Interviews. Policymakers hold nothing back. I dont want to talk about brexit. Plus, we dont miss a beat as earnings season rolls on. It is all straight ahead on bloomberg best. Hello and welcome to im erik welcome im erik schatzker. , this is bloomberg best. A weekly review of the most important Business News, analysis, and interviews from Bloomberg Television around the world. Last week ended with high hopes that a meeting of Petroleum Producers in doha qatar would result in a deal to freeze output and bring stability to the market for crude. But talks fell apart and this week began on a familiar note, uncertainty for oil. The much touted meeting of top Oil Producers. It ended without agreement or a deal. We are seeing crude and brent tumbling. What comes next . We are moving towards a balanced market. The markets are on a natural rebound. Towards the end of the year, we will be in a much more balanced market. Unless something major happens, the next gettogether of Oil Ministers will be at the next meeting on june 2. In the meantime, iran will try to boost output. It is aiming for 4 Million Barrels a day. The saudis and russians will continue to produce record levels. The financial consequences for those countries will continue. Ever since the oil summit began in 2014, they gave away 4 billion worth of financial reserves. That has been more people for more painful for some than others. What happened in doha was a situation, we had a new was a fixation. We had a new man in charge of saudi arabia. Are we ever going to have an agreement between the two countries . Cartels, as you know, require a degree of trust. There are many things between saudi and iran, but trust would not be on the list. The saudis are worried about market share more than anything else. The are worried if they pull out, the iranians or any number of others will fill that space. I think it is going to be stored the extraordinarily be extraordinarily difficult particularly where there is depressed demand. No, i dont see opec coming together for anything light its or anything like its historic role. The crushing defeat for brazil. They voted in favor of her impeachment, a decision that could bring down the curtain on 13 years of rule. But she is defiant. John, tell us what is next. The main avenue for her is to challenge, to fight the impeachment motion. What we are hearing is right now right now she doesnt have the numbers to win there. The other avenue she can take is to go back to supreme court. There is a third option. That is holding earlier elections. If and when she is impeached, the big thing remains, tackling the fiscal and economic issues. Who is best placed to do that . Certainly the man in line to do that is the vice president. He is seen as being a more businessfriendly president. He is seen as being someone who will try to tackle the gaping fiscal problems that the country has. But also important to bear in mind, he will have a limited mandate. He inherits a country split down the middle. It will be quite difficult to push through for meaningful reforms that investors are looking for in brazil. Goldman sachs just out of numbers. Talking about the worst performer in the dow this year. Down 1 in the premarket after reporting a 60 drop in firstquarter profit. Revenue fell to the lowest since the ceo took the top post back in 2006. The profit was down 60 . We look at the numbers and go, wow, ugly you start with the trading. On the fixed trading, they were down almost 50 . You saw some of their peers down in the teens percentagewise. This is significant underperformance in that area. Analysts have kind of expected that. They kind of predicted it would be an ugly quarter. The European Union took another shot at a u. S. Tech giant, this time it is google, over the companys android software. The argument is that their strength restricted contracts with tablets and phones that expand googles command in internet search. What is google saying in response to this . Google is same to have an opensource system with android. Theres a lot of choice for manufacturers and what they do. European Commission Says that while that is true, in practice, most manufacturers are required to take Google Search and google browser and that brings users into the google ecosystem as a source of search advertising. While these services are free, in practice, there is not much choice and that means rival app makers are not allowed to get on to the android phones that most europeans use. Are european lawmakers still urging regulators to break up the company . They would ask for a breakup if the commission did not do anything. They are really trying to get the regulators into action. We are seeing a very active European Commission looking at google that could order google to change things. They can order and have ordered microsoft and intel to pay huge amount of fines. This is not something you can ignore very easily. It can have a real effect on their business. The ecb staying the course, leaving its rates at record lows. Is it time, that mario draghi said, to bear fruit . I think it will bear some fruit. When you look at the impact of things, the policy of the ecb, and think about where we are in terms of growth and inflation now, i think you would have to be quite confident suggesting that the ecb has done enough. I think mario draghi suggested that today. Some central bankers this week saying that we have reached the limits of the effectiveness of Central Bank Monetary policy. Do you concur, or is there more to be done, and can more be effective . I certainly concur that the marginal efficacy of each additional dose of monetary easing is declining. I would disagree on that we have reached the end. In the press conference, mario draghi breast of those questions about purchasing equity or helicopter money. What he did indicate was that they are willing to purchase more assets and keep on doing that, and that is where i think it more stimulus is needed, that is for it will come from. Tech stocks