Transcripts For BLOOMBERG Bloomberg BusinessWeek 20180217 :

Lets start in the business section. A story that is fascinating came out a couple of weeks ago. It is about a trifecta of wellknown individuals, jeff bezos, warren buffett, and jamie dimon talking about fixing the health care system. The biggest guys around. The details on this story remain hazy. What will be the solution in health care . How are they going to try to fix this . Theyre trying to find a ceo who can spearhead this initiative in the three companies. What is interesting, and we pick up the narrative, the reaction within the industry. The health care industry, amazon is at the door, this is a big deal. That is where we picked up. Julia this is not what we were expecting. We should make the point that at the moment they are tackling the situation with their individual companies. What does this mean for the individual players, the insurers, the pharmacies, the middlemen . Carol pharma, right . Right. All of this is a massive cocktail of what is happening in health care . Why do prices keep getting higher . Consumers feel like they are getting the shortest straw of all. The speculation is there are middlemen, pharmacy benefit managers, and that is where there seems to be a focus that this triumvirate can bring to bear. Julia they can say, we are not mispricing the drugs. A lot of the money goes to the insurers. Carol when it comes to drug pricing, this does not totally makes sense. The Drug Companies set up pricing, then there are refunds that come into play, and the relationship between big pharma, the pbm, and the Health Insurance companies has been a cozy relationship. And it is very opaque. Carol right. That is why this triumvirate is causing turbulence in the market. What they can bring to bear, what if we negotiated directly with pharmaceuticals . Carol cutout the middlemen. Hypothetical. We dont know what will happen yet, but if you could do that you would put downward pressure on a bunch of this opaque market that is maybe too lucrative for some players. Julia in the middle of this you have a u. S. Administration talking about replacing obamacare. We have seen a few failed attempts and the president talking about drug pricing as well. This will be an ongoing story all of us will be watching, and this is just the appetizer we want to give you. Were trying to inform you. This story will be one we will be watching throughout the year. Think of this as the appetizer. Understand the players, and we will get to an entree soon enough. Julia what about the main course . Lets jet to the u. S. Cover and in the asian cover. We are honing in on boeing, a huge industrial. It is an amazing story because of what boeing has been able to do as a business. If you look at the dow, it has been the Top Performing stock in the dow in the past year. Investors are ecstatic about this. How did they do it . That is what the story is about. There is a lot of nuance to that, because basically everyone else in the world other than investors and employees are like, boeing is hurting us. [laughter] julia they are flexing some muscle. Carol on that note, lets go to this story about the boeing ceo. Everybody is crazy except for investors. We get more from julie johnson. Julie we think we know boeing. They have overtaken they had been around for 100 years. They have overtaken ge to be the most powerful Industrial Company in the u. S. They have started to shake up the marketplace. In ways that we are just now exploring, and whose effects we do not know. Julia their old slogan used to be working together. How far does that slogan apply to them today . Julie boeing today is really in every speech you hear a Senior Executive give, that the phrase comes up, compete to win. And this is a company that seems unafraid to play hardball, to knock heads together. And if people do not like the consequences, they dont seem to care. Julia how much of this has to do with the new ceo . I call him new. He has been around since 2015. Dennis muilenburg. You described him as turning unapologetically hardnosed under his reign. Julie i think boeing has always been a tough competitor. Dennis is a driven person personally. He is extremely charming in person and charismatic. Again, he has this goal of making boeing a Global Industrial champion, part of the 1990s era ge. His foot is on the gas. This is a company that seems determined not to let up. I think in some regards, companies reflect their leaders. That might be true of what we are seeing at boeing today. Julia the share price has doubled since january of last year. It is the best performer in the doubt. Investors are rewarding them at this stage. They are happy. Julie yes, absolutely. One thing that is fascinating, ge has imploded. For shareholders who want industrial stocks in their portfolio, boeing has become the only game. I think boeing has, in terms of their share price, benefited tremendously. At the same time it reflects the underlying strength of the business. They are focused on profitability. Really shaking up the Supplier Community with some of the ways they have gone about gaining that profitability. That is a highlevel picture. With a thousand Little Details needed to come together. Julia the Cost Initiative they are running, partnering for success, critics have called this pilfering from suppliers. Give us a sense of what they are doing and what they are achieving. It is creating a fundamental reshaping of boeings business. Julie yes, that is absolutely true. This started in 