♪ best,ing up on bloomberg the stories that shaped the week in business around the world. a growth matter are just from china's party congress. >> it will continue to be on china's terms. >> political chaos reigns in spain as madrid contains a crisis. >> it is doing exactly what madrid told him not to do. >> negotiations simply stalled. >> we don't know where they are going with this. >> automation arrived on wall street. of the highest-paid jobs

are increasingly under threat. >> conversations of consequence with leading investors and executives. >> a lack of alternatives. >> big banks had up a parade of earnings reports. >> the best way to get shareholders on board is to show our plans get graduate. >> our transformation is a journey. >> it's all straight ahead on them best. best."oomberg ♪ hello and welcome, i'm mark parson, this is bloomberg best, your weekly review of analysis and interviews from around the world. the week began with another development in spain's ongoing political drama over catalonia's quest for independence.

>> the president of catalonia failed to clarify his position on independence. he simply repeated his claim that he has a mandate from voters to act, but his decision to suspend the move has a left the country in a state of confusion. >> they are doing what madrid told him not to do. we need a simple yes or no answer. it is a four-page letter where he says he has a mandate and he is willing to act upon it, but he will engage in talks with the next few months. what is madrid going to do? this is what the government did not want. they were very specific about this. you have to answer in terms of yes or no. manner thatr in any is not the simple yes or no, article 155 will get triggered. madrid has all the grants to

trigger this article. more wall street giants posting quarterly reports. continued weakness in fixed income trading units, toy 6% decline at morgan stanley -- 26% decline at morgan stanley. >> i thought the results were ok at both firms, better at morgan then goldman, although they were starting at different points. morgan starting at a higher point, he's going well throughout the year. the bar was hired for them. i thought the most encouraging indications were out of wealth management. on the goldman side, they were -- on sick. they looked in line of that pack, but not trailing the pact significantly. i thought that was encouraging. next step is moving forward with growth initiatives.

ministers from canada and mexico rejected what they see as proposals by the u.s. in the fourth round of nafta negotiations. >> they plan on having a longer intersessional period before the next round to assess proposals. tolet's take the next month continue intersessional work and meet in mexico fresh creative perspective. >> none of us want to end this process empty-handed. there is no reason. >> we don't know where they are going with this. they want to make progress. trump says it's a bad deal and we need to do something else. they highlighted the problems the administration sees with the deal. but with the non-starting proposals, they seem to come from the united states.

while they are saying that things about each other, they feel in of hope that their scheduling negotiating sessions father down the road. >> we are coming down to the congress,hina's party where president xi will give the opening address. he will lay out his reform agenda. is in a greatent situation. our prospect is right, but the challenge is also tough. >> this is about recapping some of the achievements as the other party would see them -- as the party would see them and then highlighting the areas of focus. out,ple areas that stood president xi talked about foreign exchange and it u.n. reform and interest rate reform on the back of the comments of the pboc governor of his desire

to see a greater market. also his comments about the greater role for state-owned enterprises and mixed ownership structure. >> he has reinforced and brought the hammer down on the political economy you expect in china. even though he is speaking about reforms and exchange rates, allowing foreign investment, it will be on china's terms. that will be at the center of everything. there has been a reinforcement of the central message coming out of president xi that it will be on his terms in terms of how china's economy develops going forward. >> the spanish government announced an unprecedented decision to move forward with suspending the powers of headline government. after the president refused to drop his claims for independence. >> the catalan president is as defined as ever. he is insistent he has the mandate and the reaction from

madrid is article 155. the government said they will meet on saturday and come up to present to the senate. be anasures will indication of who will replace the president and for how long. passed their version of the budget resolution, putting the ball on the house side with possible action as soon as next week. how difficult will it be to get the house to agree with the senate? >> not that difficult. i was talking to some after the vote last night and they were saying this would be less controversial than the media has made it out to be and they are anticipating it to advance the first half of next week. that's good in terms of tax reform timelines the end of the year.

