>> coming up, a political challenge. central-bank -- taylor: coming up on "bloomberg best," the stories the that shaped the week around the world. mexico swings left in a historic presidential election. >> this time, we do have a deal. in china's central bank steps up to stabilize a deteriorating yuan. >> fed officials in general say the economy is operating in top gear. >> the fed will hike at least once more. because wage growth is still

sluggish. >> a return to public markets. they pull out all the sports to reach a target. a mega deal is completed. >> it is important so that we can be much more competitive. >> the loss to industry from trade wars as they already feel the pinch. >> all hell is going to break loose. >> and, neel kashkari has a fireside chat with bloomberg's joe weisenthal. >> there are wide estimates of where neutral is. >> that is all ahead on "bloomberg best." ♪ haidi: hello and welcome. i'm haidi lun. this is bloomberg best. lets start with a day by day look at the top headlines. voters in mexico went to the

polls on sunday, and when the ballots were counted, the result turned out to be historic. >> making history, amlo was elected mexico's first left-wing president in decades, in another decisive win for populism. he was swept to power with a campaign of anger over incessant corruption and poverty. given the details of how the election went for lopez obredor. >> it went very swiftly and quickly, and smoothly, the range by which he won was enormous. we are looking at a 30 percentage point lead as of now, over his nearest rival. >> he has talked about number of things that are unique to mexico including a war on corruption, reviewing government contracts and perhaps canceling work on a new airport. investors are concerned this morning because he made it a priority in his acceptance speech to say that he was concerned for the poor and the poor would be forefront in his legislating. may be in me that he opens the

fiscal caps. they will also look at central bank autonomy and oil deals. >> german chancellor angela merkel's fate could hang in the balance as she tries to find a compromise on immigration policy. her interior minister offered to resign, and put it on hold as talks resumed. what is going to happen? >> everyone in berlin is on proverbial pins and needles, waiting to see what happens at the meeting. at this hour, seehofer the interior minister and head of the bavarian christian social union is set to meet with chancellor merkel to discuss this standoff over immigration. it is really anyone's guess how

this will lay out. >> the german chancellor has halted the immediate threat of a government breakup, crafting a plan to tighten migration, and keep her sister party in the fold. there will be holding centers set up for refugees already registered in other eu countries. her interior minister who had threatened to quit, will remain in his position. >> it is time we have a deal going into this meeting. she had three big challenges going into the meeting, to keep her christian democrats together, and to please the interior minister. what the german government has agreed as you pointed out, is create transit centers for migrants at the border. the goal is that they will be able to determine who can stay in germany. those who cannot will be quickly be deported to the country they

came from to do this, the german government has also announced a bilateral deal with austria. mr. seehofer stays. >> the trump administration letting zte resume business activity in the u.s. shares of micron technology slumped on word that is chips have been temporarily banned in china. this seems to be the first step in putting zte back into the good graces of the trump administration. but what comes next? >> right now, zte will be able to service contracts they signed on or before april 15, when the u.s. had slapped their ban on them.

they are due to pay $400 billion in an escrow account. that was part of the ban last week, the ousted the chairman of the board, and they are moving toward august 1, when presumably, the trump administration will decide yea or nay, that they can continue doing business with the u.s. companies. >> as the door open for them, it is closing for micron in china. >> umc and micron were involved in a big intellectual-property battle, there was a lawsuit filed against them in china and they won a preliminary injunction blocking the sale of certain chips in a minute china from micron. micron will likely launch some

sort of protest, and settle the dispute with umc. it is a bit of turbulance to figure out the scope of the injunction. >> the federal reserve is due to publish minutes, where officials raised the benchmark rate by a quarter-point point for a second time this year. >> the central message from this minutes, federal officials say that the economy is operating in top gear. solid growth, strong consumer spending and increasing

investment. still, many noted that if the fed stays on his current policy path, the federal funds rate could be at or above estimates of its neutral rate sometime next year. what could not them off their path? well, most participants noted that uncertainty and risks associated with trade policy had intensified, and they were concerned that these risks could eventually have negative effects on business sentiment and investment spending. >> the united states went ahead with its tariffs on imports, and at midnight on washington time. china responded immediately with similar tariffs on u.s. goods.

