♪ nejra: coming up on "bloomberg best," the stories that shaped the week in business around the world. the fed holds rates steady as inflation creeps towards its target. >> i think the statement is loud and clear -- mission accomplished. nejra: while april's job report provides more data to chew on for june. >> the big mystery out there is what is going on with wages. nejra: mergers abound, but hurdles still remain. >> this is a combination of two great as mrs.. nejra: apple's results stand out in a crowd of earnings reports. much maneuvering, but scant process on negotiations over tariffs and brexit. >> this is not a good situation. the prime minister has got to

get a solution to this. >> they are dividing and conquering when they need to work with the european union against china. nejra: plus, a who's who of financial leaders discuss what is what at the milton conference in beverly hills. >> i think there's an opportunity in europe stemming from that. >> interest rate increases this year could the one increase more than what the markets expect. >> part of why we see interest rates going up is because it created economic growth. that is a good thing. >> i'm confident that the next correction is not imminent. nejra: it is all straight ahead on "bloomberg best." ♪ nejra: hello and welcome. i'm nejra cehic. this is "bloomberg best," your weekly review of interviews from bloomberg television around the world.

the week began with a flurry of mergers, including a third try at a tie up between a pair of big telecom companies. david: a big weekend for mergers. with marathon buying endeavor. t-mobile agreeing to buy sprint. at long last, for more than $26 billion in cash and stock. we keep saying it is $26.5 billion. it is not, really. there is debt they are taking on. it's a lot more than $26.5 billion. >> if you look at the enterprise value, it is extensively more. it is also an all stock merger with an exchange ratio, so what the price is today is not what the price is tomorrow. it will move around. there is a lot of risk on this deal. you will see that play out in any spread you will look at. people will say look, the antitrust risk is huge. the government already said they don't like this deal. i think there is a high chance this does not get done. >> what is different now is 5g. 5g is an imperative. the nation's leadership in 5g is at stake. we have fallen behind it to

china. t-mobile and sprint together is the only company that can change that. second, the uncarrier. we are going to supercharge the uncarrier. what we have said is that customers can look forward to a broader range of service, more rural competition, more broadband competition, lower prices, and last, jobs will go up. jonathan: the president delaying tariffs on u.s. allies until june 1. this as trade talks are ramping up with a u.s. delegation heading to china this week. kevin: joining secretary mnuchin in china this week will be commerce secretary wilbur ross, u.s. trade ambassador bob lighthizer as well as chief economist larry kudlow, peter navarro and terry branstad, the ambassador to china. so it is an ideologically diverse group heading over there, to say the least. but while all of this is brewing with china, the fallout coming from the eu, putting out a statement saying they feel they

should be permanently exempted, saying "we will not negotiate under threat." meanwhile, the united kingdom saying they will be working with the european union on this, saying they remain concerned. now, all of this comes, meanwhile, here in washington and on capitol hill, republicans are urging the president to reconsider. >> the u.s. has a strange strategy. because they could get the european union to help them with china. the european union is just as worried as the united states are about china and how they deal with intellectual property and how they deal with state subsidies. now, the united states has alienated the european union with these metal tariffs. they are dividing and conquering when they need to work with the european union against china. ♪ julia: apple reporting its fiscal second-quarter numbers. the beat on the revenues and a beat on the earnings per share. iphone units sold, 52.2 million, the estimate there 52.3 million.

ok -- a touch softer, but i call that back in line with estimates. bloomberg technology anchor emily chang has just spoken to apple ceo tim cook. emily: the big question is about the iphone x. lots of questions about the future of the iphone x, given that suppliers have reported some weakness going into this quarter. when i asked him about the iphone x, he said it was the most popular iphone every week in the quarter. it is the first time since they split the line with the six and six plus. the new iphone has been the best-selling. that is an incredible result if you think about it. there are a lot of questions about the price. when apple comes out with new phones in september as we expect them to, will they stick to that $999 price that is pushing $1000? did he have concerns about the price, i asked. he said, i don't have concerns about the price. i think it is priced for the value that it is. it sets us up for the next decade.

