Mark plus, conversations of consequence with leading investors and executives. What is going on right now is a lack of alternatives. I dont think we have seen it peaked in shares yet. Mark big banks head up a parade of earnings reports. The best way to get our shareholders back on board is to show our plans. Our transformation is a journey. Mark its all straight ahead on bloomberg best. Mark hello and welcome. I am mark barton. This is bloomberg best, your weekly review of analysis and interviews from Bloomberg Television around the world. The week began with another development in spains ongoing Political Drama over catalonias quest for independence. Matt the president of catalonia has failed to clarify his position on independence. Defying a Spanish Government demand. This morning, he simply repeated his claim that he has a mandate from voters to act, but his decision to suspend the move has left the country in a state of confusion. He is basically doing what madrid told him not to do. We need a simple yes or no answer from you. Did you declare a republic or did you not . Essentially, it is a fourpage letter where he is saying i do have a mandate and he is willing to act upon it, but he will engage in talks with the next two months. Again, the question mark now is what is madrid going to do . This is precisely what the Central Government did not want. They were very specific about this. You have to answer in terms of yes or no. If you say yes, article 155 will be triggered. If you answer in any manner that is not a simple yes or no, article 155 will also be triggered. Essentially at this point, it is pretty safe to say madrid has all the grounds to trigger this article. Two more wall street giants posting thirdquarter reports. Today, Goldman Sachs continued weakness in fixed income trading unit, where we saw a 26 decline. Morgan stanley was shielded from same bond trading slump that afflicted its rivals. I thought the results were ok at both firms, better at morgan than at goldman, although they were starting at different points. Morgan starting at a higher point. Things have been going well for them throughout the year. The bar was higher for them. They were able to achieve that. I thought most of the encouraging indications were out of the Wealth Management business. On the goldman side, they had really lagging on fixed. They looked in line of that pack, but at least not trailing the pack rather significantly. I thought that was encouraging. Next step is moving forward with many of the Growth Initiatives they have weighed out over the next few years. Vonnie ministers from canada and from mexico rejected what they see as hardline proposals by the u. S. In the fourth round of nafta negotiations. The parties plan on having a longer intersessional period for before the next negotiating next round to assess proposals. Lets take the next month to continue our intersessional work and meet again in mexico with fresh creative perspective. None of us want to end this process emptyhanded. There is no reason for that. We dont know exactly where they are going with this. The idea they have extended the talks is good news and that they want to make progress. Donald trump keeps saying its a bad deal and we need to do Something Else. Robert lighthizer today highlighted all the problems the administration sees with the deal. But the nonstarting proposals all seem to come from the United States. On the one hand, while they are saying bad things about each other, they feel enough hope that they are scheduling negotiating sessions father down the road. We are coming down to the start of chinas party congress, president xi jinping will give the opening address. He is expected to list his achievements since coming in to power in 2012 and will lay out his reform agenda. Our government is in a great situation. Our prospect is bright, but our challenge is also tough. This has been about recapping some of the achievements as the party would see them and then laying out policy framework for the next five years and highlighting some of the focus, the areas of focus. A couple of areas that stood out. President xi talked about the need for Foreign Exchange in yuan reform and Interest Rate reform. Interesting coming on the back of the comments we have from the pboc governor of his desires to see a greater market role for the renminbi. Also of course, his comments about the greater role for Stateowned Enterprises and mixed ownership structure. What it has done is reinforced and brought the hammer down on the political economy you expect in china. Which is that even though he is speaking about reforms and even though he has spoken about liberalizing Exchange Rates and allowing foreign investment, it will continue to be on chinas terms. That will be at the center of everything. There has been a reinforcement of the central message coming out of president xi in recent years that it will be on his terms and the parties terms of how chinas economy develops going forward. Jonathan the Spanish Government has announced an unprecedented decision to move forward with process of suspending the powers of the Catalan Government after the regional president refused to drop his claims for independence. The catalan president is as defiant as ever. As you mentioned, he refuses to drop this quest for independence. He is insistent he has the mandate and the reaction from madrid is article 155. The government said they will meet on saturday. This is an urgent Cabinet Meeting that we are going to put forward and we will come up with measures to present to the senate. The measures will be an indication of who will replace the president and for how long. Also, a date for regional