♪ >> coming up on bloomberg best, the stories that shaped the business world. from confronting carmakers to dismantling obamacare, the trump administration gains speed. >> clearly we see a more positive environment under is an alexa trump. -- president-elect trump. currency surges against the dollar. and all signs point to further tightening at the fed. there is a lot of uncertainty, that is to be expected. >> a report sees political risk

everywhere in 2017, experts access -- ss the hotspots. there is gradual slow motion. which they could retaliate in is american companies. plusst ceos talk tech -- ceos talk tech. >> we have gone from company consolidation to industry consolidation, it is all straight ahead on bloomberg best. >> hello and welcome, i am erik. this is bloomberg best. a weekly review of the most important business news, analysis and interviews from bloomberg television around the world. : most global markets were

closed for the holiday. --s was introductory interrupted by a donald trump tweet. donald trump is taking aim at general motors. he criticize them of building sayingvy cruz in mexico that general motors is sending mexican made models of chevy cruz across borders. usa or pay big for tax! -- big border tax. the must the back story about what gm is manufacturing overseas and how global the manufacturing thing is. >> they make most of them in the u.s.. in plants in ohio. that is the one that the american consumers by the most.

americans never embraced hatchbacks. that one is made in mexico. but this is symbolic. this is from pushing another automaker and he has already tussled with board. say that there is enough investment in mexico, bring jobs back. i will threaten a tarriff if you don't. >> trump is very good at governing by anecdote. this will be one way he will try to govern. small victories. being very aggressive for the american worker. itlooks like this will make very difficult for him to keep this on a global scale. >> would you have made the same decision regardless of what the president-elect had said? >> we would have made the same decision. the reason that we quit -- cancel the plant was we saw a market decline in small vehicles

are in north america. it was a board decision. it the't anything to do president-elect? >> we look at all factors. we see a better manufacturing environment under president trump. we see the progrowth policies that he is outlining. this is a vote of confidence that he can deliver on those things. further measures to support the you and and capital outlooks. let's get over to beijing. let's talk to tom mckenzie. they are now considering contingency plans to support the and he's those capital outflows, including asking enterprises to convert at least temporarily some of their foreign exchange. they may trim some of their u.s. treasury holdings to support you on and maintain a stable

exchange rate. they are trying to pull back on some of these capital outflows. >> how unusual is this move by china? >> the fact that they are preparing a contingency plan, 2016.reated a market in they are looking to react to overseas movements on the dollar. that is slightly ominous from my point of view. it is more of a dollar story. ontrump does make good whatever he has said he will do, impose tariffs of more than 40% on chinese exports to the u.s., that the start a lot of trouble. i think people are really concerned about what will happen

after he takes over. officials are endorsing a gradual rate increase as upside risks are considered. they are trying to head of higher inflation. >> the discussion was a lengthy discussion from the minutes about what might happen under the fiscal policies of donald trump. there is a lot of uncertainty, that is to be expected. what caught my eye was the discussion of labor markets. a number of people think they can under should the fed's target of employment. many participants have emphasized that timely adjustments to monetary policy could be acquired to achieve and maintain the committees committee's max employment rates.

if labor markets get even stronger, we may have to move sooner and faster than the markets anticipated. onthe chinese offshore you posted the biggest to day gain on record. gain. day >> it is almost killing season for the yuan. a bit like how we started last year. the chinese authorities are coming in a big way. ares less clear if they directly doing this. they had engineered a liquidity shortage. they are trying to stop the you want from flowing from the mainland into hong kong. the chinese authorities ahead of chinese new year are really sending a signal. a chinese depreciation is not a one-way street.

we are coming after you. >> five seconds away from the payroll reports. that is the median estimate of a bloomberg survey. the number comes now. >> 156,000. the unemployment rate as expected taking up a tent up 1% to 4.7%. -- 8/10 of 1% -- a tenth of 1% to 4.7%. participation rates, that is something that we in the bed have been watching at 62.7%. all of this means total job was 2.2 million. >> the labor markets are improving.

the underemployment rate is relatively high. it comes down by one or 2%. they are talking about the labor force that wants to work. it is a decent number. they suggest that the gdp is moving along at 2% for 2.5%. i think that in order to get a very healthy economy, trump does suggest that a strong economy needs 3% real growth and 5% nominal growth and we are about a point under for both of those. still ahead as we reviewed the week on bloomberg best, exclusive fed insight. and expert opinions on the most significant risks facing global economies and markets in 2017. up next, more of the week's top business stories. meeting expansion

into asia and different parts of the world. >> this is bloomberg. ♪

♪ >> this is bloomberg best. more developments in the unfolding trump transition. starting with the nomination of a new leader for the exchange commission. >>, trump picking -- donald trump thinking a head for the sec. jay clayton is a expert. he will ensure that our financial expectations -- institutions can thrive. it sounds like, some think the ultimate wall street insider as chief.chief -- sec

