♪ vonnie: coming up on "bloomberg best, the stories that shaped the week in business around the world. >> i think it was a little bit worse equities are little bit better. vonnie: investors read between the lines. some big firms make outside hires while others groom from within. a setback on health care could not the trump agenda for a loop. >> this failed and failed miserably. : bloombergvonnie

guests offer insight into the market. >> it is not going to rise by very much. >> this is a phenomenal asset and instruments could be quite success -- rectangular. -- spectacular. >> is the economic glass half empty or half full? >> there is lot more growth than the skeptics think there is. >> i do not think there is enough confidence. vonnie: it is all straight ahead on "bloomberg best." hello and welcome. i am vonnie quinn. this is "bloomberg best," your weekly review of the most important business news, analysis and interviews from bloomberg television around the world. let's start with a day by day look at the top headlines. the week began with a fresh batch of economic data from china. >> the chinese second-quarter

gdp data shows the world's second-largest economy growing 6.9%. brisk rate of >> all the numbers beat. gdp was better than expected. six point 9%, we were expecting 6.8%. also, factories are pumping out goods at a faster clip. industrial production at 7.6%, more than a full percentage point more than the previous month and a full percentage point more than the estimate. then we have retail sales much better than expected. 11%. we were expecting 10.6%. just inching above the estimates. this economy even though the authorities are trying to curb excessive debt and over leveraging, they are seeing still strong production and strong growth. >> overall i think all numbers , suggest the economy has stabilized, led by strong fiscal policy. the heightened policy conditions

have not affected the real economy much. vonnie: disappointing quarterly results from bank of america. trading fell 40%, making it the worst first half in that area of lloyd blankfein's term. bank of america's interest declined, failing to follow a boost. overall, trading coming in line i think it was a little , worse but equity is better. there is a little bit of trade-off. banking fees are also better. there were some bright spots in the quarter. on the other side, the cost rates show the lowest cost rate ratio in the first half for goldman. that shows that they are doing what they can in terms of managing costs in this tougher environment. >> bank of america is very tied to long-term rates. so any time that you see the 10 year not doing what we think it should be doing and picking up,

that is bad for bank of america. what really sticks out is net interest income for that bank which is core revenue for any , bank, especially for bank of america. that is something that fell despite these productions from brian moynihan two months in the quarter saying we will have at least $35 million to $50 million increasing and they actually saw a decline of $100 million. vonnie: after two more republican centers announced their opposition to the republican health bill proposed by the gop leadership, not only is senate majority leader's mitch mcconnell's replace is done, so is repealed. president trump: i am not going to own it. i will tell you the republicans , are not going to own it. we will let obamacare fail and the democrats will come to us. they will say, how do we fix it? >> this bill that failed miserably, let's go through the tick-tock. last night, you had senators coming out and saying they are against it.

then you have the senate majority leader backed by president trump himself saying let's revoke to appeal this. then senators like susan collins saying we do not even want to have a vote to proceed. discussions are already underway to find a new path forward but they will be relying on a very narrow path forward. >> morgan stanley has reason to celebrate. for the second straight quarter the bond traders posted more , fixed income revenue than its largest rival goldman sachs. , the smallest drop among the top five u.s. investment banks. to did morgan stanley manage do better than goldman once again? >> one of the things we were highlighted in the choices of writing was the commodities sector. this is something morgan stanley has largely gotten out of. interestingly enough, goldman sachs did not exactly say we had a terrible loss in commodities.

