♪ >> coming up on "bloomberg best," the stories that shaped the week in business around the world. words from the white house move markets as the president weighs in on fx and the fed. >> he is building a case and you see it one tweet at a time. >> it is all to set up a few big wins coming into the midterm elections. >> drama from the courtroom set shock waves through washington. >> robert mueller has accomplished a lot. >> this makes the midterms a referendum on impeachment. >> look who is talking very now.iations take turns for >> >> i think all indications

are we are locked on for the next stage of this trade war. >> earning season continues with another round of results. >> our expectation is the trade war will not have a direct impact on steel production in china. >> $3 billion in the last three years returned to shareholders. >> central-bank leaders speak their mind at jackson hole. >> based on what i see today, i think two more rate hikes this year could be appropriate. >> the signal now is different than it has been in the past. >> we don't need to be accommodative. we should be moving to a neutral stance. >> it is all straight ahead on "bloomberg best." hello, and welcome. i'm yvonne man. this is "bloomberg best." your weekly review of the most important analysis of bloomberg television around the world. with world bankers meeting at the jackson hole symposium, monetary policy was already on

the agenda for investors this week. on monday, remarks from donald trump put a new spin on the discussions. >> president trump, ramping up criticism of the federal reserve. the president said he was not thrilled with jay powell's raising rates. bloomberg reported trump was complaining to wealthy donors at a fundraiser that powell has not been the chief he thought he would be. >> we heard complaints on twitter and through his economic advisor and others that he does not like the rate hike path jerome powell has put the u.s. on. these remarks behind closed doors to fundraisers become more personal. >> he is building a case, and you will see it one tweet, one appearance at a time. as he gets matter and madder.

once trump gets on an issue, he won't let it go. i can almost guarantee we will hear more about trump criticizing jay powell. matt: donald trump has accused china and the european union of manipulating their currencies as he tries to wrestle concessions from two of america's largest trading partners. >> the german or european government are not manipulating the currency. we have a huge trade surplus with the u.s., but on the other side, we have a deficit taking over in earnings from americans abroad into u.s. this trade deficit is compensated. >> president trump's accusation that china and europe are many -- are manipulating their currencies may not have been a surprise. he has said similar things before, but it did move the

chinese yuan and euro higher against the dollar. did donald trump accomplish what he wanted? >> maybe for a day or so. fundamentals will revert and you will see dollar strength coming back through. >> this is all to bring people to the table to get things done ahead of midterm elections. everything he is doing, whether powell, trade, tariffs, it is to set up a few big wins coming into the midterm elections. >> moments from now, the federal reserve is due to publish minutes from its july policy meeting, where officials raised the benchmark rate to the second time this year. >> many fed officials said at the last meeting it would likely soon be appropriate to raise interest rates again. that probably means the next meeting in september. a lot of confidence in the inflation outlook overall. a lot of the confidence they would stay near the 2% target and more confidence that wage growth may be soon picking up. some references to lag from low unemployment that have yet

to filter through to the data. that supports the outlook for them. trade was mentioned as a downside risk by all participants at the fomc meeting. however, the tone sounded less concerned than the meeting in june. >> all systems go for a quarter-point in september, likely a quarter-point in december and possibly one more in january before they pause and take a breath and say, where are we going vis-a-vis neutral? the answer is, they are probably getting close by that time. >> it was a historic day as there were two former aides of president trump, paul manafort and michael cohen, were both convicted of felonies within minutes of one another. mr. manafort was found guilty by a jury on eight of the 18 counts against him, including bank fraud and tax evasion. mr. cohen in new york pled guilty to tax evasion and campaign finance violations.

