♪ on "bloomberg best," the stories that shaped the week in business around the world. the white house puts out an a budget and infrastructure, but push back. >> i hate to say it, but it is a relevant. >> markets work through jitters as inflation jumped. jacob zuma gives up his grip on power. ray dalio raises his short bets against european stocks. conditions are in place for shorts, a countercyclical view. >> two of the biggest names in banking explain why volatility

is making a smile. >> it is a much better environment for our clients. the sharpestome of minds and finance and investing share their insight to. >> one diversifies, re-balances. >> what should happen at the end of the day? hour to hour. >> asia will be one of our growth engines. >> the growth is well spread over all the categories. >> it is austrian ahead on "bloomberg best." -- all straight ahead on "bloomberg best." ♪ >> hello and welcome. this is "bloomberg best." analysisly review of

and interviews from bloomberg television around the world. offonday, equities coming their worst week in two years, president trump made two major announcements, unveiling his 2019 and unveiling and infrastructure plan. president trump seeing his cutting $1 proposal trillion from entitlement programs like medicare. is there anything that will emerge from this proposal? >> every budget is dead on arrival on capitol hill. the president proposes, congress disposes. he wants $23 billion for border security, $18 billion for the wall. republicans will push the for that. ,he calls for cutting medicare $237 million and $1.7 trillion

in entitlement spending cuts won't be adopted. ombt is irrelevant as the has said because it does not incorporate the agreement signed into law just last week, so they will have to come up with brand-new numbers during the next 4-5 weeks. very little of this will see the light of day, except for the defense increases. campaigning on a promise to rebuild america, president trump released his infrastructure plan, pledging at least $1.5 trillion in new investment. the president called the proposal bipartisan and common sense, but it is still looking like a tough sell. >> it is tough to say how they get infrastructure done ahead of midterm elections. this has even alluded democrats and republicans. it is something they say they want, but they have yet to reach

their goals on this. >> it is looking to make a permanent fix to what it sees as a broken system for funding and building infrastructure in the united states. they think there has been an overreliance on federal funding and that states and localities need to find more of their own revenue sources. process takes way too long and prevents projects from getting built. >> the world's largest hedge fund led by ray dalio has disclosed a $682 million short bet against unilever. dropped after the disclosure of these wagers. >> we had these that's against an italian banks that seemed very specific. as you said, we have been seeing this large buildup quietly building up against european companies, unilateral, adidas,

industries, but one thing to keep in mind is that when you look at these shorts, at least at the very largest companies, this is a re-creation of the european index. these positions are built on the larger the company, the bigger the weight in the index, the larger short position they are expressing. u.s. consumer prices rising more than estimated in january, adding fuel potentially to the feds fire. >> it is clear inflation is moving higher, especially the last six months. inflation is moving at 2.6% per year. january is a month where you get upside surprises at the discounts we saw. i would not read too much into a cleart, but there is acceleration in inflation, and people should start rethinking traditional relationships the between stocks, bonds, whether

they should have real assets. there should be a big rethink in markets. is largely inday line with what the fed has been hoping for. if anything, it takes in that 75 basis points people are looking for the year. that is what traders are saying. they are bringing themselves up to the three quarter-point rate hikes for the year. you are not seeing any real panic. south africa is changing leadership after jacob zuma who has ruled the country for nine years had resigned effective immediately. electment is meeting to an interim president and tell elections are held next year. jacob zuma resigned, this coming from the ranks of the ruling anc. many members of the ruling anc say they want their president to really come in and steer

government into a new direct in. we know president zuma's tenure was marred with allegations of corruption and scandal. the ruling party wanted to read regain some support it lost ahead of the 2019 elections. as the be sworn in today new interim president of the republic of south africa. >> it is a new era in south africa. there is a huge amount of confidence and hope about where south africa is headed with a decade ahead that will look unlike the decade we have been through. >> have bet against some of europe's largest companies has run to $18 billion at bridgewater. >> one of the rationales i have heard around this is that all the conditions are in place to start getting short. it is a countercyclical view.