the chinese premier spoke, saying "china will never start our trade war, but will take measures in response to others." >> this is of course, the first route, 34 billion dollars in tariffs. u.s. tariffs on chinese goods which are impacting a host of different industries, most notably in the commodities market, and protecting u.s. intellectual property. if you look at tariffs on u.s. goods, soybeans, sorghum and in the agricultural and farming states, that is a great impact on trump's base.

the very conservative heritage foundation we should note, argued against what the president has done. but he is getting support from the association of manufacturers. >> china is very much trying to keep the moral high ground that it sees itself having here, painting itself as the victim, of trump's war that he has initiated. that is the line that they will keep pushing as this continues to go on, this trade war.

>> unemployment rising, wage growth slowing. the economy adding a better than estimated 230,000 jobs, but the and implement rate rising to 4%. >> this will not change the fed to change course by itself. haidi: still ahead, as we review the week, an exclusive conversation with the chief executive of an airline. tony douglas reveals his plan to shake up the carrier and reverse losses. and more of the week's top business headlines. china manufacturing data comes in below expectations, and it is not all about the tariffs. >> clearly, there are already worries before we get into any concerns about trade. haidi: this is bloomberg. ♪

haidi: this is "bloomberg best." i am haidi lun. lets continue our global tour of the week's top business stories with a message from president trump that made an impact on oil markets. >> oil prices slipping after president trump said that saudi arabia's king had agreed to increase oil production. both he and the prince backpedaling on those comments. it added to the pressure yesterday during an interview on fox. president trump: opec allowed less than we thought last week. they have to put out another 2 million barrels, in my opinion, because we don't want that happening. >> what does the president want? does he want the saudis to break

from opec? >> i think the president wants lower gasoline prices heading into the summer. how that comes about, i don't think is particularly his concern. does he wants to see the end of opec? i think quite clearly, he has done for many many years. i think he needs to be really careful what he wishes for, because without the spare capacity that countries like saudi arabia and one or two others in opec hold, we would

have no ability to deal with any of the disruptions, even the ones we have seen in the last couple of weeks. >> saudi arabia cutting oil prices for the month of august, following donald trumps tweet asking opec do more to stabilize prices. the president tweeting "they are doing little to help with anything, there are driving prices higher. this must be a two-way street, reduce pricing now." has the president gotten what he wants to some extent with the actions were learning from saudi aramco this morning? >> it is a little marginal, but it is significant. in essence, they will only cut prices by $20 a barrel, quite an arcane part of the oil market. but it is a signal that saudi arabia has taken the president's concerns seriously. we have had another interesting reaction from a second opec member, iran. they are less keen as you can imagine to keep president trump happy. iran's opec governor has even trolled the president, saying in a tweet, "your tweets have driven up prices by at least $10 a barrel, please stop, otherwise it will go even higher." >> let us look at china data from the weekend, the pmi reading showing that trumps rhetoric on trade is perhaps seeping into economic data. the export gauge index, showing that new export orders are tumbling into a contraction. according to a survey, confidence among japan's largest manufacturers is also slipping during this second quarter due to trade tensions. what are the key takeaways for you there?

>> clearly, there are already worries even before we get into any concerns around trade. the question for the second half of this year really, is how much of this plays out against any predictions of policy support, be it from the pboc or the authorities as they try to address the slowdown. that is a tricky thing for investors at the moment. as we are seeing in the currency market, it is difficult to know what they will do next, what the steps might be. certainly, there is a lot on the plate left for them to be able to stem these weaknesses they are seeing in their economy. >> the governor of the pboc says china will keep the yuan stable at an equilibrium level. recent currency volatility on dollar strength and external uncertainties. blaming the recent currency volatility on dollar strength and external uncertainties. the yuan slumped to a level of 6.67. is that enough for the chinese to stabilize the currency? doesn't seem to be.

