Transcripts For BLOOMBERG Bloomberg Best 20240713

Unity and stability. Viviana meanwhile, violent clashes in hong kong show the extent of dissent against beijing. There have been pitched battles all day long. Viviana Boris Johnson floats a brexit plan, but it is short of a done deal. There are some issues that are problematic. Vivana Australias Central Bank rolling out another rate cut. Already, traders are already starting to price in another cut for december. Viviana the u. S. Plans to slap more tariffs on the eu. The ultimate goal according to the u. S. Trade Representatives Office is to hit europe where it hurts. Viviana plus, an exclusive conversation with indonesias president. He is pledging reforms that will attract investors. You will see many sectors removed from the negative investment list to create new jobs. Viviana its all straight ahead on bloomberg best. Hello and welcome, im viviana hurtado. This is bloomberg best, your weekly review of the most important business news, analysis, and interviews from Bloomberg Television around the world. Lets start with a day by day look at the top headlines. The week began with markets on edge in the wake of a bloomberg report the Trump Administration might set limits on u. S. Investment in Chinese Companies and Financial Markets. On monday, the white house walked that story at least part way back. The u. S. Has no current plans to stop Chinese Companies listing on american exchanges. Now, thats according to a treasury official. Its in response to a bloomberg report that the administration is looking at ways to limit flows into china. It comes at a time when china is vowing to continue to open its market to foreign investments. So what have the chinese said so far in response to the news . It has been pretty restrained so far. About 30 or 40 minutes ago, we had a spokesman for the Chinese Foreign ministry give the most direct comments about the news so far. They emphasized that Financial Cooperation has been good for both countries. They said that forced decoupling would be bad for american and Chinese Companies and for the people of both countries. They also said that that sort of thing would cause a lot of instability in global markets. Vonnie is this posturing on the part of the chinese, or is the Trump Administration really looking to decouple Financial Markets . Well, as we reported on friday, these discussions inside the white house are in early stages. No decisions are really imminent, but you can already see the impact that these ideas are having in setting the tone for a round of trade talks that are coming up next week in washington. So the main focus now is to see if the chinese trade negotiator brings a deal to washington next week and if he does, what is in it. Chinese president xi jinping has kicked off a mammoth series of parades and celebrations to mark 70 years of communist rule. Xi said nothing can stop chinas advance and china must remain committed to the onecountry twosystems approach to maintain the longterm stability of hong kong. Theres no force that can shape the foundation of this great nation. No force can stop the Chinese People and chinese nation from forging ahead. The message really is one of unity and stability and certainly economic and military might. This is china putting, of putting across a miss putting across a message for the domestic audience of military strength and stability and unity. Of course, at a time when china is facing incredible pressure domestically, or the external environment where the u. S. Is challenging china on a number of fronts. But today, china and the communist party would like us all to focus on the military parade behind us and president xi jinping. Beijing is celebrating with unbelievable pictures and events and music. [protesters chanting] on the flipside, in hong kong, protests are intensifying. There have been pitched battles all day long. In fact, 31 protesters have been hospitalized so far. Two are in critical condition. One is in serious condition. We have confirmation from the police that a Police Officer actually did shoot one protester with a live round of ammunition. This tells you just how far this protest movement has gone and how far the police have gone as well to repel it. The city obviously completely on edge right now while beijing, a very different celebration for the anniversary of the peoples republic of china. It was an anemic 10year bond option for japan. Bonds had their worst monthly performance since 2016, a huge selloff in treasuries and european debt followed that. What was behind that failed auction . It all has to do with plans to steepen the yield curve, and those plans have been stiff enough to really alarm investors. The reaction was swift. Yields spiked, then we saw a reaction as well as spill over in europe and in treasuries, too. The ism factory index posting its weakest reading since the end of the last recession. U. S. Stocks sharply down. This is obviously the second month in contraction. It is a cause for concern. We were here in 2016. The euro zone manufacturing also showing the worst month since october 2012. The question is, does manufacturing pull