♪ >> coming up on bloomberg best, the stories that shaped the week in business around the world of it daily drama in a d.c. twitter, taxes, trade, and turkey. >> every vote counts. >> almost like a strategy the trump administration has. >> slow, but systematic attempt to move the nuts and bolts of the affordable care act. >> earnings season begins with a bank with big banks reporting. >crisis in catalonia continues. dr. data skulls disaster.

-- spells disaster. the imf puts out a sunny growth forecast. we see the sun shining, we also see clouds on the horizon. >> the f alamo see reveals -- at moc -- >> inflation expectations are low. to -- we not trying are trying to get the underlying rate. >> economists consider the conundrum of tax reports. >> growth will pay for part of it, not all of it. >> there is no reason to believe this. >> there are miracles, sometimes productivity growth picks up. >> all straight ahead on bloomberg best. ♪

>> hello and welcome, i'm michael mckee, this is bloomberg best, your review of the most important business news and analysis from around the world. donald's agenda was going to be a big story no matter what, but monday dawned with unexpected clinical fireworks. president trump made an interesting choice over the weekend. he can afford to lose only two republican senators and he decided to pick a fight with one of those senators. he blamed bob corker for the iran deal. he wanted the secretary of state job but did get it. senator corker compared the trump administration to a reality show, that the white house was a day care center and the president's threats could

put the country on a path to world war iii. >> every vote counts and senator corker, not the most fiscally conservative member, his raising the fiscal issue really is in line with what some members of the far right and center have also been saying and that poses political risk for tax reform. >> trump also demanded congress funding his border wall in exchange for letting dreamers stay in the country. >> it will be another distraction. chuck schumer and nancy pelosi said that is a nonstarter. when you look at the polling of vast majority of americans, they support a clean daca bill that provides protection. a crucial moment in the crisis in catalonia. is set toesident address lawmakers in barcelona

moments from now. a lot of anticipation. formatnot sure of the parliament might take place. we are not sure if the opposition will get essay here. they have a majority in parliament and if they want to an act this law that could create an independent republic for them, they have a majority to do it and can get it done. the question is if he will back out last minute. is proposingment that the parliament should suspend the effectiveness of this declaration of independence in such a way where they can undertake a dialogue by which there can be no agreement. we need to open up a time period to have a dialogue with the state of spain. that is something that should be done today. >> spain maintaining it is ready to seize control of catalonia if

the push for independence if catalonia's efforts to break away from the rest of spain are fraudulent and rootless. >-- fruitless. >> it cannot go ahead by that amount of people. symbolic move and said he is ready to accept the mandate. catalonia was an independent republic, but he will suspend the talks. there is nothing to talk about. this is a fairytale. he is ready to implement article 155. time is running out and he is running out of options. his coalition will probably implode if he backtracks. continue,eady to there will implement this article and he is out of government. >> the fed released minutes from its september medium showed growing concern that low inflation is more than a passing fancy.

policymakers said another rate hike is dependent on the strength of the next few months. >> policymakers are taking inflation backslide more seriously than they were earlier when they were quick to write it off as transitory and idiosyncratic. now they are pondering whether part of that weakness might be not to do too much broader global trends. that means they are hedging their decisions to hike on the s data.uple economic they are announcing the hurricanes are going to muddle the reports. they are in a complicated position. as we look at the roster of who will be at the december meeting, there are four or five dubs, sure means i'm not totally chair yellen will have the vote count for a rate hike. >> jpmorgan and civic route kicked off her quarter earnings

plunged while cities group saw a decline in revenue. >> we did have topline revenue growth, but when you balance out with a week capital market, you are getting no revenue growth. maybe 1% or 2%. growth, it at loan has dropped from high school digit growth to maybe 1.3% of growth. if you look at activity in the trading market, it is anemic. >> we got cost control. both city and jpmorgan coming in very big on that metric. that is important because as the environment becomes uncertain, you know banks are doing what they can to protect profitability of the firm. you can bring down costs and

