caroline: coming up on "bloomberg best," the stories that shaped the week in business around the world. trump gets a new deal on nafta. >> modernizing the treaty to recognize the new economy we have today is the most important aspect. caroline: britain's tories are still fractured over brexit. amazon announces a wage hike for its workforce. a new jobs report suggest the u.s. economy may be cooling. >> this suggests we are pretty close to full employment. caroline: how fast should the fed move along its tightening path? three top officials tell us what

they are thinking. >> i don't think it's a rush. we don't have to rush the process. >> do you like the idea of a december hike? >> i am comfortable with it. >> we are trying to get this balance right, keep the expansion going, but making sure it is on a sustainable pace. caroline: plus, a bloomberg exclusive. china is said to have enacted a hardware attack on the u.s., all this as the countries continue their cold war on trade. >> that is not mean things will always be satisfactory. caroline: straight ahead on "bloomberg best." hello and welcome. i am caroline hyde. this is "bloomberg best." your weekly review of the most important business news, analysis, and interviews from around the world. the week began on a rare note of harmony for global trade. the u.s., mexico and canada

reached an agreement after months of negotiation to replace nafta. >> united states came to terms with canada late last night, meeting its midnight deadline and setting up a new nafta, has been renamed. it is the u.s., mexico, canada agreement. the president said it is historic and has taken care of the nasty problems he had. >> a lot of the focus has been on those problems and the last-minute negotiating snags over dispute resolution. those are some of the least important aspects of this treaty. the agreement modernizes the free trade agreement that came into effect in 1995 by incorporating things that did not exist. the internet. there is a provision in this that allows canadians to buy american products on the internet shipped over the border duty-free up to $100 in most cases. that is a big increase from the $20 that was allowed earlier. that kind of thing, modernizing

the treaty to recognize the new economy that we have today is the most important aspect. from that standpoint, it is definitely a win. >> president trump getting started early this morning when he tweeted about this and new deal, "we reached a wonderful new trade deal, the new name will be called the usmca." he says it helps farmers and manufacturers, but here in the beltway, it is being perceived as a repackaging. >> give us a sense, round numbers, general. how many auto jobs will be added? the president said there will be a lot more jobs. how many? >> we have lost a quarter of a million jobs or more in the auto parts sector. you are going to see a vast majority of those coming back. >> the former british foreign

secretary boris johnson has called on his conservative party to back prime minister theresa may, but there is a catch. >> i hope you'll join me in urging our friends in government to deliver what the people voted for. to back theresa may in the best way possible by sensibly supporting her original plan. >> there was drama coming at this conference today. the big question was would boris johnson decide or decide not to launch a bid to lead the ruling conservative party? he kept us waiting to the end of the speech. the answer came at the end, no, he would not launch a bid now and he rallied the troops to back theresa may, but he does not like her version of brexit so he told her to, in his words, chuck chequers. that became a popular has tag on twitter. he says the plan is sad and desperately wrong. whether it will do anything to convince theresa may to tweak

her plan as she makes a pitch to the eu is yet to be seen, but boris johnson not running for leadership now. >> british prime minister theresa may speaking at a conservative party conference, she said that they will never accept the eu's current brexit offers. >> this is not a new line from the prime minister. she has been saying for weeks that we were at an impasse. the offer on the table from them is not good enough. she has her chequers proposal is on the table and talks are at a stalemate. today's speech was not about shifting the conversation on brexit. it was about survival of the prime minister. she came out on the stage dancing to an abba track, that caught everyone by surprise, then pitching everyone a new vision for britain post-brexit.

>> it is the most significant known supply chain attack against u.s. companies. chinese hackers implanted microchips in servers that infiltrated the data centers of 30 u.s. companies, including amazon and apple. a bloomberg businessweek investigation conducted extensive interviews with intelligence and corporate sources. both amazon and apple dispute the summaries. so has supermicro, the company that assembled the servers. >> u.s. authorities and major manufacturers discovered hardware manipulations involving a major assembler of circuit boards. think of this as a permanent infection of a motherboard. every time the server boots up, the malware is shot to the heart of the system, creating a stealth backdoor into any of the protective systems. we reported today that amazon and apple were two of as many as 30 companies that discovered these chips.

