emma: coming up on "bloomberg best," the stories that shaped the week in business and around the world. it's a brand-new year, but many issues sound familiar. negotiations in washington over a government shutdown, concerns in china over an economic slowdown. >> both the private and official pmi are purely in contractionary territory. >> apple rattles investors with its revenue forecast. >> we've been anticipating this the past few months. this was bound to happen. >> 312,000 jobs added to the

u.s. economy in december, smashing expectations. >> for the fed, this is "i told you so." you >> there is too much gloom and doom. i prefer boom. >> how should central banks react to all this incoming information? two fed presidents share exclusive insight. >> my own view is we should be patient. >> the time is going to tell us. we are going to be looking at the data, assessing conditions. it will tell us if we are about right or if we still have more to do. >> it is all straight ahead on "bloomberg best." hello and welcome. i'm emma chandra. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews from

bloomberg television and around the world. the first-day of the trading week was the last day of 2018 and despite the partial government shutdown creating uncertainty, there were signals from the white house that sparked some optimism. alix: there is signs of easing trade tensions between the u.s. and china as an american delegation gears up to travel to beijing for talks. president trump sees big progress. what do we know so far? kevin: the talks are back on. president trump tweeted -- we are now approaching key dates including week of january 7, when the u.s. delegation travels to meet with chinese officials and this will be the first face-to-face encounter since president trump and president xi agreed to a temporary truce on december 1.

all of this comes as the government remains partially shut down and a new democratic house takes over on thursday. >> stocks have fallen across the globe. our 2019 first trading debut futures suggest declines will continue. this as the kaizen and ihs reported another week reading for chinese factory activity. we got weak data monday and equity markets went higher. investors chose to focus instead on trump tweeting around the possibility of trade tension resolutions. today is different, though. markets really jumping on this weak story. >> what we are getting is a combination of things. the private and official pmi are in contractionary territory. they both capture a broad cross-section of china's manufacturing sector. the interesting thing is that last year, the trade war did not

have much of an impact. the real impact is expected to be felt over the coming months. these pmi's drive home the importance, for china at least, of getting a deal. if they do not, the negative sentiment will linger. in fact, it is expected to worsen. >> u.s. congressional leaders and president trump have failed to strike a deal to end a partial shutdown of the federal government, now in its 12th day. >> our question to the president and to the republicans is -- why don't you accept what you have already done to open up government? that enables us to have 30 days to negotiate for border security. >> if the incoming house democrats are choosing to stage a political sideshow rather than doing the hard work of helping to govern the country -- in other words, a total nonstarter. >> out of today's meeting, what was accomplished, if anything?

>> pretty much nothing other than a little bit of talking and some arguing. democrats say they are offering the white house and republicans a chance to hammer out a deal on border security. it will be somewhere less than probably the $5 billion that trump is demanding, perhaps more than the $1.3 billion democrats are offering, but they say they want a month to do that. trump, at least, is saying no, he wants it now in this package. it could go on for days. it could go on for weeks. alix: apple shares halted in after-hours trading as the company announced it has cut its revenue forecast for the current quarter. apple ceo tim cook released a letter to shareholders minutes ago revising revenue guidance to $84 billion, down from a range of $89 billion to $93 billion that the company had originally projected. cook writing that the vast majority of the shortfall happened in china with lower iphone, ipad, and mac sales than anticipated and fewer iphone upgrades worldwide.

