the committee is risking a lot by being cautious and gradual. i don't think we are behind the curve in terms of either inflation or even risking a big financial instability events. >> no change in interest rates. no change. but a strong suggestion that hike.will be a .25 point 14 of 17 fed officials expected to end 2016 with the benchmark rate of at least 50 points. for the first time since december 2014, we are talking about almost two years. three policymakers, three dissented from the majority. >> do you take this as a pledge from janet yellen that they're going to raise rates in december, if nothing untoward happens?

anything as't take a pledge from janet yellen anymore. it's all confusing. there are hawks and dubs, and perhaps a few chickens. >> the more central banks cut or hold rates low, the more there is a bond rally. the price of the bonds go up. is this sustainable over the long term? >> no. >> people with r really enjoying this environment. and people who are just saving every day to help them build a nest egg for retirement, or a nest egg to buy a house, or a nest egg for their children's future, they are being harmed. we are seeing a real division. >> if the outlook doesn't change and reports come in strong, are you arguing for a rate hike? >> if the data is consistent, then yes.

>> you would vote for a hike . >> yes. >> no change in rates and no explicit signal that any rate increase is imminent. there were two dissents, can't the city george and cleveland semester. >> what's the big take away for you? >> they didn't want to make any waves a six days before election, and they didn't. >> to the election come up in the fed discussions at all? >> wework hard to remove political considerations for our decision-making. the one context i think it's appropriate to consider political considerations if they affect underlying economic conditions. >> no surprise the target rate for federal funds moves up .25 points, that decision unanimous. but the real news is movement in the dot plot.

1.4%, which would being -- which would mean three rate hikes in 2017. tom: do buy into three rate increases? >> i doubt the ability of the fed to raise interest rates thinktimes a year to >> i the fed took a small step beyond being just data dependence. if you walk back this notion of high pressure, this is a fed that could be tighter than we thought otherwise. that's what really moved to the market. it wasn't so much the statement as the press conference. onid: straight ahead "bloomberg best," one of the year's most significant showdowns, apple against the united states government in a dispute over privacy. did anybody when? -- win? >> and much of his works in anyone's favor. david: this is bloomberg. ♪

david: bloomberg's taking of extent forward in the race for self driving cars. come -- customers in pittsburgh can hail autonomous vehicles from the smartphone. thiser has embarked on project that everyone thought would take decades. it leaves them ahead of google and tesla, even though google seems the leader in terms of technology. you are watching the "bloomberg best," 2016 america's year in review. i'm david westin. apple remains the world's most profitable technology company, and for a few weeks in 2016, it was also america's most controversial. that after it refused to comply with a court order to help the government gain access to data from a cell phone links to a

terror attack. >> apple and the fbi have been testifying on capitol hill. >> we see it in isil's efforts to reach into this company -- usinghis country, and end-to-end encryption to task people to kill people. it's a major impediment to counterterrorism work. inability of law enforcement access devices where a judge has determined that there's evidence on those devices that may relate to a crime, whether was murder or sex crimes, is having a big impact on our ability to do our job to protect our constituents. i think of having an overall negative impact. they say there is no middle ground, it doesn't put everybody at risk. it's not about one phone, is about every phone and the future. how do you respond? the present, we've seen

how we balance privacy and security every day. until recently, apple was able to comply with our requests. they have some of the strongest security out there. we haven't seen that parade rate of horrible things in those cases either. >> there has to be some discussion of how to solve this problem, but you cannot conscript a private companies such as apple to do something to change its products. we have civil rights that prevent that sort of thing. david: the u.s. yesterday say it may not need apple's help unlocking iphone used by the san bernardino terrorists. a judge has postponed a court hearing just before the world argument today. the government said we may have another way in the doesn't involve you. we don't need you after all. work, thats substantially undermines apple's position in the sense that these phones are not as protected as without they were. >> they didn't need to do it and apple probably can do things and probably has done them in place

like china that we might not really want to talk about publicly. >> department of justice withdrawing legal action against apple after they successfully bypassed the lock on the iphone of the san bernardino shooter without apple's help. >> the fbi is dropping the request to circumvent the existing security features. >> apple presents this as a win, but it's not much of a win when you're finding out the product is so insecure that people are lining up to say we can provide you with access. i'm not sure this really works in anyone's favor. it puts off the legal day of reckoning and demonstrates that iphones aren't particular secure in the first place. david: still ahead on "bloomberg best," how some of the world's most respected investors cope with market volatility in 2016. >> we amped up our quotient. david: a round up the biggest mergers and the deals that

seemed to take forever to those that took the market by surprise. >> us out of our field. david: this is bloomberg. ♪

ceos it time for yahoo! and marissa mayer to face the music? sphere holders urging the company to make changes, specifically leadership. >> the entire board comes up for reelection this summer. this is the first shot on the way to a proxy fight. >> new leadership is a proxy for selling the core asset. >> management of the border very line. >> would you view that as a personal failure? >> i would say that what is good for yahoo! is good for me, and vice versa. >> at&t and verizon are both at the point where there's only so much they can do, at least u.s.