>> trump is expecting to and ask his decision on who will lead the fed. we were told to get a decision next week. what will the decision be? >> he is testing the waters by letting these stories drift out where he is leaning. i think republicans in general want continuity, so that points to janet yellen or a continuation of that regime, which if you want a republican continuing the regime, it is jerome powell. kevin warsh is qualified for the job, but i don't know they will pass the trump litmus test, not impeding the trump fiscal agenda. fiscal rates are the formal for the economy, so low rates will help the economy accelerate. >> still ahead as we reviewed the week on bloomberg best, oil

executives tell us where the crude could creep up to $60, plus a look at how automation is disrupting wall street. we will comb through earnings reports and up next, we will continue the top is this headlines. they may get a reprieve from the fcc. >> the fcc is close to saying, u.s. fine if you violate rules. we will not punish you for that. >> this is bloomberg. ♪

♪ this is bloomberg best, i'm mark olson and let's continue our top business stories and austria when voters went for youth in the national election. >> the 31-year-old foreign

has claimed a victory as austria's next chancellor yet protections put the nationalist freedom party within reach as second-place. what do the results from austria mean for the rest of the european partners? matt: it shouldn't be anti-e.u.. party, thewing freedom party and austria, has been anti-e.u. in the past, but they changed tact before the election to gain ground. because sebastian kurtz, the leader who has been elected pretty overwhelmingly, has said he will not form a coalition with anybody against the idea of europe and deeper unity in europe. has got to party conform to his ideas of europe to get together with him, or they could form a coalition with his current coalition partner, the social democrats.

airbus agreed to acquire a majority stake in the c-series program. the jetliner will be assembled in the u.s. and opens a new front in the battle with going over global aircraft sales. they walked away from a similar deal two years ago. what changed? >> they broke this announcement in the middle of the night to us and it was a conference call with the ceo. he said times have changed. two years ago, this is serious flying,ertified, wasn't and we didn't know if it would be popular with customers. now we have more data points on this. they try to sell a trained business and didn't succeed. the c-series is a troubled program even though it is popular, so they felt the longer we wait, the more paint the barnier will have to find a bombardier will have to

find a partner. you see the pipeline right there that runs to turkey to approach foreign buyers. >> inflows into that pipeline and it has reduced considerably. our latest intelligence shows far from pumping 600,000 barrels a day, it is not pumping to 20,000 barrels a day. 20,000 barrels a day. they are hoping this will be temporary. economics have an interest in keeping the flows going. the pipeline is the only way of exporting oil from northern iraq and it is the only way of generating foreign currency income from that production. activist investor rudolph wally has found they need targets in the

second-largest lender. according to person with knowledge of the state purchase, he has taken a .2% stake. >> the main rationale behind the move is the share prices around -- ,e is saying it is undervalued which is something other investors would say. the reason for that is the big restructuring that bank is going through and shares have been up so far this year, but since the co has been taken over, it is down quite significantly. be changed and this is why he took a stake in credit suisse. the u.s. securities and exchange commission is preparing to give all street a reprieve. they will tell financial firms they will not have to overhaul operations to comply with europe's regulations. >> among the complicated issues with mythic, the most

mifid,ated -- method, -- the most complicated is the sec rules. saying,seems close to it is fine if you violate u.s. rules to comply with mifid, we are not going to punish you for that. it is hard to see a world where wall street will make more money selling research than it has through trading. wall street has benefited for a long time. there will be a lot more issues down the line as clients go as far as revolting and say, we want what the europeans have. we don't want a conflicted arrangement. the firm who does something the best to get that service separately from them. president donald trump wrapping up a joint news conference as the greek prime -- in the rose

garden. it is a concept that doesn't work. yet, it appears we have a short-term deal. congress, they say they have reached a deal xlv, which attracts health-care shares, getting a list on that news. health insurers, those involved in obamacare, getting a boost, as well. president trump's said obamacare was dead and seconds later, bloomberg news reported that there was a deal between lamar alexander to restore the csr payments, the payments that help offset costs to middle-class people buying insurance. they removed it a few days ago 360we basically did a degree about-face and we are back to where we started. >> only a day after senators

lamar alexander and patty murray presented a bipartisan fix, you have house speaker paul ryan and donald trump coming out against the plan. >> i won't do anything to enrich the insurance companies. >> he is against some of the face, contained in the but he has made it very clear he wants to see some sort of bipartisan deal get done that prevents people from feeling pain and frankly, i don't know if that's possible. >> china's robust factory output theconsumer spending kept economy humming in the third quarter, gdp rose 6.8%, giving president xi power to shift to more sustainable growth. markets have not reacted positively. they are reeling from the comments on high corporate leverage. >> comments from the pboc, we heard from him again.