2012. Under the previous ceo. At that time, boeing was going through tremendous soulsearching after the 787 dreamliner that was enormously draining on the company. Their early issues with that plane, manufacturing problems that led to it being three years late. I think boeing took a look around them and said, why, like other large industrials, why are we plodding with singledigit operating margins when our competitors are earning double and triple that . I think there was a sense that we have to put our needs and profitability first. Julia carol boeing was on the cover of business week. We have an excellent shoot with the boeing ceo, and he has a beaming smile. We coupled that with this chunky typeface. Julia the sky is the limit. Carol its great. Its a wonderful picture of him. He looks like he is happy. He is glowing. How many pictures do you take of the ceo when you do this . It is a lot of photos, as much as the ceo will allow us. We will take as many as we can. Carol do you change the backgrounds . Yes. We also shot throughout the factory. We have these photos of them making planes. Its really beautiful. Julia that is the big story. The pushback on suppliers. You have been cute with that and the plane in the background. This is the fundamental part of the story. It really places us in the environment he is pushing for. Julia and shaking things up. Up next, why moscow is not talking about mercenaries killed in syria this month. Carol and the global ambition of wwe. Julia this is bloomberg businessweek. Carol welcome back to bloomberg businessweek. Im carol massar. Julia im julia chatterley. Carol in the politics section, u. S. Forces killed hundreds of russian mercenaries in syria. Julia the incident is raising the possibility of greater conflict between washington and moscow. Carol heres editor matthew philips. Matthew it has been an active start to the month of february. We have seen an escalation intentions. We have seen shooting going on. We have seen aircraft being downed from iran and turkey and russia and israel. We have all seen aircraft shot down over the first part of february. The most interesting event, the most seismic event, had been on the night of february 7 when it seems that a battalion of russian mercenaries numbering in the realm of 200 to 300 were killed by a u. S. Backed force led by u. S. Forces and the kurds in a failed attempt to take oil fields the kurds have been holding. Carol who was behind the russian mercenaries . Do we know . Matthew it is murky. The kremlin spokesperson would not address this. They are not official russian troops. As we know, given some of the incursions russia had in ukraine, they often are not wearing official Russian Military gear. It seems these few hundred mercenaries were under the control of a firm known as wagner. To put it in blunt terms, it is the russian equivalent to the u. S. Based blackwater. These are private mercenaries. Not unlike the folks we sent into the ground in iraq. They were not part of the official u. S. Military, but they were there to fight. Wagner is an organization who is known in russia as putins cook. He owns a Catering Company that does business with the kremlin. He also has control over these military units that have been operating in syria and helping a and helping assad shore up his game. Julia i think you said it best. What is so puzzling, for all intents and purposes it seems to be some kind of rogue attack. If you look at the response by the russians, not surprising given that they deny knowledge or involvement. The United States response seems weak. What is going on here . Matthew defense secretary mattis, all he would say on the record is this is perplexing. I think that is an accurate assessment. They were confused by what happened. We have by we, i mean we have the United States. We are in communication with the official channels with the Russian Forces that are there. This is like a jigsaw puzzle of a battlefield where proxies of big powers, the u. S. , turkey, russia, iran, israel are all waging wars. When it comes to this part of the country where the euphrates cuts between here, the u. S. Is with the kurds, and on the other side, you have Russian Forces with assad. Our people are in communication with the russians, and it seems like communication broke down. The report seems to indicate this was a rogue operation. We are not sure who gave the goahead. There was communication throughout, during, before, and after about, why are you moving . Stop moving. We are going to attack. That is what happened. There is a lot of mystery about the incentives and impetus and who called this in. You are seeing hospitals in st. Petersburg and moscow filled with hundreds of wounded these past few days. Julia up next, the problem children of exchange funds. How one entrepreneur leapfrogged his Payment Company into the mobile era. Julia this is bloomberg businessweek. Julia welcome back to bloomberg businessweek. Im julia chatterley. Carol im carol massar. You can also listen to us on the radio. Carol julia in the finance section, investors are finding reasons to worry about Certain Exchange traded products. Carol over 400 of these used derivatives. Julia that is raising red flags for market watchers. Here is our reporter. Last week we had the blowup in xiv. It bet against volatility. What that brought into focus is how some Exchange Rate products have a complexity at their hearts. There are some products that include derivatives at their heart. I have people questioning a little bit of what