♪[music] on "bloomberg best," the stories that shape the week in business around the world. hopes of a u.s.-china trade deal are fading. the two sidesr as show signs of digging in. spreading the pain in, across a whole swath of consumer goods. talks are not going to get back to life anytime soon, i think. shoots down yet another brexit propose from the government and theresa may is not just down, she's out. successor be for my to seek a way forward that honors the result of the referendum. allies try tos

maintain unity on production the marathon elections and in a sweeping victory for the ruling party. challenges the economy faces and that haven't gone away. go to the leaders polls, they speak frankly about challenges facing european banks. >> merger. consolidation. cross-border merger, not easy, you know. >> you have to first have an integrated european market. otherwise it doesn't work. >> plus, the federal reserve from its maytes meeting. top fed officials tell bloomberg what they think about the bank's pivot. that we're --ned we may have slightly overdone it with our december rate hike. all straight ahead on "bloomberg best." ♪[music]

>> hello and welcome. i'm taylor riggs. this is "bloomberg best." your weekly review of the most news,ant business analysis and interviews from bloomberg television around the world. start with a day-by-day look at the top headlines. the same wayan that the previous week ended, growing u.s. and china more and more confrontational on trade in both words and actions. >> president trump says he is very happy with the trade war and that china won't become the world's top superpower on his watch. comments signal he's in no rush to get back to the negotiating table. as top u.s. tech companies, including google, frozenm, have reportedly the supply of hardware to china's huawei. we're seeing this having an on trading over there. why are u.s. companies capping huawei, following

the instructions of trump, i guess? >> the commerce department under effectively put huawei on this blacklist, which says that any american companies that want to do business with huawei have to get a special license to components or sell to huawei and that they should essentially start from the goinge that they're not to get it. >> we hear about this blacklisting. and companies, including google, instance, are limiting the products of software that they sell to huawei. are they doing that on their or have they been given an explicit order from the government to do so? what have we heard? >> yeah. i mean, they have no choice. i mean, for years they've been for more --ing lobbying for more protection, said is chinese encroachment on their i.p. but they really did not want things to go down like this. china is increasingly important to these companies. is not really what they wanted at all. >> china is warning it may step

theetaliation against united states, after president huawei'scklisted beijing ambassador, ming accused quote, bullying and blackmail. this comes as nike and other are urging donald trump to reconsider his tariffs on shoes made in china. >> certainly from the u.s., the doesl sector, if mr. trump go ahead with tariffs, and the $300 billion worth of chinese imports, you will be spreading the pain across a whole swath of consumer goods. why the retail side, in both the u.s. and the manufacturers in china, are warning that the next trade war could be the one that has a real sentiment. consumer >> the decision to go ahead with these actions against huawei last week was related very much to the breakdown in talks with china. real sign that those

talks are not going to get back to life anytime soon. for theresaeparing may, the british prime minister, to deliver a speech. the anticipation now is that she is going to say that she is vote on arant mp's a second referendum. >> i do not believe this is a route that we should take, because i think we should be implementing the result of the first referendum, not asking the in ash people to vote second one. but i recognize the genuine and sincere strengths of feeling across the house on this important issue. way this active withdrawal agreement gets through, do you think? >> none. no chance whatsoever. the labor party is not going to vote for it. dup is not going to vote for it. large chunks of a party is not it.g to vote for this is dead as the proverbial dodo. u.s. is considering

curbs on as many as five chinese surveillance companies, cutting them off from american components. these reportedly include digital technology and other technology. >> as i understand, the top three there are really having to with surveillance, including perhaps -- >> this is an interesting takes usnt, because it i don't think just the clash over trade. makes surveillance equipment that -- it makes a strong case to takeadministration action. but the problem is it's combined with all this stuff that's going on, and it does create the for a very long trade war between the two countries are calling a new cold war, which may be kind of but kind of gives you an idea of where the two countries are going. in itsa also digging heels as well, saying that a -- xit chi chi told jinping told a cheering crowd, wes a new long march now and