down the consumer or does the consumer pull manufacturing back up if demand stays strong . That is what the fed is waiting to find out and it will take a while before we get a better clue. Caroline what a topsyturvy trading day it has been. We started in the green, had a selloff in bonds, and then the complete reverse happen. After we get ism manufacturing data, woeful out of the u. S. , adding to the mood music. I dont see a lot of good news. I have been optimistic about the Global Economy, and it is harder to remain an optimist these days. Yeah. Boris johnson unveils his brexit plan and warns the eu to compromise or watch the u. K. Walk away from talks. The u. K. Prime minister spoke to the conservative party in manchester earlier with his outline of a new brexit plan. He gave a warning of what could happen if it does not go through. Prime minister johnson the alternative is no deal, and that is not an outcome we want. It is not an outcome we seek at all, but let me tell you, my friends, it is an outcome for which we are ready. What we saw today, the brinkmanship where he said im giving europe nine days to come up with a deal, or we are going to go out at the end of october without a deal, and that is one week before european leaders are set to meet in brussels to go through this proposed deal. We also saw a bit of conciliatory language from Boris Johnson, who says hes not against europe. I love europe, he says, but the bottom line is his new proposal is unlikely to be anything european leaders, including the irish, could possibly agree to. Brutal text selling day it has selling been. The roughest open to a quarter since 2009 as we question growth around the world, the worries about the jobs data in the u. S. , worried about manufacturing worldwide. Joe pretty ugly start to the quarter, to the month, to the jewish new year. Very rough all around. A very explicable selloff. Theres not a whole lot of mystery this time about what the anxiety is. It is very datadriven, very much about those recession fears. Just when it started to look like we were maybe coming out of that or putting this behind us or maybe other things were going on, that ism number yesterday i think still reverberating, still causing a lot of anxiety. Theres nothing real good out there for people to hang their hat on. Vonnie markets are waiting for the latest services data. That would be september services from ism, and it is a miss it is coming in at 52. 6. The market was looking for 55. The markets are getting clobbered, vonnie. That is a huge miss we are getting. Weaker than economists were anticipating, very much consistent with what we saw in the manufacturing ism earlier this week. All of this contributing to this negative tone in the market and concerns about potential recession in the u. S. The Economic Data up until this week looked more like an economy growing above 2 . Now that slower pace of activity is starting to settle into the leading economic indicators. Scarlet at one point, it looked like we were headed for a Third Straight day in losses. Third decline over the fourth quarter, and then things turned around here. We have recovered because we believe the fed is going to come in and save everyone. Certainly it puts a lot more emphasis on the jobs report tomorrow. Eu leaders express doubt over Boris Johnsons brexit deal. Johnsons plan would keep Northern Ireland in the eu Single Market for goods, but see it leave the Customs Union. The Prime Minister told the house of commons that it is up to the eu to compromise and agree to his deal. The europeans now have 24 hours to really digest this new plan. They really see there are issues that are problematic. The fact that you stay in a stable market but pull out of the Customs Union it is unclear who would deal with the vat collection. At the same time, it almost implied there would be checks. This is something the irish said would never happen, that the allirish economy was their priority. At this point, we understand essentially europeans will tell Boris Johnson we need Something Better in a week, or actually there is a big risk we may not make it in time for the october 17 summit. They want to come into that summit with something that is clear will be approved. It is friday, jobs day. 136,000 jobs were created in september, just shy of estimates. August numbers were revised higher by 38,000. Septembers average Hourly Earnings growth missed, still up 2. 9 . The Unemployment Rate unexpectedly improved, dropping to 3. 5 . This is a muddled middle sort of report. Not weak enough to concern that confirm that weakness is spreading on Global Manufacturing throughout the economy, but not Strong Enough to suggest that we are immune. For americans across the country, the headline number here is the 3. 