elections. The senate yesterday passed their version of the budget resolution, putting the ball on the house side with possible action as soon as next week. How difficult will it be to get the house to agree with the senate on this resolution . Not that difficult. I have been talking to a lot of sources on capitol hill on the house side after the vote last night and pretty much what they are saying is this would be less controversial than the media has made it out to be and they are actually anticipating this to advance the first half of next week. Thats good in terms of tax reform timeline efforts by the end of the year. President trump is expected to announce his decision on who should lead the fed before he leaves for asia and about 10 days. We were told to get a decision maybe next week. What is it going to be . I think he is testing the waters by maybe letting some of these stories drift out where he is leaning or who is favoring or whatnot. I still think republicans in general want continuity, so that points to either the existing fed chair or a continuation of that regime, which if you want a republican continuing the regime, it is jay powell. Jon taylor is a brilliant economist. Kevin warsh is qualified for the job, but i dont know they will pass the trump litmus test, not impeding the trump fiscal agenda. Interest rates are the throttle for the economy, so low rates will help the economy ultimately accelerate. Mark still ahead, as we review the week on bloomberg best, Oil Executives tell us where the crude could creep up to 60. Plus, an indepth look at how automation is disrupting wall street. We will also comb through some more earnings reports and up next, we will continue with the weeks top business headlines. Thanks are anxious about anks are anxious about get reprieveey may from the fcc. The fcc is close to saying, look, it is fine if you violate u. S. Rules to comply with mifid, we will not punish you for that. Mark this is bloomberg. Mark this is bloomberg best. Im mark barton. Lets continue our top business stories in austria where voters went for youth in the national election. The 31yearold Peoples Party foreign minister has claimed a victory as austrias next chancellor, yet protections projections from yesterdays election put the countrys nationalist Freedom Party within reach of second place. Manus what does the result from austria mean for the rest of the European Partners . Matt for starters, it shouldnt be terribly antie. U. This rightwing party, the Freedom Party in austria, has been antie. U. In the past, but they changed tact before the election to gain ground. And because sebastian kurtz, the leader who has been elected pretty overwhelmingly in austria, has said he will not form a coalition with anybody who is against the idea of europe and deeper unity in europe. So he is the Freedom Party has got to either conform to his ideas of europe to get together with him, or he could form still a coalition with his Current Coalition partner, the social democrats. Airbus has agreed to acquire a majority stake in bombardiers cseries program. The jetliner will be assembled in the u. S. And opens a new front in the battle with boeing over global aircraft sales. Airbus walked away from a similar deal two years ago. What has exactly changed . We put this question to him last night. They broke this announcement in the middle of the night to us and there was a Conference Call with the ceo. He said times have changed. Two years ago, the cseries had not been certified, wasnt flying. We didnt know if it would be popular with customers. Now we have more data points on this. Also, dont forget, that bombardier is in a bit of a funk. They tried to sell their train business and didnt succeed. The cseries is a troubled program even though it is popular, so they probably felt the longer we wait, the more pain bombardier will have to find a partner. Now is the point they wanted to strike. Tensions are rising between iraq and the kurds. Iraqi troops took control of the crude deposits in the kurkuk area. As much as 6000 gallons a day can flow through that pipeline. Flows have been reduced considerably. Our latest intelligence shows far from pumping 600,000 barrels a day, that line is pumping 220,000 barrels a day. The hope is this will be temporary. This is clearly a direct fallout of tensions between baghdad and both sides have an economic interest in keeping the flows going. This pipeline is the only way of exporting oil from Northern Iraq and so it is the only way of generating foreign currency income from that production. Guy the swiss activist investor rudolph wally has found a new target in the secondlargest lender, credit suisse. According to person with knowledge of the state purchase, he has taken a. 2 stake. That means that stake is worth around 100 million francs. The main rationale behind the move is the share price credit performance of credit suisse. He thinks it is undervalued. That is something other investors would say. The reason for that is the big restructuring that bank is going through and the capital raising. Shares have been up so far this year of 10 , but since the ceo has been taken over, it is down quite significantly. Yeah, wally says this needs to be changed and this is why he took a stake in credit suisse. The u. S. Securities and Exchange Commission is preparing to give wall street a reprieve. The sec will tell Financial Firms they will not have to overhaul operations to comply with europes mifid 2 regulations. Among the complicated issues with mifid, the most complicated for u. S. Firms is complying with mifid technically they are will be violating u. S. Sec rules. They have been lobbying the sec