Week, you guys, as a cover story, you are taking a look at Hurricane Harvey. Knew thiseekly, you storm was coming, but how, as a weekly did you plan for this coverage . Howard we were going to wait and see with the storm is like. When we were planning over the weekend, the storm had not yet quite hit. By sunday it was clear it was a huge disaster. Peter coy who is back from vacation is our great synthesizer, our resident economist. And he can take almost any story and look at it from an economic angle, but also from a very human angle. So peter was perfect for this. There was also a story that was going on. Chris lindell had been doing work with fema, and reporting on building codes, and how a place like houston, and taxes in general they are allergic to , building codes. The combination of those two, peter talking about the general, largescale big picture of the economy in houston, and looking how things are put together, their cando attitude and how this patchwork of Flood Control came together. And then, there is this attitude about building codes and how things really we dont like building codes. We dont Like National building codes. Carol i have a family in texas and i love them dearly but they definitely do think there own way. Oliver when you try to strike the tone for Something Like this, bloomberg, we are always trying to look at everything to the lens of Financial Markets , through the lens of how it affects the economy. This is one of those events it events that had a great human toll, as well. Anytime you want to talk about the market angle we want to make sure we always say, heres the first thing that is most important. How do you find that sort of . One, to strike howard we have to always point out that there is huge human suffering. We point out the Energy Markets have been affected. But we point out there is a huge cost to the way people will go back and live in their homes that have been wrecked by the , floods. Back,points out, you go and not only are most homes not insured, the people go back to their homes and developing mold problems, and Health Problems will develop. There are all sorts of human details that peter pays , attention to. Carol i wonder if more information will come out in the aftermath of the storm. It does seem a lot of people at the lower economic end of the scale, if you will. I have seen interviews were people are like, why didnt you evacuate . I could not afford to go anywhere. So, interesting to see how people, who may really need an awful lot of assistance, to get back on their feet. Howard i think the lesson from the previous hurricane was the evacuation did not work. A lot of people died in a previous evacuation. Now a lot of people are trapped because there is so much water. Oliver is a major event and covering it is difficult. Peter coy wrote a story covering the effects in the economy. Peter people who went there got houston has been wet since it was born, in the early 19th century. People who went there got their wheels stuck in the mud and they kind of knew it was a swamp. For ideal reasons, and the fact that had a navigable channel, it grew and grew. It is now the fourth biggest city in the country. It has a Major Medical center, of course, the refineries. It is a happening place, and a strong city. But it is still built on a swamp. That never changed. And if youre going to be built on a swamp, you need to take extreme measures to deal with that, to work on drainage. So the approach houston has used , all these years is to try to take the natural drainage and then add to it, with a lot more ,hannels, concrete sluices conduits trying to get the water , out after it rains. And that has proven inadequate. Carol is it just a case as we talk about the storm of the century, how can you plan for 50 inches of rain . Or is it something more significant that even a few , inches can be problematic . Peter they have regular flooding and it is a problem in , houston. Yes, harvey would have devastated any city no matter , how sound their planning was. But it just made it worse than it would have been. So what people are saying is in , addition to trying to get the water off the land and down to the gulf as quickly as possible, you need to understand you want to absorb some of it in place so it gets soaked into the ground, into ponds, and so on, and then gradually discharged over days and weeks. And that is what they have not done enough of. Carol powerful and disturbing images came from the gulf coast all week. Oliver we talked with rob vargas about the challenge of creating the cover. , i imagine the challenge for treating the cover when you think about the best way to convey such a large and tragic incident in houston. Rob we have seen a lot of incredible pictures of the flooding. We, along with many people had people shooting. And the way we wanted to depict , it was a more contemplative way. A lot of people getting rescued, and a lot of newsy images. They wanted something that felt while at the moment frozen in they wanted something that felt like the moment, frozen in time. The piece is sort of like a look ahead at a look at what could have been done differently. We found this image of this one man who looks like he is struggling in the water. Carol its very dark. The actual image itself. Either you chose to target it or left it as is. Rob Phillip Montgomery is a good cross between an art photographer and a photojournalist. He has this very dark, rich style to him. Oliver nissans bestselling electric car is losing ground to tesla. So, the company is about to turn a new leaf. Carol activist investors are not known for patience. Nelson petlz is taking a Surprising New tone. On carol welcome back to Bloomberg Businessweek. Oliver keeping kids is online at businessweek. Com. Carol and our mobile app. 2010 its introduction in the nissan leaf has been the worlds bestselling electric car. Tesla, are giving they are giving their bestselling ev