Rules. Guest anchor the u. S. Welcome trains partners welcomes trade partners, but also warns them. There was a notion of china taking on the mantle of globalization. There is tremendous potential for india. [indiscernible] make sure that companies are making investments based on the inherent value of the investment, not on their particulars. Anchor its all straight ahead on bloomberg best. Anchor hello and welcome. Im scarlet fu. Youris bloomberg best, weekly review of the most important business news, analysis, and interviews from around the world. Week began with political maneuvering and the u. K. Where in battle Prime Minister theresa may moved to shore up her parliament by moving her at while moving her agenda forward. Prime minister theresa may strikes a deal to keep her grip on power. Northern ireland irelands Democratic Unionist Party will enforce her minority government on key votes. It gives us some certainty, which is what we should be happy about now. On thursday, parliament will vote on the legislative program she unveiled last week. Now with the 10 lawmakers from the dup, she should be able to carry that through without some difficulty. Ago,r just a short time the impact of the deal on brexit negotiations and the future of eu citizens in the u. K. Mr. Speaker, this is a fair and serious offer. Our obligation and the withdrawal treaty with the eu will be binding on the u. K. As a matter of international law, and we will incorporate commitments into u. K. Law guaranteeing that we will stand firmly by our part of the deal. There are areas of compromise. The big Sticking Point is likely to be the power of the European Court of justice after brexit. The eu would like it to continue to have a say in british law, creating disputes about citizens rights. The u. K. Would like to rid the british of the ecj. There is no role for the ecj to play the on brexit. Obviously that is a big area, and there are others contained in this document. It is going to be something that is negotiated in the next few weeks. A ransomware to attack has struck firms around the globe. The virus known as petya lockes computers and demands 300 in payments to gain access. Wpp and adia Company Danish shipping giant have also been struck. The attack is similar to last months rent some strike, using last months ransomware strike. , itsis invention today main mechanism force mechanism for spreading is a leak in essay exploit a leaked nsa exploit. That is not the only mechanism that the infection uses to spread, but that is the primary mechanism. It is a reminder to companies that just because the earlier infection was stopped, thanks to some careless coding by the hackers, doesnt mean that the future ones will be as easy to stop. It looks like the attackers took some more care in preparing this set of malware. Virus advanced from russia and ukraine, went through europe, ended up in the u. S. , with reports it is moving through india and china now. So far there hasnt been that widespread of an impact in asia. I think that is partly because there isnt a stringent requirements on Asian Companies as there is in other parts of the world. Anchor Senate Republicans have decided to delay a vote on the Health Care Bill until after the july 4 recess. At least five gop senators have said they wont even back a procedural vote on the measure that was supposed to take place this week. Vice president mike pence in capitol hill earlier today, trying to muster enough votes for this health care passage. At the end of the day, the numbers just didnt add up. This is a major setback for mcconnell. He did not expect it to pass expected to go this way. He expected it to pass quickly. Hes still got room to maneuver, some cards to play, and i think he will be pulling out all the stops. The name of the game for republicans is that they remain energized and the left doesnt just swarm them with the activism. Anchor we are getting the headlines for the second round of the banks of the Federal Reserve stress tests. Capital one, the credit card issuer, has conditionally passed the stress test. They got the but it must resubmit its capital plans. It is not a clear passing. Every time they do this, the fed is a little vague on what they find fault in. Its prophecies and Data Collection and all these other systemic, how they look at their risk, so they mention the same things at how they are looking at risk. They mention one of their biggest, most important material businesses they werent looking at the risks properly. Even with the conditional, it is a pass, and theyre going to increase their dividends. The big banks have more than enough capital, and lenders unveiled how they are trying to double dividends. , the nations largest lender, says it is boosting its dividend 12 . I think the banks for a long time have thought that regulators held way too much capital relative to the risk involved. The first of the opportunity they get to return capital to shareholders, theyre going to do it. The symbolism is that the pendulum is probably swinging away from tilde of capital and back towards bringing those capital ratios down. The fact that the numbers suggest banks are going to pay out all of the payout almost all the money they are projected to earn over the course of the year kind of tells you that banks are ready to start reducing the equity in the equation try and boost returns. Pretty good for people who own the stock in those banks. Shares in blue apron made their public debut thursday, but the stock gave a muted performance in its first day of trading, literary literally unchanged by the end of the session. They lower their price from 10 a share from an initial range of 15. A lot of this has to do with amazon and whole foods. Looking at the trading, a close at 10 a share with some aftermarket trade at about 9. 