♪ >> coming up on "bloomberg best," the stories that shaped the week in business around the world. news from the white house comes fast and furious. it is a turbulent time for trump and his team. >> i think canada is continuing to get a softer touch on trade. >> democrats rallied against p uzder's nomination. >> janet yellen speaks on capitol hill. of 2%had a target inflation, and we are headed in that direction. >> u.s. equities stay on a record role. experts speak.

>> it is always difficult to actually predict return >>. -- predict return. >> to see there is a delay in the brexit. >> plus, we sought through earnings reports with reaction. >> all our businesses are making progress. >> it is all straight ahead on "bloomberg best." ♪ >> hello, i'm jonathan ferro. this is bloomberg best. for much of the week, the focus of the business world has been on washington, d.c., as the active trump administration continues to dominate headlines.

president trump and justin trudeau concluding their news conference where they discussed the need to tweak terms of the trade agreement with canada. cry fromng is a far what he described on nafta, a tearing up. he obviously covered mostly trade, as you expected. was anything surprising to you? reporter: there was what finally came at the end, tweaking a trade deal with canada, not necessarily ripping it up, the type of talk we have heard with mexico. a lot more auto production is done in canada than in mexico, by far. wantedp actually really to increase u.s. auto manufacturing, he could go after the automakers in canada and say, stop investing in those plans, start investing in the u.s.. i am not sure why he is doing

that, but because the relationship is so strong between the u.s. and canada, i think canada is continuing to get a softer touch on trade and mexico is. there is a lot of news out of washington today from national security advisor flynn leaving and drucker -- treasury secretary steven mnuchin arriving. what happened? >> he quit, and obviously people in the white house forced his hand. if you can't trust your national security advisor, you don't have a job. ?> what can we read into this is this a story of disarray or decisiveness? it is a little bit of both. the washington post has a front-page piece of chaos being the modus operandi for this administration, and i can't disagree with that. hours before michael flynn quit, kellyanne conway said he had the president's total support.

it does seem chaotic. >> i know a lot of people in europe are to be relieved that steve mnuchin has finally been a part -- has finally been appointed, because they know who to call if they want to talk about currency. do they know what his priority over the next week will be? reporter: behind the scenes, he is working on capitol hill to get some of these the regulatory processes on dodd-frank in motion. he is also working with the president on tax reforms. he has emerged as the goto person for tax reform. >> janet yellen testifying on capitol hill. ms. yellen: as i noted on previous occasions, waiting to know long -- waiting to long would be unwise. it would potentially require the fomc to raise rates rapidly. >> we might hear something about a march rate hike. what did we hear from the fed chair today? >> she did confirm the fed is

going to be raising rates this year based on the information they have on the economy. too early to note what the fiscal impact would be of any proposals from congress or the administration. and she said all meetings are live. the fed does not want to take march off the table. they want the possibility of raising rates there. she tried to stress that you should not give up on it. >> a hiccup for the trump administration. cke restaurants ceo andrew custer is out for labor secretary. in the tweet, he said, i am withdrawing my nomination for secretary of labor. i am honored to be considered. why could he not get confirmed? .> republicans republicans support was deteriorating and the upper chamber. yesterday, i spoke with tim scott of south carolina, and he was still having reservations about his nomination for the

department of labor. press cohesively rallied against puz -- democrats cohesively rallied against puzder's nomination. despite having the support of the ceo's of mcdonald's and other fast food chains, they were not able to get this over the finish line, at devastating blow for the trump administration. >> the highest level of face-to-face contact between the u.s. and russia since president .rump took office rex tillerson met with his russian counterpart today in germany. >> people have been very keen to see whether he speaks for trump and what the space of the u.s. administration would look like. awkward,little bit because it is customary when you do a joint statement or bilateral with another leader, in this case sergey lavrov, his russian counterpart, to do a handshake, a couple of words.

