caroline: coming up on "bloomberg best," the stories that shaped the week in business around the world. trump gets a trade deal that looks a lot like 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 delivers 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 direct a hardware attack on the u.s., all this as the countries continued their cold war on trade. >> their responses have not been satisfactory, but that does not mean things will always be unsatisfactory. 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 bloomberg television 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 of 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. for all three countries. >> 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 through his 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 hashtag 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 now 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. nothing new in the speech. today's speech was not about shifting the conversation on brexit. it was about survival as a prime minister. she came out on the stage dancing to an abba track, that caught everyone by surprise, then laying out a new vision for britain post-brexit. >> it is the most significant known supply chain attack

ever 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 american companies discovered hardware manipulations involving a major assembler of circuit boards. what that means is, think of this as a permanent infection of a motherboard. every time the server boots up, that 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. breaking through a 3.2% for the first time in seven years. meanwhile, 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 moved because of the strong economic data and we reached key technical levels that forced the selling of futures. things compounded.

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. 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. illustrating the impact of hurricane florence. >> 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. kavanaugh 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 her 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 bank's 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 week's 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 unexpected changes at ge. >> shares are surging 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. we're looking at the plain leather unit.

it is 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 he is a proven execution operator. in fact, when he started margins were 10.7%. when he left, about 20 years later, 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. 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. 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 out private deals and stuff. 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 more than 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, launching autonomous 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

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. >> i wouldn't say they were paying competitively to begin with. i think they were. 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 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. this fits into the 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 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 fell as much as 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 people on the sanctions list or clearances made in u.s. dollars. a fine would be a big hit. we have seen that with other banks in europe. 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 at least 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? >> there is shareholder opposition that 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. those 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, francine lacqua sat down with an exclusive interview. she is setting ambitious growth goals for the bank, both financially and geographically. >> we want profitable growth and what have is this opportunity that few banks in the world

have. we have 140 million customers, and our strategy has been loyal customers and digital excellence. that is why this is all about building global platforms and this should give us growth. it should give us profitable growth, as we have done over the last few years. what we have done with capital over the last couple of years is a lot. we have 46 billion more capital. we are making more than $5 billion consensus and it is consensus, this year more than 7 billion. we are building capital. we said in june we would reach 11%. that was 8.5% when i arrived. >> investors worry that you are doing great on capital, but lagging behind in other areas. what would you tell them?

>> 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 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 bts. we are growing a profit. >> you are sticking to her dividend policy, all cash in 2019. >> i can't say what we will announce in a few months, we have increased the cash dividend for shares by 30%. this year, the target is double digit earnings. that is quite good performance. >> what is your strategy in the u.s.? >> our strategy in the u.s., i said when i arrived it would take us three years and has been

three years. the team has been in place. i am very proud of what the team has done in terms of regulatory compliance. may i say this is not just about doing what regulars want to do, it is our own standards. how we want to manage the business. this year, it is not one of our best performing businesses. profits were up 54% year on year in june. our consumer lender is at 18%. roe.% our bank normalized for capital is 7.8% return on equity. we bring the scale of the group to our u.s. business as we build these global platforms. caroline: 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 rates. >> i am open-minded. if i think inflation starts to accelerate, i could support a december increase. ♪

caroline: this is "bloomberg best." i am caroline hyde. the imf will update its global economic forecast next week. this week, christine lagarde warned trade wars are darkening growth. 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 looked at usmca and the dictate of what president trump has clearly advocated. it is an effort that brings in canada and mexico. i do not want to get you in trouble, but 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? >> it is hard for me to say or make any comment about the agreement, because we have not had a chance to review it. i have read the same articles as you have. 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 of negotiations. two things i am pleased about, one is it exists, and to have this agreement, trilateral agreement between mexico, u.s., and canada is a very positive signal. i'm encouraged because not so long ago many of us were in fear that there would be nothing, but there is an agreement. 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 showing the way, like tpp was doing, expanding beyond the products that cross borders to services, but not physically because many of them are digital. there is a lot of upside to be had from services being included in the reduction of barriers. caroline: with the north american trade deal completed, trump administration can focus on its battle with china, which most see as a trade war. we caught up with larry kudlow in washington and asked him whether the u.s. will resume talks with china. >> 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, and 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. they may meet at the g20, i am not saying there is a deal there, but perhaps and we will see how it goes. >> the other thing talking to business leaders, there is a concern the trump administrator is looking at china as a short-term situation, and we can handle a trade war for a year, but the chinese are looking at it in terms of decades. and that, they can make investments in other countries and trade trading partners in a way we might not. how do you view that conversation? >> i really do not buy into any of that. a lot of cliches. america is the greatest trading nation in the world. >> remember in the 1970's when we had the soybean export on japan, exporting soybeans for 24 hours, and japan put all their investment in brazil. >> 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. >> there could be investments by china into another country instead of the u.s. >> we want rules changed and maintained. the wto has set the rules, china should abide by them. francine: let's turn to fed speak. a trio of one-on-one interviews with the head of the federal reserve regional banks said jerome powell made it clear that he is committed to a path of gradual interest rate hikes. gradual may mean different things to different people. patrick harker told michael mckee in baltimore he favors a slower pace. >> for me, my forecast right now and i had this at the beginning of the year, three this year, two next year, and two the year after.