95 below the ipo price. It seems like there is a bit more investor concern baked in, as well. Week, market story of the their worst week in more than two months. I think the bond market has been largely telling us we are going to be in a modest inflation environment for quite some time. I think it has also been telling us that six hikes in two years from the fed is a headwind for the economy, not a reflection of an accelerating economy. For us, stock valuations are a little stretched here. We looking for the market to finish this year for the 6 lower than where we are right 6 lower than we are right now. The 100 most expensive stocks in the s p out of the 500 have only been more expensive relative to the best of the market in 99. See auld easily significant correction in those. That is where all the capitalization is. Theres a possibility of that 5 or 6 drop, but we might have seen the beginning of that in the last two or three weeks. That is the beginning of what the trading has looked like. Come as well to review the week on bloomberg best, italy arranges the rescue of two struggling banks but insists it is not a bailout. About the new reality of protectionism and how they are working around it. And more on the weeks top more on the weeks top business stories. A rather long wish list we saw coming out last night saying they should make acquisitions. Anchor this is bloomberg. Is bloomberg best. Lets continue our global to her ks top business stories. Anchor google has lost its bailey it is regulatory battle yet with a fine following an investigation into its shopping service. Biggest ever competition find from the european commission, doubling the previous record handed to intel and 2009. Look at amazon, they are doing incredibly well. Ebay, likewise. Found and studied intensively with 5. 2 terabytes of data is that there is a glaring a very close relationship between traffic and revenue. What you see is that google has taking an advantage for its own shopping comparison on the cost of its rivals and been able to do so by misusing the dominant decision in general search. That is the key of the case. Italy has approved emergency rules for two ailing euroscome on a 17 billion to the lenders. On friday the European Central bank declared the lenders failing are likely to fail, and that both would be wound up under italian solvency rules. What does this tell us about how lenient the commission and the eu are when it comes to bailing, and what does it mean for italian banks . Guest first of all, we have to say that the bailing laws make a lot of sense. Everybody believes it is a better way to go forward. I think you have to get to a starting point before you can then actually apply those across the whole marketplace. I think it is really clear italy has its own idiosyncratic problems. Debtholders,nior and the eu is having to get to this point in time where they can say, for now on, it is bailings, and this is what we see here. Anchor for car owners, it is good news because it does mean that the company will continue to operate and produce the airbags that are needed to replace those. The takeover by key Safety Systems means there will be some new investment in the company in order to produce the massive number of airbags needed to replace the faulty ones. Good news foress them, and as well for companies that have all kinds of liabilities with takata. Now that they are then crept, that they are bankrupt, there will be a big gap between what their liabilities are on the cash they have on hand. That will have to be worked out in court. Anchor nestle is coming under for its from activists stake in loreal. The rather long wish list we saw coming out last night saying they should make fault on acquisitions, but at the same time they should shed the performing assets. It is a huge company with 2000 brands. There are lots of areas where they could probably improve, and loeb said as much. He says there are many opportunities, and there is rarely a case where there are so many areas where he can improve. Anchor nestle has announced a 20 million Share Buyback and is looking for acquisitions. Is it nestle buying time . Is it nestle giving and or pursuing a plan . It is quite dramatic on the shores of lake geneva two days after dan loeb bought them. It looks like they are moving aggressively to respond. In the how long this was works, we dont know what this point, but clearly they are signaling a willingness to engage with the activists and other investors. Anchor shares of the rental car company avis jumping as much as 21 after it reached a deal with a selfguided the self driving car unit of output that unit ofalpha alphabet. Is a pretty small deal. Avisw people joking that is just changing the oil for the cars. It does show the reason that ertz stock jumped as well. It could be a big business in the world of driverless vehicles. Apple is leasing suvs from hertz , the traditional Fleet Management unit. That came on the heels of the avis report earlier today. We put out the apple story this afternoon, and as you know, shares are moving quite a lot on it. Anchor the bank of england governor has planned, all of with his Financial Stability team, to increase Capital Requirements for u. K. Lenders by 11 point or billion pounds to tackle risks posed by Consumer Credit growth, and prepare for the uncertainty of brexit talks. Could this be a tightening of conditions today, policy today . In a way. As many big split on the Monetary Policy committee lately. By raising the capital letter, that the capital buffer, that tightened conditions and gives a bit more leeway in terms of holding off on any changes in Monetary Policy come august. Anchor lots of action in the currencies. We are from Global Central Bank leaders. The euro is rebounding after a new low against the dollar after the ecb says the market misjudged president Mario Draghis speech. Removal of some monetary stimulus is