>> if michael cohen can tell robert mueller, and in some ways, back that up, that donald trump knew about the hacking of democrats, that russians had any kind of role in that, he or his people have said so far, then that probably would rise to an impeachable offense. but we are not there yet. >> right now, we have strong evidence. it is conclusive but it is strong. evidence that donald trump knew that michael cohen was going to be advancing money on his behalf to hush up the relationships with these two women and it had a political purpose to it, according to michael cohen's guilty plea. >> the first response from the president in west virginia had to do with his "still no russian collusion." that is the last stronghold because mueller has accomplished a lot in 15 months.

it is quite extraordinary that they have a jury conviction within 15 months of the investigation starting. >> the question is, what is the implication for donald trump's presidency? to me, steve bannon had the best point. this does make the midterm elections a referendum on impeachment because it is -- if democrats take the house, you can be sure there will be efforts to impeach the president. >> president trump has contradicted his former fixer and denied using campaign funds as hush money. he claims he learn later on. -- he only learned of the payments later on. >> the president continues to tweet. he said anyone who needs a good lawyer, don't see mr. cohen. the drama continues to play out, but now it will play out more legally as well. >> the u.s. and china have revived trade talks before a fresh round of tariffs is due to come into effect. >> we know the vice commerce minister of china will be

meeting with his washington counterpart from the treasury department and his team. some key areas of friction will be discussed including intellectual property transfer and the balance of trade that is a sticking point. we have heard of the u.s. side will be presenting their chinese counterparts with a new list of demands. this is all coming as we expect the additional tariffs to be implemented in the next few hours and consultations in washington over the additional $200 billion worth of tariffs. >> we closely watched trade talks between the united states and china have wrapped up with no major progress. can we extrapolate and talk about $200 billion worth of additional tariffs being the next step? >> all indications are we are locked on for the next stage of this trade war. by all accounts, there was no meaningful breakthrough in washington.

there was not expected to be. the mood music didn't point toward anything. our colleagues suggested there was -- said there was a suggestion on the china side that talks will be held off until after the midterm elections. focus is shifting to the next round. $200 billion worth of goods the u.s. talked about. how severe will those duties be? 10%, 25%? what will be the final list? it seems we are continuing down this path of continuing trade war. >> jay powell has given his first jackson hole address, indicating he will stay the course on rate hikes. "there is good reason to expect this strong economic performance will continue. i believe this process of normalization remains appropriate." did anything surprise you in what the chairman had to say today? >> he talked more about the economy than people thought he might, but nothing new. they are calling this the goldilocks speech. he presented it as a set of questions.

one is, if the economy is strengthening, as the chairman said it is, then why isn't the fed tightening more aggressively to avoid the economy overheating? the other question is, if unemployment continues to fall and inflation doesn't continue to rise, why is the fed tightening as aggressively as it is because they don't need to? he said it is a matter of risk management. you want to steer down the middle and avoid the economy overheating, but avoid putting the brakes on, as well and therefore, he says the fed's gradual path of rate increases is pretty much what should be done. yvonne: still ahead as we review the week on "bloomberg best," jeff stallman explains how tax reform and tariffs are connected. plus, we are at jackson hole, speaking with four fed presidents about monetary policy and the economy. >> there is no reason to challenge the yield curve at this time. yvonne: next, more of the week's top business headlines. world leaders facing political

pressure. australia's malcolm turnbull feels the heat in a leadership challenge. >> it has been an extraordinary period of political turmoil. yvonne: this is bloomberg. ♪

♪ yvonne: this is "bloomberg best." i am yvonne man. let's continue our global tour of the week's top stories. in greece, the government finally made an exit from its bailout program. >> greece's bailout program ends today, wrapping up a decade of crises that have transformed the economy and its people. >> how can you be sure greece won't be back in crisis? is genuine debt relief the only way to ensure that? >> debt relief is something that

can be seductive, but has to be reimbursed. this is just the taxpayers of other countries money. if you can convince the german people that they have to renounce something like 80 billion euros of that on greece, then you are much stronger than i am. there are now some short-term and medium-term measures that will alleviate a lot of that burden on greece, and i think we can say that it is on the right track. >> italy is pushing ahead with revoking the highway concessions in the wake of the deadly bridge collapse. the disaster that left at least 43 people dead has led to a

fight to salvage its lucrative tollroad investment and protect its fortune amid rising public anger. can the government revoked -- revoke concessions or is this a lot of talking? >> if we look at the contract, it is a long process to revoke a concession. the concession lasts until 2038 for atlantia. it looks like the populist government that is considering other ways. they are not trying to revoke the concessions. they may do a new low and a new low would overrule the concession. essentially, they are going to let the concession expire. it is still unclear if this is something that can be done on a constitutional basis in this country. >> venezuelan president nicolas maduro carried out one of the greatest currency devaluations in history over the weekend.

