>> coming up from bloomberg best, the stories that shaped the week in business or around the world. confronting carmakers to dismantling obamacare. the trump transition gathers speed as inauguration day approaches. >> we see a more positive manufacturing investment -- environment under president trump. >> we are trying to protect the insurance coverage americans have today. >> diplomatic discord shapes up the brexit team and all signs point to further tightening at the fed. >> this is a time you have to tread carefully.

political risk everywhere in 2017. the pillars of american policy are up for grabs. >> one channel through which the chinese could retaliate is going after american companies. quite clearly this is a year of dramatic change in industry structure. >> we have gone from company consolidation to industry consolidation. erik: it is all straight ahead on bloomberg best. hello and welcome. i'm erik schatzker. this is bloomberg best. your weekly review of the most important business news, analysis, and interviews from

bloomberg television around the world. the week began with most global markets closed for the new year holiday. the calm was disrupted by donald trump. donald trump is taking aim at general motors on twitter. he criticized the automaker holding a version of the chevy cruz in mexico. gm is not the only auto company who was in donald trump's crosshairs. canceled plans to open a new plant in mexico. give us the back story about what they have manufactured overseas. >> the car in question is the chevy cruz. they make most in the u.s.. that is when they make the sedan. consumers by the most. the hatchback is made in mexico.

americans have never really embraced hatchbacks. this is symbolic. this is trump pushing automaker after he has tussled with board saying enough with this investment in mexico. adapted governing, previewing this campaign and governing by anecdote. this is going to be one way he is going to try to govern. try to get small victories. forcesrall structural are going to make this difficult for him to keep these promises on a global scale. >> would you have made this decision regardless of what the president-elect had said? >> we would have made the same decision. our next generation focus was going to be built in that plant. we have seen a market decline

for small vehicles in north america. >> it was a ford decision. factors as weall make these decisions. clearly we see a more positive u.s. manufacturing business undernment president-elect trump. we see the progrowth policies he is outlining. this is a vote of confidence that he can deliver on those things. >> considering further measures to curb capital outflows this year. let's talk to our tom mackenzie, our china correspondent. >> they are considering contingency plans to support the yuan. including asking enterprises to convert at least temporarily therefore in exchange into yuan. u.s. treasury

holdings to support and maintain a stable exchange rate. it points to the pressures officials are under to maintain and pour back on these capital outflows. >> how unusual is this move by china? >> they fact that they are preparing a contingency plan, they have is time to devalue the currency, they created market uproar. what is different is they are looking to react to overseas movements in the dollar. that is slightly ominous from my point of view. it is more a dollar story. if trump makes good on his threats to do whatever he said , impose tariffs of more than 40% on chinese exports , that could spell a lot of trouble. really people are

concerned about what will happen after he takes over. officials endorsed a gradual rate increase. upside risks are considered. fed officials are concerned they may have to quicken the pace to head up higher inflation. >> it was a lengthy discussion about what might happen under the fiscal policies of donald trump. there is uncertainty. is thetches my eye discussion of labor markets. people think they could undershoot the target. if that were to happen many participants emphasized timely adjustments to monetary policy could be required to achieve and maintain the maximum employment and inflation objectives. they are saying we are forecasting three rate increase is out over the year.

if the economy get stronger and labor markets get even stronger we might be forced to move sooner than the markets anticipate. >> the chinese offshore you on closed the biggest gains on record as the central bank moves to curtail outflows. why is the you want up so dramatically? it is a bit like how we started last year. the chinese authorities are coming in. it is less clear if they are directly intervening. we do know they have engineered a classic the quiddity shortage. they are trying to stop the yuan flowing into hong kong. the net result is more of a short of the currency here. they are sending a signal that a chinese decrease is not a one-way bet.

trade your money at your will. we are coming after you. >> five seconds away from the payroll report. the median estimate, the number comes now. >> 156,000. below the 175,000 estimate. unemployment rate as expected picking up a 10th of one percent. 0.4%, the year-over-year gain 2.9%. more wage growth even as the total job growth's were estimated. 62.7 percent. all of this means total job growth in 2016 was 2.2 million. >> the economy is improving. i still think in contrast to what jim just said.

rate isremployment relatively high and needs to come down by 1-2%. the labor force wants to work as opposed to the e3 number. alonggests gdp is moving at 2%. get ak that in order to economy, trump has suggested a strong economy. you need 5% nominal growth. >> still ahead, as we review the week exclusive fed insight from a voting member of the fomc. expert opinion on the most and markets inks 2017. more of the top business stories.