julie they said it was the worst : quarter ever for commodities. laura maybe not a lot, but : certainly bad. that could be one of the things. one other item that morgan stanley did talk about in terms of fixed income was they had the rates, they are not good for them. fx is something that did offset that. >> the bank of japan. as expected, they took no steps to downgrade their aggressive monetary stimulus program, even as the other central banks around the world are looking for an exit. anna: the central bank acknowledged it was the being too optimistic with 2% inflation target. >> the date for when they will target toscal 2% around april 2019 which is pushing it a year. their quantitative easing, their relative control. >> there are a number of risks. one is the consumption hike scheduled in 2019, that is bad

timing. it would be best if the government delays the consumption tax rate again. another thing that is much bigger, what is much more important, the ability of prime minister abe. we are seeing the plummeting of the prime minister's approval. if he goes, there goes our support for bank of japan. without the strong vacuum of the government i think the bank may , start to feel it cannot maintain the current aggressive stance. that is the biggest risk. jonathan: anticipation for all the build. the statement reads -- if the outlook looks less favorable or if financial conditions become inconsistent in part of inflation, the council stands ready to increase the program in terms of size and duration. then came the news conference. it certainly could be taken as hawkish. the financial position is the last thing the ecb wants.

>> the may 2013 taper tantrum still haunts central bankers. the backpedaling from the meeting was very visible. this is a very delicately worded structure. even prepared to tell us what he meant by autumn when he said there was an auto date and he would give us further guidance on and sit. nevertheless, tiptoe he will. there is quite a lot of uncertainty looking around and i do not discount another taper tantrum moment. vonnie: bloomberg has learned robert mueller the special , counsel investigating donald trump's campaign is examining possible ties to russia and out examining a broad range of transactions involving the president's businesses and some of his associates. give us the details we know for certain. >> we do know that special

counsel bob mueller is looking at a lot of transactions that involved not president trump, but developer brand name trump going back at least a decade or further. anything involving russian money going into trump apartments, trump individual developments like trump soho, the 2013 miss universe pageant in moscow and the sale of a luxury property in palm beach almost 10 years ago. >> the legal authority that bob mueller has, that was given to him by rod rosenstein, the acting attorney general, has is very broad. the language says words to the effect of matters around the russian campaign collusion question and any other matter. i think robert mueller has decided these other matters are very much part of his purview. robert mueller was fbi director for a long time. i would call him a prosecutor's prosecutor. he will go to where it have to take him even if it is unpleasant. i don't think he will hesitate to bring down the hammer on donald trump, donald trump jr.

, any of the people caught up in the crosshairs. i think he views his mission to get to the bottom of this wherever that leads. that is what we know about robert mueller. vonnie: a staffing shakeup at the white house. white house press secretary sean spicer announced his resignation after president donald trump hired financier anthony scaramucci as his communications director. let's get more now with bloomberg's chief washington correspondent kevin cirilli. kevin: a clear shakeup in the communications department of the west wing. something that has emerged as the most combative against the media and one of the most visible. i have spoken to several sources in and out of the white house over the past few weeks that have said the president has grown frustrated with sean spicer. >> sean will continue to serve the administration through august. the president has appointed anthony scaramucci as communications director. >> i don't have any friction with sean. i do not have any friction. this is the white house of the

united states of america and we are serving the president. i want to make sure that our cultural template is to make sure to put the president's agenda first and we serve his interest. we have a little bit of friction inside the white house as a result of that we can all live , with that. i'm used to dealing with friction. vonnie: still ahead, as we review the week, neil atkinson of the iea predicts oil prices will keep rising. plus, barry diller has no love for president trump, but likes what he sees in the u.s. economy. we will also have a thorough roundup of the week's earnings report. up next, more of the week's top business headlines. is getting ready for a proxy fight with procter & gamble. >> it is not a breakup. it is not a ceo change. it is very much acceleration of the plan. vonnie: this is bloomberg. ♪

♪ vonnie: this is "bloomberg best." i am vonnie quinn. let's continue our global tour of the week's top business stories on wall street. where a legendary buyout firm is set to deal with the future without its founders. >> kkr has taken a big step in succession planning. the private equity firm has elevated two veteran executives in their 40's to the new role to co-president and co-chief operating officers. it is all in an effort to prepare the firm for the future when the cofounders are no longer at the helm. >> they founded the firm back in 1976 and have run it since. they started it with their mentor jerry kohlberg who left the firm in the 1980's, but this has been their shop. people wondered once they got into their 70's, both 73, who was in line to take over.