some have accelerated that pace. for me, i have not seen acceleration of inflation. we still see good job numbers, so i do not think there is a rush. we do not have to rush the normalization process going back to neutral. i am open-minded. if inflation starts to accelerate between now and december, i could support a december increase. >> what are you looking for in a pause? we have 3.7% unemployment, 200,000 people getting hired every month. what do you accomplish by waiting? >> what do you accomplish by going sooner rather than later? there is good news in the economy. i think there is some risk that i worry about with the yield curve and inversion of the yield curve. i would like to avoid that risk. i would like to slow the pace.

>> financial conditions are extraordinarily loose after the tightening. long rates are low. are you having any effect raising interest rates, going into december, would it matter? >> i do not know the answer to that question. financial conditions are accommodative. we are moving the short end and there is a reason why the long end 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 median sep's. i think my own take on a neutral longer run rate is 2.75%. getting policy up to a slightly restrictive setting, 3.25% would be consistent with a strong economy and good inflation. >> you like the idea of a december hike? >> i am comfortable with that, yes. guy: it is sometimes nice to

play with the rules. in terms of the data, the inflation data, there is a slight softening. does that concern you? >> i think the inflation data picked up in a nice fashion. we are at 2%, 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 we need to provide enough accommodation so we got to 2%, and we have a 2% symmetric, so it is all right to go above 2% for some time. getting inflation up to 2% i would say with the unemployment rate, we are well-positioned to continue with inflation at our objective and perhaps a little above. >> the dot plot suggests the fed will tighten above the collective view of where neutral

might be. why shouldn't investors worry that you will go too far this time? >> we know the history. in my view, i do not want to choke off the expansion. it is getting closest to the longest expansion in u.s. history, and i would like to reach that mark and set a new record for that. we look at the projections, my colleagues and i, when we wrote them down, when we do see the rate moving somewhat above neutral, but not enough that i think it is about tight monetary policy that would risk choking off or stalling expansion. we are trying to get this balance right, and keeping the expansion going but on a sustainable pace. >> the dot plot shows the committee coalesced around four moves and the expectation in the market is something will be done in december. there are a significant range of

outcomes, but there are people who are at two and four. what is your expectation? >> if you look at the center of the range, from my colleagues' projections, it is a reasonable view of where the economy is likely to go and where policy needs to go in terms of sustaining the expansion. you ask where will the federal funds rate be, it will depend on the data. things will happen that will affect our decision. i cannot make a prediction. is one answer better than the other, because it will depend on 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 inflation near 2%. ♪

caroline: this is "bloomberg best." i am caroline hyde. let's resume our round up the week's top stories. in china, economic reports show signs of a slowdown amid increasing fallout from the trade war with the united states. >> the latest data from china showing the trade war is taking its toll, official manufacturing pmi came in lower than expected, reflecting the general slowdown in a standoff with washington. >> in particular, what economists are focusing on is the new order's sub index, this is the advanced indicator of where things are heading. the new order sub index came in 50-50, being interpreted as the dividing line between expansion and contraction. that suggests 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 which the populist government is hanging on a view of the economy that could be too optimistic. a week after releasing an initial targets, the figure underpinned that aim. it seems growth in subsequent years paints a rosier picture than actual forecasts. is the italian plan realistic? >> economists say it is not completely insane, but it is

very optimistic as you said. the problem is growth targets that no analyst has so high. the government says we will implement the wonderful plan which will bring growth to italy, but 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 not as big as they hoped initially. overall, very optimistic targets from this government, and that is concerning the markets somewhat. >> today, the number of banks deemed too big to fail and the eurozone rose from seven to eight. 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 markets, and in denmark we need there to be the same competitive conditions than our european peers. the predictability, stability, and level playing field with the largest players in europe, and we only get it if we are in the banking union. in that sense, it is a natural step for us. >> there was a rough september for global carmakers as passenger car sales continue to plummet. what was behind these results? clearly trade is front and center for the business leaders at the moment. >> it really was partly down to a fluke in the timing. a year ago in september it was the recovery from hurricane harvey, and everybody was buying up new vehicles. their previous vehicles had been flooded.