5 Unemployment Rate. It is a 50year low. I think the economy is now in a turning zone, and i think we have had a soft two quarters, but i think now we will be moving into a much Stronger Economic story. I think we are turning, but i dont think we are turning into the fast lane. In fact, i think we may be looking for a tougher slog over the next couple of quarters. So while we have been very conditioned to 2 plus gdp growth, what we will see in q3 and q4 is really a lot of engines of Economic Growth shutting down. We saw hints of that in the ism surveys. You see it showing up in the payroll slowdown. I think you will see it in a lot of other Economic Data over the next couple of months. Viviana still ahead as we review the week on bloomberg best, the chicago fed president , charles evans, responds to some of the recent downbeat u. S. Economic data. I dont know if one more rate cut at this point is the right decision or not. I think we will have to go into the meeting and see. Viviana plus, an exclusive conversation with indonesias president. Up next, more of the weeks top business headlines. Consumers in japan rush to stock up on stable before a sales tax hike went into effect. One of the hottest selling items toilet paper. Viviana this is bloomberg. Viviana this is bloomberg best. Im viviana hurtado. Lets continue our global tour of the weeks top business stories. The wto ruled on a dispute between the u. S. And europe. That decision immediately escalated tensions over tariffs. The wto has given President Trump the green light to impose tariffs on a recordsetting 7. 5 billion worth of european exports. That is in retaliation for illegal government aid to airbus. The wto today handed President Donald Trump a pretty big weapon in trying to rein in some of europes trade abuses. Governments in the eu have unfairly subsidized airbus to the tune of 7. 5 billion, and now the u. S. Can retaliate against european goods to that amount. Paul the u. S. Is ready to slap tariffs on billions of dollars of european products following a landmark ruling from the World Trade Organization on aircraft subsidies. Not surprisingly, aircraft are on the list of retaliatory targets that the u. S. Is going to hit. Its going to hit a 10 tariff on large aircraft coming from a few european countries, including the u. K. And france. Also, though, are other items completely unrelated to aircraft. 25 tariffs on things like olives and cheese. And what the ultimate goal is, according to the u. S. Trade Representatives Office, is to hit europe where it hurts in order to get them to the table for a negotiated settlement. The impeachment inquiry deepens. Rudy giuliani, secretary of state mike pompeo, and attorney general william barr are drawn deeper into the house inquiry after new details about the administrations foreign contacts emerged monday. Kevin the house issuing a subpoena to rudy giuliani, the former new york city mayor, as well as the president s personal attorney. They want to know specifically what his role was in orchestrating some type of overseas communications with ukraine following that phone call now in question between President Trump and the ukraine president. Yesterday, there were also reports secretary of state mike pompeo was on that phone call. Meanwhile, another phone call now in question. The New York Times first reporting last evening that President Trump reached out to australian Prime Minister Scott Morrison to see whether or not he would be willing to look into the origins of the Mueller Report and work with attorney general william barr. It is just the latest in a series of questions for this administration about President Trumps communications with global leaders. Shery now, the japanese government finally raising the National Consumption tax to 10 after twice postponing the move over concerns about its impact on the economy. Tax hikes are rarely popular anywhere in the world, so how are japanese consumers reacting to it so far . Yeah, over the weekend, stores put up signs, enticing customers coming in to dine in or buy some of those bigticket items ahead of the tax hike. One of the hottest selling items toilet paper. Thats right, customers were going to shops and buying up, stocking up on toilet paper ahead of the tax hike, and local shops were saying they are completely sold out. It is a sign consumers are thinking about the tax hike in some way or another. That said, economists expect the burden on consumers to be less compared to 2014, when the tax hike rose from 5 to 8 . Chinas september manufacturing purchasing Managers Index rose to 49. 8, fractionally better than forecast. What does it all suggest . Economists do not see the slightly better than expected numbers as a sign of recovery or stabilization. The focus here is really on the official pmi readings that show chinas Manufacturing Sector in contractionary territory for the fifth consecutive month. The pboc has been stepping up some monetary support, but any additional stimulus expected to be very moderate, considering the fact that the pboc is trying to prioritize stabilization and avoid any runup in financial risks. Amanda the economic pain in hong kong is intensifying, with retail sales posting a record plunge past the longrunning and as the longrunning and escalating protests cripple tourism and spending. It does not seem like there is any let up in sight went it when it comes to where demonstrators want to go next and also where the economy is headed, too. Tourist numbers, we knew they were down throughout the summer. Now