as he started speaking, all the press were ushered out, which caused the russian secretary to ask why the press was being hushed, which is ironic. tillerson made a statement to the press shortly afterwards where one important point he mentioned was the u.s. is backing the immense agreement . that will go down well with a lot of european countries. the. trump: nomination for secretary of the department of labor will be mr. alex acosta. he has a law degree from harvard law school, a great student, former clerk for justice samuel alito. he has had a tremendous career. >> who is he, and where does he come from? >> mr. acosta is the dean of the florida international university law school. he served on the labor relations board under george bush. he has also gone on to have

extensive the justice department . nts at the justice department. there are many published opinions we will be taking a look at. he is also the first hispanic, wainwright -- hispanic, would alleviate some of the concerns of trump not appointing any to cap net position's. >> in the u.k., -- cabinet positions. jonathan: in the u.k., prime minister tony blair taking a series of headlines as he urged those opposed to brexit to stand up and fight back. >> the people voted without knowledge of the terms of brexit. as these terms become clear, it is their right to change their mind. themission is to persuade to do so.

>> what is he doing? >> i think he is saying that nobody is making the opposite case. he has a point. there is very little that represents the people who voted remain in the political discourse. i think what he hopes is there is a group of people out there not standing up, the silent remainders, that are not making their voices heard. he is hoping that maybe some within that group -- and i asked him if it would be him, he dismissed that quickly -- that somebody stands up and delivers. the joke at the moment is the pound is the only opposition to theresa may's administration. i think he is hoping that somebody other than the british currency is going to stand up. jonathan: still ahead, highlights from the week's top interviews. the case that regulation is still a good thing, and tom keene sits down with stanley fischer.

plus, we marched through another parade of earnings reports. up next, more of the week's biggest stories. softbank makes an expensive acquisition. the question is, why? if it standsclear with his vision of the future. jonathan: this is bloomberg. ♪

jonathan: this is "bloomberg best." in europe, swiss voters have their say in a referendum on corporate tax breaks. >> swiss voters have projected a , a to reform corporate taxes plan to keep the country internationally competitive. >> that comes as switzerland ins

its current practice of giving tax breaks to multinationals, due to international pressure. ministernance committed yesterday to convene a task force that will meet in coming days, and in a best case scenario, they may have a draft bill in parliament by the end of this year. at exactly what the new plan will consist of, nobody knows. >> what does this mean for multinationals in switzerland? more uncertainty? tax experts say companies will probably be postponing investments were moving investments one from switzerland -- or moving investment from switzerland to other countries. has cut telling opec it production by the most in eight years, going beyond obligations to prom -- to balance world markets. is this one of the problems of this deal struck by non-opec members, to cut production and

elsewhere, other producing nations trying to fill in the gap? >> i think that is a big concern for opec right now. share of production is coming back very strongly with these high prices above $80 a barrel. america -- $50 a barrel. americans are drilling again, they are producing more oil, and clearly that is limiting the price impact of opec to cut. it is the same story we were talking about, saudi arabia versus shale, and i think we will be talking about that for the rest of the year. >> softbank has agreed to buy investment groups for $3.3 billion. you us some background on this acquisition. why is this happening right now? guest: just as investors and analysts begin to wrap their mind among the investment thesis, you have a detail like fairlyortress is a

traditional asset management company. they have about $70 billion of assets in their portfolio, half is fixed income, basically bonds . in addition, they have a rather eclectic collection of investments that includes a tv company, wireless spectrum, as well as some assets like a railway company in florida and hotels in japan. it is not clear if it fits in future.'s vision of the fortress has the distinction of being the first private equity fund to go public, back in 2007, but the shares are about a third of that price, so perhaps it is a good deal area -- perhaps it is a good deal. >> consumer inflation coming up harder than forecast, up 6/10 of 1%. economists surveyed were looking for an increase of half that, 3/10 of 1%, so it is a sign of

inflation. retail sales for january, consumers out there spending. >> how much should we read into the cpi numbers, and how much should we not? >> i think this is significant we stronger than people had suspected, and also a bit more on the call. i think the call is significant because it is the core inflation number that the fed looks at. the uptick in inflation that the fed is looking for is coming. maybe it is coming sooner than expected. >> what does it tell us about consumers right now? >> people expected it to be a gift back in january, and that did not happen. in fact, december was revised up to a 1% increase. inlooks like this surge consumer confidence we have seen since the election does seem to be trans-placing entire spending