>> we have been anticipating this for the last few months. this was bound to happen, the culmination of the general market slowdown in china, growing trade tensions between the united states and china over the trade war and the impending tariffs discussions. we have signs from inside apple we have signs from inside apple that iphone sales are not as strong as anticipated. we reported a few weeks ago that they had an internal "fire drill" as one person described it. this was not surprising, especially combined with all the supply chain evidence we have been seeing out of asia over the past few months or so. david: the markets are the story of the day. with equities falling yesterday on bad revenue news coming from apple and a continuing slide today when ism numbers came in surprisingly soft. >> we are getting a bit of a double whammy. the s&p 500 and markets falling across the board last month. we had investors continuing to say, the economy looks good and

earnings should largely be strong. now you are dealing with these ism numbers that fell by the most since 2008. yes, they are still above 50, in expansionary territory, but they are coming down. that puts a wrench in the whole "the economy looks good" story. at the same time, you look at apple cutting his revenue outlook. that begs the question -- does this mean we will see other companies bringing down earnings outlooks as well as we get further into the earnings season? >> there we have the closing bell. the s&p 500 off by 2.6%. biggest fall since september 2014. we've seen significant volatility in the nasdaq once again today. apple dragging down tech stocks while bad economic data as to those concerns. delta airlines adds to apple's woes. >> it does seem like for the first quarter, we will have a

slew of companies talk about nondomestic weakness. the question -- how much domestic weakness is there? we have gotten a long way to now after today, pricing in considerable weakness coming in from overseas, in particular from china. we started with fedex a few weeks ago, it sort of continued on today, and we had the ism survey in the u.s. deteriorate pretty quickly. the question investors really will be asking now is we know the international economic environment is pretty weak. how much of that is going to become problematic for the u.s. economic outlook? how much weakness are we going to import? jonathan: >> payrolls blowout. wages accelerate. >> 312,000 jobs added to the u.s. economy in december, smashing expectations. >> from a fundamental perspective, this is a great

jobs report. you have a lot of jobs being created. you have higher wage growth, and importantly, you are attracting more people back into the labor force, so there's very little not to like from an economic perspective. for the fed, this is "i told you so." the fed will think "i told them so. the labor market is in good shape, therefore i should maintain my rate hike expectations, and i should keep the balance sheet on autopilot." >> i know this has been a gloomy period. i know people are concerned about the stock market. corrections come and go. nobody particularly likes it, but there you have it. there is no recession in sight. there is too much gloom and doom. i prefer boom. vonnie: you are listening to federal reserve chairman jerome powell with former reserve chairmen janet yellen and ben bernanke live, and i think it's fair to say that the powell put is back in the markets. chair powell very careful to say the data this morning does not

raise concerns about to high inflation. michael: the fed chair was able to point to this morning's jobs report and say you combine that with strong consumer spending we saw in december and the low level of jobless claims, and it's clear that the hard data show the economy has momentum going into 2019. we expected it to slow. it's not going to slow that much. we are on guard. we are not on a preset course. all the things he has said before. all the things he said in december, but he went a little beyond it with his when statement about the fed being patient, when he said that with the muted inflation readings we have seen, we can afford to be patient, and that is kind of a signal to the markets that perhaps the fed is in pause mode. it's exactly what they wanted to hear. emma: still ahead, exclusive conversations with the presidents of the dallas fed and cleveland fed. plus, ubs chairman axel weber speaks exclusively about the future of banking. >> what will get disrupted is

banks that have in their business model a court model that has no distinguishment. emma: up next, more of the week's top business headlines. brazil swearing in a new president who must win back investor confidence at home and president who must win back investor confidence at home and abroad. this is bloomberg. ♪ emma: this is "bloomberg best."

i'm emma chandra. let's continue our global tour of the week's top business stories in italy, where political squabbling and weak

growth are keeping europe's third-largest economy in a state of instability. >> italy's parliament has approved a revised budget for 2019 amid opposition complaints it was dictated by the european union. the country's populist government had originally vowed to push through costly campaign promises, including a universal basic income, but under a deal struck with the european commission last week, italy lowered its planned budget deficit from 2.4% of gdp to 2.04%. the budget looks like it has been settled, and i guess that means everything is cool in rome. >> not really, matt. that is the problem. in fact, the growth for next year has been ratcheted back according to the latest projections. there's also deep rivalry within the coalition government. now matteo salvini, one of the deputy premiers, gave a very important newspaper interview that was published today. he said he does not see any danger to the italian government coalition in the coming months, so what happens after the coming

