♪ >> the stories that shaped the week in business around the world. britain goes to the polls and a diplomatic rift disrupts the arab world. the ecb says no more rate cuts are coming. high drama on capitol hill. thet is not for me to say conversation i had with the president was too abstract. >> this is not a serious investigation yet. > apple hopes the home pod will be a hit. is in our dna.

we wanted something that sounded incredible. >> with a seat in his plan. >> america should get back to construction. >> we need more private capital involved. >> we have to invest. starsl street's brightest speak at the bloomberg invest summit and shine light on issues i nate finance. >> we seem to be picking a of fights these days. >> return valuations, looking at the equity markets, there is no longer that margin for error. >> that is all ahead on "bloomberg best." >> hello and welcome. i am michael mckee. this is bloomberg best.

the week was found to be tense in the u.k. with elections looming thursday and the weekend care attack raising the level of political urgency. >> theresa may is right now sharing a meeting of the u.k. emergency committee, cobra. it comes after saturday night's terror attack in central london left seven people dead. the atrocity raising the stakes in the u.k. election, days away. prime minister may: we cannot deny that the threat from extremism is one of the biggest we face. >> jeremy corbyn said theresa due to thestep down number of police officers was cut. theresa may has said, actually, it is not the number of police officers, it is the powers you

give to those police. that jeremyring corbyn has voted against every piece of anti-terrorism legislation throughout the time she was home. she said it was not a mark of leadership. >> saudi arabia, bahrain, and the uae have cut ties with qatar shutting down much of the airspace, sea and land. it is a worsening about the relationship with iran. it has been building up since tensions with the muslim brotherhood a few years earlier. tar andlink between qa saudi arabia being cut off, that is a big deal considering they export a lot to saudi arabia. in the meantime, citizens of qatar in the uae are asked to leave the country. what set it alight has to be the

's a mere.rom qatar claimed those statements were the results of a hack. it looks like some gulf states were not buying that. it comes off the back of trump's recent visit to the middle east. we saw trump circling the wagons around his arab allies and making a lot of anti-iran comments. that is probably the biggest catalyst for this. stocks felt a most since 2000 nine after ties were cut over links to iran. >> president trump supporting the move to isolate the nation. he wrote on twitter, "in my recent trip to the middle east, they can no longer be funding of radical ideology. leaders pointed to qatar."

>> we have seen the implementation of some of the announcements of the airlines canceling flights, some of the ports saying they are beginning fromop qatar ships to and qatar. we are seeing kuwait mediating the issue. the kuwait amir is on his way to discuss with the qatar amir. announcing herump is going to nominate christopher to replace james comey. what do we know about him and why the president picked him? is not a politician. some of those in the running didn't get it. he is also removed from the

process. it was someone interested in the job. .e overlaps with bob mueller he spent formative years at justice after 9/11 and was involved in counterterrorism he supported the patriot acts, for example. he was in the criminal degree from 2003-2005, and has done a lot of criminal defense work, white-collar crime. though he has a legitimate, is steamed career he is not at the same stature as molar. he is a republican. most notable for our viewers is that he was chris christie's lawyer. when he got into trouble and up, he went to this person to defend him, and he did so successfully. >> the ecb ruling out interest-rate cuts saying the

following. the governing council expects to keep interest rates at their present level for an extended time and well past the horizon of the net assess purchases and dropping midline or lower. >> the objective was to begin the next phase of the monetary policy cycle by highlighting the successes. that will be through the growth outlook now balanced. no longer downside risks. the removal of the need of further easing at this stage. the inflation story has complicated matters. three months ago, we would have expected that june would have been the time to signal tapering, but the inflation forecast doesn't allow that at this stage. in the last question, he said haveeflationary risks dissipated, not disappeared, dissipated.

