Transcripts For BLOOMBERG Bloomberg Best 20240713

Reach. I like real businesses, real clients, real revenues, real profits, they have got all of it. Abigail the imf predicts growth will rebound in 2020, but the director issues caution. Monetary policy space is shrinking. Abigail and the ecbs bill blaine has his insight on challenges ahead. Even though the Manufacturing Sector has faced a lot of challenges, but overall domestic demand is significant and continues to be. Abigail it is all straight ahead on bloomberg best. Hello and welcome. Im abigail doolittle. This is bloomberg best, your weekly review of analysis and interviews from Bloomberg Television around the world. Lets start with a day by day look at the top headlines. The human cost of the coronavirus continued mounting continued to mount as the week began, with reported cases nearing 75,000. And as expected, more and more companies are cutting revenue forecasts in light of the outbreak. On monday the warning came from apple. Shery apple is the latest company to issue a virusrelated guidance miss as the outbreak hits factory output and demand. The company says it has resumed operations in china, but ramping up production more slowly than expected and that will constrain global iphone supply. Apple had been looking at some of the revenues for the Second Quarter ending in march between 63 billion and 64 billion u. S. Dollars. They have pointed out they are unlikely to meet that revenue forecast. They havent of course issued a new one, but they have said production has come back online more slowly in china than expected. But apple has also seen a dent in demand for the iphone and they have closed most of their 42 stores on the mainland. This all ties into the growing pressures on the economy here, with economists we have been surveying saying you are looking at 4 gdp in the First Quarter that is down from 5. 9 . Hsbc says it will slash 15 of its workforce and cost cuts of 4. 5 billion. We think this is the right plan for now. We are definitely looking to invest 100 billion of riskweighted assets, 14 billion to 15 billion of capital in the next three years in parts of the business that are performing well, particularly asia. We think this is the right balance. Yet it is coupled with a Cost Reduction program, coupled with organizational simplification to allow us to speed up the pace of execution. So i think we will be quite surgical and ruthless in terms of targeting those parts of the business where we are not generating acceptable returns. We will take those risk assets and reinvest in parts of the business where we will see better returns. We think it is a great plan. Sporting gear rivals adidas and puma saying that they are hurting in china. Buma putting on a brave puma putting on a brave face. They did say was destroyed in february the ceos words. Adidas, similar picture. If you look at the number of Companies Reporting changes to earnings guidance, a number of demandside consumeroriented Companies Cutting earnings forecasts, because it is not just a demand problem, a supply problem as well. Chinese consumers are staying home, airlines really hurting. Now to a bloomberg exclusive, china planning on taking over hna group and selling off its core airline assets. It is the latest example of how president xis government is stepping in to contain the economic fallout from coronavirus. The company has been on a mission to turn around its fortune as it has seen its debt pile grow and cash pile shrinking. Its latest pivot to focus on aviation has seemingly backfired. Potentially tomorrow we could hear whether the government will indeed go through with its takeover of hna group. And china is reportedly is considering other measures to bolster the aviation industry, including mergers and an aid package. And a bail package. Romaine another interesting day. It is all about apple and the big guidance warning that he gave, that knocked the market down a little. But of course, all is forgiven today. And it looks like we are heading for another record on the s p 500 index, another record on the nasdaq. And the nasdaq 100. A lot of that, as we have been saying, china might take measures to support the economy. That could include bailouts for hardhit industries. That has really been a recipe for risk appetite. Ubs has named ralph hamers as its name its new leader. Hamers will take over november 1. It is a surprising pick for the Worlds Largest wealth manager. Last month ubs cut financial targets for the second time in as many years. What do you think of ralph hamers as the new boss . My First Impression is he is sort of an antiamoti. He is more in Retail Banking and amoti was the investment banker. I think it is definitely a shock. The timing is a surprise. They said they would Stay Together for one more year. So the timing is definitely a surprise. Vonnie Morgan Stanley agreed to buy eu trade, one of the few remaining standalone brokerages. It is an all stock takeover valued at 13 billion. Shery is this another wall street bank rang to get main street customers . I think that is what is driving it. Right now they cater to the wealthiest u. S. Consumers and that will give them access to more retail investors. Analysts this morning on the call seemed concerned about the dilution Morgan Stanley could see, and we will