Transcripts For BLOOMBERG Bloomberg Best 20180121

Political perspective. Juliette and a new bloomberg reports shines on Clean Energy Investment. China is far and away the world leader in terms of the most amount of capital been capital being deployed and the most of the equipment. By 2040, about 53 of new car sales globally will be electric. Juliette buckle up, conversations from the north American International auto show. It is a milestone for our future plans, but there is more to come. Our growth is coming from a degree of buoyancy from the markets but this is market share growth. They can have the option of delegating tasks to that vehicle that their grandfather never expected, including never crashing. Juliette it is all ahead on bloomberg best. Juliette hello and welcome. I am juliette saly. This is bloomberg best, your weekly review of the most important business, news, analysis, and headlines from and interviews it from Bloomberg Television around the world. U. S. Markets were closed on monday but the week began with a startling corporate headline from the u. K. Mark the once mighty u. K. Construction giant carillion has collapsed. Carillion has 2 billion in debt. They failed to get a government bailout. Share prices have collapsed in the last year. It is nice to it is not nice to play the blame game, but lets play at who is to blame . Lionel exactly right. The blame game is happening right now. I think you have both sides deserving blame, the government for presiding over a very competitive, too fragmented contracting and procurement market where price, the bottom line, is everything. Not enough attention is given to the health of these companies and other blame will be carillion itself for to for too aggressively bidding for contracts with the incentive to get the executive and the board on growth, and it should be for aggressive growth. Mark and should the government have awarded them further contracts in the wake of the year where we saw the share price plunge . What kind of message does that send . Lionel it is a concerning one because it suggests they did not know the full health of carillion. Or they did know and did not put and were hoping to put in the right contingency plan in place. I think there is a problem if the government doesnt know the full health of one of the biggest contractors and the supply chain to do with it. Vonnie citigroup is at its highest in nearly a decade after revealing plans to shower investors with profits. The bank is sticking with its plan to pay out at least 60 billion to shareholders. That is even after its larger than forecast charge of nearly 2 billion. This will adjust to the new u. S. Tax structure. Michael turning to tax reform, we believe it will greatly benefit citi shareholders. The charge we are taking relates mostly to the reduction of our deferred tax assets as a result of a lower tax rate, the implementation of a territorial tax system, and the tax on deemed repatriation. Vonnie to a larger extent, this was a gift to citigroup. Alison i think the key thing is with regard to the charge and capital return, they made this clear in early december, we will have a huge charge, but it will not stop us from that 60 billion return, which is the plan over three years so they did make that announcement before we got the final bill. With the final bill, this was related to repatriation but i think the key thing that we learned today or the one thing that is that better than month thing that is better than expected results in the card unit. We do get a little better than expected so credit coming in line with expectations and growth, pretty strong. Jonathan Bank Earnings may cashme up earnings, they k earnings, they continue Bank Earnings, they continue to roll out this one, bank of america reports bond and equity trading that beat analysts but Goldman Sachs saw its worst bond trading in a decade. This is down a massive 50 . What happened . Alison keep in mind that they had a very strong year. Third quarter stronger than other banks. Expectations were down. I think the expectations were then and it was delayed his appointed member, is important for goldman because they are more from that business than other banks but on the bullish side of things, Investment Banking, gain shares in businesses that are growing and doing better and controlling costs, so showing that there in that they are in businesses that are very transactional driven, equity training, to the extent that they can keep the cost variable, that is hopeful to the bottom line. Charles bank of america tends to not have a big swing that other banks might have. What theyre trying to do is create quarters of predictability rather than swings from one order to another and that is what theyre laying out now, the sequential quarters of steady earnings. The bottom line number looks good, the top line number was a small miss in terms of revenue. What was surprising is how strong the Capital Markets revenues were. They will probably have one of the best Investment Banking quarters of any of the big banks. Francine chinas economy has had its first fullyear acceleration since 2010. Gdp growth picked up 2. 