viviana: coming up on "bloomberg best," the stories that shaped the week in business around the world. elections in europe send political and economic shockwaves across the block. >> the pro european majority is holding. what does it mean for who is going to succeed theresa may? viviana: trade tensions continue to move markets. investors seek safe havens as the mood music darkens. >> people are sort of saying let me get into safety, and then let's see how this uncertainty shakes out. viviana: an alliance of carmakers may shakeup the auto

industry. alibaba mulls an asia ipo. viviana: the ecb wants to normalize policy, but rising risks pose a challenge that plan. >> the real risk would be a trade war. viviana: exclusive insight on volatile markets comes from the top decision makers at pimco and morgan stanley's ceo, james gorman. >> we think we are entering an age of disruption. >> around the world, we are seeing things that are all triggering market reactions, and it is more negative news than positive news. >> plus, huawei's founder and ceo speaks exclusively to bloomberg. ren zhengfei believes his company come through the u.s. blacklist with flying colors. >> the tough battle environment just reflects how great we are. viviana: it is all straightahead on "bloomberg best." hello and welcome. i am viviana hurtado. this is "bloomberg best," your weekly review of the most

important business news, analysis, and interviews from bloomberg television around the world. let's start with a day by day look at the top headlines. last weekend, voters across europe went to the polls. at stake, the makeup of the european parliament and, ultimately, leadership of the european commission and the ecb. results of the vote came in on sunday evening. nejra: mainstream political parties in the e.u. have held their ground against assaults from populist groups, according to provisional results from the european parliamentary election. they saw the highest turnout in a decade. it looks set to reward the greens and pro-e.u. liberals, but there are a couple of notable exceptions, with the far right winning in france and italy. >> the big take away from this election is not political fragmentation but the pro european majority is holding in the european parliament.

there has been a shuffle vote. the social democrats did particularly bad. the christian democrats of angela merkel also lost seats, but the greens and the liberals did gain some. so that balance of power has changed. when it comes to the populists, the concern here was we could see a surge. that did not fully materialize. nejra: yes, the populist attack falling short. of course, exceptions in france and italy, but also the u.k. was an exception, and brexit was a big part of the story. >> the "times" is leading with that. this is the take away from this story. the british main parties really lost their share of the voters here. we saw those votes go to the brexit party and the liberal democrats. the next big question is what does this mean for who will succeed theresa may? it is likely going to galvanize those hardline brexiteers, like the one that's already the

favorite, boris johnson. shery: president trump saying the u.s. isn't ready to make a deal with china on trade, although he claims beijing is, and he has repeated his threat to further increase tariffs on chinese imports. >> they are ready to make a deal. we are not ready to make a deal. we are taking in billions of dollars in tariffs, and that number could go up very substantially very easily. shery: the president not only speaking about china but also about north korea's recent missile launch. it seems those two issues may have overshadowed the u.s.-japan relationship. >> yeah, which is a little odd given that it was a state visit. he did come and pay his respects to the japanese emperor, the new one, but really shinzo abe and donald trump talked extensively about that relationship being the cornerstone of stability. while issue of china and north korea, those two issues really dominated the press conference yesterday afternoon.

north korea, he said, hey, i'm happy with the way it is going. no hurry. shery: a key slice of the treasuries yield curve falling deeper into inversion. the gap between three months and 10 year rates dipped into a -9.2 basis points, the most negative since march of this closely watched segment since the curve inverted for the first time since 2007. >> i think today is really more a refraction of haven demand. i do not think it is any -- i think today is really more a reflection of haven demand. i do not think it is any surprise. we are seeing this deepening inversion after trump himself said the u.s. is not ready to make a deal with china. that is really driving investors into the 10 year treasury, which