see if those concerns kind of linger, but it seems like Morgan Stanley feels really good about the move and is excited. You know, gorman himself said he looked at this asset many times over the past 20 years. I think he was excited about something that gives them a bigger presence and Wealth Management. The ceo of unicredit has emerged as one of the main contenders for the top job at hsbc. The 59yearold french executive is said to have been in talks with europes biggest banks as well. We have seen a lot of moves at the top of european banks this week. What do we know about this story . We know that they are in the final stages of appointing a new ceo of the hsbc. This week they came out with strategy. The Share Price Fell on the day. It doesnt look to have been received particularly well. But the main thing markets are waiting for is who is going to be running this bank and it looks like jeanpierre mustier has a good shot. The coronavirus spreading, south korea and japan sending equity futures lower and treasury yields low. Economic impact creeping into the data, china reporting car sales dropping 92 in the first two weeks of february and japanese manufacturings worst performance in seven years. Europe, activity appearing resilient but beneath the surface, supply and demand abroad impacted as factories in china shut down. We are seeing additional clusters in other parts of asia, not just china. We are seeing a surge in cases, another 52 in south korea. They have now 208 cases. Japan has 727 cases and three deaths. And of course, the Economic Impact is continuing to rise. Aiava, the the International Aviation or air Transportation Association is seeing a likelihood of its first big revenue drop in 11 years, since the Global Financial crisis, because of diminished air travel. In particular china. Joe u. S. Business activity shrinking in february for the First Time Since 2013, according to one measure, as coronavirus continues to hit supply chains. It is the first indication we have actually seen of how the coronavirus is hitting the u. S. Economy. Everything up until now has been pretty positive. It was led by the Services Sector in the u. S. , they reported that they were actually that they had dropped the most since 2009, to the lowest level since 2009. The data only goes back that far. And we have to think about why. [bell ringing] ent of thereassessm coronavirus risk and the economic risk. Is this a reality check . It is. I think the reality is we went through a time in which q4 earnings were so strong that they were an excuse for us to continue to bid up stock prices, in the face of forward revisions that were very, very negative. Now we are starting to get some real quantification of the Coronavirus Impact on q1 and q2. So i expect to see a churning market the next several weeks as we try to absorb the reality of the macro situation, which may not be as bright as we hoped for at the beginning of the year. Abigail still ahead as we review the week on bloomberg best, big changes at the banks. The head of the imf takes stock of the coronavirus. Plus, a conversation with the ecb executive board member philip wayne. The big forecasting headache is indeed the coronavirus right now. Abigail and up next, earnings reports loom large for investors, especially when it comes to commodities and the possibility for more disruption in china. Demand is holding up. We are shipping our products. Perspective, from our perspective, we are looking at shipping as per usual. Abigail this is bloomberg. Abigail this is bloomberg best, and im abigail doolittle. Companies around the world are feeling pressure from the coronavirus, feeling the impact on supply chains and consumer demand. Our review starts with the sector that is heavily exposed to those risks, commodities. Haidi the first have earnings of surging on oil prices, but the worlds top miner acknowledges shortterm uncertainty from the coronaVirus Outbreak. What kind of impact do you see and what kind of impact do you see on investor returns if the coronavirus issue isnt contained shortly . I will start with the current impact we see on business, and it has been relatively muted. Clearly, tragic impacts in terms of people but demand is holding up. We are shipping our products. Prices have held up in part because of other supplyside disruptions. And we havent seen issues with receiving payments. Now, as long as things are contained within this quarter, we think they will hold up for the remainder of the financial year. If not, we will have to revise our forecast. But so far we remain confident about the outlook for the remainder of the half calendar year. Lets talk about the australianbased metals group, they are seeing potential for lifting investor concerns, iron ore surging prices allowing the exported to boost dividends. Your assessment of the Coronavirus Impact was more on sentiment than fundamentals and pricing. Has that evolved . We havent seen any change to basic fundamentals. I mean, price is holding up well. We have faced supplyside disruptions due to weather events either in brazil or here in western australia. So from our perspective, we are shipping as per usual. Iron ore inventories are not increasing and the iron ore is being consumed, and all of our customers are Still Producing steel and we have seen no