>> some of the biggest players have done some ipo work for the biggest deals ever. alibaba for example. you're talking about someone who has spent well over a decade representing some of the firms that are ultimately under the regulatory oversight of the sec. the battle over the fate of the affordable care act is underway. the opening salvo is taking place on capitol hill. penceaker and mike promised a orderly transition from the health care law. he roundly criticized obamacare. pence: obamacare has failed. brought -- mike pence brought a little news

today. he said that does not intend to -- intense -- the president intends to use executive action. a lot of these things are in regulation. health there will be better and less expensive when obamacare is gone. that is what we have to focus on. getting rate of his law and putting in place a model and a -- ept in principle that that is what we will do. we saw the slowest growth rate of premiums for all americans. we don't want to lose that. we are going to try to protect the interest coverage that americans had today, the affordability and ali of their insurance coverage. toyota's shares have fallen after the criticism of its plans

to open a new life in mexico. >> they said that they will build a new one in new mexico. no way he says, build it in the u.s.. take a look at the share price. we can see what the power of a tweak his. $1.25 billion.a toyota came out with its own defense. they said that production volume in the u.s. will not decrease as a result of our new class and -- in mexico. it seems that toyota is going to be moving ahead with its mexico plant to make those happen. toyota is really trying to burnish its street credit with the u.s.. they said look, we have done so much with the u.s..

$22 billion in direct investment in the u.s.. --t manufacturing facilities 10 manufacturing facilities. over currency controls was not the only significant story out of china this week. our roundup of business news 10 years with encouraging data from the world's second-largest economy. >> we heard just moments ago that the gauge is coming into 51.9 four december. the highest rated in three years. they only p.m. us are pointing to a better mood. there being helped. there was inflation after four years. together, we are seeing the chinese economy.

maybe the authorities can take their foot of the stimulus pedal. there are other reforms that are needed. they are probably in a better spot than they expected to be a year ago. >> he is the rainmaker who helped build this into a wall street giant. they are planning a second act. we know what they are going to be doing short of a sales role at fitzgerald. >> he will be the president. he will be leaving expansion into asia, different parts of the world. and a lot of what he did at deutsche bank. creating new clients. and pushing people into more complex thoughts than they had before. you can growth because they have a lot of leg room to grow.

debt and equity sales and trading. the prime minister needs to be told the uncomfortable truth about the difficulties of negotiating present. that is theresa may's former envoy to the european union. >> are we looking with moments like this? does it make us think that we are potentially moving toward a harder form of present? -- i thinkeservation the reservation underlies how long and drawn out raise it will be. brexit will be. clearly, it is going to be a very difficult process. i think it is also not news to there are some differences in opinion within the government. >> theresa may is wasted no time

in filling the vacuum left eye five--- by ivan. >> she didn't want a vacuum to open up. --t letter from ivan rogers there was a lack of preparation for a strong negotiating table. she brings tim barrow and a former ambassador to moscow. after -- barely 24 hours after ivan rogers resigned. there does seem to be a suggestion that she acted very quickly and was stunned by this criticism. it is fairly unprecedented inside. it does suggest that she is trying to draw a line on a tough

24 hours. >> it is said to be i up on equity firms to help deal with the $7.2 billion settlement in the u.s.. one option being considered is plenty to firms. so basically they are saying instead of using the balance that for primeet mortgages. >> deutsche bank is saying that you want consumer relief. these private equity firms do that on a regular basis. if we led to them, we should be getting credit for them. >> what is it at all? -- what is a paintball? -- pitfall? >> it falls in that bucket of it can't hurt to ask. the point of the settlement is

to provide additional consumer relief. this is something that is going on anyway. it is not additional, you can't count it. >> christmas is not really given to some retailers this year. they are saying that they will cut jobs from the table. macy's is to cut jobs. >> they were hoping for better results. they are the announced that they will close stores. yesterday we got a clear picture of what stores those will be. more than 60 of them. one troubled to retailer from another. us talk about sears. sears -- let's talk about sears. nearlys going to close 150 stores. maybe get that to seven or 800 stores.

but they are trying to figure out what the right size of the businesses. -- business is. ♪