inflation is forecast to reach 1,000,000% this year. how bad is it? these measures are just drops in the bucket, right? >> essentially what he has done is recognize that the black market exchange rate was really setting the prices in the country, so they had this overvalued fisher rate and he has let that go and every thing will be in line with where the black market was. clearly, even as they explained, minimum wages will rise from one dollar a month to about $30. as more money is printed and the measures play out, that minimum wage will likely be eaten into by the hyperinflation. >> on the u.s. campaign trail, donald trump promised america he would revive the dying coal industry. 19 months into the term, we have more details on the plan. the epa released its affordable

clean energy. it will replace the obama era clean power plan. what is the plan? >> the administration is proposing to replace the sweeping efforts to regulate greenhouse gas in missions -- emissions from power plants that president barack obama put into place. the obama plan was expansive, it aimed to encourage renewable power and discourage the use of coal for generating electricity. the trump administration proposal being advanced today would basically set out modest equipment and efficiency upgrades that could be done at individual power plants and then give states broad latitude to decide what they want to require. it gives states more flexibility and it is a broad rewrite of the obama era initiative. >> election interference hasn't ended. microsoft said it detected and seized web domains created by cyberattackers linked to the

russian military in a potential attempt to disrupt the u.s. midterm elections. >> what we are seeing now is a pattern that in many respects is similar to what we saw in the united states in 2016 when certain campaigns and political parties were attacked. it is similar to the pattern we saw in france in 2017, when we really saw every major candidate for the french presidency targeted. we are seeing it again. >> this is a sign that 2018 will be different likely than 2016, in that companies like microsoft and facebook and others are well attuned to the fact that if they don't pay enough attention to this and squash some of these hacking attacks or block them, they are our real consequences to that. there was a lot more attention on this issue. >> the u.s. is expected to impose new sanctions on russia today over the poisoning of a former agent in the united kingdom. the measures were announced this month. limits on exports of u.s. goods on national security ground.

with the pressure on moscow, how are investors in russia taking this? >> it has been a nervous couple of weeks for russian investors, but the ruble took a beating at the first wave of these sanctions. now it is about at two-year lows. bond yields have spiked. for the russians, they have been planning this for a while. they have been under sanctions heavily since 2014, so they have been battening down the financial hatches for a while. reducing the budget deficit and new data out showing they are purchasing gold to build up their currency reserves. their gold holdings have been steadily increasing. >> the u.k. and the eu have said brexit talks will now be continuous. the chief negotiator for brussels said the bloc had to be prepared for a new deal scenario and britain had to respect the single market.

what is your take on u.k. assets? is it a good time to go into them a little more or stay away until you find out what brexit means? >> it is quite a difficult time to take a strong deal on the u.k. asset because of brexit. it could be quite binary. i think the main way that would play out is through the currency. we have seen currency is most sensitive to the political machinations. in the equity markets, it is real estate, financials that are the most exposed along with the domestic part, the ftse 100. >> saudi aramco is putting its ipo on hold to buy a strategic stake in the chemical giant. that is according to bloomberg sources who say aramco wrote to advisors and asked them to suspend work for now. it doesn't mean the planned listing has been canceled. >> they are being shrewd in that, in some respect. they had clearly worked on the ipo for a couple of years. there was a disconnect between what they thought it was worth and a lot of people in the market thought it was worth.