wise, from an m&a standpoint. they can't buy other wireless networks, they can't buy a cable company, so these digital assets for content like yahoo! is probably somewhat appealing. >> verizon is buying yahoo!'s operating business for $4.83 billion in cash. this is the merger we knew was going to happen for like seven months. it finally happened. >> identifying the assets verizon has the can make a job of yahoo! that others could not. thathoo! gives a skill takes us out of the millions into the billions. combining those are the right start for us. >> what role you in vision for yourself in this new entity? >> i have two priorities. seeing the transaction to the close, but also watching over the value of our asian assets and equity stakes that we have there. moving forward, we will ultimately figure it out. david: welcome back to the

"bloomberg best," 2016, america's year in review. i'm jim weston. 2016 -- i am david weston. 2016 saw the pace picking up as the year went on. here's a look back at the against and most interesting deals. >> ehealth and pharma deals a came out today. abbott laboratories buying st. jude medical at a deal valued at $25 billion. forie acquired stem centrex $520 million. >> the year started with the equity market up and down. that slowed a lot of deals. in january and february, the deals were one that we were working on last year. and then he got slow. today is a busy day and health care is leading the way. that is not surprise, with obamacare and the push for

consolidation, you're going to -- you'reompanies going to see consolidation. --congress plan -- can't comcast tried to buy dreamcast. >> one thing that makes it appealing is the theme park action. >> kung fu panda and shrek are going to be at universal studios. >> their sequels and a very clear tie-in between kids movies and the theme parks that was appealing to comcast. blockbuster deal would create the world's biggest supplier of farm cannibals -- farm chemicals. represented 20% premium to monsanto's last close. it would be the biggest takeover ever by a german company. if monsanto actually rejects

your offer, are you ready, or do you have the capacity to increase the offer? >> we're totally convinced about the attractiveness of our offer. >> they are open to a deal with bayer, but the current offer is inadequate. the current proposals immediately undervalues our company and does not adequately address or provide reinsurance for potential financing and regulatory execution risks related to this acquisition. >> do we intimate they would sell at a price? is affairs luncheon. i have rarely seen such a friendly rejection from the target company. linkedin,ft buying valued at $26.2 billion, $196 a share, a 50% premium to linkedin's friday closing rice. .- closing price >> i wouldn't have expected that.

>> what will the process be like and how you make sure it doesn't turn out like nokia or to some extent, even skype? >> when i think about acquisitions, i think is this something that's going to be expanding the market opportunities? is this at the core of microsoft? is this something we can differentiate? this checks all those boxes. david: oracle will by netsuite at a deal valued at $900 billion. oracle really wanted to move into cloud. netsuite is like the original cloud company. netsuite is a truly cloud business, almost a side project for larry ellison run by zach nelson. going to be curious to see their other buildings, -- other buildings. -- other biddings.

>> he basically said i want that. >> walmart agreed to vietjet.com for $3 billion in cash, giving the world's largest retailer stronger online presence. >> it's a desperate move by walmart. the here and a half ago, the market cap was double that of amazon. now they flipped, they are at $230 billion roughly. >> bayer and monsanto, is third time the charm? the number that they are has to hit to acquire monsanto is $135 a share. they are talking about a breakup fee and a potential price. >> a step closer, how much closer? >> mayor has offered $1.5 billion in a termination fee. we are going to want more because a lot of revelatory issues that are going to come up, and price always matters. -- bayerre -- they are

increased their offer. they seem to want even more. it's a five dollar pickup from the last, -- the original bid. share prices dropped, it's more attractive. was to stop monsanto from saying we accept? >> they have been clear from early on that they are not going to negotiate anything less than a number starting with the three. to try get a proper deal done. -- bayer announces a deal to take over monsanto, the largest foreign takeover by a german company. >> you feel confident you are able to do whatever is needed? >> we are blessed because this combination is one that is highly complementary and has caught for the size of this

transaction, a very low overhead. everyone isg deal talking about. at&t buys time warner for 85.4 billion u.s. dollars. >> at&t really is betting on content, we are going for some and it's very aggressive that has a decent chance of regular push back. but this is a game changing transaction. >> g combining oil and gas is this with baker hughes how many $32 billion deal. gets most of the senior positions, the chairmanship and the ceo position and baker hughes gets the vice chairmanship. it should be noted that baker hughes shareholders get a great cash payout as well. $7.5 billion. if you look to the shares this morning in premarket trading, at the moment, it looks like the baker hughes shareholders are much happier than ge shareholders. >> what is going on? you would think the election

