♪ best,ing up on bloomberg the stories that shaped the world. with bigseason roars banks in the spotlight. >> people have been scratching their heads today wondering what is going on. this company is an position that no company has been in before, and it might get bad. >> interest goes from corporate mergers. yields touch ay milestone mark and an ecb stays.

>> still, quite upbeat at the same time. shares their top themes in business and finance. >> they are still very constructive across the board. one areamanagement is in china that has never been developed. >> yesterday balanced with your stocks, your bonds, straight ahead. >> all of that, i head on bloomberg best. -- ahead on bloomberg best. hello, and welcome. this is bloomberg best, your mosty review of your important business news, analysis, and bloomberg television from around the

world. it was a busy week starting with alphabet. >> the first quarter numbers are of $24.9ting sales million. -- $24.9 billion. pay clicks it jumps 55% and capital expenditures for the giants more than tripled. capex, it'sok at more than doubled. they are investing deeply in their cloud in data centers and the machine learning technology, and they say that is not going to stop. yields10 year treasury just to 30% since the first time and since 2014, and now that we have breached of this, does the

selling pick up pace? >> so far, we have seen level holds bridge 3% and come back down and yields -- in yields. headlines are out. we probably will cross it again in the coming days and now we can sort of focus on the yield curve and all the other things that are going to impact the market going forward. from boom to boston, shares of caterpillar down in a dramatic turn and that is one of the biggest drags. what happened? the cfo said once you was the high water mark in terms of profits suggested per share. by the third or fourth question, one of the analysts drilled in, saying this is one of the higher watermarks.

is your historically 2q highest profit quarter for the year. >> u.s. stocks continue to selloff for shares of industrial and technology companies leading the action. acrossweakness technology with the biggest drags on the s&p 500, amazon, microsoft, google, and facebook. >> underlying all of this is the lack of upward momentum in core earnings. we are not seeing the underlying economic data and we are getting impatient. came touel macron washington with the not so secret goal of selling president trump on the iran deal. macron saying "something new" and president trump saying the

deal was, "insane." >> there was an interesting moment in their back-and-forth when president trump said perhaps, president macron is the only person that may have some sort of idea exactly what president trump will decide on may 12 when he announces whether or not the united states will remain in or out of the deal. president macron concluded his address to the joint press conference for congress. >> he had some interesting things to say about the trade in the global economy. at one point he said, "he hopes one point, the united states will rejoin that deal regarding the paris climate accord." trumpron just agreed with and did not manage to convince him on anything, to change his his mindran, to change

on trade, and in this case, he tried to get back to the core of decision, the core of multilateralism. he was applauded 43 times, i counted. facebook share is advancing in light trading after reporting first-quarter earnings. a big quarter for the social network, ad sales near record and users keep blocking. $11.97 billion beating analyst estimates. this quarter plosser earnings look strong, the revenues look strong, user growth look stronger, there is a lot of positive things that happen in the quarter. we are finding it hard to find negative. >> i do think we are going to

see advertisers having no choice to use facebook for the most exact targeting they can get anywhere on a global basis. that is a huge asset for the company. ans company is in absolutely, unique new position where its legitimacy is being questioned by society and governments around the world. we are entering a new phase for this company which continues to hit on all cylinders financially, but by no means, out of the woods. this company is in a position that no company has been in before and it might get bad. >> the ecb held steady. giving indications of softening in the eurozone economy, mario draghi giving the example in the press conference following the announcement. >> incoming information since our meeting in early march points towards some moderation

while remaining consistent with a solid, and broad-based expansion of the economy. >> draghi today, balanced? >> i think he presented both sides of the argument. still quite upbeat at the same time. you talked about the wages being positive and there is momentum building there. he described the slowdown in the first quarter as transitory, temporary. in 2017, growth we saw there had to be a little bit of moderation but that does not mean that is going to fall off a cliff. >> amazon reporting blockbuster results, shares jumping over 6%. , thisp analyst estimates is by swelling ranks of prime subscribers. what are the highlights? onhad the same feeling

tuesday with facebook which was, what was all the noise about? amazonironment around captured by president trump's tweets, none of that matters today. amazon is growing quickly. they added a 60% increase hiring billionr-year and 1.6 dollars net profit, unheard of at amazon. a couple of reasons. the profitable parts of the business are increasing and that north american retail business is going up, also, because of those 100 million prime members. gave itsnk of japan latest party decision today, keeping stimulus unchanged. the boj has been maintaining

