♪ shery: coming up on "bloomberg best," the stories that shaped the week in business around the world. the feast of the debt. the u.s. treasury auctions off billions of dollars of bonds. >> basically, we are back to the same kind of demand structure that you saw in october, november, and december of last year. shery: the ecb will be getting a new vp. banks make news of new construction and staff reduction. leaders in finance decifer mixed signals coming from markets. >> we are not expecting any more multiple expansion out of the u.s. equity market. we think it has to be earnings driven from here. >> when we look at developed markets, we think the u.s. bond market and australia are the most attractive right now. >> there are long-term opportunities, and we can take advantage of them.

>> the issuance of costly promises is virtually limitless. shery: central banks release meeting minutes with important clues for investors, while neel kashkari shares inside insight on the fed stock proccess. >> wall street overreacts to everything. they overreact to the upside, they overreact to the downside. shery: plus, the earnings drumbeat continues loud and strong. >> what is pleasing is all parts of the business are performing well. >> there is still a lot more work to be done, but we are pleased with where we are today. shery: it is all straight ahead on "bloomberg best." ♪ shery: hello, and welcome. i'm shery ahn. this is "bloomberg best." your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world.

markets were closed in the united states on monday, but there was plenty of drama elsewhere, as a euro group put forth a nominee for the vice presidency of the european central bank. nejra: the euro group has nominated luis de guindos for the ecb's vice presidential role. it is a move that will hand madrid a top seed at the bank for the first time since 2012. >> it is a controversial decision because it is very unusual to see politicians making these transitions from government into the central bank, especially because that is the whole point of a central bank, it has to be independent from political interference. >> de guindos has tried to portray himself as a hawk, so to speak. he has spoken in favor of austerity. he has been a strong supporter of the policies that have been taken in the euro era in the in past few years and spain has been a star performer for the past few years. its economic performance has rebounded dramatically since the crisis. he doesn't have much of a track record when it comes to monetary policy.

coming straight from politics to the central bank. julia: opening the debt floodgates today, the u.s. treasury sold $179 billion worth of debt. it works to rebuild its cash balances. yields on the three-month notes and six-month notes rose to levels unseen since 2008. >> what you saw in the three-month auction and two-year auction, was a repricing. you saw two-year notes starting to flatten a little bit against longer-end issues. one of the reasons for that is there will be a lot more of them. so the treasury department is going to issue $6 billion more every month of two-year and three-year notes, whereas they are only going to issue an extra $1 billion for longer-term securities. i think one of the reasons you have seen the front end do a little bit worse here is on the supply. abigail: we're waiting for the results of the five-year auction and they're coming in right now.

we see that the long end of the curve is just a little bit stronger, but investors care about a few different things here. the one issued rate on $35 billion, five-year note and the actual rate to come out is 2.658%. those are the actual results. in terms of the bid to cover, we're looking at a ratio of 2.44%. that is slightly stronger than the previous auction. that is good. it tells us demand is here for auctions. shery: if we see a more hawkish fed, we have the fomc statement coming up this afternoon. what could this spell for bond markets? >> one thing we are keeping a laser focus on is what the fed said at about inflation in the last meeting. the last meeting was a non-press conference meeting. we didn't see a rate hike, but we did see the addition of the word "further" a couple of times in the statement. if that turned out to be a hawkish addition because the fed is anticipating more inflation,

what you are going to see is markets getting a little bit nervous that the fed will be more aggressive in the rate-hike path. >> a somewhat hawkish set of minutes for the january fomc meeting. a number of fomc participants said they already upgraded their forecast for gdp growth in 2018 when they met at the end of january. why? because of quickening economic activity in the u.s., a brightening picture on the global outlook, and because of the tax changes that appear or may appear to be having a greater impact on the economy than originally anticipated by fed officials. >> i think the markets have gotten the take away pretty correctly, that the fed will continue on the rate path it had already announced, they're not ready to raise the number of rate moves they will make this year. interestingly, we also heard from the philadelphia fed president, who suggested he is still in favor of two rate hikes, rather than the three that is the consensus forecast.