>> he will be leading expansion into asia. erik: this is bloomberg. ♪

erik: this is bloomberg best. i'm erik schatzker. the trumpopments in transition. the new leader for the a securities and exchange commission. >> donald trump taking -- in a statement the president-elect said jay clayton is a talented expert on many aspects of regulatory law and will ensure financial institutions can thrive and create jobs while playing by the rules. donald trump picked the ultimate insider as his next sec chief.

>> there is no doubt he has bona fide's representing the biggest players. you were talking about someone decade spent well over a representing the firms that ultimately are under the regulatory oversight of the sec which he may not share. >> the battle over the affordable care act is underway. today mike pence promised an orderly transition away from the health care law as he criticized obama care. >> the american people have sent new leadership because obamacare has failed.

a lot of these things are a regulation, not a statute. >> i believe health care will be better and less expensive when obamacare is gone. that is what we have to focus on. eating rid of this law and putting in a concept that is patient and doctor centered. don't want to lose the benefits of the affordable care act. we've seen the slowest growth rate of premiums. don't want to lose that. we are going to protect the insurance coverage that americans have today, the affordability and quality of their insurance coverage. >> toyota shares have fallen the most in a month in tokyo after

criticism from donald trump over the criticisms to open a plant. >> they will build a new plant in mexico to build cars for the u.s.. no way, he says. we don't know how much the taxes. take a look at the share price. we can see with the power of between actually is. yoda more than one and a quarter billion dollars. as you can expect, production volume or employment will not decrease. now they make the corolla cars. saying we have done so much the

u.s., $22 billion of direct investment. employing 30 6000 people. washington, not the only significant story out of china this week. our round of of business news continues with encouraging data from the world's second-largest economy. the year's first survey of manufacturing. reading in almost three years. it is a bit misleading.

we're seeing the chinese economy in a sweet spot. there is a view maybe this will take this could off the stimulus pedal. bubbly in a better spot than a year ago. >> the rainmaker who helped build a wall street giant. planning a second act to add a small competitor. we know what they are going to be doing short of a sales role? >> he will be the president. that he held in the 1990's. he will lead and expansion and doing a lot of what he did for clients, pushing people into more complex products than they had before. >> he can bring it a lot of growth.

debt and equity sales. >> britain's prime mr. nice be told the uncomfortable truths about the difficulties of negotiating brexit. rodriguez, a permanent representative of the eu. we potentially are moving towards a harder brexit. >> resignation underlines how difficult the brexit process is going to be. he doesn't need this kind of stress at the end of a long career. clearly it is going to be a difficult process. it will be a difference of opinion.

>> the prime minister is wasting no time filling the vacuum left behind. selected the next ambassador to the european union. i guess it is a question of strength or weakness. >> she didn't want a vacuum to open up. she brings tim barrow in, a former ambassador to moscow. there does seem to me that suggestion that she acted very quickly and was startled by some of this criticism. suggest she is trying to draw a line.

>> let's talk about deutsche bank. it is eyeing a private equity firms to deal with it settlement in the u.s.. one option being considered is lending to firms which specialize in buying back mortgages. instead of using our balance sheet, we can buy equity and get at thease for equities doj is asking for. ,> you want consumer relief these private equity firms do that on a regular basis. we should begetting credit for that on the consumer relief total. >> what is a pitfall? the doj just comes back and say you can't do it. >> it is part of the negotiations. it can't hurt to ask. the doj says the point of these settlements is to provide

additional consumer relief. this is something that is going on anyway. you can't count it. christmas my not to some retailers this year. macy's had disappointing sales. it would cut additional jobs from payroll. sears sold craftsman to black & decker. >> they were hoping for better results. the already announced they were going to close stores. we got a clear picture of which stores those are going to be. >> let's turn from one retailer to another. across ofews coming they are going to close an additional 150 stores. for them it is a liquidity management game. you have to keep closing stores the right size retailer.