>> what we can see from the results is that the company is able to drive growth along several different areas. so the iphone, the execution in that business was solid. i think the growth in services shows that apple has built out a differentiated ecosystem that customers value. lastly, i would point out that we saw a big increase to the stock buyback and the dividend. this is a company that is very shareholder friendly and very focused on the long term. ♪ >> we are just moments away from the federal reserve interest rate decision. while investors expect interest rates to be unchanged, they will be closely watching the commentary. >> the decision from the fed, the benchmark rate range unchanged at 1.5% to 1.75%. only a minor tweak to the language on inflation. although it could be an important one. with the pce price index at the 2% target, policymakers say it

has moved close to 2%. they dropped their pledge to monitor inflation developments closely, and say, "inflation on a 12 month basis is expected to run near the committee's symmetric 2% objective of the medium-term." the fed is telling you that this inflation is no longer a concern and a symmetric target means you can expect inflation to run above 2% at least for a little bit. >> i think the statement is loud and clear. mission accomplished. >> rather than say we got here, we did it, they said we are almost here in terms of inflation objectives. they did not pop the champagne cork and say we are here quite yet. they are expressing some doubts. >> it gets back to the idea they are willing to overshoot on inflation, even as they are raising rates and allowing unemployment to continue to fall. i think we will get to four rate hikes this year.

>> the economy seems to be on the track that they thought it would be on, mainly tight labor markets, pretty good growth, and inflation coming up a little bit. but they are going to watch it and they will certainly keep on their schedule of raising, unless something terrible happens. >> tesla beat first-quarter results. elon musk predicting profitability in the second half of this year as model three production speeds along. however, shares went into reverse in late trade after a testy conference call with analysts. >> we're going to go to youtube, sorry. these questions are so dry, you are killing me. >> he was clearly more interested in talking about the product roadmap and the model y, the tesla semitruck -- that is what he really likes to talk about. you know, he was very dismissive of concerns about the balance sheets. i think you are seeing the shares decline a little bit because of that. >> shares of tesla fell as much

as 8% as investors trying to make sense of musk's reaction. >> the contentiousness on this call was all one-sided, and it absolutely was a situation where -- it is going to be a situation where this is a company that likely is going to need to raise cash, whether musk says he wants to or not. he does have the ability, clearly, to get the money from his customers and still has a significant amount of deposits on his balance sheet, but certainly the expectation is he will have to sell some stock or debt again. david: the united states and china fought to a draw in the first round of their trade talk over beijing with no progress specifically reported. give us a sense of what the united states was after in these negotiations, as far as we know? enda: they presented a lengthy list of demands from their chinese counterparts. one economist described them to me as it possible for china to -- impossible for china to agree to. the headline take away was to

narrow the trade deficit by $200 billion by 2020. then there was a whole lot of series of demands linked to opening up market access for u.s. companies, protection around ip, reduction of tariffs and most interestingly, throughout the document when you look through it, there is a demand on china that they do not retaliate to u.s. actions. a lot of people point to those clauses in particular as being especially a fundamental hurdle for china to agree to. so a lengthy list of demands from the u.s. i should say, china also made some similar demands on its side. jonathan: the economy adding 164,000 jobs in april, just falling short of estimates. the unemployment rate falling to a stunning 3.9% and average hourly earnings coming at 2.6%. >> this looks like a full employment jobs report for the fed. usually the headline unemployment rate has fallen to its lowest level since 2007. flows into the labor force are also moderating. if you look at people flowing

into jobs out of the labor force or into unemployment, those are pretty far down. at the same time, a big mystery is what is going on with wages? that opens up a big question for the fed. you have full employment, all the signs of the labor market is moderating, but you are not seeing the wage growth you would expect. ♪ nejra: still ahead, as we review the week on "bloomberg best," highlights from a slew of earnings reports. plus, conversations with steven mnuchin on treasury bonds and wilbur ross on trade and tariffs. we will also hear exclusively from the trader whose bets were more to life in the big short. what troubles will he see on the horizon? >> i think you will see a lot more trouble in the corporate market and the equity market than the structured products market. nejra: up next, more of the top business headlines. mark zuckerberg has been on the defensive over data privacy, but he is not backing down on product innovation. >> facebook is announcing a lot of things we thought they would