months? that's the question right now -- could he be seeking early elections? >> italy's manufacturing sector sank for a third straight month. pmi came in at 49.2, better than forecast by economists, but still below 50, so in contraction territory. is this the latest sign that europe's third-largest economy is on the brink of yet another recession? the president critized the budget. >> i strongly hope that the parliament, the government, and political parties can find a way to hold a constructive discussion on what happened and injure adequate debate in the future. you >> the populists, they just want to get more votes, so the head of the league, right after the speech on the 31st, made a speech of his own, which is unprecedented, saying that he thinks the big thing will be european elections in may and he wants all the populists of europe to unite and win them.

the italian papers are saying there are signs even that he might want to be the leader of european populists. he keeps making speeches like we need to take europe and change it from the inside. this will all come to a head as we move on in the new here. 2019 looks to be an exciting year for europe and for italy. >> wild moves in fx this morning. sending investors scurrying for answers. traders say this was an apparent flash crash triggered by algorithmic pricing. what do we know? >> what a way to start the new year. traders and fund managers from all the way to new york to sydney to singapore are pointing the fingers. fin liquidity has definitely been pointed to as one of the major culprits. at about 9:30 a.m. sydney time, traders were saying that there

were large orders to sell the australian dollar and lira particularly against the yen. another thing that is on everyone's mind is apple and their lower revenue outlook. that is another reason why people are looking to bad news as a reason to pile into the yen. >> jair bolsonaro has been sworn in as brazil's president. he promises to tackle rampant crime, corruption, and economic turmoil in a wave of nationalism that is sweeping the country. >> [speaking portugese] we have in front of us a unique opportunity to rebuild our country and to rescue the hope of our compatriots. i'm sure we will face huge challenges, but if we have the wisdom to hear the voice of the people, we will achieve our goals.

>> it's a good day for the market today. macau is especially outperforming, but foreign investors have been very skittish. last year was terrible for foreign inflows into stocks, and local investors are very excited and very hopeful that he is going to do the pension reform, deregulate the economy, cut down on red tape, and get the economy to grow again. foreign investors less excited for now, kind of waiting to see what happens. >> president trump says he is looking forward to meeting again with kim jong-un in a tweet early this morning. he said kim realizes north korea has great economic potential. >> it was in response to the north korean leader's new year address where he affirmed his willingness to meet with trump and also warned against further sanctions. >> trump wants kim to give up some of his nuclear capabilities before sanctions are lifted, so

this has been the impasse for a while. they are doing a little dance at the moment. kim is not ready to pull the plug on his new detente. he's not ready to start firing missiles again because if he does that, he undermines the rationale for lifting sanctions in the first place. >> opec production plunged the most in almost two years in december, even before the deal to cut oil supplies started. according to a bloomberg survey, output fell 530,000 barrels a day to 32.6 million last month as saudi arabia throttled back production. iran was targeted by sanctions, and two of the biggest libyan ports were shut down. how much further does opec have to cut before it reaches its planned pledged reduction? >> even though opec came up with the biggest cut in two years, they still have about 650,000

barrels to go, so we have seen saudi arabia trim about 400,000 barrels in this last month, they will probably go another 400,000 barrels in january. at least that is what the minister has repeatedly said, so it looks like opec will reach its pledge cut in january, which is when it is supposed to start is the other countries are to join as well. we saw iraq in the uae increase production slightly to get to an extra couple of barrels -- to get a next her couple of barrels out, but it looks like they will get there. >> china's central bank acted to release cash into the economy and support growth by cutting the reserve ratio for banks, or it will by the middle of january. why does the pboc do this again and why now? >> they did it because the

economy has obviously been slowing. everybody has seen the headlines about apple cutting its revenue projection, which they blame largely on slowing sales in china. there's also the manufacturing gauges going into contraction. today's move was slightly different than the earlier move in that this was an overall cut versus earlier, they did very targeted cuts. they will go into effect in two stages. one, 0.5 percentage points on january 15 and another .5% on the 25th. ♪ emma: you are watching