the significance for u.s. officials was that this was a leap forward for china in terms of china's ability to manipulate hardware bound for u.s. companies. caroline: the selloff in global bonds is sending shockwaves into other asset classes. the 10 year yield hitting a multiyear high, breaking through a 3.2% for the first time in seven years. the fed chair adding to the pressure after he said the central bank could boost benchmarks past the all-important neutral rate. this has sparked a significant selloff around the world. how much do you think this is laid bare? >> there was follow-through after his comments. that was late in trade. we saw a lot of movement yesterday, 10 basis points because of the strong economic data and we breached key

technical levels that forced the selling of futures. jay powell's comments solidified that this range is where we should be. >> asian tech stocks are slumping as investors are seeing reports that china hacked u.s. computer networks using a microchip built by its spies. the asia-pacific infotech index hit its lowest since july last year. are people making leaps with the specifics of the story or questioning the low-cost manufacturing role that china has adopted? >> it seems like the market reacting to what could be a seismic shift in how the supply chain works for electronics. right now, the news that came out yesterday, coupled with acceleration of the trade war, there is expectation that may change how u.s. companies buy semi conductors from asia. as well as the u.s. government, which is a major purchaser.

>> the unemployment rate fell to 3.7%, the lowest since 1969. hiring cooled and wage gains eased slightly. >> i would view this as a full employment jobs report. the fact that labor force participation rate, which fell quite a bit last month, did not recover at all this month, the fact that job growth has moderated, that depends a lot on the effect of the hurricane, but it seems to me that this is a report that is consistent with being close to full employment and i think it will reinforce the fed's path for raising rates. >> brett kavanaugh is one step closer to the supreme court. he cleared a senate testimony setting the stage for a final vote on his nomination tomorrow. >> everyone is watching these same 4 senators. susan collins from maine, a moderate republican. her good friend lisa murkowski,

a moderate republican from alaska along with joe manchin, democrat and jeff flake, a republican. >> even if collins changes are vote to no, he could still advance as long as joe manchin and jeff flake vote yes and vice president mike pence comes in to break the tie. we would need at least two senators to change their vote and vote against the final confirmation tomorrow. caroline: still ahead, as we review the week on "bloomberg best," thoughts on global trade. plus, an exclusive conversation about the banks ambition for the u.s. >> we bring the scale of the group to the u.s. business as we build its global platform. caroline: up next, more of the weeks top business headlines. facebook tries to dial down the drama as it taps a new ceo. >> this is them trying to

establish a smooth transition. ♪

caroline: this is "bloomberg best," i am caroline hyde. let's continue our tour of the week's top business stories with an unexpected change of chief executives at ge. >> shares are searching at this hour after the company names a new chairman and ceo. he was an acquisition expert, is he now going to have to be a divestment expert? >> it will be interesting to see. we already have a plan in place that is pretty aggressive as far as a breakup at ge. they're looking to spin off health care, to divest the majority of their energy assets. we could see incremental divestitures.

at this point, it's primarily an operational story how do you get , these businesses, primarily the power business, performing better so the company can do well again? >> one of the differences is that larry culp is a proven execution operator. in fact, when he started margins were 10.7%. when he left, they were 23.2% and a much better mix of consumer and aftermarket, which is what ge is looking to do. he has already demonstrated operational excellence many times before. caroline: facebook has named a new boss at instagram. he has led the social networks newsfeed team for many years. the founders quit last week, he was helming the product side and now he takes the helm itself. >> adam mosseri is a long-term

executive at facebook. he has been there for about a decade and spent most of the time working on the newsfeed team which is important to facebook. earlier this year, he took the head of product job at instagram and is now running the whole thing. what i thought was interesting is this photo they put out, which had him in the middle of the two instagram founders. this is them trying to establish a smooth transition. despite what we know about the tension between instagram and zuckerberg that led to the founders' departure. >> tesla turns it around. the automaker is surging up 16% after reaching an agreement with the sec. the settlement states that ceo elon musk must resign as chairman for three years while he and his company pay $40 million in fees. >> this could be the perfect scenario. you still keep elon, so you have