change in the schedule for our shipments. Their outlook for 2020 will be marred by considerable uncertainty due to the coronaVirus Outbreak. The Worlds Largest shipping Company Expects operating profit to be lower than estimates. Can you tell us how severe it will be . I think a lot will depend on what happens with the virus now and in the next few weeks. What were looking at now is over the past two and a half weeks we have seen a big sign in seen a decline in the number of new cases slowing every day. That is positive and that we think we may be reaching a peak in the next two weeks. If that were to be the case, we would expect a weak february and weak march and a rebound in april, may a sharp rebound in april or may. But there is uncertainty about what happens when the Migrant Workers return. Telecom expects operating income to rise again and as the german phone company edges closer to a wireless deal for its u. S. Unit tmobile to buy sprint. We had an increase by 10 over the past six years on the dividend year. So this year we decided something differently. We decided this time to cut the dividend, it is still 4 yield, which are investors get before which our investors get before the buyback, but nevertheless we want to do this integration of sprint in a perfect manner. On top of the yield, we create a supervalu coming from the merger, 43 billion, by integrating the networks, plus the opportunity to gain ground against at t and verizon. We have 140 million customers in the u. S. , and our attempt is to become the number one in the u. S. Market. Covestro plans to make an additional 200 million in savings this year after the 2018 separation from bayer. Fourthquarter profit fell 5. 1 , but that was in line with estimates. Tell us about the year, clearly a big slow down in the automotive industry. How is that playing out for covestro . Talking about 2019, i think that we delivered it not only on the fullyear guidance but the narrow guidance we have given, so overall we did deliver a solid year. It was 1. 6 million, we delivered growth of 2 and freed up cash flow of 437 million. And in addition, we also were able to have a return on capital well above our weightedaverage cost of capital, so it was a solid year in a very challenging environment. Haidi konta shares are surging in sydney after the latest earnings provided a sense of resilience. We spoke exclusively to the qantas ceo. We are publishing data at the end of may. We are keeping flexibility. That will be the equivalent of grounding six aircraft and having 700 too many people, but we are managing that by asking people to take pay cuts. Our earnings will continue the way they are and we will extend that out until june. Shery lets turn to walmart because shares are gaining ground after the retailer posted lackluster holiday sales, suffering the same fate as target and five below. Still, investors remain confident in the walmart forecast. We kind of knew that the holiday was not going to be that great for walmart, especially after target disappointed. Walmart said many similar things today, there was not excitement in the aisles like apparel and toys, but the fullyear forecast was resilient. And we have to remember that walmart is a resilient company. Fullyear sales and Profit Guidance is shy of estimates but enough to keep investors happy. And remember, the u. S. Consumer is still doing very well. After posting profits that missed analyst estimates after incurring costs related to ceo thomas rebel plan to streamline europes second largest insurer. They posted strong results today. 5 growth on the top line, 5 growth on underlying earningspershare and 5 increase in solvency, which will lead us to propose to our shareholders a Dividend Increase of 7 . It is very solid with us. Solid results. It is true we have experienced more natural catastrophes than we thought last year, but this is something that will be reflected in price increases. You have seen that prices have significantly increased in this part, so you will see that the issues have been addressed and decisions have been taken and in 2020 we will see the change. Vonnie deere surprising the streets, sales of 4 above estimates. Essentially the u. S. Farmer in a better position than the street anticipated. How is the farmer stabilizing and why didnt the street see it . I think what deere is seeing is that there is optimism on the u. S. China trade deal in these agricultural purchases will bring more farmers to the market. They have been on the sidelines because there was so much uncertainty, so how do you justify buying this expensive piece of equipment . The one caveat i will put in that is that deere in its statement did not mention the coronavirus, and it is still calling for flat Equipment Sales in china. The degree to which that shifts because of the coronavirus will be very interesting to watch. On the call they talked about how they are concerned about their supply chain and will spend 40 million to expedite so that they have the parts the need for international operations. Abigail you are watching bloomberg best. I am abigail doolittle. This week, the imf called for a global rebound despite risks from the coronaVirus Outbreak. We have an interview, and she praises chinas response to the virus and urges governments to take action. On the more