>> coming up on "bloomberg best ," the stories that shaped the week in business around the world. a new year brings a new assessment of global risks from eurasia group. distinguished guests delve into the details. >> the number one risk ceo's see out there is geopolitical. >> this transition from the u.s. is going to china. china is creating an alternative. >> the unpredictable and the leaders, the lack of a north star with the united states stepping back in so many ways. shery: mifid ii rules take effect, and the u.s. releases the old year's file jobs report.

>> wage growth at .3% -- that is just not good enough. shery: it's all straight ahead on "bloomberg best." ♪ hello and welcome. i'm shery ahn. this is "bloomberg best," your weekly review of the most important business news, events around the world. on tuesday, eurasia group released its top 10 global risks are 2018. in a bloomberg surveillance special, a distinguished panel of guests discussed it in detail. tom keene started by asking why the prevailing talent is so gloomy.

>> because when the global economy feels the way geopolitics do today, people respond. they see it is a crisis. they know they need to do something. they've got to bail things out, to infrastructure projects, get the banks ready. we had that back in 2008, and everyone knew -- we talked about this -- we all knew it was a crisis and we had to respond. geopolitics are easily as bad today as the economics work in 2008. they might be worse, and yet, there is no crisis, no sense of we have to respond. in fact, if you look at the americas, the one superpower in the world, the one country that could conceivably help to respond and dig us out of this it's actively doubling down. we are saying that we had no intention of providing the kind of certainty to our allies or supporting institutions, so as a consequence, anyone who looks at geo policy today has to understand this is not sustainable and the crises are

coming. : your mckinsey global institute is just a miracle, what you do there. i don't care about that. i want to know what businesses are going to do this year. dr. bremmer talks about accidents. you cannot do three or five-year planning amid a million of accidents. lieu of accidents. >> we should recall there is growth and over the past couple of years, we have seen that improve. the challenge is you have to go after that growth but at the same time he prepared for these risks. the number one risk ceo's see out there is geopolitical. that is the number one risk. the problem with those risks is they are not probability curves. they are one or zero. if something goes pear-shaped, it is bad. there's issues about resilience.

while you are growing, what are you doing for resilience? what does your supply chain look like? how will it withstand some of is talkingthat ian about? how you think about agility in your organization to be able to move resources very quickly -- how do you think about agility in your organization? also we are on the brink of a massive technology transformation. tom: francine, please, jump in from london. francine: is 2018 the year protectionism strikes back? >> it is certainly the year we see much bigger fragmentation because governments are becoming so interventionist. part of that is because the chinese have an alternative model for their investments, and they will be seen as increasingly the most important economies around the world who will align themselves more with beijing than with washington. part of it is that president

trump here in the united states, who in 2017 talked a lot about protectionism, talked about beating up on trade deals, but aside from leaving the transpacific partnership, did not do very much. in 2018, the u.s.-china economic relationship gets worse. in 2018, nafta has to get renegotiated in the midst of a mexican presidential election. that is not likely to go well. clearly, this is the year we will talk a lot about not only traditional tariff barriers but also nontariff barriers and government support/protectionism for their own industries. francine: what does this mean for globalization? depending on your outlook, what would you advise ceo's to do? >> we are also worried about this trade issue. nafta is the big one on the table right now, as to how that goes. that will be a bellwether, i think, as to how that moves because once we start going against trade, it is a race to the bottom. i hope that will not happen, but

it is a big risk that is there. what ceo's and organizations have to think about is you have to think about being localized. the idea of being a multinational, you have your supply chain around the world. you have to be localized. what are you doing for the local economy? how resilient are you? how do you move people? there are shortages of talent. how do you deal with all of a sudden a shutdown a trade? lead this year with china and the vacuum of china. how powerful is there leadership? how assertive can they be this year? >> the most important speech i have heard in my life on the global stage since gorbachev declared the end of the soviet union in 1991 was when xi jinping stood up at the end of the 19th party congress and said china is ready to play a global