we have hard evidence that in august, it was the worst on record. Visits from many from Mainland China falling by 42 in august and we know during this golden week holiday period, most of the shopping is from the mainland chinese, so the value of retail sales down 23 . That was the most on record yearoveryear in august. So the economy obviously feeling the impact of these ongoing unrests. The global easing cycle continues. Australian stocks surged, the most in a month after the countrys Central Bank Cut Interest Rates. The rba also said it is prepared to further ease Monetary Policy if needed. What weve seen from the ecb and the fed of late have been the slightly more hawkish rate cuts, certainly dubbed that by some, and yet from the rba, we have seen an allout dovish rate cut, havent we . Certainly, that is the way the market seems to have interpreted things. Yeah, quite remarkable. They managed to achieve something the other major Central Banks havent. Not only did they cut basis points by 25 basis points, already, traders are starting to price and another cut for price in another cut for december which will take the rate down to just 0. 5 , so they managed to achieve something which the others have not. Another cut from india. The central bank there cutting its key Interest Rate for a fifth time this year. 25 basis points cut, as expected. Growth has been slowing in this country from 8 levels, we are talking below 6 in fiscal 19. The rba governor in a press conference said he will maintain his controversial policy stance as long as it is necessary to ensure that growth survives. Market response, however, has been quite tepid because they were anticipating a much sharper cut. 25 basis points has been discounted and there is a view that this is not enough to revive the slump in demand in the economy. Viviana you are watching bloomberg best. Im a viviana hurtado. A hurtado. Ian bloombergs guy johnson got inside perspective on Monetary Policy from chicago fed president charles evans, a Voting Member of the fomc. He explained when it comes to further rate cuts, he is still on the fence. Im openminded about the decision and will learn more before the meeting at the end of this month, but i would say the ism number was, you know, a negative number for manufacturing. We had received a number of reports over the last many months about trade uncertainty, about how Manufacturing Enterprises were a bit reticent to expand capacity, Capital Expenditures have been very weak, so i think it is a little more confirmation of the reports that we have been seeing, and i think it will be very important to see the progression from here. Guy the fomc is moving towards a rate cut, though. Manufacturing is not a huge part of the u. S. Economy, but it is a significant part of the u. S. Economy. Charles oh, it certainly is. And in my midwestern district, we have more manufacturing than the average, so ive heard more reports about this and the weaknesses and what comes from trade uncertainties. But i would say, the thing about Monetary Policy and what the right positioning is, i definitely think the fomc has been moving to what at one point last year looked like headed for slightly modest, a modest restrictive position. Now we have an accommodative position and whether or not one more rate cut at this point is the right decision or not, i think we will just have to go into the meeting and see. Guy the consumer is important, as you indicate, for the u. S. Economy. Nevertheless, if the fed waits until there are signs that the consumer is beginning to roll over, is that too late . Charles yeah, i think that would be an important concern, and its one reason the committee has tried to get out ahead of this. We have repositioned the policy from being headed towards slightly restrictive policy to one that is accommodative. The question is how accommodative we need to be . I would say the issue at the moment is still risk management. I would say the weakness in the ism and in manufacturing is something that definitely increases concerns. Im definitely looking at that data, but at the moment, it still looks like my outlook for this year is 2. 25 . Next year is about 2 . Trend growth is one point 75 1. 75 , maybe 2 , so this is a pretty good growth outlook. The question is if we will be able to navigate the uncertainties and some of the shocks that come our way and get that growth path, or if there is Something Else that pushes us to the side. I think that is why we have moved to a more accommodative policy and we will have a discussion as to if more is needed at the end of the month. Viviana coming up on bloomberg best, more of the weeks top business news. Credit suisses ceo survives an internal investigation. A big decision by Charles Schwab upends the world of online trading. Plus, more compelling conversations. The head of the International Energy agency warns the Global Economic slowdown may take a toll on oil demand. We may revise down our numbers if the Global Economics continue to weaken. Viviana this is bloomberg. Viviana welcome back to bloomberg best. Im viviana hurtado. Lets revisit some of the weeks top interviews on