Mr. Gates the best governance is where you look down the road 10 to 20 years. And oil with the future of electric cars. It is all straight ahead on bloomberg best. Vonnie hello, i am vonnie quinn. Welcome to bloomberg best. A weekly look at the most important Business News and analysis from around the world. Lets begin with a day by day look at the top headlines. With the june 23 date set for a u. K. Referendum on eu membership, Campaign Season on brexit began in earnest monday. There was an immediate financial and economic impact. U. K. Prime minister David Cameron answering questions from lawmakers in the house of commons. These are live pictures you are watching. Cameron has been making the case for staying in the European Union. But camerons stance is suffering a setback as long as the london mayor is rallying for a brexit. Does it really not matter how many people turnover to the force johnson side . He is one of the most recognizable politicians in the u. K. And his decision to support brexit has had quite an effect on the pound. Jon we have a chart that shows the odds, the risks of a brexit. Is the brexit risk premium exaggerated . Rob there does seem to be a serious risk of brexit. It is something we are arguing for months that investors need to take notice of. Events over the weekend are potentially raising the risk. Because of boris johnson. But it is actually now having a referendum date, the issue is a lot more tradable than it was. Alix the possibility the socalled brexit continuing to weigh on the pound today. Which is near its lowest level against the dollar since 2009. Addressing lawmakers in london today, bank of England Governor Mark carney said the central bank is doing contingency planning. Mr. Blanchflower this has enhanced uncertainty. So this will have a big impact on the markets. Mark carney recognize that and said they will make plans. But this is obviously a global event and might well have an impact on Global Financial markets. This has raised uncertainty in the worlds biggest economy. Fifth alix six months ago, we were talking about the possibility of a rate hike for the bank of england. Seems like a hike is totally off the table this year. But the probability of a cut has risen 22 in what will we see december. First a hike or a cut . Mr. Blanchflower i think in 2016, perhaps in short order we , will see rate cuts. And perhaps more qe. In the u. K. , there is more move to maneuver. Rates are at. 5 . There is more move to maneuver. That was the talk today. The markets probably got it right. Vonnie another big win for donald trump. He won the nevada caucuses by a wide margin with nearly 46 of the vote topping marco rubio and , ted cruz by more than 20 percentage points. On hiss predicting he is way to lock up the republican nomination. It is a big win for donald trump, not just because it is three states in a row. Obviously he has momentum. But the margin of victory, which you mention, is just massive. If you add up the second and third place republicans, marco rubio and ted cruz they do not , reach Donald Trumps number headed together. Vonnie ahead of super tuesday, with home states involved, can the momentum be stopped here . Steven that is the question. Ted cruz is investing in his home state of texas. He is leading in the polls there over donald trump. It would be a big state for ted cruz to lose. A firewall, so to speak. If he loses that, where can ted cruz win . Ted cruz has been investing a lot in the south. Donald trump this is his territory. Other candidates will try to cherry pick delegates here or there. Weather in Southern States or in certain districts that reward large delegates. The real question is whether or not donald trump could as it , seems like he has done in the last three contests, sweep a majority of the contests, and the question is how to stop them, and where . Cory it has been an active day of comments from both sides in the battle for encryption. A court filing from apple insisting the Justice Department is overstepping authority by demanding they unlock one of the iphones used by one of these San Bernardino attackers. The argument here is about fighting terrorism. That is what the government is putting forward. It is about one phone and stopping terrorists. What you make of the apple response saying it is not about terrorism, and it is not about one phone . Apple has a good response. They hinge on two things one is it is unreasonable burden to comply. When you read the ruling, they to saying it will take two four weeks and six to 10 engineers to write the code. They say this impinges on First Amendment rights by code being speech, and they do not want to write code that compels them to do something they do not believe in. This is a strong case. But the Justice Department did not pick the battle if they didnt think they had a good case. But a lot of code functions as speech. It gets shared as much between people as it is being used. It is not an insane thing to say if you are aware of how the industry works. It is almost like youre talking to other programmers and the computer. Cory is the privacy argument enough to carry the day here . Mr. Ziade it is really not, in my view, because in reality, we cede privacy all the time. Certain facts and evidence is put forth, we find ourselves in a situation where privacy has to for our safety. Started withting the g20 in shanghai, but china signaled they are open to more easing. China has said they have multiple policies to assess any downside risks. I was at the speech where the poc governor was speaking. We should note he was speaking in english which shows you he , was catering to a mostly international audience, at least at that time. He said there is a need to ease. But we know that. Interest rates real rates are on the way out. The real debate and what was not answered was how they plan to do that. We are in a situation, now, in china where capital outflows are getting exacerbated by speculation that the pboc will ease. They cannot exactly cut rates. He also made the point on speculation that there is absolutely