69 meanwhile, Industrial Production estimates, but retail figures came in bit softer than expected. Tom no big surprise, it is noteworthy given that the economy has come at the beginning of 2017 saying that they expect to see a moderate slowdown in growth. That hasnt happened, but these were noteworthy given the expansion in credits starting to slow in china and you have a very focused tackling in terms of the Regulatory Environment on financial risks. Enda it seems like they have the economy and somewhat of a sweet spot. It is on Cruise Control and they are not willing to step back anytime soon. A big part of what is happening in china is actually the global story. The economy is recovering and is driving demand for exports out of town and escorts are a net contributor growth last year. That given the opportunity to do this, things are looking good, inflation is relatively subdued. Currency is stable. Growth is on track. Jonathan Morgan Stanley topping estimates with brokerage profits sending a new high for a fourth straight quarter. Alison all good. The one area they miss with six income training, i would say if investors would go to dictate area for them to invest, that would be the one and still in life with her annual target so Morgan Stanley is executing on plan. They are coming and within that 9 to the 11 range and that is the key ones. I think investors are really going to focus on how much were getting from the market and where we go from here. Devin we are seeing the Morgan Stanley is the power of their diversification and the strategic decision they made to really push forward in what in wealth management, and that business is over 40 of earnings and that should only increase from here. So you are seeing the diversification benefits and this is a quarter where we can a where we knew the fixed income backdrop would be difficult and they still and of having a good result because of management is a much bigger driver today. So i do think that there executing and it is the strategic push toward wealth management. Vonnie congressional lawmakers face the midnight deadline to avoid a partial shutdown of the u. S. Government. This, as the house passed the measure that would keep government up and running until february 16. Senate democrats say they are holding out for a provision that would protect the status of young undocumented immigrants. Marty there is tremendous pressure on Chuck Schumer to not give in on the daca deal. There are republicans, republican senators are throwing up their hands and saying i will not vote for a shortterm cr. We have to stop running our government this way, so there is no clear path for 60 votes in the senate at this point. Dir. Mulvaney we dont want this. We do not want to shut down, but if mr. Schumer insists on it, he is in a position to force this on the american people. Sen. Durbin i hope the president will join us. If he will, we can solve this problem. If he stands on the sidelines, we cannot. Just as a spending bill faces another battle, the senate will learn that Chuck Schumer is headed to the white house for a meeting at the president s request. Kevin all morning long i have been speaking with senior is to lawmakers in both parties who suggest that this is going to come down to the wire and the idea of having a shortterm deal, a mini deal, if you will, that would just give the government couple more days may not be what the administration is ultimately hoping for. Particular with the presence with the president s travel to davos less than a week away. Sen. Schumer we had a long and detailed meeting, we discussed all the major outstanding issues, we made some progress but we still had a good number of discussions that will continue. Juliette still ahead, much more Companies Including a deal that will take nestle out of the u. S. Candy business. Plus, an exclusive conversation with bill mcnabb. Bill the passive investing has provided the everyday investor better returns. Juliette and more of the weeks top business stories, bitcoin takes another dizzying get. Dizzying dip. Edward even if youre one of the most bullish bitcoin investors, you can look at the event of this week and not feel a chill. Juliette this is bloomberg. Juliette this is bloomberg best. I am juliette saly. Lets continue our global tour of the top business headlines. In canada, with the Rate Decision from the nations central bank. Julie the bank of canada raising its overnight Interest Rate to 1. 25 . It sees the need for accommodation to keep inflation on target here. Banks in canada were forecasting 3 growth in 2017, 2. 2 growth in 2018, 1. 