Bloomberg Television. The sharp, midweek selloff in global stocks renewed discussion of a Recession Risk on wall street. But areas Capital Management ceo Michael Righetti said his company is still finding plenty of investment opportunities. He spoke exclusively with jason kelly. Michael i think for a while, everyone looked at the u. S. As a hotbed of uncertainty, yet a safe haven where people were bringing in capital. But when you look across europe in markets that we play in, we are still finding ample things to invest in, real estate markets are healthy. Some of it is the central bank is very accommodative. I think people feel theres an ecb put, which is allowing people to be a little more active, given the economic backdrop we are dealing with. Jason talk about the credit market out there. How are companies feeling, given some of this macro uncertainty . Michael there is this huge dichotomy right now in the world, because markets crave certainty and we dont have a lot of it right now. We can look at whats happened in the economy. Fundamentals in the u. S. Economy, very strong. But a bifurcation between the Manufacturing Sector and service sector, questions about the health of the consumer relative to the lack of health in the manufacturing community. So generally, the folks that we talked to are optimistic, cautiously. Balance sheets are strong and healthy. Revenues are up. Profits are up. But i think we are all starting to talk ourselves into a slowdown and we are starting to see a bit of a shift in sentiment. Viviana does the ipo business need a dose of disruption . This week, venture capitalists and Corporate Executives held a summit to discuss whether the system for Public Offerings is still working. One of the organizers of the event is benchmark capitals bill gurley. He spoke with Romaine Bostick about some key issues, starting with why companies are waiting so long to go public. Bill its obviously a direct result of there being enormous amounts of capital in the private market. It used to be, if you go back in time, one of the reasons to go public was to raise capital. Now theres so much capital available in the private markets that you dont have that as a reason to go public. I certainly think thats been part of the delay. If you view the process as unfair, that might also be something that slows down your path to get there. But i dont think its healthy for companies to stay private forever. I think its super advantageous to companies to pass through and become public. And im hopeful that if we can fix this process, it will lead to more companies coming out. Romaine going public, bill, does come with a lot of responsibility. One of the criticisms that wall street and secondary investors have had is with these dual and multiple share structures out there, with the way that, i guess, the control that certain ceos and founders have over the companies once they become public, isnt really fair. Bill look, the balance of power in Silicon Valley has been leading to the founder for a very long time, so there are tons of sources of capital and only one zoom or one facebook, and thats led to founders being able to make a lot of decisions they want to make. In certain cases, that goes to a level where it costs the Company Rather than helping the company. One of the reasons i encourage Companies Going public is because i think it ups their game. I think it presents more pressure, forces them to be more more disclosive, more transparent. And for those that respond to that, it takes the company to new heights and new levels. Viviana a hot topic lately, oil, especially since the attacks on saudi facilities. Theyve threatened a serious disruption of the global supply. Supplies. Prices have not reacted to the shock as much as many in the industry expected. In an exclusive interview, the iea executive director telling matt miller why he thinks markets have stayed relatively stable. Fatih there are a few reasons, but two of them are important. The first one is the saudi authorities, very quickly, moved and reassured markets that they would come back very quickly. And many other place, such as international agencies, said please come down. We have enough stocks in iea countries and if there is a need, we will be bringing those stocks to the market no problem. This is one reason. And second, the United States yes, Oil Production is still growing very strong, shale Oil Production. There is a lot of oil in the markets. Out of these two, we didnt see a major jump in production. Current price levels are more or less there, where we just were before the crisis. Matt exactly, and the saudis have been making remarkable progress in restoring production and exports. Do you know where they are right now in terms of production and exports . Have you heard any recent numbers . Fatih i would like to refer to what the saudi authorities say. They are very close, if not almost there, in terms of both production and exports. I have no reason to doubt about their numbers. Matt on the demandside, you have, the iea has expected growth to be above a Million Barrels a day this year and next. Is it still the case . Is that still your forecast, given the slowing Global Economy . Fatih so we currently expect growth of about 1. 