that was dependent on oil price and every thing else, but nonetheless, they wanted us -- they wanted this money for the sovereign wealth fund and diversifying away from oil. by doing the deal, $70 billion from one state-owned company to another, but it allows aramco to go into the capital markets, raises money through bonds. in the end, it will still end up with its cash. >> president trump has gotten involved in a sensitive subject in south africa. he tweeted he is directing the secretary of state to investigate the south african government's plan to seize land from farmers without compensation. rand weekend -- rand weakened. this tweet emanated after president trump saw a documentary on fox news. >> we have since heard the international foreign affairs minister released a statement saying he will be engaging with the u.s. secretary of state directly and also saying he has asked for the department to engage with the acting

u.s. ambassador on this particular subject to reach clarity. also that president trump's comments were unfortunate and probably misinformed. >> we are looking at pictures of the new australian government being sworn in and of course, this comes as australian treasurer scott morrison will become the country's sixth prime minister in 11 years. morrison did win 45-40 over a right-wing populist in a closed-door meeting of liberal lawmakers. that follows the ousting malcolm turnbull. what will change on the economic front from here? >> it is unlikely anything substantial will change under prime minister scott morrison. he was, since 2015, the finance chief. since 2007, we have had six changes of prime minister and

since that date, no prime minister has served a full term. the election cycle here is only three years compared with five years in the u.k. it really has been an extraordinary period of political turmoil. ♪

♪ yvonne: you are watching "bloomberg best." i am yvonne man. monetary policy hogged the spotlight this week. investors were keeping an eye on trade developments. jeff solomon joined bloomberg markets for an interview and shared his view that trade policy and monetary policy are closely linked. >> this administration believes we need to put america first from a trade standpoint. the easiest way to bring partners to the table is threaten them. that is what this administration does. tariffs is the best way to do

that. you can see it this week. the chinese are negotiating, even though we have -- people are here, and they are negotiating. how do you create -- tariffs in and of themselves can be an economic drag, so how do you create space in the u.s. economy to impose tariffs? you pass a tax cut, and the tax cut essentially creates the space for you to reimpose taxes in a different form to achieve an objective. i don't think there were a lot of people talking about the tax cuts as a prelude or precursor to tariffs, but when you look at it, it makes total sense to me. we have created space -- the administration has created space to move forward with tariffs without worrying about huge drag on the economy. >> we saw earnings leap because of the tax cut, stock prices leap because of the tax cut. does that mean it comes back down once the tariffs are put in motion or we go through the process of a gearing how different countries negotiate?

>> we don't know enough about tariffs yet. this is an experiment and they have never been done before, so we don't know. the reality is, few of the tariffs have been implemented for a long enough time for us to see them. the ones that are implemented are relatively small and the net impact on the global economy or even the u.s. economy is minimal. if we going with the additional $200 billion -- will there be a knock on effect? consumers change buying patterns, prices change dramatically, that is when markets would get concerned. today, they don't seem terribly concerned about it and the economy seems to be humming along at a reasonable clip. yvonne: coming up on "bloomberg best," perspectives on the fed direct from fed presidents. conversations from jackson hole straight ahead. >> my view is inflation will keep moving up because cyclical factors are very strong. yvonne: this is bloomberg. ♪

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>> pepsico agreed to buy soda stream for $3.2 billion. the beverage giant would gain the technology for making soda at home. this amid rising concern about plastic waste. six months ago pepsico could have bought this business for less money. what are they buying and why are they prepared to pay such a high price? >> soda stream has gone from strength to strength with every quarterly report. having laid out a strategy i think had its finger on the pulse, they made two changes. one was to get out of the soda business. it is ironic they are being purchased by pepsi. the other was to focus on the fact you can reuse sodastream bottles many times. the ceo correctly grasped health and environmentalism were going

to be trends with consumers, and i think that is what pepsico is buying here. >> alibaba shares higher, premarket trading, reporting earnings miss, but revenue surging by 61%. how do you interpret the earnings miss versus the increase in revenue? >> this is generally a good earnings report, in line with revenue, but 61% growth from last year. that is what people will be counting on. the eps miss is due to do a big valuation gain for one of their subsidiaries, ant financial. stripping that out their , earnings were pretty much in line with investors expectations and what people were counting on alibaba for. alibaba is still spending, and that will take a hit for profits.