that highlights what is on their mind at the moment. >> fired fbi director james comey addresses the senate select committee on intelligence. he offered more details on the interactions he had with president trump before he was fired. >> it is not for me to say if the conversation i had with the president was to obstruct. i took it as a very concerning and disturbing thing. accusing the president of being a liar. he said he lied about him. he raises questions on the president's motives regarding his termination. praised the special counsel as the right choice to lead and declined to answer questions if he believes this rises to the level of obstruction of justice. that will be the question going forward. >> the president feels vindicated and is eager to move forward with his agenda, the

business of this country, and with this public cloud removed. reality tv. this is not a serious investigation yet. what is happening behind closed doors may make a difference, but we have to understand counterintelligence, not just if the president feels vindicated. the best person to investigate this in more quiet and cerebral rooms is bob mueller. stable.sing strong and what we have is anything but. the snap election gamble backfired spectacularly. the conservatives losing seats rather than gaining them. jeremy corbyn outperformed expectations. this is bloomberg reporting that theresa may is calling to form a government with the northern

party. this is what she needs to do to form any sort of majority. the number of seats the conservatives has won have fallen short. >> we will continue to work with our friends and allies in the democratic unionist party in particular. this e-government will guide the country through the crucial brexit talks, securing a new partnership with the eu that guarantees our long-term prosperity. >> she is toughing it out. reduced the majority are the conservative party went into this with a working majority of 17. she finds herself without a majority at all. >> the of session of the markets throughout the day, the sterling balancing act. in the immediate aftermath of the election, performing a

balancing act between the pessimism of the outlook in the election and the optimism of this softer brexit. where do you stand on the idea that a hung parliament produces a softer brexit? produces anrliament unstable government. even if you have a government willing to pursue a softer track, is that government going to see it through? it feels like people should be worried about the prospect of a new election. still to come, as we review the week, an exclusive interview with tim cook. plus, jamie dimon and larry summers on the trump economy and .ill gross on bonds more of the week's top business headlines. gm shareholders send a message to david einhorn. company's split the

stock has stalled. >> there's not much he can do at this point. michael: this is bloomberg. ♪

♪ michael: this is "bloomberg best." let's continue our global tour of the top business stories. donald trump campaigned on bold promises to improve america's infrastructure. on monday he offered his first concrete proposal. >> kicking off what the white house is calling infrastructure week. to handked congress over the reins of the air traffic control system to a private company. type of committee privatizing the air traffic

control regulatory regime similar to fudge we have seen in other industries, like the financial services. this is a big win for american airlines and delta. this is where the president did not get into specific details. how he will pay for it. that is the division in the republican party. looking at this as a benchmark in what they wil hope will be a larger infrastructure plan. >> general motors rejected a proposal by david einhorn to split the company's stock. he wanted to divide gm stock into 2 classes. >> is that the end of it? does it go away? >> short of buying more shares and making a push for the next proxy, there is much else he can do. he lost i quite a bit. over 90% voted against his

proposal. you didn't hear the shareholders supporting him either. i'm not sure he has any momentum. capital asn euros of the european central blank said popular was too big to fail. >> it makes strategic sense. it compromises our franchise in spain and portugal. in spain we will have 24% market share. in portugal, we are the leading private bank. >> for retail customers of the bank, they will be relieved santander is taking over. for the customers that hold equity in the bank, or any kind of bond, or so forth, there could be problems.

one of the big fronts to look for going forward will be litigation. spain shareholders have the right to sue any company or issuer that may have misled them. there is anticipation there could be a lot of legal battles to come. bounced back from a four-day drop as the foreign minister says he wants the qatar government to show concrete commitment to stop supporting terrorism. the long-term rating has been cut 1 notch. are we expecting this isolation to continue for a long time? >> the latest on the medical front, the kuwaiti amir is amir.ng with the qatar nothing concrete as it stands. the other part is a global powers aligning themselves with a different sides of the dispute

. turkey is backing qatar clearly, as well as the latest bill to add troops. you have the united states with the comments from last week. the question is what will happen with russia and china? >> extending its decline after a 5% tumble. u.s.ng at the bloomberg, crude and product supplies at the highest level since 2008. you can look at the terminal. that is what caused a steep slide in oil. the move yesterday, the velocity was surprising. that into perspective for us. >> we have a massive increase. -- ashtly pointed out rightly pointed out, and increase since 2008 that caught

the market wrongfooted. reason foranother opening short position for some people who believe the market has not rebalanced and opec is failing trying to bring supply and demand into balance. .> leaving the bank a possible successor to jamie announcement in a memo. there is a glass ceiling it appears that j.p. morgan in the form of jamie dimon. >> possibly. -- manyn has been wonderful and talented executives have come out of jpmorgan. this situation might be a similar one where he got to a senior level in the organization, there isn't enough upside in the near-term horizon, and there might be greener pastures in another organization.