the power of the brand name, his creativity, but you might get somebody sitting on his shoulders to make sure he doesn't do crazy things like tweet outgo private deals and so forth. on paper, it is a perfect deal. in practice, it might be different. if it is something like promoting the director or existing board members, that keeps you in the same situation, because the existing board has been unable to rein in elon musk and keep him from twitter and some of the things we have been talking about for the last two months. >> tesla reported its first delivery numbers since settled its case with the sec, a production surge in the third quarter. the company rolled out 83,000 vehicles, double what they made last quarter, and 55,000 where the model three. what is the significance of the headline? >> they delivered more cars than

they produced in the last quarter, so they are getting rid of the inventory hanging around. surprisingly, stock is muted today, and the question is demand. is there a huge demand for these cars or is it a multiplier effect? >> the battle on cars is revving up with honda committing $3 billion to general motors for self-driving unit cruze, gm is keeping its efforts to launch a time as vehicles next year on track. >> as soon as we are on the right level of safety, we will be able to deploy. the partnership with honda really accelerates some of the effort that will come after that. in particular, we are working together on a jointly developed autonomous vehicle, which would be looking to roll out in the next stage of scaling after our initial deployment. >> it comes as honda was engaged in a deep conversation with waymo on a collaboration on autonomous commercial vehicles, sort of delivery trucks was the way they were going.

as recently as april, waymo was saying that was on track. to come out now, it is a bit of a surprise. in another sense, gm and honda have been getting closer together. they have got plenty of partnerships and they said there would be more. >> amazon workers are getting a pay bump. the online retail giant is raising wages for its u.s. and u.k. employees november 1. workers in the united states will be making $15 an hour. >> we said, what do we want to be as an employer, what do we want our focus on pay to be? we decided this was a place we could lead, so we decided to move to $15 starting in november 1 while we are moving to 9.50 pounds in the u k and the 10.50 pounds in london. effective november 1 as well. >> i wouldn't say they were paying competitively to begin with. it is above most brick and mortar retailers. coming out and saying they will

set a floor in the u.s. at $15 is a pretty big move, considering most retailers are probably around $10. >> big names have surged this year of companies listing in the united states. tencent music has a $1 billion ipo. >> we have seen this spin off into their recent plans to reorganize the company. >> they are definitely going through another period of change. they saw profit decline in the latest quarter, and 18% dip in the quarter for the stock price. operating margins are shrinking. of course, there is the regulatory pressure on the gaming business. they need to find other avenues of revenue. they will be investing heavily into the cloud. cloud business as well. it dovetails with this reorganization, and they are still going to be a main owner

of this unit. before this ipo, 58% owners of tencent music. >> aston martin shares have tumbled on their trading debut in london. this after a valuation on par with ferrari. shares are priced at 19 pounds each, giving the luxury car maker a capitalization of 4.3 billion pounds. after initially hovering around that level, they share at 6.6%. what is your take on the share price? are you a little disappointed? >> we have taken 105 years to get to an ipo. i don't think we are going to worry too much about too much about what the initial shares are doing. we are always looking over the longer term, and our plan is a long-term growth plan. >> the u.s. has launched an investigation into the money laundering scandal that has engulfed denmark's largest

lender as they canceled their 2018 share buyback program. >> it is not clear the details of the investigation, whether it has to do with clearances made in u.s. dollars. a fine would be a big hit. we have seen that with other banks. that is obviously a concern for shareholders. it is also a concern that they have ordered the bank to set aside 10 billion danish krone for insolvency, to cover risks. that is what prompted the bank to discontinue its share buyback program. that is obviously also not good news for investors. >> unilever drops its plans to leave the u.k. for a single base in the netherlands. why the decision to abandon the plan? >> shareholder opposition was mounting day by day and fund

managers in the u.k. spoke out more strongly against it. more than 10% of shareholders had already said they were opposed to this. though shareholders faced losses on holdings when they had to sell them, because unilever would have dropped it out of the benchmark u.k. stock indexes. it was just not looking good for unilever. ♪

caroline: welcome back to "bloomberg best." i am caroline hyde. this week, bloomberg's francine lacqua sat down with an exclusive interview with banco santander's ceo. she is setting ambitious growth goals for the bank, both financially and geographically. >> we want profitable growth.