he was meeting with regulators and he flagged this issue of high corporate leverage and household debt. he was also pushed on the question of yuan reform. the pboc governor said this is a long-term process and he sees no immediate need to change the trading band for that you went. that was another issue. it doesn't seem like much for the markets to hang their hats on. up.umer spending is you have a lot of infrastructure spending as a result. >> lyft, the ridesharing company, is raising another round of ending. -- funding. they were in talks a month ago and the cash infusion, $1 billion, a total game changer against its competitor, uber. >> it might be a shift.

google alphabet was one of the early investors in uber and now they are putting $1 billion through google corporate for their private equity arm. i do know they are excited about this space. they were an early investor in sight card. now in lyft. now they are talking about using ridesharing with self-driving .ar started > divorce talks one succeed and she wants to see an agreement rather than an unpredictable resolution. >> the eu said it has given the green light to start making preparations to move the talks to trade in december, but no guarantees. we heard from emmanuel macron in the past hour. he said the ball is in theresa may's court.

we are not halfway there on the financial settlement. what's more, people familiar with the matter that they told humbert there might not be a final number published on this divorce bill because they will break it up to make it more palatable politically. i thought that was interesting that bloomberg news managed to get that. even though you have the eu president saying there has been progress, that is not accurate and i'm hoping to move on to trade talks by december. hope it doesn't always translate to reality. ♪

♪ will come back to bloomberg best, i'm a mark barton. automation changed the nature of many industries around the world and now it is changing wall street. in a series of reports, bloomberg examined the revolution overtaking financial institutions and what it means

for the people who were not there. >> some of the highest-paid jobs, some of the jobs but if people are literally making millions of dollars in some cases to do these jobs, are increasingly under threat of automation. that is jobs like trading on buy the sell side and the side, admitting hedge funds and asset managers. everybody on the portfolio site, to the order taker on the trading floor, to the legal department that is determining whether that swaps document is valid or not, there are technologies able to do those tasks and while it is not clear they will be able to do all of it, it is still early stage, this is being actively tested and roll out of the wall street firms around the world. what areas of wall street are already using automation? >> they are already experiencing

with ai over across the region of trading areas -- across session of areas. the thing i learned about this come up when you are able to use machine learning algorithms and apply that to augment a lot of features. they are looking at hedging and market making that as well. areit is another area they exploring. >> how many jobs could potentially be lost? >> what you hear often is 30% of jobs in the next five or so years. that, how many hundreds of thousands of people are employed in these banks and many of them doing chemical things does not seem to be an overestimation. a lot of the wall street is taking traders trying to bring them into the 21st century. at goldman, they are taking

engineers and trying to give them some ability to be traders. for a long time, they had these, what they call, "strats." they settled next to traders. they come to the data designing algorithms and -- comb through the data, designing algorithms. strats atave 2000 goldman. >> what is the technology in ai that is the most missing -- most promising? ai that listens to every single conference call from company management and is r --ening through four - it's decided what words are the most interesting ones. words like "challenging" or

"difficult" you would think would mean that news. -- bad news. those words are clear. that machine words learning is good at picking up that are the things telling you, while it says at this in the headline, this is really what the person thinks. maybe one day, they will be able to judge by the way i twitch or at the wrongnk moment, but they are not doing that today. coming up on bloomberg best, the week's most interesting interviews. frank talk on the oil market from top chief executives. plus, lessons learned from a crisis three decades ago, memories of black monday

straight ahead. >> it was a frightening week, more frightening than any week in 2008. mark: this is bloomberg. ♪