become a more efficient. that provides more upside. bank of america posting its best profit in six years, higher rates helping. wells fargo takes a surprise $1 billion charge for precrisis mortgage program. >> many of these metrics we measured came positive for bank of america. we also point out the expense control of the bank of america is quite strong and they continue to focus on reducing expenses to $50 billion number for next year. the wells of numbers, they obviously had the one-time charge. the revenue growth was not as strong as some of the other banks as they continue to work their way through the scandal they have been dealing with. >> president trump has disavowed the iran nuclear deal without

the national accord. he refused to recertify iran, which he must do every 90 days. he hasn't quit the accord. >> as i have said many times, the iran deal was one of the worst and most one-sided transactions the united states has ever entered into. >> we are in limbo now. if you look at the broader geopolitical situation in the middle east, this is adding more uncertainty into the mix we have right now. for business, this is not what people wanted to hear. they wanted a sense that this massive market with all this huge potential will be open up again. this probably will continue the next few years. still ahead as we reviewed the week on bloomberg best, conversations with ims managing director. the ubs ceo and fed president

charles evans. up next come up more of the week's top business headlines. richard taylor is happy to an the nobel prize, but not upbeat about the market. >> i don't know about you, but i'm nervous. >> this is bloomberg. ♪

♪ >> this is bloomberg best, i'm michael mckay. let's continue our global tour of the top business stories. in japan, where a scandal engulfed one of the nations top manufacturing companies. >> chairs in japan's third-largest steelmaker continue to fall, being back to -- being absolutely battered. steel admitted to falsified data about the strength and

durability of some of its products. >> this is damaging for japan and the integrity of the manufacturing sector. those are the bloodline of japan's economy. it comes on the back of other scandals, such as takata's airbags. we know kobe is one of the oldest companies and one of the biggest automakers like toyota. autoey are supplying other companies around the world, it will\onto japan's integrity and cause considerable consequences. >> shares of kobe steel falling for a second day, down about 15.7% as ofnow -- now. it admitted falsifying information about its other products. seemed or, powder, also to be the data was falsified for that and that was shipped to one customer. iron oreowder --

powder was shipped to other sites. we are trying to pin down which customer and that was, but some of the customer has confirmed. one of the problems for kobe steel, the steel industry has seen a lot of consolidation and mergers, which put more pressure on kobe steel to compete with huge arrivals. it branched into other businesses. one of the things we are looking to see is a selloff of assets to deal with liability and help sharpen its focus on its core businesses. of naftaurth round renegotiations begin today in washington. trump says the u.s. will walk away if the deal does not meet its expectations. >> we will see what happens. it is possible we won't make a deal, it's possible we will. >> that priority of the trump

administration, canada and mexico might regard as poison pills. real deal breakers. do people have to prepare for the possibility nafta could go away? >> there is increasing chatter that it looks like some of these proposals are so far off the limit, politically impossible in canada and mexico, it looks like the strategy the trump administration has to put a box these.e -- kabash to the talks are really doomed from the start. >> congress failed to pass health reform and president donald trump took his own action, signing an executive order that will promote choice and competition. >> my in menstruation will explore short-term limited -- might administration will explore short-term limited duration. andt signals his intentions

kind of a tertiary affect, the potential to a chilling effect on sign-ups with the affordable care act heading into the enrollment period and the prospect of polling healthy people out of the existing system. >> the trump administration is taking the most drastic step to roll back the provisions of the affordable care act, saying it will stop making subsidy payments. the bailout of insurance companies to these unlawful payments is another example of how the previous demonstration abused taxpayer dollars to prop up a broken system. >> let's be clear about what is happening. there is a slow but systematic attempt to remove the nuts and bolts of the affordable care act in order to foster uncertainty in the market. some degree ofe

legislative action. talks have hit a wall, specifically how much the u.k. owes the eu. very done would be deal. >> u.k. is planning for all outcomes. we are planning for everything. >> the progress made was theresa may's speech in florence, which he said the uk's would meet its obligations rightly and continue to pay the budget for two years after exit. what they said to -- after brexit. he mentioned it may's speech and said that the negotiators here but theve not put -- negotiators here today have not put it up for debate. the deal has to be approved. months of approval process once the deal is approved. it is looking tight. >> the trump administration

