♪ julia: coming up on "bloomberg best," the stories that shaped the week in business around the world. it has been five days full of flashpoints, trade, diplomacy, and politics all causing commotion for global markets. >> there seems to be a three-dimensional chess game. >> the second round of a boxing match. >> we just do not know which is really important when trying to form a government. julia: big decisions await the fed and the ecb leading officials to discuss the path forward. >> i would take that as a bearish signal to the u.s. economy. >> markets have been reading our reaction function quite well. >> we are going to look through these transitory movements and look at where inflation is going.

>> we will give additional guidance. julia: plus, another week of corporate news and earnings season. >> what we said was we would pay out 50% of our profits in dividends. >> it looks like tencent is not going to let go. they are going to spend more. >> is anyone surprised by these results? they have not been reading the news are paying attention. -- or paying attention. julia: it is all straight ahead on "bloomberg best." .on "bloomberg best." ♪ julia: hello and welcome. i am julia chatterley, and this is "bloomberg best," your weekly review of this week's important business, news, and analysis, and interviews from bloomberg television. trade was on the agenda this week with talks between the united states and china scheduled in washington. before face-to-face meetings began, a tweet provided an

unexpected twist. >> donald trump has ordered the u.s. commerce department to get back into business this week, just weeks after cutting off the chinese government out of their -- chinese company out of their suppliers. in a major reversal, the president tweeted that he and xi were now working together. >> this is a surprising development indeed. we certainly know that it has proven to be a considerable source of tension for china because there are 75,000 jobs. they are at stake. u.s. action meant that company would head out of business and perhaps suggested that cte is a bargaining chip on the table, but we don't quite yet i know what china has put on the table. >> they said they will take another look at semiconductors. >> the chinese did resume examining the qualcomm take over after trump's tweet.

there seems to be a three-dimensional chess game and trump's tweets were moving a knight in that game. north korea, the larger trade and economic dispute with china, tariffs, it has all become interrelated. it is on story. -- it is all one story. >> releasing the list of chinese a shares for the next month, the three biggest additions to the emerging market. what does it mean to these companies? >> these stocks are large caps. they are huge. which means, a slice of these companies is going to be added to the indices. initially, we should not see much impact. this has been well flagged.

it is not a huge move, and that is exactly what the index provider wants, what investors want. you do not want a big bank move where shares nobody has owned before our in all of these index charting portfolios. that is about $2 trillion worth of money. it will own it, but it will not be huge shift from the status quo. >> china has dispatched a delegation to washington about trade talks. -- washington for the next bout of trade talks. u.s. businesses have lined up to oppose the trump administration's tariff policy, including the ceo of the world's most valuable company, apple ceo tim cook shared at the white house meeting. tim: i talked about trade and the importance of trade and how i felt that two countries trading together make the pie larger. and it is true undoubtedly true that not everyone has been

advantaged from that in either country, and we got to work on that. but i felt that tariffs were not the right approach there. >> the bond rout getting worse. the 10-year yield hitting its highest level since 2011. the 30 year yield knocking on the door of 3.25%. >> there was a feeling, an underlined bearish sentiment in the market and they were looking for a reason to selloff. it was sort of a combination of a bunch of things, and it seemed like the market was ready to sell. we saw that you cannot -- good -- couldn't breakthrough towards a rally, and you have all of the

shorts in the market, and it seemed like it was time. >> north korea has canceled wednesday's high-level talks with the south. that puts next month's planned summit with president trump in doubt. they blame the military exercises with the u.s., calling them a provocation. kim could be saying, ok, if the u.s. backs down on the military drills, maybe i have the upper hand more. each side is trying to get the upper hand heading into the negotiations. >> in a statement published in the state-run korean central news agency, a north korean prime minister warned that if the u.s. is trying to drive us into a corner to a unilateral nuclear abandonment, we would no longer be interested in a dialogue. >> i would characterize this as a second round in a boxing match after north korea is coming back after being cornered the last few weeks by the u.s., particularly by trump. all indications are today is they are saying, hey, we have got skin in this game and we have leverage here as well.