no basis whatsoever. You look at the fundamentals of the chinese economy. No basis for a persistent decline in the value of the renminbi. I guess that speaks volumes to what they are now using to turn the if you will, and all of speculation that the yuan will fall further. It has gone very expensive to defend it. They have seen a massive drawdown on those reserves which , he says is not a trend. I guess that is what a lot of people have been talking about. Come out andd to manage expectations. Vonnie later, tech leaders tell us what is on the horizon for smartphones. And u. S. Treasury secretary jack lew says we are not in a moment of economic crisis. But next, more news in the world of business with Big Companies facing very big questions. Vonnie welcome back to bloomberg best. I am vonnie quinn. Lets go around the world with a look back at the weeks Major Company news. Banking and commodity firms have been hit especially hard this earnings season and it appears , their struggles are far from over. Shares of hsbc, europes biggest bank, down today, posted its first quarterly loss in more than five years. Shares were off as much as. 5 . Why do we have this unexpected loss . Hsbc is suffering along with asian commodities. And with the commodities crash, it really has shown loan impairments increasing. It has shown a slowing down of the loans they have been able to give in the regions. Under certain risk controls, it is not able to expand as aggressively as it had planned. When i spoke to the ceo they are , slowing a job hire program in china by two years, and they will also not put 100 billion of assets in the country as quickly as they planned. So what we are really seeing is ambitions to expand in china checked by the macro environment here. It is looking like he will have to find a plan b. Mark that is the big question. We have had measures announcements in june to cut 25,000 jobs. Is plan b more cuts . Stephen plan b might very well be more cuts. Speculation from analysts when the results came out where that the program already announced might not go far enough in the current environment. Curiously, the only division to report an increase in fourthquarter profit is the Investment Bank. It is earlier case of the Investment Bank propping up the consumer and what divisions. Qantas shares take a dive in sydney, this by rising to a record 660 6 million in the first half of the fiscal year. That was better than analysts expected, and in the higher range of the company forecast. Cheaper oil also helped boost growth. You decided half a billion in terms of a share buyback. Why not a dividend . Because of the cumulative tax losses that we have had the last few years, we do not have a huge amount of frank credits left to pay frank dividends which is important for the australian shareholders. After having a look at the best way of returning the surplus cash that we have to shareholders, we and the board felt buyback was the most efficient way to do that. Bhp billiton has cut its dividend for the first time in 15 years. A reported a 92 drop in first half profits. Underline profit came in at 412 million in the six months to the end of december, compared to 4. 9 billion a year earlier. What are they doing in this business to counter the downturn. How do you deal with the headwinds . In a nutshell, it is share and spend less. They will cut spending in the following year by about 2 billion. But it is really about the dividend. They are joining a lot of companies, saying with this kind of commodity cycle we cannot guarantee greater dividends. Tom how are you going to cut expenses when 90 some of your delta on your income statement is price changing commodities . How much more fat is there to cut . We have done an outstanding job in cutting costs. We have productivity gains of 10 billion the past three years. We think that will continue to be an important factor. In this financial year, we are guiding another 2. 1 billion of productivity gains. Having said all that, clearly in the space of 30 reduction in prices, you cannot make up for that. That is the reality of a cyclical industry. Time inc. Is interested in possibly buying yahoo s core business. Verizon,ompeting with at t, and comcast, as well as buyout firms like bain capital and tpg. How would this work . The structure would be this reverse markets trust. That is lingo for when one company spins off assets, they merge it in a stock for stock deal with a company that is slightly smaller than it. So time is wellsized for this transaction to go through. It would be a taxfree transaction, which would be some benefit for yahoo . This would be a disaster. Time inc. Is a struggling company that is struggling to find itself in the digital world, let alone the mobile digital work. So i think you have putting these two companies together would be a mistake. Intercontinental hotels says it plans to return 1. 5 billion to shareholders in the form of a special dividend. We are joined from the London Stock Exchange by the company ceo, richard solomons. Good morning. The market was looking for around 1 billion. You have gone for 1. 5 billion. Why the extra size . Mr. Solomons we have completed our proposal program. We had a good year. Prospects look good. So we increased our regular dividend by 10 . And as you said, we are returning 1. 