would make people be concerned, but it doesn't seem like that had any impact at all. >> the election would have mattered if election -- of equity prices would have been more volatile. it's incredibly stable equity prices, for very large companies. a lot of these big deals typically involve some equity. but the fundamental factors -- they are very strong. low growth, which is bad for most things but good for m&a, that's how you get growth and very common in capital markets. on "bloombergup review,merica's year in on the whole, 2016 was not the best of time for hedge funds. it's a matter of perspective. >> is there too much money? flex $3 trillion isn't what $3 trillion was 10 years ago. david: this is bloomberg. ♪

david: you are watching the "bloomberg best," 2016, america's year in review. i'm david westin. 2016's revisit some of most compelling conversation with investors, financial leaders, and economist. market volatility was a theme throughout the year, especially in january as a global selloff raised fears of a recession. it was the topic of much discussion of the world economic forum in dallas -- in dallas -- in davos. >> it feels a little like 2009. will countries that are growing keep growing and sustain that growth versus commodities downdraft and the expectation is china won't grow as fast. >> you make it sound sensible. >> it is always sensible. day, companieshe like ours just have to keep driving the consumers america's

continue, the question is how it plays out. >> i would say that we are in an environment in which is very important to have a well diversified -- that will include assets like gold in your portfolio. try to achieve balance in various ways. at the whole subject about how to do it. -- that is a whole subject about how to do it. i think gold at 5% of your portfolio, five percent or 10% of your portfolio -- under the circumstances, would be a prudent thing to do. prudence is the important thing to do. the reason i'm referring to that is win situation where debt is money. we have a fiat monetary system. we are having problems as central banks operate. think of it as another form of cash. when cash has 0% interest rates are less, think of it as one of those possibilities in terms of

how you create diversification? >> the first quarter for the hedge fund business has really d,en a very unfavorable perio in large part because when you hedge equity positions, for turn andand markets they go up, sometimes everything goes out and you are short. and it goes up. and then what compounded that were too few really interesting opportunities that many people were in. when they recovered their positions, stocks went up 100%. 200%, 300%, just for technical reasons. but sitting back from it, the rates of return to in the hedge fund business and the fee structure has discourage some investors, so it's highly probable that the asset class will trigger bit -- will shrink

a bit. >> we will find out. >> the hedge fund industry has grown to a gigantic industry, more than $3 trillion. it's gone from a modest sized to this gigantic industry. probably about the same size as the private equity industry. maybe slightly bigger. evil or investing because they investing,ple are and people think it hedge funds, you can get better rates of return. haveof these hedge funds had problems. typically the macro. people realize you have very smart people, highly motivated come investing their own money aside investors and is likely they're going to do it well over a longer time. money?3 trillion to much is beingf the money invested outside the united states, not just in the united states. -- $3lion dollars trillion is not what $3 trillion was 10 years ago.

it isn't that big in this context. >> the market can a longer look to banks to make market street -- can no longer look to banks to make markets. institutions have turned to etf's. it's the easy way to add beta and -- or take risk off. paradoxically -- ats are areetf'sbest etf's 3% of the market. we don't have any objective evidence of how much trading activity they provide in the market. but say it's 10%. what we're hearing. an etf flows on a daily basis do move the market notably one direction or another. you have the advent of institutional investors who are trying to deal with market

volatility using etf's and etf's archly sharpening volatility somewhat. of detail.t's a lot is yout translate to need more and more portfolio managers have to set their course and stay on their course. >> what's happening in the bond market versus the domestic u.s. economy? >> what you say is certainly right. a flighthat we see is to quality. after the brexit shock, people are going for sovereign debt of the strongest countries. the feeling of risk aversion is very high and they say take me to the safest asset, those happen to be the sovereign debt of japan and germany, the united states. even with interesting is the u.k. yields going down and the pound dropped 10%.

bondsdn't do well in u.k. if you were a non-sterling investor. the demand for high-quality liquidity has been the story of the last two or three years. >> it's very challenging today, in a low return part. and how do you do your business in a low return world? you can settle for low return with characteristic safety, or you can pursue a high return. how you get a high return in the low return world? you have to take significant risks. >> are you comfortable taking that risk? >> i'm a professional. don't try this at home. i have been doing this for 38 years. we know how to do it and what we've done in the last five years, we've operated under a mantra, move forward, but with caution. why say with caution for oaktree , oaktree is a cautious investor.