>> the risk for the u.s. is whether to really engage in this discussion publicly with north korea or try to keep the waters as calm as possible and get to june 12, get to singapore, and see what president trump, who is frequently marketing himself as the master of dealmaking, is able to do. >> in italy, another round of negotiations between leaders of the country. two populist parties and a plan on the government this evening. they haven't yet decided on prime minister. what has been agreed to by these two parties and what has not been agreed? what has been left out? >> the main thing is we just do not know who is going to be prime year, which is really important when you are trying to form a government. there was a draft program that had tons of points. you have tax cuts. you have some control on immigration. pension reform.

nobody really thinks it is feasible. to really do all of this, they would have to exit the e.u. and many international accords. very populist program. markets might worry if they do all of this. >> in italy, the leader of the five star party announced today that he reached a final agreement with his counterpart, head of the league. italian bonds sold off even more on the news. what in what would have announced -- what in what was announced would have triggered this reaction in the bond market? >> the main concern about the impact on state finances and the parallel to that of course, is the relationship with the e.u. and the budget rules there. what is concerning the markets, including pledges like what the program called a flat tax, a citizens' income for the poor, which five-star evaluates at a cost of 17 billion euros while pension institution says it is more than double that.

there are pledges to review, or try to review, an e.u. treaty that includes a fiscal contract and various constraints. >> hopes were raised when a trump administration official said that china had offered to cut its trade deficit to the united states by $2 billion. chinese officials denied the report overnight. they said, "the question is about some u.s. officials who said china will cut the deficit. this rumor is not true. this i can confirm. the consultations are still underway. i am not getting ahead of that. the consultations themselves are constructive." >> president trump telling reporters that china has become "very spoiled." with regards to their trade policy with the united states." but let's start with the good news. china has scrapped nearly $100 billion worth of sorghum imports. they say that their investigation is not in line

with the public interest, but now we got a take a look at the bad, because china has cast out -- cached out on that deficit report. they say china will not negotiate under the conditions set by the u.s. and they are dashing hopes of the intellectual property element of this very much on the radar, of the host of lawmakers. in addition, the energy sector and labor are other contentious points between the u.s. and china. >> the u.s. trade representative says that the u.s., canada, and mexico, are "nowhere near a deal to renegotiate nafta." >> with nafta, the hope was that if they could get a win, they could get something that would appear to improve u.s. prospects and hurt canada and mexico prospect, and get that through congress this year. it does not look like they are going to get anything done. paul ryan had put a deadline on it yesterday that is based on

the calendar and the legal steps you have to take to get this approved. they have always had more wiggle room than he gave it, but even another two or three weeks is probably not going to get them there. julia: still ahead as we review the week on "bloomberg best," exclusive conversations with central bankers about the next steps for the ecb and the federal reserve. plus, steve eiseman, the man behind "the big short" has advice on what stocks to short today. >> deutsche bank is a problem bank. i think it has to shrink dramatically. julia: and up next, more of the business headlines. nominees to keep post at the federal reserve take questions on capitol hill. >> this is the flag and apple pie kind of hearing. you do not want to take a controversial stance. julia: this is bloomberg. ♪

♪

julia: this is "bloomberg best"" i am julia chatterley, and let's continue our global tour of top business stories. in israel, the u.s. opened its new embassy in jerusalem. there was ceremony and controversy. >> we believe that it is possible for both sides to gain more than they give so that all people can live in peace, safe from danger, free from fear, and able to pursue their dreams. >> the u.s. embassy opening in jerusalem today. in the meantime, at least for -- 41 palestinians, tens of thousands converging on gaza's border. it is more than symbolic, isn't it? >> it has been a fantastic week for the prime minister. on one hand you have the iran deal getting ripped up after he tried to spike it and say the iranians lied. and you have the israelis with unprecedented violence, the yom kippur war, and now finally --

since the yom kippur war, and now finally jared kushner, ivanka trump, they're in jerusalem marking the opening of the american embassy. something that all israelis are enormously happy to see. they have wanted it for a rate -- they have wanted it for a long time. it is the best week he has had in office, and he is delighted to see all of this happen. >> at least 55 people have been killed in clashes between the israeli army and palestinian forces.