is the section of the curve moving today. shery: china could be gearing up to use its dominance of rare earths in its trade war with the u.s. that is according to commentary in china, including hints from the state planning agency. >> we had the ndr head official saying last night that china isn't going to let the u.s. use the products it makes from its rare earths to contain china. and then we had commentaries today in the "people's daily" and the "global times" echoing that same line. no doubt about the fact that china sending this signal that it is ready and willing to use its rare earths as a tool in the trade war. obviously, that would be a nuclear option, just like what the u.s. has done with huawei. >> and chinese dominance in the

rare earths market could be devastating if beijing pushes forward with threats to use the metals as the next front in the trade war. the united states gets 80% of its rare earths supply from china, which is used in everything from cars to dishwashers to key american weaponry. how much does this hurt the u.s. on the flipside and on china as well? >> the biggest impact will be on the u.s. as you say, the u.s. relies on china for 80% of its rare earths supplies. so if that is suddenly cut off, there are not a lot of options for the u.s. they themselves have only one rare earth mine. they cannot make enough domestically to meet the demand. in terms of the impact on china, probably more limited. china consumes most of the rare earths it produces domestically,

and we would also probably see a big spike in rare earth prices, which would help domestic producers. so definitely the big hit would be on the u.s. >> what about the u.s. sparing china from the tag "fx manipulator?" i mean, that would have been a very demonstrable ratcheting back against china. do you take heart from that? >> it is certainly a sign that talks are still on the table, or both sides don't want to escalate things too much. there is no real reason for the u.s. to do that. china only meets one of the criteria, and the u.s. tends to use this as just a rhetorical thing. there are no real penalties involved if they were, in fact, to do that. but certainly, in the current environment, that would have

been a significant ratcheting up of tensions. right now, everything we are seeing is rhetoric on both sides. we are not seeing actions yet. it all seems to be pointing towards a potential meeting between trump and xi jinping at the g20 in japan next month. >> in bonds, a crucial part of the treasury yield curve has become the most inverted in more than a decade. we are talking about the gap between three-month and 10-year rates. it dipped to a -12.3 basis points, sounding alarm bells for many analysts on the street. >> i think right now people are sort of saying, "let me get into safety and then let's see how this uncertainty shakes out and then i will adjust my positions accordingly." it is not necessarily a super bad time to be in treasuries, given that you are earning some sort of yield, especially on the short end.

but again, the ten-year rally has been pretty dramatic. >> we talk about the yield curve, particularly that three-month and ten-year inversion -- do you think this is a reliable signal, not so much of recession, but of a real downturn, sustained downturn, in the economy? >> historically, a very reliable signal, but with qe and qt, it has been distorted. so even though it is probably a good signal, it is probably over-emphasized today in terms of how important it actually is. nejra: the mexican peso has slumped as u.s. president donald

trump vowed to impose a 5% tariff on goods from the nation. he said the move would stand until the country stops immigrants from entering the u.s. illegally. mexico's president responded, saying, "from the start i expressed that i don't want confrontation." he added that the nation's foreign minister will visit washington tomorrow. but the decision throws the stability of the rebooted nafta pact in focus. >> donald trump says he and the u.s. will post 5% tariffs on everything that comes in from mexico in mid-june, and then, if mexico does not do enough to curb illegal immigration into the united states, trump says that those tariffs are going to ratchet up, step by step by step, until you get to about 25% on every single thing coming into the united states from mexico by october 1. this is a massive escalation. >> a tit-for-tat america versus china is relative to america's strength against china, but we are so integrated with mexico that if we got into a tariff battle with mexico, i think that could be more costly to the u.s. economy and have a more direct effect on business confidence, which would cause them to retrench, and that could lead to an economic slowdown. david: earlier today, chinese state media announced that the

government would establish a list of what it called "unreliable entities," based on whether they obey market rules, violate contracts, cut off supply for noncommercial regions, and generally damage the interests of chinese companies. what do we know? as i understand it, we do not know it all yet. >> it looks like it is pretty much in response to the u.s. entity list. in essence, it looks as though china will target those companies that have cut off supplies, those u.s. companies that have cut off supplies to chinese firms, and huawei is obvious the example. that is the obvious example. china is getting serious about retaliation and flexing their muscle to show they do have some options. viviana: this is bloomberg. ♪

