hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. ♪ >> coming up on "bloomberg best," the stories that shaped the week in business around the world. trade tensions, china's and america's allies battle the trump administration's isolationist policies. a week of actions and reactions on global trade. >> i regard this as much like a family quarrel. >> trade is issue number one as g7 leaders meet in québec. president trump and shinzo abe hold a pregame huddle at the white house. >> to achieve a fair and mutually beneficial partnership. plans to leavetz

starbucks, possibly for politics. athena health jonathan bush is out. jeff immelt is in as executive chairman. elon musk and a vote of confidence from tesla shareholders. >> it is a victory. it is not surprising given the base. >> bloomberg speaks to figures in global investing. >> a sellers market. japan is not only growing in real terms, but there is a fundamental restructuring happening. >> we should look at china equities as sin stocks. and the ubs ceo offers this advice during the recent volatility. >> this is not an environment in which you put on more risk. >> it is all straight ahead on "bloomberg best." ♪ >> hello and welcome. i am erik schatzker. youris "bloomberg best,"

weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. last week, officials from the u.s. and china met in beijing hoping to make headway on trade issues. , byite a cordial veneer monday, the two sides were playing the blame game again. u.s. commerce secretary ross met with the chinese vice premier to discuss trade. while he said that talks were friendly, china is warning it will withdraw commitments if president trump carries out his threat to impose tariffs on $50 billion worth of goods. >> they are willing to negotiate , want to buy more goods and shrink that trade deficit, but now this language suggesting if you go ahead with of these tariffs, all bets are off. >> mexico saying they will begin

to tax a range of u.s. products in response for terrorists. 25%co will put tariffs of products, steel, tennessee whiskey, pork, apples, and potatoes. >> there is a serious risk of a trade war. we have a protectionist president who clearly wants to put import restrictions on a wide range of products. the other countries will retaliate on a dollar for dollar basis. that will hit our own economy hard and could cause some serious risk to the economic out look both in the u.s. and globally. see the u.s. government is asking some opec members to increase production by a million barrels a day, and comes as gas prices are at the

highest level. >> the president said he would not tolerate high oil prices. he iss the first time following through, asking opec to raise output. we see airlines complaining about prices hitting their profit. we have seen the indian oil minister complained to his saudi counterpart the price is too high. consumers are stepping in and the u.s. is the big guy in town, and president trump asking opec to raise output. that is hitting prices as well. the european central bank chief economist and senior board member has confirmed the ecb it from qe atn ex its june 14 meeting. >> it is important to consider the underlying growth of the economy and to what extent ,ctually this growth assessment

the assessment that we make, is passing through to wages and transformation. >> is there anything in the central bank or politics space that could move the markets? i don't know whether they have been complacent or cool. >> that is the surprise. we have the start of a trade war, which everybody thought would be a trigger for a market correction. , soave currency volatility it is surprising the markets have not responded more than they have. one expectation is there is more liquidity. we are talking about slowing down asset purchases in the ecb and the pace of fed hikes have been long market expectations, so that is probably why the markets are sanguine. continues as momentum continues to drive stocks higher. this is the fourth straight

session we have seen the s&p 500 and major averages on the rise. the nasdaq is at a record. >> are these highs justified? >> i think so. we have a terrific economy. there is the fear that that is the time to get cautious. a number of things besides reaching records, underperforming groups like media and retail are starting to participate. >> we had the big rally for attack. not so long ago we had fears about regulation, not thinking that anymore. the nasdaq hitting all-time highs. of the s&pthe chart 500 tech index going back to years. it is a clear uptrend. uptrend like a textbook , above are rising 200 day moving average, above the 50 day moving average, and taking out

and trading at all-time highs here. just a weekend separates us from potential history being made, all looking ahead to the summit in singapore on june 12. we have this bilateral meeting between the japanese prime minister and president trump where they discussed wanting to sign an agreement with north korea on that tuesday meeting potentially to put a formal end to the korean war, saying they have talked about this, but that will probably be the easy part. the hard work comes after that. a lot of pressure expected on the american president when it comes to trade and tariffs. he spoke about the trade relationship america wants to have with japan and its allies. >> the united states seeks a bilateral deal with japan that is based on the principle of fairness and reciprocity. hard to reduce our trade imbalance, which is very substantial.