>> xiaomi has delivered a 60% revenue jump in its latest revenue results while fending off a challenge from rivals. i guess the ipo is overshadowed. do the results make up for that? >> i think these results make up for that. what you need to do is go through the line. net income was awesome, but a one-time gain because they revalue the class b shares. gross margin shrank two percentage points. look really nice topline numbers that make the company look good. profitability is not as strong as it should be. >> the increase in protectionism.

hurting economic growth and raising the price of goods, expecting consumers to push back as they become aware of the true economic cost. however, the ceo does not see a slowdown for bhp in china. >> the concerns we have looking forward is if protectionism does take hold, it will have a dampening effect on the global economy. we do expect china will mitigate some of the impact it faces. we don't just sell to china. we are able to do more to stimulate domestic demand. it will work harder to encourage exporters. from talking to trade ministers around the world, a lot of countries want to trade more with each other. we worry about protectionism generally because it is bad for global growth and the economy. >> fortescue metals with a slide

million when$878 it reported monday. how much if at all does that way -- weigh into what your industry is contending with at the moment? >> china produces 50% of global steel. 1% is directly exported to the united states. there is some still exported that may end up in the u.s. come up but most of the steel produced in china is consumed domestically. china is focused on the belt and road initiative. that provides additional stimulus. the trade war will not have a direct impact on steel production in china. history has demonstrated that protracted protectionism is not good for global growth. >> the world's largest wealth fund producing 8% in the second quarter and faces growing challenges. norway's $1 trillion fund posted

and boosted by stock investments and decreased exposure to emerging markets and china. despite the aim to divest oil and gas stocks it was those sectors that fueled positive returns. >> the broad gains in the u.s. stock markets helped the fund in the second quarter, as well as european shares. it suffered declines in emerging markets and china so that is interesting because it has been expanding in emerging markets and china. stocks gained despite increased fears of rising protectionism. it is a real threat to the fund. it has a global philosophy to invest across the world. >> retail earnings today, shares of tjx gaining. >> the results were good, but shares are trading down because they are almost double from where they were last year.

investors have probably built in higher expectations. tjx, 7% was just fantastic. that is on top of a two-year stack of low to mid single digits. no one had expected that. the strength there is the region -- the reason for this movement we are seeing in the shares today. >> target and lowe's reporting better than estimated earnings. target, really impressive numbers on the same store sales front, 6.5% gain. the best growth for the company in 13 years. is it a one-off? >> i don't think so. we have seen them building towards this for some time now. they have then remodeling stores, better lighting, displays, and they are getting 2% to 4% lift in sales where they have done that. their e-commerce operation is

improving as well. >> this year's best performing airline is qantas, but shares of -- shares are down by the most in a year despite posting record annual profits. the carrier is planning to return as much as 500 million aussie dollars to shareholders. >> when you look at the cash flow position of the company, generating $3.4 billion of operating cash flows, spend $2 billion on new product and aircraft, there is a strong net free cash flow, and that is why you have confidence in our distribution back to shareholders. this gets us to $3 billion in the last three years returned to shareholders. after this buyback, we will have bought back 26% percent of our stock. that shows you how effective the buybacks have been for shareholders.