a makeover. Jim they are trying to come up with something that certainly will not be a tesla killer, but it can go oneonone against the new low price tesla and the chevrolet volt, also a similar car. That is going to be tough for a couple of reasons. The biggest is, the leaf does not have the range of these newer cars. The old leaf. The old leaf really tops out, even with the extended battery at 107 miles. The regular one only has 80 something mile range. That goes up against about 220 for the new tesla model 3. And almost 240 for the chevy volt. That means a lot. You can go double the miles. Oliver the price differential is not that big. Jim the price differential for the model three, the new tesla, is only 5,000. So, what is going to happen is, the leaf is going to have to come up with a car that has much greater range, probably double the range it has now. And it is going to have to come up with a lot of snazzy tech features people expect from people like tesla. Carol to be fair the price , differential of 5,000, that is for the barebones model. Week has done this at when theyaid they want to add things in, it becomes a bit pricier. Nissan is going to unveil a new leaf the first week of september. Jim september 5. There will be a new car. It will definitely have new styling. Right now it has a quirky styling that does not work for a , lot of people. Remember, this is the first major redo in seven years. It will look more like todays car. They have been doing spy shots of it. But they have been quiet about what kind of range it is going to have. That is what you care about, what a lot of analyst say it will have to you will likely have an engine that is either standard or an optional engine battery that will take it up to the range of the beginning model three, the tesla model three, or the bolt. That will break the 200 mile range barrier, which seems to be where you need to be these days. Oliver it seems like they need to engender some excitement around the brand. I feel it a big part of this might be branding as well. Everyone has been talking about the tesla. Carol are you saying believe are you saying the leaf has no cachet . Jim that will be difficult to do for a Japanese Company. That is not the way they are. They are trying to do it is , as Japanese Companies typically do by adding , technology to the car. They are adding this is the first part they will have sold over here that will be able to the first car they will have sold over here that will be able to park itself. It will have some Driverless Technology added to it. It will have something unusual. They have a new feature that will allow the acceleration and braking to be done in a single pedal. That is really popular on another nissan cars sold in japan, the note. But a lot of things that work in japan with auto consumers sometimes dont connect with the u. S. Oliver , continuing in the continuing in the business sector activist investors are , supposed to be hardnosed raiders with shortterm goals. Carol however nelson peltz is , taking a softer approach. About a month ago when the Procter Gamble proxy fight started to kick off, nelson peltzs fund put it a special section on special their website, where they declared a a special interest in esg issues. Environmental, social and governmental issues. Oliver he owns a little over 1 of Procter Gamble. They are angling to get nelson peltz on the board. That is the proxy fight. Why did it think that is going to help, as part of this effort the timing is too as part of this effort . The timing is too coincidental to states not part of the effort. Im sure they would say this is like a longterm issue for them, something they look at when they are choosing a target. These are risks they need to manage when they going to an investment. Try on is a little bit different than the typical activist fund. They dont consider themselves confrontational. They like to consider themselves as a highly engaged activist and activist instead of a fighter. Carol who is nelson peltz playing two, in this corporate stewardship . His investors are interested in this. He has to win someone over to win a proxy fight. There are a lot of institutional firms like blackrock, state street, and the like invested in , this company who also like the esg issues themselves. That is part of their decision as well. Carol they are the major investors in this company. More than even nelson peltz. You dont win a proxy fight with 1 of the company. You are not going to be multiple your seat on the board unless you win some other people over. Every little bit helps, obviously, this is a little bit, but it helps. Oliver maybe this is editorializing, forgive me for the feedback. There has been a lot of focus on active investors throughout this bull market. There has been a lot of hubbub around these guys and investors , as icons and very much , artistic in some sense. , there is a lot of excitement by their investments. A lot of times the community thinks they are being hawkish and they dont like the attitude behind it. There is this Cultural Movement behind activist investors. Does he push towards saying we will be better stewards and look for these other types of things besides just making money. We want to make money on esg. Is it an image thing . I think it is an image thing. But in particular, these two funds that we cite in the article, blue harbor and triad, they are different from the carl icahns of the world. They are not afraid of a proxy fight, but they never go in that direction. At the same time, trian is trying to position itself as not an activist, corporate raider fund. What they are trying to do is say, look, we are not in this for the shorthaul. Were in this to fix this company, put it on the right path and maybe i will sell later down the line. Carol a hefty chunk of yales endowment is tied up in timber, but lately not all is good with wood. This is Bloomberg Businessweek. Oliver welcome back to Bloomberg Businessweek. Carol you can catch us on radio on sirius xm channel 119, a. M. 1330 in boston, 99. 