exports,rriers to u.s. and to achieve a fair and mutually beneficial economic partnership. ♪ >> we are going to deal with the unfair trade practices. ,f you look at what canada mexico, the european union, all of them have been doing to us for many decades, we have to change this, and they understand it will happen. >> what are we expecting? they will not get anything out of this, except the other six members will vent at donald trump, and it looks like he will vent at them, even though he is speaking from a position of ignorance on trade. twittereen active on throwing out accusations against the g7 members, saying they have been taking advantage of of us, except he forgets we don't have trade deals with most of the g7,

only canada. erik: still ahead as we review the week on "bloomberg best," the ubs ceo comments on troubles at deutsche bank. plus, conversations with key decision-makers and private equity, asset management, and corporate america at the bloomberg invest summit. next, more headlines. tesla members back to this each board and elon musk. shareholders own a large stake and they tend to believe in elon. it is not a surprise that he won. erik: this is bloomberg. ♪

erik: you are watching "bloomberg best." i am erik schatzker. with microsoft shelling out billions for a company that is a top destination for millions of software developers. >> microsoft has agreed to hub.ire get help -- git what is the logic behind the deal? most profitable business is its cloud business. ,hat a lot of companies do google has a coding language

which it uses for special intelligence. it is a way of on boarding them. microsoft has always been a developer-first company. now we are all in on open source. together,coming github makes a lot of sense. we can contribute a lot and state true to the original ethos of github. that is how we will operate github going forward, which is developer first. >> starbuck says howard schultz, the founder of the coffee chain, is stepping down as executive chairman and they have named the next chairman. melanie hobson has been named as the vice chair of starbucks. howard schultz step down as ceo last april, leaving that role to kevin johnson. this is howard schultz cutting his ties. , a titana 64-year-old

in the industry. starbucks has been under pressure in terms of sales and socially. it closed a thousand stores just to have sensitivity training. bush is stepping down after facing allegations of misconduct involving women. for alears the way potential sale of the $6.3 billion company. elliott management proposed buying athena health early last month. elliott has made a bid for the company. do you think that makes the most sense, or do you think a strategic buyer comes in here? >> i think $160 is the downside on the stock. i think it makes a lot of sense for a strategic buyer to come in. athena health is an asset that is really unique in the health care world. their software application is in front of doctors eyeballs in 100,000 offices around the

of whereground zero health care decisions are being made. the likely buyers would the big tech companies. i think athena is a software company, and the likely bars would be software companies. round ofr day, another outrage at facebook's handling of user data. this time it is not about a consulting firm with ties to president trump or apple, this time it is four chinese consumer device makers. wahuawei was barred from having its audit sold to the pentagon and armed forces. is having, facebook to answer concerns it is failing to be transparent in how its user data is handled by third parties. how much fuel does this add to the fire? >> it adds a lot of fuel to the fire.

they have both said no data was awei's servers. the problem with that statement is we don't trust facebook anymore. lawmakers are not really taking to thisa clear response concern. they want to know why zuckerberg didn't mention when he had 10 hours of congressional testimony and he was talking about third-party relationships, white not bring up these relationships o? so there are a lot of angry people on the hill today about facebook. tesla, investors have back to the deceased board. cited with the board's recommendations on all agenda items, including keeping elon musk as ceo and chairman. it is shareholders overcoming what critics have said about

tesla having failed to reach production targets. on anusk combative earnings call is well. how big of a victory is this? >> it is a big victory. it is not surprising given the shareholder base. the pension funds are small and the company is really a held by the shareholders. they believe in elon. it is not a surprise he won. we will not know and tell it is filed in a few days, but all three directors were collected and musk stays on as ceo and chairman. >> we have been watching this verizon, new leadership. he is the former ceo of ericsson. forhis the right direction them to go? >> yes and yes. >> ok. >> it was a big surprise.