this answers the big question not just for the public investors, public shareholders but also the institutional , investors, pension firms and endowments that give billions of every year.kr >> the british broadcast company confirming this morning a new itv ceo. it seeks a successor and start a new position in january 8. there were rumors she wanted to go into politics. why did she land at itv? >> it does seem like a slightly strange move to go from aviation to broadcasting. in her case it is slightly less odd because that is where she comes from originally. she worked for "the guardian." she's probably at a point in her career where she would like to try something new again, to some degree, something old. are trying to reinvent

themselves into production, less on the advertising. the question is does she still have that touch? that she still understand that industry having spent seven years away? >> the ceo of the oil company has resigned, citing health reasons. his ongoing battle with the shareholder elliott. he will be replaced by the former head of this specimen to decision -- specialties decision -- division. it is second fiddle to what is happening with the lax story. do these resignations open the door for what is happening? >> that is the question because they walked away on june 1. it has six months that it can come back with a new offer. the successor is currently the head of the chemicals division. it is all about the market is looking now when moving up to the chemicals division.

how can the attention be retained if the head of the chemicals division is now leading the company? david what looks to be the : biggest proxy fight in history, trian has nominated its founder nelson peltz to the board of procter & gamble. procter & gamble has a market cap of over $200 billion. they have underperformed their peers because of their insular culture. they have been talking with procter & gamble for some time. why did they decide to move? >> in july, there was a meeting where they presented their ideas for how this company could turn around and be a little faster and more responsive to the market changes. they suggested at that meeting that nelson peltz get a seat at the board and the company's directors decided that was not the avenue they wanted to go because they already had a plan in place for writing the ship. ting the ship.

david is this a restructuring : situation? >> it is not a breakup and not a ceo change. it is very much acceleration of the plan. peltz does not believe that will have any impact whatsoever unless they have somebody there guiding it and pushing it through. >> a country moving to reduce financial risks and stimulate growth, some banks have lowered the rates they offered on wealth management products. >> the wealth management product part of this particular push is important because they are essential cog in the china banking industry. on the one hand, they are quite popular for retail space, looking for higher yield. they have been averaging 4.6% in recent months. that is much higher than you can get in other products. retail is happy to funnel their money. the banks like that because they are an alternative source of funding, they are cheaper than the cost of funding in the money markets. the reason regulators are worried, they are saying if you are paying yields that high, there is a risk you might pass

on those costs tier customers and the economy and hurt the real economy. regulators are trying to put a squeeze on the wealth management products telling these banks to , put down the yields for the customers to make it more affordable, less pressure in their funding race. it's generally part of this wider crackdown of containing risk. francine: the german carmaker daimler is recalling 3 million mercedes-benz diesel vehicles after potential in emissions cheating. the company could avoid massive penalties. what led to this recall? >> it has been bubbling along in some sense ever since the volkswagen crisis broke nearly two years ago. they have been very adamant that they have not cheated like volkswagen did but they may have , pushed the boundaries in terms of regulations in turning off emissions controls to protect the engine. the boundary for those criteria is pretty loose. so what they are trying to do is

at least come good with the german government and saying, ok, we are going to get out ahead of this thing. we are going to basically recall every single modern mercedes out on the road right now in europe. it is like 220 million euros. if this fixes the problem for them, they get away pretty cheaply. >> trade talks in washington between the u.s. and china have gotten off to a rocky start after news conferences were called off after the trade imbalance. -- after wilbur ross criticize them for their trade imbalance. >> it is time to rebalance our trade and investment relationship in a more fair, equitable and reciprocal manner. >> we were kind of managing expectations going into this dialogue, but it feels it is more acrimonious than expected. michael the opening statement : was. the rhetoric was sharp.