♪

♪ >> i don't think the data are disappointing. although there are some slight fluctuations, the fundamentals are sound. based on our judgment, the economy is operating steadily with some improvement, and that condition has not changed. >> the data does suggest a gradual slowdown. when does that slow down bottom out? >> the goal we set is for china's gdp to grow by around 6.5%. but in the first half of this year, we have realized a growth of 6.8%, which is a lot higher than our original target. i think it is fair to say that

growth of 6.5% is a very rapid speed in the world. among major economic powers, only india can beat that. we will continue to aim to achieve these growth targets, but in my personal opinion, this year's full-year growth may even surpass the government target. >> that was tom mackenzie's exclusive interview with the head of china's national bureau of statistics, who says he expects the country to exceed its growth target this year despite the threat of a trade war. time to revisit the wide open spaces of jackson hole where financial leaders gathered at the annual economic symposium. bloomberg spoke with top officials from the u.s. central bank, starting with the kansas city fed president. >> i agree the economy is doing well, and based on what i see today, i think two more rate

hikes could be appropriate, but i am mindful that at each meeting you have to recess and understand what are you seeing in the data, what are you hearing from your constituents, and make the decision at that time so hopefully everything holds together. >> would you say the committee is coalesced around that view? >> if you look at the dot plot, which the committee puts out, the minutes, the statement, it would suggest there is a degree of consensus around the state of the economy, but within that committee, you will get differences on how many rate hikes are appropriate. >> you were worried about the pace of growth and inflation picking up and that fed policy might have to move faster. is that what you are expressing now, or do you think this will have to pick up more in 2019? >> today, i don't think the performance of the economy and the way inflation has performed

has argued for going faster or fundamentally changing the course, but an upside risk is we have procyclical fiscal policy at the time we have accommodative monetary policy, so we have to watch that risk. >> have you penciled in a number of rate hikes for 2019 yet? >> i am obligated to pencil in rate hikes, but whether those come about, it is hard, as you know. the next quarter -- looking at 2019 will be a function of whether this economy continues to perform. >> do you have an estimate you would like to share with us? >> somewhere in the neighborhood of a 3% neutral rate, which is how i think about the long run neutral rate, would suggest we need to make several more moves next year. >> you don't get the impression there is any kind of change afoot for the open market committee and the right path they are on? >> markets are putting high probability on september.

you can poll the other members as i can. there seems to be sentiment in that direction. >> would you expect forward guidance to drop out of the statement that rates are accommodative and will stay that way? >> that is an interesting issue. we will have to wrestle with that one. i would rather not be calling rates accommodative. i think the whole structure of rates is lower and we are very close to neutral right now. >> you and other members have said we would not intentionally invert the yield curve, what are -- are you smart enough and you do you have enough insight into the markets to know whether you would do that? >> here is what i think. i was around in 2000. we played it wrong. 2006, the yield curve was inverted and we played it wrong. this time i want to take the

signal seriously even though when you look at the models, it does not fit into the models the way you would like, but have to -- you have to take it seriously as a signal. there is no reason to challenge the yield curve at this time. there is no reason. in other circumstances -- if inflation was higher and heading higher, then i might say we are taking some recession risk, but i'm willing to trade that off. it looks like inflation is getting out of control -- we are not in that situation today. inflation is low and stable and barely getting to target today. we don't need to challenge and be preemptive on the yield curve. >> you are 100 basis points below where the median terminal rate would be based on your latest forecast. if you're going to keep raising rates and the yield curve is flat, does that suggest markets are not getting the message or they disagree with your assessment of the economy?

>> the slope of the yield curve is something we look at. there may be reasons to believe it is not signaling as the same in the past. an inverted curve is usually correlated with an economy going into a recession, but there are reasons the long end is depressed for other reasons. in particular, demand for safe assets, quality into the u.s. treasury market, and also, qe around the world. a lot of central banks have used the long end. in the u.s. we bought long-term , assets, and that put downward pressure on the long end, so this signal from the yield curve now is different than it has been in the past. >> you mention qe. at the last meeting, you had a presentation on monetary policy tools. the conclusion was we will get to the zero lower bound in the next decade. they aren't sure how much qe or

forward guidance will help get off zero. does that worry you? >> i think qe was successful in terms of putting lower accommodation into the economy. it is one of the tools we have. forward guidance is another tool. this discussion was important to have so we are prepared. longer-term interest rates are going to be lower in the future for demographic reasons and because of demand for safe assets, so it is good for the fed to have these discussions to be prepared, but we do have tools at the lower bound. >> do you have enough confidence in them? you need to find another arrow for the quiver? >> we are always looking at our monetary policy framework. that is something we will have a discussion about in the future. that is part of prudent planning for the future. >> the fed had three main