viviana: this is "bloomberg best." i am viviana hurtado. let's continue our global tour of the week's top business

stories with more fallout from the european elections. a crushing defeat for the ruling party in greece puts the prime minister's future in doubt. >> stocks in greece climbing this morning after prime minister alexis tsipras called for a snap election following a crushing defeat in the polls. we have also seen that 10-year yield in greece hit a record low. why are markets are reacting like this? >> basically because, whilst polls had shown, from a few months ago until just before election, that tsipras was set to lose the election, we did not expect that loss to be as big as it was. in fact, the 10 percentage points difference with the main opposition party was where the loss was seen at the beginning of the campaign. it gradually was reduced and reduced to around between 3% and 5%, so the loss was bigger than expected, and markets have very much welcomed that, because they feel that it will be hard now for tsipras to make up that lost

ground in terms of the national election. with the idea that the leader of the new marcus lee party will be the new prime minister. vonnie: german chancellor angela merkel has concluded her well laid secession plan is unraveling. her designated successor, the person she thought would lead the party after her, seems to have other notions about that. explain to us what is going on. >> their new party leader for merkel's christian democrats, annegret kramp-karrenbauer, she has been at the top of the party since december. what you would have expected with a fresh face is a boost in the polls. that has not happened. on sunday, in the european election, the cdu had its worst showing since the war, so things aren't going the way they were supposed to go. in addition to that, kramp-karrenbauer -- we call her "akk," her initials -- has

committed quite a few gaffes. she picked a fight with some activists before the election, so a lot of people are wondering whether she is up to the job. and what we already hear from the chancellor is that angela merkel feels the same way. matt: europe's most influential leaders are already tussling over who should be the next european commission president. angela merkel failed to win support for her pick. manfred weber led the picks. emmanuel macron pushed for chief brexit negotiator michel barnier, who ran an unofficial campaign against weber, even though they are in the same party. >> it as clear as day now that emmanuel macron and angela merkel do not see eye to eye on the issue. they will have to clarify who becomes commission president before they can focus on the european central bank.

we could see a delay or a transition period that becomes very long. the problem is mario draghi needs to leave the central bank by the end of october. vonnie: the standoff between e.u. and italy continues. italy said to respond to the european union as it faces a multibillion-dollar euro penalty from the commission due to the

country's failure to rein in debt. it does seem like we have been here before. why is this time different? >> yes, well, it is different because the balance of changed inside the coalition. we now have matteo salvini, of the league, who is the dominant force in the coalition, because of this massive win in the european parliamentary elections, and he is taking a much more brussels-bashing stand, and the latest we have is he is preparing for a collision course with brussels. >> the chinese government's first seizure of a bank in more than two decades is piling fresh pressure on shares of small lenders, which are already trading at rock-bottom valuations. the bloomberg index of hong kong listed banks dropped to a four-month low monday after

regulators assumed control of baoshang bank, citing serious credit risks. tell us about the fallout from the seizure. >> we see a lot of negative impact, not just in the equity markets. we also see that in the bond market and the money market in terms of repo rates. so, as you mentioned, the shares of hong kong-listed chinese banks have dropped to a four-month low, and interbank repo rate has hit a one-month high, and smaller banks' coco bonds also failed on monday. this is the first time that the chinese government seized a bank since 1998, so the market participants are still very nervous. they do not know what is going to happen next. vonnie: special counsel robert mueller about to make a statement on the russia probe. this is the first ever public statement that special counsel robert mueller has made or will make on this matter, or any matter related to the probe. >> if we had had confidence that the president clearly did not commit a crime, we would have said so. we did not, however, make a determination as to whether the president did commit a crime. david: president trump was out