julia: interesting price action today. if you take a look at the performance, just on the daily session before we got the minutes, we were in positive territory and there you see the repricing. the u.s. 10 year spiking higher, and that impacting what was going on as far as sentiment and a leg lower into the close. >> there was expectation that the fed might telegraph a pullback of that three rate hike path that we have for 2018. i think when we first got the statement, it looked like there may be a pullback, but once they read between the lines, they realized the fed is not going lower than three. they will probably not go higher than three. we are basically back to where we were this morning. what this said is there has been a major mispricing in this market or at least a misalignment between what the market sees, the stock market sees, what the bond market sees, and what the fed is telegraphing.

francine: barclays ended a torrid 2017 on a mixed note. trading income slumped 18% in the fourth quarter, but that beat both the 26% decline estimated by ubs and the average 25% drop posted by wall street banks in the same period. the chief executive is more optimistic about the path ahead, and he is putting his money where his mouth is, increasing the bank's dividends and considering a share buyback for the first time in more than 20 years. >> we begin 2018 with a clean operating amount, that is the first time in five years for barclays. but also, we close 2017 with a strong capital position. 13.3%, that is above our target. first time we have done that in a long time. and what that will enable us to do is, the announcement we had this morning, that in 2018 we plan for a dividend of 6.5 cents for our shareholders. that is more than double what we paid in 2016 and 2017. we feel good about that. david: we learned from the ecb

account of the january meeting out this morning that although they were comfortable staying the course for now, some officials were ready to remove a pledge to expand the bond buying program if needed. this is to quote from the account, "some members expressed a preference for dropping the easing bias regarding the asset purchase program from the governing council's litigation program as a tangible reflection of past inflation." they went on to say, however, it was concluded that such an adjustment was premature and not yet justified by confidence. >> it is important not to read too much into this because these governing council members expressed this, clearly, they do not carry the day. for some of them, it is a natural step that you get to the point where instead of continuing to be promising to extend and expand your qe program, if needed, you say we will carry on up to a certain date. we may extend it, but will not

expand it. alternatively, you start to shift to saying at total stimulus, negative interest rates, free loans to banks and the stock of assets held under qe provides stimulus, and that is enough. that is what some of them want. shery: so the seven-year ratio is 2.49, which is lower than the previous auction. 62.2% to the right bidders. how would you compare that to the shorter treasury sales earlier this week? >> it is just like the rest of the auctions. back to the same kind of demand structure you saw in october, november, and december of last year. which you know, it was kind of ho-hum. this was an ok auction. the fact that it tailed a little bit shows that there was indigestion in the market that needed to be taken down. interestingly, in two weeks we get the 10 year and the 30 year

auctions, and those will be telling, because will there be demand for the longer and more interest rate risk product then we have seen this week? haslinda: china is to take control of anbang, removing the chairman and prosecuting him. talk about taking control, what do we know? >> what we know is that regulators say that they will be taking control of anbang as of today for one year. as you said, the chairman will be pushed out of his post, and he will be prosecuted for economic crimes, is what they are saying. they also said that the reason they have to step in is because illegal operations at the company were testing and putting pressure on the solvency of the company. anbang has been one of the most aggressive, one of the biggest swaggering conglomerates in the last five years or so, spending billions of dollars in acquisitions overseas. it has about $320 billion worth of assets.

including those not just the flagship ones, the waldorf-astoria in new york, but strategic hotels and resorts, and also insurance companies in countries ranging from the netherlands to korea. and they paid in many cases, for many people, skyhigh valuations and skyhigh prices for some of their assets as well. so, it will be a long process of trying to unwind some of these problematic purchases for the regulators. you have regulators and officials from the pboc, the foreign exchange commission, and securities and banking, all trying to pick apart this problem. shery: still ahead, as we review the week on "bloomberg best," neel kashkari says market blips should not knock the fed off course. a ceo sees a bank consolidation coming in europe. plus, we sort through a heaping helping of reports. up next, more of the week's top business stories, bloomberg reports that deutsche bank plans to cut hundreds of jobs, but how

does that square with the promise to grow revenue? >> the challenge is to increase topline while cutting costs at the same time. obviously, it is a big conundrum. shery: this is bloomberg. ♪