♪ >> welcome back to bloomberg best. the effectiveness of central banks was a constant topic of debate in 2000. -- 2016. now it is a new year. will we see a new direction in monetary policy? with an exclusive interview, david gore explore that question with the reserve bank of india. exit our great font market distortion? >> i think we are in the process of exiting with the federal reserve seeing omitted room for

continued accommodation. starting to raise interest rates. i think you'll see the pressure on other central banks coming off as much as it has over the last couple of years. my guess is that we are in the process of it. how fast it will be will depend on conditions in the united states. how comfortable the federal reserve feels with those --icies and the way it feels whether it feels it needs to move faster or slower. how quickly it will come in? it seems to me as one question comes up, another question comes on. certainly seeing on capitol hill another round of senators coming in. they are hell-bent on changing the relationship between congress and the federal reserve. >> i think it is a very important issue.

it is there across the world. because central banks have been the only game in town for the last few years. they also acquired a sense of political power that certainly creates apprehension amongst the political establishment. of course, they would like to control that power. unfortunately, it is coming at a point when increasingly, central-bank independence will become an appointment. -- important. to controling asked inflation. we spent many years getting an apparatus which ensures the independence and ensures they can raise rates at the time that is needed without feeling somehow constrained by political pressure. it does, these pressures come at a time when it is a very delicate situation. mandy moore central banks.

>> -- mainly for central banks. >> it seems to me that the fed is dan if you do or damaged don't when it comes to raising rates. >> given the political situation, this is a time where they have to tread very carefully. but given the tradition they had established, the fed will do what it thinks is right. rather than cater to political opinion. >> we will zero in on the bed coming up. they sat down for an exclusive interview with robert kaplan. also coming up, conversations with the leading voices of the tech industry. but first, when you need to know about this in 2017. experts tell bloomberg it could be coming from places you don't usually expect. global is driving

political risk and uncertainty. this is bloomberg. ♪ . .

♪ erik: you are watching "bloomberg best." i am erik schatzker. 2017 could be the most volatile year for political risk since world war ii. that is according to the eurasia group and their report that was released this week. we discussed some of the details with some very respected analysts. starting with larry summer. >> what is your chief concern or observation as we are 17 days away from the inauguration of president trump? >> i think it is a moment of extraordinary uncertainty.

there are prospects that things could work out well for some. however, there are enormous risks to the global economy. enormous risks from a possible united states protectionist measures. enormous risks to the world from experimentation where certain pillars of american foreign-policy are up for grabs. enormous risk to the american economy from an administration that will take a very different approach to american society than has been traditional. this is probably the largest transition ideologically and in terms of substantive policy that we have seen in the united states of the last three quarters of a century.

>> there is no question that donald trump comes into this office with a feeling that most important bilateral relationship in the world between the united states and china is not being fundamentally well-managed. he feels that the united states needs a hard response. it is happening at a time when zhi jinping will not take any uncertainty. from 1998, we started off from. when we talk about global, political risk it was emerging markets and the middle east, and that the financial crisis hit. you had the eurozone. in 2017 leading the docket is the united states. america is driving political global risk and uncertainty. that is not reflected in the markets right now, but it is a fundamental seachange from anything we have seen over the

past few decades. it is this transition that matters so much to the rest of the world. ♪ >> i am curious about the new representative we have. i wonder if the u.k. is going to be at the top of the list. do you have to do a brexit to get on with the trump administration? >> there is an idea that the united states will have a trade deal with the u.k., and i think that is very far-fetched. i think it is going to take much more than two years to reach an agreement with the eeo -- with the e.u. it is going to damage economic growth to the united kingdom. it is at a time when europe is in the process of gradual, slow motion disintegration. who comes to power in france, what political party gains power in italy. >> what we need to know about

the domestic policies of beijing if they address the president of the united states? >> the key risk we see for china is being a the edge in 2017 because of the leadership transition. the potential for china to overreact. because xi jinping is so focused on the big incoming congress -- they are going to be on edge to any kind of external activity or action whether it is u.s. china relations or north korea. that could either pose a distraction to xi jinping or it could cause some kind of activity that he would have to respond forcefully to in order to not lose credibility at home. >> do they take out u.s. companies? is it a supply chain problem? or is it even worse? >> it really depends on what the provocation is.

