>> coming up on "bloomberg best," the stories that shaped the week in business around the world. ceos get into the hot water. united airlines, after a shocking video. thanks for fired up after the start of their earnings season. >> the main street side is not as strong. >> janet yellen says the fed is ready to change its focus. others focus on the balance sheet. >> it is higher than anyone thinks it should be. >> who do you think will be the next french president? what will happen to germany?

the terms and conditions of brexit? >> donald trump continues to promise big reforms, but opinions differ on if and when he will pull them off. i do not -- >> i do not know if it will happen. >> there has to be something taken away. straight ahead on "bloomberg best." ♪ hello and welcome, this is "bloomberg best," your weekly review of the most important business news from bloomberg television and around the world. with several major banks reporting earnings, there is big news from the financial sector this week. they certainly did not expect the news about barclays they came out monday. says they made a

significant cut to the coo's pay. after hesays apologize, he made an error in not applying perfect governance. out016 he tried to figure -- the tension of the board. it seems to be in violation of rules. >> he should've thought to file that identity. were repeated attempts to find out the identity. >> the board stands by staley. staley will be reprimanded, he apologized in a staff memo, saying he should have left staff compliance handle the menu.

-- handle it. >> why is he still in the building? >> the board thinks he can survive this. they think he might be given a sympathetic hearing. >> the wells fargo accounts scandal is rearing its ugly head, after a six-month independent investigation found they shrugged off the scandal. they lay the most blame on the former head. they struck back, rejecting conclusions, saying we strongly disagree with of the report. >> when did they know things? one of their main conclusions is that the woman that ran the community bank new a lot of person she was a hard that would not allow a lot of other people to make changes to the banks. also had john stumpf, the former ceo, her boss directly. he had been slow to fire her and

did not give enough guidance at that time. else are the additional consequences today? back $40oted to call million. in terms of other firings, the board found earlier in this investigation, they did fire for people, some were deputies, others worked in the bank less strictly. >> federal reserve chairman janet yellen said the fed is no longer putting the pedal to the metal but has shifted to gains in growth. >> what we want to make sure of is that we sustain the progress that we have achieved, and that the appropriate stance of policy now is something closer to what we call neutral. >> does the story matter? they tell us it is not timing,

it is the removing of accommodation. does it count? >> a does count when you get into the markets. the set is still accommodating, putting stimulation into the economy, just less of it. what we should start to see as time goes on, the effect in the markets of rising interest rates stockss juice for the market. we have not seen that so far, which is the interesting conundrum here. geopolitics continue to take center stage. rex tillerson meeting with sergey lavrov. rov is meeting with tillerson right now. what do we expect out of these meetings? >> the u.s. had low expectations. there are hoping for russia to say, we will think about it, with the u.s. proposal.

washington wants moscow to reconsider its support of the syrian president, bashar al-assad. >> the current state of u.s.-russia relations is at a low point. there is a low level of trust between the two countries. >> they are aiming for the results where it is mutually beneficial for both countries. >> there were questions about whether or not mr. lavrov and secretary tillerson would play nice politically. rhetorically speaking, they vowed to work together to remove terrorism from syria and to denuclearize north korea. but there is a difference that will shape and mold president trump's time in the white house. >> president trump says he is unlikely to brand china a currency manipulator. he also said the u.s. dollar is

to strong, it would suggest tough trade rhetoric has faded. but what does it really mean, domestically? >> this is a very big deal and a big step for donald trump. label china ald currency manipulator on day one if he were elected president. it is a major reversal from that campaign promise. in the article he said a strong dollar is not good, a bad thing. and that is a real move for the u.s. as a whole. for the past several decades, presidents have said a strong dollar is in the u.s.' interests. a reversal of that is significant coming from donald trump. michael: we have heard from three of the five largest u.s. banks. themesre variations and that we should take away? icy, wall street banks are doing well, trading is ient.ly and -- ebull

