They are teaming up and saying they will do something in health care, Something Big. Canadas minister of Foreign Affairs sees cautious optimism. I think a winwinwin outcome can be achieved. The worlds most valuable Companies Report earnings. We have not done a deal in 3. 5 years, but this one was too good to pass up. We have shown we have what it takes. I think there has probably not been as good a time to be in banking in the three main economic blocks. It is all straight ahead on bloomberg best. Julie hello and welcome. I am julie hyman. This is bloomberg best, your weekly review of the most important Business News, analysis, and interviews from bloomberg television. Around the world. On monday, investors watched with keen interest as canada, mexico, and the u. S. Concluded their sixth round of negotiations over nafta. Hints of promise, u. S. Trade representative robert light highs are struck a chord of optimism, saying the latest round of nafta negotiations wrap up today. They made progress, but we are still not friends. Contentious issues remain. The u. S. Trade representative, while more upbeat than in the past, is continuing to say mexico and canada are taking advantage of the u. S. , citing import and export data, and called on both countries to help modernize nafta and rebalance trade, and while he is willing to continue the negotiations and he says they have to move a lot faster. The Canadian Foreign minister was more upbeat, saying they have made progress and is pleased with what they accomplished. The mexican economy secretary said the three sides basically are close to being able to make a deal. Jamie dimon, warren buffett, jeff bezos planning to join forces. Jp morgan, berkshire hathaway, and amazon announcing a way to collaborate on Healthcare Services to their employees. Aetna, pfizer, cigna all falling sharply on the news. What do we know . Three big companies, more than a million employees, teaming up and saying they will do Something Big in health care. We dont know what. We see them expressing frustration. Investors have been worried that amazon will get in. So you bring all these complementary strengths into health care, it will be interesting to watch. Mr. Speaker, the president s cabinet. We are waiting for when the president himself will come to give the state of the Union Address. Officials say President Trump will deliver a unifying message tonight. Tonight, i am extending an open hand to work with members of both parties, democrats and republicans, to protect our citizens of every background, 00000000000000000000000000000000 color, religion, and creed. [applause] the era of economic surrender is totally over. From now on we expect trading relationships to be fair and very importantly, reciprocal. [applause] i am asking both parties to come together to give us safe, fast, reliable, and modern infrastructure that our economy needs and our people deserve. [applause] does this change the equation at all . No. [laughter] i think there are so many problems they have to solve, taking on infrastructure is not going to happen in this congress. The longer he can keep up a performance like tonight in play in the public eye, the more successful he can have. The polling is against him, democrats are committed to fighting, and he has already lost a lot of americans. No surprises from the Federal Reserve, leaving the rate unchanged, while hinting at a rate hike in march. There were subtle, but important changes, in the fed statement where they referred to expectations for a gradual adjustment of policy and gradual increases in the federal funds rate. This time they added emphasis, referring to further gradual adjustment and further gradual increases. That does not seem to change the meaning of those sentences, but does attract attention and emphasizes expectations for further rate increases this year. I dont think there is any question the fed will be raising rates. It is only a matter of how many times. It may not be that dramatic a change, but it does say that the Jerome Powell fed will be raising rates. He had to have signed off on it. Facebook reporting another quarter of record revenues this despite a dramatic drop in users following changes to its biggest moneymaker, the news feed algorithm. One of the most important things we can do is to make sure our services are not just fun to use, but good for wellbeing and society overall. Mark zuckerberg did a great job explaining what they are doing with the feeds. I think you saw record margins approaching 70 , and Mark Zuckerberg has been tempering higher earnings with growth, etc. , but he has always outperformed. My money is that they can raise engagement and the quality of engagement. Apple reporting fiscal firstquarter revenue 88. 3 billion, analysts looking for 87. 3 billion, and iphone units sold, a miss, 77. 3 million. I just got out of the meeting with tim cook at apple park, the new headquarters. These are the first earnings from their new campus, asked about the iphone x. He said it was the most popular iphone. They launched in november. It has been the topselling iphone every week since they launched. He could not be prouder. At first we got the numbers were not very good and a weak forecast, but the average selling price of almost 800 that implies that when shoppers are buying an iphone, they are buying the top one, and that is apples goal for this quarter. The yield is now above 3 and the 10 year yield is the highest in almost four years ahead of the january jobs report tomorrow. What is driving this in your mind . It is the good data, the idea that if the Federal Reserve will only hike three times this year and once next year, that is not enough and maybe they are behind the curve. The surprise in this move is not so much 2. 