>> no, i think there will still remain some short-term pressure of the yuan until we get a couple of days of strength. the concern will not go away. we saw the capital outflows story at the end of two any 15 and 2017, even after the yuan started appreciating, those concerns lingered for a little while longer. while this is much of a valid, short-term story, traders and day traders should be watching the yuan and should be concerned. long-term investors should not be concerned. this is not a long-term story. >> lets pivot now to iran, the president rouhani seeking deeper ties with switzerland. he called on europe to deliver on its promise to shore up the 2015 nuclear deal. iran has said it will resume its nuclear activities unless france, germany and the united kingdom can guarantee continued

investment and trade. what happens next in this story? >> we are really looking at the measures that the eu may be taking, how far they may be able to go in order to counter the u.s. sanctions that are unilaterally imposed, and will be introduced as early as next month. so we have coming up now, on friday, a meeting with foreign ministers from the parties that remain in the deal, that is the u.k., germany, france, russia, china and iran. they will meet in vienna and discuss a proposal, or an economic package aimed at buffering iran against of those sanctions, countering the impact of those sanctions. >> resilient car sales -- top u.s. automakers reporting high sales in the month of june, despite rising interest rates and escalating trade tensions which were expected to curb those sales. i guess the takeaway is that americans continue to purchase suvs and light trucks at the expense of those passenger cars. >> the numbers keep snowballing, right? we saw the shift in demand, people shifting away from cars toward suvs. fiat chrysler started killing off their less-competitive cars, but they still sold in large numbers, mostly to rental fleets. when you take those out, you see more numbers. ford started disinvesting in their car lines, and we will

keep seeing more of this. no sign of stability, no end to the fall in car demand at this point. >> the ecb fearing that market expectations for a rate hike in december might be too low. some members of the governing council reportedly saying that september or october of 2019 may actually be on the cards. the euro climbed been on the news. this sounds like reining dovish expectations on the margin. >> yes, what this is is an attempt by the hawks on the governing council to cement expectations for a rate hike in september. and it has worked, it bolstered expectations a bit, and as you said, it supported the euro. >> the prime minister theresa may has rejected a deal on the customs union. meanwhile, britain's top carmaker warned against a bad brexit deal, saying that investors in the united kingdom would be jeopardized if the latest of a series of nick household names warning against brexit. >> yes, talking about the huge number of investment in the united kingdom that is a threat if we have a very bad exit deal,

or what they mean by that, a hard brexit. lots of trade barriers between britain and the eu. if you look at what she is proposing, and what mr. davis seems to have rejected, it is trying to inch towards a softer end of the brexit curve. this rhetoric might actually strengthen theresa may's hand. hand. >> may backed a plan to keep close ties with the eu after leaving the bloc. the united kingdom will have a closer relationship to the eu single market than campaigners had hoped for when the first set out plans in january of last year. ♪

haidi: you are watching "bloomberg best," i am haidi lun. businesses around the world are feeling the impact of tariffs battles. from agriculture to manufacturing, costs are increasing and uncertainty is raising the threat of layoffs we talked. we went across the atlantic ocean to see how trade was are unsettling the industry there. ♪ >> with all this talk of global trade wars, new england's most valued export is already in hot water. >> this trade war is going to have some really negative effects on the lots of people in massachusetts. ♪

>> lobster is one of the nearly 700 american asked words that china is targeting for terraces of 25% -- american exports. it is a response to president trump's 25% tariffs on $34 billion on imports from china. massachusetts lobster man billy mahoney, says, he is already been $.50 less per pound on the news. >> if they will pass the deal, all hell will break loose, as far as the price. >> new england landed nearly $700 million worth of lobster last year, 94% of the nation's total. exports to china increased 30% year-over-year. >> hope for the slack, but i am not very hopeful. -- i hope the domestic market can pick up the slack, but i am

not very hopeful. >> also cut in the terrace the crossfire, steelman effectors -- in the tariffs crossfire are steel manufacturers. >> some of it comes from canada, some of it comes from the u.s. and since the first of the year, the price of the product has nearly doubled. >> the ceo blames president trump's 25% tariff on imported steel from canada and the eu. >> it puts handcuffs on us, because we are unable to buy raw materials at a competitive price. >> he says he might have to raise his prices 15%, and sourcing american-made steel is not a solution. >> many mills are booked after october. they are not sure they will able to get the products if booked in advance. >> some worry that this have the opposite effect. >> we have actually clawed back a lot of the exports that were coming into the u.s. from china. this will give them an

opportunity to take them back from us. >> china will chase down the canadian lobsters and the u.s., will just be hurt by all of this. i think this could affect people going out of business. haidi: coming up on "bloomberg best," the weeks top stories, including europe's biggest steel merger in more than a decade, with reaction from ceos on both sides of the deal. and kumal highlights from the week's most interesting interviews. at airline ceo says investors and passengers can expect changes. >> we are not shy, we're taking the rules off. haidi: this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.