do they own in their portfolios . Julia there are a lot of technical terms in there. Explain what investors were doing when getting involved in these products. Volatility is a way we can measure how active the markets are in terms of price swings. When markets are calm, volatility is low. When markets start moving, volatility moves up. A lot of complacency in the market. Very much so. We saw that suddenly change. That creates problems for products that bet on an against volatility. Julia they were betting volatility will remain low. It has been for a long time. Thats exactly. Exactly. People in the industry, we saw that stuff get washed out on monday afternoon. One place we saw that was in the Exchange Traded fund. We saw Exchange Traded notes. An etn, which is a debt obligation from its issuer, it started to run into trouble because the index it was tracking moves so much over a short period of time. Anybody who poured money into the fund carol by winding up the product that can go down to zero. Right. This is what we saw. Anybody who had come in the week before this happened, 500 million flowed into this product. All of those people were accelerating this note were terminated. Julia does that mean they lost money . Absolutely. This product went down 90 . That will be liquidated later this month. People will get back whatever the price was at that point. Julia who was actually invested in this product . Was it sophisticated investors or momandpop . It is difficult to know who owns these things. If you look at the holders on the bloomberg terminal, youd be left with the impression it was sophisticated investors. That is who it is aimed for. Talking to a number of retail investors, it seems like that was not necessarily the case. There were forums about this online, talking about how xiv was making a huge percentage every year. People were piling into this, putting all their savings. I spoke to several people who lost thousands of dollars. Carol this is tremendous. Youve done great reporting on all this. While the markets were complacent, people were making crazy amounts of money. That inverse volatility index was making so much money. When volatility started to spikes, that was something that people thought markets have been calm for a while. We will see that spike disappear. Instead, they got washed out. Carol this weeks game changer is steve treat steve street. Julia he has reinvented his company to facilitate mobile payments. Carol we got more from our reporter. Steve is the founder and ceo of a Company Called green. Green dot that not a lot of people have heard of. They provide be paid cards. They have been thinking a lot of deals in silicon valley. They have worked at apple and uber. They are trying to build out their platform. Julia take a step back. He is a visionary, i think. He foresaw the shift to mobile banking. He made some bold moves. Correct. Back in 2012, he could see the Banking Experience was moving to mobile phones, and he felt his company was not going to get there in time with the technology they had. He went out and did an acquisition of a company that was a weird one. They were a dating app that had failed. It had a lot of Geolocation Services and interesting technology. The bank said, i dont care what technology you have, i want your talent and the people who can develop for mobile. He brought that team in and shook things up in his company. Now they are inking important partnerships. Julia not a lot of people have heard from them, but they are with some huge businesses. Exactly. They power apple pay cash. It is an interesting business. You dont see green dot anywhere in the app or in the card. They are the ones powering it. It is interesting, a lot of people are using them in have no idea. Julia they are working with uber and into it. They have fingers in many pies. The acquisition gave them the kind of mobile Development Team they need to work with Big Companies for how they can use Financial Services in their business. Green dot says they are a platform, not just a prepaid card. You can use this to plug into technology companies. Julia it is one of the most distributive banks in the country. The growth we have seen is phenomenal. Yes, indeed. Not to knock the prepaid business, but yes, the partnerships, uber for instance, they pay all the uber drivers at the end of the week. They are facilitating payments for silicon valley. When i spoke to steve, he said the reason we are able to do this, we have this platform and team that can do it all, but we are able to speak tech to these companies. As more of these tech giants want to make their way into banking, it is interesting to see them partner with the longerterm players. Julia are the bank that speaks tech or a tech firm that speaks banking . That is a good question. They are definitely a bank. Prepaid was steves brain child. He saw that more people would buy things online, especially teenagers, and they did not have a bank account to do it. That is why he created the prepaid card. Flash forward 20 years, and now it is a company where prepaid is the biggest part of the business, but they can see the platform being used in different and unique ways. Carol up next, exxon targets of the lawyers they say are conspiring against the company. Julia what is behind the republican change of heart regarding spending. Carol this is bloomberg businessweek. Julia welcome back to bloomberg businessweek. Im julia chatterley. Carol im carol massar. Whatever happened to the deficit hawks in d. C. . Carol how the