, maybe to a lower savings ratio. putting the two things together, and looks like consumers are spendingbe heavily, and retailes are taking the opportunity to raise prices. money managers have focused on this wednesday, out with their latest polling from the fourth quarter. filings are revealing interesting things, starting with warren buffett. apparently,busy, during this period. one of the more interesting things was buying monsanto shares. that is interesting because we think of buffett as a long-term investor, but he bought monsanto after a buyer agreed to purchase monsanto. southwest, he is doubling down on airlines. i want to talk about procter & gamble. bank of america, if you look thess all the holdings, was company segal had a play the biggest increase in investment

.rom these money managers - g.m.'s ceo is in germany on something of a charm offensive in order to win support for the sale of opel. >> it would be a real way and if he could get rid of these divisions. they have been losing money for general motors for almost two decades. last year, they would have been profitable had it not been for brexit. to out load opel inbox all. -- and vauxhall. hopefully they can use those economies of scale to boost margins. inc. wants to raise as much as $3.2 billion in its ipo. that would give snap a market

value of about $18.5 billion. it would be the first social media company to go public since twitter, more than three years ago. what is the message from this company? >> please don't treat us like twitter, please see us as alibaba. when we think about ipo's, there are not been a lot of big ones. this is one of a few. consumption from millennial's, is that going to work? is it going to grow? obviously it is popular, but is it a trend that goes away in six months? this is something with long-term potential. >> samsung's de facto leader is in detention in seoul, arrested on allegations of bribery, perjury, and embezzlement. the company has issued a statement saying they will insure their best to get the truth out. this seems like a big deal. >> it is. i was there when the first

appeal for the rest were in -- the arrest warrant was made by special prosecutors. the feeling outside the court, this is business as usual, we will reject it, and sure enough the court did reject it. special prosecutors have come back with more evidence, and in the last couple of hours, the cortes world in favor of special prosecutors issuing the arrest courts ruled in favor of special prosecutors issuing the arrest warrant. a proposal for craft and time to combine, unilever rejecting it, but the company is not giving up. is this round one? but iteems like it is, is interesting that those shareholders are optimistic. unilever does not seem to be optimistic at all. they are saying there is no

strategic benefit to this proposal, no rationale. they are almost saying please go away. is that reflected in the u.s. shares? the u.k.nd also with regime, you need to remember that they have until the 17th of next month, because you have 28 days for a shutout period, by t needs to come back with a better offer or go away. we could see further negotiations, but right now we unilever does not -- right now unilever does not look like it wants to sit at the table. ♪

you are watching "bloomberg best." last week, federal reserve governor daniel cerullo announced he would be stepping down.

he was appointed by president obama and became the fed's point person for restructures in the 2008 financial crisis. he talked about regulation and more in an exclusive interview this week on daybreak america. >> you came in and a lot of things were broken. almost everyone would agree. what remains broken after eight years, in terms of the regulatory structure? isi don't know that anything so severely broken that we should worry about immediate consequences, but i think two areas on which we tried to concentrate over the last 80 years still need attention, and the first is the largest firms that have been characterized as too big to fail. there has been a lot of progress, but there is more work needed area secondly, the nature of the price -- of the crisis in 2007 and 2008 reminded us that the nature of funding in a financial system in which

traditional lending and capital markets are so integrated is just as runnable as the 1920's, when big deposits were not insured. it is a different form of funding now, repo, securities transactions, but the run ability of that funding combined with the big drop in key asset price housing was what produced the crisis, and we need to be constantly on the lookout for vulnerabilities with runnable funding. i think that is an ongoing exercise. you are not going to get to the point where we say, now it's done, we move on. when someone comes to you with the too big to fail problem, that's when you should get worried. because the financial system adapts so readily and so expertly and a lot of ways to create new opportunities for making money, the financial regulatory system needs to be attentive to those changes and to evolve with it.

by the way, that is what did not happen in the precrisis area. >> i do wonder if we are getting into a cycle where people are forgetting the financial crisis? mr. tarullo: that is an excellent point. if we go back to a decade or 12 years ago, what was the state of the financial system, including our biggest firms then? even though capital market traditional lending had been integrated, when firms price or risk, a lot of the instruments in which they traded, they did not take into account the credit risk in bedded in those instruments. mortgage backed securities are the best example. two, they were not attuned to the possibility a you could have a liquidity screens -- liquidity squeeze. instances, they did not know what their own risk was.