always do but never have done. nejra: this is bloomberg. ♪

♪ nejra: this is "bloomberg best." i'm nejra cehic. let's continue our global tour of the week's top business headlines with another megamerger, featuring two u.k. grocery groups. >> british grocer sainsbury has agreed takeover terms with asda, with walmart owning 42% of the combined entity. a lower percentage in terms of voting. >> this is not a takeover. this is a combination of two great businesses. the management team has made the best of both businesses. we will run two separate head offices and a dual rant strategy -- brand strategy in the u.k. >> they have been saying there

will be consolidation in retail. this was seen as a consolidation driver. but i think investors are thinking that this deal will go off well. but the big question is what does the regulators say? vonnie: a titanic merger in the u.s. oil industry. marathon has agreed to buy refiner endeavor for $23.3 billion. the new combined company would be the largest independent fuel maker in the u.s. what does it mean for the industry in general? >> you have two companies in different parts of the country, largely, and they are now the biggest refiner in the country. they have 15% of fuel making ability in the country. not only that, they both have large pipeline assets. so they are a real giant presence now. >> combining these two suites of assets, we believe we can lower our costs by at least $1 billion in what we call synergy. when you take $1 billion out of two companies, it is good for the shareholders but it is also good for the consumer.

♪ francine: the u.k. prime minister theresa may has named her new home secretary, who replaces amber rudd following allegations that she misled parliament. >> the interesting thing is the makeup of her in her brexit cabinet. she has has the cabinet and then a sort of inner war cabinet. so far, the balance on the cabinet has been evenly split between leavers and remainers. and now, with this appointment, the balance has shifted in the inner cabinet. >> the meeting of theresa may's inner circle and in a crisis for -- ending in a crisis for the prime minister yesterday when a majority of ministers rejected both her compromises on the eu customs union. this comes as may suffered yet another defeat in the house of lords, with peers backing an amendment to avoid a hard border

in northern ireland after brexit. >> this is not a good situation. the prime minister has got to get her solution to this. >> the real negotiation, the higher stakes talks are here among the british officials and british policymakers. until that is sorted, the eu can just sit on their hands. nejra: israeli prime minister benjamin netanyahu says his country has documents that proves that iran had a secret program to build nuclear bombs. tehran strongly denied the allegations, while u.s. senate foreign relations chairman bob corker said these were nothing new. who was benjamin netanyahu speaking to? what was his audience? >> he had an audience of 1 -- donald trump. for some people, it will resonate. but for people who follow this very closely, to the european capitals, this does not move the needle. i think he was really aiming at trying to convince donald trump

to get out of the nuclear deal in the coming days. : facebook's developer's conference is underway in san jose, california. privacy is following the cambridge analytica scandal. mark zuckerberg addressed those concerns by unveiling a clear history talk, which gives you the option of deleting their data. >> circa berg said that is the first of many things -- is theerg said that first thing -- first of many things that they are going to try to regain trust of their users, but this is a conference for developers. he wanted to make the point first and foremost that they should keep holding with facebook. facebook is announcing a lot of things we thought they would always do but never have done. uploading and downloading for comments, for example, is one thing they did. dating will be a really important move, especially because of the way it works on facebook is it is leveraging mutual interests in attending events to match them up. it is something that is already integrated into the platform.

>> the xerox ceo, because he is resigning, brings an end to a proxy fight with activist investors. carl ichan has sued to block the company's plan to sell itself to rival fujifilm. why did investors object to the fujifilm deal in particular? >> carl icahn objected to a couple things. i mean, one of them was the ceo's play to make the deal in the first place. there is an allegation out there that he did so to save his own job and that he engineered this in a way that i passed -- bypass ed carl icahn's interest. the main point is the money. carl icahn did not see the value in this transaction. that is because it is a complicated share swap transaction with no cash in the deal. if you are carl icahn, you did not become a billionaire by doing share swaps. there would also be a lot of debt left. he did not like that idea. now it is in court and looks like it is heading in his favor.