particularly trucks and suvs were bought at that time. this year, it is a tough month to be compared against. of course, analysts knew this already coming into it, and pretty much everybody fell short of analysts' estimates for decline. for the japanese carmakers in particular they have a heavy car lineup, and sales are still plummeting. 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 if the president is worried about rising oil prices, he only has himself to blame. explain. >> that is right, he is taking a stance against the u.s. president, who has been pushing back and tweeting, and verbally talking about how opec is ripping off the world. opec and its allies has a 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 to his face that he should look at himself in the mirror. he is saying the rise in oil prices is not due to what is happening in the markets but what is happening in the u.s. administration. the sanctions in iran and he pointed to the political situation in venezuela and libya as well. >> we're talking samsung posting another record profit here. topping estimates. there are concerns remaining over weakening demand for memory chips. >> record operating profits again. 17.5 trillion yuan. 17.5 trillion won. $15.5 billion. the problem is going forward we are seeing weakness in memory chip prices. good operating profit in the

third quarter, sales were in line with estimates, so it does fend the wolves from the door. most analysts are saying the two-year super cycle is already waning, and we will see cyclical weakness. >> former u.s. secretary treasury hank paulson is familiar with global economic risk. having led the financial crisis in 2008, he sees serious crisis in 2008, he sees serious long-term risks in the u.s. trade war with china. we sat down with him, and he shared insight into the relationship between the two largest economies. >> we are dealing with a different china today than even a few years ago. so china is now an economic competitor to the united states and 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. i think it is untenable for china to continue to say the world should 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 does not benefit anyone. and the tariff impasse is a serious thing. >> knowing china's leadership the way you do, is there a better way to get them to open markets than they are doing now? they have a lot of pride. saving face is very important. >> 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 reliable, stable economic policies. and so the question really is, is china going to start looking for new markets from which they would buy soybeans? brazil and africa. are they going to be concerned they need to protect themselves if there is another tariff war and they need 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 come in and build a plant in the united states if they are afraid of being in the middle of the tariff war? there are potential risks here. i applaud the objective, the objective of opening up the market. past efforts have not been as successful as they should be, but i worry about the long-term impact. ♪

>> this raises the question for the federal reserve, are they going to hike again in december? and fed funds traders seem to say yes they are. this is the probability of a december rate hike over time each day. >> there are about 30,000 functions on the bloomberg, and we enjoy showing you our favorites on bloomberg television. maybe they will become your favorite. here is another function. 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 the 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 as worries increase about the potential for harm. this is your bloomberg quick take. 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 make and find. they are named for the artificial 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, and introduce a new element, like a face or voice, and a deep fake is born. >> is extremely easy to make

these things. there were some breakthroughs from academic researchers who work with this machine learning in the past few weeks would drastically reduce the video 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 have software that accurately renders facial features, as well as changing weather patterns and flowers in bloom. this is not yet available to the public. with increasing capability comes concern. >> this is fake news on steroids, potentially. we haven't had a case yet where someone has tried to use this to perpetrate fraud or information warfare campaign, or for that matter to damage someone's reputation. it is the danger everyone is afraid of. >> in a world were fakes are easy to create, authenticity

also becomes easier to deny. people caught doing genuinely objective things claim the evidence is false. fake videos can be difficult to detect. researchers around the world and at the u.s. department of defense are working on ways to counter them. deep fakes have some uses. take the firm that uses voices for those who have lost theirs. there are applications that can be considered good or bad, like the many deep fakes to turn as many movies as possible into nicolas cage movies. >> that was just one of many quick takes you will find on bloomberg. you can find them at bloomberg.com with the latest business news and analysis 24 hours a day. thank you for watching. i am caroline hyde, and this is bloomberg.

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♪ carol: welcome to "bloomberg businessweek." i am carol massar. jason: and i'm jason kelly. we are joining you from bloomberg headquarters. carol: a businessweek exclusive on an army of 16,000 and no, this is not a subversive sci-fi movie, it is the state of politics in the united states. jason: it turns out women are not the