positive side, we see china taking very aggressive measures involving containment of the virus domestically, but also in pouring liquidity into the economy, the equivalent of 115 billion from the peoples bank of china, cutting Interest Rates, driving stimulus in the direction of affected regions. My most Important Message is a broader message. We do live in an era of heightened uncertainty. We just saw a reduction of trade tensions, and the coronavirus hits. I was going to follow up on that and if i may, ask about more detail. You are just coming off the back of the trade tensions, and now you have the coronavirus to deal with. On an imf level, what tools are you looking out for synchronized response to mitigate the downside . We very much value the fact that when 2019 shaped up to be the worst year since the financial crisis, Central Banks stepped up through a synchronized rate cut and more monetary easing. What they have done is the equivalent of a. 5 boost. We also saw fiscal measures coming from countries that discussed pace and have used it, but what is missing is a more aggressive swing in Structural Reforms. That is where we expect, if there was to be more attention, it should go. Obviously Monetary Policy basis is shrinking, and the reliance on fiscal measures as well as on Structural Reforms to boost growth ought to be stronger. Abigail coming up, deeper dive into two of the weeks biggest stories. The ubs chairman talks about the transition at the top and the Morgan Stanley ceo talks about the deal for e trade. Plus, more conversation with global policymakers. The singapore budget features billions in stimulus. The finance minister tells bloomberg, investors shouldnt worry that the government has abandoned its fiscal prudence. It is the prudence that we have this large reserve that we can use. Abigail this is bloomberg. Abigail welcome back to bloomberg best. Im abigail doolittle. Singapore is planning to post its biggest budget deficit since at least 1997. The government stepping up to support the economy amid the coronavirus issue, pledging more than 6 billion singapore and a fiscal package. The deputy Prime Minister also serves as finance minister and told Haslinda Amin why these measures are essential. I think the economy is already feeling the effects of the global slowdown. And this Virus Outbreak will have fairly negative impact on the Global Economy as well as on the singapore economy. If you look at chinas integration in the Global Economy, it accounts for a much larger share of the gdp, the global gdp, than during sars, and our economy is a lot more integrated with china. The asean economy. how dire could it be for the singapore economy . It depends on the severity of the outbreak. Today, the Global Supply chains are a lot more integrated and the Ripple Effect of what is happening in china will have an effect on the rest of us. That is why it is important to stabilize the economy. Haslinda you said there are further funds to spend if needed. Are you concerned about the signal on fiscal prudence you may be sending to investors, if it comes to that . Well, we have the it is because of our fiscal prudence that we have this large reserve that we could use in this current government, and at the same time, we also have our past reserves, if we ever have to call on it, at which case we would need the approval of the president. But for now, the government has been very prudent in the past few years of our term and i have enough firepower to deal with this for now. [laughter] abigail two of the biggest stories this week involved two of the worlds most important banks. Ubs, who said ralph hamers will be its next ceo. And Morgan Stanley agreed to buy discount broker e trade. Bloomberg went to the top to analyze these moves starting with Morgan Stanleys chief executive, james gorman. I have always felt e trade was an incredible brand, great technology, incredible company, but clearly doing stuff on the digital side at a pace ahead of where we were. So we had a constant debate of build versus buy and felt we were in a condition to make a bold move and we went for it. Reporter so why was e trade the right business as opposed to a newer business . You say digital was a big deal for you. Have you considered robin hood . Mr. Gorman i like the e trade business model. They have a lot of clients. They have one of the best Digital Online banking businesses in the marketplace, and they sit on 600 billion of assets. So added to us at 3. 1 trillion, you add the stock business two hours, sitting on 600 billion, we have 21 billion in combined Wealth Management revenues, big time margins above 30 . It is not comparable. Robin hood is a completely different kind of business. So i like real businesses, real clients, real revenues, real profits. They have all of it. Reporter real clients but these are much different than clients Morgan Stanley has traditionally taken on. How does this change Morgan Stanley . Mr. Gorman less than you would think. You would think that the stock clients are our corporate institutions, so that is not different at all. And for many of us, having Advisory Relationships also have online accounts with our banks or with a Financial Institution providing financial advice, so i think the channels in the last my observation is the channels have come