i think the u.s.-china relationship -- if donald trump and the trump administration decides to take a series of very heavy, aggressive trade actions against the chinese, then one channel they could retaliate is by going after american companies. and, there are all sorts of informal ways that they could sort of harass american companies as a way to retaliate. ♪ erik: risk is a word that came up several times in the minutes of the federal reserve policy meeting as they debated the 2017 rate. on friday, we had a chance to probe deeper into the fed thinking with robert kaplan. dallas fed president. ♪ >> you read the minutes of the last fomc meeting, and you cannot help but walk away with the belief that -- federal reserve officials have very little confidence in the donald trump forecast in 2017. there may not be a lot of

confidence in what monetary policy is going to have to do. is that fair? >> no, i would not say that at all. i would say the second half of 2016 was very strong. our own forecast at the dallas fed is that the first half of 2017 will also be strong. gdp in excess of 2.5%. i think the reforms provide upside to that forecast. i would not say that people like me, members do not have confidence. it is just that we are acknowledging that, with additional economic policies, it will provide upside to our forecast. we might need to be nimble to revise our forecast as events unfold. that is the way i would put it. >> with the economy need additional fiscal stimulus? >> i will say this, there have been two, major headwinds we have been talking about.

one of those is slow labor force growth due to aging and demographics. by the way, it will continue for the next 10 years. the second trend is weak productivity growth. i've been a believer that monetary policy alone will not deal effectively with those issues at this point. we need some kind of reform. maybe regulatory review, potentially some infrastructure spending that could improve productivity. policies that could improve those two issues. our belief is that the policies would be most effective if they address those two points. >> what you think of the report after today? the december unemployment report. >> i think it is consistent with the message that we are moving towards full employment. it is consistent with moderate growth. it is consistent with removing some additional slack from the

labor market. and so i would say it is consistent with our forecast. for me, it is consistent that we will have relatively solid gdp growth in the first half of next year in excess of 2%. >> what about the wage numbers? 2.9% year-over-year, the strongest sense >> that is noticeable. it is worth noting that, as the labor force is tightening, it is tightening more for skilled workers than unskilled workers. it is consistent with reduced labor slack and moving towards full employment and a tighter labor market. ♪

erik: 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 industries most influential executives.

we spoke with a number of ceos and these are some of the highlights. >> last year, it was all about connectivity. we are really doubling down as an industry. this year, we are showing technology and four pillars of conductivity. that is about collaboration of many different technologies from apple, samsung, ibm, google. more and more automation that you bring in is getting complicated for average users like you or i. we want to customize the human side of machines. the u.s. political scene has been talking about the hacking, so set of security is important. you cannot have home security without cyber security.

it is very important. these are some of the biggest trends we are showing here with the home and the car. >> you are talking about driving us in a self automated car. it already talks to you and opens the garage for you. when is it a reality and not a concept? >> it is more than a concept now. i think the technology is ready. as far as the infrastructure, we are not ready to deploy. cars today are being driven by humans, and they are not intelligent. so the next few years will be exciting in terms of implementation. >> is it theoretically possible that these series of hacks have any affect on the brand of yahoo! in any way? that it damages the brand? >> from what our goals are,

yahoo! remains on track. the breach is a bit of research, and the investigation is ongoing. >> when you look at that asset, what do you see that holds such value? the breach continues to dominate the discussion. what do you see in its underlying value? >> well, you know, yahoo! has one of the largest footprints on the consumer side. it has a large advertising and e-commerce business in asia. we look at this asset, the combined assets would have over a billion consumers, you know, doing billions and billions of dollars in ad revenue. it has a very big footprint in mobile. you add into it verizon with the opportunity for data and targeting and getting to mobile consumers. it is huge. i think the breach information and investigation is there, but

from a business strategy standpoint, especially when you look toward the next 5-10 years, the asset coming together represent a very unique opportunity and scale. you know, look, we have gone from company consolidation to industry consolidations. verizon has been very clear on their execution and thinking on where they believe the world is going with media and wireless and mobile. we are excited about verizon and we are excited by yahoo! and we are excited about the team overall. there is one issue that needs to be resolved over all, but on the integration side as far as the strategy -- the strategy remains intact. >> my colleagues had a dispute this morning about mrs. trump's thoughts -- on -- had a dispute this morning on mr. trump's thoughts on the at&t and time warner deal. he is seemingly not a fan of it. what are your thoughts? >> who cares what he thinks? unless he is going to micromanage it and go through the whole legal process, he is just doing what he does. he is making noise.

on a subject he really does not know anything about. >> it has taken a chunk out of the company shares today. >> i have heard this a lot recently -- if he says something, your stock goes down. yes, fine. if your stock is subject for more than a day or two to his comments being a negative drag on you, then you have a very lousy business. and, it is all, you know, it is all today is -- it is all today's ridiculous silliness. >> the merger efforts last year -- do you see any likelihood of the merger being resurrected? >> no. it could have never happened anyway. >> oh really? why do you say that? >> because if you are on a committee representing the shareholders, then you are not going to buy five, for anything other than a bargain sale price.