♪ shery: this is "bloomberg best." i am shery ahn. let's continue our global tour of the week's top business stories, in new york where j.p. morgan chase announced plans to build a brand-new headquarters. vonnie: j.p. morgan chase is getting a new address. the largest u.s. bank is planning to consolidate its new york city offices and 15,000 workers into a new headquarters on park avenue. the announcement came this morning in a joint statement between ceo jamie dimon and the mayor bill de blasio. >> they are tearing down their current headquarters, which was

built in the 1950's and 1960's and was meant for a much smaller staff. and so, they will build a sleek, new, modern tower that is about twice the size. so this will be about getting all of their people into one spot. right now, they have that building, they have the old bear stearns buildings, this is going to be a major project that they are going to tear down the building starting next year and it is going to be five years of construction. so if you work for j.p. morgan, you will be spread out into other offices for the next years but then you have a new tower to come back to. >> in some ways it is jamie dimon leaving a present for his successor. it will be done around the time that he is planning to step down about five years from now. so this certainly commits them to new york in a big way. nejra: germany's largest bank is cutting at least 250 jobs globally at its corporate and investment bank, deutsche bank is trying to limit expenses amid

a sustained slide in the securities unit. the cuts could run deep, widening to over 500 layoffs. over the past few weeks, they have cut positions in london and the u.s. >> the challenge is to increase topline while cutting costs at the same time, obviously it is a conundrum. we have to keep in mind that this is part of a broad strategy at deutsche bank to cut costs. i think what people need to look out for is what is happening at the management level, because i think there is a struggle there between the forces that want to cut costs on the one side and the ones that want to invest and expand the investment bank on the other side.

it is hard to reconcile those two forces, and we will have to see how it plays out in the future. lisa: south africa released its annual budget today, raising the sales tax and curb spending in an effort to avoid another credit downgrade. >> the president yesterday saying that he will take personal charge of the state-owned companies. he will take personal charge of the structural reforms and state-owned companies, giving direction as to structural reforms in the economy. i think all of those will do just enough for us, not only stave off a downgrade, but also to realize a change in the outlook for s&p, so we can regain our investment rate. anna: siemens is planning an ipo for its health care division. the new company will be called siemens health. this has been a long time coming. this is something that i spoke to them about many times.

asking, what is the timing of this? we are getting news today. >> and it will be one of the largest ipos in europe. they are talking about 40 billion valuation and they might raise as much as 10 million euros. it is also part of this broader theme we have seen across europe and even globally, of these really big complicated conglomerates with businesses everywhere, simplifying and saying what are we good at and let's focus on that. nejra: u.k. prime minister theresa may is planning the trade deal she would like to achieve in brexit negotiations, britain will seek to stay close to the e.u.'s rule book in some areas while breaking away from others. it is an approach that some in brussels are calling cherry picking. we learned if britain doesn't get the deal it is prepared to hold back from brexit payments. can the u.k. do this, is this

legal? >> there is a chance that this kind of protest statement from the u.k. could cause disruptions. we might end up in a court or a european court to try to arbitrate on this. what we do know is that britain has a contingency plan if the trade talks go wrong, if at some point in 2021, 2020, or 2019 -- after brexit has after taken place, the e.u. doesn't honor those promises and the u.k. thinks one option would be to hold back the payments of the money it has already promised. nejra: apple is moving to secure its supply chain. the company is in talks with cobalt mines to buy the metal directly from the with no middlemen. apple is worried that demand for cobalt in electric vehicle batteries could threaten its own supply, which it needs for its iphone and ipads. is this unprecedented for apple? >> for apple, yes. apple has never gone and bought