wwe came to dominate streaming. Julia all of that still ahead on bloomberg businessweek. Julia bloomberg businessweek, in the more must read section we , are honing in on at some mobile, sick to death of the Climate Change of lawsuits. It is fighting fire with fire. It is an interesting take. I would call this, a need to know read. What exxon has done here, is change the narrative by going after lawyers. The lawyers that are suing them, they are turned the narrative and they are going after them. We are talking environmental activist and attorney generals. Carol they talk about the la jolla playbook. The lale oil playbook jolla playbook, that is the term. What happened is six years ago, the rockefellers, which have a fund, the irony here is the rockefellers were standard oil. Standard oil is basically exxon today. The rockefellers invited a group of people to la jolla, and exxon has pointed a finger at that and said they were conspiring against us. That is the whole essence of this story. Carol so they were plotting against exxon . Some of the legal experts say this is a moonshot comedy but a moonshot, but a bold it is one. Designed to be a fear tactic. Julia they are going after the attorney general of new york . Massachusetts . To get them to back down. It is an amazing legal maneuver that a lot of people have their eyes on to see if they can poll ll it off. Carol it is amazing, a fear tactic against the rockefellers. It is bigger than that because the rockefellers, it is the brothers fund. This is all about exxon knowing something about Climate Change, and doing nothing about it. There are multiple people who would be interested in that side of the conversation. The Drug Companies<\/a> set up pricing, then there are refunds that come into play, and the relationship between big pharma, the pbm, and the Health Insurance<\/a> companies has been a cozy relationship. And it is very opaque. Carol right. That is why this triumvirate is causing turbulence in the market. What they can bring to bear, what if we negotiated directly with pharmaceuticals . Carol cutout the middlemen. Hypothetical. We dont know what will happen yet, but if you could do that you would put downward pressure on a bunch of this opaque market that is maybe too lucrative for some players. Julia in the middle of this you have a u. S. Administration talking about replacing obamacare. We have seen a few failed attempts and the president talking about drug pricing as well. This will be an ongoing story all of us will be watching, and this is just the appetizer we want to give you. Were trying to inform you. This story will be one we will be watching throughout the year. Think of this as the appetizer. Understand the players, and we will get to an entree soon enough. Julia what about the main course . Lets jet to the u. S. Cover and in the asian cover. We are honing in on boeing, a huge industrial. It is an amazing story because of what boeing has been able to do as a business. If you look at the dow, it has been the Top Performing<\/a> stock in the dow in the past year. Investors are ecstatic about this. How did they do it . That is what the story is about. There is a lot of nuance to that, because basically everyone else in the world other than investors and employees are like, boeing is hurting us. [laughter] julia they are flexing some muscle. Carol on that note, lets go to this story about the boeing ceo. Everybody is crazy except for investors. We get more from julie johnson. Julie we think we know boeing. They have overtaken they had been around for 100 years. They have overtaken ge to be the most powerful Industrial Company<\/a> in the u. S. They have started to shake up the marketplace. In ways that we are just now exploring, and whose effects we do not know. Julia their old slogan used to be working together. How far does that slogan apply to them today . Julie boeing today is really in every speech you hear a Senior Executive<\/a> give, that the phrase comes up, compete to win. And this is a company that seems unafraid to play hardball, to knock heads together. And if people do not like the consequences, they dont seem to care. Julia how much of this has to do with the new ceo . I call him new. He has been around since 2015. Dennis muilenburg. You described him as turning unapologetically hardnosed under his reign. Julie i think boeing has always been a tough competitor. Dennis is a driven person personally. He is extremely charming in person and charismatic. Again, he has this goal of making boeing a Global Industrial<\/a> champion, part of the 1990s era ge. His foot is on the gas. This is a company that seems determined not to let up. I think in some regards, companies reflect their leaders. That might be true of what we are seeing at boeing today. Julia the share price has doubled since january of last year. It is the best performer in the doubt. Investors are rewarding them at this stage. They are happy. Julie yes, absolutely. One thing that is fascinating, ge has imploded. For shareholders who want industrial stocks in their portfolio, boeing has become the only game. I think boeing has, in terms of their share price, benefited tremendously. At the same time it reflects the underlying strength of the business. They are focused on profitability. Really shaking up the Supplier Community<\/a> with some of the ways they have gone about gaining that profitability. That is a highlevel picture. With a thousand Little Details<\/a> needed to come together. Julia the Cost Initiative<\/a> they are