together. What you have to do is build businesses that make your clients happy, be convenient to them, not convenient to yourselves. And our Financial Advisors, already our clients are constantly working electronically with Financial Advisors with Morgan Stanley. So i think the channels have converged. There is a league of banks and he has been leading one of those banks for seven years successfully in a very difficult and Challenging Market environment. He knows how to interact with regulators globally, knows global regulation, and as ceo, he knows banking strategy, and he knows digital. So he brings a lot to the table. We are honored to have him join us. And we also say sergio marty has been a fantastic ceo for nine years, one of the longestserving ceos in european banking. Sergiore very happy that has led the bank transformation, and we worked together well during that time and a really good understanding and appreciate his leadership as a ceo. Now it is time for the next chapter at ubs and that will be written by ralph hamers. Reporter did ubs need Regulatory Approval given the ing money Money Laundering issues . Absolutely. In switzerland, before a regulator can be announced, we reject regulators in many of these banks. We have our own Due Diligence process, including Legal Counsel in switzerland and in the netherlands. We have taken into account publiclyavailable information, and, of course, in the end, we build our decision on some reassurances that this was a chapter that ing put behind itself. Said himself that that has led to transformation. Let me remind you that one of the first tasks of sergio and myself at ubs was to settle similar issues with Law Enforcement and with regulators around the globe, and sometimes, as a ceo of a bank, you have to close some of these chapters, and there was no personal liability for him that any of the investigation indicated, so we feel pretty confident that we have gone through a Due Diligence process based on Public Information and aided by investigators and based on Public Information and on more details. Abigail now for a view from the European Central bank at a key moment for the Global Economy. An ecb board member spoke with bloombergs michael mckee. We have an economy that is growing, because even though the Manufacturing Sector as faced challenges, overall domestic demand has been significant and it continues to be. So what we have is a scenario where the economy is going to year,1. Something this which is modest but not where we see an accelerating problem. The fact that Services Continued to grow gives a lot of reassurance that we do have an economy that is growing. And, by the way, if you like optimism, we do see continued wage growth. We do see continued signs that our forecasts of a gradual improvement of inflation remains something that we can rely on. Michael well, you are three weeks away from publishing new quarterly projections. Do these developments suggest we are going to see any changes . We are right in the middle of the forecast exercise. Let me emphasize, the data we are forecasting is indeed due to the virus. But in the base case, where it is concentrated in the first weeks and months of 2020, this is not particularly an indication for the key or mediumterm element of our forecasts, which is what drives our Monetary Policy, so the fact that pmis this morning and other indicators are coming in broadly in line with what we have expected, most of what we see is in line with how we saw the world in the last forecast in december. Abigail you are watching bloomberg best. Im abigail doolittle. Lets resume our global tour of top stories in business, finance, and politics starting in washington with the fed releasing minutes of the january meeting. Fed officials dont see m anxious to be raising Interest Rates anytime soon. January minutes reveal officials were cautiously optimistic but acknowledged the coronaVirus Outbreak as a new downside risk. What was striking in the minutes today was that they were very optimistic about Business Investment prospects on the back of the trade deal. What else was interesting in the minutes was that they did mention coronavirus eight times in the minutes. But they do say they are not ready to deliver any cuts. That is implied in the minutes. I think they think they provided enough insurance in terms of cuts last year that that will help the economy that will create a cushion for the economy to withstand a shock like coronavirus. The European Commission unveiling its white paper on regulating big data and Artificial Intelligence today. A commissioner says she favors one single eu digital tax for technology giants. It is kind of tricky if each member state makes their own system, because then, they have to deal with one set of rules and one country and another set in another country. Maybe it is easier to say, this is how it is done in europe. One stop, here you go, these are the taxes that you have to pay. The message now is very clear. The europeans are saying we have a huge market, a market where you can make a lot of money, but if you want to do business in europe, you have to do with the european way. You have to do it in a way that plays by our own rulebook. There is a sense, and this is what you get behind the scenes when you speak to officials, eu feels the american tech owns too much of this market and are two dominant unwanted change that through not just regulation, because today they unveiled measures to help European Companies in the tech space. But they really do feel that it is regulation that is going to be key Going Forward. Turkey cutting its oneweek repo rate to 10. 