a forecast on when the economy would hit the 2% target. most recently, 2019, that is what the boj said they were expecting. there was speculation that they might put that out further the 2020. is it something if the boj is being more dovish? they can have an endless quantitative easing, endless yield curve control. and a new deputy governor. that is one conclusion. has become the first north korean leader to enter south korea. the border by at south korean president ahead of a historic summit between the two. "a new history of peace and prosperity." >> this was a very interesting because i'veeting,

been to many of these government-government type of occasions, but they are usually stiff. the thing that struck me was how at ease the two gentlemen seem to be at each other's company. want tosaid they finally ended the korean war 65 years after it took place with a peace treaty. until now, it has been an armistice. >> more importantly, as we approach a historic summit between donald trump and kim and kim it is what moon say will be a complete denuclearization of the peninsula. >> the united states and all of its great people, should be very proud of what is now taking place in korea -- donald trump tweets. >> i have spoken to on the issue of north korea, and my correspondence said that

communication in north korea is a positive step for the that all to be greeted with caution. ahead as we review the week on bloomberg best, exclusive interviews including a frank discussion with the ceo of charles schwab of how clients are coping with jitters. and malaysia's prime minister will must put the one ndb scandal to rest. next, a further focus on earnings reports with results from european banks. is this rescaling of our ambitions, particularly internationally. this is bloomberg. ♪

♪ >> this is bloomberg best. i am ramy. let's continue our global tour

of the week's top business stories with a look to europe, where some of the world's biggest banks reported global earnings. that started monday with ubs. >> ups's investment bank, what went wrong and what went right? >> the investment bank has done fantastically, equities trading is up, and the mma advisory business is not a -- has had a fantastic quarter. 's feels vindicated in strategy and not using too much of the balance sheet. a smaller banking is parts and wealth management is a bigger bit. wealth management people have been scratching their head today wondering what went wrong. earnings were a sliver underestimates but that created

a negative market reaction. >> the pivotal wealth management. attracting in the first quarter, why do credit suisse investors have a smile on their face today? >> it is not just the investors, it is the president himself. down onosts, he scaled the volatile trading units, and he is been saying to focus on wealth management and he has been delivering on that. that is notable because it is an industry filled with topline pressure. they seem to do something differently than the rest of the markets. barclays reported a first-quarter loss while the bank of beat trading expectations for the second straight quarter and showing momentum for jes staley.

staley has had a rough time, but with momentum turning, restarted to see the fruits of his strategy? >> definitely. you've got a ceo that is firmly behind and growing -- behind growing the investment bank because risk is growing. 40%, rememberp by goldman sachs, they were up less than 40%. great quarter for trading. did a good job on costs. >> deutsche bank and abandoning its ambitions to be a top global security firm announcing plans to scale back. it will review its global equities business with a view towards cutting that back as well. >> there is not that significant a shift in terms of strategy. we aim to be a corporate led, global investment bank with global reach.

rescaling of our ambitions, particularly internationally. if you like a discipline in terms of focus, making sure our activities in the u.s. and in some degree in asia aligned with that european core. plan to cutbank's headcount in the u.s. what have you uncovered? focus onlayouts would equities, corporate finance, and they are looking at u.s. rate. they will ago more than 10% of the workforce and that is more than 1000 people. a laterind out at point, it is bigger but we do not know yet. another bank said that it generated less income in the first quarter, making it a challenge for them to live up to their goals. >> we have not delivered on the 4 c's. cost, credits, capital, and

compliance which are the basis for driving a bank the -- a bank forward. profit increase on net so we can be customer focused and increase momentum. big american automakers reporting earnings. estimates, beat while chrysler fell. ford andg news was their decision to discontinue business and most of their car business in their home market in north america. these are still really profitable companies. they are doing very well, and yet, pressure from the tech industry is forcing them to make or the way gmnges

has markets like russia and india. notnvestors are simply singing it, shares are down after the company beat estimates , while warned that that revenue growth could slow in the second half of the year. >> we had a great quarter, and it gives us opportunity to go back in the areas where we have been investing like audience and engagement growth, revenue products, and sales. we will be investing in all of those over the course of a year. we will grow headcount to 10 to 15% and that is focused on those priorities. break down samsung earnings, profits beat estimates on booming exports of its memory chips. stagnant sales of flagship models. >> i have to be conservative for the first quarter. strong quarter, and it is usually week.