75 plus or minus yields on the 10 year, it is that the curve has steepened a lot this year. That is the question i keep getting. How come it keeps steepening when the fed is still hiking and we still have relatively low inflation even though it is picking up a little bit. U. S. Employers added 200,000 jobs in january and wages rose the most since 2009, increasing 2. 9 , even as the Unemployment Rate remained at 4. 1 . We have 2 unit labor costs and hopefully 2 inflation. It does not factor in the weak dollar. Over the past 12 months. Yes, i think it basically means we are approaching that magical number at which the fed will continue to raise rates. In the last 70 years, we have never seen the rate of 4 when deficit is expected to increase from 4 to 5 , so you have an economy running hot. Do you see 2. 9 as sustainable . That is the great question. We are very excited to see the 2. 9 wage growth number. It is what we have been talking about for the last year. It was really the impetus for our tax plan, to create sustainable wage growth, something missing for a long time. We are excited to see it this month and hope it is sustainable. We dont want to say after one month that we have done it and it is successful. You hope it is the start of something new, real, and good, and it will need a couple of months to reaffirm we are seeing wage growth in the United States. Still ahead bloomberg best, more analysis of the weeks top stories. Alan greenspan on the fed, donald trump state of the union message, and canadas perspective on nafta. Plus, a deeper dive into earnings from Tech Companies and some big european banks. Up next, more of the weeks top business headlines, to Beverage Companies combined in a move that could shake up the industry. They said it gives them unrivaled distribution capability to reach every point of sale in north america. Julie this is bloomberg. This is bloomberg best. Lets continue our global tour. On wall street, a major bank announced plans that raised as many questions as it answered. J. P. Morgan has named two people as copresident s, positioning them to succeed jamie dimon. They will take the role from jamie dimon, who says he plans to stay in the top job for about five more years. There is a running inside joke at jpmorgan that jamie dimon is always saying five more years, but here we have this clear step of promoting people to take over that role. These guys will jump in if something happens to jamie dimon, whatever in the next five years, these are the guys ready to take over today. That is very important. Given their age, if you look at gordon smith, he is not that much younger than jamie dimon himself. He is almost at retirement age in five years, so that would kind of disqualify him. It is more likely that it comes down to two women named mary. The cfo, and head of asset management. Big news on the beverage front in a deal that brings dr pepper and snapple brands under the same roof as the keurig singleserve coffee system, creating a beverage giant. It will be called keurig dr pepper. Lots of iconic brands including snapple, keurig, and dr pepper. If you think of markets across the United States, you have Green Mountain coffee there. They have an ecommerce agreement with amazon and other companies, so that is great. The company did say this gives them unrivaled distribution capability to reach every point of sale in north america. It is a great crossselling opportunity. The latest in a battle, sanofi outbids nova for a belgian drug maker in a 4. 8 billion deal that gives sanofi a blockbuster drug for blood clotting disease. It is interesting from a company absent from the deals front. They tried their hand at a couple of transactions twothree years ago. That did not work out and they walked away, but now they delivered this knockout punch today to novo who had previously bid for this assets, a low bid they said they did not like, and that left the door open for sanofi, a week after they spent top dollar, about 12 billion, on another acquisition. All in all 60 billion which shows the direction they are going in, this new area of hemophilia blood diseases, and that is where the growth is. Another hacking incident in japan has led to big swings in bitcoin and calls for stricter oversight of digital currencies. Tokyobased coincheck was hacked for almost 500 million in digital tokens. The boj has been subdued when it comes to this craze in cryptocurrencies, but tell us about the bojs position at this point. Regulations in japan have actually been quite forwardlooking. Japan was one of the first to actually adopt rules for the use of bitcoin, and even taxation rules, back last year, but this will most likely make authorities take another hard look at whether those rules are actually going to work. Cryptocurrencies are plunging today along with many assets, but bloomberg reported u. S. Regulators are scrutinizing a Virtual Currency venue and a company that issues a widely traded coin. When it comes to tether, this is a company that issues a widely traded coin pegged to the u. S. Dollar, so what are the concerns surrounding tether . As the peg in plies, for every tether created, there should be a dollar in the bank account controlled by the company. They have issued more than 2. 3 billion tethers now, so there should be 2. 