"bloomberg best." i'm emma chandra. as 2019 begins, european banks are stuck in a bear market, prompting many institutions to change their strategies and reevaluate their business models. bloomberg's francine lacqua spoke exclusively with ubs chairman axel weber about the future of banking in europe. axel: i think the industry is in the middle of a transformation already. the first 10 years after the financial crisis largely saw a reregulation of the industry, and many, including ubs, have changed their business model. we were among the first. over the next 10 years, there will be different trends that will shape the industry. technology is one of them. overall, the business model will be challenged by disruption, and the question in the future will be -- can incumbents like ubs raise too the challenged and transform themselves rather than be disrupted? i think banks will continue to face challenges, so a think we will rise to the challenge. we will basically adopt what is

good through financial technology. the business world will change. it will become more technology-driven. it will become even more client-centric because the main beneficiary of the technological disruption will be the clients. francine: how do the banks not be disrupted, not get left behind or become obsolete? axel: the banks that will be disrupted are the banks which have been their business model a core model with no distinguishing. banks like our business area -- i would not say niche because we are the largest player in the world in wealth management, where content matters and content will matter even more in the future. clients are getting more educated about financial markets through technology. clients are more risk sensitive. the they have a different interaction with the banks through technology and banks that will assimilate that enter

their business model will continue to provide content and be industry leaders, they will survive. francine: do you think ubs can serve as a blueprint? axel: not necessarily because i would not want everyone to move into wealth management, and nobody has the core strength in the home market that we have. it is a small home market, but it is a very lucrative market. also, because of the small size of our home market, we were a very early force to be international. at the moment this helps ubs. francine: what of the risks associated with wealth management, especially wealth management for very high net worth individuals? axel: if you look at what we recently announced on our investment day, we think the current trends in the markets will continue to produce one byproduct of this qe and monetary policy easing that is unwarranted, and in my view undesirable, and that is an increasing difference between the best performing in the economy and the least performing. you inequality is going to rise.

it will continue to produce very high income and very high wealth in many of the affluent parts of our societies, and the middleman will continue to feel somewhat left on the sidelines and that will continue to offer opportunities for large banks who can basically focus on the wealthiest of their clients and on the most affluent in their society, and ubs is one of those banks. emma: you can see more of that interview on the current edition "leaders with lacqua" on bloomberg television. coming up, more on the outlook for u.s. banks for 2019 as well as the global forecast for oil. plus, exclusive interviews with two federal reserve bank presidents. robert kaplan of the dallas fed said he is ready to pause rate hikes while economic conditions come into clearer focus. robert: my own view is we should not take any further action on interest rates until these issues are resolved or better or for worse. emma: this is bloomberg. ♪ amazon prime video is now on xfinity x1.

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emma: this is "bloomberg best." i'm emma chandra. turbulence in global markets and signs of a coming growth slowdown have many investors hoping that the federal reserve will hit pause on rate hikes. this week, bloomberg's michael mckee sat down exclusively with two regional federal reserve bank presidents to get perspective on how policymakers are taking current conditions into account. let's start with his conversation on thursday with the head of the dallas fed, robert kaplan. >> there's only one question that matters to the market. has the correction been long enough, deep enough, severe enough, that the fed has to react?