♪ david: when congress was debating tax reform last fall, we heard warnings of the effect on high tax states like new york if it limited the options for state and local taxes. now, we hear that alliance bernstein holding will move its corporate headquarters from wall street to nashville, in part because of the tax differential. >> you wonder if you are in and around wall street if this is a bit of a southern canary in a coal mine. taxes are definitely a part of it. and a lot of southern states, including tennessee and specifically nashville, in this case, are taking advantage of these high tax jurisdictions and luring people down. elias bernstein, we were told, set out on almost an amazonian surge for a new headquarters. they looked at 30 cities, and the main thing they were looking for was lower cost of living and education and quality of life. but cost has become a real factor on wall street. ♪ julie: amazon pay, it may not be

as well-known as paypal, but if amazon has its way it will be. the online retail giant is offering discounts to retailers to expand its payment system. >> amazon's payment service has been a challenge for them. it is similar to paypal. it is where if you're on a website, you can, rather than enter your credit card data and delivery address, you can simply login with your amazon service. the wariness has always been, do i want to share this info with amazon, which might be competing with me as a retailer? what they are trying to do is offer a discount, trying to get merchants over that hump, hoping that once they take the leap of faith will see positive results. >> xiaomi filing in hong kong for potentially the the world's largest ipo since alibaba back in 2014? >> yes. it's the first company using hong kong's new rules for going public here it two days after the rules came into effect, what is your initial takeaway? we were talking about how this feels like a weird timing for the company. it's not exactly the company at its peak. >> actually, they have had a

good year the last eight months. i think they have timed it perfectly. i believe they have done what they need to do over the past 18 months to really ramp up the numbers. they have a great story to tell. >> turn it around. >> they have got a great turnaround story. the bankers have a great story to tell investors as we go into this ipo process. we are seeing the smartphone business do very, very well, and they are spending a lot of time talking up how their shipments have done very, very well. they have that momentum. >> what is interesting with xiaomi is they say they're going to curtail their hardware profits and the gross margin will be restricted to 5%, but that implies that building their in store base which allows them to push more services and those businesses are at a 40% to 60% margin, gross margin, depending on what they are. that obviously gives them better prospects and takes them more toward the 80% or 90% that samsung is able to do. ♪

♪ nejra: this is "bloomberg best." i am nejra cehic. this week, the u.s. treasury announced that net borrowing reached record levels in the first quarter of 2018. 10 year bond yields have been hovering near four year highs and the fed is expecting to keep hiking rates. so when treasury secretary steven mnuchin stopped off at the milken institute global conference on his way to china for trade meetings, bloomberg's stephanie flanders asked him if he is concerned about the state of the bond market. >> i think the good news is the u.s. treasury market is the most liquid and robust market in the world. while i won't comment on interest rates because i respect the independence of the fed, what i will say is the market, the forward curve expects interest rates to go up. how much it goes up and how fast it goes up, we will see if it is more or less than the market predicts.

but part of the reason we see interest rates going up is because we have created economic growth. that is a good thing. we have been focused on targeting 3% sustained gdp. and part of the reason why interest rates have backed up is because of that economic run. stephanie: bob michael said on bloomberg this morning, he had never seen as bad the market supply conditions in the treasury market -- so much supply coming on. also, central banks, the federal, others running down their balance sheet, so many things coming together. sec. mnuchin: let's say again, it is a very large, robust market. it is the most liquid market in the world. and there is a lot of supply, but i think the market can easily handle it. stephanie: do you see yields going to 3% with bond markets responding to that? for you, is there a danger level that you think it's not three, but is it four? what would worry you in terms of really causing a pressure on financial markets?