haidi: you are watching bloomberg best, i'm haidi lun. businesses around the world are feeling the impact of tariff battles. from manufacturing to agriculture, costs are increasing and uncertainty is raising the threat of layoffs. bloomberg's boston bureau chief tom maroney talked at the atlantic ocean to see how trade wars are unsettling new england's lobster industry. tom: as talk of global trade wars heats up, new england's most valued sea product is already in hot water. billy: the trade war is going to have some really negative effects on lobster men in massachusetts. tom: lobster is one of nearly 700 american exports that china is targeting for new tariffs of 25%. scheduled to take effect july 6, the levees are beijing's response to president trump's 25% tariffs on $34 billion of imports from china. massachusetts lobster man billy mahoney says he is already being paid $.50 less a pound on the news. billy: when the dealers get hit, they're going to pass the negativity to the lobstermen. all hell is going to break loose as far as price. tom: new england landed nearly $700 million worth of lobster last year, 94% of the nation's total. exports from maine to china increased more than 30% year-over-year.

billy: we are hopeful the domestic market can pick up the slack, but i am not very hopeful. i think we have become dependent on the chinese market. tom: lobster traps are also caught in the tariff crossfire. steel manufacturer riverdale mills in northbridge, massachusetts supplies 85% of the north american market for wire mesh lobster traps. jim: this is steel wire rod. some of it comes from canada, some of it comes from the u.s., and since the first of the year, the price of product has nearly doubled. tom: ceo jim knott blames president trump's 25% tariff on imported steel from canada and the eu, and hoarding. jim: it puts handcuffs on us because we're unable to buy raw materials at a competitive price. tom: knott says he may have to raise his prices 15%, and sourcing american-made steel is not a solution. jim: many mills are booked up through october. they are not quite sure when they are going to be able to get the product, so they are booking it in advance. tom: president trump wants to

level the playing field for american markets in the global economy, but some worry that it will have the opposite effect. jim: we have actually clawed back a lot of the exports coming into the u.s. from china. this will give them an opportunity to take them back from us. billy china is going to go chase down the canadian lobsters and the u.s. is just going to be hurt seriously over this. i think this could affect people going out of business. haidi: coming up on bloomberg best, the week's top company news, including europe's biggest steel merger in over a decade,

with reaction from ceo's on both sides of the deal. and staight ahead, highlights from the week's most interesting interviews. the new ceo of etihad airways says investors and passengers can expect changes. tony: routes that weren't profitable for us, we are not shy now in taking them off. haidi: this is bloomberg. ♪

♪ haidi: u.s. financial markets were closed wednesday for the july 4th holiday, an opportunity for many to take the day off and enjoy a barbecue. recently, bloomberg's joe weisenthal visited minneapolis federal reserve president neel kashkari, the only fed official who regularly uses social media both to communicate on monetary policy and to boast about his skill at the grill. he invited joe to his home for some home-cooked steak and a conversation about issues like the natural rate of inflation. neel: in a recession, economists tend to raise the natural rate of unemployment.

they think that people get dislocated, skills are mismatched, and it ratchets up. and then only begrudgingly do they lower it. so one conclusion i have already made is i don't think it is useful in a recession to ratchet up the natural rate of unemployment, because we are so reluctant to then lower it and we end up being late lowering it

in the recovery. we would be better off just holding it fixed than ratcheting it up. and now maybe it's a lot lower than we think. we know workers have more education today than they did 20 years ago. we know that firm dynamics have changed. is it 4.3, is it 4.5, or is it 3.5? we don't really know. joe: that's interesting. so there is an asymmetry in people in the estimate of what is full employment, and it is easier to bump it up and then