>> well, let me answer it this way. there's three big issues that i see reflecting in the market that are consistent with what i'm seeing in the economy with the discussion, in context. global growth is decelerating, interest sensitive and economically sensitive industries are showing weakness, and financial conditions have tightened, and credit spreads have widened. and i think those three issues are, i'm sure, affecting the markets, but they are also affecting my thinking about monetary policy. it is going to take some time to see the depth and breadth of those three issues. >> so do you think the fed should go on hold for now? is we should not take any further action on interest rates until these issues are resolved, for better or for worse. so i would be an advocate of taking no action, for example, in the first couple quarters of this year. if you ask me, my base case

would be take no action at all. that could change if things improve, but my own view right now is we should be patient and give some time for the economy and watch how the situation unfolds. >> do you think the markets know something the fed hasn't seen about what is going to unfold this year? >> i don't know about that. i think we have been watching this very, very carefully. i watch the markets very carefully. others at the fed watch this carefully. i think we have been trying to balance a very tight labor market, a strong consumer, and and trying to meet our dual mandate. but i think it is critical in the job i am in that you pay very close attention to what the markets are saying. but it's important in what they tell us about what's going on in the economy, and also some of these market forces, including financial conditions, can spill over and tighten the economy and cause growth to slow. it is critical that we are very

attuned to it. >> do you see that happening now? >> i think it may be happening now, yes. i mean, credit spreads since october have widened pretty substantially, we haven't had a high-yield issue for the last number of weeks. very little issuance, and i think it suggests lack of access. history has shown us and shows me that when you see that kind of action, it tends to, if it is prolonged, could lead to a slowing in the economy. at the dallas fed, we have an estimate for gdp growth that is a little below 2%. you have been hearing me say all during 2018 that while 2018 would be strong, we think the effect of fiscal stimulus will wane into 2019, the impact of the fed's rate increases will take hold. and so we expected some slowing in 2019, greater than we had -- in 2019, and i think that slowing is a little greater than

we had expected. so i'm watching this carefully. >> have you changed your forecast at all? >> our gdp forecast has come down a little bit. we are still close to 2%, and you have heard me say before it has been our view that by 2020 we would be trending back down to a potential about 1.75%. but our 2019 forecasts have come down a bit, and it has been affected by some of the issues i just talked about. global growth decelerating, economically sensitive industries, and what we see going on with credit spreads. and the shape of the yield curve is another thing i watch very, very carefully, and all these things are affecting our forecast. >> my view of inflation is that we are basically at our goal right now, and we are going to see it pick up or down 1/10. that wouldn't bother me either way. i think our sites have to be on the dual mandate old that week sights have to be on the dual mandate goals, maximum employment and inflation, and right now we are in a pretty good spot relative to those

goals. it is really calibrating our policy to that picture of the economy. but again, i don't see anything compelling that inflation is going to take off too much, nor do i see the inflation go down too much. i think we are in a very good place on the inflation side, and obviously it's great to have labor markets be strong, wages going up and people going to work. >> does that suggest you are neutral now? as the markets are pricing, you will not raise rates? >> my view is that the economy will tell us when we are neutral. we are in range of neutral now, the fed neutral projections go from 2.5% to 3.5% in terms of range, and we are about there. the economy is going to tell us, right? we will be looking at the data, assessing the conditions. it is going to tell us whether we are about right or whether we have a little more to do or not. that's the way i'm going to lead -- going to approach policy going forward. let's look at the data, let's assess conditions, and let's do our forecast, and think about what is the right policy path in

order to hit the dual mandate, maintain that, and maintain the expansion. >> government shutdown. big deal in washington, big deal on cable news networks, big deal in cleveland? >> i think it is a big deal in that it adds to the air of uncertainty, so in that sense it is something we have to think about when we are thinking about where businesses are going and what kind of policy plans or investment plans they are making. in terms of the actual day-to-day impact on particular businesses, no, but for people who aren't getting a paycheck and have to think about that, it is a big deal, and it is something we should try to move beyond if we can. emma: what central banks do in the year ahead is one of many factors that could affect economies and financial markets around the world. this week, bloomberg television looked closely at some of the sectors that saw volatility towards the close of 2018 and will be under particular scrutiny in 2019. let's begin with the outlook for oil.