cobalt directly from miners before. it never had to, because the cobalt market has been quiet, backwater, a pretty tiny market in the global commodities world. there has never been a question about whether they would have enough supply. nejra: this is to secure the supply chain. how likely are they be able to do it? >> if they are willing to pay up then there are plenty of mining companies to have plenty of cobalt supply, planning increases in supply, and no doubt at the right price a deal could be done. >> a spacex rocket carrying three satellites went into space from the california coast. the falcon 9 carried a satellite and two, smaller satellites for a system that would provide internet access to remote regions. mark: talk to me about the crossover and how potentially this can be and how important it might be to tesla in the future. >> the idea of tesla and spacex merging together is a tantalizing idea. i personally think that this

will absolutely happen, there is a tremendous amount of technology overlap, both companies are committed to seeing ai and machine learning develop and incorporate those technologies into their respective businesses. the spacex business is actually a great business. and when you look in the future, call it 2025, it is a business that could dramatically improve tesla's revenues and operating profits. >> we caught up with a treasury secretary steve mnuchin who is not worried about rising prices and growing debt. in an exclusive interview with bloomberg, he said "there are a lot of ways to grow the economy. you can have wage inflation and not necessarily have inflation concerns in general." we got some insight from jeff gundlach. check out these tweets, i'll run you through both of them.

mnuchin, policies will raise wages without inflation. yeah, sure, and we are going to expand the buffalo art museum without making it bigger. then he follows it up with this. if inflation is no up with wages, if inflation goes up, it is not good for bond yields. can you get the wage growth without inflation? >> you need productivity, that has been talked about a lot. so hope springs eternal. but i'm not sure there's a lot of credibility coming out of the administration on the policies and what it is exactly going to do. is it inflationary, disinflationary, progrowth, low growth, it is really hard. ♪

♪ shery: welcome back to "bloomberg best." i'm shery ahn. the past few weeks have given the fomc a lot to chew on with a january surprising inflation spike, rising bond yields and turbulence in the stock market. this week, bloomberg international and economics policy correspondent michael mckee sat down for an exclusive interview with the minneapolis

fed president, neel kashkari, who said he does not think that one month of data should change the policy path. >> i do not want to overreact to one job report that showed the wage increases of 2.9% or the latest numbers. we don't want to dismiss the data, but i also don't want to overreact to one month's blip in the data. we have to look at year-over-year what is happening and see if inflation actually building toward our target. i hope it is. for almost 10 years, the fed has been undershooting orientation target. we keep saying inflation is around the corner, and then it surprises us. allow inflation to come to us. we have tools to keep inflation from going to hide. we have limited tools if inflation ends up being too low. i have always been saying, allow inflation to come to us.

>> just reacting, you can have reaction in the market. we have a jumpy wall street these days. if you saw inflation breakout, are you concerned you would see wall street overreact to the fed moving more quickly? >> wall street overreacts to everything. they overreact to the upside, the downside, we can't make policy based on market blip up and down. we have to focus on the long-term economic outlook and the mandates that congress has given us. congress has said our dual mandate is stable prices and a maximum employment and we try to achieve those on average over the long term. wall street will do what wall street will do. >> if they do that, it could have an effect on the economies. and for years, people on wall street have said that the fed will step in because they do not want a collapse in business or consumer confidence if the markets go down too much. is that so-called fed put still

in place? >> i think we do care about financial stability. we do know there is a feedback mechanism, just like there is a feedback mechanism through the currency markets on the u.s. economy. but we at the fed are not targeting currencies, we know there is a feedback loop. we do pay attention to either currencies or the stock market, but we are not sitting here trying to engineer a certain level of the stock market and obviously we want to avoid crises. so to me, i tried to differentiate a stock market correction mike the tech bubble bursting, which did not lead to a financial crisis. from the 2008 housing bust, which did lead to a financial crisis. we have to work hard to prevent crises, but within that we should allow the markets to move up and down. shery: more compelling conversation straight ahead on "bloomberg best." morgan stanley's adam schiff predicts more pain for the stock market. a former prime minister looks ahead to italy's elections, and frederick expects europe's economy to keep expanding, but as for the number of banks, that is a different story. >> long-term, yes. i think we will have those banks.