role. "we are prepared to become a global superpower." they have never said that before. tom: what was the distinctive feature for eurasia? >> it was that china is no longer small, no longer modest, they will no longer be underneath them. they see that not only are they bigger than they have ever been before, not only does china have can all it needed leadership under the strongest leader they have had since mao -- may be greater than that -- but also that is happening in the context of nobody else. it is happening in the context of trump. if trump has had one major impact on the global order -- and he has -- it has been the road that he has created for xi jinping. the opportunity for the chinese to just really occupy some of that vacuum. but the last time we had a big transformation of global order was the u.k. to the u.s. special relationship, great

allies, fought in the war together. now, this transition run the united states -- not going to china. anna is creating alternative. francine: where do you see the relationship between australia and china going, and will that hurt trade and investment in australia? >> of these leak, there are political tensions between the governments at present. prime minister turnbull has made a series of statements about chinese activities in australia. this has caused reaction from beijing. we will see how this stabilizes and the period ahead or if it does not, and furthermore, we will see if economic consequences flow from the current political instabilities, but i get back to my earlier point. the relationship between china and australia is one of a much broader equation involving all regional governments where the rise of china is a palpable phenomenon. coming up, more

discussion of eurasia group's top risks for 2018. and wall street must change the way it deals with women. >> it is not just sexual harassment. it is a lack of diversity. shery: and former treasury secretary jack lew does not think new tax legislation will have a positive impact. >> leaving us broke so we cannot deal with these fundamental problems. shery: this is bloomberg. ♪

shery: welcome back to "bloomberg best." we're examining eurasia group's report on top global risks for 2018. high on the list is a global tech cold were. microsoft's president and chief legal officer described the international landscape for

technology. >> at one level, i.t., information technology, has become more global. the industry has become more global. this is another area where en -- arehas been saying we seeing the rise of china. we are seeing chinese tech leaders emerge as global tech leaders, but at the same time, we are seeing fragmentation in the sector. they're no longer in some respects is quite as global and internet as there was a decade ago and five years from now, we may see more of that fragmentation -- there is no longer in some respects is quite as global and internet. tom: how afraid should google and appleby of washington in 2018 -- apple be of washington? thisthink we have seen

unfold over the last decade. you certainly see political commentators and washington, d.c. identify the tech sector as a piñata, as you mentioned. it is not just those on the left. it's those on the right, those in the center. i do not know that people have yet transferred that concern a definednology into course of potential political regulation, but that could come, and i think it really behooves all of us in the tech sector to be listening to that and be out addressing the concerns and even just acknowledging the concerns, which silicon valley has sometimes been a little bit slow to do. tom: let's go to the commonwealth of massachusetts and talk to ian bremmer about the tech commons. what is it and what does it mean for us? >> you have the president of microsoft saying that what we thought was going to be a global tech commons increasingly looks like you are going to see fragmentation. as we move from the information

revolution to a data revolution, it is much more top-down, right you can the space that is being created, the way people are engaging and the filters people see to engage in commerce or surveillance are increasingly coming from a bunch of reichmann to companies that are competing with each other very sophisticated in the u.s. or through the chinese government. completelywo different models. that is not the u.s.-led globalization we have been thinking about for the past 40 years. i think you could make an argument that the facebooks microsofts are easily as strategically important for the united states as lockheed and raytheon ever were during the cold war, but i do not think the u.s. government is prepared to align with these companies that way. i don't think they have the technological sophistication to understand how to do it, and i also think that some of the silicon valley libertarianism is

part of the problem. you want to talk about china? it is the same thing. i think that is an incredibly important space for brad to be a leader on. risks among the biggest for global wall street in 2018 -- institutional inequality. sallie krawcheck says business and government are failing women and a culture change is necessary. somehow, as a country, we are mantocracies meritocracy's and believing it. silicon valley, wall street, which have been these epicenters of harassment actually are not providing particularly good returns for their investors. venture capital funds, mostly you could just invest in the public markets. just the sexual harassment. it is a lack of diversity, which has led to poor results, which