>> oil has been on a wild ride in 2018. just three months ago, talk of $100 oil was rife, and wti had climbed to a four-year high. but just a few weeks later, crude plunged into a bear market, and prices are now down approximately 40% since early october. what are the key factors driving the level of volatility we are seeing in oil prices? more recently, it seems to be about global growth, but there are many factors to choose from. >> yeah, so i would condense it down to two main factors. on the supply side we have seen the u.s., saudi arabia, and russia, the three largest countries by production in the world, all respectively reaching record high volumes through late 2018. when you combine this with the demand side concerns of global growth slowing through 2019, this has created an overwhelmingly bearish sentiment for oil price, moving into this year. but we still remain cautiously optimistic, and this is largely

due to opec production cuts coming into play right now. that's 1.2 million barrels per day of supply being taken off the market, and we see that as gradually rebalancing the oil market through the first half of 2019. >> if i look at the previous year for oil and services, companies, oil and gas companies, they were down big time. i wonder how well the european oil companies are positioned for continued low prices in 2019. >> you are correct in that it was a very difficult year for many of these oil and gas companies, but i would point you more to their financial frameworks and how well-positioned they are moving into 2019. it is important to frame this in the context of the 2014 oil downturn, which forced to these companies to make swift and difficult decisions on cost, on capex, and in efforts to shore up their balance sheets. so these companies are arguably in one of the best positions possible, given the current macro environment.

they brought down their breakeven costs and are still investing, although with a much apex, and they are using a more disciplined investment criteria for new project approvals. so we continue to see positive free cash flow generation at $60 a barrel. we see dividend programs as safe, and even share buybacks are rolling in for many of these companies. >> european banks are one of the worst performing sectors in the stoxx 600 this year. deutsche bank and danske bank are among the biggest losers, as each has grappled with legal troubles and changing management. we are focused on deutsche here, the new lows it constantly hits and danske with the scandals. are they at all better off now that they have had this year of new lows and legal fees and turning revenues, etc.?

>> in terms of our starting point for 2019, this point for 2019, this is a much better place to be. we are trading one year forward, at the beginning of this year we were trading 10 to 11 times. litigation, a lot of litigation has been settled through rbs, barclays. clearly down to -- clearly danske has the money laundering question mark overhanging, as those standard chartered and banks were generally. but at the start of the year, i would be rather where we are, revenue expectations falling and probably keep falling. valuations are now somewhere where if i look at prices, i do not think things are more expensive but capital i -- capital is more difficult to identify. >> are the european banks in a worse position than u.s. banks? there are still more positive expectations for the u.s. economy next year, plus you have a higher interest rate environment and animal spirit seems stronger. is that the case? >> i think yes.

a simple answer. the biggest problem is topline interest income across europe. mortgages in the u.k., is a horrible place to be, massively competitive. you look at deleveraging, at nonperforming loans, the banks have to continue to shed. it's not a positive momentum story. at best, we are talking 2% to 3% topline growth for the sector, but i suspect that may be too high, which means it is all about costs, and we need provision charges to stay low, credit will start to deteriorate more quickly. >> what are your top surprises for 2019? >> the fed doesn't raise rates at all. the market appreciates 15% from its opening. i would say those are the two major ones.

>> the fed not hiking has actually been built into the market at this point. do the markets stay in this direction, or do we see a shift in expectation? >> well, the fed not hiking at the beginning of the year is built into the market, but the but the fed doing no increases all through the year, i don't think that's in the market. and also, the third surprise notable from your point of view is no recession before 2021. >> how do you feel about tech post the apple story today? >> well, i think apple is little different from tech. apple is a hardware producer. tech today is mostly software. but i think the apple story is a sad story, and i don't know what is going to turn it around, and i don't know how it's going to