people are really slow to bring it down. neel: that is just an observation i have made. you know, in the very deep, great recession, the unemployment rate hit 10%, most economists' estimate of the natural rate of unemployment ratcheted up very quickly. and then there was a narrative -- and i was echoing it, too, saying all these people who left the job market were permanantly lost. they would never come back. that has proven to be dead wrong. we would have been better off not having made that assumption than only slowly learning that it happened to be true. joe: as the unemployment rate has come down, maybe people will

ratchet down their estimate of where the natural rate of unemployment is. is there something that the fed can do next time around so that it's not keeping that number too high, and therefore implicitly running monetary policy that is potentially too tight? neel: well, i think one simple thing is do not ratchet it up. if we figure out where it is, maybe it is 4.5, maybe it is 4, maybe it is 3.5. if we, in this cycle, say ok, it really 3.5 or 3.7, i say the next time there is a recession, let's just hold it there and operate monetary policy using that assumption rather than the reflexive ratcheting it back up. joe: i know that canada every five years has some kind of big review where they look at just their approach to making policy and whether it makes any sense and revisits all of their assumptions. would you support something like that at the fed? ♪

haidi: you are watching "bloomberg best." i'm haidi lun. let's resume the roundup of the week's top business stories, the focus on company news. it looks like tesla finally had production results to celebrate this week, but that excitement wore off pretty quickly. scarlet: tesla succeeded in hitting its target of producing 5000 model 3's a week, but what should be a cause for celebration is instead creating concern as shares closed lower on the day, off by 2.3%. dana: the news was sort of digested yesterday when we got an internal email from elon, congratulating everyone at tesla

for making it. so the fact that they had sort of hit this 5000 plus number was not new today. what was new today was just their overall delivery figures, which were a big miss. i think investors are now realizing that they made this mark late in the quarter and it will still be an uphill battle to make it sustainably week after week after week. yvonne: tesla is said to be pausing model 3 production, just days after meeting its target of 5000 cars per week. the news comes as some analysts question whether the company can sustain those high output levels. yesterday, it was like elon musk was declaring victory, we are a real car company now, and now they seem to be backtracking a bit. ville: it does signal that elon musk has some confidence in the company's manufacturing operations right now. it is a delicate time for the company, definitely hit that 5000 unit weekly target, but the

expectation is that the pause in production won't affect their production targets going forward. it is not unusual for carmakers to take a break during the july 4th holiday or thereabouts to check their facilities, do some maintenance, give the employees some time off. francine: germany's thyssenkrupp and india's tata steel have reached a final agreement to set up what they call a "european steel champion." the companies say they see synergies of 400 million to 500 million euros, and that the joint venture is for the long term. it is expected to come into effect in 2019.

are you satisfied, more or less, with the outcome of renegotiations over the deal terms? heinrich: i'm satisfied. we've brought a two-year negotiation to a successful end, and what is most important is that we could address the four major issues for us. that we really address the structure problem to the steel industry in europe, that we create substantial value for shareholders with the synergies you mentioned before, 400 million to 500 million a year. and for the majority of our employees, we could secure a more promising future. but the fact that we remain shareholders, it is also a good cultural fit for our transformation. david: how does this joint venture that into a world where there is too much steel being produced? natarajan: i think that is why consolidation becomes very important, so we can be much more competitive.

we will not be able to achieve the kind of cooperation we can achieve together and that is why the consolidation in this situation makes a lot more sense. >> thyssenkrupp's ceo has resigned, bowing to shareholder pressure, heinrich hiesinger stepping down days after the company signed a deal for a european steel joint venture that was strongly opposed by some investors. earlier this year, elliott management wanted to oust hiesinger, who has been criticized for the company's declining revenue, rising costs, and falling stock price.