1 Million Barrels per day this year. First of all, it is much lower than the historical averages, much higher. But also, looking at the Global Economy, weakening, china, drive of the global oil demand, experiencing the lowest Economic Growth in 30 years. Advanced economies are slowing down. We may well revise down our numbers, demand numbers, in the next days or months to come if the Global Economy continues to weaken. Viviana now to another bloomberg exclusive. Indonesias president says he aims to deliver on many of the major reforms investors are demanding. Jacoby, as he is known, sat down with bloomberg editorinchief John Micklethwait in his hometown in central java. Among the sweeping changes hes promising, changes to the countrys labor laws. We compete against other countries in attracting investment to create jobs. Complaints from investors on labor law are always expressed to me, especially for labor intensive sector. They also express the need to simplify licensing. We will work on these two as soon as possible. I will talk to labor unions, discuss with them how to revise the labor laws, but without causing loss for workers. This is for new workers that industries can expand, Foreign Investors can invest, and help create jobs, and indonesian children can work in available sectors. John is that your priority . Will you introduce that law before the end of this year . Joko [speaking a foreign language] translator yes. Priority is labor law. But i have to talk to labor unions. We will also propose 74 laws under the omnibus laws. Licensing can be simplified. Negative investment list will be reviewed to attract investment and provide jobs. John you also have this negative investment list, which you have said you said you would fully open up 25 sectors, such as telecoms, education, but that has not happened yet. Do you have a timetable to open up those sectors, where you can fully buy companies in indonesia . Joko [speaking a foreign language] translator still in process. We will see the revision in the end of this year. For education, we will provide room for Foreign Universities to set up universities in special economic zones. Foreign hospitals with the latest technology will also be allowed, but in special economic zones. Also in the technology sector, we will provide room. We will see in the yearend, we will see many sectors removed from the negative investment list to create more jobs. John the biggest thing in the Global Economy, which hurts indonesia, hurts the world, is the u. S. China dispute. That is the dispute where people in Southeast Asia have to decide whose side they are on. Whose side do you feel as if you are on . Joko [speaking a foreign language] translator indonesia is in the middle. We want to get opportunities because the trade war is not good for all countries. But indonesia wants to take opportunities so that the trade war doesnt negatively impact our country. We have good relations with the u. S. And china. The most important thing is our National Interest comes first. Viviana this is bloomberg best. Im viviana hurtado. Lets resume our roundup of top stories in politics, starting with corporate drama involving a surveillance scandal at a major european bank. Matt Credit Suisses coo has resigned in the wake of the spying scandal that has rocked swiss finance. But the ceo has been spared. Credit suisse is in full damage control. We heard from the chairman today, who presented this entire scandal as a rogue operation by the coo alongside the global head of security. Of course, the two have now resigned. The chairman said there is no indication that the ceo knew or approved any of this. He did say, however, and issued a very public apology, that this should never have happened. He said this is something they simply do not condone. I have to say, however, the investigation from Credit Suisse may be over, but the prosecutor said their investigation continues. So this is certainly not over. Romaine the ceo is working to win back his troops after surviving a spying scandal, telling his staff in a memo full accountability has been taken with the resignation of his longtime confidant. He is responsible. Not looking good, share prices down. Employees internally are very concerned about it and angry. Never had so many people coming out and saying look, this is something fundamentally wrong. It remains to be seen whether they can rebuild trust. I think thats the key issue at this moment, rebuilding trust with its own employees. Matt after a rocky ipo path, ab invevs asian unit makes its trade debut in hong kong. Budweisers asian shares rallied as much as 7 from its ipo price. So i guess it looks like going out at the lower end of expectations with your initial price is something that makes investors much happier. Investors today cheering on the listing of the asian unit of budweiser. It was the most actively traded stock in hong kong today. The fact its already profitable may be helping that performance. As well as the revised valuation the second time around, which has been perceived to be more