6 in 2019. Slowing, obviously. The bank of canada expecting inflation to remain at 2 . Mr. Poloz we are operating at about our potential. Inflation is above our target. Arguably, if you took that as a snapshot, Interest Rates should be higher. Any model would say that. I think what we need to bear in mind is the experience that we have been through has actually depressed potential output. In every expansion, we get to this stage of the cycle and firms say now it is time to invest. But it goes faster than what we have in our model. It happens every time, and we think this time it could be a bigger effect than usual. This is a long, slow cycle. We have to at least entertain the possibility, because to the extent that it occurs, this is a higher level of gdp forever. If you are worried about inflation risk and so on, first of all, you have a tendency to nip that process in the bud. And we are being very careful not to do that. Mark they are concerned. The vice leader saying i am concerned about sudden movements that dont reflect changes in fundamentals, look at fundamentals, inflation is declined slightly in december. He is one of several officials that say a stronger euro may harm ecb efforts to get inflation to the goal of just shy of 2 . The concern is that it is rising too fast, it could happen in the future, if we carry on these paces, inflation doesnt show much signs of underlying strength in particular. Headline inflation is down because of oil. There will be increased concerns on the dovish wing of the governing council who are already nervous about unwinding stimulus potentially too fast. Shery bad news for bitcoin, falling as much as 20 today, that amidst the surge of crypto crackdowns. This is a broader january sell off with a Digital Asset down over 35 this month. Why is bitcoin going down again . Is it the jitters of more regulation . Camila yes, that is a main driver for the bitcoin slump. It got to as high as 20,000 last year and it went as low as 11, as low as 11,200 this morning. It is now back up again around 13,000. It is a big slump and the main driver has been regulatory concern. The latest is that south koreas finance minister says showing down Cryptocurrency Exchanges is an option. There are reports of china that they are escalating the crackdown. That is weighing on the markets. Shery bitcoin tumbled below 10,000, bringing its loss to almost 50 from the record set only a month ago. The latest plunge brings more drama to a digital coin market that has lost more than 300 billion in value since january 13. Edward even if you are the most bullish of bitcoin investors, you cant look at the event of this week and not feel a chill about what is happening. I think when you get into everything is going to ok, that is when you look at the everything will be ok, that is when you look at the blockchain story and how you continue to see a lot of adoption and research and development into the underlying Database Technology in bitcoin and you look at the fact that bitcoin is still up 11x from where it was today. It has a history of volatility like this, sure, the stakes are higher right now but there has to be a lot of fear out there and also a lot of deep breath deep breaths about it being ok. Betty trade tension between the u. S. And china. They surface again with trump telling chinas leader to tell them that the growing deficit is not sustainable. China is bracing for more trump backlash on trade . Tom they realize that the rhetoric is being ramped up again in washington. It have been floated 2017. They know now that this is coming out of the white house and the administration from officials there suggesting that theyre going to be taking a tougher line, and of course they are aware that President Trump has failed to reduce the deficit with china and with 2016 and with 2017 increasing u. S. Dollars, they will have missed that the u. S. Is taking a tougher line on these deals. The trade with beijing is being blocked as well. All of those things are being weighed by officials here. The chinese are being very clear, theyre saying if tariffs are imposed, they will retaliate, and therein lies the risk. Harry indonesia and the Stock Exchange was evacuated. This after the floor of the buildings level one in tower two collapsed. Officials said that several people had been hurt. What is the latest there . We just got confirmation that the incident was not due to any bombs or attacks, this is the floor on top of the main lobby of tower to was collapsed, but the reason for the incident is unknown until now. Manus obviously, trading was interrupted at that juncture. That has been restated. Give us a sense of the kind of impact. Harry it happened during the lunch break, so we do not see any disruptions in the trading this. We plan to deliver this by an we plan to delay this by an hour, but we did not have a stuffed up so the trading has resumed. David San Francisco fed president john williams, who is said to be in the running to be vicechairman. This puts him beside lord lindsay and mohamed elerian, the chief economic advisor, they are all three phd economists. How alike are they and how different . Michael they are very much alike in their Monetary Policy views, except the political side of it. Mohamed elerian obviously is a big thinker, comes from the wall street background. Larry lindsey, a longtime republican, would bring the supply side view of the economy, maybe it would be a bit more dovish. John