75 , and we look at what the turkish lira does in reaction. Tom 10. 75 is so, so distant from developed economies. How does any Economy Today move forward with a doubledigit Central Bank Rate . An,well, if you ask mr. Erdog he says he wants the rate lower, in Single Digits by the end of the year. And the central bank is predicting inflation should ease in turkey through the rest of the year. What is interesting Going Forward though is that we are going to have a more frequent Turkish Central Bank meeting through the rest of the year. So it will give markets a little more, if you like, transparency as to what the policymakers in istanbul are doing with the turkish economy. Indonesia cut its benchmark rate after three months, joining a string of other Central Banks that have eased policy to cushion the viruss Economic Impact. Indonesia lowered its growth forecast for southeast asias largest economy. It is not the first, it will not be the last. Exactly, we should prepare to see more Central Banks in the region respond and provide stimulus to the economies. We have seen the philippines malaysia, sri lanka, thailand as , well cutting Interest Rates. So far this year bank of korea , is having a meeting next week. But as we see more Coronavirus Infections happening in korea, they are going to take a hit to gdp growth as well. Franklin resource agreed to buy rival money manager mason for 4. 5 billion. The allcash transaction values mason added 23 . Together, the companies have 1. 5 trillion in assets under new management. Franklin stock has been taking a bit of a dive in recent months. On the other hand mason pushing for changes, part of that meaning consolidation. This is a nice little premium in allcash. Now the question is, can they pull this off . When we see mergers of this type, we often see attrition when it comes to Money Managers and clients because there is uncertainty when it comes to this integration deal. This will be an interesting mix of institutional and retail clients. Can they do both well . Jupiter Fund Management snapped up rival u. K. Asset manager marion Global Investors as the industry faces pressure to consolidate. The british fund manager will pay 370 Million Pounds through the issue of new jupiter shares to marion shareholders. There is pressure to consolidate , and this is just one of the players that is acting on that now. Yes. This has been there for a couple of years. You saw a couple of years ago very large mergers in the industry. This is on a much smaller scale but this is a company in jupiter that is very much active management focused, so the pressure coming from etfs, passive management, is quite severe for jupiter. Contessa sao paulo has launched an unsolicited 4. 9 bid in one of the largest deals since the financial crisis. This has taken them by surprise. We were told by people familiar, as well, that they had no idea that this was happening. Only yesterday, they released their threeyear strategic plan. That shows how much they werent aware of it. From the intesa side, it looks very long planned and very worked out. They worked outside deals with their insurance partner. They are already looking at what the potential antitrust issues will be. So they have examined this and set this up very completely before they sprang the offer. Investors like the moving and the timing of the move because it is clear whoever buys or wants the european Banking Sector to be consolidated, and we were the first to move, and the transaction can create value and otherntesa shareholders. Anchor elle brands, the chair stepping down. What will be different now going into private hands . Now that victorias secret will be private, a lot of the challenges that they face in production and sales, that can be now handled without scrutiny of the public markets. That was one of the big strategies in taking this private. But what is left of elle brands is the bath and body works. So their skin and lotion and candle line, and that brings the question of how valuable that company alone is. The u. S. Sanctioning a unit of the largest Russian Oil Producer Rosneft over its ties to venezuela. This sanctions announced today target rosneft. It is based in switzerland and targets the chairman of the particular unit. It is effectively another turn of the screw. Already there is a wide array of sanctions placed by the u. S. Government on venezuela and companies doing business with venezuela, but despite the countrys Oil Production really a shadow of its former self, the oil coming out of the country into places like china and india is coming from rosneft, and this is another attempt to cut that off. U. S. Homebuilders are off to a hot start this year. New Home Construction remaining robust in january as applications to build homes jumping to the highest level since 2007. We saw Housing Starts remain strong. They eased a little but are still the secondfastest pace of the economic expansion. And housing permits, which are often looked to as a proxy of future construction, hit the highest level since 2007. And even below that number what i thought was exciting was that singlefamily permits. So to build those singlefamily homes and not apartment buildings and things like that, those jumped to the fastest pace since 2007. European leaders failed to reach her breakthrough over its 1. 