he has not been within that long. people may remember him as the ceo of ericsson. he did a great job. he is a great visionary. he is big on 5g. is thatef and mind too it will transform the industry. it helped to shape him as a good choice for the role, but the timing and actual news is a big surprise to many. that onewas the view person would not stay around forever and so does this mean anything internally about verizon and others who might not stick around in the wake of this? >> it is possible. hans is an enthusiastic guy. is infectious. he is a very likable guy. i can see him smoothing the waters. >> interesting. >> and communicating the vision

well. what i always look for in the ceo is i want to see someone who will manage to a well-defined vision, and i think he is good at that. i think people respond to that. apple's supply chain is roiling investors. a report said the text giant warned suppliers of a drop of 20% in iphone component orders, but could all this just be noise? >> is soon as i saw that report by nikkei, i thought is this anything new? we have seen this before. >> it happens every now and then. reporting on apple is so competitive around the globe. not just apple, but also players in asia and elsewhere. every now and then you will get this type of story saying some supplier saying they are reducing orders to us, that sort of thing, but it is a complicated supply chain.

the bloomberg story does a great job of explaining this. sometimes they shipped to other suppliers because of constraints or whatnot. >> at the end of the day you look at apple and the big story of the year is this $100 billion buyback. that may not be a panacea for fundamentals, but it indicates there will be a big buyer of the stock all year. in a reports like this, you will have to take that into account. deutsche bank said it will probably report another quarter of declining revenue as it scales back investment banking operation and cuts jobs. it is accelerating its focus on europe, having announced plans to slash 7000 positions. >> we are learning through reporting that the chairman of deutsche bank has floated the idea of a merger with commerzbank. is deutsche bank chair

set to talk on the deal. we know the two german firms have discussed merger two years ago. couldas aborted, but this generate cost savings and produce a lender that poses less systemic risks to the financial system. we are getting news right now that the chairman of deutsche of ahas floated the idea merger with commerzbank to the board. that they had this conversation before. why do we think commerzbank would want to do this again? think both banks know they need scale in the notoriously over-bank to german market. a merger would benefit both. toy are looking for a way cut costs, so synergies would be a good way. both banksclear that think they are not ready for any

such merger just yet. they are both in turnaround plans. they will have to go through that before it becomes an option. people's mindsn and that people like to talk about, so the thought is there. ♪

erik: welcome back to "bloomberg best." i am erik schatzker. the head of switzerland's largest bank says, hang in there. he told manus cranny that investors should stay in the market despite the volatility. he sat down with the next was of interview in zürich, switzerland. bonds, but ifn you go back into the levels of in general, fx

movements, yes, some movement, but not a lot of volatility compared to the standards. i would say overall investors are very cautious. they are out there observing the situation. they are not panicking. they are starting to get concerned. : did you take any risk off the table? >> i think we have been focused on managing our risk for a while. this is clearly not an environment in which you put on more risk. >> what about italy? did you have any exposure to italy? >> no. our exposure in terms of countries is well within our risk appetite. i am comfortable that there is no substantial short-term risk posed to europe or any countries in europe. manus: one thing i focused on last week was sovereign risk and banks, alive and well.

it had not gone away. of the day, banks are a transmission mechanism for the economies and if the underlying economy, political landscape, is unstable, banks are suffering come so it is quite normal. having said that, i do think banks in europe in general are in better shape than they were 10 years ago. they willnced that persist and be able to absorb any shock related to any bank. the problem will be what are the rest of the shocks outside the banking sector? is a shock toit the system. it is finances, the underlying economy, and the structure that needs to be implemented to create a better environment. manus: when you took over this bank in 2012, is deutsche bank

at a worse position than when you write full-time here? >> it is difficult to make a comparison. sure we back then, you know, what we did is we focused on our strengths and shaped our balance sheet, and i think deutsche bank is going through a similar exercise, and it is the right thing to do at this stage. it is difficult to make a parallel also because we have quite different business models. manus: one of the things the it, howis looking the market should be focusing on deutsche bank, is it about counterparty risks? if counterparty risk is taken away, that is the beginning of crises. >> i don't think there is any counterparty risk per se. i think it is difficult for me

to make judgment about another bank at this stage, but i don't believe there is any counterparty risk in the system at this stage that is meaningful. erik: coming up right here on "bloomberg best," more of the compelling conference conversations from the york. >> we have a lot of good data we are able to feed into a model where we think the world is going. for example, we have been able to back test that and when we expect a recession to happen next. >> and that is? erik: this is bloomberg. ♪