stocks,he other fang because they are going to have good earnings -- i think facebook, google, will have good earnings. >> so is brexit now a coin toss? >> one of the surprises on brexit -- i said there won't be any deal as of march 29. that parliament will ultimately decide to have another referendum, and when they do, the british voters will select remain, and britain will remain a part of the european union. ♪

emma: this is "bloomberg best." i'm emma chandra. let's resume our roundup of the

week's top business headlines. 2018 was an up-and-down year for electric carmaker tesla. and on the first trading day of 2019, the company found itself right back on the roller coaster. >> elon musk is starting off the new year on a familiar note, one of uncertainty. tesla shares plunged on the first day of 2019 after the company unexpectedly announced it is cutting prices on all of its electric cars in the u.s. by $2000, this after delivering fewer model 3 sedans than expected in the fourth quarter. now, walk us through the numbers. >> deliveries were not a huge miss, but it was less than the street had expected. but what caught everyone by surprise was the price cut. if there is off the hook demand for this car, why are they cutting prices? and what is the reservation number? >> what is your read? >> very similar. i think the production number was a disappointment. i think when you are in a growth

phase, even with their production issues, investors want to see you exceeding those numbers. it was called a 1% miss, but that's a little bit emphasized when you are in a growth phase. >> carmakers are out with u.s. auto sales for the month of december, vehicle sales of ford falling by 8.8%, the estimate down by 6.2%. what do you see in the latest sales numbers? >> first of all, gm had their quarterly numbers out this morning. they were down. ford is down more than expected. fiat chrysler had a good month, but they didn't quite hit expectations. only toyota so far has beat expectations. so the market is not seeing a great look ahead, they are figuring 2019 will be down a little bit from 2018, which did not finish on a high note. we are definitely going to see a pullback this year, and we've already seen a pullback in china. i think that is what investors are reacting to. if we are not going to see growth in the u.s. market, which is the most profitable market

for all the car companies, and there is no rescue from china coming, you put all that together and the shares are doing so hot this morning. shares are not doing so hot this morning. >> a megamerger on the second day of the year, bristol-myers agreeing to buy celgene for $74 billion in cash and stock. why does this deal makes sense? the market right now seems to be skeptical. >> absolutely, and it's interesting because this deal came literally minutes after there was an analyst call from bank of america, saying it was unlikely that mega pharma deals would happen. we definitely get get the sense -- definitely get the sense that it is all about the cancer drugs. the best-selling cancer drug seems to be one of the big draws here, and a few of the other biopharma companies are rising in the market on the talk that more deals could be emerging in the sector. there was a lot of skepticism at the end of last year on whether big m&a is going to continue, and dealmakers seemed a little scared about that, but this is interesting. second day of the year you have a mega pharma deal.

>> college football won't go dark now on new year's day. as the denver rising -- disney and verizon narrowly avoiding a blackout of college football games, agreeing to a multiyear agreement. why did it go down to the wire and what was the deal that got made? >> well, it didn't quite go down to the wire. the deadline was today and they managed to wrap it up yesterday. i don't think there was any doubt these companies were going to do a deal. they still need each other, even with everything going on in the cable industry and all the angst about falling ratings for sports. verizon still needs espn on its main tv's of scripture, and -- tv subscription, and disney still needs to be out there. >> next, trimming pretax profit guidance for 2019, cutting estimates from 727 million pounds to 723 million. so you wouldn't expect it, but shares are up this morning after it reported a 1% gain in christmas sales.

next has kicked off the retail reporting season with what would seem to be a dismal announcement. why are investors happy and buying the stock? >> although they have cut profits, it is only a slight reduction, and it was due to selling more lower margin products. and actually selling more online, which has higher costs. so it wasn't because consumers weren't spending or because there was a rash of discounting. so all in all, it was a pretty decent 4 months. >> not for sale. facebook ceo mark zuckerberg has not sold a single share of facebook in the fourth quarter, despite a bow to unload the stock to fund his philanthropic efforts. my understanding was that these transactions were scheduled in advance. so what happened here? >> well, he said he would sell 35 million to 75 million shares of facebook stock. he has only sold about 30. sometimes these planned trading

plans can have limits on them at the stock falls too far. they won't sell automatically -- or it could mean that he cut it off, because you saw that facebook had declined so much from that high last july, down more than 30% since then. and he could think that maybe he could get more bang for his buck if he held onto it a little longer. ♪