quarterp had its best for fixed income trading in three years. that is great, but the consumer on the main street is not as strong. is not what people would have hoped, given the ms. in the market. a variety of reasons have been given. expenses are not going down sharply. some have arisen at wells fargo, for example. >> for jpmorgan, capital markets drove the equity trading, better than expected. everything else seemed to align. of the bank reserve releases this quarter, driven by energy. last year that was a big headwind for the company. they were being conservative in

terms of conserving losses. we are seeing some of that being released. still ahead as we review the week on "bloomberg best," christine lagarde assesses the big risks to the world economy in 2017 and stephen schwarzman explains why the devil is in the details for donald trump off tax plan. plus, growth opportunities in china. week's top business headlines, a viral video sets off a social media explosion in the united airlines fallout. >> economics may be that they are willing to raise the price, willing to pay passengers to get off the airplane. this is bloomberg. ♪

♪ michael: this is "bloomberg best

," i am michael mckee. let's begin our global tour of the top is this news involving a commodity giant facing a challenge from an activist shareholder. >> bhp targeted for an overhaul. called the world's biggest mining company to unify corp. structure and improve capital returns. exactly -- were not things thee three hedge fund is calling on bhp to carry out. ger of the u.s. a nonconventional oil assets, valued at $22 billion. they want to see those bundled into a single entity on the u.s. -- new york stock exchange. , essentially two companies,

one in london and one in melbourne. that has all manner of legal complications. it also brings up quite a number of complexities in the issuing of dividends. the third thing and would not be a surprise for improved returns to shareholders. >> bhp says it is not worth the cost and rejected the suggestion of an overhaul to their business. what does it mean about shareholder activism in the mining industry? what does it tell us about where we are in the cycle? >> it tells us that management of this -- of these companies need to be aware of the internet feeling. investors will be look at -- looking at these hard, finding pockets of value they think management should be addressing more closely. this is a perfect example of that. keeping u.s. manufacturing

jobs onshore has been a priority of the trump administration. pledged $10ed it -- million it would keep in the u.s.. the president went out of his way to say this is a great investment that reflects real confidence in the economy. how long has this been in the planning stages? has this happened since the election? >> the program for toyota is not new, it is an opportunity to start introducing it here in north america. only a couple other manufacturing platforms right now. we are honored to be the first one in america to get the program. but we have been working on this camry for over three years. it is not just brand-new and picked up most recently. withday, at&t made a deal a health care provider, and in

talks with the drug provider alcorn. whoever heard of straight path? they have nine employees. they are not the biggest company in the world. at&t is trying to get ahead of where the internet is going. sometime down the road you can use your phone and start your car before you get to it so it is warm. at&t has been inquisitive. they bought directv and time warner. they have done these $1 million, $2 billion deals throughout the years. conglomeratech forced to drop its $2 billion acquisition. just the latest setback to the global expansion plans. they are facing huge challenges. part of that is the sales picture looking distinctly murky. >> absolutely, a pretty grim

picture for the ford echo in the u.s. the chinese conglomerate does everything from smartphones to video streaming to electric cars. they are the target of $100 million in u.s. dollars in revenue by the end of 2016. million and thus are cutting jobs by 1/3. they have pushed through to buy visio for $2 billion. it was part of their attempt to grow the brand and get a foothold on the american market. in terms of brand recognition it is pretty weak. it speaks to the cash crunch problems. in a letter to the employees, it seems the situation is getting worse for u.s. business. heatllionaire patrick draw exploitck hoping to

stock market gains to create currency for further expansion. why now, and what can they do with this money? >> they are a cable company formed through acquisitions, two smaller cable companies. with this ipo they can raise money for other deals in the cable space. i do not think many people are thinking they would stop at acquiring cablevision suddenly. one they have expressed interest is cox communications. cox has repeatedly said it was not for sale. but that is one big target for alstice. off by 3% aslines, a video of united airlines personnel dragging a passenger off and overbooked plane went viral. walk me through the real issue for united, besides pr. >> all the u.s. full-service

airlines are looking for ways to make their operations more efficient. we are getting close to the and what webooking call load factors, the amount of people on the airplane. we are getting to the maximum they can put into an airplane, that is the challenge. >> if they are hitting against their macs load factor, what is the mean for their bottom line? >> it means we will not get a benefit from selling the load factor even higher. the airline sector think about, if they will oversell their airplanes to the degree that they are right now, the economics may have to be to raise the price they are willing to pay passengers to get off the airplane so they can get priority passengers on.