5 billion to shareholders, which will make about 12 billion since we became an independent business. It is another step on the road. Honda announcing a shakeup at the top with quality concerns persisting a year after the carmaker replaced its chief executive. Who is in, who is out . Takahirord president speaking earlier this morning. He is Still Holding these press conferences in tokyo. I guess he is still putting a stamp. If we have a look at who is out, the changes that the chairman to retire in june, part of the management shakeup that was the eight other executives leave the company. Under chairman ike, we have seen him have this job since 1983. He joined honda in 1982. If we look at the chart in the bloomberg it shows how honda has , underperformed. It has fallen 18 since april, 2013. Compare that to the blue line. That is toyota. They have seen gains of 23 under the same period. Stephanie shares of jpmorgan are trading down after the bank held its annual Investor Conference yesterday. Jpmorgan Investment Banks david patel david pinto said sales and trade revenue was down 20 so far this year due to market turmoil and lower fees. It is a tough environment you have low rates and low oil, low stocks low capital markets. , stephanie investors sitting in cash. So the expectations for earnings this year are pushed out to next year. Next years are pushed a year further. It is delayed. That was the bad news. It is a tough environment. Stephanie what did you ask jamie . Mr. Mayo my question was why is it good to be a big bank . You see the public sentiment. You have the movie the big short up for an oscar the sunday. Public dislikes big banks. Stephanie his answer . His answer was because a 787 is a safe airline. I thought he should have elaborated on that more. He couldve given a better answer. I think jamie dimon struck out on that last answer. Shares in sharp tumbled more than 60 the past few days after foxconn said they would buy the troubled electronics maker, and then postponed the deal. What went wrong . Foxconn issued a terse one paragraph statement saying new information has come to life from sharp. They require more time to discuss it. Nothingpanies have had have said nothing else. Our sources tell us the point of contention is something called contingent liabilities these are costs related to potential, possible restructuring and layoffs. Sources are saying that they could be a nexus of 300 in excess of 300 billion, but could also be a lot less. At this point, without knowing more about what the liabilities are, it is hard to tell if there is a major roadblock for the deal. Vonnie you are watching bloomberg best. I am vonnie quinn. The mobile World Congress in barcelona this week was a showcase for dazzling new gadgets. Check out these images captured by bloombergs photo team. It was also an industry Summit Featuring the industrys most influential leaders such as Mark Zuckerberg, who publicly backed apple in its dispute over privacy with u. S. Authorities. Caroline hyde was there to cover all the news and gather interviews. Caroline we see sensitive subjects being debated by Mark Zuckerberg. I merrily his own wealth. Primarily his own wealth. Remember the 99 given away why wasnt that a foundation . He also discussed his disappointment that india has banned the use of free basics free access to certain websites like facebook, wikipedia. That has been banned. He talked of his disappointment there, with the push for internet. Org. Notably, the shift to video the shift to 360 degree video, and what is needed from the Telecom Equipment makers and operators. He needs them to stop being competitive and be collegiate. This is something we spoke to jason taylor, head of infrastructure for facebook. Mr. Taylor Building Infrastructure is a fundamentally hard thing to do, and if we solve a problem through this project, or, say, an operator solves a problem, and they share it through this project, the odds of their neighbor, maybe one of their competitors, actually seeing the same bottleneck are probably really low. But that idea or that particular solution will probably find a home somewhere else over the globe. Caroline Mark Zuckerberg a bit of a call to arms yesterday. Trying to get the operators, equipment makers to push forward collectively to get to 5g. Where are you in the 5g spectrum, because i know you are strategicr announcements new initiatives , with many of the players. We are. We are working on technology, the processing capability to support 5g. We think as a look at the future, the socalled internet of things with 40 or 50 billion pieces by 2020, it will required technology to facilitate that. We went to ensure we can provide that not only on the endpoint, the mobile wallet, connecting cars, connecting devices, but also in the infrastructure to facilitate that. Caroline what sort of investment is needed to get to the end goal whatever 5g actually is we have not had the exact recommendation for what 5g will be. It requires all the companies to work together, making sure we have a common platform to support that, and provide the ability to move massive amounts of data it in a very efficient manner. With 50 billion pieces think , about the bandwidth required to support that. Caroline are you worried about the highation point in end smart phones . Mr. Lurie not at all. The smartphone really just begun 7, 8 years ago. Were not worried about that. We are still seeing growth, still seeing Great Innovation whether from the os side or the hardware side. It is still growing. Theres a lot of gas in the tank. What is exciting about that is what is behind the glass. Everyone talks about what is behind it. The innovation will be behind it what drives it, the apps and , how we solve problems for our customers. Caroline when you say it is still growing, do you still see demand for higher end phones at the same pace . Mr. Lurie same pace is a different discussion, but it is still growing. We are seeing in their prepay segment. We are seeing it really everywhere. Everyone wants a smartphone, and 90 of what comes on to our network are smartphones. Caroline already you are envisioning 5g the next way in which you and i can get download speed even faster. You teamed up with the likes of intel, ericsson, but facebook is now calling for everyone to work together, share learnings, get 5g out there faster. Do you agree with what facebook is pushing for . Mr. Lurie what everyone is saying is we want broadband everywhere we want broadband to be in the good us and everyone should have to be ubiquitous. 5g is exciting, but it is 4, 5 years away. The key to 5g for us is first of all, lets maximize what we have today. There are advantages in the next generation, but what we have today is awesome. Caroline what sort of size market will we get to in terms of the internet of things have y