concerns, not concerns in the sense of imminent problems for the economy, but things you are watching. emerging markets is a big one. what is your feeling about the fed's responsibility for what happens in emerging markets, given the dollar's role as the reserve currency and the outsized effect you have on other people? >> congress has given us our mandate, centered on the domestic economy, but we are in a global economy, so the feedback affects of other markets and countries on the u.s. economy is something we must take into account when we are doing u.s. monetary policy. again, at this point, i anticipate there will be big feedbacks, but we have seen financial markets can propagate shocks from one economy to another, so something we will be monitoring. >> one of the arguments around the table is that inflation is

roughly at your target, but not moving up fast. you have been advocating continuing with the path you are on, but why do you need to do that if inflation is not breaking out? >> our measure at the dallas fed is the trend mean, a core inflation measure without extreme moves to the upside and downside, and we see that 2% by the end of this year, and even strengthening. here is what is going on. there are two conflicting factors. cyclical factors. we have a tight labor market, higher input costs, tariffs, transitory factors but there is no question cyclical factors are pushing prices upward and having inflation. there are structural factors, globalization, automation, people replaced by technology and so my own view is inflation will keep moving up. cyclical factors are strong.

i don't think it will run away from us, but the balance we are trying to tread is you want to move gradually. you don't want to move so slowly that inflation and the cyclical forces get ahead of themselves and we have to play catch-up, in which case we would have to raise rates more quickly, and that typically leads to more bad outcomes. in particular, recession. what we are trying to do is raise gradually, and that is the reason i have been advocating let's keep moving. the other reason is we are meeting our dual mandate objectives, our full employment objective, inflation around 2%. in that context, we don't need to be accommodative. we should be moving to a neutral stance. neutral would mean three to four increases, and that is the primary reason why i have been advocating we should keep

gradually raising the fed funds rate. ♪

♪ >> we can go to the factors moving the market. value stocks continued to be absolutely hammered in europe. three month target price change doing well. eps revisions doing well. you are rewarded if you are delivering but the value stocks are being crucified at the moment. >> there are 30,000 functions on the bloomberg, and we enjoy showing you our favorites. maybe they will become your favorites. here is a function you will find useful, quic , where you can get context and insight into timely topics. >> hurricanes, typhoons,

tropical cyclones, what ever you call them in your part of the world, they are getting more intense, and the water they bring is likely to cause bigger losses of property and life in the future. >> a good example of what the future may hold was hurricane harvey that set brand new rainfall records for the u.s. >> some areas get 50 inches of rain. >> in a warmer atmosphere, the the atmosphere carries more moisture, so the chances are the storms will get 10% to 50% rainier. >> the storms do the bulk of their damage through the storm surge. the walls of water they bulldoze onto coastal land. that is not scared people away from shores. just the opposite. >> more people are living your the coast than ever before. -- are living on the coast than ever before. florida, an area prone to get hit, that would be the gulf coast. >> the gulf coast has seen its

population surge 25% in 16 years. it is costly not just for the homeowner, but government and taxpayer. >> you own a piece of land on the beach and have a beautiful view. i own it and want to do whatever i want. the government will have to send in the fire department, police department, helicopter, whatever to rescue you when things go wrong, so they want a say in things. you have insurance issues. in the u.s., flood insurance is a government-subsidized program. people who don't live new the -- near the shore are the fact of subsidizing as people who do live new the shore. >> policies cost half of the true market rate, but relocating families is also expensive and will cost the u.s. government $48 million to relocate two dozen families in louisiana. that is why some are harnessing technology to defend against storm surge.