♪ when he surveyed the ceo's are they worried about the world at large and politics here in the united states are overseas? >> honestly, no. they are going all out day-to-day, w look at the supply chain and make sure you don't have a snag in the cream peninsula -- korean peninsula that will stop your business? you prepare for those things. job, wertfolio manager have to make sure we are on top of subjects like that. doesn't mean it will happen or we worry about them, but we plan for outcomes in case things happen. ofthat was blackstone, head

private equity portfolios. how are investors feeling these days? bloomberg's jason kelly sat down with the conference with the heavy hitter in that associates founder and chief executive ken lancome. what is going on in the market right now is a lack of alternatives. you look at the stock market and bonds, you know this. 2.25% bond, if the fed takes rates up next year 100 races points, dachshund basis 100ts, a 10 year bond -- basis points come up for tenure bond is going to -- i like the companies that .how the ability to grow

i'm more focused on dividends and buybacks. buybacks are an on and off kind of thing. i'm sensitive to balance sheets. is a stress event out there, these companies have to be able to stay the course. >> how healthy are balance sheets? >> enormous. up qe, thesops liquidity will go away. the banks are in the best shape they had ever been in my entire life. i think the excess of regulation out of the washington gives us opportunities to say, regulation is more reasonable. i think the fed probably is nervous to have a bank a out more than 30% of its earnings in dividends. they will let you buy all the stock you want because that can be turned on and off.

i would like to see possibility on the upside of dividends. look at jpmorgan. i tried to get jamie to run home depot when he was out of work. i wish i had gotten him. i really, really believe the banks today are a whole different kettle of fish they were in 2008 or any time in the past. >> the week began on a positive note for oil prices with crude holding amid signs of cubicle tensions that could affect production. manus cranny asked chief executives where the market was heading. manus: what does it take to get us through $60? what does it take to break the new bandwidth in crude? >> we have a solid demand and it seems to me that it is relatively stable for quite some time. it will be important.

responsive that will be at various levels, we might have been surprised it is growing, but not to the extent some might have expected. that would be a critical factor in this equation going forward. --us: do you think shell they are at peak production in the last month -- is that my read from what you just said? >> i don't think we are heading toward the shelf yet. what we might not fully understand his what kind of hurdles, bottlenecks are refacing with shell and how does it work? kick off it take to those options? >> we could see a provocation above $60 in the near term. opec, not opec, do they need to extend -- they were saying, yes

they do. they want to see the markets moving up, it would like to extend. that will be increasingly difficult. onre is upward pressure election in many of these countries. for the price to continue moving in a north direction, they need to extend. manus: they are pesky, aren't they? do you think they will cap out the market? your view on fractures in the the e -- frackers in state. >> that is one of the downsides in the market. we are still moving a lot of oil, even more oil from the u.s. to the far east. that will have an impact. that is one of the reasons it can be bearish.

this week also marked the 30th anniversary and one of the darkest days in wall street history, black monday. for some investors, the memory is fresh. we talked to one who flashed back to the crash in conversations with bloomberg television. >> i had a really interesting vantage point for black monday. as i make plans to travel to texas to do marketing for my hedge fund, i was in dallas, the day of the crash. was the so fascinating hotel that i checked into had alan greenspan and margaret thatcher in attendance for some awards thing -- i don't really remember what it was. the vivid memory i had was trying to call new york from my find room that evening to

out more about what was going on and not being able to call out because they monopolized the switchboard. the federal reserve and british government monopolized the switchboard. it was this odd, bizarre vantage point to be where they were physically the day of the crash. week, moreightening frightening than any week in 2008. not the dateit is of the crash that was the big trading day. it was the next day. overnight, greenspan lowered interest rates by something like 275 basis points and the futures rallied by 275 basis points on the open. they didn't know what was happening. bonds, there was

a bonds future, that was locked because if it rises above a certain level, there was a lock limit and the one trading in the market would be up about 10 or 11 points. at the time, that was a huge move. statisticalmove, move, the largest outlier as a something happening as compared to what model was in the realm of possibility, or abnormal but within the normal, was the euro-dollar. i remember, the stock market was asomething like, it few variations of of 20. a fewe talked about -- variations above 20.