-- weak. it still managed to beat estimates and the fact that that profit mays slow is very reasonable, but the focus is again on memory chip division. second quarter should have and this isand, good enough to overcome all of the weaknesses. >> big day for big oil. exxon misses, chevron beats across the board. what did we learn from today. >> it is a mixed bag. exxon really fell short of estimates and in part, that is because of a productiveness. they had their lowest first-quarter production figure in 19 years which is quite substantial for a company that size. chevron was beat by every estimate that was out there and

you had time >> reporting that -- timex reporting to their best profit in a decade. >> who'd we look forward to next? reports next week so there be lots of interest in that and the shell companies, and that will give us -- shale companies and that will give us whether or not they can not go hog wild. ♪

jon: -- ♪ bloomberg back to best, u.s. 10 year treasury yields broke through the 3% mark for the first time in four years. some think this could be a turning point for the bond market.

eric schaffner spoke exclusively with charles schwab ceo and how investments might change if bonds turn bearish. >> it is a big issue. we try to do a lot of education with investors around what it could mean in a rising rate environment. is the thought, well i will get out before it happens? unfortunately, that is something we hear from some investors and that is not a strategy for success. principle, it does not work, do you think we will see a stampede at fixed income? pace atpends on the which rates go up and how far it goes up. jump to oree rates or 300is points -- 200 basis points in the course of 90 days, you are going to have panic among some investors. >> what about the inevitable

correction or bear market in equities? it is going to happen, it is coming. we do not know when. maybe you do. >> i do not. >> how do you expect investors to react then? >> you have to be diversified. you are picking up nickels in front of a steamroller because the market is a fairly high level. you have got to be diversified, balanced with your stocks and bonds, your cash, your portfolio needs to withstand it. haverms like blackstone big ambitions with what they can build in retail. view on the cost for some investors? >> the track record is not great. there are firms that are very

focused, generally have a lot of experience, who deliver outperformance, but they are few and far between. in general, i would have to categorize internal investments are not a great deal for most investors. if you get lined up with one of you havetional firms, a fighting chance to get outperformance. come on bloomberg best, more of the week's top news stories. some bidding wars seem to be hating up -- heating up. plus, contentious investor meetings. >> wells fargo is not improving. up next, the head of china's largest investments firm explains how trade tensions are shaping his goals.

>> it is welcome. this is bloomberg. ♪ retail.

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♪ ramy: you are watching bloomberg best. and barclays were among the major financial institutions in europe the reported results this week and then a quarter that solve volatility come back to global markets, the perspective from these top executives was particularly interesting. >> the threat with geopolitical tensions rising, the concerns over trade globally, how much of a threat is that? it is really mixed.

the economic dynamics are still very constructive across the board. there is still sign of synchronized growth and momentum. on the other end, when you look at the geopolitical picture, the picture gets a little bit foggy. clients are feeling that. the first quarter of client activity, we have an -- beyond therate normal, seasonal factors and followed by much more muted client activity in february and march which was similar to what we saw in 2017 during the year. very difficult to say anything other then, we are prepared from a business standpoint. d momentum in our businesses and we know our business allows us to navigate

almost every market condition that we observe. it is absolutely perfect for china. the chinese economy is being driven by amazingly successful entrepreneurs. and the ability we have to manage their wealth, to help them raise capital, to help them grow their business, to help them invest abroad is unique. the organization has to be structured based on a clients' needs. we have one client. we do not private banking clients, in asia, it is the same person. we should really interact with the person in a , we have cases where we now manage the wealth of people. wehave other cases where

work both ways and been very successful. >> competition must be heating up, right? focused -- iinside keep people inside focused. >> what happens if there is a 20% correction on trade deficits because of tensions. >> it would be quite disruptive. but in wealth management, we are long-term relationship with clients. we would think about how to reallocate. what we said last quarter was what we will do in 2018. main conductt the in litigation issues behind us

and everybody knew that the main litigation issue we had was the department of justice around the mortgage-backed securities sold in 2005 and 2007. that was settled. we settled for one point 4 billion pounds which is roughly in line with how this u.s. bank settles. that is what we were seeking to do. now the department of justice situation is behind us, and people the a's behind us now, we can be focused on generating double-digit returns -- and that ppi's are behind us now, we can focus on generating double-digit returns. we are not going to give a date to that. we have a stress test with the bank of england to go through. there are things that we want to do with our balance sheets and deal with some of the legacy preferred issues that were issued during the height of the