in 2009 when we ran that first set of stress tests on the fly, as it were, we sent out requests for information, and more firms than one would have expected were not able to aggregate risk to the same counterparties from across their big firm. those are the things that produce the regulatory changes that we put in place, and those are the things that should not be forgotten as a historical matter, but as i said a moment ago, a kind of adaptation in the financial system may mean that new risks are created along the way. jonathan: coming up, david solomon of goldman sachs sees a lot of confidence in the tech sector, and luke ellis sees reasons to be optimistic about hedge funds. the week's top interviews are next. you could call it a life meeting. >> our target is 2%, senator

donnelly above -- significantly above, you would begin to worry and begin to act. ♪

♪ welcome back to "bloomberg best". i am jonathan ferro. it's time to revisit some of the week's most compelling interviews. aboutbegin here, speaking adjustments to u.k. growth as a result of brexit. >> it is true we have adapted our forecast for the u.k. we thought the growth which was forecast at 2% would be 1% in 2017, and we see there is a brexitn the effects of as far as investment is

concerned. , in linehy we see 1.5% with other institutions around the world. 1.2% in 2019, so we believe there will be a significant effect from brexit, but that , andbe longer in time lucky for everybody -- >> do think it would be a tragedy if france were to leave the single currency? do not worry that by suggesting to the next french president that the first thing that should be done is austerity that you're playing into the hands of marine le pen? authorityas never a in france. there is no authority and france. france is reducing their deficit slowly. they are right under 3%. they must go on.

debt is not strengthening an economy. -- they know that getting out would be tragedy, and a suicide. >> you are still going to pursue tpp minus the united states, why do this? >> a lot of work was put into that deal, and there are 12 countries involved. the united states is the biggest, but there are still a 11 countries keen to do more business with each other. the unitedwe believe states will want to have a bigger piece of the action in the fastest-growing part of the world, which is the asian pacific. we think the tpp agreement framework todes a good boost trade. when things are put into place

-- things change. thatu could have made argument when the u.s. was involved, but now that it is not, perhaps it does not have as much teeth as before, so why not abandon it and move on to regional trade pacts? >> we can do both of course. firstly, it would be preferable for the united states to be part of the tpp agreement from the go, but president trump has made his views clear. we understand there is support among senior republicans otherwise, so this might well involved in the years ahead. so much effort has been put into the tpp agreement as a means of boosting the capacity of businesses and our region to do business with each other and remove trade barriers, better integrate our economies, it

would be a shame to throw all of that work overboard. it is a fascinating time for hedge funds. there has not then a lot of confidence. have we seen the bottom? >> i think we have had a period where active management and hedge funds have found life difficult because there is increased competition every day. there is more competition, and you have to get better at what you do, but we have also had an unprecedented environment where the central banks agreed on what to do and did the same thing, and basically they drove down risk premiums. that just makes a difficult environment for active management. whatever you think of the policies, it looks pretty clear that last year's political moves

started the breakdown of that global consensus, and that creates a good opportunity for making returns. , look,ge fund business you can't justify fees unless you make returns, so as an industry, we have to concentrate on making returns. haveu noted that returns not matched a vanilla stocks and bonds portfolio, so where did they go in 2017, up? i run a load but of hedge funds, so of course i hope so. it is always difficult to predict. it is easy to say next year will be better, but there is a great descriptor for hedge funds. when they are elevated, people don't make money. when they are at normal levels, discretionary or quantum macro hedge funds make good money. in the same way, stockpicking

funds make money when the stock correlations are low, and when they are elevated, they struggle to make money. looking today, both correlations have all drop down to normal historical level since the trump election, and it has been a good for hedge funds returned. if you tell me the correlations, i will take you what the returns will be que. >> what are ceos in the technology industry telling you now? lot ofe is an awful optimism, and it comes from the fact that a lot of these companies are having a significant impact on businesses, industries, a lot of change, disruption, and growth, so this is a part of the economy where there is significant growth, and growth leads to optimism.