♪ >> this is "bloomberg best." i'm erik schatzker. we heard from key decision-makers in private equity, asset management, and corporate america right here at

our new york headquarters. let's begin with our own jason kelly, who sat down with the global head of private equity at blackstone. >> how expensive is the world right now? >> it's extremely expensive, historically expensive. and weubject to that, have to navigate within that. fortunately, we are only making 12 investments per year, roughly, globally, out of our global buyout fund across five key geographic regions. and we have 140 people out in the world trying to source transactions. i think we are able to find the 12 or 12 interesting, incidents, but there is no single place where we say it is time to buy, the wind is in the sales. onhink we have headwinds most of the key industries we

look at, with the exception of energy about 18 months ago, but that has come roaring back. and when you -- >> and when you think about the recession, globally, and in the u.s., how worried are you that it is looming, and what is the timeline? our 90, looking at portfolio companies and the data we get monthly from them, i would say the economy is globally in good health, and i don't see any signs of that abating anytime soon, meeting in the next quarter two-year. the expectation of our ceos is continued, strong growth. 2015 -- thesince industrial economy in the u.s. didn't really rebound much until 2015, and we now have businesses that are growing their top line at 8% to 10%.

we're above gdp trend the u.s. industrials, german industrials, consumer businesses are more on trend, 3% or 4% real growth. and i don't see that changing anytime soon. i think the risk for this is less when a recession comes, because it will, but it will not be the same severity or 2009-2010as the crisis. i think the global cost of capital is poised to increase rather significantly, which will affect credit spreads and the treasury rate, which has already moved up. that, i think, will be the risk, where people bought assets assuming they could sell at the historically high multiples they paid, and that won't necessarily come to fruition. ♪ >> it's a sellers market.

we are late cycle in the u.s. in particular, and if you look at our activity on the private sellers,de, we have especially in the u.s. -- you have a couple different avenues you can pursue within kkr to understand global economics and global politics. henry mcveigh, given the macroeconomic and microeconomic perspective, as well as david the trails, who could give you a good a read as anyone on hotspots -- >> geopolitics. >> what are you hearing from them as all of these headlines run every day about what's going on in the world and how it is affecting the way you deploy capital? >> i'd say in terms of what henry mcveigh's group does, it helps us make sure we are reading the signals we are getting. a large portfolio around the world, they did an ok job using

the data, but we do a much better job translating information we get out of our portfolio companies, and looking where the world is going. >> what is an insight you have gleaned of late? >> one of the things the team has built is this gdp predictor model, which has turned out to be quite accurate, because we have a lot of good data we are able to feed into a model that tells us where we think the world is going. for example, we have been able to back test that, when we expect a recession to happen. >> and that is? >> not in the next 12 months, but in the next 24. we'll see something. our expectation is a modest pullback from what we saw, may be more like a 2001 type rather than the financial crisis, but it does tell us when we expect we will see a dip in the u.s. economy. ♪

ofwhere are the real pockets investable opportunity at this point, as you look around the world? and maybe let's start with europe. been in the headlines a lot, whether it is italy are other places. how does europe feel? >> europe feels very good. the european economy continues to perform well. it is growing at about 2%. there are pockets of news between brexit and italy and maybe greece every quarter, but europe iske away in you have a european economy that is driven by x boards -- by exports and consumption. that results in a much stronger european economy than we have seen in a long time. we think europe is four years behind the united states and its recovery. companies in europe didn't really compressed the cost