tokyo built a massive, underground diversion facility. new york is building a system of walls and levies to prevent damage from future storms. there is no time to waste as climate change is supercharging storms on earth. ♪ >> china has faced a series of health scandals over the past decades. among the list of tainted goods were toothpaste, fish, toys, blood thinners, cooking oil, pork, and most recently vaccines. where the authorities used to downplay scandals and sweep them under the rug, this vaccine scare shows how much things have changed and the reason why. the chinese have turned to social media. the government has responded. parents are expressing anger on social media after drug regulators found a health care company produced 250,000 low quality vaccines.

the shots, compulsory in china were supposed to protect kids , from diphtheria, whooping cough, and tetanus. fair to say it happens in other countries but in china due to the large population, every problem gets amplified. for rabies vaccines were also found to have been fabricated. parents picketed offices and flew to hong kong for foreign-made shots. the government had no choice but to address the public outcry. >> i think we are seeing a tipping point where social media is becoming more influential than traditional news outlets. the government can control -- cannot control social media with traditional media, so they are having to address these issues. like never before. >> in a rare reaction to public outcry, president xi jinping called the scandal shocking, and executives were detained after the initial clamor on social

media. >> due to the rapid growth of users on social media and increasing numbers of bloggers, news can spread more quickly. the government's response recently was more timely than ever and punishment more effective. >> critics say the health crises have stemmed from lax regulations and light punishments. >> in a current crisis, for example, for the 250,000, they only got a fine of $440,000 in u.s. dollars which is pretty low, and so if the country lacks regulation and punishment for violation, it is a big temptation for local makers to use low-cost materials, even bad quality products to sell and make a huge profit. >> the inadequacy of regulations stems from efforts to coddle

domestic companies in an effort to help them grow. on top of that -- imported medicine and vaccines have long been unavailable because of an arduous drug approval system. chinese companies had to repeat drug trials for imported medicines to get them signed off. this protected local drugmakers. in october 2017, the country's regulator abolished of this -- abolished this rule. by introducing competitors, that -- >> by introducing competitors, that will raise the bar in terms of quality, and social media will continue to act as regulators. ♪ >> are screens disrupting childhood? yes, but it is complicated. the average age for a first smart phone is 10. half of american and british kids have social media accounts

by the age of 12. they are glued to their phones, often using social media to share sensitive data about themselves during working time inan already tough puberty or adolescence. they are worried screen time can be addictive, and researchers say it can lead to bullying and depression. a recent survey reported 22% of eight-year-olds to 17-year-olds said they had been bullied online. >> there is evidence to suggest kids can use their smart phone for up to two hours a day. if you spend your time showing positive information, it can make you happy. i am the tech editor at bloomberg. just like anything, if you have a drink it -- a drink with your friends it is great. , if you'd carry on drinking for 12 hours, not so great. it is the responsibility of parents to manage that. >> parents aren't the only ones sounding alarm bells. a group of pediatric and mental health experts are lobbing

-- lobbying facebook to discontinue a version of its messenger app for children ages six years old to 12 years old. most platforms have age restrictions, but almost the honor system is impossible to enforce. after please from shareholders, as fromr ple shareholders, apple recently unveiled a new feature to help people take control of their habits. >> we know this is something that can help families achieve the right balance for them. >> experts still cant agree as to how serious threat this all is. >> most of the evidence is new on whether social media is a good thing or bad thing. snapchat was only found in 2011. we all know how long it takes academics to come to a conclusion. >> like it or not, social media and screens are here to stay, putting concerned parents in a difficult bind, letting children too young to use technology and social media run amuck, or risk isolating them from their peers. ♪ yvonne: you can also find them at bloomberg.com along with the

latest news and analysis 24 hours today. -- 24 hours a day. that will be all for "bloomberg best" this week. thank you for watching. i am yvonne man. this is bloomberg. ♪

taylor: welcome to "bloomberg businessweek." i am taylor riggs. jason: i am jason kelly. we are at bloomberg headquarters in new york. taylor: we have an exclusive interview with the ceo of snap. jason: we looked to air france and the turbulence it is experiencing with a new ceo. taylor: first, we take it the look -- we take a look at the u.s.-asia cover. it is all about harley and their