and what have is this opportunity that i think few banks in the world have. we have 140 million customers, and our strategy has been loyal customers and also digital excellence. that is why this is all about building global platforms. and of course, this should give us growth. it should give us profitable growth, as we have done over the last few years. francine: will you focus on your capital levels? ana: what we have done with capital over the last couple of years is a lot. we are -- we have more capital. we are making more than $5 billion consensus, and it is consensus, this year more than $7 billion. so we are building capital. we said in june we would reach 11%. that compares to 8.5% when i arrived. francine: i guess investors worry that you are doing great on capital but lacking some of your rivals. drop thewould somehow

cash dividend 2019. what would you tell them? ana: capital is about the capital buffer. santander -- and this is bloomberg data, by the way, and i am sure very accurate -- santander is one of the most predictable in terms of earnings banks in the world. we do better than most of our peers, if not all, and it is about the capital buffer against the minimum. and we are about 11%. that is the right level for us, given the predictability in our quarterly etf. and the fact that we are actually growing our profits. francine: you are sticking to your dividend policy, all in 2019? ana: i can't say what we will announce in a few months. we have increased the cash dividend per share is since i arrived by 30%. this year, the target that we gave the markets two years ago was double-digit target percent growth. that is quite good performance. francine: what is your strategy in the u.s.? ana: our strategy in the u.s., i said when i arrived it would

take us three years. and it has been three years since the team has been in place. i am very proud in terms of what the team has done in terms of regulatory compliance. may i say this is not just about doing what regulars want us to do, it is our own standards. how we want to manage the business. this year, the u.s. -- it is not one of our best performing businesses. profits were up 54% year on year in june. our consumer lender is at 18% r.o.e. our bank, if we normalize for capital, is 7.8% return on equity. remember, we bring the scale of the group to our u.s. business as we build these global platforms. caroline: now coming up on "bloomberg best," former u.s. treasury secretary hank paulson says he is not in favor of escalating a trade war with china. larry kudlow says the trump administration may have no choice. and three fed presidents tell us how fast they think the fomc should be moving to hike interest rates.

>> i am open-minded. if i think inflation starts to accelerate between now and december, i could support a december increase. caroline: this is bloomberg. ♪

caroline: this is "bloomberg best." i am caroline hyde. the imf will update its global economic forecast next week. this week, managing director christine lagarde warned that trade wars are darkening the outlook for growth. still she is encouraged by the , new north american trade agreement, and she explained why in an exclusive interview with bloomberg's tom keene. tom: i look at usmca, and the dictate of what president trump has very clearly advocated. it is an effort that brings in canada and mexico. i do not want to get you in trouble, but i got to ask.

did canada and mexico cave into the rhetoric of president trump, and is that something we will see in the coming years as the president looks at multilateral and brings it over to a unilateral approach? christine: >> it is hard for me to say, to make any comment about the agreement, because we have not had a chance to review it. i has read -- i have read the same articles that have been out. but it has been in the making for 13 months, so it is obvious there must have been back-and-forth, bargaining, and trade-offs, and that is the point about negotiations. two things i am quite pleased about. one is that it exists. and to have this trilateral agreement between mexico, u.s., in canada is, i think a very , positive signal. i am encouraged with that. because not so long ago, many of us were in fear that there would enough thing. but there is an agreement, number one. number two, what i hear is that the services are also partly or

entirely -- i have not read it yet -- covered. and i think that is really tbp, forhe way that instance, was doing. expanding beyond the products that cross borders to services that also do, but not physically, because many of them are digital. there are a lot of upsides to be had from services being included in the reduction of barriers. caroline: with the north american trade deal completed, the trump administration can focus on its tariff battle with china, which most see as a trade war. alix steel caught up with larry kudlow in washington and asked him whether the u.s. will resume talks with china. larry: we like to talk if it is substantive. talking is better than not talking. we like to talk if it is serious. we have made our asks. they know perfectly well.