that means more caution than usual. we amped up our caution, amped up our selectivity and skepticism, all the things i said earlier were in short supply, we have increased. >> i think the negative rates completely stop saving, because you are not only rewarded for saving -- not rewarding for saving, but penalized for saving. i don't think that's good. that it has caused a huge bubble in the bond market because people have nowhere else to put their money unless they buy a beautiful piece of art like our ceiling, or some pictures or something of that nature. tom: where would you put your money now? if negative rates have distorted the markets in central banks have distorted the markets, how

would you be exposed today into the end of the year? >> i think the only game in town are equities. and we have to play in that theater. >> you are cautious, almost as cautious as you have been at any point in your career. why? >> i am not uber-bearish. i'm not forgetting calamity, but my portfolio, i'm sitting a lot of cash right now. almost 60% cash. there are a few reasons for it. number one, just going about my day-to-day business of trying to find good stocks to buy and a handful of stocks to shore, and finding very few belongings and a lot of shorts. that bottoms up tells me something i think about the markets. see all the down, i major indices at or near all-time highs, complacency at very low levels. a very uncertain world with a wide range of outcomes. i predict not calamity, but am

quite certain is going to be a lot more volatility in the world. as a stock picker i welcome that. that's how i make money. ♪

>> argentina's big win in court today. the country contact the international credit markets for the first time since 2001 and payback holdout creditors from its default. >> lifting the injunction allow them to issue enough debt to pay of the vast majority judgments against them. they can tap the market and pay off the guys with the sharpest teeth, star reintegrated with the international capital market. >> today could be the last day in office for president dilma rousseff. the senate is scheduled to hold a vote that may force rounded into impeachment trials that she

looks unlikely to win. is upzilian local debt 30% this year, that's the best return anywhere in the world. are betting we had five months of uncertainty and five months of not knowing where brazil is going. let's get this behind us and let's move on. we can take it from there. nowhe vice president is active president, inheriting the worst economy brazil has seen in decades. david: welcome back to the "bloomberg best," 2016, america's year in review. i'm david weston. victory in the u.s. presidential election was largely unexpected and the president-elect transition has been under close scrutiny as the business administration looks -- as the business community looks ahead to the new and administration. >> it's going to be a very business friendly administration. i want to say it's going to be a christmas tree, but business is going to be down. in the short run, all of this is probably good for business.

in the longer run, $5.8 trillion in tax cut is probably not so great for business because of inflation, just rates, and so on. >> you are just like everyone else in your industry, and for that matter, all of finance. all of industry is trying to figure out what a trump presidency means to your business. >> it is a sea change. republican senate, republican wants and a president who to do things like infrastructure spending to get it done. we are moving to a faster growing economy. the pace will determine interest rates. david: the president-elect's candidate -- cabinet is coming together. what does that appointment tell us about the treasury? >> it tells us that goldman has a lock on the treasury. he is a loyalist and he will be someone who is definitely following the lead from the white house, maybe not so much for him of his own, but following some. isid: president-elect trump

close to naming secretary of state and the firm on her comes from the world of oil. -- the front runner comes from the world of oil. he tweeted rex tillerson is a world-class player and dealmaker. stay tuned. >> rex tillerson is a very foundation of the trump administers and makes them shake and quite. -- and quake. >> we saw michael jordan go from basketball to baseball. you can be great in one area and not necessarily great in another, somewhat related area. david: trump's cabinet is looking more like a board room than a cabinet. have you seen anything like this injection of senior business leadership into washington? what would likely lead to? >> there are very successful business people. being successful in business does not mean you will be successful in government. david: rick perry, considered from the to the oil industry, will be nominated as energy secretary.

>> big oil is dominating this cabinet. whether it is deliberate strategy or just coincidence, it's anybody's guess. that is pretty amazing how many people from the energy sector are going to run this government. >> if you are going to be president, you should have the best people sitting around the table. but think it's a mistake to be told if you work for an oil company were a bank, that that makes you bad. you want the best team. i think it's a good thing, because a lot of these people are very qualified people who want to help the country. they are not going to try and help their former company. these are people with deep knowledge that hopefully will do a great job. ♪ david: that wraps up the special edition of "bloomberg best," the 2016 america's year in review. find more stories, interviews, and analysis from 2016 at bloomberg.com, along with all the latest business news, 24 hours a day. thank you for watching.

i'm david weston, this is bloomberg. ♪

tom: the new year brings radical change to washington. nothing will change for janet yellen. the chair, they are accommodative, and the fed must right size amid trump reflation and go to cash. here's the truth. i went to cash, and i have seller's remorse. for this entire hour, abby joseph cohen from goldman sachs