short-term interest rates. that was a big move. it was the next day. euro-dollar future. that was when i realized options, out of money options, were extremely explosive. ♪

♪ you are watching bloomberg best, i'm mark barton. let's return to a roundup of the week's top stories. busy week for corporate earnings reports, starting with impressive results from netflix. >> it was a blowout corner for the world's largest online tv service, netflix reporting an increase of 5.3 million subscribers in the third quarter, less a bead on the top line, the company saying going

to spend as much as $8 billion on programming next year. what do they spend that on? incredible. that's $1 billion higher than the market was looking for. they keep adding billions of dollars to their programming and they are producing more original programming, relying less on traditional hollywood studios and some of the studios like the walt disney company are pulling back on the content they license to netflix. netflix is staking the future of the company on original programming. they believe that drives the subscriber growth and will ultimately pay for these incredible programming obligations they are incurring. >> johnson and johnson announced its third-quarter earnings and it beat estimates on earnings per share and revenue for the quarter. it took estimates going forward. we heard from the president in detail about how he wants to reform health care and he adjust the question of drug prices.

-- he addressed the question of a drug prices. are you feeling the forecast of washington on your business? >> the overall discussion on health care cost is a good discussion. the focus is narrow. the overall impact on drugs, drugs are 40% of the overall health care -- 14% of overall health care budget. we think the focus is to narrow, the broader discussion should be about the overall health care cost. -- has missed earnings on the third, dropping by 13%. is not forecast to be in line with 2016. this is a business that has been around through many challenges. how do you go about rebuilding trust with shareholders? what is the most important task?

>> the most important task, beside the dialogue stepped up massively to explain what our plans are and what the future steps are, the other step is to deliver. the third quarter is a mixed message, one encouraged by the forward momentum and the positive turn on prices we see in the markets at the same time the third quarter, what you have seen from a variety of industry and estimates. many others are in the same about, a number of natural disasters, hurricanes, earthquakes, all sorts of items happening that make it model in the third quarter to prove that, that is the best way to get shareholders back on board, to show how the plans get gradual granular in 2020. >> the company says it's on

track to reach its outlook for 2017. if investors are concerned the revenue number looks light, compared to estimates, should they be concerned? >> it is a good quarter. the company is growing by 1.3%, in line with our imminent. activityoming from the that has been growing 20% during the quarter -- 22% during the quarter. time, the growth is profitable because we have continued on improving our operating margin by 50 basis points. it is now around 10.5% for the quarter. our transformation is a journey and i am happy to see the rigorous implementation of those strategies staying off. weak saleseported and the corporate -- culprit is

the weather. what went wrong? >> the weather is part of the story, what you are seeing is a longer term trend. people are not excited about mainstream rants like they were like they work for decades. a big brand is what you wanted because that's what jones is had. now it is about differentiating yourself from the joneses. now you are finding niche brands that are growing faster to bolster growth. they are doing that, but it is tougher to do it. handles payroll for roughly one in six americans. we sight of their high for quincy data on labor markets on bloomberg, recently, the company has been in focus because of a proxy battle. bill ackman has been pushing for three boards seats at the meeting. to urgent totter

reelect for current slate of directors. >> we make progress and we have plans to continue progress. 580margins have improved basis points and we guided to another 500 races point dachshund basis points in the next three years. points in the next three years. it comes down to the difference in opinions about pace and risk. >> united airlines ceo oscar munoz had a bad day yesterday. disappointing third-quarter earnings hurt the stock. he got on his earnings call. by the end of his talking to analysts, the stock was down the most it has been in eight years. what went on? >> analysts were looking for clarity on how united will an active their vision of improving their yields, which are the

affairs of they get paid in the u.s. to mastech market as they close that with delta and with american. that is the secret to more profitability and united didn't give them more details to adjust their models and figure out how the company will turn angst around. -- turn things around. gma not pleasant start for ceo john flannery. finery is dealing with one of the deepest slumps in ge's history. lost a quarter of its market value in 2017. >> it was much worse than expected. it has been really bad and margins held 700 basis points. i looked for restructuring and it wasn't in there. oil and gas was also bad. ofre was a little bit non-restructuring, but still down more than expected in organic growth was worse than expected -- expected. organic growth was worse than expected. one thing people were most