if you are on the other side of the committee, then you are only going to sell it at a premium. it was never going to happen anyways. so, i do not know why anybody made noise. >> how would you try to turn around paramount? >> you make good movies. it turns. ♪ >> president-elect donald trump has taken aim at companies -- particularly those that manufacture in mexico. he has been threatening tariffs on companies that import products from mexico. does that change at all your view on how you operate in that country? i know you produce in mexico. >> we produce in mexico, but we also produce a lot in the united states. just want to remind you, we have the largest manufacturing plant in the united states. 640,000 cars, the most and all of the americas. it is the largest plant in all

america for the car industry. we are happy in the u.s. what i want to tell you is that there is a new administration coming. there are going to be some new policies and limited. obviously, we are business people, and we will adapt to the new policies. >> what does that mean? >> with additional the past be coming to north america, we will take into consideration the policies coming into place. america, new mexico, canada. so far, the policies have been nafta. this was an agreement signed between the three markets, and this we adapted to the policy. if this changes, then we will adapt to this condition. what is important is that, as a rule, we implemented for everybody. >> as it stands now, he has clearly targeted mexico. so you are saying if you are going to add capacity it is going to be in the u.s. or canada? >> i do not want to preempt on what will be decided when the

new administration will be in position. but i can tell you, 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 car market in the world. when the president of the united obviously, states says something, everybody listens. ♪ >> clearly, this is a year in dramatic change in industry structure. i strongly believe that dish's capability will persist, but something is going to happen with them. i also predict that cable players will fail miserably and have to cope with that. i stand by my predictions. >> including also that google is going to get into the wireless world. i want to mention one that people keep predicting that you have to keep swatting away. it is a merger between t-mobile and sprint. you seemed to hint earlier that

you think this might go through. that this might actually happen. i do not want to put words in your mouth. particularly, with the new president in the white house. >> yeah, and again, in order for something to go through, it has to exist. i would never comment on the existence of something that we are currently at auction about. when i have been clear about all along is that the structure, especially around the mobile internet, is going to bring together multiple players either vertically or horizontally. and yes of course, the scale provided by sprint and t-mobile being together is something that has long been considered. i believe, under a trump administration, there will be a different level of regulatory scrutiny and possibly industry structure. consolidation tolerance. and so i think it is going to be a fascinating year. a great year to be a healthy, vibrant, growing brand. ♪

>> we go into the bloomberg, and we are using a great function. this is bloomberg mass that was released last year. this is a map of north america plant production. we see ford in blue and gm in yellow. and it is right in the united states. erik: there are about 30,000 options on the bloomberg could we always like to show you our favorites on bloomberg television. here is another one you will find useful. quic. it can take you to our quick takes for insights into timely topics. here is one 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 is like the entire state of ohio. even as the syrian government recaptures aleppo, there is no end in sight. here is the situation since 1966, the minority offshoot of shiite islam has been in power. this despite the fact that they only represent 12% of the population. the sunni muslim population represent around 60%. the current president, bashar al-assad took over in 2000 after the death of his father. cut to 2011 and arab spring. the world watched the rising as tunisia toppled its dictator. instead of stepping down, assad violently crushed the peaceful

uprising using tanks, artillery, and gunships. many protesters responded by arming themselves. that is when the conflict took on a sectarian nature. they looked to the saudis who put their backing behind aleppo. shiites gave their support to the regime. meanwhile, the jihadists of the islamic state use their power attacked both sides. then, there are superpowers like the united states and russia who are frequently at odds over the war. the united states is against assad while russia supports it. both countries are actively fighting inside syria against the islamic state and al qaeda spin off. this in the name of combating terrorism. but russia uses the terror attacks to bomb groups supporting assad including rebels supported by the united states and its allies. devastated by the fighting, syrians were able to escape the

bloodshed by fleeing by the millions into neighboring countries. straining resources into a global humanitarian refugee crisis. for years, the united states has helped them stay independent. but now it has insisted that assad must go. in the interest of the broader fight against the islamic state. donald trump's presidency means that stance might soften further. he suggested partnering with russia to combat the islamic state. erik: that was just one of many quick takes you can find on the bloomberg. you can also find them on bloomberg.com along with the latest business news and analysis for the four hours a -- 24 hours a day. that will be at for "bloomberg best" this week. thank you for watching. i am erik schatzker. this is bloomberg.

♪

>> the trump of fact -- fiat chrysler is the latest to come under pressure from the president-elect. >> china's currency reserves slumped as the yen site the best slide into decades. that china backed asian infrastructure bank is open to u.s. membership. we will hear exclusively from the president. >> to samsung executives face prosecut