for them it is figuring out what the right size of the business is. ♪

erik: welcome back to bloomberg fast. centralctiveness of banks was a constant topic of debate in 2016. many complain historically low interest rates were distorting of financial assets. will we see a new direction in monetary policy? david gort explore that question. >> when do we exit our great bond market distortion? >> we are in the process of

exiting. with the federal reserve seeing limited room for continued accommodation, starting to raise interest rates, you will see the pressure come off as much as it has been over the last two years to continue accommodation. my guess is we are in the process of exiting. how fast will depend on the net it states. whether it feels it needs to move faster or slower. >> one pressure comes off another pressure comes on. before the rhetoric. we have seen what is happening on capitol hill. many of them hell-bent on changing the relationship between congress and the federal reserve. how does this bank deal with that?

>> it is a very important issue across the world. central banks have been the only game in town for the last few years. they have also acquired a sense of political power that creates apprehension amongst the political establishment. they would like to control that power. unfortunately it is coming at a point when increasingly central bank independence will become important as perhaps inflationary prices rise in central banks are asked to do other things. it does these pressures come at a time when it is a very delicate situation for central banks.

>> the backdrop to this is the possibility we could see policy changes, a big infrastructure spending package. it is a dammed if you do do them if you don't position. >> absolutely. situation,olitical this is a time you have to tread carefully. i have no doubt given the tradition they have established the fed will do what it thinks is right rather than cater to politics. >> straight ahead, we will zero in on the fed. an exclusive interview with dallas fed president robert kaplan. also coming up, conversations with the tech industry. first, what you need to know about risk in 2017. it could be coming from places you don't usually expect.

global is driving political risk and uncertainty. this is bloomberg.

♪ you are watching "bloomberg best". i am erik schatzker. 2017 could be the most volatile since world war ii. that is according to the eurasia group in its annual outlook released this week. we discussed that report with 's most the world respected analysts, starting with larry summers. is your chief concern, observation, as we are 17 days from the inauguration of donald trump? >> it is a moment of extraordinary uncertainty to the

extent that markets enough to appreciate. there are prospects that things could work out well, but there are enough is risks to the global economy, enormous risks to the global economy from possible u.s. protectionists to the globals economy from experimentation in a world where foreign policy is up for grabs, enormous risks to the american economy from an administration that will take a different approach to american society than has been traditional. this is probably the largest and inion ideologically terms of substantive policy that we have seen in the united

states in the last three quarters of a century. ♪ thatere is no question trump comes into this office with a feeling that the most important bilateral relationship in the world, that between the noted states and china, is being well-managed, and the fact this country requires a hard response, happening at the exact takewhen xi jinping won't any uncertainty because he is leading into his own political cycle. when we talked about emerging risks, it was emerging markets, middle east, financial crisis, eurozone. in 2017, leading this document is the united states. driving global political risks and uncertainty, and that is not reflected in the

markets now, but is a fundamental change. it is this transition that matter so much for the rest of the world. ♪ >> i'm curious, sitting here in london about the new trade representatives we have. i wonder if u.k. will be at the top of the list. >> u.s. policies will be more protectionists. u.s. will have a trade deal with the u.k. is far-fetched. on brexit wills become cumbersome and, much more than two years to reach an agreement with the eu, and the risk is we will go to a situation that will damage economic growth for the united kingdom. europe and the eurozone is in the process of slow-motion disintegration. if le pen comes to power in be the this could

beginning of the end of europe and the eurozone. tom: what do we need to know about the domestic policy in beijing. because of thee leadership transition and the potential for a china that overreacts. xi jinping is so focused on the big party congress, the leadership transition, they will externale for activity, action, u.s.-china relations, north korea, that could pose a distraction to xi activityr some kind of that he would have to respond forcefully to so he doesn't lose credibility at home. >> what does a china that overreacts look like? do they kick out the u.s. companies? is there a supply chain problem, or is it worse?

for example, dropping the u.s. dollar as a reserve currency? >> it depends on the provocation. if the trumpet ministration decides to take a series of heavy trade actions against the through one channel which the chinese could retaliate is going after american companies. there are all sorts of informal ways they can harass american companies as a way to retaliate. a word that came up several times in the minutes of the federal reserve december policy meeting as the fomc debated the rate. on friday, mike mckee had a chance to probe deeper into the feds thinking with robert kaplan. you read the minutes and you can't help come away with the belief that federal reserve officials because of donald trump have little confidence in their economic forecast for