must start all over again. >> the chinese definitely rhetoric, while interesting, donald trump has talking aboutd trade. but, you know, this administration is full of surprises. think things are darkest, there could be a breakthrough. countinghe markets are on that. attheresa may's final shot passing a brexit deal is coming under fire. the prime minister is facing the vote andcrap resign within days. >> i think the adverse reaction was immediate yesterday after her speech in london did surprise.cials by and we heard michael gove, environmental secretary this morning, refusing to confirm that the bill would actually go to a vote in parliament. obviously clearly a lot of thinking going on over the next few days. cabinet minister, leader of the house, has andgned from the government

other ministers are also. increasing pressure on theresa go of both her e.u. exit deal and her role as the leader. >> the big picture is that theresa may is leaving. her dealing is almost certainly dead. therefore, i'm afraid, three years after the referendum, we are no further forward in what brexit is actually going to mean. down.s why the market is that is why the pound is dropping in recent days, because the market is bracing for the prospect of a boris johnson or rob as prime minister. and the prospect that they might theto lead the u.k. out of e.u. without a deal. latest shows policy makers will be patient for some with inflation far below target. so. don't think i think we pretty much got what we expected. members observe that a patient determining future

adjustments to the target range for the federal funds rate would appropriate for some time. again, that word patient, right sentence.portant also very important in these minutes, they said that many -- obviously not a majority. many means probably more than half. but many of those fed officials that inflation is likely to be transitory and basically the patient pause persists. >> as we get ready for the aree-day weekend, we looking at a market in decline, equity markets. you're looking at declines of greater than 1%. the worst performing of the bunch, off by 2%. >> just a nasty day overall. i think obviously overnight the commentaryom chinese in the state media is getting pretty aggressive. we hadof that, you know, these fed minutes yesterday. and the latest that we're they are still on hold, you know. i think a little bit of disappointment there, coupled

the ratcheting up of the trade tension. equation for a day like today. >> the u.k. prime minister theresa may announcing she will resign as party leader in just two weeks. always remainill a matter of deep regret to me that i have not been able to deliver brexit. it will be for my successor to forward, as a result of the reference -- that honors the result of the referendum. >> what next? >> we don't know what is going to happen next. we know that theresa may is on the 7th ofdown next month. then we're going to kick off this process for the next leader of the conservative party and the next prime minister. that's likely to conclude by the july. we now have at least a time line with which the markets can operate. >> a new prime minister does not mean fundamental renegotiation. that is a line that comes out today.ussels if anything, if we do get a prime minister, that makes more difficult in the

eyes of the e.u., would potentially increase the no-deal brexit. >> president trump has now at for aopened the door possible resolution of the huawei dispute. >> it's possible that huawei even would be included in some kind of a trade deal. if we made a deal, i could imagine huawei being possibly included in some form of or some a trade deal. >> does china believe it could win a technology war with the united states? should have technological war with each other. we should have cooperation, collaboration between us. >> what about a trade war? >> i never believed that trade war is a good one. mutual benefit. about mutual destruction. how can you put these very different concepts in one term? you expect them to meet in osaka, and duping that teams think that teams would have moved things far enough along to come to a

tentative deal, or do you think it's going to take longer than that? >> so far, there's no official discussion about possible meetings between the two presidents. always possibility is open. >> still ahead, on "bloomberg best," conversations with a pair fed presidents shed more light on whether markets are wise to price in a rate cut. plus, the former governor of hong kong shares his thoughts on the controversy over huawei. and up next, more of the week's top business headlines. oecd puts out a bear forecast on global growth and leaves no doubt where they put the blame. was going on in sync in 2017. bloomberg. ♪