fairly quickly. when you say that there is insufficient evidence that a person is guilty, that person is innocent. case closed. do you think it is closed? >> no. it is almost an incitement from mueller to congress that it is in your hands. this is the way the constitution is organized. if there will be the prosecution of a president, it does not come from the executive branch, it is up to you. so the case is, by no means, closed. matt: 5g, the new communications network, has arrived in britain. bt is rolling out the next generation mobile technology today through its ee carrier, with rivals vodafone, o2, and three all set to follow in the coming months. what does this mean for the controversy over huawei, which, obviously, for a lot of countries, is the preferred 5g equipment maker? >> absolutely. huawei is the elephant in the room when it comes to the 5g rollout. bt relies on huawei for a lot of the radio and antennas needed for 5g. it had to pull huawei's new 5g

smartphone from its glitzy 5g launch last week. so while they are able to roll it out, there are uncertainties as the government is making up its mind. >> we have china manufacturing pmi worsening more than anticipated, dipping further into contraction territory. >> the forecast had been for 49.9, so certainly firmly in contraction. you look at the subindex of new export orders, that fell into further contraction as well, so you've got a combination of weakness in terms of domestic demand, external demand, and those trade pressures as well. nonmanufacturing data, that came in line with what we saw in the previous month, 54.3. so the services sector still holding up, but it's the manufacturing sector firmly under pressure. ♪

viviana: you are watching "bloomberg best." i am viviana hurtado. this week, bloomberg's china correspondent, tom mackenzie, sat down for an exclusive interview with huawei founder and ceo ren zhengfei. the company is caught in the

crosshairs of the trade war. despite sanctions from president trump, ren said decisively and defiantly huawei will find a way to survive. ren: the u.s. manages its own companies. the u.s. is not the international police. they can't manage the whole world. the rest of the world decides whether they should work with us based on their business interests and positions. if some companies don't want to work with us, it is like a hole in the airplane. we are working to fix the hole, but the airplane is still able to fly. of the chips we have been using, half are from u.s. companies, and half we produce ourselves. if the u.s. imposes further restrictions on us, we will reduce our purchases from the u.s. and use more of our own chips. if american companies have permission from washington to sell to us, we will continue to buy from them. tom: what exactly have you put in place in terms of contingencies? ren: we might have contingency plans for the core of the airplane, the engine and fuel tank, but we may not have a plan for the wings. we need to review the situation all over again and fix those problems. you can come back to interview us in two or three years to see

if we still exist. if we are gone in two or three years, please remember to bring a flower and put it on our grave. tom: what extent of damage, how much damage do expect to be felt in the consumer division of the business, so smartphones and laptops, which depend on u.s. chips and software? ren: we might miss our expected growth target, but we are still growing. being able to grow in a tough environment reflects how great we are. tom: you have talked about having a two-year lead in terms of 5g on your competitors. does that lead get eroded? ren: definitely. if we slow down, it is because the wing of the airplane has lots of holes. if we fly slowly but others fly fast, of course they can catch up, but we will keep fixing the holes. we will fly fast against once

all the holes are fixed. viviana: you can find much more of that exclusive interview with the founder and ceo of huawei at bloomberg.com. and check your local listings for a bloomberg television special, "huawei: connected and contested." it airs throughout the weekend. coming up on "bloomberg best," more compelling conversations. ecb vice president luis de guindos discusses the bank's latest financial stability report. and morgan stanley ceo, james gorman, speaks exclusively on markets. he says the problems may be all in our heads. >> the issue is the market psyche. viviana: this is bloomberg. ♪ viviana: welcome back to "bloomberg best." i'm viviana hurtado. morgan stanley's chairman and ceo does not expect a full-blown trade war between the u.s. and china. but he says anxiety about trade

is having a negative effect on markets. james gorman spoke with bloomberg's tom mackenzie at the morgan stanley china summit in beijing. james: the market's psyche is fragile. i would say the market itself on core fundamentals is fine. you have got unemployment at 3.5%. who thought this was possible a decade ago? we have muted inflation. there is plenty of liquidity in the market. the market sentiment -- the issue is the market's psyche. there is more downside risk than upside risk. more people think the market is heading down, and we are

potentially heading into a recession, which inverted yield curve would suggest, than we are the latest innovation from xfinity isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome.