for months over this and the sec seems close to saying, look, it is fine if you violate u. S. Rules to comply with mifid, we are not going to punish you for that. It is hard to see a world where wall street is going to make more money selling research than it has through trading. Wall street has benefited for a long time from bundling these services. I think there will be a lot more issues down the line as clients perhaps go as far as revolting and saying we want what the europeans have. We dont want a conflicted arrangement where we are paying you one fee for everything. We want to pay the firm who does something the best to get that service separately from them. President donald trump wrapping up a joint News Conference with the greek Prime MinisterAlexis Tsipras in the rose garden. He mentioned this is a critical point once again that obamacare is a concept that does not work. Insurers have made a fortune and yet, it appears we have a shortterm deal. Because in congress, Lamar Alexander says he and patty murray have made a deal which tracks healthcare shares, getting a list on that news. Health insurers, those involved in the Obamacare Exchange markets, getting a boost as well. President trump has said obamacare is dead, and literally 11 seconds later, Bloomberg News reported the news that there was a deal between Lamar Alexander, the republican, and patty murray the democrat to restore the csr payments, the payments that help offset costs to middleclass people buying insurance. The very payments that trumps executive order had removed a few days ago. Weve basically done a 360degree aboutface and we are back to where we started. Mixed messages from washington. Only a day after senators Lamar Alexander and patty murray presented a bipartisan fix to shore up Obamacare Exchanges, but now you have House Speaker paul ryan and donald trump coming out against the plan. President trump if something can happen, thats fine, but i wont do anything to enrich the insurance companies. He is against some of the things contained in this fix, but he has made it very clear he wants to see some sort of a bipartisan deal get done that prevents people from feeling pain. Frankly, i dont know if thats possible. Chinas robust factory output and Consumer Spending kept the economy humming in the Third Quarter. Gdp rose 6. 8 , giving president xi jinping a firm footing to deliver on his pledges to rein in excess capacity, curb pollution, and shift to a more sustainable growth. Despite this, markets have not reacted positively. Likely still reeling from the pbocs comments on high corporate leverage. Comments from the pboc governor, we heard from him again. At a session he was meeting with regulators and he flagged this issue of high corporate leverage and also Household Debt is Something Else that he talked about. He was also pushed on the question of yuan reform. That was something that came up in the president s speech yesterday. The pboc governor said this is a longterm process and he sees no immediate need to change the trading band for the yuan. That was another issue that came up. Yes, it doesnt seem like much for the markets to hang their hats on yet. There are a couple of caveats. Yes, Consumer Spending is up. But you have a lot of Infrastructure Spending as a result of this credit push. Lyft, the ridesharing company, is raising another round of funding. It is being led by alphabets investment arm, capital g. They were in talks a month ago and the cash infusion, 1 billion, a total game changer against its competitor, uber. This is clearly a Huge Investment and a valid indication of maybe a shift. Google alphabet was one of the early investors in uber and now they are putting 1 billion either through google corporate i guess they are deciding to go through their private equity arm. I do know they are excited about this space. They were an early investor in sidecar and uber, and now in lyft. They are thinking about using ride hailing with selfdriving car. It is a space they feel they need to be in. Jonathan the brexit mood music improves in brussels. German chancellor Angela Merkel throws theresa may a rope. She is saying there is zero indication the divorce talks wont succeed and she wants to see an agreement rather than an unpredictable resolution. The e. U. Said it has given the green light to start making preparations to move the talks to trade in december. That is just preparation, no guarantees. We heard from Emmanuel Macron in the past hour. He said the ball is in theresa mays court. We are not halfway there on the financial settlement. Whats more, people familiar with the matter have told bloomberg there may not actually be a final number published on this divorce bill because they will break it up to make it more palatable politically. I thought that was interesting that Bloomberg News managed to get that. Even though you have the eu president , donald tusk, saying there has been progress, that is not accurate and im hoping to move on to trade talks by december. Hope doesnt always translate to reality. Mark welcome back to bloomberg best. I am mark barton. Automation has changed the nature of Many Industries around the world and now it is changing wall street. In a series of reports, bloomberg examined the revolution overtaking Financial Institutions and what it means for the people who were not there. Some of the highestpaid jobs, some of the jobs where the people are literally making millions of dollars in some cases to do these jobs, are increasingly under threat of automation. That is stuff like trading on both the sell side and the buy side, meaning hedge funds and asset managers. Everybody from the Portfolio Manager who is making