proposed to repeal the obama era clean power plant. 2015 regulation and a cornerstone of obama's environment to policy. environ to protection agency imitator scott pruitt said they are committed to writing the wrongs of the obama admin station by cleaning the regulatory slate. it will be done properly and with humility. >> they are arguing the obama epa overestimated the potential for climate taints -- climate change and health that if it's while downplaying potential costs for electric customers and utilities and arguing the epa overstepped its authority, that this rule was too broad and was decades of practice regulating power plants because the obama approach required broad changes to the sector. the attorney general of new york and other sectors indicated he

theychallenge the plan and will focus on how the trump administration is justifying this change. 180 degreefied a pivot in the policy. >> facing increased pressure to perform on his pledges of growth at the firm. raised 95 $5 billion from investors in april. there are rumblings that if he doesn't deliver, his job might be at stake. is he on borrowed time? >> he has been for a while. as soon as he announced his , het, investors said doesn't have much time to show that will work. the numbers in the second quarter were somewhat disappointing and the news hasn't gotten better. he has been described as a fireman and he's come in and put out the fires and he is back

into rebuilding the bank. this is where investors will get nervous that the rebuild is taking longer than they might have liked. next chiefnt is the executive officer after mark tucker offered not to break tradition and serving insider would they have been better off going down the barclays route and opting for an outsider? >> i don't think so and i think that's because there was not as much pressure to choose an outsider. we are seeing because u.s. rates are normalizing, because growth is there, they want more of the same, which is more low issuance, more cost cuts, and a steady hand at the tiller. that is what mr. flint represents. >> richard taylor won this year's nobel prize for his work

biases ing human decision-making and their effect on markets. he co-authored "nudge". this is the badge of authenticity placed upon economics. was the guy who did all the talking and tackling in the organizational work to make behavioral economics respectable to creative institutions, to make it possible for grad students to make money. he was the institution builder who did not want to destroy mainstream economics, but get people to pay more attention to the weird ways we think. >> less volatility in the stock market, yet stocks are going higher. do you have behavioral explanation for this? >> i'm nervous and it seems like when investors are nervous, they

are drawn to being spooked. nothing seems to spook the market. if it is based on the expectation of a big tax cut, investors should have lost confidence that would happen. given what has happened so far out of congress. ♪

♪ welcome back to bloomberg best, i'm michael mckee. the international monetary fund raised its forecast for global growth as it kicked off its meetings in washington, d.c. despite a stronger baseline outlook, inflation and monetary tightening remained points of concern. the director fleshed out the ims report in an exclusive conversation with bloomberg

reporter tom mckee. have we reached escape velocity on all the agony in the last 10 years? >> let's hope so, but it is not guaranteed. we have a better growth and better growth forecast, they put 6% this year, they .7% next year, 3.7%6% this next year, is not shared around the world. while we see the sun shining, we also see clouds on the horizon and countries and people not having the benefit of it. tom: how does the imf link constructive tax reform with the idea of getting debt hosts in order? is tot needs to be done look at the evidence of the data at the numbers and to determine policies on that basis. , the political

objective of thing wanting to improve the situation and ultimately reduce excessive inequalities if that is the case in that country. and is what needs to happen clearly, in those countries that have a heavy debt burden and those that have entitlements coming to fruition, that will probably increase the spending. it is necessary to take into account the medium-term and make sure any tax reform is a revenue-generating. what is important here is the tone of the imf in an optimistic world. the united kingdom is off their game brexit and other serious issues with emerging markets. you also marked down the u.s. because the imf is doubtful on successful tax reform

legislation in the short-term? >> we actually marked up the u.s. economy compared with our july numbers and marked up a few other countries, including advanced economies. what we hope to see is implementation of the reforms that we have called for for many years, a good solid tax reform. that will be simpler, corporate rates will be lower, a base much more solid and clear. that is what we hope to see and the sooner it goes through, the better. >> still to come on bloomberg best, more headlines from a busy week in business, including the latest bad news for uber. and fighting words on a trade from the british mp. plus a dive into the weeks interviews. some highly respected economists weigh in on important assumptions.

thing taxesrtant matter one way or the other for underlying growth. >> this is bloomberg. ♪ who knew that phones would start doing everything?