the prudent thing to do. viviana: welcome back to "bloomberg best." i'm viviana hurtado. morgan stanley's chairman and ceo does not expect a full-blown trade war between the u.s. and china. but he says anxiety about trade is having a negative effect on markets. james gorman spoke with bloomberg's tom mackenzie at the morgan stanley china summit in beijing. james: the market's psyche is fragile. i would say the market itself on core fundamentals is fine. you have got unemployment at 3.5%. who thought this was possible a decade ago?

we have muted inflation. there is plenty of liquidity in the market. the market sentiment -- the issue is the market's psyche. there is more downside risk than upside risk. more people think the market is heading down, and we are potentially heading into a recession, which inverted yield curve would suggest, than we are the reverse. that is not a good thing. that is why you're seeing, at any point in time, when these macro stories hit the news, whether it is prime minister theresa may announcing her resignation, the shock election results in australia, around the world, you are seeing things that are triggering market reactions, and it is more

negative news than positive news which is driving it. tom: that yield inversion, the three month versus the 10-year, how concerned are you when you look at that? james: it's concerning. it is the leading indicator of recessions over the last 50 years. on the other hand, i saw former chair yellen, i think last night, say it could mean that or it could be time for the fed directs to cut rates. that surprised me, frankly. i think the fed is being decidedly neutral at the moment. which, i, personally, feel is the prudent thing to do. to cut rates ahead of hard evidence the recession is coming is using some of your firepower, and they do not have a lot of firepower.

viviana: on wednesday, pimco published a new global economic outlook. it predicts lackluster growth and a likely recession within the next three years to five years. bloomberg's jonathan ferro spent the day at the company's headquarters in newport beach, california. he spoke exclusively with several top executives, starting with joachim fels and scott mathur. >> we are seeing the end of an era. the last five to 10 years, we have had massive outperformance of financial assets. we think that era is coming to an end, and we think we are entering an age of disruption. jonathan: just going over the last five years to 10 years, you underlined this in the piece, it would be a mistake to extrapolate forward the non-macro environment and push

that out over the next three years to five years. why is that such a big mistake? >> it seems like the market has become used to central banks being powerful in terms of taking volatility out of the market and pumping asset prices up. one of the things we talked about in the market is that that era is coming to an end. the u.s. central bank was the only central bank that was able to normalize policy rates. but basically, elsewhere, there is no monetary firepower left. jonathan: there was a broad assumption that we could engineer, the federal reserve could engineer, a soft landing. is that starting to unravel? >> i think the downside risks to growth have increased over the last couple of weeks. the main downside risk is, with respect to trade, we have seen an escalation in tensions between the u.s. and china again. the economic impact of the tariffs, for example, that direct impact, is estimated to be relatively small. we think it is 3/10 of a percentage point. the bigger and more important point here is it is happening during a time when global

growth, as well as u.s. growth, was already on a decelerating trend. the slowing growth in china does spill over into the u.s. in that kind of background, when you create uncertainty, it just creates a broader environment where you could see a bigger deceleration. manny: what we do think is that there are opportunities because of what banks used to do that they don't do anymore. it goes from lending against real estate to buying securities in housing to being able to opportunistically do direct lending to do values private credit transaction, which, if managed properly and constructed the right way, should deliver 10% to 12% business equity. it is an opportunity for us and for other people. jonathan: they are big returns.