>> the presumed successor. there are people it is not as if jamie dimon has driven everyone out. there are 4 people with operating responsibility plus marion lepert the chief financial officer. gordon smith who runs the commercial and consumer bank. and mary erdos who runs jp asset management. >> the house floor just past the rollback to jobs. is a significant legislative moves from the house to rollback which is one of obama's main accomplishments. there is a high hurdle in the senate. >> it will be the senate banking committee chairman who is going to be taking this up. he is writing his own legislation. he said he hopes to consider the choice act. he also wants to work with

democrats, which significantly changes what is feasible and likely to actually go somewhere. >> hopefully the nightmare of dodd-frank will be gone soon. we can hopefully get capital back into the economy. too much capital is sitting on the sidelines. what we know is the big banks have gotten bigger, the small banks have gotten fewer, the economy has lagged. ♪

apple's conference kicked off in san jose, california. it is one of apple's biggest events setting the stage for hardware and software that we had the market over the next 18 months. ibooks, inced updated

that prose, and an overhaul of the operating system. >> it is beautiful. we call it home pod. apple is going after amazon and google with a new home smart speaker. >> it is the product of the day. the first new piece of apple indware besides the airpod two or three years since the apple watch in the fall of 2014. >> hours after apple introduced pod at the worldwide developers conference, tim cook sat down with bloomberg television for an exclusive interview. >> what we tried to do is build something that is a breakthrough speaker first. music is deep in our dna. ipodg back from itunes and

. we wanted something that, number one, sounded unbelievable. i think when people listen to it they are going to be shocked over the quality of the sound. of course, it does a lot of other things. all of those are important as well. we wanted a real high quality auto experience as well -- audio experience as well. >> what about the other things? can i make a phone call, call a car, order groceries? havee of the advantages we , there are a lot of things that siri knows how to do from the phone. we will start with a patch of those, as phil showed during the keynote. then there is nice follow-on activity.

>> you have been engaged with this white house. you urged president trump not to pull out of paris. he didn't listen. what does that mean with their relationship with the president? listen to me. he didn't decide what i wanted him to decide. i think he decided wrong. i think it isn't in the best interest of the united states, what he decided. in terms of the way that i look interacthing, do you with politicians, or do you not, my view is that first and foremost, things are about, can you help your country? if you can help your country and do that by interacting, then you do that. if i get the chance to pitch the again, i'm going to do it again. i think it is very important we

engage to fight climate change on a global basis. this is not something where you can solve it country by country. it requires a global action. sions created in one country affect another. it is something we feel strongly about. i wanted to do every single tell howcould do to important it was to stay in the agreement. unfortunately, he decided something different. has been a remarkable week for exclusive interviews. conversations coming up with , bill gross,man and more. straight ahead, big names in in oness way in -- weigh

donald trump's infrastructure plan. i applaud having air-traffic control being the leading edge. this is bloomberg. ♪

♪ >> we can't reduce our carbon footprint unless we deal with transportation. transportation is 40% of the greenhouse gases. the only way will do that is with clean cars. the clean cars will not just come out of california, although that is part of it. they will come out of china and other parts of the world. i have to say china is a real driver in the money they invest, the diligence of their animation, and i'm in california to partner with china in that endeavor otherwise we won't be able to achieve our climate goals. >> how much of a threat you think is posed to u.s. innovation and green tech in

california and across the u.s.? how much of that is under threat from trump's decision to pull out of the paris accord? >> i think the role of america in the what has been my dues -- has been reduced because of trump's pullout. in general, i would say the chinese are on the move. they are a rising power. >> that was california governor jerry brown speaking with tom mackenzie in beijing after discussing clean energy technology, trade and investment with china's president xi jinping. meanwhile, this was an important week for donald trump's economic agenda. the president outlined plans for a trillion dollar infrastructure program. can he muster the political capital to get it done? we just discussed the state of the trump economy. starting with this conversation with jamie dimon. >> how do you see the u.s.