reasonable, especially with a carving out of the more mature australian operation, which gives the unit more focus on the faster growing parts of the business. As it stands, based on a 2020 multiple of 17 times, budweiser asia is the second most expensive beer name in the world after china. Vonnie wework out, putting its ipo on an official pause. The executive announced the move in a statement to staff, saying rest assured, wework will become a Public Company, but we can only ipo once and we want to do it right. What happens now . Does the whole thing gets shelved and back to square one . Thats pretty much right. The company has said they are committed, they want to be a Public Company at some point. But that would mean this deal is unlikely to happen in 2019. So what we should expect is that the entire process will rewind. They will study ipo profits again. What is more important is not only are they not going to raise the 3. 5 billion for the ipo, there is a Credit Facility contingent to the success of the ipo. There is also 6 billion that potentially would get unwound. Apart from redoing the ipo, theres also negotiating with the banks to do in terms of that credit line. Anna shares of the Biggest Online brokerages have absolutely been pummeled today after Market Leader Charles Schwab announced plans to eliminate commissions for u. S. Stocks and some options. Who is hurt the most by this ongoing price competition that is just a race to the bottom . Eliminate commissions for u. S. Stocks and some options. Td ameritrade and ameritrade are hurt the most. They both get over 30 of their net revenue from trading commissions. Charles schwab is only about 8 , so they really take it on the chin. Td ameritrade is down the most because they compete against schwab to attack to attract independent advisers to their platform. And so our view is that might make it more difficult for them to attract advisors and their customers assets to their platform, because now schwab is zero cost. They are going to have to match it. I expect all brokers to match the zero cost. Vonnie the treasury and the fsh essay announced sunday may and fannie mae and freddie mac will be allowed to boost their capital to 25 billion to protect against potential losses. This is a key step in the Trump Administrations push to free the mortgage giants. How much of a sigh of relief will hedge funds be breathing today and what is the path forward . It is an important step farther hedge funds, because as long as what was known as the net worth sweep was in place, they were never going to get their hands on the money that was the prophet, the massive billions of dollars in profits fannie and freddie were making. Its all been required to go to the treasury. Every quarterly profit the Companies Make since 2012, theyve been required to send to send that money to the treasury. Hedge funds understand these Companies Need more capital. In their current state, theyre in no position to be able to endure losses. But the hedge funds would like some of the companys profits, the argument being that we are big shareholders and these companies, we should be getting the dividends, not the u. S. Government. Romaine aircraft maker boeing unveiling a structure overhaul to deepen its focus on safety. The ceo, Dennis Muilenburg, says the plane maker is in the endgame of preparing its 737 max to finally return to the commercial market. I keep hearing this called a Safety Organization that Dennis Muilenburg is creating. I dont understand what that means. I dont understand why it didnt already exist. I think thats a fair question. What it means is they are going to take the various aspects of the company charged with Monitoring Product safety and concentrate them in one place. The safety review boards, the team, the delegates, are going to be their own separate organization that reports to the chief engineer for the dedicated aerospace safety. To your point, why did this not exist before . I think thats a very valid question, but i am encouraged that boeing is at least realizing that engineering took too much of a backseat in its operations. Now you have a direct line from engineers and people on the ground to top management. I think this is necessary, but perhaps overdue. Caroline choosing a different route to go public. Airbnb is reportedly looking to enter the market in 2020 via direct listing versus ipo. We have heard this particular song before. We heard it with spotify. We have heard it then more recently with slack. Are they the arbiter in the way to do it if you do need to get more money in but need to get people some liquidity . Thats for sure. You can raise money in different ways. Its about a 2 fee to raise money through private markets rather than the 7 fee that is traditional for an ipo. Of course, thats been going down a bit. If you raise money a different in a different way, through private debt, through private equity, it could be cheaper than a traditional ipo. Airbnb is already worth over 30 billion in private markets. Its quite big. Venture capitalists, investors alike, the exchanges, they all want people to start going public earlier. If this is a way