running, partnering for success, critics have called this pilfering from suppliers. Give us a sense of what they are doing and what they are achieving. It is creating a fundamental reshaping of boeings business. Julie yes, that is absolutely true. This started in 2012. Under the previous ceo. At that time, boeing was going through tremendous soulsearching after the 787 dreamliner that was enormously draining on the company. Their early issues with that plane, manufacturing problems that led to it being three years late. I think boeing took a look around them and said, why, like other large industrials, why are we plodding with singledigit operating margins when our competitors are earning double and triple that . I think there was a sense that we have to put our needs and profitability first. Julia carol boeing was on the cover of business week. We have an excellent shoot with the boeing ceo, and he has a beaming smile. We coupled that with this chunky typeface. Julia the sky is the limit. Carol its great. Its a wonderful picture of him. He looks like he is happy. He is glowing. How many pictures do you take of the ceo when you do this . It is a lot of photos, as much as the ceo will allow us. We will take as many as we can. Carol do you change the backgrounds . Yes. We also shot throughout the factory. We have these photos of them making planes. Its really beautiful. Julia that is the big story. The pushback on suppliers. You have been cute with that and the plane in the background. This is the fundamental part of the story. It really places us in the environment he is pushing for. Julia and shaking things up. Up next, why moscow is not talking about mercenaries killed in syria this month. Carol and the global ambition of wwe. Julia this is bloomberg businessweek. Carol welcome back to bloomberg businessweek. Im carol massar. Julia im julia chatterley. Carol in the politics section, u. S. Forces killed hundreds of russian mercenaries in syria. Julia the incident is raising the possibility of greater conflict between washington and moscow. Carol heres editor matthew philips. Matthew it has been an active start to the month of february. We have seen an escalation intentions. We have seen shooting going on. We have seen aircraft being downed from iran and turkey and russia and israel. We have all seen aircraft shot down over the first part of february. The most interesting event, the most seismic event, had been on the night of february 7 when it seems that a battalion of russian mercenaries numbering in the realm of 200 to 300 were killed by a u. S. Backed force led by u. S. Forces and the kurds in a failed attempt to take oil fields the kurds have been holding. Carol who was behind the russian mercenaries . Do we know . Matthew it is murky. The kremlin spokesperson would not address this. They are not official russian troops. As we know, given some of the incursions russia had in ukraine, they often are not wearing official Russian Military<\/a> gear. It seems these few hundred mercenaries were under the control of a firm known as wagner. To put it in blunt terms, it is the russian equivalent to the u. S. Based blackwater. These are private mercenaries. Not unlike the folks we sent into the ground in iraq. They were not part of the official u. S. Military, but they were there to fight. Wagner is an organization who is known in russia as putins cook. He owns a Catering Company<\/a> that does business with the kremlin. He also has control over these military units that have been operating in syria and helping a and helping assad shore up his game. Julia i think you said it best. What is so puzzling, for all intents and purposes it seems to be some kind of rogue attack. If you look at the response by the russians, not surprising given that they deny knowledge or involvement. The United States<\/a> response seems weak. What is going on here . Matthew defense secretary mattis, all he would say on the record is this is perplexing. I think that is an accurate assessment. They were confused by what happened. We have by we, i mean we have the United States<\/a>. We are in communication with the official channels with the Russian Forces<\/a> that are there. This is like a jigsaw puzzle of a battlefield where proxies of big powers, the u. S. , turkey, russia, iran, israel are all waging wars. When it comes to this part of the country where the euphrates cuts between here, the u. S. Is with the kurds, and on the other side, you have Russian Forces<\/a> with assad. Our people are in communication with the russians, and it seems like communication broke down. The report seems to indicate this was a rogue operation. We are not sure who gave the goahead. There was communication throughout, during, before, and after about, why are you moving . Stop moving. We are going to attack. That is what happened. There is a lot of mystery about the incentives and impetus and who called this in. You are seeing hospitals in st. Petersburg and moscow filled with hundreds of wounded these past few days. Julia up next, the problem children of exchange funds. How one entrepreneur leapfrogged his Payment Company<\/a> into the mobile era. Julia this is bloomberg businessweek. Julia welcome back to bloomberg businessweek. Im julia chatterley. Carol im carol massar. You can also listen to us on the radio. Carol julia in the finance section, investors are finding reasons to worry about Certain Exchange<\/a> traded products. Carol over 400 of these used derivatives. Julia that is raising red flags for market