economy right now? and in the second quarter some of the trading volumes and trading revenues is taking a bit of a dip. i know that is the market as opposed to the economy. >> it's like the weather. i think it was a waste of time. to me, when we do trading, we serve clients around the world. it is prices, execution discipline. if you say over 20 years, it will go up. the financial assets of the world will go up. i couldn't possibly tell you. this economy has been chugging along just under 2% growth rate for years. it is a long recovery, a weak recovery. about half of the average recovery. great weak spot in the american economy. i think we can grow the economy more.

i wrote about it in my chairman's letter. >> china is pushing infrastructure. what needs to be done in the united states? >> we in the bill to major airport in 20 years. i'm told it takes 10 years to get the average permit to build one bridge. we haven't built a bridge in new york city -- was depressed and 50 years. i just came from hong kong, it is embarrassing. we just need to get back to a can-do attitude about infrastructure, it is our country. we are getting behind and we should not. it damages growth. >> i could support big reform in air traffic control, they are right about that. they are right about radar being bad and the gps being good and we use radar. here is the problem. the center of their plan appears

to be a nonprofit quasipublic corporation. the only nonprofit public corporations i can think of an united states are the post office and amtrak. i don't think most americans would regard that as a usually successful formula. i want to see why they think that this change in organization is really going to be enough to change things. but i applaud the decision to focus on infrastructure and have air traffic control be the leading edge of that. the question is will they find a way of going at it or will they use this buzzword of privatization. i am concerned in that regard and will be watching anxiously to see what is said today. >> if you had to pick one thing that would help change the dynamic here in the u.s.,

health, growth, maybe 2%, 3% gdp, what would it be? the one thing? >> infrastructure investment and rational immigration policy. >> what other chances that we get that? >> well under 50-50. we spent our time on budgets that don't add up and on scandals and on tweets. >> what do you make of the president's plan so far? starting with air traffic control. does he need to start with congress, talking about changes to minister the law? >> let's start with what we doing today. direct spending of $100 billion a year. they also subsidized state and local municipal bonds. in total, we spend about $150 billion a year at the federal

level on infrastructure. but that represents 3% of the federal budget. it pales in comparison to what we spend on defense, what we spend on medicare, what we spend on social security. these are the kinds of investments in the future that drive economic growth. we are spending less and less at the federal level. will we have suggested is that if the federal government -- the budget it has at the federal level not be resolved anytime soon, fundamental divisions between the republicans over tax rates and tax levels and between the democrats on other spending priorities. entitlement programs. we will have to find a way to get more private capital involved. in order to get more private capital involved, the states and municipalities, the water systems and wastewater treatment systems, and the airports and ports, things we are paying for his users today we have to get , those things off the balance

sheets and into the private sector. we have to encourage privatization to find the funding to do this. >> how do you get that done across the board? >> the way to get it across the board is you can encourage the state and municipalities to privatize their assets by giving them financial incentive. use $20 billion a year to get the states to sell their assets that they are under investing the airports, the water systems in america, get them to sell them and use a federal fund as an incentive. >> i think this is a good time for infrastructure. generally, because it is one of the few areas where democrats and republicans seem to have an overlap that more is better.

it is an asset class that has really suffered from a confluence of good intention in terms of laws and policies. but altogether it has made it almost impossible for people to build things. and, for example, in the united states he could typically take 10 to 15 years to get something permitted. in germany and canada, it is two years. it is stunning. these are real countries. this is like g7? are these two of the g7? given this in two years or that any adverse environmental consequences. >> i'll ask what we asked duncan earlier.