has made all of us poorer. >> are you going to see a shift in 2018? was 2017 and inflection point? >> i think there's no doubt. we had in 2017 what i believe is the largest march in history, with over 3 million people, 5 million people, etc. people were asking where is this generation's gloria steinem. she did not show, so women started naming names and something happened that was very different than what happened before. we supported each other and rallied around each other. : we are behind on this policy, this policy for families and on and on and on and on, and we see that with the tone of this present administration. i would not editorialize, but say it is the observance at the end of the year. what would you say to the leader of our big banks, the leaders of

our investment banking, the leader of our brokerage firms? >> i will never forget being on your show last year, a couple of aars ago, where leo was portfolio manager, and he turned to me and we were talking about women in business and he said, "we just love having women. we just find it hard to" -- tom: i remember this. >> i turned to him. i was like "your mom says to be polite." and i said, "have you thought about promoting them?" , "oh, what ake novel idea." did very first news story of 2018 is -- is the very first new

story of 2018 is #timesup, which is women coming together to put money behind the issue. >> we have talked about developed country institutions, and the number one risk is that trump provides space for the chinese to actually do a lot more. you cannot look at the #metoo movement in the absence of president trump. it is precisely the fact that women around the country and around the world are looking at democratic institutions and weighing these do not feel legitimate for me. they don't feel legitimate for us and we don't think the governments are going to fix them. ahead, former u.s. treasury secretary jack lew joins a conversation on global risk in 2018. he sees significant risk in the gop's recent tax overhaul. shoe to drop next

will be an attack on the most vulnerable in our society. shery: this is bloomberg. ♪

shery: you are watching "bloomberg best." former u.s. treasury secretary jack lew joined this week's "surveillance" special analyzing the tops report on risks of 2018. >> the thing that underlies so much of it is chaos. the unpredictability of key leaders, the lack of a north are with the united states stepping back in so many ways, and it is this kind of destructive policy without anything constructive to take its place, and that is true on issue after issue here in the united states. you look at markets over the

last year, the call miss -- calmness of the markets almost suggest we should look past this uncertainty because what can we do about it, but the moment comes when something happens or something is a surprise that should not be a surprise, i worry about binary changes. tom: i want to go back to the beginning of your career with joe moakley of massachusetts, who was among the most basic of politicians from another time. what is your democratic party need to do to provide leadership within this chaos? what do you wish from mr. schumer, ms. pelosi, and many others? >> fundamentally, democrats are not in charge, so i don't think it is fair or realistic to look to democrats lead the way out of that. you have an administration chose to make policy in a very one-party way, did not include

democrats in any of the conversations and now cannot rally their own troops to do the basic this in his of running the government, making sure we do not default on the debt, making thrownildren do not get off health insurance. i think the challenge will be to truly work together, and that does not mean coming with a fait accompli and saying "we need your vote." it means doing things you otherwise would not have done to reach a consensus around reasonable compromise. reasonable compromise is the basis around working together. we are not seeing any of that. >> you called this tax bill dangerous. why? >> what it does is almost the exact opposite of what anxious and angry voters were calling for in an election just a year ago. you have people who were worried about where they it in a economy where technology and trade and globalization seem to be changing all the rules they grew up with. what we need his training,

education, infrastructure. we need to invest in the kind of workforce of the future that gives people confidence. what we have seen as a tax cut that spends money we don't have to have very concentrated and if it's for global corporations and the top 1%, and it's leaving us broke so that we cannot deal with these fundamental problems so we are farther behind in actually making progress, and i fear the next shoe to drop will be an attack on the most vulnerable in our society. how are we going to pay for the deficit? you will see legislation to take basic food support away from poor people, to attack medicare and social security. one could not have made up a more cynical strategy. >> people are going to reject things that otherwise are good when they do not work for them. free trade -- good thing for global growth, but people reject it if they think it does not work for them. technology -- obviously a good thing, but they reject it when they see it does not work for