we have growth on all cylinders, so perhaps that is the rationale, and that makes him cents. >> the senate hitting a wall in the search for 60 votes, failing to advance any immigration plan today. >> the motion is not agreed to. >> i think president trump is the key to getting anything's signed. the sweet spot in the senate seems to be as we have seen with daca sixer proposals a combined with border security. failed is thate president trump wanted additional cuts to family-based immigration that democrats were not willing to give here a. we are stock. >> robert mueller and diving an announcement of an indictment. >> the defendants conducted what

they called information warfare against the united states. with the stated goal of spreading distrust towards the candidates and the political system in general. >> i was truly expecting mueller to do something like russian collusion next to, and he delivered on a grand scale with credible details that goes beyond the social media efforts to defy this country. it talks about unwitting members of the trump campaign manager were approached. it points to something that may go beyond this indictment. there are references in here to a conspiracy with people known to the grand jury and unknown to us involved in this effort. we don't think it ends here. >> still ahead as we review the week on "bloomberg best," insights into market swings with lloyd blankfein, steve schwarzman, and others, plus a barrage of earnings reports.

up next, the weeks top business the headlines. this may be the moment when diplomacy became and him and export. the charm whenever offensive or propaganda machine they instituted over the olympics, it has worked. >> this is bloomberg. ♪

>> this is "bloomberg best." tour continue our global of the week's most important business stories at america's largest private equity group. another management takeover ,n wall street, blackstone naming john grace as chief operating officer. tony james will transition to another full-time role as

executive vice chairman. >> this has been one of the worst kept secrets in the world of private equity. john gray has long and considered the likely successor the founders, and and ceo of blackstone. himself distinguished as one of the world's leading real estate investors, so this completes the puzzle for the private equity business as an industry transitions to a new generation of leadership. the serioushas said fraud office has brought charges against its barclays bank operating unit in a case linked to a 2008 fundraising at the peak of the financial crisis. we thought barclays had faced charges on this. explain the second leg we are seeing here. >> in june, the serious fraud

office in the u.k. charge the holding company and four of its top executives, including the former ceo, so what has come up now is that the operating company here is being charged as well. all banks receive their operating licenses based off the operating units, so that is why people really care about what is happening to the operating company here. , comcastthe fight mulling another bid after its initial offer was turned down for a deal with disney. >> if comcast wants to come back him a they will be a credible bidder. i think rupert murdoch and 20th century fox prefer the disney deal. one, they believe it has less regulatory risks than a comcast deal. comcast is not the most well

loved company and washington, d.c. i think rupert murdoch prefer to own disney shares. his family will be the largest owner of the walt disney company, and i think he likes that position better than comcast. >> north korean leader kim jong on has invited south korean president moon to meet, a dramatic gesture that may raise prospects for easing tensions on the peninsula. the invitation was delivered by cam's sister. will the charm offensive pork? >> i think it has. considering that there are calls for talks with kim jong-un. clearly the local media here was all over her visit. she overshadowed the olympics. forget about the opening ceremony. ago, vice president

pence in an interview said the u.s. is willing to engage in talks with north korea without the precondition there were before, that the u.s. would not talk with north korea until they have started dismantling their nuclear weapons program. clearly what ever the charm offensive or propaganda machine they instituted over the olympics, it has worked in a practical sense because there is diplomacy now. i.t. thatd bet on could shake up the defense industry. general dynamics has agreed to sra for $6.8 billion, the itgest ever acquisition as looks to expand its i.t. offerings. csra has a footprint in dod,

homeland security and other federal agencies. gd has some in those agencies, but it is concentrated in the defense sector. the other thing that may be going on is the federal government is about to announce a huge cloud contract. this could be $10 billion for 10 years and it may be is looking to position itself to get that. is an important story around economic growth in japan. the slowed sharply in fourth quarter, expansion of the just 0.5% for the previous three months, half of the 1% estimated, and down from 2.10% growth in the third quarter. -- 2.2% growth in the third quarter. where does that leave the boj? >> even with the conditions and the labor market as tight as it is, they are nowhere near their inflation target.