the question is other people. it is an incredibly competitive environment. we talked about areas where there might be froth. is there areas where there might be better froth? >> on the corporate side is where we see the froth. in terms of direct corporate issuance outside the space. when we look at commercial real estate, residential real estate, private or public, we continue to see considerable opportunity. that is a sector that, despite the global financial crisis being 11 years past, where we still see frictions and markets, where we still see opportunities for investors on the private side as well as the public side. that has really been our focus for now, looking to harvest opportunities in that space. viviana: you can check out many more interviews from jonathan ferro's day at pimco on bloomberg.com. check your local listings for a bloomberg television special featuring his complete conversation with ceo manny roman and cio dan ivascyn. the european central bank presented its financial stability reports. it says risks to the eurozone's private and public finances has

risen. it cites internal and external threats to growth. matt miller sat down with ecb vice president luis de guindos and asked him about the report's key findings. >> the economy is growing. it is growing at a slow pace. it is going to be slightly above 1%. there are downside risks. but these downside risks are related mainly to issues outside the borders of the euro area. that is something we have to take into consideration. matt: i wonder about trade. when you watch what is happening between the u.s. and china, are you concerned about the sure-to-come trade war between the u.s. and europe? luis: i think that now the focus is -- i think that the main risks are the trade tension. so far what we have seen are some announcements of increasing

in tariffs. but the real risk would be an escalation toward the full-fledged trade war. that would be into mental to the european economy, the global economy. matt: don't you think, over the past few days and weeks, we are pretty much there? luis: i hope that will not be the case. that, at the end of the day, common sense will prevail. if that is not the case, that would be risk that we have for the global and the european economy. viviana: staying with central banks, president donald trump still has two open seats to fill on the federal reserve board. a possible nominee -- trump economic advisor judy shelton. this week, she joined david westin on bloomberg's "balance of power" and discussed the fed's role in maintaining a level monetary playing field during the trade dispute with china.

judy: china is able, with its state-controlled apparatus, to bring everything to bear. they can intervene in the currency markets daily. they do so as a matter of policy. they can engage in fiscal stimulus at the drop of a hat. i think it is tempting. the united states wants to fight fire with fire. but we do not do it that way here. we believe in the private sector. but i would not what the fed to be a burden and to do the wrong thing at this time and undermine some of the good growth prospects that we have ahead of us. david: did it do the wrong thing in december when it raised rates? judy: i think, by its own admission, we have seen almost a complete turnaround. so i think the fed itself went from being quite inclined to raise as quickly as possible to now rethinking and sitting tight

and now even hinting that it could go the other way. so i welcome this newfound humility on the part of the fed of watchful waiting. i think it is an admission that central bankers are not always omniscient in knowing exactly where interest rates should be. i think it would be healthier if we had a more organically determined interest rate that reflected market thinking. ♪

viviana: this is "bloomberg best." i'm viviana hurtado. let's resume our roundup of the week's top business stories with a focus on company news. european carmakers fiat and renault announced plans for a cross-border megamerger, delivering the latest jolt to the global auto industry. shery: fiat has formally proposed a merger with renault that would make the world's third biggest carmaker. how well do these carmakers fit together? >> there is a range of places where they might overlap.

of course, as always, they are making a lot of different types of cars, including competing brands. the key here is that is where they have a good fit. certainly in electric cars, that is a big, growing segment. and there you have renault with very good technology and very good selling models and fiat not so much. so that would be a big boost for fiat in terms of acquiring electric car technology. same goes for nissan. they have some great electric car technology. so to the extent that they are brought along into the lions, those are good areas. fiat itself claims there will be about 5 billion euro in savings a year from this merger. those will primarily be in r&d costs, product development, those kinds of things. so it does look like there are good reasons to make this fit. >> the french finance minister was on the radio this morning, and he said he thinks this is a

great deal. he said that car companies have to bulk up to deal with the challenges of the future. they need to have the ability to invest massively in all the new technologies coming on board, from autonomous cars to electric cars. pretty much a green light from the french government. >> sources have told bloomberg the alibaba group is considering raising $20 billion via a second listing in hong kong. the megadeal would bring china's largest company closer to investors in its home country. they, of course, tried to start a deal in hong kong before their 2014 new york ipo, so why are they revisiting it now? >> before they went to new york, there was lobbying in hong kong, trying to get the partnership structure done in hong kong. at that time, the hong kong stock exchange was not quite ready, but since then, we have seen the hong kong stock exchange relax its listing rules so companies like xiaomi have done a structural listing in hong kong. given its job, with the trade war going on, there are threats that the u.s. may shut off china in the capitalist market.