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♪ i think what is good for the market is that you don't limit participants to the marketplace. liquidity is important and when you live in participation -- limit dissipation and times of iness -- limit participation times of stress, you want to make sure everybody is in the marketplace. -- pokergo to the ball -- correct. the banks should not be allowed to prop trade. there is nothing wrong with it

if they are regulated like everybody else. that was terry duffy expanding market dissipation and -- explaining market participation. we had another exclusive conversation with ubs chief executive sergio ermotti. julia chatterley and joel webber asked where investors are focusing interest and whether he is worried about complacency. more remarkable is kids credit across the board being -- , but also in corporate credits across and the junk or investment grade. i see a lot of complacency in the level of risk and him that investors are getting in the effectiveness they are taking. julia: enough to cause alarm? >> not alarm because trends seem

to last longer than we expect and therefore, it is too early to say that this is alarming or not. but we have to pay attention to that. >> what are you hearing from clients right now? more of aa little bit willingness to deploy cash, but that hasn't changed from the beginning of the year. , cashsured our indicator balance with the bank. we were drowning in the last four or five years and the high 20's, now we are going down to the mid-20's. that is good news. toittle bit more willingness deploy money and invest money in equities than in bonds or any other asset classes. still looking for diversification and the completion -- differs occasion

-- diversification and the completion is not that high. leadel: will proposed cuts to huge deficits or generate sustainable growth to pay for themselves? three economists addressed those comments on bloomberg television. >> cuts in the corporate rate will increase investment and productivity and wages. the tax cut will not pay for itself. there has to be based on it. growth will pay for part, that not all of it. the two sides are talking past each other, but the center of the debate needs to be growth and wages. lower corporate tax, higher wages. >> if it is driven by capital investment, how can it be that corporations are waiting for tax cuts? it has been approaching zero for a long time. if they wanted to invest, they would be investing right now.

>> a lot of companies are confused about the state of the economy. when they ask about interest rates, tell me about growth and i can tell you everything. thenesses are afraid economy is in a slow growth mode. expectationnge the and climate for business investment. as well as the location of that investment. >> their message in d.c. is that we can get up to 2.9% over 10 years. that's how they think it will pay for itself. can get you think gdp to sustainably over 10 years, given the difficulty forecasting the next six months? >> it is possible gdp growth could get to that level, but it would require more than tax reform. demography was destiny. i don't agree with that.

only a modest decline in labor force participation in the next decade. they knew what demography was. we have seen a collapse in labor force participation. that is more than the tax bill. >> the underlying growth rate seems to be lower than it was before the crisis and we don't understand exactly why, but we are not going to get 3% growth anytime soon. >> the idea we can't get to the 3%.ent, we had -- get to you basically saying that is not possible, even with what you see in the tax plan? >> nearly anything is always possible. it is not likely. the big issue in the u.s. and elsewhere in europe is that , souctivity growth is a low

you at aging to this and this gives you growth rates which are far below free. there are miracles, sometimes on activity picks up and for reasons we don't understand, it could happen. tax reformieve that on the table would generate this , but it could happen for other reasons. but it is very unlikely. >> there is little reason to think tax cuts would matter one way or the other. if the base cut taxes, you cut tax collection. >> if you are arguing the financing will be provided by higher growth as a result of the tax cut -- >> unicorns will come and deliver packages of money. there is no reason to believe this. >> are there ways you think it can be a way that is more efficient? >> the form paul ryan floated

this year, that destination-based cash flow tax, which included the border tax adjustment, was a not stupid idea. it was one of the few things i have seen from paul ryan -- >> one of the few moments that he is praising paul ryan. >> it has bipartisan support among tax experts. this is a good idea. being the one thing i have seen from paul ryan that was not a terrible idea, it died instantly in the political arena and without that, without the border tax adjustment, there is no way to make a significant corporate cut in marginal tax rates that doesn't explode the deficit. the minutes of the moc september meeting answered questions about the monetary policy, but further insight came

from the one-on-one interviews. let's start with manus cranny's conversation in zurich. >> i'm thinking it will take longer to get to 2% and we might need a continued accommodative stance. from here on out, every rate increase will get closer to that line where we are not sure if it will lead to inflation moving up. we have toudgments come to before the next rate increase. manus: from the data you have seen so far, where you stand on a december hike? >> it is too early to say. i think the inflation data has been disappointing. that itd the arguments is likely due to transitory factors. there certainly have been a number of those in the u.s.