take a tumble. Microsoft and alphabet deep in the red in the premarket. Missing analysts forecasts. Look at the tech earnings we have had so far. It is a story across the board about valuations and investors getting a little too excited about the prospect of some of these companies. You can make that argument from one hand it is probably too , early to tell. The moves in both microsoft and google are in the area of what they were forecasting. They are still growing. But that is all associated with the cloud at this point . The cfo is sandbagging a guidance lowering guidance of so they can be that beat that. Doing a lot better than expectations, but that is because guidance was set so low. Profit growth. Imagine that . [laughter] and growing. Biggest Profit Growth they had seen in a year. How about alphabets . Their stock was down. Boy, they are growing. This was a really strong order for google. In the secondary Strong Quarter across all things. There were more losses in the other categories. The revenue was higher there, too. Erik we will have much more on tech a little later. Yahoo , intel, and ibm facing financial challenges. But up next, more traffic at the intersection of government and markets headlined by argentinas blockbuster bond sales. Erik this is bloomberg best. Im erik schatzker. Argentina returned to global credit markets in a big way, selling more than 16 billion of dons. The biggest oneday issuance on record for a developing nation. We dug into the details of the bond sale and its implications going forward. After sitting on the sidelines for more than a decade, argentina is back in the global bond market in a really big way. The company boosted its bond sales to 60. 5 billion. 16. 5 billion. It marks the end of its status after it defaulted on 95 billion in debt back in 2001. They are selling more than they expected. Absolutely. On the street, you are hearing the subscription for the bonds were five times oversubscribed, which is a lot. The majority of this money will go to repaying the holdouts. Others who have held bonds from the last 15 years and have been waiting for a payday, about 10. 5 billion goes to them. What was the cost of this 15 isolation foret argentina . The finance minister, when he was in washington, was saying the whole mess has cost the country 120 billion. It is not just about, we have untapped markets. The policy measures that the last government had to implement because they werent tapping markets and avoiding tapping markets. Because they werent tapping markets in the commodity boom ended, they started printing money to finance themselves. When you print money to finance yourself, you start accelerating inflation. When inflation starts blooming, money does not want to stay in your country. Then you start putting currency controls. That limits foreign direction. All of this was a very brutal cycle just because they would not sit down and finish what they started with the default in 2001. Another National Government made business headlines this week, the kingdom of saudi arabia moving forward with plans to take its state owned energy firm public. That story begins a roundup of the weeks top company news. The ipl in saudi arabia is almost to big to imagine. Jpmorgan and a banker who runs his own boutique has been suggested to run his own ipo. What is the latest on the ipo . There has been a lot of skepticism on whether the saudis are for real. It is such a huge company and is so unprecedented. This is more evidence that they are for real about this. They are bringing in jpmorgan in what seems to be the lead banker and underwriter. Michael klein, he is a Longtime Energy banker, investment banker. He was with citigroup for a long time. This is a strong team and more evidence that the saudis are serious about doing this probably before the end of 2017 they say. China may be looking to get control of the most popular fast food chain in the country. Sources say they want to buy majority stake in the yum brand local business. Why would the cic want control of yum china . It is the most popular fast food chain in the country. 7000 restaurants and owned by a u. S. Company. They had been proceeding with a planned spinoff, but it opens a door and gives a chance for buyers to come in. It looks like cic is very keen. Yumg had originally originally wanted to add a minority partner. Lets talking little bit about who else may be involved. Other sovereign funds including assets. They have also expressed some interest in considering acquiring minority stake. We are focusing on mitsubishi motors. After they admitted to violating test results. Can mitsubishi survive . Is this just the tip of the iceberg . What we have seen so far, it is limited to one particular model. Mitsubishi is not really in the best of financial health. I do not see this as a question on their radar. It is a question of how they get out of the crisis and Gain Customer confidence. It harks back to the days when mitsubishi had this scandal back in 2004. Around that time, they started cheating on the fuel consumption. Is it fraud, is it not . It is. I dont know how the japanese regulators will handle this. But regulators around the world will say is this a good way of self certifying, because that is what happened with mitsubishi. They were doing their own tests and certifying themselves. That part of the trust will go away and this will not only be in japan, this will be in the u. S. , europe, japan, and also in china. We just got news on volkswagen this past hour. The company and u. S. Government agreeing to settle the charges that it rigged its software to cheat emissions test. Monetary part of the settlement has not been finalized. How much does it put to rest this settlement . It helps to set aside any risk for investors that this is going to really blow up and total loggerheads with the regulators and turn into a nasty lawsuit. But for consumers, if you own one of the 600,000 noncompliant vehicles in the u. S. , and thought today, seven months after this all came out, i am going to know what to do with my car, you are going to have to wait two more months. Vw set aside 6. 