Transcripts For BLOOMBERG Bloomberg Best 20170319 : vimarsan

Not surprised. Erik in the midst of political turbulence, business and financial leaders seek out solid ground. We need to maintain optional option analogy. Erik and positives in new policies for u. S. Automakers. This is something we can do to be more effective and more efficient, and in the end, i believe it will have a greater impact on the environment and we will be more efficient. Erik it is all straight ahead on bloomberg best. Erik hello and welcome. I am erik schatzker. This is bloomberg best, your weekly review of the most important Business News, analysis, and interviews from Bloomberg Television around the world. Many of this weeks most important events have been on the calendar for months, notably centralbank policy meetings, but on monday, political surprises were the order of the day. We have some breaking news because the Congressional Budget Office has released its scoring, its assessment of the house gop alternative to obamacare. Some of the big headlines, the bill would reduce the federal deficit by 337 billion. However, it would cause a 14 million more people to be uninsured in 2018. What is your snap judgment . This is a win, the fact that it is saying it would reduce the federal deficits by 337 billion. That is something the white house will be pushing for. Again, the fact that it would increase the number of people who are currently ensured, that is a number the democrats are going to pounce on. Without question, the fact that they are saying it would reduce the federal deficit is the takeaway for the white house. If you roll back federal subsidies for Health Insurance by a lot, as this bill would, there are two natural consequences. One is fewer people have Health Insurance and the other is the government saves money. In that sense, cbos estimate should not be surprising to anyone. Scotland heading for another vote on independence, opening a new front in the brexit bottle battle. I will seek the authority of the Scottish Parliament to agree with the u. K. Government, the details of a section 30 order. Massive deal, mediumsized deal or not so big deal . Sturgeon is wanting to call another referendum. She is nothing if not a canny politician. She will not make that kind of call unless she is confident she can win this. For may, it will not stop brexit or triggering article 50, but it could complicate things significantly for her. One, it will give the European Commission that ammunition to say look at the divisions in your own country. I think this is a lot more than just an empty threat. The Prime Minister is preparing to trigger brexit in the last week of march according to two officials familiar with the plans. Last night, parliament passed legislation to invoke article 50 of the lisbon treaty. We remain on track with the timetable i set forth six months ago. I will return to this house before the end of this month to notify that i have formally triggered article 50. And begun the process there went to the u. K. Will leave the European Union. Bloomberg has been told by officials familiar with the plan that the end of the month is still on track and one official said the most likely date between march 2730. This bill is going through unchanged. It is going through with no amendments because the house of commons rejected the amendment put forward by the house of lords. Lets go to Kathleen Hays at the Federal Reserve in washington. Federal reserve raises benchmark to 0. 75 . The president in minneapolis said he didnt want to hike the key rate. The median estimate remains three rate hikes. It is a stronger consensus. We continue to respect that the ongoing strength of the economy will warrant gradual increases in the federal funds rate to achieve and maintain our objectives. What did you learn in the press conference . Not much. We learned that janet yellen is the perpetual dove, even when conditions are rather hawkish in terms of full employment and employment growth and stock market at an alltime peak. She proceeds in a gradual way. I dont think that is inappropriate, i think because of the higher leverage in the u. S. Economy and global economy, the Central Banks have to proceed in a gradual way. She is a dove and that is why the markets reacted as they did. The bank of japan kept unchanged today. They are maintaining the pace of asset purchases. How much creative can governor kuroda get . He decides to cap at 10 year yields. What does 2017 bring . The fact of the matter is that he probably feels that the ball should be in the court of the corporate side, not his side. He is not a magician that can bring out rabbits all the time. Although they deny it, i think their deep pocket is not there is much as it used to be. You can see the reaction of the financial market, it is showing signs that boj is running out of cards. A record high as the pound declines. We are moments away from the bank of englands monetary decision. That decision drops now, a decision that leaves rates unchanged at 0. 