shery: this is bloomberg. ♪

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♪ >> have you ever been offered a bribe? >> no. never. i have been hinted. i have been hinted. but these are very, very thin ice things. you never know. guy: but there was even a hint. did you report that hint? ilmars: no. guy: why not? ilmars: that is a good question because usually you think, ok, maybe i misunderstood. let's see how things are developing. but the bank of latvia, the most important thing is we have nothing to do with commercial banking supervision.

guy: sure. but i am curious to know why you didn't. even a hint, even the merest whiff of impropriety, why did you not report it at that time? that would have been a clear thing that you could say now, that happened then, i did not even know, but i reported it. ilmars: of course, you could not imagine -- if i could know that this thing was going to develop like it has been developing, i regret that i did not do that. shery: that was latvia's central bank governor ilmars rimsevics, who denied corruption allegations against him this week, speaking exclusively with bloomberg's guy johnson. staying with european finance, societe generale ceo frederic oudea joined "bloomberg daybreak: americas" this week for a wide-ranging conversation this week. he spoke about the future of europe's banking sector. frederic: the most important thing for me is, beyond the long-term opportunity in europe, financial markets. we are going to complete the

banking union. we are going to see deeper capital markets. there are long-term opportunities, and we can take advantage of these. on top of this, the economic activity is good in europe. we have growth rates that we have not seen for the last, maybe, 10 years across the eurozone. that is an opportunity for banks. and hopefully, we will see rates rising. you know, we suffered dramatically from negative rates. you did not have that in the u.s. -- it is painful, i can tell you. and progressively, we have a little more inflation and the exit of monetary policy, and we will see a much better rate environment. alix: it is not just the steeper curve you need. you need to get out of the positive rate environment. what is your best case for that? frederic: our assumption, the strategic plan was that progressively in 2019, we will exit the negative rate territory for the positive rate. with growth rates at 2.3% or 2.4% for the eurozone for the next two years, normally you

should also see progressively lower unemployment rate, which also means higher inflation on wages. i think this is much better and that the central banks would like to exit the monetary policy progressively to avoid any asset bubble, any distortion on prices. david: as you look forward to a european banking union, which you anticipate at this point, does that mean that socgen has to get bigger? particularly, will there be consolidation? will there be cross-border consolidation? what do you anticipate? frederic: the completion of the european banking unit would be at the top of the agenda of the governments. once we have the german government, there will be discussions on what the next step for the eurozone, in particular on the banking union. long-term, yes, i think you will have less banks. shery: investors had a lot of news to keep their eyes on this week. rising yields for u.s. treasuries, mixed economic data from the u.k. and europe, and

the vestiges of volatility from the recent correction in global equities. let's revisit some of the most interesting conversations about the markets, starting with morgan stanley chief asset strategist andrew sheets, who said a february selloff in stocks was "the appetizer, and not the main course." andrew: it is never possible to be as precise as you would like to be around these things, but when i look at our economists'forecasts, you really do have two overlapping themes that crossover in the second quarter. you will have inflation picking up, not just in the u.s. but in the eurozone and in japan. at the same time, i think that we see a number of activity indicators, like global economic surprise indices, which are fundamentally mean reverting series, are going to be moderating. and so, it is not necessarily that it is going to be a recession or a sharp slowdown, but that these rising inflation numbers will seem potentially more worrying when the economic data is not as strong as it has been.

alix: fair point. let's take a look at what yield you are watching. they look at the 10 year, and they say 3% or 3.5%. you look at 10 year yields and inflation-linked notes -- and i have the chart -- we are right around the high of 2016, around 82 basis points. what do you think is the breaking point in the equity market when it comes to yields? andrew: unfortunately, you cannot be too precise about an exact breaking point. but the reason i like this chart quite a bit is first, i think real rates, the interest rate over and above inflation, is probably the most important rate when it comes to thinking about equity markets and discounting cash flows. for all that has happened in the last five years and all of the shifts in market thinking about growth and inflation and stagnation, we've actually been in a pretty stable range for these long-run real yields, these long run expectations for where policy will be.