2017, and therefore not a lot of confidence in what monetary policy will have to do, is that fair? not say that all. the second half of 2016 was very strong. theown forecast is that first half of 2017 will also be strong, gdp growth in excess of 2%. the new fiscal policy and structural reforms provide upside to that forecast, but i would not say that people like the fomc members don't have confidence. it is that we are acknowledging we may need to be nimble to revise our forecast as events unfold. that's the way i would put it. an economy with 4.7% unemployment need additional fiscal stimulus? will say this, there

have been two big headwinds we have been talking about. ,ne is slow labor force growth mainly because of aging demographics, and it will continue for the next 10 years, and the second trend is weak productivity growth. i am a believer that monetary policy a loan won't deal effectively with those issues at this point, so we need structural reform, regulatory review, infrastructure spending that can improve productivity, other policies that could address those two issues, and so the issue is, these policies forthcoming would be best and most effective in my view if they address those two points. the: what did you make of december unemployment report out today? >> it is consistent with the narrative that we are moving towards full employment, consistent with moderate growth, removing some additional slack from the labor market, and so i

would say it is consistent with our forecast. that we willstent have relatively solid gdp growth, at least in the first half of this year, in excessive 2%. mike: what about the wage numbers? isit means the labor force tightening for skilled workers more than unskilled workers, but it is again consistent with reduced labor slack, moving towards full employment, and moving towards a tighter labor market. it is consistent with that. ♪

♪ .rik: this is "bloomberg best" i am erik schatzker. the annual consumer electronics show in las vegas is a showcase for new products and innovative

platforms. it also brings together the tech industry's most influential executives. we spoke with a number of ceos this week, and here are some of the highlights. ♪ ces last year was about connectivity, and we were doubling down, but this year, we are showing technology implementation of cloud oflications, collaboration many technologies from apple, samsung, ibm, google, and the further customization. more and more automation is getting complicated for average users, and we want to customize things to the cars, the homes, and the fourth most important, the u.s. political scene has been talking about hacking, cyber security. you cannot have it connected

home or car unless you have a foure network, so these are connectivity in home and the car and the enterprise. >> you are talking about driving , oneself automated car that seamlessly talks to your garage and opens the door for you, when is this a reality and not a concept? >> it is more than a concept now. the technology is ready. the infrastructure were not ready to deploy because we have 800 million cars on the road today driven by humans and not intelligent, so the next 3-5 years will be the most exciting in terms of implementation. >> is it three of radically possible that these series of hacks and the public's knowledge of them has any affect on the brand and damages the brand in any way? >> i would say from what our

goals are and what we have been tasked with, it remains on track an the breach is investigation still ongoing. >> when you look at that asset, would you see that holds such value? thebreach tends to dominate discussion could what dcs the underlying asset and its value? >> yahoo! is one of the largest footprints in the world with a large advertising and e-commerce weiness and a share, so when look at the combined asset, it would have over one billion consumers, billions of dollars in ad revenue, and have a footprint in mobile, added with zon with the data, targeting, and getting mobile consumers, it is huge. there is the breach information and investigation, but from a business strategy standpoint for

the next 5-10 years, the assets represent a unique opportunity and scale, and we have gone from company consolidation to industry consolidation, and thinkingas been for and very clear on the execution of where they think the world is going in terms of media, wireless, and mobile. we are excited about yahoo! and the team overall, and there is this one issue that needs to be resolved, but i look through that to look at the strategy and the strategy remains intact. >> my colleague had a scoop this at&t-time warner deal. trump is seemingly not a fan of it. i don't know which her thoughts are on that particular story. >> who cares what he thinks? unless he's going to micromanage it, anti-trust coming go through the legal process, he is just

doing what he does, making noise on a subject he does not know anything about. >> it has taken the shares down today -- >> i have heard this a lot recently, which if he says something, your stock goes down. yeah, fine, if your stock is subject more than for a day or two to his comments being a negative drag, then you have a lousy business. it is all ridiculous silliness. >> there was some other merger efforts last year, cbs-viacom fell apart. do you see any likelihood of that deal being resurrected? >> no. >> why do you think that? >> if you are on the cbs special committee representing shareholders, you are not going to buy viacom at anything but a