25 , and Asset Purchase Program docketed at 445 billion. Kristin forbes votes for a 25 basis point Interest Rate hike. The bank of england with rates unchanged. What i am surprised about from these minutes is the discussion about the survey evidence of activity was almost glossed over. It was almost like there was no evidence. We know there has been. We have seen Business Investments intentions fallen off sharply. Admittedly not as much as we thought they would. I think we are going to see the data start to roll over. Historically deep cuts, that is what President Trump is proposing in his budget. The president s socalled skinny budget was released overnight and would touch almost every federal agency and program. President trump wants to boost military spending by 54 billion, and he would look to offset that increase by cutting several key agencies. Including the epa. We are going to move away from some of the domestic priorities and move to protecting us. Again, our president said this from day one on the campaign and im not surprised. This to me is a very shortsighted budget. I heard my friend Mick Mulvaney talking about how this was taken from President Trumps campaign speeches. If that is what he got out of Trumps Campaign speeches, he ought to be a translator at the United Nations because i dont think anyone can get this out of what he campaigned on. President trump and Angela Merkel are meeting for the first time in washington, d. C. There is concern about a u. S. Shift toward protectionism. Economic policy and trade agreements. You could not have two more polar opposite Global Leaders in terms of immigration and global immigration regarding the middle east than Angela Merkel and President Donald Trump. A lot of attention focused day on trade policy as well as immigration. I think her main message really is, dont look at trade as a zerosum game. She has said this in various ways in the last few weeks in the buildup, and ever since trump won the election. It is seen in germany as a protectionist agenda. I think it is a clever move to bring the ceos of bmw, siemens, and tesla with her. All three of them stand for German Companies and investment in the United States that add up to more than 600,000 jobs in the u. S. If you start to impose a border adjustment tax or any other measures, you are also at risk to lose a good chunk of that tradition. I think that is a language, someone who is constantly bragging about his business skills, would understand. Erik still ahead as we review the week on bloomberg best, an election in the netherlands flipped the script on european populism while another candidate stumbles in the french president ial race. Plus, axel weber tells us what kind of brexit he is expecting. Next, more of the weeks top business headlines. Autonomous cars are coming down the pipe, and intel pays a premium to enter the fast lane. This deal is immediately accretive to our earnings per share. Erik this is bloomberg. Erik this is bloomberg best. I am erik schatzker. Lets continue our local tour of the weeks top business stories with a big deal. One of silicon valleys stalwarts went shopping in israel. In a move to dominate the technology for self driving cars, intel in a deal valued at 15 billion. Shares are up a whopping 29 . Is that reasonable . It is insanely expensive. This company is paying 15 billion. It is a profitable company. It is a free cash flowing company, it is no snapchat, but they are paying through the nose for the company because it is the leader in this emerging field of automated driving, self driving cars. It is a very high price tag for this company, but that is what intel thinks it has to do to jump start their efforts here. We knew this was a hot space. Gathering up these technologies and building on this platform was important. And also, this deal, although large, is immediately accretive to our earnings per share and our free cash flow. It was a good deal from that perspective for intel. Hsbc has named mark tucker as its chairman. He will succeed Douglas Flint starting from october 1. What has been the latest . What more do we know at this point . Mark tucker will be the first external hire to take on the role of chairman and hsbc. When hsbc said they were looking for replacements for Douglas Flint as he approaches the end of his term, they had said there would be an external higher and a nonexecutive role. We knew that was what they were looking for. Tucker was aig ceo for several years. Mark tucker comes into this role as chairman, and he will have to find a replacement for the ceo, who is also on the way out. Were talking of course about the slew of chatter, the deluge that is coming out of investment and factory investment. More surprising from china. The retail sales number increasing 9. 5 for the january to february period. The estimates have been 10. 6 over that period. Missing quite substantially on the retail sales. It is not bad growth, but it compares to double digit growth in previous years. Do you think we are reaching a peak when it comes to chinas growth stabilization . Not when it comes to the growth story, but when it comes , it willou ppi probably be high enough for the pboc to raise Interest Rates further but we are not far from that peak. Click lets talk about toshiba. They are considering selling the larger stake. They made the announcement to delay the release of thirdquarter earnings for a second time. Remind us what is causing the delay. Today was supposed to be the day that the Company Finally reported its earnings for the quarter ending in december. Instead, it said it cant produce those results and sought an extension of a few more weeks to calculate the numbers. At the same time, its looking to sell a majority stake in westinghouse. Toshiba is trying to get around how deep the problems are with the nuclear unit. It has been struggling to complete Nuclear Plant Construction Projects in the United States, years behind schedule right now. The company says it will need to take a writedown of probably about 6 billion, but it could be bigger than that. Its auditors will not sign off on the books. The company is investigating whether management at westinghouse exerted undue pressure as they try to cut a deal to buy Nuclear Construction site. They have problems there trying to get their hands around. Bank of england Deputy Governor Charlotte Hogg has quit. A Parliamentary Committee said she did not meet the standards required for the role. Lawmakers were concerned that she did not reveal