them. when jack is saying now is on the back of this extraordinary tax bill, if you do not see cuts for the average american people, the response is going to be vast rejection. >> this did not arrive with donald trump. the united states has been spending money at has not had for a long time. my question is why is this any different to what we have seen before? >> i have been in office in several different periods. in the clinton administration, we ran a surplus. we fixed the problem. when i can into the office of management and budget in the obama and menstruation, we went from a deficit of almost 10% of gdp to 3% of gdp. we have intentionally as a government made the decision to add substantial amounts of debt at a time when the economy does not need fiscal stimulus. when it needs is targeted investment. the risk of the tax bill is both

further disenchantment with institutions, and if you look at -- and the report gets to this, the kind of rejection of institutions. how are people going to respect institutions more when they realize what the tax bill does? up: ian bremmer, you grew tough in chelsea. when you are living fat and where chelseaw is. how would your mother do it today in this environment? could you have gotten to tulane in this milieu today? >> let's be clear, i did not grow up tough. i grew up getting my ass kicked. would haveother voted for trump or maybe for bernie sanders. there is no way she would have voted for a mainstream democrat. there ain't nobody else from my neighborhood that got out of the

chelsea projects that is now talking on bloomberg, and i think it is precisely that environment, environments like it all over the country that are saying this is not working. tom: what does your party need to do to get dominance in chelsea or wisconsin or minnesota where you lost the election? >> that is a good question and what you're talking about used to be the base of the democratic party, and we need to find a way to communicate with people talking about the things that i am talking about. ian is right. you cannot win by saying trade is the whole problem with that is not the hope problem p you have to talk to people respectfully and explain what it is you're going to do so they can have a piece of the economic pie going forward. shery: we will continue discussing eurasia group's top risks of 2018. top news stories including the last jobs report of 2017 and the first phase of

regulations known as mifid ii. >> it's like being on a customer service helpline. shery: this is bloomberg. ♪

best." is "bloomberg we look at the headlines. markets were closed around the world on monday but the dominant ory is the resumption of gamesmanship. kim jong-un said it is a reality and not a threat. and renewing the message. how significant is his overture to south korea here? >> this is significant and

tactical shift. he is pro vockcative in his comments and particularly those directed towards the united states and president trump. and this is an olive branch said he would be willing to have talks with south korea. he wants the olympics to go well and this really is a change. we'll see how significant it is in terms of what kind of talks they are willing to have. ut as part of the new year's message. >> president trump has responded the latest threats says the u.s. has a bigger button. it continues with the u.s. and have opened phone lines is it having as big an impact? >> i think politics is back very quickly to center stage in 2018

and there are two sides. on one side we had kim come out and say he wanted to have better relations and they were testing technical checks on the phones and this is an advance of a possible meeting between the two sides next week. that's all very positive. the flip side is that trump continues to take a very hard stance. the u.s. is concerned this could be a ploy that they are seeking to drive a wedge between south korea and the u.s. on the nuclear issue. >> the biggest shakeup finally here. and banks spent years, the question remains is everybody ready? >> and i hope so that processes are now in place but i would be

surprised if they are ready. i think there is a resumption by some of the regulators that system changes will take some time and will be pursued. >> is there a possibility or the prohibit of a resurge of prior war? >> i think it has been happening over the past three years. going back to september and august, we saw high prices being quoted by the south side and we saw the quotations come down significantly. and that is evidence that price competition is having a impact so the wagers. back to way early it is sequel? >> to anyone in the market,

everyone is going to complain that story about how annoying it is and again i think it is too early. but there is plenty of grace periods in this regulation. but it hasn't been implemented yet. >> president trump baking away from steve bannon he said he had very little to do with his victory and lost his mind. give us the back story. >> the book is going to be explosive. some of the excerpts came out today and the interview is among them and that is the news peg. and they are a formal splitting of this relationship that has been strained since bannon was forced out of the white house several months ago but still existed and this is a turning point. >> i think what has happened over the last year both trump