williams is straight down the center and he has been a member of the fed since basically 1994, the detour to the council of economic advisers, and has voted along with the chair all of the time, the time he has been a member of the open market committee. Williams might make a difference with longterm strategy because he has been arguing that the fed needs to take another look at the 2 inflation target and maybe inflation targeting instead. Francine oil slipping as the International Agency became the latest to see a jump in production in the United States. The group said that u. S. Oil output is up for explosive growth this year. When you look at what they are saying, they are basically saying that u. S. Oil output will increase because the price of oil is increasing. There is nothing really new. Will what is new is that people expect u. S. Shale to accelerate much faster than they thought. All this new supply should be bearish for oil with a couple of other things to factor into the equation. One thing they pointed out on the other side of the equation in this report is the precipitous decline in venezuela production. It lost Something Like 300,000 barrels a day last year. The other thing is will opec hold its line . So far, this has been very so far, it has been very disciplined, but if prices stay and climb, we will hear more and more voices saying that opec should ease its policy stance. Juliette welcome back to bloomberg best. I am juliette saly. Bloomberg new Energy Finance has released its 2017 report on Clean Energy Investment trends. This is based on its wellbeing database of projects and deals. The analysis tracks Global Investment in Renewable Energy and Energy Smart Technologies in the past year as well as the outlook for the future. We discussed the report in detail this week on Bloomberg Television. Julia the world is going greener, spending on green energy last year was up from 2016, but it did not manage to top the 2016 peak. Top the 2015 peak. That is according to a new report from Bloomberg New Energy Finance team. What were the key drivers . Ethan the biggest driver and headline of course this year was china where we saw an unbelievable volume of new solar build that 53 gigawatts of new solar capacity added in all kinds of places. China is far and away the world leader in terms of the most amount of capital being deployed in the most amount of new equipment being deployed as well in support of new energy. Again, it was a year where china led the pack and it was everybody else that came a distant second, including the United States. We saw 57 billion of investment compared to 130 billion in china. Julia if we look at the key countries, you have pinpointed the u. K. , germany, japan, to what extent do think United States could suffer as we push through into 2018 as a result of the president s decision over the paris accord . Ethan the paris accord in terms of the symbolism of the u. S. Pulling out certainly sends a negative sign to the rest of the world about the u. S. s commitment on these issues, however, if you look at where rubber meets the road in terms of economic renewals, tax credit and other things, the market was generally fine in the u. S. We had logged about 57 billion worth of investment. That is more or less where we have been for the last several years. Alix in 2017, bloomberg estimates that sales will be posted 1. 59 in 2018 and china, leading the way. Angus china is the most Dynamic Market at the moment, and we think it will continue in 2018. It has a lot of government muscle behind it. They want to establish china as the main Manufacturing Base for electric vehicles and the batteries that go in them. We have seen the same thing happen where chinese policy has pushed the adoption there. They have subsidies in china. Those will continue for a while. They may be scaled back later in 2018. At the moment, it is the biggest market, but places like that are like europe are also important, and with the u. S. Predicting that by 2040, about 53 of new car sales globally will be electric. Juliette straight ahead, we will revisit some of the weeks most compelling conversations. Vanguard chairman bill mcnabb shares his thoughts on opportunities in china. And carmakers gather at the north American International auto show. Find out how they view the road ahead for the industry and for their companies. Bill the coal industry was not was built around the notion of nafta, and i think we have to be very careful with how much we tinker with it. Juliette this is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. What does the u. K. Have to do for its banks to retain access to the Single Market . Well, i think the whole situation, in a way, is dramatized excessively. You think overdramatization is hindering . Oh, yes. It is never good. We would have to dedramatize and look at things as they are. What have we seen the last 18 months . Lots of players in Financial Services that are only based in london do need to have a subsidiary, they need to have substance in the u. K. Single market, because they