areink all the indications that they will stick to the course. don't forget, we have the expected appointment of governor kuroda coming up, which is expected to serve as a double down, and no sign it will change materially anytime soon. >> shinzo abe nominated governor kuroda to beat the boj for another five-year term. abe also appointed to deputy covenanters. >> we should seek monetary stimulus continue aggressively for at least the next few months. inhave another meeting march. nobody expects any change. ofre will be a great deal interest in april with the first meeting with the new leadership in place with the two deputies alongside governor kuroda. perhaps moving into this new term will give him a chance to rethink, recalibrate, and we will be watching with a lot of

interest, especially the april meeting. the cleveland fed president is said to be among the contenders for vice chair. .ou have a fresh fed chair would it be best to surround him with established figures to be able to guide him through the first year? >> i think loretto is an excellent person and would be a choice. is an excellent person and would be a good choice. federalbeen in the reserve system for some time and knows the system well, so i think that is it a good power d uo. tories began their roadmap to brexit in a series of public speeches outlining hughes on how britain should leave the eu. inauguralson gave the

address entitled "a united kingdom" attempting to reach out. , he few things became clear might still be interested in the job of prime minister. on the transition, he says everything can stay as it is. he does have red lines. he wants to versions. diversions -- >> some of the biggest fund managers in the u.s. are reporting what they bought as well as sold last quarter in their 13f filings. >> the fangs have been souring. >> it looks like investors are slowly selling out of the fangs, and this has been an important area for stock pickers because

they have lamented the rise in growth stocks, while value has me higher with the stock market. we saw a lot of managers sell out of some of their fang holdings. >> warren buffett has just about had it with ibm. it cut its stake in the company by 94% in the fourth quarter. >> we don't know to what extent , his warren buffett investing deputies, but you saw in this quarter he boosted his apple stake while reducing ibm. of may bethe question warren buffett is trying to figure out how the world is changing as he is adjusting his businesses. >> he is adjusting towards teva as well. >> that was the first time we have seen that stake disclose. he ise wondering if betting on his turnaround or there are other things drawing him in. deal, qualcomm rejected

broadcom's latest offer to buy the company for $82 a share saying "it materially undervalues the company." depends on how firm the last and final is. this is old-school negotiation. if you look at what qualcomm and broadcom are saying is that it is interested in keeping its business together and feels $82 a share is unequivocally low. broadcom on the other hand believes this stock is trading week, this will be a long, drawnout process. qualcomm investors, take your money and run. ♪

♪ you are watching "bloomberg

best." david westin spoke with lloyd andkfein in washington dc discussed the sudden return of volatility to markets and what it has meant for the trading business. >> things are going to happen. there will be something that happens in the world here there will be a natural disa -- the world. there will be a natural disaster. something will happen that will cause the relationships of one acid to another readjust against each other. it has been unusual that that has not happened. people are not sure the reason why. my own best guess is that when i look to act is people will say that because of qe and central banks around the world buying risky assets, as much as they

could get almost as fast as debt was issued, they bought them, that tends to be a blanket over spikes in asset prices and that probably kept things low has the market and people anticipate that coming off, i think we will see more volatility. >> this is your job. contingency come you are planning for the possibility of. is it fair to infer that goldman is doing pretty well right now in trading, commodities, fixed income given what has happened with volatility? the problem with trading was a lack of volatility. >> this is a much better environment. insurance to people. we take risk away from each other. if there had not been a hurricane on the east coast for buyingpeople stopped insurance, and those that buy insurance don't want to pay a lot. hurricanes, the

next year everybody buys insurance and paste whatever we ask them to pay. changed the risks have that much, but their sentiment and anxiety has changed so it is a better environment for our client franchise, and the answer is a better environment on any we could be positioned braun and have to position inventory based on the best guess as to what our clients will want the next day come a week, or month, so it may not work right every day, but the environment is good and gives us a chance and makes his bible to our clients. , another view on volatility from the head of another leading investment bank, the credit suisse ceo, and how much do computers have to do with sharp selloffs in the markets. selloff?ey cause the no.