>> we can see it is a man of asian descent. what is the ramification in terms of passengers in asia? there is a blowback here. >> there is a very potential blowback here. if the chinese population feels united was discriminating against this passenger, that can be a severe problem. united has the most nonstop flights to china from the u.s. among u.s. carriers. >> there is said to be in talks to combine train operations. >> what is the logic? the industrial logic? does this combination makes sense? >> it absolutely makes sense. it is a capital-intense industry, requiring stock from producers. joining forces makes sense. china was the largest producer of its stock.

one company snapped up and italian peer. there is a clear rationale for combining those players. >> toshiba shares are slumping in tokyo after it warned it may not survive the enormous losses at its westinghouse nuclear unit. the stock down 2.7%. the warning came when it relayed delayed earnings reports. how good or bad is this? very unusual step for a company to take in japan. they have been trying to close the books on the december quarter. we are quite a few months past that. this was their third deadline for filing financial results. not getd they could auditors to sign off on financial statement so they did it themselves. they made the disclosure and did cite the risks.

this is a big deal, stemming from the billions of dollars in losses at their westinghouse nuclear business in the u.s. tesco shares lower today, when the uk's biggest supermarket kept prices low. they are beset by shrinking profitability. rose.ed operating profit there are plans to pursue dividend payments in the 2018 the fiscal year. confident that we are on track for the 2.5% to four 4% operatingto margin goal. ♪

michael: welcome back to

"bloomberg best," i am michael mckee. the annual spring meetings are next week in washington, d.c. down ink, we sat brussels with imf managing director christine lagarde to get her thoughts on the state of the global economy. >> what is the one thing we should worry about more? our protectionist measures as bad as we thought a couple months ago? >> protectionism clearly is a threat. one of it was to be realized, would really be a break on growth, a break on productivity, a break on investment. seeing both innovation and trade are conducive to productivity. productivity is the agent for growth.

as part of the risk of that we see, clearly, protectionism is one. the political uncertainties we see around the world, particularly in the european region, is high on our agenda. and the potential for capital flows moving from emerging-market economies to advanced economies as a result of the reinforcement of the dollar and the rise of interest rates, is the third one. that applyhree risks to a situation which is quite positive at the moment. >> do you believe the trump administration could be less protectionist than we feared in the beginning of january? always, i do not think any prescribeuld actually limited growth, limited

productivity, limited investment, limited innovation. if policy, including the u.s. growth,kers, one better more investment, more innovation and productivity, trade is part of the solution. then you going to the question, what kind of trade? is it trade with restriction? trade with a distorted measures? i hope everyone would agree we do not want distortion, we do not want restrictions. we want trade that is open, fair, and inclusive, to facilitate. >> do you worry about french politics or the greek bailout? >> i worry about the outcome of any election these days. what the economies do not like and what investors do not like is uncertainty. the track record in the last few months has been the realization

of unpredictable results. that leads to a period of uncertainty now. everybody wonders, who will be the next french president? what about the next politician in germany? what will happen to the terms and editions of brexit, the regarding the rest of the european union. they plan the location of business and so forth. she also asked the e.u. economics commissioner about his plan b if brexit negotiations fall apart. you will hear his answer later in the program. ," anxt on "bloomberg best exclusive conversation about cutting down the feds considerable balance sheet. plus, businesses chomping at the bit for donald trump to deliver a tax reform plan.

stephen schwarzman says, take a deep breath. >> it is complicated. if the numbers were easy, someone would have printed it. this is bloomberg. ♪