the chinese vice premier also warning the united states not to bring geopolitics into it because any kind of sanctions would torpedo the talks. maybe a direct reference to the steel sanctions the president has threatened. no specific agreements were expected at this meeting but what the hope was, that they could continue meeting they , could create an action plan of one year of negotiations to follow the 100-day negotiations that came out of mar-a-lago. we have no idea if they got that far, neither side talking yet. >> deutsche bank ceo john cryan telling employees to prepare for a hard brexit in a videotaped message. cryan said -- there is a lot of detail to be ironed out and agreed depending on what the rules and regulations turn out to be. we will try to minimize disruption for our clients and for our own people. >> basically what we are seeing the big banks are making decisions, assuming they will lose passporting rights from

britain into the eu. they are looking into the businesses, trading businesses and deciding they will have to have parts of those in the eu to be operative in those markets after brexit. is telling us is he is preparing for a hard brexit scenario and that will entail this and moving a large chunk of the trading business into frankfurt. >> talks between scripps networks and potential suitors are heating up. according to people familiar to the matter, a deal could be by the end of the month. we have reported that discovery communications and viacom have been holding separate talks with the owner of hgtv and the food network. give us more of a sense on what remains to be negotiated. >> one of the main factors is who will control this combined company? whether it is discovery or viacom that ends up being the buyer the control of a combined , company is somewhat tricky because all three companies here

are owned by families, or at least controlled to some degree. scripps network controlled by the scripps family. john malone controls a lot of these entities. discovery controlled by malone and viacom controlled by the redstone family. if a deal is done with a cash and stock component as my sources are telling me both , sides will have to figure out exactly who controls the votes. those can present major complications to a deal being is what i am sure that the advisors of these companies are working on right now. ♪ vonnie: welcome back to

. vonnie: welcome back to "bloomberg best." i'm vonnie quinn. u.s. crude oil inventory sales further than expected this week. according to the international energy association. giving hope to producers and investors that global stockpiles

could shrink and prices rise in the second half of the year. but it is still a complicated picture. iea's neil atkinson discusses the outlook for oil. >> next week, opec will meet with russia. are they going to achieve more production cuts? >> we don't know if that will happen or not. we have to wait and see. what we are sure about the moment is that although the opec cut agreements and not opec cut agreements has for the six-month in a whole as it has been operating has been reasonably successful. but for the month of june, the latest data for which we got reliable numbers, it looks as if the compliance rates have slipped a little. we have to wait and see what they decide. opec is responsible for its own decisions and we are observing it just like everyone else. >> it is extremely difficult to predict the price of oil. are we still range bound?

>> at the iea, we don't formerly publicly forecast oil prices but we are able to say that based on our current outlook for supply and demand in the rest of 2017, we do expect stocks to start falling during the second half of the year. on that basis of falling stocks, you could expect the price to be supported and the price to perhaps rise but not by very much because every few dollars that the price does begin to rise, it incentivizes more oil from the united states and other places. to some extent, any rise in the prices is capped by the availability of short cycle oil. vonnie: coming up on "bloomberg best," more of the week's compelling conversations. perspectives on the slow slog towards brexit, gridlock in washington and movements in the markets. >> i would not be surprised if you saw london reprice 5% to

10%. vonnie: this is bloomberg. ♪

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vonnie: this is "bloomberg best." i'm vonnie quinn. brexit talks between the united kingdom and the european union continued this week, but with prime minister theresa may's political support at a low ebb, some question whether she can rally the nation behind an exit plan. former u.k. ambassador to the united states peter westmacott discussed the uncertain path ahead with our jonathan ferro. >> you can draw a parallel maybe between what is happening here in the united states with health care and what is happening over in europe with the brexit negotiations. >> well, there are moments where it looks a little similar. that is to say there are people who decided they would vote to get rid of obamacare without working out what they wanted to replace it with, and that is