did they caused the vine going to the market? yes, absolutely. >> this is bloomberg. ♪

♪ >> how worried are you about how the brexit negotiations are going at this point? what is your biggest concern? i have been an open book as far as brexit is concerned. i felt it was a disaster for the u.k. and sad for your. it iseve now that becoming clearer what a disaster brexit is going to be. thatt is a very people voted for brexit out in the that theas of britain

latest research has shown will be hardest hit by brexit. i am still hopeful that when all of the facts are on the table in front of the house of commons that people realize how damaging it is going to be for great britain. that britain does what ireland did and they change their mind at the last minute. was richard branson expecting his hopes that the u.k. can reverse its exit course in a conversation at the goldman sachs 10,000 businesses summit. another european business leader sat down with bloomberg this week. sawcredit suisse leader that market volatility would give the bottom line a boost. means that people see it as a negative.

it creates opportunity. for willeople we work see that as a key part of the it isgy and they -- really working. they understand markets. as aecognize volatility part of trade. we are increasing our trade revenues. management --set 16 billion euros -- two thirds of that come from our national connections. are there people saying they do not want to transact at the moment? we see a lot of activity in the secondary market. but the primary market issuers

are reluctant to issue volatility. things seem to be settling down now. we do not believe that what we have seen is a major disruption. inevitable in was equities. -- has held upe very well. you have not seen a contagion which means the fundamental economy is healthy. unemployment is at a historic low. company earnings are going up. we do not see a downside scenario in this economy. >> did you expect a contagion? >> we believe credit markets will hold because the economy, the underlying economy is so strong.

there is no prospect of defaults. do not see any indications of such negative developments. our conversations about market volatility brought out quite a range of opinion. let us start with jason kelly's interview with stephen schwarzman. >> is this volatility we have been seeing normal? is it a new normal? >> i think it is like pretty normal. -- thelook at the world developed world will probably grow around 3% this year. i could be wrong. it could be 3.25 or less. the stock market was up about 7.5%-a percent. one month. multiply that i 12 months. what do you get? stock market performance if you annualized that somewhere in the

80's-90% with 3% growth and that is simply ridiculous. stop that kind of haveunding or else you almost a whole year's performance in one month. what is going to happen in that scenario? it has got to go down. and then it will go up and then down. it will be a more volatile world. i look at what should happen at the end of the day. not our two-hour the way -- not horur to hour. i think with the economy looking so good around the world, that we will have an up year. they cannot be hugely up because we already did huge last year. >> do you think more dealmaking or less in terms of private

equities? >> generally, you have more deals when markets feel good and people are confident in prospects for their own business. you seldom by someone else's business if your business is having trouble. as business confidence remains high, you will probably see more activity. >> people are playing a psychological game. it is not just patterns of earnings. a wonder when other people will sell. model orard to predict. what you do as an investor? , and stays away from things.- faddish >> you did not really want to own treasuries bus -- because they cap selling off.

same with gold. utilities were hit because of higher yields. if you need to rebalance, how do you do that? you will rebalance across sectors, stocks, and countries. recently thebeen most expensive stock market in the world. and i think that is not a reason to avoid the u.s. but i think it is very much time to consider whether your investments in u.s. stocks has become overbalanced. defaultweek, the response from so many people before even looking at the numbers and the data was blame the machines. thecan we not blame machines on the actions of last week? selling by ctas last week? absolutely. they came in long risk.

that was the wrong positioning last week. were they doing some reshuffling of positions? yes. did they cause the selloff? no. >> did the narrative exacerbate the selloff? buy whenswer is if you markets are going down, you decrease the selloff. technically, you increase it. why wouldn't you sell positions when the market moves? they are not doing it indiscriminately. the same as humans would do it. i would say history does not tell you that buying dips is the right answer. when volatility in the market increases, you should run less positions.