there is a lot going on in the world, but as you talk to companies in the tech sector because of growth in that space, you tend to get an optimistic view than other parts of the economy. >> as that growth perpetuates, wanting to see the opportunity for companies coming to market. , thethe doors open wide rest of the tech community and private sector come to market? >> there is a good amount of capital available, privately, away from the public market. last year was a historically low year in terms of ipo activity. i am a big believer that these things at an flow, but ultimately gravitate towards amine. activity thisre year, but when you look at the world these companies operate in, if they are able to grow and

access capital privately and there aren't other pressures, these companies are putting off the opportunity to come to the market longer, because capital for growth is available privately, so i would expect to see more companies coming back to the public markets than last year, but that process will continue to be a thoughtful and methodical process for these companies. u.s. monetary policy was a central topic of discussion, and after janet yellen's testimony on capitol hill, we set down with an exclusive conversation with vice chair stanley fischer. economy is an extremely competent mechanism. are we getting more complicated because of rising inflation, forng inflation in germany, different reasons in the united kingdom, and suddenly a lift in inflation in america? very complicated

when the inflation rate was negative and very low. target of 2% inflation, and we are heading in that direction, and so it is not making life more complicated at the moment. very high inflation, which we will do what we have to to prevent, could complicate the situation, but we are not there by any means. >> how do you define high inflation? the atlanta fed numbers, the dallas inflation, the cleveland inflation? what is the number, this statistic, that suggests high inflation? >> our target is to present. hit itly you don't exactly. you hope to be close to 2%. we are as worried about being below as above. you know, it is something that if you are close to 2%, it is not a problem, significantly

above, you begin to worry and you begin to act. >> part of this relationship been i really has don't talk to you about the parlor game, but i'm fortunately have to. i believe there is an ides of march meeting, goldman sachs changing their probability of what the fed will do, not specifically what we you do at the march meetings, but this new inflation dynamic, does it change the cadence of two or three rate increases as we go to the end of the year? >> i don't want to give you , butrs on two or three this is consistent with what we have thought should be happening around now. that is, that we would be moving closer to the 2% inflation rate and that the labor market would continue to strengthen. if those two things happen, we

will be on the path we more or less expected. ♪

jonathan: you are watching "bloomberg best". . am jonathan ferro another busy week for corporate earnings reserves, and we start with credit suisse. >> credit suisse posted a fourth-quarter loss of $2.3 billion. secondback resulted in a consecutive annual loss, but good news below the surface. >> overall positive. we think the frontier pendulum has swung. swung,k the pendulum has time is better for banks, market sentiment better, and we are

getting towards constructive solutions in terms of regulation. regulationsorried in the u.s. does not make u.s. competitive? >> we have a strong franchise in the americas. one of our targets is to get to percent to 15% and america, so we are at target. after ana shares absolutely nasty tuesday, it, 11% downay of after that write-down and questions about the company's future. we were this time yesterday looking forward to toshiba coming out with its earnings report. they did not come out, and then they did not say when they would, but then they did release those results. >> that's right.

a $6.3 billion write-down for their nuclear unit. the chairman is going to step down as well. , the plansthings that toshiba may have for its chip unit. >> to secure resources for further growth, we are taking a flexible stance on the memory chip business. we do not insist on securing our majority stake in this business. i slump in fourth-quarter profits for the french bank. the french consumer banking unit was an issue, a decline in , underlyinges performance is good, and shares are rising. are you happy? we are happy to see all of our units making progress in commercial terms, and that is on the background of a very strict

monitoring of costs. the ratio is falling markedly, and also we maintain a low risk. i don't want to single out any unit. there is strong commercial activity in all parts. mitsubishi shares falling in singapore. the bank missing fourth-quarter estimates, continued stress when it comes to the oil and gas industry, affect inc. all of the banks, a challenging environment , not just those cbc here. >> it is hard to make money when you have to put aside more for bad loans. provisions jumped almost 60%. it has to do with the energy sector. the fallout is not over. it is coming at a bad time.

singapore's economy is slowing, loan demand is easing. shares in commonwealth bank are higher in sydney after its eight annual profit. future earnings growth is now starting to become muted. thee are a function of australian economy, so the rate of growth has come down and that is reflective of the fact that the austrian economy has been slower recently. we have great faith in the longer term strength of the australian economy and will move mainly in line with that. we do see that there is opportunity to become more efficient, and frankly, to better serve our base of customers and continued to grow revenue are ahead of underlying inflation in australia, which we have been doing consistently. >> german industrial services