and bannon believe they are responsible for trump's election nd they are the leaders. the near term effect it is going to weaken his movement. this faction of right-wing republicans. and the other thing, bannon's main benefactor is mere series whose hedge fund support has supported the organizations that bannon has been in charge. mercier is going to withdraw that ort support and it will be good news for moderate republicans. >> commommedyits on a 15-day winning streak. a record run. fessing levels that we have not seen in three years. what's driving it? >> well, you have a combination

of things. and reducing production significantly more than anyone expected. what is new how strong the global economy is doing. look at the manufacturing index and manufacturing activity has acquired the the likes of machines and chemicals to produce plastics. and unemployment at an all-time low. and why we see the prices the height we have seen in three years time. >> we are about 25,000 in the dow industrials. record highs once geng. >> three days again. x. nything we can say since >> the fascinating is this the

massive commodities dollar and this rapid increase. the futures commodity index isn't keeping up with the spot. the dollar is on everyone's mind. or now, it's very much a commodity-driven story. > the expectation for jobs the 190,000 private jobs to be added . d 4.1% >> short of that 190,000 estimate that alex was mentioning it. 4.1% was the jobless rate. hourly earnings up. up 2 1/2%. both of those figures in line of the estimates and earnings growth here.

>> wages, i came into the number, the jobs creation find, t's the wages .3 and down to .1. that's what we are looking at and if we get wages going. sna is what the fed wants to get to. >> i have been telling you the one disappointing number that we have seen month after month fter month, c.p.i. of 2.2. you see real wage growth. that's not good enough and we are committed to get real wage growth and we believe i will see it over the next year or two. >> more of the stories that shaped the week in finance. steve cohen can manage it, but his new shop looks different.

>> tired of the -- >> 50. ♪.

>> welcome back to "bloomberg best." and the top business stories in washington where the the minutes were released of its meeting. the federal reserve out with its september minutes. and tax cuts and business spending are unsure. the minutes showed strong support for gradual rate hikes. and going into these minutes, the big question was what was the discussion on inflation and how it's going to change from their meeting from november to

december. there wasn't a lot of difference in the discussion, but the one difference was that in terms of the risk assessment around inflation, what the chart shows fewer people saw risks to their inflation. that's the blue line and that number went down from 4 in september to 2 in december. we are kind of back to where the committee is seeing the risk to the inflation outlook on the upside and downside. >> let's go back to rahm and the death toll from the anti-government protests and the clash with protestors. least 20 have die after unrest. the president is trying to diffuse by defending the people s' right to demonstrate. >> what we have, officials are

saying that the protests will die down in a few days. these were comments from the supreme security council and perhaps they plame the u.s. and britain and saudi arabia for seeking to take advantage of the unrest. social of hashtags on media were created by saudi arabia. that developers led to local stocks that a property tax may be delayed until 2020. what are the three main concerns that the chinese authorities will have? >> it seems it will be an important year for china. ey are trying to -- curb

overall debt and tackle and off-balance sheet lending and that is one area they are going to look at. and they want to free up the environment of rapid fire growth. the campaign will be one to watch. and big companies that rely at the risk of putting thousands of workers and focusing on cleaning up the banking system. all indications, they are getting the balance right. but the campaign is in its early ays and get their debt prosh under control. >> steve cohen is back and he has big brother with him. they are set to manage $4 billion of planned money. after running in legal troubles,

what is difference? >> he just served a two-year ban from managing outside money and with that, he hired 50 members. >> 50. >> yes. and following the traders very closely. and the new general couple, number three at the justice department and following folks and listening to audio and emails and getting involved in money managers and part of the settlement he is an outside monitor separate from the general counsel who is following reports to make sure they are following security laws. shakeup of the retail landscape. gene saying it could acquire

target noting they focus on mothers and families. >> a.m.a son is a combination of online and off line. and it would be very valuable. >> it is a bold prediction. but what it highlights is the main weakness that a.m.a zon has right now is wal-mart. amazon, they purchased whole foods. but that is 1/10 of the presence of wal-mart. if it wants to give shoppers the choice to buy things, it has a lot of catching up to do. >> and that merger after they failed to win regulatory approval in the u.s. and offered