decisions on what to invest in, to the order taker on the trading floor, to the Legal Department that is determining whether that swaps document is valid or not, there are technologies able to do a lot of those tasks and while it is not clear they will be able to do all of it, it is still a very early stage, this is being actively tested and rolled out at wall street firms around the world. Vonnie what areas of wall street are already using automation . They are already experimenting with a. I. Over a crosssection of areas. We are talking about cash equities. What you think about equities, they went electronic decades ago. They had the data. The thing i learned about this is when you have data sets, you are able to use Machine Learning algorithms and apply that and automate a lot of features. They are already doing that for education. They are looking at hedging and Market Making that as well. Credit is another area they are exploring. Machine learning a. I. Vonnie how many jobs could be potentially lost . A figure that you hear often is 30 of jobs in the next five or so years. Think about that. How many hundreds of thousands of people are employed in these banks and quite often, many of them doing mechanical things, does not seem to be an overestimation. A lot of wall street is taking traders, trying to bring them into the 21st century. At goldman, they are taking engineers and trying to give them some ability to be traders. For a long time, they had these, what they call internally as strats. Some of the original data scientists on wall street and they settled next to traders. Basically combing through the data, designing algorithms and as wall street changed, as more technology came into the business, they have done more. They now have 2000 strats at goldman. Francine you look at the world of a. I. , what is the actual piece of technology in a. I. That is the most promising . We have a piece of a. I. That listens to every single Conference Call from Company Management and is screening through for its decided what words are the most interesting ones. One of the things is, the words you would expect it to look for like challenging or difficult, you would think Company Management says, it is bad news. The reality is as the companys ceo, you learn very quickly. If youre going to say challenging, this is what the market is going to say. Those words are clear. It is actually subtler words which Machine Learning is good at picking up that are the things telling you, while it says this in the headline, this is really what the person thinks. It is not maybe one day they will be able to judge by the way i twitch or blink at the wrong moment, but they are not doing that today. Just the use of certain words does tell you what somebody really thinks about what is going on. Mark coming up on bloomberg best, the weeks most interesting interviews. The conversation with ken lenchon. Frank talk on the oil market from top chief executives. Plus, Lessons Learned from a crisis three decades ago, memories of black monday straight ahead. It was a frightening week, unlike more frightening than any week in 2008. Mark this is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. When you survey the ceos, are they worried about the world at large . Are they worried about politics here in the United States or overseas . Honestly, no. I think, you know, their daytoday, they are going all out. Now, will you look at the supply chain and make sure you dont have a snag in the Korean Peninsula that could stop your business . Of course, you look at those things, and you prepare for those things. As a Portfolio Management job for us, we have to make sure we are on top of subjects like that. Doesnt mean it will happen or we worry about them, but we plan for outcomes in case things happen. Mark that was blackstone, head of private equity portfolios. David calhoun discussing the confidence level among chief executives. How are investors feeling these days . Bloombergs jason kelly sat down at the robin hood Investor Conference with the heavy hitter, Internet Associates founder and chief executive ken lancome. What is going on in the market right now is a lack of alternatives. You look at the stock market and bonds, you know this that a 10 year, 2. 25 bond, if the fed takes rates up next year 100 basis points, you know a 10 year bond is going to have a negative, going to have a rising yield and a reduction in value. I like the idea of companies that have shown the ability to grow. That are generous in sharing their success with stockholders and dividends. Im more focused on dividends and buybacks. I consider buybacks an on or off kind of thing. But im very sensitive to Balance Sheets. If there is a stress event out there, these companies have to be able to stay the course. Jason how healthy are Balance Sheets . Ken there is enormous liquidity in the market. Enormous. As the fed sops up qe, the liquidity will go away. But i look at the banks, the banks are in the best shape they have ever been in my entire life. And in fact, i think the excess of regulation out of washington gives us opportunities to say, ok, regulation is more reasonable, i think this is going to be good. For example, i think the fed probably is nervous to have a big payout more than 30 of its earnings in dividends. They will let you buy all the stock all you want because that can be turned on and off. I would like to see some flexibility on the upside of dividends. Look at jpmorgan, for example. I love the bank, and i love jamie. I tried to get jamie to run home depot when he was out of work. I wish i had gotten him. I honest to god really, really believe that the banks today are a whole different