where it is muddle now with replace and repeal. i think in the united kingdom, there were a lot of people who voted to leave the european union on what some would say was a pretty dishonest prospectus, without working out what their alternative was, and i think that is the reason why once again there is talk about thinking again and holding a second referendum. we were not getting that a few months back, but it seems to be back on a number of agendas. >> ambassador, what would that referendum be on? what kind of specifics would that referendum be on? >> i don't think -- it is not for the near future at all. i mention it because i think it is back in the editorials and some of the comments from the experts. if there is ever another referendum, it could only happen if parliament decides there should be one. you cannot get rid of one referendum result without holding another one to consider it again. what would it be on? i think it would have to be, do you or do you not accept the deal which the government has negotiated? of course, it has not negotiated

one yet, so we would not know. the problem is that any conservative government, and that is what we have in power in britain at the moment, has said it wished to hold a referendum, if it lost that, it would not survive. they will be very reluctant to hold a referendum because it would look like a vote of no confidence in the deal that the government manages to negotiate. nevertheless, it is still on people's minds. vonnie: the dow, s&p, and nasdaq all reached records this week, despite signals that donald trump's business friendly agenda is stalling on capitol hill. but guests on bloomberg television shared a more nuanced view of how they see politics and markets interacting in the long-term. let's begin with blair effron of centerview partners, who told david westin that business optimism may be starting to fade. >> there is a rising level of frustration. we had optimism early in the year and now we are sitting in july and there is recognition that a lot of the promise of

what we wanted to get done -- tax reform, infrastructure -- just isn't gathering appropriate momentum. yet you have the market at an all-time high, three points on multiples higher than the year average. you have growth points according to the cbo at 2%. fundamentally, that optimism needs to be turned into something real for that to be sustained. clearly the frustration that has been expressed on friday really is quite broad. >> if the frustration is broader than just jamie dimon, how is it affecting business decisions? investment decisions? decisions to buy and sell, things like that. is it having real effect in the real world? >> it absolutely is. today, you would have expected -- for example, in my world, m&a, we went into the year with certain projections, saying it would be a record year. over $4 trillion of m&a. fact is, it isn't. and the biggest deals in particular. if the deal is over $10 billion, you've seen the volumes be half of what they were a year ago. a lot of that is based on

certainty, decision-making, confidence in where we are going to go next year, three years. remember when you do things, when you make investments, you want to have a good tailwind, 12 months, 18 months following that investment, and i don't think there is enough confidence today that we have broken out of a 2% growth world. >> the economy is good. there is much more growth than a lot of the skeptics think there is, or some of the numbers, all of the numbers are not terrible. but there is definite, complete -- and i mean complete in a pragmatic, but stimulating way -- there was optimism. >> optimism? >> optimism. >> do you share that optimism, or are you at odds with the consensus, as it were, that you found there?

>> well yes, i certainly think that for business, there is no reason not to be optimistic. i mean -- this country -- this is a bromide, but our resources and our basic way of conducting business is -- has basically, other than pockets of south korea in technology, certainly china in certain areas, nobody compares within a, i don't know, shoot, 1000 miles, 12,000 miles. so yeah, i do. >> how would you describe the state of commercial real estate in europe? >> i think the state of real estate in europe is actually pretty good also from a supply/demand perspective, meaning european cities have been typically very difficult to build in. small, urban cores, often times height restrictions, in certain cities -- not london, for

example, but other cities. lots of capital still looking for opportunities to park in defensive asset classes. but on the other hand, lots of opportunities for transitional assets, which we focus on, largely coming out of the uncertainty around brexit or some of the political issues that are affecting continental europe. for people like us, those moments of instability create opportunity, with respect to transitional assets. >> has brexit been fully priced in to the london real estate market? >> we don't believe so. we saw a surprisingly a very de-bid reaction to the brexit vote, largely because when the pound devalued, lots of global capital felt that buying london would be cheap because the pound was cheap. but obviously, there was a reason the pound was cheap. it was cheap because of the anticipation of brexit and what that meant to the u.k. economy. so we as a firm feel that the u.k. economy and the u.k. bid