>> this is "bloomberg best." i'm taylor riggs. let's continue our global tour top businessd's stories. in australia, where the incumbent prime minister held on office after an unexpected electoral victory. >> the australian broadcasting cooperation saying scott secure awas able to majority government after that unexpected win on saturday. trailing in despite most polls during the campaign. it's what scott morrison called a miracle. on theas a huge surprise night. and it's transformed scott morrison, who has only been at the helm since august, into a conservative hero. front page newspaper this mortgage, if you can see -- that, itif you can see says messiah. he did an incredible job in tearing down probably the most

progressive policy agenda that upopposition party had put in decades. and clearly that negative campaign strategy worked for him. reached antocks have all-time high as prime minister narendra modi looks to win a majority.ty as results rolled in, the index milestone. 40,000 this seems to be like a pretty convincing win for narendra modi. >> yeah. exactly. exit polls that came out earlier this week had predicted a withlide victory for modi an average of between around 300 540-seatthis parliament. modi seems like he's actually going to surpass that optimistic assessment. it looks like his ruling coalition could get around 350 which is actually more than he won in 2014. euphoria around the

long,on win didn't last with the currencies sliding on thursday, after rallying to records. washe euphoria yesterday largely sentimental, the way the markets move. but i think come this morning, set in.has it's bad business as usual for stocks.s and for there are challenges that the economy faces, that haven't gone away. india is faced with the prospect of slowing growth. that theators show economy is slowing down. the second is the issue of jobs. problems are long-term that will need fresh thinking by and quickministration execution by whoever is in charge of the finance ministry. >> from india to the indonesian presidential elections. lodges a legal challenge to his loss to the president. acrossolence spreading

jakarta. six people have died, hundreds thered, in the wake of political violence. challenge from jokowi's rival? >> if you look at the official results, he lost by a significant margin. andallegations of fraud widespread cheating haven't been substantiated yet. haveendent observers dismissed the claims. allno legal expert, but signs are that this, you know, unlikely toge is succeed. and its allies meeting over the weekend in saudi arabia to discuss everything from iran.tion to while saudi energy minister urged opec to, quote, stay the course on output cuts. >> they're going to commit and our ownextra month on

and i hope my other colleagues will do the same, will not jump the gun. >> this meeting in saudi arabia was really laying the groundwork people's thinking were ahead of this meeting, where they can either decide to production cut, you know, or get rid of it. and right now, it's very clear stay the want to course. it sets up an interesting scenario in june, because on the alexander novak, while he didn't say either way, would complyrussia if they striked a deal. but he did seem more keen on easing the cuts and producing. eye onre keeping a close oil, because the losses today are pretty notable here. the worst daily performance of the year as mounting trade tensions sent investors fleeing from all kinds of risky asset. a single catalyst for today's drop. the inventory report came out yesterday.

>> yeah. it feels like it's been kind of a slow accumulation of bad news i the markets, which began, think, an friday. we got our first numbers, they were noat longer adding to the long hedge positions. this week, again, there hasn't notable.hing there hasn't been, you know, a huge problem in terms of a down signal in demand or anything that would signal that something horrible is about to happen. but it's just been a slow drip oftion, a steady bad news. then the continuing trade war rhetoric, being upped, really the markets some concern about the global economic demand, going forward. >> the forecast in global growth, slowed only 3.2% this while the growth rates seen over the past three decades. think that trade has derailed it, that was going on in 2017. >> we ran various different through ourios model of the global economy to bigand get a sense of how

the costs could be and where could they fall. base case is neither we stick with the 25% u.s. tariffs 250 billion dollars of chinese imports, plus the chinese retaliation that's already been announced. we would seerio, global g.d.p. down by about .3% 2021, relative to the base line of no trade war. if trump follows through on his threat of tariffs on all imports, that amplifies the impact. in that scenario, we'd be global output down $600 billion.