there must be some concern in alibaba that they should bring it to the home investors which know their product and know their platform best. >> if they do come, it is not a surprise to us, because i have said, when you travel far, you come home. everybody does that. but that does not mean you give up on your new home. so i am sure they're just going to come back and keep whatever they are doing in new york or other places and they will be coming back to asia. vonnie: it is the payment industry's third megamerger of the year. global payments will buy total system services in a deal valued at $21.5 billion. why now? why did it take until now? >> a few things. first, pace of innovation in payments has accelerated. for example, in new york, contactless cards coming to the subways. if you look in asia-pacific, with alipay, across parts of china, the necessity has more scale in our business to make the investments compete. and to further fund innovation is driving a lot of transactional activity you are seeing. >> thousands of small suppliers and longtime vendors on amazon.com are holding their

breath for what could be a purge that would favor major brands like procter & gamble, sony, or lego. the purge is expected to reduce amazon's overhead and increase revenue. what is behind the purge? why are they considering such a thing? >> basically e-commerce business has two parts. it has a retail side, where it buys products wholesale and then resell them at a markup, like a traditional place like walmart. and they have a consignment shop. they have this marketplace similar to ebay where there is a website as a matchmaker between the seller on one hand and the buyer on the other. what is happening is amazon is trying to shift more of its smaller vendors, people that buy through wholesale model currently, shift them to this marketplace model where suppliers will be selling directly to amazon shoppers one shopper at a time. >> apple has unveiled its first updated ipod touch. it has a new chip and a way to tap into apple services and a new price tag, $199. why is apple revamping a product that -- well, it is cracking on, isn't it, 20 years old. >> the last time the ipod touch was updated in 2015, so four years ago. next week is the annual developers conference, where they develop new software.

in order to get the newest features, you need the newest hardware to make it work. some of these features are processor intensive and require a lot of speed. and because the ipod touch had not been updated in four years, it needed a new chip to take advantage of services like augmented reality applications, similar apps from developers. it made a lot of sense it would develop it. they did not go too far. >> the last time the ipod touch was updated in 2015, so four years ago. next week is the annual developers conference, where they develop new software. in order to get the newest features, you need the newest hardware to make it work. some of these features are processor intensive and require a lot of speed. and because the ipod touch had not been updated in four years, it needed a new chip to take advantage of services like augmented reality applications, similar apps from developers. it made a lot of sense it would develop it. they did not go too far. they went to a faster chip.

there is really nothing else new going on here. >> it is a big week in european football. according to this year's champions league football valuation report, for the first time, real madrid has overtaken manchester united at the top of the money league. winning the champions league three times in a row has allowed the spanish club to grow their commercial revenue and almost double the rate. so what does this tell us? >> it looks at the enterprise value of the clubs. it takes into account player values and also the projected revenue streams that the clubs generate. as you mentioned with real madrid winning the competition those three years in a row, they have managed to move ahead of manchester united, who have not performed so well in this competition. a lot of movement has come from that champions league performance. we have also seen u.k. teams 8x8 a kind in sterling, given that the league is based in dollars. and we have seen at barcelona moving down, because they have spent a lot on player wages recently.

>> retail stocks are getting taken to the cleaners today. luxury winter coat maker canada goose, casual abercrombie and fitch and michael cours falling after weaker than expected earnings. is a predominant theme across these or do these just each have their own story? >> each have their own story. i do think this is consistent when we look across retail earnings season more broadly. we really did see trouble in apparel and home goods. we did not see that same trouble at the big box stores. walmart and target both had blowout quarters. and best buy and home depot were fine. apparel was a tough place to be in the quarter, and we saw that show up again today. vonnie: the u.s. justice department is demanding that t-mobile and sprint lay the groundwork for a new wireless carrier, a fourth with its own network, as a condition to clearing their merger. i am speechless. merging t-mobile and sprint