for risk asset should adjust to a more normalized level. >> and that is a repricing of what percent? >> it's tough to tell, because again, every risk asset is different, but in the real estate space, i would not be surprised if you saw london reprice 5% to 10% for core-type assets, and in transitional assets, which you are buying to create ultimately a core asset, the expected rate of return for transitional assets should reflect that risk. i would expect transitional assets to reprice as well. >> tom, i want to ask you a question about venezuela, because i know that you own pdvsa bonds. there is a great deal of nervousness about the degree to which venezuela will be able to honor those obligations. what is your point of view? >> we look at this and say this is a phenomenal asset that, if it is allowed to operate as a normal e&p company, will have an enormous amount of value. we think that value will accrue to the benefit of all

venezuelans and will improve the economic circumstances that presently exist on the island. the key is, can you get to where we are today, where things are somewhat dysfunctional, to the point where they can operate like a regular company? >> and? >> our view is that it will be a rocky road, but there will be a point in time where there is no other choice but for that to happen. >> how much time does venezuela have left? they've got $10 billion in reserves, $5 billion in debt coming due. >> interestingly, they had $10 billion in reserves before the last debt payment was made, and they have $10 billion in reserves today. it calls into question perhaps there is a bit more capital that is there than is evident to the public market as a result of the disclosures that are made. but i think they have got in the vicinity of six to 18 months, depending on the level of liquidity that may exist outside of officially reported sources. >> and at this point, you think the instruments you own are good? >> we think that the return on those instruments could be quite spectacular if the company is allowed to operate as a normal e&p business. ♪

vonnie: you are watching "bloomberg best." i'm vonnie quinn. beyond the big banks we mentioned earlier in the program, it was a busy week for quarterly earnings reports. let's dive back into our roundup of results, starting with netflix. >> netflix is already dominant in streaming video, and its latest numbers just reinforce that dominance, with global subscribers estimated to reach 108 million by the end of the third quarter. it is all about the original content on netflix, and the momentum is expected to continue with most analysts raising their subscriber estimates and price targets. all good news? >> i tell you, investors continue to focus on subscriber

growth. the company is trying to get investors to focus more on revenue and profits and things like that, more traditional financial metrics. but again, this is a momentum stock, and it is tied to subscribers. that is still the focus. on that regard, they blew out the second quarter numbers on both domestic and international subscribers. even more importantly for the stock, third quarter as well. it is not like they pulled some of the growth from the third quarter into the second quarter because they are forecasting subscriber growth in the fourth quarter also very strong. >> the drug giant novartis has reported a smaller decline in second quarter profit than projected. that is amid early signs of a revival of the alcon eyecare division. does this give you more options? how committed are you now to spinning off this business versus, say, six month ago? >> i was pleased to see the turn on alcon. in the second quarter, it grew 3%. at the beginning of the year, i said that we are going to undergo a review of the alcon business, everywhere from keeping the business to capital markets exit. and i think what this beginning of the turn does is it improves the options that we have

available to us. for example, if we were to do a capital markets exit, we would want to see a number of quarters of consecutive growth. so hopefully, we can continue this momentum and drive additional growth in the back half of 2017 and end at 2018. >> ibm coming out with its numbers. second quarter operating earnings per share of $2.97 does top the consensus estimate of $2.74. revenue, however, falling short of forecasts, $19.29 billion. it was expected to be a drop, and it was a bigger drop. i can't find the last time that ibm booked a revenue gain. >> it has been a while, and as you remember, the company is undergoing a massive transformation going into emerging technologies and some of those numbers are fairly held. the cloud number is about 30%. it looks like the drag because of legacy business is still continuing. the growth margin expectations