financial crisis that carry a very high interest rates that we were able to call. there are balance sheet issues that we want to do, but at the right time, we will look at returning excess capital through buybacks. we are not going to put timeframe on that yet. asia now where investors are trying to keep their footing as the ground of global trade the seems to shift almost every single day. head of china's top investment term sat down with tom mackenzie. they talk about how uncertainty is affecting business. the current situation concerns us. on the one hand, there are solutions to trade issues. i think will make things worse. >> do you expect to see a slowdown in chinese investment

in the u.s.? >> this year, for sure. 2017 with already 30% lower than 2016. although, 2016 was a huge year. lowerect 2018 may be even and certainly we will be more proactive in looking for those deals in europe and we are doing a lot in japan in the last 10 or 12 years. at the end of the day, capital can go wherever it is welcome. >> are you investing in areas par ofe linked to or the made in china 2020 strategy? >> of course. there is the tailwind behind us and we need to look into it. for example, information technology, medical equipment -- of these, in our view, is

clearly sectors that are seeing a lot of demand. a lot of the reasons to look into them for investment opportunities. incense of the changes around foreign ownership, financial , for many it sounds positive but the reality is that operating in the insurance banking space, it is going to prove very difficult for foreign players who need to compete domestically and in china. >> the most interesting factor in some factor might be a reaction to asset management. the onenagement is sector in china that has never been developed in many ways. is saving inw much china, you can bet it is just a matter of time. malaysian voters go to the

polls on may 9 and the shadow of 1 ndb. one of the biggest financial scandals hangs over that election. of malaysia sat down exclusively with bloomberg news asia editor to give his perspective on 1mdb. essentially a business issue became a political issue because 1mdbponents wanted to use to change a democratically document between election cycles. that is why they created this as a big issue. meanwhile, our rationalization program is working well. our debt level as gone down from 30 billion to about $1.2 billion. what do you feel that some

believe that you have acted dishonestly, what is your response to that? >> there is no evidence to that. you cannot just accuse somebody of being a thief unless there is evidence. quote, "weif i can have to act on evidence." they could not find any evidence or wrongdoing. a politically motivated statement. >> but your donation from the saudi government, you admit to that? >> yeah, but there is no wrongdoing. the saudi government said it was a donation. the facts speak for themselves. ♪

>> a face-off between media heavyweights, fox, disney, and comcast. disneyast any war with -- in a war with disney. are we in a bidding war now? >> the excitation izzie, yes, we are. and fox is likely to come back with a higher offer. -- the expectation is, yes, we are. and fox is likely to come back with a higher offer. tech platform,e 20 million subscribers across

europe, and then a world of it netflix and amazon. shares of japanese maker now trying to acquire biotech company. 49 pounds per share battling shire at $64 billion. offervised slightly up. additionally, the take away from the twoline to companies to agree was extended to may 8. more news coming on that front. >> a record plunge. that is after the united states softened its position. it has been quite a roller coaster for russo as well as

aluminum. is this latest statement from secretary mnuchin so important? -- twog back to weeks people all over the supply chain are worried about where the metal is going to come from? got a softening and they have extended the amount of time that companies can still deal with russo and taken other steps to ease the affect of sanctions. thelly, they said that if millionaire is synonymous with aluminum industry, as he exits, that might be a way out for russo. fighting forum survival in the face of u.s.

sanctions. theredication was that if are passed it goes, though u.s. was thatlike -- light if -- the indication was that if goes, the u.s. would be like on sanctions? explain. >> we are reporting today that deripaska who is known as one of russia's great fighters has no intention of going. companies said that they reports higher output. do you think the oil price comes down from here? >> i think the oil price will continue to be volatile.

a lot of volatility, and what we see these days is it has come down to more normal levels than what we see in an oil price that is more susceptible to geopolitical events, which impact the oil price. >> the shakeup continues at deutsche bank. the company naming today franco koonco as coo. widers part of the restructuring of its investment bank. tell us what we know of him, he guy.y looks like an admin >> was particularly striking is that he has been with the company for 32 years and joined in 1986. he has been with an even longer than the new ceo who joined in 1989. they are lifers and both german.