can volatility is low, you run bigger positions. it is about taking the same amount of risk all of the time. >> some of what happened last week was related to volatility funds being overly aggressive. i think there is more of a regime change going on. from monetary stimulus to fiscal stimulus. we think that ultimately will transcend and go global. were talking to steve schwarzman earlier this morning and he said this level of volatility feels pretty normal. do you agree or is this an aberration? >> i agree that you have more volatility in the equity market. you arechanging is losing the cover of the federal reserve. we have had the fed protecting us for quite some time and now they are clearly changing interest-rate policy. we have not seen that in europe. in japan, we had the opposite

where they are still very accommodative. i have a slight difference in that there is a shift in monetary policy leading to more volatility. we are seeing it in interest rates right now, not necessarily in credit. that makes sense. this is more about changing the rate than the conditions of corporate's around the world. a lower tax rate in the u.s. probably makes corporate profits stronger this year. ♪

♪ nejra: you're watching "bloomberg best." i am nejra cehic. it has been another whirlwind week. nestle posted full-year sales that rose to the slowest pace in more than two decades.

revenue was up 2.4%. the swiss food company was increase this%-4% year. >> all categories contributed to growth. we expect the same thing to happen this year. it is one of the strongholds of nestle. that will remain the same. within that framework, geographically speaking, asia will be one of the growth engines. and wewe expect the same thing o happen this year. it is one of the have categories coffee and pet care. the water business should also recovered. >> is this going to be still challenging in 2018 in terms of a pricing environment? weboth volume and pricing last year.at soft

we are optimistic in terms of 2018 and beyond. >> credit suisse shares trading at more than 3% higher. the market swings in the past week have a negative impact on the advisory unit of the bank but he could not be more please. we are optimistic in terms of in the performance of the trading businesses. year hasart of the been very strong. global market revenue is up 10%. q1 last year was very strong for us. front -- posted a fourth quarter revenue that beat estimates. especially in the u.s.. tradinger reported a 7% decline in terms of equity and fixed income. smaller compared to the drop of some of its european or us. how do you describe the first few weeks of 2018? atcompared to what they were

the end of 2017, we say that thetility wise, one of slowness and the return of volatility is because of the opportunity for banks like ourselves to help our clients. expected a better than increase for 2017. the swiss asset manager saw inflows of almost 6 billion francs beating estimates. results -- one part of your business in particular -- what has been driving that? demand for ahe

strong risk oversight product that can navigate an environment where everyone is afraid of rising interest rates. we delivered. pattern ineseeable becomes evert that more choppy. let us get straight on to airbus and shares their have jumped the most in almost six years after the company promised and earnings growth of 20% in the current year. this let us get straight on to airbus and shares their have comes despite engine issues slowing the production and a charge against its military transport plane. >> we found out last week about the latest problem with the you have the visibility to have confidence in those comes targets? >> yes, you are right. the guidance we have given the onket in 2018 is dependent amongst other things, that our engine partners deliver the

requisite engines. but that was not different in 2017. we have had more problems with the new engine -- very fuel efficient engines. bright side. yes, there is a new glitch that was discovered roughly a week ago. we are assessing the implications. in the year early and i am quite confident that we can work through this and recover whatever needs to be recovered in terms of deliveries throughout the year. cisco surging to its highest level in more than 17 years following stronger than expected earnings including its first revenue increase following the one-time charge. the company is revealing in ther and i am quite confident that we can work through some big plans increasing its dividend by 14% and a $25 billion stock buyback. >> we are not a capital intensive business.