concerned about his cash flow from operations. they regarding 12-14 for the year, now they are guiding seven. part of it thinks they are trying to clean the decks. he is going to reset the company, the expectations, and get it in front of us. >> we look at earnings from a host of big companies. let's turn the spotlight on a company not on that scale, but growing fast. simple blossomed from a website into a thriving content and e-commerce destination for food and home products. the cofounder tells the story in the latest edition of small to big. food 52 is an at to inspire people to eat thoughtfully and a live joyfully. kitchen resource for and home enthusiasts, meaning we offer both content and commerce

and community. and i come from two additional media backers. we were editors and writers. we saw this opportunity to create a brand around kitchen and home that lives online. $100,000book deal, got advance and used the advanced to pay for the building of the initial website. in 2009, we started with recipes. raised more money to build our e-commerce platform. represents our top line revenue and ad sales is the majority of the rest of the very small book sales. the majority of advertising is made of advertising and branded company -- branded content. with a lot of events

brands on the ad sales side and then we have our own brands pop up when we showcase a product that you can only buy online. year, during several weekend, -- cyber weekend, we had an average== -- we had an outage and we had a total backup. what we decided to do was to remove the sales tax functionality completely so the orders could get through and turn it to our advantage by making it a promotion. we followed up with an email and said to everyone, we will cover the sales tax for the rest of the weekend. when you have a community you are talking directly with, it enables us to have a direct conversation with people. this is what we are going to do. you are that important to us.

12ht now, we are touching million people on a monthly basis. our unique visitor growth has .een 65% over the past year we are talking to amazon alexa about a partnership, something we talk about all the time is what does the food 52 presents look like off-line? we are closest to profitability and it is one of our key focuses for the next 18 months, to become unsustainable is this. -- a sustainable business. ♪

♪ take a look at the bloomberg, you have the largest chunk of analysts on this -- that's the beige bars in the middle. , and five sellds ratings. a lot of folks were more optimistic than they should have been. there are about 30,000 functions on the bloomberg. we enjoyed showing you our favorites. maybe they will become your favorites. here is another function you will find useful. to importante you

quick takes. here are some quick takes from this week. >> it is impossible to ignore the opioid epidemic anymore. the numbers are staggering. nearly 500,000 americans say they use heroine every day. heroin overdoses have tripled and deaths from opioids are approaching the number of deaths from car crashes. how did we get here? paint. here is the situation. there is a grim connection between opioid addiction and harrowing addiction. doctors turn to vicodin and percocet to treat chronic pain. the number of opioid prescriptions and i can attitude, 79 million, by 2012, 217number rose a lot to million. they forced drugmakers to make

perception pain medication harder to abuse. time, heroin and mexico became cheaper and it readily available. the result is four or five new heroin users who said they misused discussion pain relievers. donald trump appointed a commission that advised him to declare opioid addiction a national emergency and rapidly expanded treatment capacity. >> it is a national emergency. we will spend a lot of time and a lot of effort and a lot of money on the opioid crisis. focused onid he is cutting off the supply of drugs rather than treatment. the health care bills passed by house republicans would have dropped the requirements that it is covered by medicaid. every state has active laws, including targeting doctors and pharmacists. opioidents have made the

causingavailable, 26,000 overdoses between 96-toy 14. -- 1996-2014. mark: that was just want of the many quick takes you could find on the bloomberg. you can also find them on over.com with the latest -- on bloomberg.com with the latest analysis. that will be all for bloomberg best this week. i'm mark barton. this is bloomberg. ♪ who knew that phones would start doing everything?

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powered by hyundai motors. ♪ >> ♪ i-d-e-a, ideas ♪ ♪ >> [speaking foreign language] narrator: yeondoo jung mesmerizes audiences with his photography. -- with his photography into video work. andith his photography video work. >> he is a contemporary or