♪ michael: this is "bloomberg best i am michael mckee. janet yellen said the federal reserve should adopt a more neutral policy chance and i'll back its stimulus efforts. to do list,fed's trimming its $4.5 billion balance sheet. interview, they adjusted the need to bring that figure down. trillionof all, $4.5 is higher than anyone thinks it should be, that is number one. number two, if you want to create policy space for the future and at least have the option of doing quantitative easing's in the future, you

should get the balance sheet down to a reasonable size today. another aspect, all you have to do is to allow the reinvestment policy to end. then you can gradually run off some of the balance sheet size over time. lumpy,f you think it is if you look at the pictures of what is maturing when and what month, it does look lumpy. but we can manage that and smooth it out in such a way that it declined at a given rate. it is not a matter of doing something that would cause volatility in markets. i think it would be taken in stride by markets. i think we could get to wait lower number than a $4.5 trillion with a reasonable policy. >> what is a reasonable size, what is the number? >> that is a good question. before the crisis it was about $800 billion, almost all cash,

with some reserves. post-crisis, cash is all the way up at $1.7 trillion now. if you add some reserves to that, maybe a couple hundred billions of reserves, you could get to a balance sheet size of $2 trillion. the $4.5 trillion we have now is way above anything like the $2 trillion range. we should allow it to run off so we are making progress toward that eventual goal. the committee has not decided what it wants to do, but even if we ran policy with significant amounts of reserves, we would only need a balance sheet in the $2 trillion range. the point is not to go to $2 trillion immediately. it is just to allow the run off to occur gradually over several years. also plentyre was of conversation about u.s.

fiscal plans this week on bloomberg television. on tuesday, president trump welcomed more than a dozen ceos to the white house for discussion of economic initiatives and strategies. blackstone group ceo stephen schwarzman leads the president's strategic and policy forum. he leads up our roundup of interviews on politics and policy. >> did you get a general sense of the timetable for tax reform? when will we have a plan coming out of the white house? >> i am not sure about that, it is complicated. if the numbers were easy, someone would have printed it and send it to you. to accomplish something in that area, there has to be something toen away from other people have the revenue to finance the tax cuts. there are a lot of different ideas, a lot of people -- of different people on capitol hill in the white house.

they are all thinking about what the trade-offs are. deliberate,uch more logical approach, than trying to pass health care in 17 days. that is not going to happen in a tax year, which is good for everyone. i think there will be a circle back on health care. in other words, the publicity on that three weeks ago is dead and gone. it has difficulty being dead and gone. i think it is worth working on in the house. how long that will take, i do not know. but people are talking and ultimately, they should be able to get something out of the house. whether it goes to the senate, that is your call and everybody else's. >> do they need tax reform up? they indicated that was the sequencing to follow.

>> it would be better from a scoring perspective if they could do that. i think that is in the land of the unknown. we could plan for that not to happen. if it did, it is a huge bonus and makes life easier for tax reform. >> it sounds like the president is looking at a comprehensive approach. tax reform, not just tax cuts. people say we could get tax cuts easier -- faster. rather have would comprehensive tax reform even if it takes longer. >> when you're dealing in months, that is not long. that is only long on television. context ofong in the the kind of legislation issues. taxes, that is a

fallback, as opposed to reform. >> is there any element of the tax reform package that you think is essential? that if we do not get, it is not worth doing? >> i do not look at it that way. number one, i am not charge of that world. i do not know that anyone is. we work with what comes out of the system. individuals are somewhat powerless to affect that overall outcome. what specifically do you see the administration getting out of congress? >> i specifically see corporate tax rate reductions. that is a key to rest parity in the long run. we have one of the lowest oecd.es in the oed -- depreciation rules. if he can get that rate from 35

to 18 and have 100% expensing of capital purchases, this could be one of the most explosive growth. bang -- explosive growth periods in u.s. history. >> when will it happen? >> if i knew that, i would be very rich. honestly, it is going to happen. biguld expect some of the tax cuts will not happen until next year or the year after. if you remember with reagan, the really big tax bill was 1986 when we dropped the highest rate from 50% to 28%. we cut the corporate rate from 36% to 34%. that is when we unleashed growth in the economy. it may take time and this administration but i am expecting it sooner than later. >> why should i be patient as an investor and wait for something that will take one or two years?