-- palestinian protesters. deadliest day since 2014. >> are they going to send more people to the border? people themselves may want to go to the border because this is a reflection of an unresolved issue for 70 years now. you know, the long-term concern is whether this will destabilize the region even further? >> the situation in turkey getting really interesting. the president of the country making a vow to tighten his grip on the economy. in an exclusive interview, president erdogan says he plans to take more responsibility for monetary policy sending the turkish lira to record lows. >> first of all, you are the head of the state. when the people fall into difficulties because of monetary policies, who are they going to hold accountable? they will hold the president accountable. since they will ask the president about it, we have to give off the image of a president who is influential on monetary policies. >> today, again, the lira hit a record low against the dollar, but after that, the turkish central bank came out with the statement and said it was mounting market reaction and it

would take necessary steps. the lira recovered a little after this, but investors say that the central bank is going to be forced to raise rates, and they are expecting a significant rate hike. at least 200 basis points, in order to curb inflation. and, the widening current account deficit. it needs to restore investor confidence. >> japan releasing its latest eco-numbers for the first time in two years, it's economy has shrunk. if you take a look across the board, this is a set of pretty bad numbers. what can we make of them? >> there are a lot of things you can point out. business spending and private consumption were both down. a lot of the blame seems to be pointed at the weather, which was extremely cold during the period in question, unseasonably cold. it seems to have pushed down consumer spending. vegetable prices, the increase is something the government is blaming, as well as people

buying fewer smartphones. people are being a little cautious. it might point to something more permanent, but the opinion is that this is going to be temporary. >> let's dig into some data from the eurozone. economic growth slowed across europe at the start of the year. germany seeing its pace of expansion cut in half amid weaker trade. what is the data telling you? is this a temporary blip? >> i think it is. you have to look at other information that can tell you whether it is temporary. the place i am looking at is the labor market. labor markets and recoveries -- labor market recoveries continued a pace even though growth is slow. if growth is going to be bad for permanently slower, you start sacking people. that has not happened. what the labor market data is telling you is that the gdp weakness is going to be temporary. >> until today, betting on sporting events was illegal throughout the united states, except in nevada. in murphy versus ncaa, the supreme court this morning struck down the federal statute,

freeing individual states to authorize gambling on sporting events as they see fit. what changes? >> yeah. everything. if you are an operator, a league, this is going to be a seismic shift that really upends the entire sports market and the entire gaming market. david: where are we going to see it first? >> new jersey and delaware. those will be the first two out of the gate. they will be immediate, maybe the next week or two. then you will see others, those that already have laws on the books. those will happen quickly. >> wall street has been waiting for congress to cut back on the volcker rule and now it seems regulators will be taking the first step. doing away with the presumption that positions held for less than 60 days are speculative. explain exactly what the regulators are going to propose. >> yeah, they long-held this view that transactions violate the ban on private prop trading. this is wall street making trades for themselves, rather than the clients. unless you can get authorization

from regulators that a short-term trade was to hedge a position or make a market for a client, the presumption was that those traits were banned. now, that is being flipped, and the presumption is most short-term trades are in compliance with volcker, and the only way you get in trouble if you are a bank is if a regulator comes in challenges you later on. >> the confirmation hearing underway. president trump's pick for fed vice chairman before the senate and committee. a nominee for fed governor also fielding questions from lawmakers. he is saying he prefers the fed. >> this is the flag and apple

pie kind of year, you do not want to take a controversial stance. everyone on the fed agrees that their balance sheets should be made up of treasuries. they have mortgage bonds and they had to restart the mortgage market and they agree, they want to get out of that business. the rest of richard clare's testimony has consisted of is looking at what he has said about the fed in the past. they should try to push unemployment as low as they can raising -- without raising inflation, and the fed has a duty to remain apolitical. all kind of a thing you would expect from any fed nominee. >> oil rising to $80 a barrel in london for the first time since 2014 as u.s. crude inventories fell, traders bracing for the impact. does it directly have an impact +on the amount of oil consumed? >> that is what the ia said yesterday when they released their monthly report. they said the prices at these levels will start to have some impact on supply greater this year.