3 billion in the bank account. They have not been willing to let their books be audited and there is concern that they are printing tethers without the backing of the dollars, and then going out and using the tethers to buy bitcoin. That from our reporting is what we understand they would like to know more about. The u. S. Published a list of 210 russian billionaires and top officials close to president Vladimir Putin, part of a sanctions law designed to punish russia for interfering in the u. S. Election. President Vladimir Putin called the list an unfriendly act. Does the Market Reaction tell us this report on russias elite may be milder than what was expected . Yes, that is exactly right. Essentially, the fact the list was so wideranging, it included every single russian billionaire and every single top russian official, excluding Vladimir Putin, and the interpretation here was the Trump Administration isnt serious about going down this road, that they will not sanction any of these people. Prime minister theresa may is trying to secure good trade relations with china. She brought the largest delegation of politicians and Business Leaders to beijing, where she discussed the future of u. K. Chinese relationship with the chinese premier. We agreed to joint review of trade and investment, which i think is a good step towards looking towards what our future trade relationship can be. David cameron promised that golden era of relations with china. Are we approaching a golden era . For the chinese it is tricky because from a Strategic Point of view, they, like the russians, would like nothing more than to have the u. K. Split off from the eu, weakening and major global rival. From an economic point of view, it complicates things, in terms of investment decisions, as they do everywhere else, so it is a tricky situation for them in particular. There are a lot of conflicting interests. The indian finance minister in the middle of delivering his budget speech to parliament and focusing on farmers and the rural population as Narendra Modi looks to win over voters next year. What were the highlights for you this morning . What the budget has told us is that 225 billion will be spent on rural infrastructure. Out of that last year, the whole budget was nearly 340 billion, so that shows how much Infrastructure Spending will go on. That means the fiscal deficit numbers have gone a little bit awry. We are hearing for this year is going to be 3. 5 of gdp compared to 3. 2 , which was what was targeted. Next year will be 3. 3 compared to a target of 3 . So clearly consolidation is in search of votes. Ray dalios hedge fund, bridgewater has boosted its bets against the italian Banking Sector to 3 billion. What is he betting against . Mostly italian financials and banks, and the trigger is italian elections in march, although he has been running these bats over the last three months when he wrote he had 1 billion in shorts against italian companies. Is it time to do this when you look at how the italian Banking Industry fared this year . It seems to be a contrarian bet. The italian index is one of the best performing this year. The banking index is up 14 , so some of these bets might be painful for bridgewater, but it looks to be a topdown macro call on the country. Julie welcome back to bloomberg best. The sixth round of nafta talks wrapped up this week and a commitment to resume discussions next month, but many points of contention remain. Canadas Foreign Affairs minister, chrystia freeland, discussed the situation in an interview with michael mckee. I think that my view, which is similar to what both of the other said on monday, is we all felt that in the montreal round, we made some real tangible progress with the anticorruption chapter closing, very significant, and that was good news. And we made some progress on the most difficult issues, in the areas of the unconventional u. S. Proposal where we managed to start a real conversation, and that is progress, and that is a good thing. Having said that, significant differences remain. We have some hard work to do to bridge those differences. I believe it is absolutely possible. I think a winwinwin outcome can be achieved, but our approach in canada is hope for the best, prepare for the worst, and we are doing both. One of the central messages was that the negotiations are moving too slowly. Do you agree . If so, how do you speed them up . Look, all of us would like the negotiations to be finished as soon as possible. The economic relationship inside nafta are essential to all of our economies, and so we would like to resolve it as quickly as we can come and we are all working extremely hard. Having said that, it is a really complicated deal with complicated elements, and there are some areas where there is a big gap in terms of vision. Canada is working hard to find creative ways to bridge that gap. And we will continue to do that. People have been concerned that it is so complicated and moving so slowly that you run up into the mexican elections. On july 1 and the u. S. Midterms on november 1. Does canada agree that you can talk through those selections and that this could go into late 2018 or 2019 . From the outset canada has said we are not putting any false, artificial deadlines on these talks, so our objective is to work as hard as possible. We are throwing tremendous resources at these talks and are working with goodwill and all possible faith, but artificial and all possible speed, but artificial deadlines arent helpful to anyone. Coming up on bloomberg best, more of the weeks corporate earnings reports and more of the weeks most compelling conversations. When Alan Greenspan was fed chair, he warned about irrational exuberance in the market, so what is he worried about today . There are two bubbles, a stock market bubble and a bond market bubble. Julie this is bloomberg. Julie this is bloomberg best. No surprises from the fed this week, as the fomc voted unanimously to hold rates steady. It was Janet Yellens final policy meeting before Jerome Powell takes the reins as chairman. Former fed chair Alan Greenspan joins bloomberg tv on fed decision day and talked about the challenges facing Central Banks in the global economy. I dont want you to pontificate on what Jerome Powells to do list is, but you can talk about the underlying theories of the phds at the eccles building. Does Alan Greenspan still believe in the phillips curve . I never did. [laughter] well, with the sainthood of the philli