that her brother works at barclays. Which of the central bank regulates. Give us a sense of how embarrassing this is for the bank of england. From a pr perspective, this is quite uncomfortable and embarrassing. This is one of the cases where it is more perception of conflict of interest rather than actual conflict of interest. Lawmakers have said they dont believe she the deliberately misled anyone with the connection to barclays. There has not actually been a conflict of interest while she has been chief operating officer, but now that she is Deputy Governor, the standards that they expect for that position, she has not met those. That is why they said she did not meet the standards. Is it because she was essentially his pick that this happened . I think it is a case of she was an appointment by mark carney and is seen as being close to mark carney, and he is losing a close and loyal ally. Valeant shares are down in the premarket as activist investor bill ackman cuts his losses. He sells his stay in the embattled drugmaker. He is cashing out and makes the challenges faced by the company more difficult than before. Weve learned he is sold his entire steak at a loss and is leaving the board. How much of the story is about bill ackman, and how much is it about hedge funds more broadly . I think it is both. I think bill ackman has built up he is a polarizing figure, even among activist investors, which is a polarizing category of investors. He makes these very big bets and he is very outspoken and there have been a number of situations where he has been criticized for just holding on too long or letting his ego get in the way and not wanting to give up on something that arguably shouldve been given up a lot longer go. This could be another one of those situations. The u. S. Government is pointing the finger at russia for another highprofile cyber attack. Justice Department Official charged two criminal hackers in a wideranging scheme in a 2014 breach at yahoo this is the russia equivalent of what the doj released against china. Against the chinese pla hackers. It is their job to paint a picture of how russian intelligence is cooperating with criminal hackers who helped them high intelligence operations but also help them be more effective than they would be on their own. It is a devastating picture of what happened inside yahoo these guys got access to internal systems that allow them to basically create encrypted cookies that go on machines and access any of the users actual email accounts anytime you wanted over a period of years. President trumps second travel ban has been blocked in a court in hawaii. This is the second, another defeat. Tell us what led up to the ruling today. The attorney general of hawaii, supported by a number of other agencies across the country, argued that the travel ban is unconstitutional because despite of the revisions to the order, the impetus remains rhetoric from the campaign, where the president called for a muslim ban and registry. The questions raised by the judge were why he should consider those arguments. Justice department was not able to sway him to ignore them, and he ruled to ban the travel ban. Lets turn to the g20 meeting of finance ministers and central bankers in germany. Trade of course top of the agenda. For the finance ministers gathered here, trade is not normally central to the agenda, but it has become a Sticking Point in coming up with a communicator to assure the g20 is a cohesive group. The u. S. And chinese in particular have faced off over the word fair, whether global trade should be rules spaced or rulesbased and fair or just open and free. Chinese do not want fair. The u. S. Pushing for it. The europeans caught in the middle. Others have come up with compromises, but nobody has agreed on anything and it will be a major topic of discussion this afternoon. The man who is at the center of everything, steve mnuchin, how is he doing so far . He seems to be doing alright at least in public. He has sat on the right things has said all the right things and talked about cooperations, getting along with his colleagues. Weve heard other finance ministers describe the negotiations between their deputies and u. S. Officials as extremely difficult. Erik welcome back to bloomberg best. I am erik schatzker. At a meeting with Auto Executives in michigan this week, President Donald Trump announced he had ordered a Midterm Review of industry regulations, including fuel standards put in place by the obama administration. Bloombergs david westin discussed the implications with gm chairman mary barra. I think it is so important that we look at all the progress that has been made in the last five years in technology, how Consumer Trends have changed, and look at the whole environment because we can do things that are going to improve the environment, are going to not threaten jobs. I think we can do things that will create jobs and strengthen the economy, but do the right thing for the environment. That is the key thing. This is not at odds. We can be more effective, more efficient and i think it will have a greater impact on the environment. This is something you and your colleagues asked for. That is to say lets go back and take another look at this. The regulations go to 2025. Which is a long way. At what point, if they had not changed the pack, would gm have to change the way it is doing business . What would really happen is we would not be able to give customers the choice we give them today. They choose if they are going to buy an suv or an electric vehicle. We are full range. We are continuing to invest in the Chevrolet Volt ev. 238 miles. We are very proud of it and it is doing well. We are making investments to have the right products. There is more change happening