mnuchin: let me just say, i have tremendous confidence in chairman powell and his leadership at the fed. again, lots of these issues are interrelated. it depends on where inflation is, on where growth is, depends on where unemployment is. there are lots of issues that are all interrelated. i'm sure as they look at monetary policy. stephanie: the fact coming into it is you may have reduced demand and a big increase in supply. that is quite basic, and that is quite independent of the fed policy. but we are not just talking about the fed policy, we are also talking about the amount of supply that will be -- sec. mnuchin: by definition, supply and demand will equate. stephanie: it could be at a very, very high rate in terms of yields. sec. mnuchin: i'm not concerned about that. there are is still a lot of buyers for u.s. treasuries. ♪ nejra: there's still plenty left to cover on "bloomberg best," including earnings reports of bp and some of australia's largest banks. and coming up, more conversations from the milken global conference. >> we're talking to ceos right now. ceo confidence is also

relatively high, but people are also cautious. nejra: this is bloomberg. ♪ we use our phones and computers

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♪ nejra: this is "bloomberg best." i'm nejra cehic. leaders in business, finance, and politics gather this week at the annual milken global conference, set in beverly hills, california. bloomberg television was there to discuss the most pressing issues in the markets with the most influential people in the world. let's begin with erik schatzker's conversation with david solomon on the topic of volatility. >> i don't think i can explain the difference between good volatility and bad volatility, but i would say that the first quarter was an environment where for a variety of reasons, our clients were more active in shifting around portfolios and changing some of the assets they were holding and the positions that they had.

and in that environment, given the strength of the franchise, they performed very, very well. if you look at the returns in the first quarter, the results reflected the fact that clients were more active. >> does that reflect more conviction on the client's part? i mean, you spent a lot of time traveling around the world and meeting face-to-face with big clients. what are they telling you in terms of their conviction? david: i think you talk to different clients and get different conviction about different things. it can be conviction but also a shifting landscape. i think there is no question in the first quarter that there was a sense that rates were moving and we were heading to an environment where, in the u.s., rates were moving and that was getting to be a focus on shifting their position. in talking to people, generally speaking, people are relatively upbeat when you are talking to ceos right now. ceo confidence is relatively high.

but people are also cautious. the matter how you look at it, -- no matter how you look at it, we are linked in this growth cycle. it could run for a while, but at the same point, people are cognizant of the fact that asset prices have been going up. there is a shift in monetary policy around the world, and that could lead to some changes or shifts, but people want to be -- that people want to be cautious. >> we think there is an opportunity in europe stemming from banks. banks basically have, in a pretty good way, a cleaned up balance sheet and sought assets that they did not need to own or could not own anymore, and that has given opportunity in real estate, nonperforming loans, sometimes in consumer credits for people like us to buy a big portfolio at attractive prices, work them out, and put them into private fixed income structures in such a way that you basically realized the cash flow. >> is that an opportunity all the way across particular countries? manny: no.

it has been in italy and spain, some in the u.k. and some in ireland. banks are doing fine. there has not been much in germany. there has been some in eastern europe, but they are very name specific. someone needs to do something for capital reasoning, and then it happens. in the u.k., things have been happening since the financial crisis. john: what do you see at the end of this? do you think the eurozone is going to work better, with macron -- do you see him as someone who could change france? manny: i think he is a breath of fresh air and trying to do the right thing. doing the right thing in france is not easy. hopefully, he will make concessions and get france to be a good partner with germany in the labor market. but one of the things

positive for europe is that banks are now in very good shape. >> i think the inflation numbers are not completely showing the real inflation in the market. i think that is one of the problems, because the way they are measured is still measured in historical ways, not really reflecting the market today. that is why my thinking is that the interest rate increases this year could be one increase more than what the market expects and also, not impossible to have 50 basis points. >> instead of 25 basis points, the rate increases 50 basis points? >> may be towards the end of the year is possible. >> what would prompt that? what would be the catalyst for that? >> exactly what we are talking, unemployment. unemployment goes down, employment pressures increase in the market, and inflation goes up faster than what the market is expecting right now. ♪ >> it is kind of ironic that the