and they downgraded just a little bit estimates of how much prices will grow this year, but it does seem they were warning producers that if these ranges, you will see supply and demand coming into action and crimping growth as people worry about how much gasoline is costing. and also soliciting more supply from oil fields. >> the e.u. summit is underway in bulgaria. leaders representing a united front against president trump's tough talk on tariffs and iran. there have been quite punchy quotes coming out. >> that's right. the summit was supposed to be about the western balkans, a low level discussion as far as the european union is concerned. but what it has turned to is a talking shop about how the e.u. confronts donald trump. mainly on two issues they don't like. one, the u.s. pulling out of the iran nuclear deal, and two, the trade sanctions against the european union. there have been no decisions, but i think there has been an

attempt to promote this united front in europe, where we know that leaders squabble a lot. that says a lot. ♪

♪ julia: welcome back to "bloomberg best." i'm julia chatterley. steve eisman made a famous bet against some prime mortgages -- subprime mortgages before the 2008 financial crisis. it was immortalized in the book and film, "the big short." he's recommending investors short deutsche bank. the explains why in an exclusive conversation with yvonne man. >> deutsche bank as a real possibility, issues in money and technology and has not spent money in a long time. they are probably undercapitalized. deutsche bank is a problem bank and has to shrink dramatically.

yvonne: to see more consolidation? >> i cannot speak to europe on whether there will be consolidation or not. i think there will definitely be consolidation in the united states. it is driven by how much companies are spending versus much smaller amounts for regional banks. the regions will have to merge. yvonne: when you talk about excessive leverage, is that where we are going to see the root of it now in this time of the cycle? where do you think china is in the cycle at the moment? >> i am not going to comment on china. i do not think it would be appropriate for me to talk about it. yvonne: talk more about the biggest long opportunities right now. you are very positive about the banks, technology is one of the biggest sectors. what do you think is the biggest opportunity for you in 2018? >> i think the biggest

opportunity is long-short is making a come back. there are more ways to make money on the long side and the short side. in the past, it is really on the long side. there is more volatility and i think the volatility is here to stay. and so, running a hedge portfolio makes a lot more sense. yvonne: what do you make of just -- i know you are saying you're not looking in the fixed income space right now. is it because you are seeing how much higher yields can go? >> i think, look, qe is over. rates are going up. i just do not look at many opportunities in the bond market. call me in two years and we can talk. [laughter] julia: coming up, we will dive deeper into the week's company news, and go through another array of earnings reports. more exclusive interviews just ahead with policy thoughts from prominent central bankers. >> that would be a concern that we not march into an inversion

without our eyes being wide open. julia: this is bloomberg. ♪

♪ julia: this is "bloomberg best, i'm julia chatterley. investors know that policy movement will be coming from the european central bank. ecb has not signaled when it will wind down its purchase program, let alone begin to hike rates. this week, we spoke with two members of the banks governing council about the policy path. let's begin with the interview with the bank of france governor. >> first, we will have to decide about the end of the net asset purchase traders. i already said whether it will end in september or in december, it is not a deep question. we were very clear about the sequencing.

we said the first rate hike would come well past the end of this. what i explained is that we will give additional guidance before the end of the year about the timing of this first rate hike and about its contingency. let me explain about the timing well past, meaning at least some quarters and the contingency, it will be contingent on the inflation. we will see exactly how we formulate it. we are predictable but we are -- it is a clear virtual of our monetization policy. we look at data and the economic situation as it is and will be.