likely to become necessary. Reacteduro markets have strongly to a speech by mario draghi yesterday. Risk put in danger the progress the ecb has made and its Monetary Policy. Draghi is an signaling anything imminent here. Anchor now the bank of england may need to begin raising rates. Only a week ago, he suggested he wasnt in that camp. s comments today suggests that august 3 is going to be quite a tricky meeting his suggests that august 3 is going to be quite a tricky meeting. Anchor Rupert Murdochs 21st century fox inches a little closer to securing sky and the u. K. From the first record of the u. K. Government, they were prepared to refer to the regulator. As mr. Murdock had the man out of the news from the u. K. Today . I think shares are surging because this isnt the worst Case Scenario for fox with its proposed takeover of sky. The worstCase Scenario would of been an outright rejection. With the government has done today is said they are planning to review this to refer this for an additional regulatory review, which could take another six months, but it is definitely not the worst Case Scenario. Anchor walgreens has scrapped a write a takeover a takeover of rite aid, which was being looked at by regulators. What they have come out with today is quite interesting. They have said we are going to do the deal, but in massively revised terms, so we are only going to buy a small portion of the stores rather than the all company. The interesting question now is what happens to the rest of rite aid. Scarlet youre watching bloomberg best. The health of italys Banking Sector under scrutiny this week as the government allow the secondlargest lender to take over the good assets of two failed banks for a token amount. We discussed the deal exclusively with the italians finance minister. One of our columnists wrote earlier, this is a bailout that nationalizes losses and privatize is gains. Werent banking rules meant to stop this . Guest i totally disagree with that statement. It is not a bailout. Everything was done by the rules. Is the National Liquidation of two banks declared failing or ecb. Y to fail by the anchor we do not say to those claim that this might undermine confidence in the Banking Union project . Guest i dont think so. We follow the rules with the european institutions. State aid is totally legal in this case, so there is no disruption of the rules whatsoever. Anchor its legal, but a week spain went down a different route. How are these two italian ancoers different from b popular . Guest i think there is a difference between santander and italian banks that have decided to come in and acquire the good assets of the banks subject to clausetion, but with the that the capital ratio of the acquiring bank will be kept unchanged by the operation. On the other hand, bank of sense and their the bank of something there had of santander had to raise capital. Anchor so you dont accept the accusation that some have level leads to athis nonlevel Playing Field in europe . Guest absolutely not. This is capital neutral. The position of the bank has not changed from that point of view. As i said, given the fact that this is a liquidation according to some specific rules, it was deemed to be totally legal from the point of view of state rules. Is not changing the Playing Field. Regardless of what you say, there are concerns. There are concerns in germany. Might this tender further eurozone integration, as some have suggested today . Guest i totally disagree with that statement. We have strengthened the euro integration and the Banking Union. We are working to make it even stronger. Scarlet straight ahead on bloomberg best, interviews from the conference known as the davos of asia. Ceos from around the world speak out on topics of concern, along with tax concern. To be more competitive on a global basis, it is essential that it gets done. We are working very hard with them. Scarlet this is bloomberg. Riskere we see the biggest is that as we roll forward, there are going to be changes in government policy. Public policy will be made on made. Back at have big effects on industries. Think of german utilities a few years ago. There will be change in technology, which will shift the Competitive Landscape quite quickly. And there will be, potentially, a pull forward in anticipation because that is what markets do best of such changes. Who is going to win . Who is going to lose . Who is going to benefit . Who is going to be penalized . If i am allocating capital, i want to know to be able to make investments. I also want soft information on who is thinking about this so i can make qualitative judgment about management and Risk Management that often unlock your value. Unlock bigger value. Scarlet that was the bank of a late governor the bank of england governor discussing climate change. He has a task force on Financial Disclosures chaired by michael bloomberg, founder and parent owner founder and coowner of our parent company. He also spoke about chinas changing role in the global economy, a topic that Stephen Engle discussed with several highprofile guests. Reporter what did you take away from the speech . It was almost a carbon copy of previous speeches, saying that china can withstand all of these challenges. They are going to meet their targets. There is not going to be any hard landing. Guest on the domestic side, i think he was sending a very soothing message, but also making it very clear point that in the lead up to the Party Congress in november, the government is going to do whatever it takes in order to maintain reasonable rose and Financial Stability. Next year is the year to be concerned about because we might see some more forward reforms which could set up unprintable consequences of their own. Unpredictable consequences of their own. What i found even more interesting was the International Aspects because,