u.s. administration is putting on a trade war right now because there are a lot of consumers in china, 300 million, and president xi jinping last year at davos said over the next five years, china is going to import $8 trillion worth of goods. because of the trade war, they put the gates down. because of retaliation, this is going to hurt everybody. it is going to close off a lot of opportunities for producers in the united states. >> alibaba's jack ma says they plan to create one million jobs in the united states, and they said they may not happen if a trade war move the head. -- moves ahead. are you pulling back on that? will those jobs not be created if the president states support? >> jack has said we are not going to create a million jobs, we could possibly create 10 million jobs if the trade flows are open. but if there are trade wars, if there are opportunities for small businesses that are being shut off because it is a trade

war, then the consequences would be quite severe. ♪ >> the president decided to delay by one month the imposition of steel and aluminum tariffs. you have been leading talks with the e.u. why weren't you able to reach a deal with the europeans in principle? >> the reason is we are having very productive discussions, and we are hopeful that we can come to a mutual agreement that will protect the national interests, the national security interest in steel and aluminum. scarlet colson -- scarlet: it sounds like you are closer to a deal than farther away from it. what will you be doing over the course of the next month to reach an agreement with the europeans? sec. ross: i have been having discussions with the commissioner, my counterpart there, almost every day since we first came up with the tariffs. so those will continue.

scarlet: earlier today, you said the u.s. trade deficit with china was due partly to what you called "evil practices." what do you mean by that? sec. ross: sure. technology transfers, forced joint venture agreements with intellectual property, cyber breaches, artificial barriers to trade and regulatory approval, high tariff barriers. china, as you probably know, talks a lot about free trade. in fact, their behavior is highly protectionist, much more protectionist than the u.s. scarlet: is it productive to use that characterization of evil practices before you meet with their counterparts? sec. ross: those are not characterizations. those are facts. scarlet: how have they responded to those facts? >> those are facts. ♪ nejra: now for another bloomberg

exclusive from the milken conference, greg litman became famous as one of the traders who trade in the movie "the big short," but never sat down for television interviews when he told erik schatzker what he thinks may trigger the next market correction. >> if the first quarter volatility is a harbinger of something bigger, you will see a lot more trouble in the corporate market and equity market. i think the consumer is in much better shape than the corporate. consumers are less levered and corporate are more levered precrisis, and i think structured products are not going to be the epicenter. people always fight the last war. that is not what will happen this time. i feel strongly that in an adverse environment, structured products will outperform. if you remember in 2002, there were not a lot of structured products hedge funds, but there were a lot of structured products at the time, and structured products were generally up modestly in 2001, 2002.

even while equities were down. erik: so where are you finding the best opportunities right now? greg: our portfolio is more diversified than it was before. rdf is down 20%. from a high level, what i am trying to do is construct a portfolio that generates enough returns until the next correction that people are happy with us and satisfied investors, but is also constructed prudently enough that we survive the next correction. i think what is not clear is when the next recession is coming and whether we have liquidity driven correction first, like in february. erik: what does it feel like to you? does it feel like we are getting close? we are certainly closer, every day we are closer. by definition. greg: i think a lot depends on what happens with interest rates, what happens with wages and cost pressures, what happens with trade. very early, things that china -- with china could all get

sorted out. i am confident that the next correction is not super imminent, but it is on the horizon and we are wary for it. ♪

♪ nejra: this is "bloomberg best." i'm nejra cehic. earnings reports for front and -- were front front and center in this week's business news. let's resume our roundup with results from british oil producer bp. >> bp has reported numbers this morning. it has reported adjusted net for the first quarter that beat the highest analyst's estimates, but cash flows came in less than analysts expected. >> they went up a little bit. we got $70 a barrel. are you surprised it went up a little bit? >> no, it is following the plan we laid out for this year.