structures, and as a result, as revenues recover in margins expand faster -- we see europe from an economic standpoint study, stable, and growing. -- to lendto let its itself to a good real estate environment, a good energy environment, a good credit environment. >> what are you looking for? where is the most exciting place for you? to -- youou have can't ignore the far east. what we are seeing in china, 6%, 6.5% growth despite what has occurred, the tremendous growth in the consumer sector that is happening, the opportunities in tech and in health care, it just can't be ignored. i think you will see real opportunity there. believe it or not, japan is not only growing in real terms, but

there is a fundamental restructuring happening. not only with large corporations needing to spin off and sell subsidiaries, but also privately owned firms that need to transition to the next form of ownership. we are seeing tremendous opportunity in japan as well. ♪ bige talked about this in a way for the first time back in september, and at the time, it was in the 4000 neighborhood. we predicted that crypto, broadly speaking, was going to be the biggest bubble of our lifetimes. was that the december bubble, or does that bubble -- >> that was 1996. that was 1996 internet. let me give you some metrics. the total market cap in january, if you're adding coins and private companies and everything else, was probably a $1.2

trillion. take the fact that this is a global revolution, you could r-middlenly buy -- uppe class to rich u.s. people participating. this is global. there are people in bangladesh buying coin. it is monstrous in tokyo and korea and china and india and russia. so we have a global market, a that $1.5ia, and trillion is going to look small. this will be a bubble when we are at $20 trillion. it will go there. ♪ e not unique to china. there a bigger point to be made about china's impact on the american capital market, and the capital system, if we want to extend it a little more? >> sure. so i would argue that we should

start looking at, as western investors, at china equities as -- where, from a governance perspective, it's really something where allocators should be asking themselves whether it's something they should own. it goes beyond fraud. let's be clear. only one leg of the issues is this idea that chinese actors can list companies in the u.s. that are fraud and do it with total impunity. another leg is that we are financing -- at the end of the day, and i would argue this as a fact, at the end of the day in china there is no such thing as a purely private company. private companies will do the bidding of the states when they are required to do so. so we are at this very strange

moment in history where, as liberal democracies, we are struggling to adjust to this devolution of the technological edge from the government sector to the private sector. so our best technologies now our strategic technologies, in the hands of private companies in the u.s. who are open to doing business with these companies from china that you don't know whether they are really acting in their own interest or the interest of the government. ♪

ahead of the curve, what assumptions are you making of about the fed next week how .losely are you watching it

it is at 3.6% within our 2.1%, andd now it is there is no reason -- on the longer-term that it is going to be lower. you are talking about -- what is fair value?

before this new development -- 3800,ime when they did but then in february came out flows and strengthening again. we are seeing the development of inflows again, but not to the level we want. is goinghe development to the future. how much can you intervene? >> this is beyond normal. this is the think markets are in the process of adjustment. this is where they need to step , to ensure that the

adjustment a small. pace that to ease the stimulus is withdrawn. indonesia bank as if the heart, and it prompted him to race rate hikes for the second time in two weeks. >> when we do our analysis of how much that they have in u.s. terms and how much that is due in the next 16 months, the numbers are extraordinarily high. that is where the market is looking at. across the emerging-market at a time when the dollar we have is at a premium. >> you came out saying em will outperform, you still stand by that call and where? in aggregate we believe the

emerging-market currencies are very attractively valued. just to remind ourselves we had a significant drawdown on the em side from 2012 through 2015. we had a bank through 2017 and we are now correcting an hour if you. -- in our view. 20%ink it is 15 to undervalued. there is significant dispersion and we suggest there is some countries and currencies that are less attractive. it was surprising to hear that by various metrics you get countries like brazil, south africa, and in some instances turkey. fiscal positions have improved. internal balances have improved since the paper tantrums. all of that in aggregate come up with and that there are pockets.

we have toes rise remind ourselves that a growth driven rise in u.s. rates is typically very positive for em currencies. they appreciate during those periods, and em markets outperform em during that period of driven growth rises. think the backdrop over the next 12 or 18 or even 36 months and perhaps three to five years remains positive. internal and external balances have improved. andal growth is picking up, the em growth premium is widening and that environment for us is very attractive for the medium-term. 17.75 come at that is a 125 basis point rate hike for the turkish central bank.