were slightly above what they were looking for. i think this is where the big story is at that point, a lot of the pricing pressure. >> how much more cost savings can they wring out of ibm? >> that remains the biggest question. if the growth margin decline doesn't stop in the next couple of quarters, will they have to take a lot more restructuring in order to have pretax income growth again next year, because that is something they focus on. that is an area of focus for investors. >> let's get on to volvo's shares. they are trading lower after second-quarter earnings, jumped 39%. the swedish truck maker delivered more vehicles and demand for construction machinery increased. give me a sense of trump's infrastructure plan. are you starting to see the fruit of it? you raised the forecast for the north american market as a whole, but forecast is still below demand for last year. >> yes, it is. what we have seen from the truck side is that our forecast is the

market has bottomed out with the new and used trucks are considerably better, and also economic activity is strong. so we are guiding up to 225,000 units. i think that is a sign of recovery in our truck markets. and also, the construction side, it's a slight improvement as well. from flat to a slight improvement. so that is the situation. >> unilever reported second quarter sales growth in line with estimates this morning as underlying revenues rose 3%. this is a business clearly very much in the m&a crosshairs at the moment. it has fended off kraft. the question is, does the current business model and plans going forward justify that or do you think the m&a story will be back online? >> what we have focused on is long-term compounding with our

continuous investment model, and i think this again shows what enormous value can be created with the unilever model. over the last ten year continuous total shareholder return. so a long-term, compounded model like unilever is a good model for many of our shareholders. >> microsoft shares are rising in extended trading, as much as 2.17% after reporting sales and profit that topped estimates in the fourth quarter. adjusted sales rose $9 as demand almost doubled for microsoft's azure cloud service. it all points to the company's turnaround plan working, and investors are closely following the ceo's plan to reshape microsoft as a cloud computing powerhouse, with services related to azure and office 365. a shift that led to a massive restructuring this month. we have got to talk about the cloud first. big progress.

>> it is amazing growth. it is one of the biggest businesses out there in the cloud indeed, and it just shows you that they have used the strengths they had, particularly microsoft office, to move corporate customers from just office to office and in this case, office and the cloud. a lot of their dedicated customers were already storing stuff using office 365 and other things, already using azure and have some comfort with that, they are willing to go to microsoft for their cloud needs. they are benefiting from the industry trend and their existing relationship with customers. >> ge getting hit today after reporting earnings this morning. it is the third biggest point drag on the dow, subtracting about eight points from the dow, at its lowest level since october of 2015. an ugly day for ge. what happened? >> they set expectations at the lower end. they talked about power and oil and gas being a lot worse than they expected, so they will have to make it up in costs and other

actions. they warned on the -- i don't want to say they warned on the dividend. they said three or four times, the divident is ok, the dividend is ok, but that almost creates concern. >> like the more you talk about it, the worse it gets? ok. >> but they did say they are going to back off on the buybacks, probably to help fund the dividends. so there was a little bit of worry about that. and they also pushed out to november when they are going to talk about flannery's plan. i think people were thinking more early fall, and now it is late fall. he is basically saying, it is a big company, it is taking longer. vonnie: boston-based fashion retailer m. gemi is not a public company yet. but the two-year-old firm is growing fast. it is aiming to disrupt the market for luxury italian shoes and expects to hit $50 million in revenue this year. m. gemi founder and ceo ben fischman tells the story on the latest addition of "small to big."

>> m. gemi is a new luxury brand that is providing the customer with the highest quality italian shoes at prices that have never been historically possible until now. we looked at the luxury marketplace, and there were so many qualities about luxury that were great, but there were qualities that needed some real reinvention. the incumbents were not reinventing. shoes happen to be a category that we fell in love with, because we love obsession. we want to be a business that occupies a spot, a place in the customer's mind all the time. shoes create that unique obsession. we think that you've got to be newsworthy. you've got to be different, you've got to have a story to tell. our consumer knows there is must see tv every monday, and it is not about markdowns, it is not about private sales, it is about great, new product. we actually do not release that many more products than other traditional retailers do, we just don't do it all at once. the way we describe our company to the consumer is we are old world meets new world.