david: boeing and brazilian planemaker embraer have reached a preliminary agreement for a $4.75 billion joint venture. we knew about this back in december. but remind us exactly what this deal is. >> it has taken many evolutions as they have negotiated this, and that is partially because embraer is kind of viewed as this brazilian champion. the government did have a say in how this deal turned out. what they have come up with is a joint venture with a commercial aviation part of embraer. that company will continue to have a defense operation and executive aviation, small, private business planes. but the commercial part is what boeing wanted and what they are getting out of it. the transaction values this part

of the company at $4.75 billion, which is a significant premium when you consider that it is all valued at less than that right now. >> trouble for airbus. the company is set to miss delivery targets with their jets this year. why is airbus going to miss it? >> my colleagues were reporting over the weekend and into today that airbus is having continued

issues with its a320 and the two types of engines that go on the plane, and it is continuing to cause headaches. and what we have been reporting and hearing is that it will essentially lead to 30-40 planes fewer of that type being delivered this year. >> glencore has fallen the most in two years in london after company said it was subpoenaed by the u.s. department of justice to produce documents relating to corruption and money laundering. the world's biggest commodity

traders said the documents related to the company's business in nigeria. it also included the democratic republic of congo and venezuela between 2012 and the present. it is quite a big move we are seeing in the shares. is it potentially overdone, given the news? >> on the face of the announcement, potentially, yes. i think what investors are reacting to is the potential for this to broaden out. in this announcement, we have an

indication that the doj is also looking at payments made by the oil business in venezuela and in nigeria. one of the key differentiating factors is that the appetite for risk for operating in difficult jurisdictions, and the question now is just exactly how those operations have been run in recent years, and very difficult regimes. >> glencore is to buy back as much as $1 billion of its own shares that might shake investor

confidence, after a u.s. government probe earlier this week. the timing is interesting. would it have happened anyway at some point? >> it might do. glencore is having a very good year, we should remember the underlying business is strong, and the whole mining industry is throwing up lots of cash. so, yes, they are well within their balance sheet metrics. it makes a lot of sense, but as

>> there is some concern, if you can take a look at my bloomberg. this is the fa function and you can see that macau, the yellow bar, is falling short of revenue. haidi: 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. here's another function you will find useful, quic. it will take you to our quick takes, where you can get important context and fast insight into timely topics. here's a quick take from this

week. >> when you think about people who shape the world cup, pele or rinaldo spring to mind, but how about the american executive who admitted to taking bribes, partly as a result of his testimony in the wiretaps he wore? international investigations have led to the arrest and convictions of dozens of corrupt soccer officials, including blazer himself. >> once they got blazer, sat him down, they realized that, this is a monster. we have something big here. >> that is an author at investigative journalist who wrote this book on the scandal. in may 2015, swiss keys raided a five star hotel in zurich and arrested top executives from fifa. >> that moment has now become an indelible, watershed moment in the history of modern soccer. >> the world cup and soccer in general have become such big business that executives were offered huge bribes to ensure certain companies won media contracts, all pushing for a particular country to host the

world cup. >> it went from an organization with annual revenue in the seven digit figures to what it is today, which is every four years we see revenues in the $5 billion, $6 billion range. >> blazer had done particularly well from his dirty dealings. he reportedly bought himself a $900,000 beachside condo in the bahamas, two south beach apartments, hundreds of first-class flights to and from europe, and a suite in trump tower for himself, and apparently another one just for his pet. but like al capone, his undoing was tax evasion. he struck a deal with the fbi and provided live information for a year-and-a-half, while still on the all-powerful executive committee. they were the two dozen or so

men who decided, in secret, who gets to hold the world cup, a decision worth billions of dollars in media rights and infrastructure projects hanging on it. >> very quickly, a culture of behind the doors dealing, bribery, and sketchy behavior developed in this committee. >> blazer alleged the vote to give south africa the world cup was rigged. he also took part in the most contentious decision of all, a decision in 2010 that had the world cup go to russia and qatar, a tiny but rich gulf state with little soccer pedigree. swiss, u.s., and french prosecutors are still investigating allegations of bribery surrounding it. of the x members from 2010, most are now either banned from soccer or facing investigation. in the u.s., $300 million from around two dozen guilty parties has been collected so far. six of them, former x co-members, including blazer.

haidi: well, 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. i'm haidi lun. this is bloomberg. ♪

♪ >> welcome to bloomberg businessweek. i am carol massar. carol: i'm jason kelly. carol: -- let's not forget that this issue is all about heists. jason: jason: we jason: go digital and look at something happening al a