kettle of fish than they were in 2008, or any time in the past. Mark the week began on a positive note for oil prices with crude holding above 50 amid signs of healthy demand and geopolitical tensions, which could affect production. Manus cranny went to the oil and money conference in london and asked chief executives where the market was heading. Manus what does it take to get us through 60 . What does it take to break the new bandwidth in crude . I think, we have a solid demand, and it seems to me that it is relatively stable for quite some time. So, the demand picture is obviously going to be important. The shale, how responsive that will be at various levels. I think we might have been a little bit surprised it is growing, but not to the extent some might have expected. That would be a critical factor in this equation going forward. Manus do you think that shale, peak shale, peak production in the last month, is that my read from what you just said . Are we hitting peak shale . I dont think we are heading towards peak shale yet. There is large potential within shale. What we might not fully understand is what kind of hurdles, bottlenecks are we facing within shale and how does it work . What does it take to kick off those options . Manus you say with the kurdistan issue, we could see a provocation above 60 in the near term. Opec, nonopec, do they need to extend . They were saying, yes they do. Needs to be a twoyear deal. I think if they want to see the markets moving up, they would probably like to extend. You know, i think that will be increasingly difficult for them to extend because there is obvious the upward pressure on production in many of these countries. But for the price to continue to move in a northerly direction, they probably need to extend. Manus finally, the frackers. They are pesky, arent they . Do you think they will cap out the market . Your view very briefly on fractures in the states. Yeah, that is probably one of the biggest downsides in the market. In the sense of price, we still see a huge amount of production to come on from the states. We are still moving a lot of oil, even more oil from the u. S. To the far east. I think that will have an impact. So, yes, that is one of the reasons in the shortterm, it can be bearish. Mark this week also marked the 30th anniversary of one of the darkest days in wall streets history. October 19, 1987, is known as black monday. For some investors, the memory is still fresh. We flashed back to the crash in conversations with Bloomberg Television. I had a really interesting Vantage Point for black monday. I had made plans to travel to texas to do marketing for my hedge fund, and i was in dallas on the day of the crash. And what was so fascinating was the hotel that i checked into had Alan Greenspan and Margaret Thatcher in attendance for some sort of awards thing, or i dont really remember what it was. The vivid memory i had was trying to call new york from my hotel room that evening to find out more about what was going on, and not been able to call out because they had monopolized the switchboard. The Federal Reserve and British Government had monopolized the switchboard. And so, it was this odd, bizarre Vantage Point to be where they were physically the day of the crash. So, it was a frightening week, more frightening than any week in 2008. Actually, it is not the date of the crash that was the big trading day. It was the next day. Overnight, greenspan lowered Interest Rates by Something Like 275 basis points, and the futures rallied by 375 basis points on the open. They didnt know what was happening, and they thought he would ease even more. And i remember the bonds, there was a bonds future that was locked because it couldnt rise above a certain level, and it was locked in. You consume the bond, the one trading in the market would be up about 10 or 11 points. At the time, that was a huge move. But the largest move was not a statistical move. The largest outlier was something the models could not predict assume was in the realm of possibility, or abnormal but within that model, was eurodollar. I remember. The stock market moved Something Like several uh, uh, it was a few variations above 20. It was one and a half times in shortterm Interest Rates. That was a big move. It was the next day. Eurodollar future. And that was when i realized that options, out of money options, were extremely explosive. Mark you are watching bloomberg best. Im mark barton. Lets return to a roundup of the weeks top stories. It was a busy week for corporate earnings reports, starting with impressive results from netflix. It was a blowout quarter for the Worlds Largest online tv service. Netflix reporting an increase of 5. 3 million net subscribers in the Third Quarter, plus a beat on the top line. The company saying going to spend as much as 8 billion on programming next year. 8 billion . What do they spend that on . This is incredible. Thats 1 billion higher than the market was looking for. They keep adding billions of dollars every year to their programming, and they are producing more and more original programming, and relying less on traditional hollywood studios. Some of the studios like the Walt Disney Company are pulling back on the content they license to netflix. What we are seeing netflix do is really stake the future of the company on original programming. They believe that drives the subscriber growth, which drives revenue and cash flow, which will ultimately pay for these incredible programming obligations they are incurring. Johnson johnson announced its Third Quarter earnings less than an hour ago and it Beat Estimates on earningspershare and revenue for the quarter. On top