will lose automatic general access. Everybody realizes that now. When i talked to you 18 months ago here in china, that question was still open in many peoples minds, that the u. K. Could eventually have a cake and eat it. Everybody realizes now it is not possible. Juliette that was pierre gramegna. In detroit this week, executives from Automobile Companies around the world gathered at the north American International auto show. Bloombergs david westin spoke with several of the industrys top leaders, starting with jim hackett. David can you give any sort of timeline on when you will hit a Tipping Point for av and ev . When will that come . Three years, five years, longer . Jim i quote bill gates who said you really overestimate the arrival and underestimate the impact. I really believe that. I think the impact is onceinalifetime history. Bill and i talked when i took this job, it was the most important thing in the last 80 years that the Ford Motor Company has to address, which is the integration of this capability in the design of vehicles, coupled with a smarter world. This is what we said at ces, that it didnt seem like the kind of thing that would come from an auto manufacturer, but the nature of Edge Computing or internet of things is evolving so fast that the vehicles have to couple with them in ways to do Something Like this. You know, you waste more fuel in trying to find a parking spot then you do sitting in a traffic jam . Well, there is no reason for that. If the vehicle is smart enough and the parking spot can ping its available. In that world, there is no need for a city meter maid, because the intelligence can meter out parking fees, and the vehicle can pay for it without the customer having to do anything. Reporter for a child born this year, 2018, would they have to learn to drive in 2034 . Jim i think a child born today, 16 years later, i think they will have the perfect option. They can drive, because it would be a world where the passion for these vehicles never ends, but they can have the option of delegating tasks to that vehicle that their grandfather never expected, including never crashing. We have to talk about nafta. We have a big negotiation coming up later this month. Right. You have talked to the president in the past. Have you talked to the president to get a sense of where we are with nafta . I havent. Do you have a sense whether there is a real danger to pull out of nafta . The canadian government well, to do something that drastic would not be something we would prefer. Nafta could be modernized. We could get some currency into nafta. But nafta has been in place as a in place for a while and has served the industry well. Reporter how badly would it hurt Ford Motor Company . Bill i mean, i think whole the whole industry. Our industry was really built around nafta. So it depends what you mean, too. There is a continuum here, there is a complete blowup and then theres a modernization, something we would not be opposed to. But again, this whole industry was built around the notion of nafta, and i think we have to be very careful with how much we tinker with it. Volkswagen has had some difficulty in recent years. We are coming back. How much of that do you think was driven by the atlas suv . We believe it was a key model for us. It is probably the most american car we have ever built, designed in the United States. Month by month, it has seen tremendous growth and the attraction of that car coming into the showroom. We are proud of the achievements we have with atlas. We had a strong opportunity in 2018 because the car really fits well on the streets of america. It is a car that is perfectly blending with the American Culture and actually has all the ingredients that people love about volkswagen. They love the details, High Technology in the car, sort of beautiful execution, and the reaction of the customers is extremely positive. So atlas, i think, is just the milestone for our future plans, but there is more to come. Atlas is just the first shot. Reporter how big could this get for cadillac in china . You are what, 125,000 vehicles . Johan we will probably do 200,000 this year. I think when we roll out our new product portfolio, which will drive a lot of growth domestically in the u. S. , we will continue to see an acceleration in sales. But we have performed well in other markets, in china as well. Export markets grew by over 10 last year, and particularly on financial side with transaction prices continuing to grow, 2017 was a bumpy year for cadillac, the second highest in terms of sales. It sets us up well for 2018. Reporter so that pace of growth in china is quite remarkable, even the projection of over 200,000. Where is it coming from . Is that a larger market or are you taking it from other people . In particular view it, because i think buick has been your main brand in china, going back to the last emperor. Johan for general motors, buick is the big brand, one of the largest in the Chinese Market overall. But theres obviously a very clear stratification and differentiation between