♪[music] watching "bloomberg best." i'm taylor riggs. plenty of fed speak for investors to absorb this week, from the minutes of the may speech by the chairman, jerome powell, giving upbeat economic outlook. and several top central bank directly tooke bloomberg television. federal reserve bank of in louis president sat down hong kong and discussed the fed's rate path in an exclusive conversation with bloomberg. good place in the u.s. right now. if anything, we're a little bit restrictive, i would say. i am concerned that we're -- we slightly overdone it with our december rate hike. thei was pleased that

committee divotted the current committees from the are for the policy rate to remain flat during 2019. low inflation numbers or low inflation numbers and low inflation expectations. a little bit concerning to me. and, you know, i think that to justify a rate cut at some point. >> markets factoring in -- perhaps some market indicator, one or even two. thing about that issue. we've had two years of great upside surprise in the u.s. that growth turned out to be better than we thought. unemployment, lower than we thought. everything coming up roses on the real side of the economy. and yet inflation is really not at our 2% target, based on our preferred measure, which is this pc inflation year over year, only 1.6 right now. me pause -- gives it gives me pause that that's so low. and it gives me more pause that

the inflation expectations are below our target. why can't -- why aren't those right at our 2% target? take this can opportunity maybe to try to recenter inflation expectations 2% target and gain credibility for our target. >> ok. but i think you did a newspaper interview recently. persistly, 1.6%. definition of persistent? one month, four, a year? think at a minimum, you'd like to see what the first, second quarter of this brings as as inflation news, and we really won't have all that information until you get to the september time frame. could be there's just noise in the data. it's always possible. back.hing might bounce then you wouldn't worry about it. but if it doesn't, and it looks our we're going to miss inflation target again in 2019, i think that's what gets very concerning. looks like --

>> the downside? >> yes, miss it to the downside. been belowlation has more or less2012 consistently. seems like we should be able to overur inflation target that long of a time period. i don't want these inflation to get entrenched in the u.s. economy and globally that people think that the inflation target is only 1.6%, which is kind of the average the last rate over several years. ballard wasn't the only fed president to go one-on-one with bloomberg this week. a conversation with rafael bostic about the federal reserve bank of atlanta. >> if you asked me how the scales are, i don't feel like, for me, they're tilted more. think we're pretty much in balance. >> plus, low interest rates and complex regulations have european banks in a bind. prominent executives explain why pain.e feeling the

>> europe has still been hesitant to allow the deep capitalf markets like we have in the u.s. >> this is bloomberg. ♪

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♪ this is "bloomberg best." let's get to another perspective on monetary policy from another fed insider. federal reserve bank of atlanta president rafael gothic told michael mckee this week that he's not ready to get off the fence when it comes to the fed's next move. ♪ >> i am not in the position right now where i think a move in one direction or the other is more likely. there are a lot of risks out there which, if they come to fruition, may help the economy, and the rate cut might be appropriate.

but there is a lot of sources on certainty that if they resolve in particular ways might get stronger,, which could suggest we might want to do a rate hike. right now there is still uncertainty. it is hard to say what the next move will likely be. but i am certainly not in the case where you ask me how the scales are -- i don't think like they are tilted more to the cut than to the hike, i think they are in balance. >> monetary policy works with long and variable lag so do you think the december rate hike was justified? could the fed to be slowing the economy as the year goes on >>'< i don't -- goes on? >> i was very supportive of the cut in december. i thought it was going to be the last one, and when i talk about it really my policy, goes to the feedback i was getting from businesses. early 2018 businesses were

energized, they saw a lot of possibilities. when i got to the middle of the year, about september, businesses were saying something different. they said they were comfortable, but in 2019 you guys may want to hold off or a bit. that became a common theme for what i was hearing. i listened to them, and in 20 you guys are good, 2019 we think you should take your time and don't be rushing to a number. that's pretty much how we are operating. i think the policy course we've done has been exactly on point. i think the economic performance we have seen, growth continue above the long-term trend -- we haven't seen very much inflation to suggest the economy is overheating. i think we are in a pretty good place. ♪ >> european banks remain under looming, andxit

the ecb showing no inclination to begin raising rates. several leading executives joined bloomberg television this week to talk about the future of banking in the region. nhe blackrock vice chairma spoke exclusively about the importance of forming a european banking union. ♪ >> being a bank in europe is tough. scale is one of the answers but it is not the only answer. you have to have the appropriate business model. but i do think all countries should recognize that, for their own respective banks, to operate at scale across the entire european market would be a tremendous advantage. it would also shift the focus away from being too exposed in the u.s. and having more, of a scaled up huge market at the european level. >> this has to be cross-border, right?