$1.2 billion of those related to a doj settlement, the bullet payment went out in the first quarter. that cash has gone out. we have reached a peak now of quarterly payments are this year in terms of the condo payments, and that is why net debt rose. it was that plus the working capital build, you will start to see that come down as the year progresses quarter on quarter, especially given where prices are today. >> china's largest retailer posted better-than-expected quarterly revenue and profit. alibaba got more business and targeted online ads. online sales doubled. meanwhile, alibaba forecasts revenue will grow more than 60% next year. >> this was a real blowout quarter for alibaba, blowing out estimates across the board. revenue grew 61%. this is the eighth straight quarter that alibaba has posted revenue growth of more than 50%.

some things that go with that, they sold $715 billion worth of merchandise this year. that is $105 for every single person on the planet. they had 617 million active monthly users enter seeing revenue growth of 60% for 2019. a big part, as you mentioned, is in the cloud computing business. that saw growth of 103% this quarter. a record, so that is a really big number off the top there. ♪ betty: i want to turn to another tech company, snap. they reported their results as well. wow. are you surprised at how badly users took to the redesign? >> in some ways yes, in some ways no. if you think about social media, they are almost like fashion companies, right? you have the celebrity endorsements and the celebrity discussions, and that influences the social media platforms much more than any technology-type products. and look, there is a history of

social media platforms that were around and gone -- not to say that snap will be gone, but these things change much more frequently. the funny thing is we were talking about apple, primarily a hardware company with services -- snap calls themselves a camera company. clearly, the spectacle thing has not been doing particularly well. ♪ david: big pharma companies pfizer and merck reported earnings them a beating earnings per share, but pfizer was down somewhat and merck is unchanged. what happened with merck and pfizer this morning? >> merck's results were as expected. they had very strong results from their cancer franchise. they had an oncology drug that is first in class and is emerging as a leader, and driving the business. the pfizer story is different. their revenue was not quite what some analysts had been expecting, and i think what investors are looking for now is obviously with pfizer, they make big moves and have shown a lot

of willingness to do big deals, and i think people have been looking at them to say ok, tax reform is done. a lot of money is coming in. what are you going to do now? >> hsbc is returning money to shareholders in a $2 billion buyback, but that was not enough to please investors. the stock is down after europe's biggest bank reported costs that rose at a faster pace in revenue in the first quarter, and suggested that it would reinvest excess capital generated in the future. >> i think the buyback we were mentioning this morning is broadly speaking in line with the pattern of what we have done in the last couple of years. there may well be a couple in the community that have been expecting a little bit more. from our capital management perspective, the numbers for the first quarter bear out is the growth environment we are seeing across some of our home and network markets. we have a good revenue progression across retail bank, wealth management, commercial banking, and our focus has always been in putting our capital to work. supporting the organic growth of the firm.

♪ >> first-quarter earnings missed analyst's estimates as trading revenue at france's second-largest bank fell 13.4%. overnight, the company also announced a reshuffle of top executives, naming four deputy ceos. >> our business makes is quite specific. if you look at the market's dynamic in the first quarter, the biggest rival has been the flow equity market in the u.s.. sad to say, our exposure to the equity market in the u.s. is smaller than competitors. so there has always been revenue in equity and fixed income, but in australia, this is the direct result of our business, first, and our --, second, but we are not geared in europe or asia. >> we are going to be watching the open in sydney, the bank missing expectations in the first half, and also forecasting

difficult trading conditions ahead. >> the housing market is slowing down, for good reason. but that puts a little bit of pressure and makes the market much more competitive. >> the ceo was quite clear in the results that the golden era, if you like, that has characterized australian banking for the past 20 years, he says it is over. a combination of things. obviously, we have talked many times about more regulation coming through to the sector, and we are seeing slow wage growth -- consumers do not have as much money as they did -- and there is increased competition, between the big four and as well as the more attractive parts of the bank's. the result is not bad, a bit messy. the estimates are difficult to reconcile. it is not a bad result, but not being that bullish on the future. ♪ >> national australia banks reported first half cash profit

of $2.1 billion u.s., and also announced plans to spin off its asset management business. >> we have a wonderful business and private bank, and consumer bank, and we see great opportunities in corporate institutional infrastructure and renewables. and while we think wealth products and services are important for our clients, we say the business has been doing better with ownership than the bank. ♪ >> bill winters is closing in on his return target after three years spent struggling to transfer the lender. but the bank still has not shaken off concerns of cost and growth. >> we saw the highest quarterly revenue under bill winters, the former boss of jpmorgan's investment bank. he has been in charge since june 2015. so initially, the shares jumped up on optimism that they were going to hit targets, a bit of momentum to hide income growth. but then as they came on and the cfo spoke to investors, they said the cost may rise this year, which has been a perennial