>> when you say some quarters, could we assume that six months or could it be nine months? >> english is not my native language but i understand it could be several triggers. >> three or four? when you look at the main concerns or challenges for the ecb, is it communication to the markets? >> i do not think we have specific concerns. coming back to a 2% inflation target, we are making progress towards this target despite some transient effect. inflation is

rather low in the eurozone for 1.2%. we think inflation will resume its progress in the coming months and this is a temporary effect. we are focused on delivering our price stability. we have been efficient. two years ago, there was 2.5% -- there was still deflation risk. last year we were at 1.5%, we expect inflation in 2020 to be at 1.7%. >> are you still comfortable with market expectations which which were roughly for an end to qe net purchases and a rate hike in the middle of 2019, does that sound reasonable? >> it is difficult to anticipate what may happen in all central banks. we monitor what is happening.

what i can tell you is that we generally consider that markets have been reading our reaction function well. >> the euro softened quite a bit in recent weeks. do you get a sense from policy makers that there is not a great deal of concern about the euro strength? >> we were concerned always. but we do not have a target for change rates, as you know. the volatility in markets has been more to what has happened to the dollar than other parts of the world. .of the world. that is still the story. julia: the federal reserve had a lot to consider this week as bond yields rose with inflation

expectations. these issues were top of minds for two fed officials who spoke with bloomberg television. let's start with james, who shared his concerns about a flattening yield curve in an exclusive conversation with kathleen hays. >> if the fed goes up three times for the rest of this year, that is 75 basis points, you have to ask yourself if the 10 year is really going to go up that much in that kind of timeframe. if it does not, we are going to have an inflated yield curve. i think it is crunch time for this. those that are sanguine on this issue feel that the 10 year will rise. we have seen the yield going up in the last few days. the question is, how is that going to proceed over the remainder of this year and into 2019? i do not think we are in any danger right now.

the yield curve has an upward slope, it is not too far off the average slope over the last three years or something. -- 30 years or something. would be concerned that we not march into an inversion without our eyes being opened. >> the risk is recession? >> if the yield curve does invert, i would take that as a bearish signal for the economy. it means the market has a different view of the future than the fed. >> is that your big concern, that the yield curve inverts? >> no, the yield curve would invert. that would send a signal, but you could argue it has been a pretty good signal of problems ahead for the u.s. economy. i do not think you want to get into that situation without thinking it through. >> inflation has been shy of 2%

for quite a while. we have seen on acceleration. i wouldn't be surprised if we see commodity -- near-term inflation readings go higher. we also see commodity prices going up. when the fed is thinking about our dual mandate the goal in inflation 2%, we are thinking about it on a sustained basis. we are going to look through this transitory movement. my own forecast is that we would see inflation at 2% over the next one to two years. >> when are we going to get back to measuring topline inflation? that is the largest amount of mail i get from people in every fed district that don't get the idea of core inflation. you lead on that with the cleveland's cpi.

when do we get back to topline -- when do we get back to measuring the inflation our viewers and listeners live with every day? >> we do have our goal for topline inflation, but in order to be able to forecast inflation, we have to look at a variety of different measures of inflation. some of the core measures that drop out food and energy prices, cpi measure that you mentioned earlier, the true mean measures, we look at those because they give us a better sense of the underlying trend in inflation. nonetheless, it is the headline inflation number that we are targeting and that is how we framed our goal. we look at the other ones because it helps us forecast inflation. ♪

♪ julia: you're watching "bloomberg best." i am julia chatterley. let's resume our roundup of the week's top business headlines with a focus on company news. chinese internet giant tencent was one of the high-profile firms releasing earnings reports. >> tencent is silencing the skeptics after delivering a better quarter profit. investors were bracing for a squeeze from increased spending and investment. what solidified these numbers? >> it is definitely up today because it has not recorded a beat for net income revenue. if you look at their operating margin, it was an increase and even beat estimates for growth margin. if you strip out the other one off items, their core margins actually dropped. it looks like tencent is not

going to let go. they are going to spend more and very committed to their online revenue, online streaming projects, and they are going to expand into new retail. the spending spree looks like it will continue for a long term. >> in the middle of retail week with macy's reporting stronger earnings yesterday, walmart reporting that which fell short of estimates, and jcpenney. >> is anyone surprised by these results? the reality, online is winning. if you have a winning digital platform, you are having winning in that area. walmart, their floorspace is what they need to be dealing with now. they need to start addressing their brick-and-mortar operations, shutting down stores. they need to make sure they are turning around what they are doing in those main source areas