we had said the three areas that we would focus on as we got tax reform would be to reduce our share count through the buyback which you saw us announced yesterday as well as well is continue our capital strategies to ourrning cash shareholders. we increased our dividend yesterday by 14% and we also left ourselves plenty of dry activityr ongoing m&a that lines up with our strategies. >> heineken is the world's second largest -- second-largest brewer. it has reported and adjusted analystsat beat expectations. this year, it will be below target after integrating a resilient business. is this the case where you will try to invest a lot, expand the business, take market share

aware -- away from the number one contender in brazil? >> the acquisition in brazil is putting our strategy into action. winning in the premium segment which we have been doing in brazil with the heineken brand. then, if we want to play with a full portfolio, having a number one or a strong number two position in the market. together, now, we are covering the full gamut and we are ready to deploy the. aj. >> let us have a look at shares of rising. we were up 3%. -- 2.6% now. competition is -- starting to hd to a lot of the prices of across most of these contracts. contained your guidance. the math tells me we should expect a slight moderation in your earnings. >> i am going to talk about

earnings over the full 12 month period. the earnings guidance range is sound. and we recognize some of the things that we have to implement as part of the regulators million will cost a few pounds as well. >> rising 50% in the third quarter eating estimates earnings. the company is going ahead with transformation program. are you sitting with the previous timeline? give us an update. >> i can confirm that. at the end of last year, we could not reach an agreement with our union. that, what we are still working on is the due diligence and on the other side,

agreements with the unions and workers representatives. those need to happen to come to a signing. to the timeline. signing early 2018 and closing expected by the end of 2018. salescis all comparable rise 43% in the third quarter of 2017. >> it is spread across all of the categories and all of the geographies and over all of the clientele's. it is very strong. what we have put in place in terms of supply chains will help us compete on production. lack of being demanding for quality. this is all in place. it is very efficient growth. i am not concerned that we will be able to-- we will

continue at that momentum of 44%. become bigger in terms of sales? >> i hope. why not? >> acceleration in the cloud. demand for digital and cloud services show growth in the fourth quarter. business seems to be ok. what do you think the biggest risks are in the next 12 months? >> i would underline that in the fourth quarter we accelerated growth, notably in the u.s. the u.s. was the weak point at the end of 2016. now, we have fully accomplished growth there. we ended in the fourth quarter with more than 20% growth. for us, digital is the engine. and it now accounts for 40% as you just said. when you speak of risk, maybe protection is something we

should be talking about for a while. ♪

♪ i have got inspiration this morning. this is your 3-d yield curve. what you have, if i turn this around is the -- off the curve. nejra: there are about 30,000 functions on the bloomberg. we enjoyed showing you our favorite functions. here is another one you may find useful. go. here is a quick take from this week. >> there is a global trend taking place. a lower percentage of people are smoking cigarettes. this has forced tobacco companies to create products

that can keep them profitable. there answer may, in the form of an increasingly popular alternative to smoking. they thing. a chinese pharmacist and smoker developed the e-cigarette in 2003. the device uses no tobacco at all. a battery heeds nicotine liquid. -- there is another product. have a taste to and nicotine boost a comparable to a traditional cigarette. a boost that is better than an e-cigarette. tar. is no smoke or the u.s. food and drug administration admitted in 2017 -- event -- essentially embraced ve being -- vaping. at $7rket is estimated

billion a year and growing rapidly. here is the argument. some help groups believe that this will help kids start smoking cigarettes. -- u.s. government survey however, the rise was counterbalanced by a drop in traditional tobacco products. according to a 2013 survey, vaping may help smokers trying to quit. however, a 2015 independent review of the evidence concluded ping is 95% less harmful than smoking. it may be the breath of fresh air that smokers have been looking for. nejra: that was just one of the many it takes you can find on bloomberg. you can also find them on bloomberg.com along with all of the latest business news and

analysis 24 hours a day. it will be all for "bloomberg best" this week. thank you for watching. i am nejra cehic. this is bloomberg. ♪

alisa: i'm alisa parenti in washington, and you are watching "bloomberg technology." let's start with a check of your first word news. deputy attorney general rod rosenstein today announced the indictment of 13 russians and three russian entities, saying "bloomberg technology." let's start with a check of your first word news. they meddled in the 2016 u.s. presidential election. the russians are charged with stealing the identities of u.s. citizens to fraudulently buy ads on social media to sway public opinion. plenty more on this ahead on "bloomberg technology." the fbi today disclosed that it failed to follow up on a 10 on -- failed to follow up on a 19-year-old the alleged shooter