>> because you have no choice, honestly. it will pass for all of us. if you sell off your stocks and their inpatient and take your gains right now, someone else will get the real profits you do not have. >> do you think we could actually get the some kind of comprehensive tax reform this year? >> i think the chances of that are below 50-50. but they are below 50-50 every year for the past 30 years. it will take a concerted effort by the president to say this is what i want, this is what is good for the american middle class, this is why i came to washington, to improve economic performance. that kind of effort is necessary to get tax reform done. even with that, it could be quite difficult. as you point that, just because they are republicans, does not mean they agree on the nature of the reform. we saw that in health care, we will see it in reform.

capital will be spent in the white house to get this done. >> deregulation is something we hear about from a lot of market leaders and financial leaders. particularly in the financial institutions area we hear that they want to cut back on dodd-frank, and they say maybe glass-steagall will come back. what do you make of that set of proposals and terms of what they would do for growth in the united states? was a 2500eagall page piece of legislation developed in one year in the midst of a major crisis. excuse me, dodd-frank. it is inconceivable that there should be changes made to dodd-frank. some surely much to burden on a set of community banks and smaller banks. there are other provisions that are having reverse of facts.

i am worried about what is happening to liquidity in the bond markets as a consequence of the changes contained therein. hopefully we can go about it in a rational, thoughtful kind of way. it was only a few years before the financial crisis that you had an administration that was doing photo ops, they would take books of regulations, and they would take saws like you use for wood, and all the major officials would be pictured taking saws to the books. that seems it to be the wrong philosophy toward financial regulation. a kind of mindless, he regulate for the scent -- for the sake of egulate fore -- der ulateake of dereg

philosophy. that would be a grave mistake. ♪ ♪

milestoneit a new after surpassed general motors to become america's most valuable auto company. $51 billion in terms of market capitalization. symbolics more of a moment where tesla crossed the line of being more valuable than gm and ford. but you have to wonder why. investors seek tesla as a future dominator of electric cars, maybe a leader in electric storage. you have a lot of businesses with potential. that is what it is playing for, and that is a long-term play. michael: you are watching "bloomberg best," i am michael

mckee. we have interviews with business and policymakers. we caught up with the ford ceo in a shanghai and talked about the automaker's ambitions in china. >> there are huge, enormous twoal ties between the countries from a trade standpoint and we have to tread carefully because the economic relationship is the basis of the overall relationship. i am glad to see both leaders meeting on -- meeting early on. one areato area is where china could level the playing field in terms of tariffs. is that something you think is possible now? >> for u.s. businesses, china is an important market. tangible reforms and openings

are needed. do you make sure you decrease policy uncertainty, boost business confidence and at the same time, create equal opportunities for each nation? i sit on the manufacturing council and we all share the same objective. we want a very healthy and vibrant u.s. economy. >> what are the opportunities in china in terms of sales and how much will that be reliant on a relaxation? if you look at the chinese market, less than 2% of the market here is pickup trucks. even with that, it is the fourth largest in the world. the government is thinking about potentially changing some of the thinkctions, which we would grow that customer appeal for pickup trucks. a couple provinces have done that already. the research we have done, the initial orders on our f-150

raptor, is a huge opportunity to grow our business in china. >> how will brexit go? europe andries in what countries will suffer the most because of this? >> i refuse to speak about no deal. if you start talking about plan b, it means you do not believe in plan a. i am convinced we can make it. if we negotiate on principles -- what are the principles? citizens, thebout freedom and movement of citizens. there are 4 million people from the e.u., they are working in the u.k.. london is among the biggest. aspect, the financial and discussing the future of our relationship, which needs to be .ery close

this must include a trade deal and other items such as the fight against climate change. optimistic.at i am >> you are optimistic, you believe in plan a. but reassure me there is a plan b if it does not work. >> we would need time to think about it. but here, everyone is energized and mobilized to succeed. times, be difficult at obviously. ands a complicated divorce, we have so many links together and so many interests there. but everybody is mobilized to succeed. and at a clean brexit strong relationship with the u.k. >> let's talk about the presidential election in france. you have the far debt -- far

left candidate catching up with republican fillon. melechon, where is he getting the most support from? >> we are doing a happy campaign, that is why it is working. we are far from the pessimistic pictures that some of the candidates are giving. this is a very grassroots movement we are trying to install in france, far away from the traditional political party stuff. notou talk of melechon wanting to leave the single currency or the e.u. straightaway, but wanting the e.u. to change. ambition tos propose france leave that the e.u.? is that his ultimate ambition? >> absolutely not.