-- same source areas because it will be a drag on the online offering longer-term. the flipkart deal is evidence of that. they are buying into a market where amazon is already doing well. to turn that around in another market while they still have problems at home, they have a lot of work to do in the u.s. >> announcing a partnership with the british online grocery. kroger will take a stake. it will become the exclusive user of its automated distribution technology. does this deal give kroger as much scale when it comes to delivery as amazon? >> what this deal should do is give kroger that competitive scale. it is not just about where they can reach customers, it is about how quickly they can and how efficiently they can seal orders -- phil orders -- how they can phil orders and get them to people. >> the dutch banking group reporting first quarter income

of 5 million euros, beating -- 595 million euros beating analyst estimates. what are the factors that you are weighing up in deciding and getting closer to decisions on whether to increase dividends? >> we gave an update on capital in february and what we said was we would pay out 50% of our profits and dividends which we declared for the last year. but that we would also consider additional distributions. if we remain within our capital target and we would reflect on that later in the year. it is really quite early to do that now. all the normal sorts of things that we would consider would reflect on where the business is, how well capitalized we are, where we see the opportunities. >> let's talk about what is happening with credit agricole. trading revenues slumping in the first three months, missing estimates and squeezing earnings at the

investment bank. the company says it is well on track to meet its 2019 targets. what happens in trading? can you run us through the numbers of where you saw the weakness? >> there have been changes in the perimeter. participation in banks. obviously, there has been action rates which were unfavorable. the dollar went down during the first quarter compared to the first quarter of 2017. we are mainly strong and specialize in fixed income. activity has been sluggish. a weak market and a bank which is not trying to compensate by

taking more risk, the sluggishness of the activity in the markets. >> allianz has reported 1.8% of above the analyst estimate. it is said to have been boosted by president trump's changes to the u.s. corporate tax and lower restructure charges. >> the operating profit was down 6% but if you adjust for the affect and a one-off that we had last year, it was up 4% and this reflects the underlying operating improvement across the board if you look at the compilation. we have a business of 8% and estimates meant we could across

-- post $21 billion and it went down. the package is very strong across all business lines. >> merck, the german mark has -- german mark said the probability will probably fall as much as 15% this year. that as the german company's a link -- a link liquid crystal business. is this the low point? >> not yet. we have announced that we have a -- we have lost some market shares in asia and that this process is actually continuing until end of 2018.

we expect with our most steering kit in 2019. 2019 will be a tough year. >> fiscal sales and fourth-quarter earnings estimates falling short. shares flipping this morning. they touched their highest price in more than 17 years last week. >> we had record eps, capital returns, it was a really solid quarter. the fact that our security business grew 11%, our application business grew 19%, that is the second big piece here that gives us confidence. the third, the business model. our deferred revenue from software and subscriptions it grew from 29%. product revenue was up over 30% year-over-year. we are in guidelines with what we were looking for. next year, -- next order we are

-- next quarter we are guiding for continued momentum on the top line as well as record earnings per share. we are pleased with the quarter. julia: a major victory for activist investor. -- xerox has called off a $6 billion takeover by japan's fujifilm. the company also parted ways with the ceo. great news for these guys. >> it is. they had settled and were going to replace a big chunk of the board and then xerox backtracked and said, we are not going to settle. this one seems like it will stick. they are backing away from the fuji deal. >> this turned out best for the shareholders and the judge made a landmark decision. he is basically saying if you don't play by the rules it doesn't matter how self-righteous the board is, you have to play by the rules. this turned out good for the shareholders. that isn't why we entered this. we entered this to try to get