of all that, it up estimates going forward. We heard from the president in some detail yesterday about how he wants to Reform Health care, and he addressed the question of drug prices. As you look at washington, are you building into your forecast any effects from washington on your business . David, the overall discussion on Overall Health care costs is a good discussion to have. The focus on drug prices is a little bit narrow. The overall impact on drugs, drugs are about 14 of overall of the Overall Health care budget. What is lost is the discussion about the benefit of the overall drug program to the health care system. So we think the focus is a little too narrow. The broader discussion should be about the Overall Health care costs. Akzonobel has missed estimates for the Third Quarter with earnings before taxes dropping 13 . The forecast is thought to be in line with 2016. This is a business that has been through many challenges and the changes at the top in recent months. How do you go about rebuilding trust with shareholders . What is the most important task . The most important task, i think for shareholders, is beside the dialogue that stepped up massively to explain what our plans are and what the future steps are. The other step is to deliver. And in that sense, the Third Quarter is kind of a mixed message, one encouraged by the forward momentum. The positive turn on prices we see in the markets. The same time, the Third Quarter, as you have seen from a variety of industry announcement, everybody else is in the same boat. A number of very natural disasters, hurricanes, earthquakes all sorts of items happening that have made it a bit more muddled in the Third Quarter to prove that, that is the best way to get shareholders back on board, to show how the plans granular in 2020. And showing the steps to get in that direction. Philips lighting has missed its track to reach its outlook for 2017. If investors are concerned the revenue number in the Third Quarter looks a little bit light compared to estimates, should they be concerned . Q3 is a good quarter. The company is growing by 1. 3 , totally in line with our commitment. This is once again, coming from the energybased activities that have been growing 22 during the quarter. It beat more than two thirds at what we are selling. At the same time, the growth is profitable because we have continued on improving our operating margin by 50 basis points. It now stand at around 10. 5 for the quarter. You know, our transformation is a journey. I am scary i am very happy to see the rigorous implementation of our strategies paying off. Nestle reported weak sales today, and the culprit is the weather. A summer of hurricanes in the u. S. And rain in europe. What went wrong . The weather is part of the story, but what you are seeing is a longer term trend. People are not excited about mainstream big brands like they were for decades. It used to be about keeping up with the jones, and a big brand is what you wanted because that is what the jones had. Now, it is about differentiating yourself from the jones. And so these Big Companies have to spin on a dime, and find niche brands that are growing to bolster their growth. And they are doing that, but it is really tough, and getting tougher to do. Adp handles the payroll for roughly one in six americans. We regularly cite their High Frequency data on labor markets on bloomberg. Recently, the company has been in focus because of an almighty proxy battle. Active investor bill ackman has been pushing for three board seats at the annual meeting in three weeks. Adp with a letter to urgent to reelect the current slate of 10 directors. We made progress ourselves are ready, and we have plans to continue progress. In the last six years under my tenure, the margins have improved 580 basis points, and we just guided to another 500 basis point improvement over the next three years. We have, over the course of six to nine years, have been able to accomplish the same thing. I think it does come down to a difference in opinion about pace and risk. David United AirlinesCeo Oscar Munoz had a bad day yesterday. He had some disappointing thirdquarter earnings, which hurt the stock a bit. Then, he got on his earnings call. By the end of his talking to analysts, the stock was down the most it has been in eight years. What went on in this call yesterday . I think analysts were looking for more clarity on how united is going to enact their vision on improving their yields, which are the shares they get paid in the u. S. Market as they try to close that with delta and with american. I think that is the secret to more profitability at united. He didnt give that many great details on adjusting their models and figure out how the company will turn things around. A not pleasant start for new General Electric ceo john flannery. After the company slashed forecasts for the year. Flannery is dealing with one of the deepest slumps in ges history. The company has lost a quarter of its market value in 2017. Certainly on the top line, the power business was much worse than expected. It has been really bad and margins fell 700 basis points. I looked for restructuring, and it wasnt in there. Oil and gas was also bad. I mean, there was a little bit of nonrestructuring in there, but it will still down more than expected. Organic growth was worse than expected. Down 1 . They have been running free percent to 5 for the year. One thing people were most concerned about is cash flow from operations. They were guiding 12 to 14 for the year. Now they are guiding seven. There are a lot of questions and part of it is he is trying to clean the decks. He is going to reset the company, the