issue for them in terms of restructuring and implementing compliance is to keep mistakes from happening again. there was good growth in asia. they are fairly modest on equity target. ♪ >> bayer cut its forecast for the year, saying the german company pushes to close at $66 billion purchase of monsanto. what is the strength of the euro in the first quarter mean for bayer? >> it is met by foreign exchange. i think it is very important to focus on the underlying performance. we are pleased to report a sales increase of about 2% across the group from a very strong prior-year quarter. with that also in terms of earnings, if you exclude currency, we met earnings of last year, which was also the strongest quarter of the year.

let's wait and see where our currencies move. i remember last year, when people were talking about parity of the euro dollar by the end of the year, i think the rest is history. >> adidas reported first-quarter sales up 10% at an exchange rate. the german sporting-goods maker has reiterated its goal to grow revenues by 10% this year. the currency story here is amazing, and the sales growth will be impressive for investors, but the conversation is all about kanye west after his slavery comments. how do you interpret what kanye west said? >> you know, we don't comment on every comment every single creator is making. kanye west has been a fantastic creator. he is a very important part of our brand from a revenue standpoint, and an important part of how we promote our

products and parts of the world. our adidas brand group in the u.s. grew at 23%, and growing 11% under the adidas brand. while kanye west is an important part of the adidas brand, they -- adidas is a large global company with a strong presence around the world, and will continue to perform well. >> have you had any conversations within the business in the last 24 hours about dropping kanye? >> no. ♪

♪ >> if i show you a chart of your debt distribution, we see on the bloomberg ddis, a lot more debt coming in 2020 and 2021. nejra: 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 favorite. here is another function you will find useful. quic will lead you to our quick takes. where you can get important context and fast insight into timely topics. here is a quick take from this week. >> amazon's acquisition of whole foods highlights the explosive growth in organic food sales. the u.s. department of agriculture says foods labeled organic must be grown without synthetic fertilizers and be free of gmo's. meat must be raised from animals without growth hormones and must be grown outdoors. organic foods have nutritional benefits and can help fight cancer. that is why they sometimes spend nearly twice as much for an organic product compared to a nonorganic one. but are organics really healthier, and are they worth the money?

here's the situation. concerns about the use of pesticides and use of antibiotics in animal feed prompted some consumers to look for so-called organic food. in 1990, congress passed the organic foods production act to develop national standards, and organic products became more common. mainstream grocery chains started their own lines of organic food, and larger food companies began acquiring smaller health food companies to get in on the action. now, from the big boxes to the small specialty stores, three quarters of u.s. grocers sell organic foods. here is the argument. proponents say organic produce have more nutrients, including antioxidants and vitamins, than conventionally grown fruits and vegetables. they also suggest eating organic limits exposure to toxic chemicals that may lead to certain cancers, but while eating organic does reduce your exposure to pesticides, there is no evidence that the trace

amounts of food are a danger. scientific surveys have not found that organic foods are much more nutritious, and just because food is organic, it doesn't mean that it is good for you. it may be nearly as high in sugar, sodium, and other unhealthy ingredients has -- as nonorganic products, but more farms are going organic to feed demand. with big supermarket change like kroger selling more organic products and amazon's determination to drive down prices at whole foods, organic foods should only increase in popularity, healthy or not. ♪ nejra: that was just one of the many quick takes you can find on the bloomberg, and you can find them on bloomberg.com, along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week.

thank you for watching. i'm nejra cehic. this is bloomberg. ♪

carol: welcome to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. carol: we take a deep dive into the issue of equality. jason: that's right. it is me too and times up, but there's more. i was fascinated by the socioeconomic impact of all of this. a lot to dig into. carol: yes, a lot of angles. all of that ahead on "bloomberg businessweek." ♪