, a decline in group output, but an improved earnings margin. the result comes as activist shareholder's campaign to downsize. that me ask you about this activist investor. are your goals aligned? >> that is a good question. we have spent quite a lot on strategy, to division lines come divisions -- then we shared it with the supervisory board, where we have a permanent place. in other words, we are in line

with the general strategy at all parties are facing in the right direction. sees 2017 sales and profitability below its long-term target as they step up efforts to restructure the company and reignite growth. >> generally it is somewhat volatile and inflationary as an environment. we are better served with straightforward annual growth and earnings guidance. this is what we are giving for 2017. 6% model for growth for nestlé over? >> our focus on organic growth will remain, and we do believe that with good internal initiatives that we can achieve good organic growth in the mid-single-digit range by 2020. duke energy reports fourth-quarter earnings, largely in line with estimates, the

largest regulated utility in the u.s. it is also seeing growth through the utility and pipeline business. i know you have invested a lot , do you expect changes there and the business strategy to change it all? >> regarding incentives for renewables, i'm not hearing a lot about changes to the current tracking of those incentives. they are set to expire over the next several years as tax incentives are typically designed to do, and i have not heard a lot about changing any of that. the issues of tax reform that affect us are involved with the deductibility of interest expense, critical to a capital-intensive this is like our own, so that is one of the issues we are looking at very closely. popping inares after-hours trading, revenue over 11.5 billion dollars, just

beating estimates, but the forecast for third-quarter sales and profit may fall short of projections. >> cisco is the poster child for managing earnings. p, this this command sur column shows the percentage of toprise, if i scroll back 2015, 2013, 2011, all green. as far back as we can see, cisco estimate whent's it comes to adjusted earnings, so the fact it has beaten by a penny is so meaningless because they manage expectations, guidance, and wall street really well. ♪

you looking at bearish bets

.n the yout euro options investors are now the most bearish on the euro. the spikes show the extent of bearish bets. jonathan: there are 30,000 functions on the bloomberg, and we always enjoy showing you our favorites here on bloomberg tv. av they will become your favorites as well. uice is another function q . here is a quick take from last week. ♪ protecting the nation from foreign terrorists entering into the nine states. >> after president trump's executive order suspended

refugees and travelers from seven predominantly muslim countries, leaders rallied against the move, saying it violated the country's principles and risk disrupting its engine of innovation. sergey brin showed up at san francisco airport to join the protest. >> we are seeing tech standup unified in anger. >> silicon valley derides an and or miss strength from immigrants. >> trump's next strike could be closer to home. well.now the h-1b very that is something i use, but i should frankly not be allowed to use. we should end it. following his tough campaign rhetoric, trumps administration orderopped an executive aimed at overhauling the work visa program that technology companies depend on to hard tens of thousands of employees e.g. your. here is the situation. in 2016, it took less than them.k to exhaust

with facebook doubling the amount of money it spent on lobbying in 2016 compared to 2012. with techs popular companies because it is designed to bring in specialists and science, technology, engineering, and math to work for three-year terms. in recent years, outsourcing companies from india have snapped up more of these h-1b visas even as tech economies complain they cannot get enough to meet the demand. now here is the argument. changes to the h-1b program could shift to silicon valley's bottom line. one bill before congress would prioritize visa requests willing to pay h-1b hires twice the prevailing wage. of theuld address one complaints, the companies have replaced higher paid americans with lower h-1b workers. the u.s. tech companies argued

that universities are not producing enough math meditations or engine years to keep pace with the jobs in the field each year. opponents of the h-1b visa point to an increase in students seeking degrees and science and technology, and they say the program leads to job loss in the u.s.. outsourcing firms receive half of the h-1b visas, they are hard in the u.s., then take those jobs back to their country. >> from this day forward, a new vision will govern our land. from this day forward, it is going to be only america first, america first. ♪ was just one of the many quick takes you can find on the bloomberg. you can also find them at with the.com along latest business news and analysis 24 hours today. that will be all for "bloomberg best" this week.

thank you for watching at home. i am jonathan ferro. this is bloomberg. ♪

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