is there a political will practice at the federal level but at the state level to do that in the united states? >> i think some of these roads and other types of infrastructure are getting to the point where you are wearing out cars, it is a consensus which travels abroad. our structure, if you have travel abroad, is vastly inferior. of amost any other country significant income. i think we were rated d- by one of the big civil engineering firms. we're 16th in the world. i think most people have said that this is enough, we have to invest. we have to fix things up.

in a way some of it is a political question. do they have the will? >> you urged president trump not to pull out of the paris climate accord with other business leaders. hours later he pulled out. how did that impact your relationship with the president? >> as you know i was on the other side. as a lifelong republican, i endorsed hillary clinton. but once president trump ran -- won, i wrote a note that said president trump has won, we have to give him the benefit of the doubt. so we are giving him the benefit of the doubt. but when we think there is something that is not in the interest or the country's best interest, i will speak out. i thought we also stay in the paris climate accords. the next generation of industries around clean energy is an important thing for the interest or theunited states o. it doesn't impact our relationship.

people can disagree, and we happen to disagree on this particular issue. >> tim cook says he thinks that the president decided wrong. he plans to keep an open dialogue because he thinks it is important for america. what is your strategy and the number one things on your priority list when it comes to discussions at the white house? >> we are in favor of tax reform. we believe the idea to repatriate cash overseas a lower rate is important. on the other hand, we are not for the border adjustment tax. that is very difficult for companies that import a h igh degree and work on a low margin. the retails, a lot of the tech technology companies -- we'll -- we don't think that is in the best interest of the united states. that was what this country was

built on, the ability to disagree without being angry. ♪

♪ michael welcome back to : bloomberg best, i am michael mckee. many of the financial world's heavy hitters gathered in new york for the bloomberg invest summit. we showed several panels on bloomberg television, as well as exclusive interviews with participants. here are some of the highlights, starting with thoughts from jim chanos on how he interprets the shifting u.s. relationship with china. >> that is one of the interesting things about the administration. china was the boogie man 2016 in the campaign. following one visit to mar-a-lago, the president and xi

jinping appear to be best buddies. so this is, i think, one of the things that is caused most of us watching geopolitics -- or member we are stuck. we are not macro people. i will make this disclosure as i always do. this policy could change tomorrow. i think that is something that has a lot of people a little bit uncertain. you had this currency manipulator, trade problems. administration is focused on trade. all of a sudden china is our best friend in the western pacific. i don't know. clearly, people are focused on north korea as they should be. but the south china sea is still being developed militarily by china. you have the chinese currency stabilizing.

which i think probably is a good thing. we will have to see. this administration seems to make it up as they go along. whether policy will be six months or year from now, i have no idea. >> we can't safely say that a threat of a trade war with china has been removed? >> a trade war with china. anything that will bring tariffs is kind of a dumb idea. i am a free trade guy. i think that will extend well beyond china. that will extend to our partners in north america and europe. we seem to be taking lots of fights these days. china seems to be where we are not picky. in general, rising tariffs are the general drop in global trade. it would have to be bad news, i think. >> how do you balance the

caution with the need to earn some return? what the loan? >> you own what you think are the most attractive and least overvalued assets. i would suggest, as we do, there are attractions and closed in discounts, 5%ect to 10% acid discounts that are leveraged awesome cheap leverage. that off of some cheap leverage. you go there and you basically tell your investors that it is a changed world. returns are going to be lower. if you want to sleep at night, and to accept the market as it is, the low volatility requires low return. >> what about treasuries? what about cash? >> i think treasuries are the

most attractive of the developing market bonds. -- inn paris and comparison to the tenure bund. 190 basis points. relative to a 10-year jgb. that one is easy because that is 205 basis points. it is more attractive on a yield basis. still, i would suggest they are overvalued pricewise and investors should because cautious in terms of how much they want to own relative to cash. do you have a cash position? >> we have a large cash position. >> how large? >> i will put it in a durational content. this is a zero duration benchmark. it has a negative one or two-year duration.