bargain sale price. if you are on the other side on the special committee, you are not sell it at anything but a premium, so it will not happen anyway. i don't know why everyone made so much noise? >> how would you turn around paramount? >> if you make good movies, it turns. president-elect donald trump has taken aim at companies, particularly some who manufacture and mexico, threatening tariffs on companies who import products from mexico. if that is changing at all your view and how you operate in that country. i know you produce in mexico. we produce and mexico, but also in the united states. we are the largest manufacturing 640 thousandu.s., jobs, the largest plant and all

the americas for all the car industry, so we are heavy in the u.s. and all our capacity are full. there is a new administration coming that is probably going to be some new policies implemented. we are business people and we will adapt to the new policy. >> what does that mean exactly? >> additional capacity to come in north america will take in consideration the policies that will be prevailing in the united states, mexico, and canada. so far, the policies have been nafta. this was the agreement signed between the three markets, and we adapted to these policies. if this changes and there is a new agreement or no agreement at all, we will add that to these conditions. the is important as that rule will be implemented for everybody. >> as it stands now, clearly he has targeted mexico, so if you add capacity, it would be the u.s. or canada? >> i don't want to preempt on

what will be decided by the new administration when it is in position, but we will not make any moves before understanding exactly what is going to be the new policy of the american administration. this is the second largest market in the world for car markets. you want the president of the united states and everybody listens. >> clearly this is a year of germanic change in industry inucture, -- dramatic change industry structure, but something will happen. i predicted that the cable players will fail miserably and have to reconsider that. we have a bunch of fun predictions, and i stand by them. >> including that google is going to get as well into the wireless world, but i want to mention one that people keep predicting, that you keep having to swat away, which is a merger

between t-mobile and sprint, and you seemed to hint earlier to reporters that you think this might go through, that this may happen, and i don't want to put words in your mouth, particularly with the new president in the white house? order for something to go through, it has to exist, and i would not comment on the existence of something, especially during a quiet period . the structure, especially around the mobile internet is going to bring together multiple players either vertically or horizontally to serve customers, and yes, of course, the scale provided by sprint and t-mobile potentially being together is something long considered, and i do believe under a trump administration that there will level oferent regulatory scrutiny, and possibly industry structure consolidation tolerance of a fascinating year, but a great

year to be a healthy, vibrant, growing brand, and then figure out the best way to serve your shareholders and customers. ♪

♪ erik:erik>> this bloomberg mavsd out at the end of last year, a map of north america's plant production. we see ford and gm, ford and blue, gm and yellow, right in the united states. erik: 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 .on quic

here is a quick take that examines the civil war in syria. ♪ half a decade of uninterrupted violence, 450,000 deaths, at least 11 million people displaced from their homes. that's like the entire state of ohio. even as the syrian government recaptures aleppo, there is no end in site peers who here is the situation. since 1966, the minority have been in power in syria him at this despite the fact that they represent 12% of the syrian population. the sunni muslim population represent 60%. the current president, bashar al-assad, took over in 2000 after the death of his father. the arab spring, inspired, syrians took to the

streets to oppose the oppressive rule of bashar al-assad. instead of stepping down, he violently crushed the uprising. many protesters responded by arming themselves to that is when the conflict took on a sectarian nature. areas throughher their backing behind the rebels. shiites gave their support to the regime. meanwhile, jihadists used turmoil to seize territory and attacked both sizes. sides. simply put, the u.s. is against bashar al-assad, and russia supports him. tosia has used its veto repeatedly protect the regime. both countries are actively fighting inside syria against the islamic state, but russia -- including rebels

supported by u.s. and its allies. russia assisted bashar al-assad's forces in retaking aleppo, the biggest in six years of civil war. devastated, syrians were able to escape the bloodshed by fleeing to neighboring countries, creating a global humanitarian refugee crisis. wants to keep syria sovereign and independent by backing bashar al-assad. for years, the u.s. has insisted the bashar al-assad should go, but has since softened its position. ,ith donald trump's presidency that stance may sultan further. he suggested partnering with russia to combat the islamic state, taking precedent over supporting rebels. ♪ erik: that was just one of the uic takes you can find on the bloomberg. you can also find them at bloomberg.com, along with the latest business news and

analysis 24 hours a day. thank you for watching. i am erik schatzker. this is bloomberg. ♪

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