to encourage more people to do it, theres a great hope this model can persuade more people to go public. Matt tesco has announced its ceo, dave lewis, will step down next summer and will be succeeded by a surprise choice, walgreens boots alliances ken murphy. U. K. Investors love their supermarkets and this is a surprise change at the top. You are right, matt, absolutely. This is a surprise change. There was speculation lewis would step down because he had been around for five years at the top of the company. He has been instrumental to the turnaround of tesco, which despite the brexit jitters, has increased its profitability, cut costs, laid off people, extended businesses. There were rumors. But the choice theyre making for this dark horse, for a top walgreens boots alliances executive, ken murphy, is quite surprising. Theres speculation they would get somebody internally to step up to the ceo role. Caroline auto sales posting near record results, but shares are currently falling to the u. S. Manufacturers as investors doubt the u. S. Car market can sustain the near record results for much longer. General motors says u. S. Sales rose, but not as much as expected. Meanwhile, fords Third Quarter sales fell less than expected. Fiat chrysler fell flat, but did beat expectations after the real concerns flagged by toyota, nissan, the asian producers yesterday in the u. S. It felt like a real relief getting the u. S. Manufacturers numbers. Yeah, but its not a real apples to oranges comparison. Because what the asian manufacturers reported yesterday were just september sales. This year, september sales did not include the labor day weekend, which is a high selling period. And what the detroit automakers reported was a three month period. So that included august, which had the wonderful Sales Results from the labor day weekend. So they get a little bit of an easier marking period than the asian automakers did. That is why you have this contrast. Paul tesla slumped in late trading, even after recording record quarterly deliveries. 97,000 cars delivered looks pretty good. Why were investors disappointed . As always, it is a matter of expectations. Last week, elon musk, the ceo of the company, went out and said they could possibly hit triple digits or more than 100,000 vehicles. It was a record. It was a good quarter. But they didnt hit the expectation they set for the market. That always makes investors nervous. They are kind of watching for any sign that there is enough electric vehicle demand out there to satisfy teslas scores, or if theres not, theyre going to flee the stock. If you look at factor factors to watch, this is a great function to monitor what different styles are doing. Last month, you can see value topping the leaderboard at 12 , momentum falling, just about 10 . While this hurt most hedge funds, a deep value fund like green light does really well. But then when you look at a shorter time horizon, take one day, it looks like this reversal has stopped and were back to normal. Viviana about 30,000 functions are on the bloomberg. We love showing you our favorites on Bloomberg Television. Maybe they will become your favorites. As we wrap up this edition of bloomberg best, lets return to one of the weeks top stories. On tuesday, the peoples republic of china marked its 70th anniversary with a military parade and mass pageantry. At least 100,000 people were involved. President xi jinping spoke at the event. He declared no force can stop the nations rise. Here is a quick look at the Nations Development from mao to now. Mao zedong established the peoples republic of china after years of civil war. The 70 years since have seen the nation struggle through extreme poverty to become the worlds secondlargest economy with a political reach far beyond its borders. In the late 1970s, the reforms in socialism with chinese characteristics kick started chinas remarkable Economic Growth. That led to milestones, including its succession to the World Trade Organization in 2001. And in 2016, the u. N. Joining the elite club of imf global reserve currency. Chinas gdp today is about 90 times bigger than in 1978. The 21st century has been marked by an increasingly assertive china on the world stage, leveraging economic power, building alliances through initiatives like its belt and road program. As the peoples republic turns 70, its dealing with a trade war, a slowing economy, and unprecedented political protests in hong kong. And president xi jinping urged the communist party to race for brace for longterm struggles, extending even beyond the prcs 100 year anniversary. Viviana you can find more coverage of chinas anniversary events at bloomberg. Com, along with the latest news, business, and analysis 24 hours a day. Thats all for bloomberg best this week. Thanks for watching. Im viviana hurtado. This is bloomberg. Carol welcome to bloomberg businessweek. I am carol massar. Jason im jason kelly. Were inside bloombergs headquarters in new york. Carol we look at President Trump and what it may mean for the 2020 election. Jason how the companys culture caused it to stumble. Carol keeps climbing. Jason first up, a private