the best deal for our stock and it turns out, we got a pretty good decision that is going to help shareholders all over the country. julia: the board coming under more criticism. the world second proxy advisor separating the chairman and ceo roles that elon has held for the last decade. the question is, is elon musk listening? >> a very legitimate question and honestly, i am dubious a -- as to just how much this criticism is going to amount to anything in a couple of weeks and we have tesla's annual shareholder meeting. there is a long history of tesla facing real criticism over its board and the lack of independence on its board is primarily comprised of people who have long ties to elon musk and personal and professional relationships with him. there is real questions about

how much they can hold elon musk to account given the role he plays in the company. and just how much the value of tesla is in match with how much people think highly of elon musk. >> cbs drama has taken another twist. the network's board moving today do the voting interest of the redstone families and its controlling shareholder. shari redstone has been diluted by a tremendous amount, right? >> she has. her voting power has been diluted from 80% to about 17%. however, she doesn't think it should count, because she came out with an option of changing the bylaws. instead of a majority of directors to vote for this, you need 90% of the directors to vote for this. on that basis, she has won the vote because it was 11-3 against her. for investors, it means further uncertainty. these companies have been at

this for two years. many companies need to get their act together if they are going to be able to compete against netflix and the googles of this world. it is very tricky. an uncertain time to be at cbs or a viacom shareholder. ♪

♪ >> i mentioned the euro, it hit a session low after we got the german gdp data coming in weaker than expected. the extended the losses to go below 119. i suspect a lot of that is to do with a stronger dollar than anything else. julia: there are around 30,000 functions on the bloomberg. we always enjoy showing you our favorite on bloomberg television. maybe they will become your favorites. here is a function you can find useful. quicgo. it leads you to our quick takes where you can get insight into -- importing contacts, fast insight into timely topics.

here is a quick take from this week. >> when it debuted, the 4g wireless we had today allowed -- have today allowed people to hit the road and explore unknown places with only a smart phone for directions. when 5g arrives, it could enable driverless car to take us there. 5g stands for fifth-generation mobile networks and it is fast and can accommodate a lot more energy. the reason it is being called revolutionary is because 5g will allow connected devices to speak to each other as well as people. >> right now, we are living in a world where it is a one-way experience. >> that is a bloomberg tech reported ian king. >> you can talk to your phone, -- that is reported ian king. >> you can talk to your phone, you can transmit data, and send it back to the network.

5g, for the first time machines will be communicating with each other in a meaningful way. >> 5g could end up being 100 times faster than what we have now with speeds that could reach 20 gigabits per second. in plain language, that means it downloading an hd movie in seconds. 5g will also increase bandwidth, which will be needed to accommodate the growing internet of things like internet connected for -- refrigerators, thermostats, dog collars, but it will enable many more. >> factory where machines are not connected at all, suddenly, we are looking to be connected in real-time monitoring and things like cars, utility poles, light poles. >> the biggest advance would be huge reduction in communication lifetime, known as latency. a network of driverless car's will need the speed to avoid collisions. near instantaneous data transfers could allow doctors to perform surgery with a robotic scalpel. how will this work?

you need to improve network density. >> what we are we be -- what we are being told is that is not the case. >> it will not only use the existing mobile spectrum, but tap into higher frequencies called millimeter waves. they can carry data that travels -- they can carry data, but chapel short distances. the new towers may have as many 100 antenna ports. getting 5g ready is expected to cost providers billions of dollars over the next five years -- seven years in the u.s. alone. look for the first service to pop up in big cities sometime in 2019. julia: that was one of the many quick takes you can find on the bloomberg. you can also find them at the bloomberg.com along with all of the latest business news and analysis 24 hours a day. that will be all for "bloomberg best." thank you for watching. i am julia chatterley and this

is bloomberg. ♪

jonathan: from new york city for our viewers worldwide, i'm jonathan ferro with 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ jonathan: coming up, the week belongs to the treasury bears. yields breaking out to the highest level since 2011. the italian bond market adjusting to a populist government determined to spend more. and e.m. central-bank credibility very much in question. just who is turkey's central bank governor -- the governor himself, or president erdogan? we begin with a big issue, treasury yields breaking out to new highs. >> short-term, yields are going higher on a 10 year treasury. the reason is because inflation is making a comeback in