17.75%, i want to look at the immediate reaction of the lira. you can see the dropping like a stone as the turkish lira bounces higher. will this be enough and will it last? we see central banks will back currency, but at the same time bankers have sustained credibility. >> especially true in turkey. responds is going to be the key about this market. a week ago and his campaign speech sounded like he believes in the independence of the central bank. >> it not just turkey we are dealing with. argentina and brazil are also front and center and take a look at what has happened, four is potentially what we are looking at. is there a broader story?

fed saying we need more communication of where we are going. it is affecting our currencies come and we see argentina and mexico and brazil, all currencies take a hit against the dollar of late. >> this backdrop of the central banks around the world taking a punch bowl away so people are looking to see how this is going to impact some of the weaker emerging markets. what we saw a few weeks ago in argentina, played out in turkey. inalso saw the big selloff brazil. we are seeing the same phenomenon taking in south africa. all about the fed and

the possibility of the ecb next week to announce preferred stages or steps towards removing stimulus. ♪

♪ >> keep coming back about drug prices. how is that affecting the industry? >> we had another tweet from the president this morning, amongst the number of tweets, in which

he talks about less expensive health care plans coming out later this month. if you take a look at my bloomberg terminal, the nasq=daq biotech index is down today by .8%. down by truckled companies that didn't have positive news to share. there are about 30,000 functions on the bloomberg, and we always enjoy showing you are favorites on bloomberg television. maybe they will become your favorites, too. here's another function you will find useful, quic go. it will take you to quick takes, where you can get important context and fast insight into timely topics. here's a quick take from this week. ♪ >> after decades of limiting families to one child, china has a new message -- please have another baby. why the change of heart? and ast, china is aging, is the working population. although china changed the rules

in 2016 to allow couples to have as many as two children, it hasn't convinced many couples. long work hours and surging childcare's answers mean many couples feel they can only afford to have one, or even none. on top of that, a study found their33% of women had i pay cuts after having a child, and 30% were demoted. >> if they want to reverse the demographic trends they are facing, they will not only have to deal with the cost of having a child, but will also be fighting against demographic and social trends in which people are having fewer children. >> to counter the trend, the government is considering lifting limits from the number of children a family can have, otherwise, one quarter of the world's most populous country will be 65 or older. an economic boom built on a vast labor supply. >> countries don't usually

become great powers when they are old and gray. they become great powers when they are young and vigorous. xi jingping wants to complete that transition, and he may need to build a younger country that can pull it off. >> how did we get here? after the creation of the people's republic of china in 1949, the government trained tens of thousands of "barefoot doctors" to bring health care to poor and rural areas. the result, mortality rates plummeted, and growth rates skyrocketed. by the 1970's, china was facing food and housing shortages. in 1979, its leader, deng xiaoping, decided to limit most couples to just one child and it worked,. the average birth per woman dropped to less than two. however there was a social consequence of this. the traditional preference among chinese errands for sons caused many parents two aboard female fetuses.

the imbalance grew to 120 men to one woman. overtime, women became very picky about possible husbands. some rural men began to buy wives from human traffickers. in early 2018, authorities rescued 17 vietnamese women and arrested a of the gang of 60 traffickers who had been selling women in china. the change was meant to fix the nation's demographic problems, but after an initial spike in the birth rate, the 2017 numbers didn't appear as large. >> indications are that people won't be rushing out to have kids. they might see a temporary bump in the number of children, but whether it will be a lasting change that will affect the demographic trajectory is in doubt. ♪ that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg

best" this week. thanks for watching. i'm erik schatzker this is bloomberg. ♪

♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." the state of apple suppliers are once again in focus after nikkei reported apple plans to cut orders for components by a whopping 20%. plus, facebook'ssheryl sandberg testifies in europe. we will talk to a whistleblower who believes more data scandals are to come.