>> if you take a snapshot of the surprise indices in the united states sector to sector, the only thing still beating expectations, the labor market and the household sector. and i would say both of those are lagging in indicators. >> 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 favorites. here's another function you will find useful. quic. it will lead you to our quick takes, where you can get important context and fast insight into timely topics. here's a quick take from this week. >> china wants to grade its 1.3 billion people based on how good, or bad, of the citizen they have been. critics of china's plan have pointed to the black mayor -- "black mirror" episode where everyone gets rated in their daily interactions. >> you want a cookie with that? >> sounds awesome. >> in china's version, your acquaintances would not grade you. that would be done by the state. a dozen cities are already testing different systems with the government need to create a nationwide network by 2020. this is your bloomberg quick take on what china is calling its social credit system. the plan was first outlined in

this 2014 government document, where the guiding ideology of the social credit system is described as "keeping trust is glorious and breaking trust is disgraceful." >> the government is battling a bit of a perception problem domestically. trust among public has taken a hit and the country has suffered scansorruption, financial andfinancial scams, corporate scandal over the past several decades. they are selling this new system as an attempt to raise standards and uphold basic laws and restore public trust. >> local trials are covering about 6% of the population. already, a network that collates central and local government information has been used to blacklist millions of people from doing things like booking flights and taking high-speed transfers. -- high-speed train trips. how citizens are judged in the trials varies from place to place. for example, in wenzhou donating -- in hangzhou donating blood or volunteering for work is seen as pro-social, while violating

traffic laws counts against someone's standing. elsewhere, walking dogs without leashes hurts your credit rating. here, your score can be boosted by helping the elderly or protecting public property. >> the government plan is that those deemed untrustworthy will be "unable to move even a single step." you could be denied basic services or stopped from borrowing money, or it could end up restricting your employment opportunities. in some cases you may not be able to stay in a fancy hotel or buy a house or a luxury car or send your kids to a private school. >> even foreigners are subject to scrutiny. a bad credit score can result in visas and resident permits being -- residence permits being denied or revoked. it is still unclear exactly how the program will work nationally, but unsurprisingly, technology is helping to make it possible. >> big data advances have made the task of collating vast databases of information on civilians much easier, and regional officials are now studying how they could apply facial recognition technology to

identify people who are jaywalkers, or even cyclists who run red lights. >> there are doubts, however, that china will be able to combine diverse local networks into a universal system. so far, the reactions to the trials have been mixed. >> criticism of the system within china has been pretty varied so far. a lot of urban-educated elite support the system. they see it as a means to promote honesty in society rather than as a privacy violation. >> criticism has been harsher overseas. rights groups see the credit -- the social credit system as a sinister move to expand the state's already tightening control over china's people, and even what they think. emma: that was just one of the many quick takes you can find on the bloomberg. you can also find them at bloomberg.com, along with all the latest business news and analysis 24 hours a day. that will be all for "bloomberg best" this week. thanks for watching. i'm emma chandra. this is bloomberg.

♪ 7p5óóo

♪ david: why did your parents come to the united states? dr. kim: my father was a refugee from north korea. david: did you feel discrimination because you were korean? dr. kim: the people were literally screaming at us. david: you met at harvard medical school paul farmer. dr. kim: we began talking about what is the nature of your responsibility to the rest of the world. david: you lead a protest against the world bank and said it should be shut down. do you have any regrets? dr. kim: i want to say to everyone here to know i am very glad we lost that argument. [laughter] >> 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. ♪