and we are now at the top end of that range. so breaking out of it, while it is not guarantee anything, does suggest something different, and i think that difference is something the market may have to assign a higher discount rate for. and i think that is a reason why we are not expecting any more multiple expansion out of the u.s. equity market. we think it has to be earnings driven from here. mark: i think when we look at developed markets, we think the u.s. bond market and australia are probably the two most attractive right now, on a relative basis. this is really a story where the rest of the world is catching up. europe is about two to three years behind the u.s. economic cycle, and their economy is finally picking up. we think the ecb will gradually taper their balance sheet, and we ultimately think japan, which is targeting 0% for 10-year

rates, could ultimately move that target upward over the next year or so. really, as these other economies -- europe, the u.k., and japan, start to pick up their growth rates, we should see their bond yields rise. and that spread between u.s. and those rates narrow. so overall, what it highlights is the u.s. treasury market looks attractive relative to bunds in germany, relative to gilts in the u.k., and jgb in japan. nejra: what about peripheral spreads in the eurozone? are they underpricing risk at the moment? mark: what has happened really, and this has been since 2012 and 2013, we have seen a significant tightening in those peripheral spreads. obviously, that has been the result of not only improvement in economic conditions, but also, quite frankly, massive bank support from the ecb. the issue we have now is that those spreads are quite tight. we are not really taking significant risk in italy, because we do think, longer-term, those peripheral spreads are at risk of widening.

so as a function of how tight the spreads are, we are more cautious at those levels. francine: are you worried that all of this ultracheap monetary policy from the european central bank has taken away the risk that we see in italy and, therefore, in italian politics? mario: to some extent, yes. the ecb made an extremely smart monetary policy. and president draghi has been very smart in mastering the support for qe. and he still has that support. i personally believe that the phasing out would be rather quicker than slower. and i believe that among the factors which explain why the electoral promises issued so liberally and so irresponsibly by all the political parties -- one of the reasons is that there is no feeling of pressure whatsoever. francine: but what will reality look like?

first, is there a real danger that reforms obese low, will be lagging, with whoever becomes the next prime minister in italy? also, there are a lot of parties offering tax cuts. how do you fund tax cuts in italy? mario: first of all, a positive to be put on record is that no party, populist or not, has any longer in their program the idea of leaving the euro, calling a referendum to leave the euro. they have all calmed down. but, indeed, the issuance of costly promises is virtually limitless. but what will happen? i am not too concerned that these promises will be honored. luckily, they will not be honored. but, what will be the explanation of the parties which have promised so much, the day they have to cut down on promises?

the culprit would be europe, because european constraints will not allow them to fully deliver on the promises. ♪

♪ shery: you're watching "bloomberg best." i am shery ahn. earnings season is in high gear. our roundup of the week's quarterly reports begins with results from europe's largest bank. francine: gulliver's final set of results from hsbc not quite the swan song he had hoped for as he hands the reins over to his long-term lieutenant. that is john flint. europe's largest bank missed estimates for fourth-quarter numbers that are down.

is this the legacy of sir gulliver or is this a blip? elisa: i think it is probably a blip. that they were hoping not to see. they had seen a return to the revenue growth that they were hoping for, and this did not come through in the fourth quarter. iain: the fourth quarter, certainly from our perspective and the industry's, was a little weaker with respect to global markets, particularly in the ficc space. and in common with some of our peer group, we also took some provisions for corporate exposures in the fourth quarter. so that is really the feature of the fourth quarter. a couple of things on the unexpected front with respect to charges coming through a global bank and markets business, and lower revenues in the quarter from the same business. vonnie: walmart shares are dragging down the dow. investors are worried that e-commerce growth is slowing at the retailer. why can't walmart satisfy shareholders these days, no matter what it does, from buying

jet.com to plowing money into new operations? investors do not seem to be happy. sarah: it is true. they sure are hard to please right now. i think what we saw this quarter is walmart had been having this utterly sizzling growth in the last three quarters of plus 50% on their e-commerce, and we just saw a drop off. now, the 20% growth they did post, to be clear, is not actually that bad compared to a lot of their competitors. it is outpacing the retail industry's online growth overall, but investors are just worried that perhaps the honeymoon is over. with marc lori, the executive who has been spearheading this, maybe his magic is not as sustainable as we thought. vonnie: bhp billiton shares are taking a hit today as results missed estimates. the world's largest mining company is divesting from its from its $10 billion shale units. andrew: we have a lot interest from buyers. some want to buy the lot, others want to buy just one region or two regions. we will put all of these bits