expectations, and lets just get it in front of us. Mark we have just looked at earnings from a host of Big Companies. Lets turn the spotlight on a company that is not on that scale, but growing fast. In eight years, food 52 blossomed from a simple website into a thriving content and ecommerce destination for food and home products. The cofounder, merrill stubbs, tells the story in the latest edition of small to big. Merill our mission at food 52 is to inspire people to eat thoughtfully and live joyfully. We are a comprehensive resource for kitchen and home enthusiast. That means we offer both content and commerce and then community as the tie that holds it all together. My cofounder amanda and i come from traditional print media backgrounds. We were editors and writers. In 2008, 2009, we saw this opportunity to create a brand around kitchen and home that lives online. We went out and got a book deal, and got 100,000 advance and used the advance to pay for the building of the initial website. In 2009, when we launched, we started really with recipes. In 2010, we raised an angel round of 750,000, which we used to invest in building out our own ecommerce platform. Ecommerce represents about 60 of our top line revenue, and ad sales is the majority of the rest. With a very small percentage being cookbook sales. The majority of our advertising is made of advertising and branded content. Events are also a key part of all of our business. We do a lot of events with brands on the ad sales side. And then we have our own events on the calmer side. They are typically pop up where we are showcasing products which you can typically only find online. Last year, during cyber weekend, we had an outage where the company that calculates our sales tax was down for over 12 hours. So we had a total backup. What we decided to do was to remove the sales tax functionality completely from the checkout process, so orders could get through, and turn it to our advantage by actually making it a promotion. We followed up with an email and said to everyone, we will cover the sales tax for the rest of the weekend. When you have a community you are talking so directly to all the time, it enables us to have that sort of direct conversation with people by email. This is what we are going to do. We are going to turn it around to your advantage, because you are that important to us. Right now, we are touching 12 Million People on a monthly basis. Our unique visitor growth has been 65 over the past year. We are talking to amazon alexa about a partnership. Something we talk about all the time is, what does the food 52 presence look like offline . A permanent brick and mortar presence . We are very close to profitability, and it is one of our key focuses for the next 18 months, to become a sustainable business. Take a look at the bloomberg and anr, you have the largest chunk of analysts have hold ratings. Thats the beige bars in the middle. There are 10 buys still, 20 holds, and five sell ratings. A lot of folks were more optimistic than they should have been on snap. Mark there are about 30,000 functions on the bloomberg. We always enjoy showing you our favorites on Bloomberg Television. Maybe they will become your favorites. Here is another function you will find useful. Quicgo will take you to important quick takes. They can give you fast insight into timely topics. Here is a quick take from this week. It is impossible to ignore americas Opioid Epidemic anymore. The numbers are staggering. Nearly half a million americans say they use heroin every day. Heroin overdoses have tripled between 2010 and 2014 and deaths from all opioids, including heroin, are approaching the number of deaths from car crashes. So, how did we get here . Pain. Here is the situation. There is a grim connection between opioid painkiller addiction and heroin addiction in this country. In the 1990s, doctors turned to drugs like vicodin and percocet to treat widespread undertreatment of chronic pain. The number of opioid prescriptions filled in 1992 . 79 million. By 2012, the number rose a lot to 217 million. As those numbers skyrocketed, the federal government forced drugmakers to make prescription pain medication harder to abuse. At the same time, have owe heroin from afghanistan and mexico became a cheaper and more readily available alternative. The result is four or five new heroin users in the u. S. Who has said they previously misused prescription pain relievers. Here is the argument. President donald trump appointed a commission that advised him to declare opioid addiction a national emergency, and rapidly expand treatment capacity among other measures. Pres. Trump it is a national emergency. We will spend a lot of time and a lot of effort and a lot of money on the opioid crisis. But trump said he is focused on cutting off the supply of drugs rather than expanding treatment, as his commission recommended. The Health Care Bill passed that trump supported also withdraws the requirement that drug treatment be covered by medicaid. Nearly every state has enacted laws related to opioid abuse, including targeting doctors and pharmacists who overprescribed pills. States in the federal government have made the opioid naloxone readily available, reversing overdoses. Meanwhile, advocates for patients in chronic pain worry that rushing to solve the addiction process would be those who truly need opioids with needless suffering. Mark that was just one of the many quick takes you can find on the bloomberg. In you can also find them on bloomberg. Com, along with all the latest Business News and analysis. That will be all for bloomberg best this week. Thanks for watching. Im mark barton. This is bloomberg