$18 a share and a deal. what happened here and how big is this? >> pretty significant blow to the international expansion. there was a lot of expectation there would be things between moneygram and asia business and the company was confident all the way up to this moment. you can see the company sees no way that the trump administration is going to approve this deal and pay $30 million as part of the termination agreement. >> dominion energy will buy for $8 billion and makes it a target. cents are soaring do 24 day. this is a good way out. >> if you look where this

company is going. and power plants. quite far along the road and we aren't going to do it. good way out. but for dominion, the potential liability they are taking on here is enormous and unknown and they aren't going to be able to recoupe it from customers. whether or not they finish it. >> last time-out, the state run energy giant has agreed to pay $3 billion to u.s. investors llowing the corruption scandal. qua might this mean? >> this is good news. i know $3 billion sounds like a large amount but investors were expecting $10 bill i don't know.

so the settlement came in at a lower cost and earlier than expected. people weren't expecting it to be this early this year. d it sends out very positive signs. it he most significant -- was a large overhang. >> tesla has pushed back its production target for its model 3 after shipping fewer cars than expected. 3's. delivered 1,550 model that trails estimates of just over $2,900. they have kicked the can down the road by another quarter. they said they would be hitting it by the end of december and in a release said today it won't be

until the end of june. i think investors were heartened by other sales that were strong. it was a mixed bag. but they aren't down by that much. chipsres in intel and the could make its operating systems could be to hacking. and they are susceptible and how big a deal is this? >> this is a pretty big deal. this affects. they make over 90% of the processors made in the world. so this is a pretty huge deal. what is key, at the moment, there is no known exploits of this hold. nobody has been attacked. and haven't taken advantage of it get.

>> yet, we reported on the chip design vulnerability that could give them access to information, but now apple says the flaws gives them access all around the world. what exactly is the problem? >> all of the chips that are used in all of these devices have a vulnerability that would allow a hacker to steal what that chip has in memory. all of the vendors that have compute per hardware and -- apple was quiet about this and said yesterday yes, this affects all of our hardware with the exception of the apple watch. but everything else is affected by this and will have to be patched. ♪

> quick take from this week. >> 2016 was the hottest year on record and the previous 17 years seen our 16 years most somping. global warming is the culprit and just getting started. extreme weather, wildfires, droughts and the hits keep coming. what are we doing about it? accord.the world took a nations must change energy policies and invest huge amounts of money and will likely do it without the united states.

>> the reality is that withdrawing is an america's economic interest and won't matter much to the climate. >> here's the situation. decades in the making, the paris agreement united paris and china and 190 nations to limit fossil fuel pollution. greenhouse to cut gases and reduce disasters. the globe is expected to warm by 3.4 degrees more than the u.n. target. the governments will have to offer more for energy and make emissions more costly. it is estimated that it will equire $13.5 trillion.

each country set its own paris target and promised to improve them. the u.s. was to play a lead role but his executive order reverses executive orders and expands production of coal. the resulting policies threaten the global fight. other countries may join it. this could make it impossible and even more expensive down the line to change climate change. businesses, cities and u.s. states such as california are investing wind and solar to make it work. >> i have been called an environmentalist, if you can believe that. >> one of the many quick takes that you can find on bloomberg and find them at bloomberg.com

and business news and analysis. that's all for "bloomberg best." this is bloomberg. is this a phone?

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>> i am a alisa parenti in washington and you are watching bloomberg technology. through the check of your first word news. president trump says michael wolff's behind the scenes look at the white house is a lie. but wolff says he can back everything up. >> i have recordings and