low inflation is a global environment and the whole world is dealing with transitory effects. i'm sure there is is some of that that is true. expectations are low and have been low for quite some time. we are going back to october 2014. we haven't calling out market measures, they are moving down and they continued to be low even though they bounce back after the election. survey measures are weaker than we talk about. for godotike waiting currently? where is it going to come from? >> what we have seen is a lot of tightening in the labor markets and that will put upward pressure on labor markets. we have done a bunch of research and our analysis suggests labor

-- labor force participants are usually the last to come back in response to recession. and have started to pick up we are at the end of any sign of slack in the marketplace. >> when you get inflation, that is what you are suggesting? with that in mind, will the fed go in december? >> i don't know. one of the things we tried to do and i try to do, is let the data tell me what the marketplace is doing. because of the storms that have racked a lot of my district, there is a lot of noise in the data coming out and i'm going to try to go into the field and talk to my business contacts and get a sense of how disruptive it has been and from there, draw a conclusion about what i think we should do in terms of monetary policy. ago, eric said to

bloomberg news we will be close byour 2% inflation target the end of 2017. that is the kind of forecast that has drawn some questions on global wall street. >> right. if you look back to march, we were still expecting 2% inflation and one of the things that occurred was the wireless pricing change, which had an impact on the current numbers. we are trying to get the underlying trend on prices. that is one reason we focus on core inflation rather than total inflation. oiltimes we get spikes in and sometimes oil goes way down. that is not predicted. we are not trying to address the relative price changes in the economy. we are trying to get the underlying rate. the reported inflation is quite low, it is a reflection of

temporary factors. we are about to have more temporary factors. the hurricane is likely to have had temporary factors. that is not something we should react to either. we want to get the underlying inflation rate. my expectation is that we will get underlying inflation rate closer to 2% over the course of next year. ♪

♪ you are watching bloomberg best, i'm michael mckee. let's return to our roundup of the weeks top is this story in a pledge from saudi arabia to cut back its output of oil. >> saudi aramco is planning to make the deepest cut in oil supplies in november to reduce global inventories. they are cutting 516,000 barrels

a day despite the fact demand is holding up ready strong. i found this interesting at a time where exports are increasing and they are getting market shares. >> i think they are trying to keep the rhetoric stable. to do is has tried help for deductibility for the demand side of it. they can control supply, but not demand. so they do this kind of action. it is about consolidating the trust they think they have built up with a market and the are showing thehey are price we see today is justified. >> tensions between the u.s. and turkey are rising, both sides suspending be set services to citizens. this comes after turkish president erdogan arrested a person who works at a national consulate.

it is taking a toll on the lira and turkish stocks and bonds. >> the u.s. announced it was suspending nonimmigrant u.s. visa services across -- similareleased this statement. the reason behind the move is because last week, turkey arrested a turkish national who worked for the u.s. consul here in his temple. turkey says he is -- in istanbul. they gave a brief remarks in kiev and the most interesting hets of that remarks is that laid the blame on the u.s. ambassador and not on the administration, which is his way of leaving the door open for some sort of reconciliation, direct president to president. >> the cofounder planning to

start two new funds according to bloomberg sources. why now? >> investors are leaving hedge funds, but some of the traders who invested in the want -- in the fund have a track record. if they market their performance, maybe there is a probability some of those investors invest in them and that can arrest the decline. they have lost -- they manage less than $12 billion, down from $40 billion four years ago. >> what gives him the confidence to offer more products of the fund if they are not doing well? >> macro is making a comeback, maybe a small come back. turning things are positive for these macro managers. billionaire activist investor