cadillac and buick in terms of Distribution Networks and pricing. Its a different customer, and our growth is coming from a degree of buoyancy from the market, but there is market share growth. We are taking it from other competitors. Juliette another exclusive interview this week took place in beijing, where bloombergs Tom Mackenzie sat down with bill mcnabb. They began by discussing his companys prospects in china, as the nation opens its financial system. Bill there is a lot of opportunity for what i would call lowcost investing. There is still a lot of very highclass product in the asian market, and whether it is passive or low cost active, you could make a case for both. So it is likely you will see us doing both over time. Tom the likes of fidelity are starting to push back and lowering their fees, becoming more competitive. What changes are you seeing in the Fund Management industry . Bill so i think for the first time, there is widespread belief that price actually matters. Theres a couple things driving that. One is our success, blackrocks success in the etf space. People arent coming to us just because we are lower cost, they are coming because the net return to the investor is better, and that is the whole driver of the cost argument. I think people have awakened to this, the data are overwhelming. You just cant charge if you are an active fund and you charge 100 basis points, you have very little, very low probability of outperforming in the long run. Money management has been a very lucrative profession for asset managers, and it is getting less lucrative. I dont know what to say about that except people have to reinvest themselves and get smarter about how they actually run money. Tom there are skeptics out there that say this huge embrace of passive investing poses a significant risk to the markets. How do you defend against that . Bill the data just dont support it. What passive investing has provided the everyday investor is better returns in a risk controlled way. You think about it, it is a zero sum game at the end of the day. We have to add up to the market, so the only difference in returns is cost. I think the cost differential is really the only thing that is driving the growth of indexing, and that was not always the case and is not the case in every market. There are markets where there is a big retail presence, where the Retail Investor owns a huge part of the equity market overall. Some of the asian markets, certainly. Active managers will do really well in those markets, particularly if they are lowcost, because it is not a zerosum game. The source of alpha, if you will, will come from irrational Retail Investors. I would also say to the skeptics, because index providers are longterm in nature and longterm in outlook, it is much better for the economy and much better for corporate governance. I actually think it reduces the risk in the system rather than increases it. Juliette you are watching bloomberg best. Im juliette saly. Lets return to our roundup of the weeks top business stories with a focus on company news. General electric entered the new year with a new ceo and new hope for a turnaround, but this week was rough for ge. Vonnie shares of General Electric are falling today after the company said it would take a 6. 2 billion charge in the Fourth Quarter because of lingering problems with its insurance business. In a statement, the ge ceo said, at a time when we are moving forward as a company, a charge of this magnitude from a legacy endurance portfolio in runoff for more than a decade is deeply disappointing. Brooke there has been increasing concern among analysts about ge capital, because even after they significantly reduced the size of the business, this is still a behemoth. One estimate from an analyst puts it as a top 20 u. S. Bank, with over 140 billion in assets. I mean, this is huge, and very opaque in nature. We dont totally know everything in here, as evidenced by the extent of the charge, and there could still be more to come with different pieces of ge capital in terms of liability. Not all of this is john flannerys fault, obviously, he has only been in this job since august, but we have had the bad news in october, the bad news in november, and if you are an investor you have to be saying, when is it going to end in terms of nasty surprises . Emily apple will return hundreds of billions of dollars in overseas cash to the United States. In a statement out wednesday, the company says it will pay 38 billion in repatriation tax. Apple also plans on investing tens of billions in domestic jobs, manufacturing, and data centers in the coming years and give employees a 2500 bonus. Alex 20,000 jobs is quite good news from a political perspective, but given they have 84,000 employees already, thats quite a big bump. What is interesting to me is if you really look at the numbers, the big number they want everybody to talk about is 350 billion in the u. S. Over the next five years. The odds are they were going to spend most of that money already. The new money is 38 million for the