do you have to do domestic champions first? the journeyt think has to go by domestic champions. you first have to have an integrated european market or it doesn't work, and then you have to have players in the starting position to move into that market. they will tend to be the biggest domestic players. but i don't think we need to think of it as being a domestic champion to be a european champion. it's about being well-positioned and having a market that is open and integrated so you can operate to scale and make investments that will be necessary and large. these will be very large investments where you need a market of scale to make the profit. ♪ >> i think ecb is right when they say there's is a need to continue to restructure the banking sector in europe. the crisis is not yet over. time, burger

consolidation, cross-border merger, not easy. business case is difficult in the current environment, flat interest rate curve, fiscal requirements. people have to make clear assessment of the situation before making a decision. this is what we've seen in the recent case of deutsche bank and commerzbank. it takes time, and you need a business case to do it. >> is the german government picking up the phone and asking you about commerzbank? >> the answer would be no. >> is there any banker in europe you could see any advantage with consolidation? no, but at the same time we are consolidating market shares, which is a different notion. we have good clients and are

growing the business and activities in germany. that's the big difference. market shares and entities. you can measure your risk, you can assess it, you can lead the process. acquisition is more difficult, more risky, more challenging in the current environment. ♪ >> 10 years on from the crisis, the fundamental issue for european banks in my mind is two pieces. one is they still have balance sheets that are not ready to into play their role in driving economic growth. europe has still been hesitant for deep capital markets like we have in the u.s. so much of the risk ends up on the balance sheets of the banks. what we look for over there is, can we find institutions like proxy a that don't have legacy loans? if you can find a place to start without legacy loans and without

legacy technology, the ability to bring the technology in and develop a digital offering is better than it has ever been for all the reasons we know around the development of technology. business,n be a good but the negative interest rates are damper on profitability. ♪ >> now to another exclusive interview focusing on asia. governor ofonial hong kong discussed a range of topics it an extended conversation on international of government. blunt comments about the territory extradition law which would allow people to be sent to mainland china for prosecution. ♪ want -- what the extradition law does is destroy the firewall between rule of law in hong kong and what the

chinese diplomatically call rule by law in china, and that means there's no real distinction between the courts, the security services, and what the party wants to happen. so it's not surprising that this has caused as much alarm as it has in hong kong. i think it's the worst thing that's happened as far as the communist and beijing are concerned since 1997. and what it raises is a fundamental issue for all of us. people talk about china's role in the 21st century, but the chinese have yet to prove that we can trust them, and if they break their word over hong kong, where are we going to trust them? >> huawei specifically, when it comes to the u.k. do you think they can be trusted enough to be a key player in british i.t.? >> i don't know whether huawei can be, but if it comes down to whether or not you can trust china, the answer is no, you can't.

that people are prepared to separate while ways interests from china's. whether you can or not, given the rather murky issues, is going to be a really important and challenging question, which we will have to discuss over the next weeks and months. i'm not sufficiently knowledgeable to be able to comment on the relationship between the core of 5g technology and the fringes. aat i can comment on is simple fact that china can't be trusted. ♪

♪ this is "bloomberg best." let's resume a roundup of the week's top business stories with a focus on company news. earnings season is winding down,

but there were still reports this week with imports and implications for investors, including results for some heavyweight u.s. retailers. ♪ >> retail wills are worsening. home depot, calls, and jcpenney's are out with earnings, and all three missed. >> notably we are seeing a dire quarter for nordstrom. >> yes, and a particular call out there is that their department stores really whiffed, a 5% decrease in sales. they said it was execution issues, and my years of retail reporting have told me it's two consecutive quarters and -- you have to ask yourself about the health of nordstrom going forward. >> target soaring after earnings temporarily blunted concerns over the new chinese tariffs. tariffs really haven't hit them, they are firing on all cylinders. >> they are doing a good job. they have the haves and have-nots of retail.