5 trillion euro budget. Member states have been battling over key financial contributions. The situation here is that we do have a funding gap of 60 billion to 75 billion euros pegged to the u. K. Anding the european union, this is of debate, but the only way to fill the gap is spending cuts or put more money on the table. We are actually looking at a difference that is just one percentage point between the two sides but they are not able to get the agreement. Officials behind the scenes will tell you it is not a big deal if we dont get it today. A lot of this has to do with the optics of a deal. Leaders have to be seen as fighting hard for taxpayer money, but as long as it is done in the first half of the year, that is good enough. You can get all our latest stock stories from our equity teams with tv on your terminal, and you can also get your first word news on the mobile app. Abigail 30,000 functions on the bloomberg and we always enjoy showing you our favorites on Bloomberg Television. Maybe they will be your favorites. Here is another function you will find useful. Q u i c will get you quick takes, where you can get important content and insight on timely topics. Here is a quick take from this week. In a Thread Exchange on april 17, writer Mckenzie Fagan had a few questions about Jetblue Airlines new boarding procedure. No boarding pass and no i. D. Instead, a camera and screen verified her identity against a customs and Border Patrol database and then let her on the plane. Some passengers might consider the increasing use of facial recognition in everyday life convenient, some might think it is orwellian, but it is already everywhere. The question is, how far will it go . Turns out even some of those developing the technology are scared of what the answer might be. This is your bloomberg quick take on facial recognition. In may, San Francisco became the First American city to block police and other agencies from using facial recognition software. The biggest concerns are all around Civil Liberties and whether you are essentially two enable a totalitarian state with this technology, which seems to be the direction things are heading. So how did we get here . Like other Artificial Intelligence applications, facial recognition initially developed slowly, beginning in the 1960s. With the help of newly developed defh desk cameras highfe cameras, machine learning, and giant databases of photos to increase accuracy, it advanced in a hurry. Facial recognition is a technology that takes images from video cameras and tries to identify the faces of people in those images by taking key points in the face and doing measurements of the distance between all of those various points. In december 2018, London Police made their first arrest based on facial recognition after crosschecking photos of pedestrians and tourist hotspots against a database of known criminals. In new delhi, a police trial reportedly identified in 3000 missing children in just four days. If it involves finding criminals and missing children, why would anyone be against it . For that, one might look at the most developed facial recognition system in the world, china. This has been used in combination to create this vast surveillance network. That has been applied against minority groups. Even in western democracies, there is a concern about Police Technology to find suspects and people who might be involved in legitimate protests, so they can be tracked. And those are just concerns about the technology when it works as intended. A study from the m. I. T. Media lab found that white men in a sample were correctly identified 99 of the time, while error rates of up to 35 of the time with darkerskinned people. When microsoft last year was the first Major Tech Company to say they feel really uncomfortable with deploying this technology until there is clear regulation around it. Amazon,e joined by which seconded those calls. It seems other companies are plowing ahead without such qualms at all. To stake out some guidelines, the algorithm center and the Georgetown Law Center asked companies not to provide ai for autonomous weapons or sell to Law Enforcement unless specific laws are debated and passed to allow it. A few companies have signed on, but not microsoft or amazon, possibly to sell facial recognition to Police Departments and governments the world over. So what is preventing your image from saying a whole lot more about you than it used to . Face it, not much. Abigail that was just one of the many quick takes you can find on the bloomberg. You can also find that on bloomberg. Com along with Business News and analysis 24 hours a day. That will be all for bloomberg best this week. Thanks for watching. Im abigail doolittle. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Carol welcome to bloomberg businessweek. Im carol massar. Jason im jason kelly. We are here at bloomberg headquarters in new york city. Carol this week, we explore the economy to navigate the latest threat