bill ackerman spoke with number of about the wide range of topics. his battle with adp that is front and center. there will be no compromise with adp because he wants a mandate for change. >> not at this point. he said the board would have a change of heart to make a settlement. they are willing to implement his plan and push to the changes he wants and maybe one would be enough, that as it stands, he sees no room for compromise. general electric has a new ceo and now a new director. ge towardjoins the yesterday and nelson peltz has been pushing ge to get off it's up since acquiring its stake in 2015. mr. garten said he is disappointed about the recent performance that he believes it represents an attractive long-term investment opportunity.

is this basically conceding? they havet, they said a good plan and we will lead you a lot. then the stock went down. now they are forcing their hand. also another board member was leaving. the timing worked. stocks are terrible. there was first euphoria, change of guard, then there was a billion dollar company. it will be multiple years to get this thing reached. it has been restructured, what to turn cash flow and other things around. uber'scontinuing saga of legal troubles, they are facing two additional criminal investigations. -- have bribery, fcpa >> fancy acronyms. >> the legal fight with alpha that, self-driving car's --

alphabet and self-driving car's. hell and acing and great ball are the remaining -- greyball are the two remaining competitions. aside from brexit, prime minister theresa may is grappling with fallout over trade disputes across the atlantic. how will this end? this has turned ugly. the rope threatens jobs. what is the next threat? are the king of corporate welfare in america. they are subsidy junkies and this is the most egregious hypocrisy i have seen in international trade in many years and they need to understand the way in which they are playing does not sit well

with u.k. parliamentarians. the way in which they sold and least back the planes to monarch airlines is something i will be referring to the eu commission to look at whether there is an anti-dumping case there. >> here is boeing's response. they say despite the recent rhetoric regarding these proceedings, they focus on preserving a level playing field in the aerospace market. be close to making a change. exclusivening from bloomberg reports, they are considering cutting the monthly bond buying by at least half. policymakers could reach an agreement on how much that the central banks will buy at the meeting. is there any to stipulate that it will end in september? >is that causing some division

within the ecb? >> it is clear a decision will be reached and it is clear that no matter what the hawks or dubs can be, everybody is in agreement, it seems. they want to exit the program gradually and carefully. what the report has shown is that this compromise might lead to extend the program for nine months at the pace of 30 billion euros per month, which is the pace of how it has been happening so far. ♪

♪ this is the spl see unction supply chain. you can see shinzo corporation at the top, mitsubishi, toyota, general motors, nissan, honda, these extended to vehicles on the road. about 30,000 functions on the bloomberg and we enjoyed showing you our favorites on bloomberg television. maybe they will become your favorites. here is another function you will find useful. quic go. you will get important insight into timely topics. here is a quick insight from this week. protection,llent

three inoculations. the second given not less than two weeks after the first. >> minority of parents leave this does more harm than good. this group undermine progress against disease in europe and the u.s. and health officials worry about future setbacks. two years old, two and a half years old, a child went to have the vaccine and came back and a week later, got a tremendous fever, got very sick, now is autistic. >> here is the situation. the backlash took off in 1998 when the medical journal turned out to publish a fraudulent discussion linking it to autism. 2010retracted the study in and the authority stripped of his medical license, but the idea took hold. in u.s. was measles free

2000. andnumber spiked to 667 2014, worse in europe. whooping cough has remained at elevated levels 2012. choice not to vaccinate doesn't just affect individual children, since lundbeck st. kitts live in clusters, groups can lose her immunity. the pathogen dies out in that area. if communities lose it, those who can't be vaccinated for medical reasons or are too young, become susceptible to infection. even those immunized because no vaccine is 100% effective. the u.s. sets vaccine requirements for school attention. some public health specialist support intimating these waivers and in some cases, courts have agreed.

in a striking down a religious exemption, mississippi cited public interest in keeping children healthy. others worry making taxation more compulsory would harden the opposition. 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 news and analysis .4 hours a day. it will be all for bloomberg best this week. thanks for watching. i'm michael mckee. this is bloomberg. ♪

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