our ambition is to change europe for the better, for better cooperation between our people. but also because we all agree, left or right, from different citizens, we all agree on one thing, the current e.u. is not working. tot we want is plan a rebuild a different europe, and wen b if that does not work, want to new tactics for cooperation to join forces with brussels. >> what is the top issue for melechon? in terms of change? crystallized -- what is the top issue for melechon? >> he wants to bring back democracy. >> treasuries have rallied. president trump says he likes the fed's low rate policy and would like to redenominate janet

yellen as fed chair. it was a spectacular day when it comes to the treasuries market action that we saw. expected this story, this trump and china story to continue driving these moves? >> it is the only thing that is. there is no reason why yields in the u.s. or rest of the world are as low as they are. the reflation trade going on well before trump is embedded for at least another year. the geopolitics is the driver right now. that time we get back to level, it does not hold. that would be the key important level. >> what breaks it out of that range? >> we need to see the employment side of things coming through, wages more than anything else, in the u.s. we have to shift from monetary to fiscal. we need to see demand push and

lift inflation and treasuries to get upside. moreownside from yields, military action here in asia will drive people into more and more safe havens over the next few weeks. it seems that is a major script we are looking at the moment. >> what would you touch? french bonds, 10 days away from the presidential election there? that is spread between german growth and french bond. >> pretty wide. the things i worry about the french election, there are a lot of undecided voters. le pen, or you see maybe melechon coming up. the digital outcome you get with these elections, at least you get a second attempt. chasing french

spreads at the moment. there are enough for returns elsewhere you do not need to get extra return that france gives you. but it isten wider, not enough to offset the volatility you will get if you goe le pen and melechon through the first rein. ♪ ♪

>> check out what we have seen. on your terminal, orange line, average premiums have been higher. the white line has been lower. >> there are about 30,000 functions on the bloomberg and we enjoy showing you are a rich. maybe they will become your

favorites. it was another you will find useful. it will lead you to our quick takes, where you can get important context into timely topics. here is one from this week. europe's common currency, the euro, has been chasing debt for years. with the u.k. headed for an in potential crisis, and discontent across the continent, can the the euro, the world's most ambitious financial experiment, survive? voters are fed up with the economic failings of some e.u. countries and the loss of control to brussels. withdrawal from the euro has become a rallying cry for the nationalist movement, including italy's five-star movement and marine le pen's natural front -- national front in france. meanwhile, the greek tragedy

continues. they struggle to me creditors demands to keep the bailouts slowing. germany's insistence on austerity leaves the lingering sense that greece may have to leave the union sooner or later. and there is the slow recovery from the worst ever recession. unemployment for people under 25 has been stuck above 40% in whate and spain, causing some call a lost generation of european youth. the global financial crisis exposed the flaws in the common territory. when it was created by 11 countries in 1999 they agreed to a central bank and set interest rates, but only a limited unified approach to government spending or bank regulations. when banks began to wobble and countries like greece and spain were pushed to the brink, the common currency meant they were which meanteuro,

they could do nothing but except massive bailouts. germany, the biggest economy, pays the lions share. leadersen, euro area say they are strengthening it to make the common currency more resilient. falls out of the block, the euro will survive. leaders have shown they will do what it takes to keep the currency going. and then there is the politics. the euro, unlike other currencies, is a symbol of europe's aspiration to unite in peace and prosperity. some business leaders, analysts, and politicians suggest the deficiencies mean its demise is just a matter of time. just one oft was the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with all the business news and analysis 24 hours a day.

that is all for "bloomberg best ," this week. i am michael mckee. this is bloomberg. ♪

"bloombergto businessweek." the satirical newspaper striking fear into the hearts of french politicians. post-itsthe maker of is doing. and the most expensive mistake for the u.s. military. anchor: we are here with the editor and chief. we want to talk about something in technology.