costcoe walmart, target, -- and the have-nots are a lot of the traditional department stores that we saw opposed very disappointing results. jcpenney, coals. and some of the home-improvement retailers, lows down the most in a decade, that's a turnaround story. each retailer is grappling with it in differing ways. ♪ >> deutsche bank is hitting historical lows with the annual shareholder meeting on the backdrop of further revenue weakness. they are targeting investment banks were "tough cutbacks" in a campaign to restore market confidence following the breakdown of takeover talks with commerzbank. did anything get said in the agm we weren't anticipating? anything new? >> we do know now that they will have more cost cuts, and many people were predicting this. they did leave out the fact that the equities business, which

many say are going to get deep cuts, but the question remains what they will be talking about in the timeframe. time will tell whether this is going to be enough to boost share prices. clearly shareholders are not happy, everyone sitting in the agm. ♪ eliminate planning to about 7000 salary jobs, about 10% of its global white-collar workforce. the automakers under pressure to keep pace with massive technological shifts amid signs that global car demand has peaked. this is still far less drafty than what morgan stanley predicted last year. >> morgan stanley was looking at cuts of 25,000, so yes, this is less than half of that, but this is still pretty deep. 10% of the global salaried workforce. they are taking out those at the top and the greatest degree. they say the management level is going down by about 1%.

they say it will save them $600 million per year, and it also gets them flatter and quicker in the decision-making, perhaps with this new management structure they will be able to update their products more quickly. ♪ >> tesla shares have seen a selloff of over 20% following this month's raising of more than $2 million of capital. --y concerns for investors what tops their agenda? >> the main thing right now is demand for the model 3 and how many cars tesla will deliver in the second quarter. the company has given guidance that they plan to deliver 90,000 to 100,000 cars in q2, in north america, europe, and china, and there's not a lot of visibility into how that is going in the quarters halfway over. >> wall street analysts are dealing musk another blow, morgan stanley forcing its worst-case scenario for tesla share prices. >> first quarter sales were definitely disappointing. so are they going to get some

dead cap growth? possibly. but these are expensive cars, and the question a lot of analysts are asking is how much appetite is there in the u.s. for cars that start around $40,000 and go north of $100,000? if it's not an obvious closed stock at this point, then how do you justify the valuation? that is why you've seen those shares plummet so much this year. ♪ paihe fcc chairman ajit says he will give the $26.5 billion merger between t-mobile and sprint the go ahead. shares of both tele-communicators jumped on the news. this transaction was announced almost a year ago, and the company didn't think they would have to try this hard, but they are making some serious commitments. they won't raise prices for three years, they are going to do a build out of 5g with certain things they need, and they can have serious fines. >> the fcc says yes but the doj

is leaning toward no. sources tell bloomberg the antitrust regulator isn't happy with the competition remedy proposed. to the have been opposed steel for a number of years and the question from the beginning was whether they would get ahead of the doj or overrule the staff to go for the deal. it is very rare for the doj and fcc to diverge like this. the last time we can think of was back in 1977. >> wow. ♪ meshelby beat expect -- show beat expectations and smart gadgets. morees were $453 million, than double the forecast. how will the market take this beat? one, is quite a big however we have to keep in mind that they took off investment gains.

so in terms of core profitability, look more closely at operating profit. it is not as glamorous. ♪ >> sending a signal to qualcomm. the chipmaker found to have violated antitrust law, shares tumbling on the news. i u.s. district judge says they are abusing their dominant position in the market to exact excessive licensing fees and suppress competition. possiblesticks, is it to quantify what this will mean in terms of the hit the bottom line? >> it is really impossible to quantify. they have to renegotiate licenses, go forward to negotiate new licenses, and it is impossible to say what that will do. it will take away some of their leverage when they negotiate for licenses. if they can't threaten to withhold ship supply and order to get the terms they want. it is unclear how that will change that bargaining