replaced john,nd nco, he's replacing and he is american. definitely a turn in leadership towards germany. >> wells fargo investors of -- have had a big day. notable cricket calling for changes is california's treasurer. he wants the ceo oh to step down. >> that dog does not part. >> compared to last year, we did not have stops in the meeting, we have a lot of people wanting to talk to sloan on various different issues. things like foreclosures, medical costs, all kinds of issues presented to kim sloan e as our first

meeting heading for wells fargo as chairwoman. >> general electric under pressure to fire the auditor, kpmg. gets hit by another piece of bad news was moody's downgrading gets ratings outlook on ge to negative. there are protests outside of a shareholder meeting as well. how agitated r.g. investors -- are ge investors? the factre upset about that ge share prices are down so significantly eating into retirement savings. that is what we heard today. you brought up the credit rating outlook, that as a big deal because ge relies so significantly on commercial paper for day-to-day operations. kpmg was ratified to stay as ge's auditor but the percentage

was 65% of participating shareholders for kpmg last year, that was about 95%. >> china has eased its grip on capital outflows. one of the practical -- what are the practical implications of this move? >> this is being broadly welcomed by analysts. it means that china will be able to buy more securities abroad. it has relaxed the quota and has increased the amount of securities it allows to be 90 billion u.s. dollars to about 98 billion u.s. dollars as of april 24. it does give those institutional investors more options and it seems to be another step toward a gradual move to open up the financial markets. china and see the markets.

investors here to be more integrated with the global .ystems it is seen as a significant move. --docusign has become the latest company to go public. shares are soaring out of the gate. >> we think about our opportunity, even though the total opportunity is much larger. if you think about the opportunity, we now have an international footprint was -- but still another growth opportunity for international expansion and finally, one of the most important opportunities expanding withis existing customers. many of our customers only have docusign,cases with

and we see a lot of opportunities for hundreds of them. >> german chancellor angela merkel is meeting with president trump at this hour. that is two days after french counterparts held meetings with president trump or he tried to make progress on difficult issues like trade and the iran nuclear deal. but she will have only two hours to do it. what can they get done in a two hour lunch? >> not much, but top of the agenda is making permanent the aluminum and steel trade tariffs and president macron here earlier this week hoping to do the same. a number two, getting president trump to reconsider his position on the nuclear iran deal. pres. trump: they will not be doing the nuclear weapons. you can bank on it. ♪

♪ we did see a gauge of em currencies actually drop, but the ruble outperformed last week, but if you look at this is showing the emerging markets and basically puts to cause what is showing you over the next month, traders are the most bearish on the russian ruble and the tec -- turkish lyra. there are about 30,000 functions on the bloomberg and we always enjoy showing you our favorites on bloomberg television. one function in particular you go. find useful is quic

one quick take you will want to see from this week. >> we have all seen terminator two. cialyear is 1997 artifi intelligence is trying to destroy humanity. ai is very much your. in the past decade, artificial intelligence is found real-world applications and everything from hedge funds and beer brewing. how far ai cann go from here. artificial intelligence is software that solves problems. it learns from what happens. it as aan think of giant excel spreadsheets where you are running statistics to try to find the best guess. this an apple that is run come all of these calculations

that should that qualities that reminded of an apple. >> the companies making the most use of ai today are companies like facebook, google, microsoft, and amazon. >> basic stuff like recognizing your face in a photo, it is -- translatingnu a menu on your google phone, it is using computer vision on a self driving car to see where other cars are. the first attempts to create artificial intelligence was in the 1950's with the arrival of software that could use pattern recognition techniques that take place in our brains. it was not until the last decade that ai started to take off. finally provided the data that these systems need and that is what allowed these ai algorithms to take off. beat --, ai system skin

humans.can beat it still needs humans to occasionally tell it, you are doing the right thing to, or no, that does not look right. the end goal is agi which is artificial general intelligence which would be an ai that did not need a human to hold its hand. >> the possibility has made skeptics of people like elon musk and bill gates who warned might end up automating so many tasks that many humans will end up without jobs. >> with artificial intelligence, we are summoning the demon. ramy: that was one of the many quick takes you can find on the bloomberg and bloomberg.com as well as all of the latest business news for hours a day. that is offer bloomberg best, thanks for watching. this is bloomberg. ♪

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taylor: welcome to "bloomberg businessweek," i'm taylor riggs. we are inside the magazine headquarters in new york. still ahead in this week's issue, we look at china's new gateway into europe, a billionaire working overtime to impeach donald trump. and youtube having its worst year ever. all of this straight ahead on "bloomberg businessweek." ♪ taylor: we are here with the editor in chief joe