7 billion. We have carried this story all day. The deal struck today was for 10 billion. There has been all sorts of theoretical figures on what the total costs could be for vw. Some ranging as high as 42 billion. Are we any clearer on that . We are not just the report of we are not since the report of last night. The 10 billion lines up somewhat with that original 7 billion. That was set aside as a global number four fixes. Global number for fixes. The other costs, that could be criminal penalties, shareholder lawsuits in europe, that will still be hanging on after we get the california thing settled. Again, we are not sure what its going to cost. The 10 billion for the repairs, there is also another big chunk that will come out of the california case, which is the remediation. Erik you are watching bloomberg best. Im erik schatzker. Earnings season swung into high gear this week, some reports pleased investors, some perplexed them. Many did both. We begin our review of earnings with morgan stanley. Morgan stanley climbing up the fourth quarter. Profit beast the estimates thanks to cost cutting and Beat Estimates thanks to cost cutting and trading revenue less than expected. It Bloomberg Intelligence says the drop was worse. In a headline, they will be more aggressive on cost cuts if revenue falls. What is left to cut and how back bad can it get . There is always fat to cut. A fixed income business across all of wall street is really struggling. It has been a liquidity story, a story of credit markets freezing and a lot of overindulgence in credit during the qe era, which is trying to find its way as we moved out of the qe era into the in the United States. That is a problem for a lot of these banks that built up huge businesses in underwriting, corporate loans, corporate debt and finding the new equilibrium, which is less of that in an era where we are not going to expect expand as much during a 2009 period. We have sales from the biggest pharmaceutical company. Thirdquarter sales rose by 5 narrowly beating analysts estimates. Steady as she goes. That is the best way to describe it. We have a 1 beat versus consensus. As expected, the key engine is the Breast Cancer portfolio. I think perhaps on a relative basis it is sales, which is a drug use for helping do with flu outbreaks. Although they are lower than last year, they Beat Estimates quite a bit. Perhaps, it makes up for the other drugs that didnt quite make it. We had a good or a Bad Influence . There we are. The diagnostics business does very well. Johnson and johnson sales are up in premarket after reporting earnings a little while ago. Strong pharmaceutical sales boosted the companys. You beat on your earnings per share and for revenue. Take us below that. Tell us what is going on beneath those topline numbers. We had a very Strong Quarter with all of our business is picking up momentum. From sales have been very robust. The pipeline continues to build, which is going to be good for continuing that string of excellent performance going forward. The consumer business is making steady progress and is always improving its margins. The medical device business continues to show signs of improvement. We are pleased across the board. What do these numbers tell us about the Health Care Industry and particularly, pharmaceuticals . J and j has been growing at a very fast pace. In medical devices, they got some of the segments that have been historically low growth likes hips and knees. They reported 8 growth for the u. S. , which raises the question, more people getting coverage through obamacare and the aging population. Maybe we are seeing growth. Investors may have been hoping for a stronger turnaround. Cocacola shares fell in the premarket after the Company Posted firstquarter earnings that Beat Estimates. Sales were down 4 . They beat consensus by a penny. Macros slowness pressuring volume. It drove a topline to come up a point light of what they expected to be for the full year. They clearly expect to make this up over the year on the top line on the back of incremental marketing over the key summer months. Are they targeting the wrong type of consumer with the wrong product, or is the consumer weak . Part of it is the consumer being weak. We heard similar commentary out of pepsi. I think specifically in Eastern Europe and china, we have seen incremental deceleration. General motors up more than 3 in the premarket after reporting earnings that beat analysts estimates. It is a record profit the most , money per share you have ever are. What was the big driver of that . Broadbased improvement around the world. North america was up, importantly, europe and south america improve significantly yearoveryear between the almost 400 million. We are very pleased with the broadbased improvement across the business in the First Quarter of 2016. Are you expecting u. S. Auto sales to plateau or come down a little in 2017, 2018 . We think the fundamentals in the u. S. From an Economic Perspective will support a strong industry level for the next number of years, not only as, but other industry observers. 18 million. That is where our baseline plan is driven by credit availability, low interest rate, strong household balance sheet. That is what we are operating towards. Ge out with earnings Beat Estimates showing an effort to transform the company. Shares in the premarket are lower. Down in down. 25 . Most of the segments the estimates, including oil and gas. Most of the segments Beat Estimates, including oil and gas. Industrial operating margins had been getting 40 to 50 . Vonnie targeting 17 and the total Industrial Market came in at 12. 8 . I want to read a quote, from the statement. A transformed ge is wellpositioned. Our portfolio is simpler and stronger. Ge is on track to meet its investor goals. You say things are getting simpler. Let me correct that the 12. 8 is com