negotiation between qualcomm and licensees. i should also say they are likely to appeal this, and there is some chance they could win on appeal. i think a lot of things are still up in the air with respect to how this will impact them. ♪ >> china's biggest airlines are seeking compensation from boeing for auto delays and losses caused by the grounding of the 737 max 8. how much of a threat is this? >> this adds yet another layer, exposes another layer of risk for the plane maker. this is one of their biggest customers. we are talking about 53 of 96 planes grounded now, and the airlines want compensation for that. when you look at that fleet, it accounts for about 55% of air traffic within china in 2018. this could stack up to be a pretty big hit for boeing, and these kinds of compensation cases are unlikely to stop with this single airline. there's a lot of leverage the

buyer has over the seller in this case. ♪ -- david the original tepper, is planning to return money to investors after more than 25 years running apple's analysis center. he follows a raft of other headphones managers. is it the environments or is it personal reasons, he has made his money and can do what he wants? >> the decision to turn his hedge fund into a family office isn't totally unexpected, but it is still a significant moment. the fact that now he is thinking --returning outside capital like you mentioned he has been running this for 25 years and now he has other preoccupations -- why now? run,s a football team to he bought the carolina panthers. the have to deal with

nagging questions of investors and why deal with that headache? ♪

♪ if you go into the bloomberg terminal, it really highlights the suppliers for the company. you have chinese companies, u.s. companies -- it is all feeding into huawei, in the red color indicates the declines over the past five days. >> 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. 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. ♪ a tweet threat exchanged with jetblue on april 17, a writer had a few questions about the airlines new boarding procedures. no boarding pass, no i.d.. instead, a camera and screen verified her identity against the u.s. customs and border patrol database, then let her on the plane. some passengers might consider the increasing use of facial recognition in everyday life convenient. some might think it is orwellian. but it is already everywhere. the question is, how far will it go? turns out, even those developing the technology are scared of what the answer might be. this is your bloombergquint take on facial recognition. in may, san francisco became the first american city to block police and other agencies from using facial recognition software. >> the biggest concerns are whetherelebrities, and

you can enable a totalitarian state with this technology, which seems to be the direction things are heading. >> so how did we get here? like other ai applications, facial recognition initially developed slowly in the 1960's, with the help of newly available high death cameras, machine learning, and giant databases of photos to increase accuracy and advance in a hurry. >> facial recognition as a technology that takes things from video cameras and tries to identify people. it does so by taking some key points and taking measurements of the business on all various points. 2018, londonr police made their first arrest based on facial recognition after crosschecking photos of pedestrians and tourist hotspots against a database of known criminals. delhi, a trial reportedly identified 3000 missing children in just four days. so if it involves catching

criminals and finding missing children, why would anyone be against it? facial recognition have been used in combination to create this sort of vast surveillance apparatus, particularly applied against certain ethnic minority groups and even in western usingacies they are technology to find suspects or even people who might be involved in legitimate protests so they can be tracked. >> and those are just concerns about the technology when it works as intended. a study from the m.i.t. media lab found white men in the sample were correctly identified 99% of the time, while error rates of up to 35% were found when he came to darker skinned women. >> microsoft came out last year, the first major tech company to say they feel uncomfortable with putting this technology until they have clear regulation around it. they were then joined by amazon, which seconded those calls.

it seems like some other companies are running ahead without qualms at all. guidelines,out some the algorithmic justice center in georgetown university law center unveiled the faith-based pledge which asks companies not to provide facial ai for autonomous weapons or sell to law enforcement unless explicit laws are debated and passed to allow it. a few companies have signed on, but not microsoft or amazon, possibly loath to lose the opportunity to sell facial recognition technologies the world. so what is preventing your image from saying a whole lot more about you than it used to? face it -- not much. ♪ 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 taylor riggs. this is bloomberg. ♪

♪ taylor: i'm taylor riggs in new york in for emily chang. this is "bloomberg technology." coming up, has the technology cold war already begun? president trump says while we may be part of the trade deal shifting from previous efforts to campaign against a company is a separate issue during ongoing trade dispute. plus the electric carmaker continues to get pummeled by the bears. can the company weather the storm?