tax bill and 30 billion 38 billion spent on the tax bill and 30 billion spent on the u. S. If you subtract that from the 252 billion they have offshore, they still have a huge pile of cash, and that is what shareholders will be excited about in terms of buyback. Haidi workers at one of apples largest chinese suppliers have made allegations of harsh factory conditions. The main manufacturer of the iphones distinctive brushed metal casings is now under fire over claims made to Bloomberg News and a Chinese Labor watchdog. The company has now responded, saying it does meet apples code for suppliers. But tell me about some of the details of the allegations and what we have learned. Edwin china labor watch, an advocacy group, is making allegations for 14 separate violations of either apples code of conduct or local law. They kind of run the gamut from labor violations such as forcing workers to pay for their own uniforms or equipment to certain environmentaltype violations. Although, as you mentioned, the company is denying it violates any sort of code of conduct or requirements. Yvonne the worlds number two maker of construction and Mining Equipment says sales of diggers in china nearly doubled last year. Turnaround in chinese demand has helped drag their stock to a record high. We heard from the likes of caterpillar in the u. S. , a lot has to do with china. Brian absolutely, and it is not just komatsu in japan. It is also Companies Like hitachi construction. They are all benefiting from these twin engines of growth. One is the Infrastructure Investment in highways and bridges, china has just entered the last half of its latest fiveyear plan, so theres a lot of push to get the projects done. The full run in commodities has been a big story last year and we expect it to continue this year. It has been a big driver of growth for all of the heavy equipment makers. Manus lets talk a little bit more about asml. They have had their First Quarter sales that trailed estimates. Europes Largest Semiconductor equipment maker said its firstquarter revenue came in at 2. 2 billion euros. The Company Also Named a new chief financial officer. Absolute record year. Wolfgang we just finished an absolute record year. We did over 9 billion in revenue, which is 33 up from the prior year, and earnings topped 2 billion, which is 44 of the prior year. We have a very, very positive outlook going into 2018. We will see Significant Growth in both revenue and in earnings. We have such Strong Demand that we pulled over 400 million in the last quarter, therefore the revenue guidance for the First Quarter is slightly lower, but if you take the two quarters combined, it is significantly better than what they expected. Shery nestle will sell its u. S. Confectionery business to italian nutella maker ferrero. We have confirmation, what is the deal about . Nabila this is really about the shift away from unhealthy snacks. Nestle wanted to get out of this business, had been veering away from chocolate and sugary sweets. They are now the leader in mercs consumer unit. They want to take themselves away from that. The relatively new nestle ceo, this is his biggest divestment to date as he repositions the company away from suite. For ferrero, this is about buying into the u. S. Market, but nutella, as much as i love it, they do not see it that huge in the u. S. So they need to diversify it here. Francine airbus closed 2017 on a high. The european playmaker announced this morning it booked a Record Number of contracts for 1000 jet lines, 52 more than 2016. John it is in many ways a record for us, but in nine of the last 10 years, we outsold our competitor in seattle. It is more a continuation of a trend, i would like to say, but it was a very good year, and it was back end loaded. This industry is going through a very good time, 7 growth in the world airlines. Youve got about 35 billion in profits being forecast, airport congestion, high load factors. It means more airplanes and bigger airplanes. Francine emirates has ordered 36 airbus a380s. Do we have any idea of how much guy no way is he paying 16 billion, he had a massive discount. John leahy a, wanted to get it done before he left. Keep his legacy, hes handing over the job next week. And b, they want to keep the program alive. So tim clark is in the drivers seat. Vonnie amazon announcing they have narrowed the field of cities for the proposed new headquarters to 20. Contenders include new york, boston, chicago, miami, austin, texas any surprises here . Paul one of the ones that was interesting was raleigh, north carolina. In that research, Triangle Park area, sunbelt, growth city surrounded by a lot of universities. Duke, n. C. State, but the question is do they have a big enough airport . But that is one of the interesting ones that is outside the bigger markets. I think observers are looking for something on the east coast to balance the Pacific Northwest of seattle, but there is a lot of interest in all the cities, and we will see over the next several months those cities put their best foot forward to