together and figure out how to go forward by the middle of the year. jonathan: once those asset sales go through, what proportion could investors expect to get returned to them? from the cash you get from the assets? andrew: i think it is too early to say. what we have been able to do is take the debt into safe haven territory, between $10 billion and $15 billion. we are just below $15 billion, and we will continue to pay it down to the lower level of that range. but once that is done, we have been clear that our capital for the next few years will not exceed $8 billion, and the rest can be returned to shareholders in some form or another. manus: anglo american assets pay an annual dividend of $1.02 a share. it is the first time since 2015 they put money back on the table. that is after the global mining giant reported its adjusted earnings per share for the full year. $2.57.

that was a little bit light on what the market had expected. is your recovery complete? mark: no. we have established some very firm foundations with the improvements we have got. we have reduced the assets by 47%, yet production is up 9%. costs are down 26%. return on capital employed, 19% against a starting quarter of 9%. we have come a long way -- still a lot of opportunities, and, in in the next three to five years, we will improve. still a lot more work to be done, but we are pleased with where we are today. >> party like it is 2008, glencore. the world's largest miner reported its highest trading profits in decades. it also surprised investors with $2.9 billion in dividends, and it still has got cash to spare. the ceo saying, "we are generating $10 billion of free cash flow on current commodity prices. there is room if and when we want to do any acquisitions." generally, investors usually do not tend to like it when companies have a lot of cash,

but i guess it depends on what they spend it on. will: given how much debt and how you go about it. i think most investors are very happy with this state of glencore's balance sheet. what is interesting today is that they were able to surprise investors with the dividend. that clearly, they still have a headwind to do deals if they want to. they are closer to $10 billion which is the bottom of the range glencore set itself, so glasenberg has given himself room to maneuver. >> fortescue was dwarfed by its iron ore rivals. the company saw profits tumble 44%. why is the company struggling when we are seeing a different story with the majors? david: this is all the story of china's efforts to curb pollution. it is all about those cuts to capacity we have seen over the winter months there in china. what we saw over the last year was a real shift in the chinese iron ore markets. to favor higher quality raw material.

if you have higher-quality, it helps you maximize output amid those capacity cuts. and it also helps steel mills comply with some of those mandates to cut emissions. that is boosting the likes of bhp and rio tinto. they sell a higher-quality product. it is not good news for producers like fortescue. they typically sell a product that is below the benchmark grade. there is an ever widening discount for those products. and we are seeing the result is a into those first-half profit results from fortescue this morning. guy: reckitt benckiser reporting sales growth this morning for the fourth quarter at 2%. the u.k.-based maker of painkillers says it is time to take revenue growth to 13% or 14% for the year. is 2018 going to be better than 2017? rakesh: absolutely. 2017 was a tough year. where we had macros. but during that year, we made two transformation moves.

we sold our food business for a good price. and then we acquired mead johnson last year, as a result of which, 50% of our business now comes from higher margins and higher growth in the health care categories. as i look forward to 2018, i think it is going to be a better year for rb. and that is how we are guiding the market today. >> qantas giving more money to shareholders after record first profit. the carrier will buy back as much as 378 million aussie dollars of shares. it announced a $.07 a share dividend. that is on top of the $2 billion already returned to investors from late 2015. what is your read on the first half? alan: really good. what is great and pleasing is that all parts of the business are performing well. we had a record result for qantas domestic. a record result from the jet star group. a record result from qantas loyalty.

and our international was down slightly, but we have a huge change for that business that will be implemented next year, and we are expecting a significant improvement in its performance, all things being equal next year. so across the board, there were pretty pleasing results. and we saw today that our shareholders and customers and employees all benefit from those results. emily: hewlett-packard enterprise and hp ink reporting earnings. hpe boosted its full-year forecast, beating estimates and hp ink topped estimates with strong computer and printer sales in the holiday shopping quarter. maintaining its momentum even as the industry stagnates. what do you think is driving these results? crawford: there are a few things driving these results, so we have to unpack them. because for a long time hpe talked about being better together, and this quarter they were better apart.