it is a lower than cash-like return but it's positions. >> at this stage of the cycle, i think it is prudent that aboutors think reserving capital and protecting against a negative scenario i can economic slowdown which could lead to an increase in default rates. >> if we saw a downside surprise somewhere, where would that biggest risk or downside surprise be? >> it is usually the risk that you don't tend to think about. we spend a lot of time at our forum over the weeks talking about the risks to the market. there are plenty of risks, some of which are geopolitical in nature. asia is a region where there is increasing political uncertainty. the middle east is an area where even this week we have seen signs of instability as well.

there is plenty of risk from a geopolitical perspective. another risk we have been monitoring for a few years relates to this antiestablishment sentiment that exists around the globe. we have seen it over in europe, in terms of their political cycle, we saw it with the recent residential election in this country. there's a lot of antiestablishment traction that is building. it is occurring at a time where economic growth is not too bad. if you have any type of anticipated shock that hits growth and on a planet rates, you can have an acceleration in this process. those are a few examples of the risks. the final point i will mention is when thinking about risks, it is very important to think about valuations. early 2016, people were worried about a lot of things, the valuations were such that there was enough margin for error with things stabilized and you can afford it.

current valuations whether you , look at the equity market, there is no longer that margin for error. i think it is a market where you will be particularly susceptible to bad news, even small doses of bad news going forward. ♪

♪ >> i want to show you this is to get perspective on some of the credit. we have abu dhabi, we have qatar, here are some of those credit default swaps. i have fastened this one for you and moved sharply in comparison to some of its peers.

>> there are about 37,000 functions on the bloomberg. we always enjoy showing you our favorites on bloomberg television. go> this will give you insight into our topics. here is a quick take on this week. >> actors are not like they were in the movies from the 1980's and 1990's. >> they want me to hack the planet. >> now cyber criminals can be state sponsors, breaking into service and disrupting national elections. >> they were successful because he introduced chaos and division. >> he can be a nefarious collective, blackmailing billion-dollar corporations by threatening to release piles of sensitive data, or they can the agents looking to expose the cia's on capabilities. easily professionals are always finding new ways to gain entry and e-government industrial and , financial networks. the hackers get more sophisticated and so other

safeguards protecting sensitive data. here is the situation. in 2005, 5400 databases have been disclosed. the biggest think the adobe act of 2013. 152 million records were compromised. these individuals are not the only at risk. ones the u.s. has been battling an escalating cyber war with china and russia for years. in multiple u.s. agencies 2016, concluded russia was by the hack of 20,000 democratic national committee emails hoping , to push the election in donald trump's favor. a conclusion vladimir putin denies. if proper precautions are taken, not all have i know the innings in may of 2014, 110 million numbers were stolen from target. those numbers were useless because the pin codes work encrypted and the banks immediately closed all the cover must attacks.

-- also compromised attacks. cybersecurity is at the worst and best it has ever been. the size, scope and frequencies of attacks is skyrocketing, but the safeguards protecting individuals and corporations are always being improved. the massive 2014 hack of jpmorgan did not result in financial losses for customers. they were covered by consumer protection law. but it did inspire jpmorgan to build a vast cyber security operations staff of former military officers. the u.s. eventually identified and indicted hacker. keeping data secure requires constantly updating technology. an extensive human monitors watching for any signs of trouble. high-security comes with a high price tag. michael that was one of the many : quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with all of the latest business news and analysis 24 hours a day. that will be all for bloomberg best this week. thanks for watching, i am michael mckee. this is bloomberg.

♪

♪ david: what was it like when you came here? did people make crocodile dundee jokes? james: people would say to me, is it true that all australians wrestle crocodiles? i would say, well not all of them. david: wall street ceo's are thought to be people who throw things at the walls, scream and yell. james: i think if you are the seventh of 12 children, you don't want to be the thrower. david: are you in favor of repealing dodd-frank? james: that is a terrifying thought to start again. what will replace it? the world doesn't want the large banks to be unregulated. david: you have been a ceo for seven years. that is pretty long. james: what are you telling me, david? [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