make themselves standout. Yvonne uber has completed its deal with softbank, triggering a series of governance reforms. The japanese conglomerate is now ubers top shareholder. Tell us about the changes expected now that the deal is done. Pavel the biggest impact will come in the form of an expanded board, which will be increased to 17 seats. That is quite a lot of people by any companys standards. Softbank will have two of those seats, strengthening the companys influence on decisionmaking going forward. The big difference is that the deal eliminates this twotier voting structure for shares that heavily favored early backers as well as early employees. It also will put an end to a lot of internal strife that has handicapped the company, specifically ending a loss by a benchmark capital, one of their biggest backers against travis kalanick. If you take a look at the bloomberg and the various business lines of merck, you have got vaccines in blue, Animal Health in orange, and pharmaceuticals in white. Overall, what you are looking at is tepid, if any, growth for the various revenue lines, particularly when you put them all together. Juliette there are about 30,000 functions on the bloomberg, and we always enjoy showing you our favorites on Bloomberg Television. Maybe they will become your favorites. Heres another function you will find useful, quic. It will take you to quick takes, where you can get fast insight into timely topics. Here is a quick take from this week. Used to be when a colleague emailed you to say they are working from home, you might not have envisioned the most productive day. Maybe he was doing some personal chores. Maybe he had a bit too much to drink. Maybe he was just slacking off. Uh, whats your dads job again . But telecommuting is legit. Currently, over 60 of u. S. Companies provide the option, and it is often promoted as an extra perk to attract and retain talent, allowing companies to consider candidates in different cities or countries. But are Remote Workers productive workers . Heres the situation. Even as telecommuting rapidly expands as an option offered by u. S. Businesses, a number of early adopters are beginning to secondguess the concept. When discussions on telecommuting began in the 1970s, the focus was less on productivity than it was on pollution. It was suggested that reducing the need to commute might curb the environmental damage caused by cars. In 1990, an amendment to the Clean Air Act required companies with over 100 people in severely polluted areas to limit vehicular commuting. Telecommuting didnt take off until the internet, especially if companies noticed unimportant ancillary benefit, dwindling real estate costs. Between 1995 and 2005, ibm, an early adopter of telework, reduced its physical space by 78 million square feet, which created at least 200 million in annual savings. Annual savings. But as more and more companies offered employees telecommuting benefits, some of the earliest pioneers have become skeptical. After 20 consecutive quarters of falling revenue, ibm calculated bet its Remote Workers that its Remote Workers performed better in close proximity to colleagues. In 2017, thousands of remote ibm employees received an ultimatum move near an office or lose your job. Best buy, once lauded for its innovative approach to flex scheduling, scaledback in 2013, as did yahoo . So why the change of heart . Well, heres the argument. A survey conducted found that only 38 of companies in the world Group Employees by job types. The growing trend is to Group Employees with various functions into teams. Critics of remote work argue this structure requires a level of collaboration that simply cannot be attained without facetoface interaction. Some bosses also suspect that Workers Abuse remote benefits. On the other hand, studies show employees who telecommute are happier. Theyre also more productive, though that might be true for only certain types of workers. The most widely cited study was looking at callcenter employees, whose jobs require little teamwork. Some advocates argue that telecommuting could narrow the gender pay gap by allowing mothers to balance childcare with work duties. One study found that a spouse working from home is given more chores. So while certain aspects of telecommuting can be attractive for workers and businesses, just like anything else in life, everything in moderation. A review of studies concluded that the most successful arrangement involves at least some face time in an office. Juliette that was just one of the many quick takes you can find on the bloomberg. You can also find them at bloomberg. Com, along with all the latest Business News and analysis, 24 hours a day. That will be all for bloomberg best this week. Thanks for watching. Im juliette saly. This is bloomberg. Scarlet i am scarlet fu. This is bloomberg etf iq. Scarlet with Interest Rates creeping higher, the flow of money into highyield debt has taken a detour. We take a look at Interest Rate hedge ietfs. D itfs. State street is losing ground to blackrock when it comes to new cash