1 fm in washington, d. C. And a. M. 960 in the bay area. Oliver and in asia, on the Bloomberg Radio plus app. Sectionn the finance Many American universities have , added timber to their endowment portfolio. Yale has found out that owning a forest, has its downside. Mary it is a hedge against inflation and new volatility in stocks and bonds. You own this other asset. And as yale went, a lot of other endowments wanted to follow. Because they were getting such outsized returns. Oliver this seems to be something that often happens in markets. There is not only a search for yield, perhaps that leads to risky places. You have to get more creative. They have a big investor, a big pension fund or Endowment Fund that leads the way and everyone gets on board. Do we have an assessment and how big it is across different types of investors . Mary it is like the big ones like harvard and yale that have a lot of assets in it, in endowments. They have a long time horizon. Oliver centuries. Mary centuries. Where you see may be an issue is where some of the smaller endowments follow. And they may not really have the expertise or enough assets to stay in it for the long term, the long game. Carol mary, there had to be returns. Talk to us about the terms timber provided yale and others. Mary it was going up, up, up for quite a while. Doubledigit returns. And now, you see the returns just have not been there. A lot of players got into the game. Some of them the endowments now, like wake forest, are saying, they are pulling back because they are not seeing the returns for the foreseeable , future. Carol it is causing some investors to do other things with their land. Talk to us about their at relationship and the leeway have, that that maybe it is not just about harvesting timber. They can do other things. Mary they own the land outright. And they have forest managers. They can harvest it. Some of it could be just investment return. But someone like harvard for , instance, they had romanian forests. They just recently sold, and uruguay eucalyptus plantations. , they were being harvested for timber, and it was not as lucrative, or they just decided to make the sale. And there are a lot of those Different Things they can do. Carol talk to us about yale. They were something controversial they came up in , that isa power plants fascinating. Mary yales manager entered into a lease for a power line that will through quebec. 192 miles, the 24 miles of yales land for New Hampshire that will power new england. It is controversial because yale activists say they are not harvesting in the right way or being responsible. Locals are saying it is not necessary. It will not create jobs. Again, the yale managers are not being responsible in the way they are clearcutting. There are canadian tribes who are saying it will desecrate their tribal land. And environmentalists say it is going to impact on moose and caribou and salmon. Carol but they get money from it, by leasing it to the power plant. Yale will make money from this. Carol storms like Hurricane Harvey dont come along every day, but Many American coastal communities cope with flooding every year. Oliver and they turned to the National FloodInsurance Program for help area unfortunately, that is in financial straits. Here is editor matt phillips. Matt it basically subsidizes private insurers to go and write policies for homes that are in very flood prone areas. This has been around since the 1960s. It was used as a way to incentivize the private market to get in there and write , policies they would not have otherwise. And it has lowered the cost of building and staying in homes in places we probably it is becoming clear we might not should be there. In the 50 years that this program has been in place, Coastal Development has exploded, but so has flood claims. The u. S. Government, through this program basically backstops , and pays out the majority of residential flood claims in the united states. It is currently 25 billion in debt. It needs to be reauthorized by the end of september. And this is already a problem. But harvey put a big spotlight on it. Oliver this is public they funded. It is a taxpayer funded program that basically puts the responsibility on private insurers to handle this. Where does the debt buildup come from . Is it just there are too many storms or houses in these locations . Matt over the past few years it has gotten a lot worse. In some years your claims are , far less than what your revenue is so you are ok. , this program borrows from treasury. Over the past decade it has , gotten severely strained and has been in debt to the tune of tens of billions of dollars for years. Carol borrowing more from treasury . Matt that is right. That is right. And it is forcing this debate in light of harvey. The need to think about the vested interests on either side. Carroll i want to get to the political side of this. Matt you have Home Builders on one hand who want to make sure they can build homes at the cheapest cost possible, and to be honest, dont mind too much rebuilding homes again and again. Especially if it is subsidized by the Insurance Industry which would not be there to begin without the government. We had a situation in 2012 or , where Congress Found the political will to overhaul the nfip. You have this Rare Alliance between Tea Party Republicans who looked at this and said why , are we spending this money . And your climate activists saying, from a climate standpoint we should not be , here. They overhauled the program. The result was that your average homeowner policy for Flood Insurance in a lot of coastal areas went through the roof. ,we are talking about from hundreds of dollars to tens of thousands of dollars. That lasted for two years. Congress rolled it back in 2014 because of the opposition was so , great. Whether there