as the president has said, their responses have not been satisfactory. but that does not mean they will always be unsatisfactory. and the president has a good relationship with president xi. and they me, perhaps at the g20 -- i am not saying there is a deal there, but perhaps. we will see. we will see how it goes. alix: the other thing talking to business leaders, there is a concern that the trump administrator is looking at china as a short-term situation. that we could handle a trade war, a tribe battle -- trade battle, one or two years. but the chinese are looking at it in terms of decades. they can make investments in other countries and trading partners in a way we might not. how do you view that conversation? larry: i really do not buy into any of that. alix: why not? larry: a lot of cliches. look. america is the greatest trading mission in the world. alix: sure it is cliche, but remember in the 1970's when we had the soybean export on japan. we were not export soybean for

hours, and japan put all their 24 investment in brazil. larry: soybeans off the coast of peru -- i was a child of wall street, i vaguely remember that. this is not soybeans, although the chinese are blocking our soybeans. alix: but that there could be investments made by china into other countries instead of the u.s.? larry: look -- we want rules changed and maintained. the wto has set the rules. china should abide by them. caroline: let's turn to fed speak. a trio of one-on-one interviews with the heads of the federal reserve regional banks said jerome powell made it clear this week that he is committed to a path of gradual interest rate hikes. but "gradual" may mean different things to different people. philadelphia fed president patrick harper favors a slower pace, as told michael mckee in baltimore. patrick: for me, my forecast right now -- three this year,

two next year, and two the year after. some have accelerated that pace. for me, i have not seen an acceleration of inflation yet. we still see these good job numbers. so i do not think we have to rush. we do not have to rush the normalization process going back to neutral. i am open-minded. if i think inflation starts to accelerate between now and december, i could support a december increase. michael: what are you looking for? 3.7%, 3.8% unemployment. 200,000 people getting hired every month. what do you accomplish by waiting? i can ask the opposite question. what do you accomplish by going sooner rather than later? right now, i think there is good news in the economy. i think there is some risk. think there is some inversion of the yield curve. i would like to avoid that risk. i would like to slow the pace. michael: financial conditions still are extraordinarily loose

after the tightening. long rates are low. are you having any effect raising interest rates, going another into december, would it 25 matter? patrick: i do not know. i honestly do not know the answer to that question. yes, financial conditions are accommodative. we are moving the short end. there are a lot of reasons why the flight to the long and is not moving, including the flight to safe assets. i think we can take our time in moving the rates up. >> i am quite comfortable with the expected path of embedded -- embedded in the median sep's. i think my own take on a neutral longer run funds rate is 2.75%. getting policy up to a slightly restrictive setting, 3.25%, would be consistent with a strong economy and good inflation that we are looking at. >> so you like the idea of a december hike? charles: i am comfortable with that, yes.

according to the rules, we are not supposed to modify which dot is ours. guy: i fully appreciate that. sometimes, it is nice to play with the rules. in terms of the data, if i look at the inflation data, there is a slight softening of late. does that concern you? charles: i think the inflation data picked up in a nice fashion. we are at 2%, just a touch under, given the monthly data movements, but it has improved significantly in the last couple of years. i have been saying for quite some time that we need to provide enough accommodation so we got to 2%, and we have a 2% symmetric inflation objective. so it is all right to go above 2% for some time. in fact, we ought to average to be above 2% for half the time, perhaps. getting inflation up to 2% is really quite an accomplishment, i would say, with the unemployment rate. we are well-positioned to continue with inflation at our objective, perhaps a little above.

>> the dot plot suggests that the fed is going to tighten above the collective view of where neutral might be. why shouldn't investors worry that you will go too far this time? >> obviously, we know the history. in my view -- i do not want to choke off the expansion. it is getting closer to the longest expansion in u.s. history. and i would like to reach that mark and set a new record for that. so when you look at the projections that my colleagues and i, when we wrote them down, we do see the funds rate moving somewhat slightly above this neutral. but not enough that i think it is really about tight monetary policy that would risk choking off or stalling the expansion. i think we are trying to get this balance right, keeping the expansion going, but making sure it is on a sustainable pace. michael: the dot plot shows the committee coalesced around four moves this year. and the expectation in the

market is you will do something in december. there are a significant range of outcomes, but there are people who are at two and four. what is your expectation? john: i think if you look at the center of the range of my ections, i think these are pretty reasonable views of where the economy is likely to go and where policy needs to go in terms of sustaining this expansion. you know, you ask me where will the federal funds rate be at the end of next year? it will depend on the data. things will happen between now and then that will affect our decision. i cannot really make a a prediction. is one answer better than the other? because it depends on the data. if the economy continues on the path it is on, a gradual path of rate increases in the next year is the right course for us to keep this economy going and keep inflation near 2%. ♪