i think you have two companies that have stronger ability to be nimble and to resize their infrastructure, particularly in the case of hpe. now, in the case of hpi, the parent company, it is a company performing on all cylinders. they are in a market that is flat for pc's. that is nominally flat for printing. they are gaining share. they are putting up numbers like 15% growth year-over-year for total pc's. putting a 14% growth for printing. 28% growth for commercial printing. remember -- that includes the samsung business they acquired, and this is the first quarter they have had that. but really just stellar performance and huge operational efficiency on the part of hpi. ♪

♪ >> so if we take a look at the treasury note commodity, the

curve in the bloomberg function, ccrv, can you talk to us about what you are seeing here? michael: this is the commodities curve where the futures contracts are trading. these are front month, the earlier ones. these are out month, the ones of the end. what you are seeing here is the downward slope. that is the market saying we expect those treasury futures to be trading lower, because yields are rising. when yields rise, treasury bonds trade down. shery: there are about 30,000 functions on the bloomberg, and we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorites, too. here is another function you will find useful. quic . it will lead you to our quick takes, where you can get important context and fast insight into timely topics. here's a quick take from this week. ♪ >> americans own more guns than anybody else on earth. firearms are involved in the deaths of more than 33,000

people in the u.s. annually. every time another mass shooting occurs in the u.s., it sparks arguments over gun ownership rights. here is the situation -- in 2017, pro-gun advocates got a boost when republicans gained control of the white house and both chambers of congress. a month later, congressional republicans rolled back a rule adopted by resident barack obama in 2016 that was aimed at preventing people with serious mental health problems from buying guns. >> the ayes are 235, and the nays are 180. the joint resolution has passed. >> that was just the most recent time congress has dealt with gun restrictions. in 2013, congress defeated a bill to expand background checks. this was just months after a mass shooting took place at sandy hook elementary school in newtown, connecticut where 20 children were killed. in the u.s., 25 children die from bullet wounds each week. gun rules are largely determined by states. since 2013, democratic-led

states like california and oregon have expanded gun restriction. the majority of states have weakened restrictions, and many permit guns now in more places like schools, restaurants, churches, and public buildings. also, all 50 states allow people to carry weapons that are concealed from public view, and many states have expanded rights to use guns in self-defense. the u.s.'s original gun law is almost as old as the country itself. the second amendment right of the people to keep and bear arms was established in the 18th century to allow states to form militias to protect themselves against the federal government. in 2008, u.s. the supreme court ruled that the amendment protected the gun rights of individuals, not just militias. as many as 310 million guns are now thought to be in private hands. here is the argument -- the national rifle association -- >> let's fight for freedom. >> and its allies argue that gun regulations only hurt law-abiding gun owners, because criminals simply ignore them. since congress let a ban on assault weapons expire, violent crime in america has fallen significantly. and fatal and nonfatal shootings

have also declined. meanwhile, gun-control advocates say limiting weapons would drive down gun-related crime, and they point to australia, where strict gun ownership laws were enacted after a historic massacre in 1996. since then, there have been zero mass shootings. and firearm-related death rates have plummeted. so while politicians try to tighten or loosen gun laws from one administration to the next, u.s. citizens continue to be caught in the middle of this legislative gunfight. ♪ shery: that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with all of the latest bloomberg news and analysis, 24 hours a day. that is all for "bloomberg best" this week. thank you for watching. i am shery ahn. this is bloomberg. ♪

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carol: welcome to "bloomberg businessweek." i'm carol massar. julia: i'm julia chatterley. we are inside the magazine's headquarters in new york. carol: in this week's issue, in the year of the dog, beijing continues to feel the bites of deleveraging. julia: a hub for moving chinese cash. carol: steve bannon has another warning for the white house. julia: all that ahead on "bloomberg businessweek." ♪