we identified very early on in the business creation a team in italy that i had had some history with that we could, in essence, acqui-hire. there was a group in italy, in florence, that have been in the shoe manufacturing business for generations. there was a whole bunch of challenges in taking the old, historical italian shoe manufacturing industry and putting this new engine on top of it. unlike most fashion brands that produce things four times a year, where you have these big spikes, we are providing them with this constant demand, keeping their factories moving all of the time. we had to get them to start producing products at the pace that we wanted them produced. the only way to solve that was to learn. they have done a pretty good job of learning through our data, they have done a pretty good job of learning through our forecasting. what opportunities they can receive by moving faster than they ever moved before. they have been pretty open to listening about ways to improve

their demand forecasting, ways to improve their speed of production, but they are not so open to listening to ways to make better shoes, that's for sure. probably rightfully so. we opened our first store in soho. 80% of those customers who bought in the store first buy their second purchase online. if you are buying things with the frequency that our consumers are buying them, a luxury of multichannel drives to their purchase power. 50% of buyers come back and buy a second time. once they buy a second time, on average they have four purchases within a year. we are also seeing consistent 100% growth year-over-year in total sales and margin continuing to improve in each of those years. the goal is not go as fast as you can go and grow as fast as you can grow. the goal is with really good controlled growth, ensure that you can double your business for a number of years. ♪

>> bank of america and goldman sachs reporting earnings this morning. both are weaker in premarket, but the cake goes to goldman sachs. that stock down almost 1%. here is the why. take a look at the bloomberg here. this is their fixed trading revenue. it was down 40% and is the weakest since 2008. vonnie: it is a new function we have on the bloomberg. if you look up an equity and type gp tv, and then if you date it for about a month back, you see all sorts of tv clips that are attached to certain dates during that month, and a list of stories related to that particular company. we are always adding new functions on the bloomberg, and we always enjoy showing you the newest ones on bloomberg television. here, though, is an old favorite that you will also find useful, quic .

it will lead you to our quick takes, where you get important context and fast insight into timely topics. here is a quick take from this week. >> amazon's planned acquisition of whole foods highlights the explosive growth in organic food sales. the u.s. department of agriculture says that foods labeled organic must be grown without synthetic fertilizers and be free from genetically modified organisms. meats must be from animals raised without antibiotics or hormones and with access to the outdoors. its fans say organic foods have greater nutritional benefits and can even help fight cancer. that is why they sometimes spend nearly twice as much for organic products compared to a nonorganic one. but are organics really healthier and are they really worth the money? here's the situation. concerns about the growing use of pesticides and antibiotics in

animal feed prompted some consumers to look into so-called organic foods. in 1990, congress passed the organic foods production act to develop national standards, and organic products became more common. mainstream grocery chains started their own lines of organic food, and larger food companies began acquiring smaller health food companies to get in on the action. now from the big boxes to the small, specialty stores, three quarters of u.s. grocers sell organic foods. here is the argument. proponents say that organic produce has more nutrient, including antioxidants. they also suggest eating organic limits exposure to toxic chemicals that may lead to certain cancers. but while eating organic does reduce your exposure to pesticides, there is no evidence that the trace amounts in food are a danger.

scientific surveys have not found that organic foods are much more nutritious, and just because food is organic, it doesn't mean it is good for you. it may be nearly as high in sugar, sodium, and other unhealthy ingredients as nonorganic products. yet, more farms are going organic to feed the appetite for pure foods. with big supermarket chains like kroger selling more organic products and amazon's determination to drive down prices at whole foods, organic foods should only increase in popularity. healthy or not. vonnie: that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching. i'm vonnie quinn. this is bloomberg.

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♪ david: are there many who said, "i want to be the leading cellist in the world?" yo-yo: so, in music, there is no such thing as this is the greatest anything, because it is about learning forever. david: what about where you play? yo-yo: you don't have to be there. i don't have to be there. so, if we are going to spend time together, let's make it count. >> 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. ♪