caroline: this is "bloomberg best." i am caroline hyde. of let's resume our roundup the week's top business stories. in china, economic reports show a slowdown amid increasing fallout from the trade war with the united states. >> the latest data from china showing that the trade war is taking its toll. thecial may factory pmi and gauge came in lower than expected, showing the general from the standoff between beijing and washington. >> in particular, what economists are focusing on is the new order's sub index, this is kind of the advanced indicator of where things are heading. and the new order sub index came in 50-50, being interpreted as

the dividing line between expansion and contraction. so that suggests that the number of new orders coming into the chinese producers is actually falling. and that indicates that, indeed, the escalation in tensions and the escalation in tariffs between the u.s. and china are indeed taking its toll. caroline: now to italy and the controversial budget plan of its populist government is hanging on a view of the economy that could be too optimistic. a week after issuing deficit targets, the coalition finally revealed the figure that underpinned that aim. it seems growth -- that paints a far rosier picture than actually forecast. is the italian plan realistic? >> well, economists say it is not completely insane, but it is very, very optimistic, as you

said. the problem are the growth targets, which no analyst has at so high. of course, the government says we will be able to implement our wonderful plan, which would bring growth to italy. the problem with back, -- the problem with that, our economists tell us, is a lot of what they are doing does not boost growth much. there are some tax cuts, but they are not as big as the league had hoped initially. overall, very optimistic targets from this government, and that is concerning the markets somewhat, yes. >> today, the number of banks deemed to be too big to fail in the eurozone rose from seven to eight. is uber bank.l the bank has made clear it is driven by regulatory considerations, and they wish to be inside the european banking union. danish banks have expressed concern about joining the banking union, in part because they are having worries about having to salvage southern europe's struggling banks. why does that not worry you? >> as the largest bank in the

nordic region we have four markets, where we are the leading bank and all four countries. we need there to be the same competitive conditions than our european peers. the predictability, the stability, and the level playing field with the largest players in europe, and we only get it if we are in the banking union. so in that sense, it is a very natural step for us to take. >> it was a rough september for global carmakers as passenger car sales in the u.s. continue to plummet. what was behind these results? clearly, trade is front and center for all the auto business leaders at the moment. >> yes. i mean, it really was partly down to just a kind of fluke in the timing. a year ago in september, of course, it was the recovery from hurricane harvey, and everybody was buying up new vehicles. their previous vehicles had been flooded.

particularly, trucks, suv's were bought up at that time. coming this year, it is a tough month to be compared against. but of course, analysts knew this already coming into it, and pretty much everybody fell short even, of analysts' estimates for decline. for the japanese carmakers in particular, they have a car heavy lineup, and car sales are still just plummeting. so that is a big burden for them. >> russia's president vladimir putin is taking a new stand against president trump's criticism of opec and, crucially, its allies. vladimir putin saying that if the president is worried about rising oil prices, he only has himself to blame. explain. >> that is right. he is really taking a stance against the u.s. president, who has been pushing back and tweeting and even verbally talking about how opec is ripping off the world.

opec and its allies, of course, have this deal to cut global supplies. he is saying if he is going to talk to president trump as he did in helsinki, he would say it to his face that he has him to blame, that he should look at himself in the mirror. the rise in oil prices is not due to what is happening in the markets but what is happening in the u.s. administration. he says the likes of the sanctions in iran. he also pointed to the political situation in venezuela and libya as well. >> we're talking samsung, posting yet another operating profit here, once again topping estimates. but there are concerns remaining over weakening demand for memory chips. >> record operating profits again. 17.5 trillion won. $15.5 billion. it was better than the 17.2 trillion won we were expecting. the problem is going forward. we are already seeing weakness in memory chip prices. right now, good operating profit in the third quarter. sales were in line with estimates. so it does fend the wolves from

the door immediately. but going forward, most analysts are saying the two-year super cycle probably has already waned, and now we will see cyclical weakness. >> former u.s. secretary treasury hank paulson is quite familiar with global economic risk. having led the u.s. response to the financial crisis back in 2008. he see serious longtime risks in a u.s. trade war with china. he recently sat down with an exclusive conversation with david westin in chicago and shared insight into the relationship between the two largest economies. hank: we are dealing with a different china today than we were even just a few years ago. so china is now an economic competitor to the united states . it is a security competitor to the united states. it is using its capacities and capabilities to exert influence in long-standing spheres of u.s. influence.