would take away a fourth, but leaving sprint out on its own, it is not clear it would survive. how would any fourth survive? >> i think what the justice department is looking at is trying to preserve some form of competition, and going from four to three might obliterate some of that. so they are saying maybe you can spin out the sprint brand and give it its own network. we are not sure how the structure would work. but what they want is to preserve another brand in the markets. vonnie: amazon is interested in buying prepaid phone service boost from t-mobile and sprint, according to reuters. it would be a wholesale deal that would give amazon access to t-mobile's wireless network for at least six years. if t-mobile and sprint are allowed to combine, they need to get rid of boost. they have been told that. is this a perfect solution? >> everybody and their mom is

interested in these assets. it is because of that 6-year wholesale agreement to lease spectrum. the question is would sprint or t-mobile really want to sell this to amazon? or, would they prefer to sell it to someone like a charter or comcast? and who would be the better competitor? from the doj's perspective, they want this to go to somebody that will create a genuine fourth competitor in the market. >> uber shares are getting a boost after its earnings report. the world's largest ridesharing company reported fourth-quarter sales beat estimates but lost $1 billion, among the largest loss of any public company. >> i think they performed better than expected, especially on the

top line. they already gave us unaudited results, and the booking at 41% looks really strong. the core platform rates and ebitda margins are going to improve for the rest of the year. they bought up this quarter and they talked about more rational pricing. that is a positive. they are seeing lyft being less aggressive when it comes to subsidies and pricing in the u.s. markets. so they expect more rational pricing to improve take rates. ♪

alix: yields on the move, the 10 year treasury down. what struck me yesterday is the rates did not move like you'd

expect. you have consumer staples and utilities down almost 2% yesterday, despite that move lower in yield. viviana: 30,000 functions are on the bloomberg. we always enjoy showing you our favorites on bloomberg television. maybe they will become your favorites. here is a function you will find useful. quic . it will lead you to our quick takes. that is where you can get important context and fast insight into timely topics. here is a quick take from this week. >> thanks to the smartphone, going from a to b is so easy that has got some urban dwellers wondering why bother owning a car when you can easily get where you want at the press of a button? it's an idea known as mobility as a service, where travelers say goodbye to their own cars and sign up instead for transportation on demand. booked through their smartphones. imagine, for instance, a commuting plan that charges by the mile or through a monthly fee, like netflix. the demise of car ownership, at least in the world's growing urban sectors, is a prospect that the world's automakers are getting ready for. but it will not happen right away. a major switch to subscription transportation requires two things to fall into place. the first is already well underway. the explosion of ride-hailing apps like lyft, grab, and careem. the second part is not quite

there yet. that is driverless cars. removing the human from behind the wheel snatches the costs. that will make mobility as a service cheap, and it will not make financial sense to own a car anymore. a typical ride today costs $2 to $3 per mile. a robotaxi is projected to cost as little as $.70 per mile. tesla ceo elon musk thinks he can lower that to $.18 a mile. that will turbocharge demand for mobility as a service that is destined to become a $10 trillion business, according to ford motor company. that is why tech giants like google and apple are developing their own self driving systems to take on the world's leading automakers, including volkswagen, general motors, ford, and toyota. eventually, a single smartphone app could connect us to a web of options. robotaxis, self-driving shuttles. it will get us through congested megacities. two thirds of the global population is projected to live there by mid century. they may have to spend a day in the country to capture the glimpse of the 20th century show pony known as a private car. viviana: that was just one of the many quick takes you can

find on the bloomberg. you can find them at bloomberg.com, along with all of the latest business news and analysis 24 hours a day. that will be all this week for "bloomberg best." thanks for watching. i am viviana hurtado. this is bloomberg. ♪

♪ >> welcome to "bloomberg businessweek. jason: we're at bloomberg headquarters in new york. >> this week's special money issue, how one child -- ivy league and had one point -- $1 billion. famedald trump, the iconoclasm hotel. >> we begin with one of