it is -- on the economic side, china is almost a $14 trillion economy, and it has not opened up like it should. so it is sort of -- i think it is untenable for china to continue to say the world to keep its markets open for chinese companies if china is not going to open up for foreign companies. so, there is a lot going on. but i really believe that this trade war, obviously, does not benefit anyone. and the tariff impasse is a serious thing. david: knowing china's leadership the way you do, is there a better way, a more effective way, for them to get to open markets than they are doing now? they have a lot of pride. saving face is very important. hank: i do not think there is an easy way.

but i think, by far, the best way to do it is to work with our allies to exert pressure. and to exert pressure that way as opposed to tariffs, because not only is it a public confrontation and issue, but the other thing about tariffs are people focus on the short-term impact, which is a tax on the american consumers. i think we do not pay enough attention to the dangerous long-term impact. companies and countries want to do business with the united states because we have got reliable, stable economic policies. and so the question really is, you know, is china going to start looking for new markets from which they would buy soybeans? brazil and africa? are they going to be concerned that they need to protect themselves if there is another tariff war and they need other suppliers? what about the foreign companies?

are they going to want the u.s. to be a supplier if they think the united states is going to come in and break up the supply chain? is a foreign investor going to want to come in and build a plant in the united states if they are afraid they are going to be in the middle of a tariff war? there are some real potential risks here. so i applaud the objective, the objective of opening up the market. past efforts have not been as successful as they should be. but, you know, i just worry about the long-term impact. ♪

>> this raises the question for the federal reserve, which is are they going to hike again in december? and fed funds futures traders seem to be saying yes, they are. this is the probability of a december rate hike over time each day. caroline: there are about 30,000 functions on the bloomberg, and we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorite. here is another function. go --go -- quick

quic . it will lead you to our quick picks, where you can get insights into timely topics. here is a quick take from this week. >> we are entering an era where our enemies can make it look like anyone is saying anything at any point in time. >> jordan peele created this fake video of president obama to show how easy it is to put words in someone else's mouth. >> moving forward, we need to be more vigilant in what we trust from the internet. >> not everyone bought it. but the technology behind such fraud is improving, even as worries increase about the potential for harm. this is your bloomberg quick take. deep fakes, or realistic looking fake videos and audio, gained popularity as a means of adding famous actresses into porn scenes. despite bans on major websites, they remain easy to find. they are named for the artificial deep learning intelligence algorithm that makes them possible. input real audio or video of a specific person, the more the better, and the software tries to recognize patterns in speech and movement.

introduce a new element, like someone else's face or voice, and a deep fake is born. >> it is actually extremely easy to make these things. there were some breakthroughs from academic researchers who work with this particular kind of machine learning in the past few weeks would -- which drastically reduced the number of videos you need. >> programs like fake app, the most popular and widely available for making deep fakes, need dozens of hours to create a video that looks like this rather than this. in august, researchers at carnegie mellon revealed software that accurately renders butot just facial features changing weather patterns and flowers in bloom. this advance is not yet available to the public. but with increasing capability comes increasing concern. >> this is kind of fake news on steroids, potentially. we do not know of a case, yet, where someone has tried to use this to perpetrate fraud or an information warfare campaign or, for that matter, to really damage someone's reputation.

but it is the danger that everyone israeli afraid of. >> in a world were fakes are -- where fakes are easy to create, authenticity becomes easier to deny. people caught doing genuinely objective things could claim evidence against them is bogus. fake videos can also be difficult to detect. researchers around the world and at the u.s. department of defense have said they are working on ways to counter them. deep fakes have some uses. take the firm that creates digital voices for those who have lost theirs. there are applications that can be considered good or bad. like the many, many deep fakes that exist solely to turn as many movies as possible into nicolas cage movies. caroline: that was just one of many quick takes you will find on 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. thank you for watching. i am caroline hyde, and this is bloomberg. ♪

david: you produced some of the most famous movies in american history. barry: first we failed. in order to figure stuff out, you are going to make a mess. david: when you did decide to >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. david: i don't consider myself a