watchers. Here is our reporter. Last week we had the blowup in xiv. It bet against volatility. What that brought into focus is how some Exchange Rate<\/a> products have a complexity at their hearts. There are some products that include derivatives at their heart. I have people questioning a little bit of what do they own in their portfolios . Julia there are a lot of technical terms in there. Explain what investors were doing when getting involved in these products. Volatility is a way we can measure how active the markets are in terms of price swings. When markets are calm, volatility is low. When markets start moving, volatility moves up. A lot of complacency in the market. Very much so. We saw that suddenly change. That creates problems for products that bet on an against volatility. Julia they were betting volatility will remain low. It has been for a long time. Thats exactly. Exactly. People in the industry, we saw that stuff get washed out on monday afternoon. One place we saw that was in the Exchange Traded<\/a> fund. We saw Exchange Traded<\/a> notes. An etn, which is a debt obligation from its issuer, it started to run into trouble because the index it was tracking moves so much over a short period of time. Anybody who poured money into the fund carol by winding up the product that can go down to zero. Right. This is what we saw. Anybody who had come in the week before this happened, 500 million flowed into this product. All of those people were accelerating this note were terminated. Julia does that mean they lost money . Absolutely. This product went down 90 . That will be liquidated later this month. People will get back whatever the price was at that point. Julia who was actually invested in this product . Was it sophisticated investors or momandpop . It is difficult to know who owns these things. If you look at the holders on the bloomberg terminal, youd be left with the impression it was sophisticated investors. That is who it is aimed for. Talking to a number of retail investors, it seems like that was not necessarily the case. There were forums about this online, talking about how xiv was making a huge percentage every year. People were piling into this, putting all their savings. I spoke to several people who lost thousands of dollars. Carol this is tremendous. Youve done great reporting on all this. While the markets were complacent, people were making crazy amounts of money. That inverse volatility index was making so much money. When volatility started to spikes, that was something that people thought markets have been calm for a while. We will see that spike disappear. Instead, they got washed out. Carol this weeks game changer is steve treat steve street. Julia he has reinvented his company to facilitate mobile payments. Carol we got more from our reporter. Steve is the founder and ceo of a Company Called<\/a> green. Green dot that not a lot of people have heard of. They provide be paid cards. They have been thinking a lot of deals in silicon valley. They have worked at apple and uber. They are trying to build out their platform. Julia take a step back. He is a visionary, i think. He foresaw the shift to mobile banking. He made some bold moves. Correct. Back in 2012, he could see the Banking Experience<\/a> was moving to mobile phones, and he felt his company was not going to get there in time with the technology they had. He went out and did an acquisition of a company that was a weird one. They were a dating app that had failed. It had a lot of Geolocation Services<\/a> and interesting technology. The bank said, i dont care what technology you have, i want your talent and the people who can develop for mobile. He brought that team in and shook things up in his company. Now they are inking important partnerships. Julia not a lot of people have heard from them, but they are with some huge businesses. Exactly. They power apple pay cash. It is an interesting business. You dont see green dot anywhere in the app or in the card. They are the ones powering it. It is interesting, a lot of people are using them in have no idea. Julia they are working with uber and into it. They have fingers in many pies. The acquisition gave them the kind of mobile Development Team<\/a> they need to work with Big Companies<\/a> for how they can use Financial Services<\/a> in their business. Green dot says they are a platform, not just a prepaid card. You can use this to plug into technology companies. Julia it is one of the most distributive banks in the country. The growth we have seen is phenomenal. Yes, indeed. Not to knock the prepaid business, but yes, the partnerships, uber for instance, they pay all the uber drivers at the end of the week. They are facilitating payments for silicon valley. When i spoke to steve, he said the reason we are able to do this, we have this platform and team that can do it all, but we are able to speak tech to these companies. As more of these tech giants want to make their way into banking, it is interesting to see them partner with the longerterm players. Julia are the bank that speaks tech or a tech firm that speaks banking . That is a good question. They are definitely a bank. Prepaid was steves brain child. He saw that more people would buy things online, especially teenagers, and they did not have a bank account to do it. That is why he created the prepaid card. Flash forward 20 years, and now it is a company where prepaid is the biggest part of the business, but they can see the platform being used in different and unique ways. Carol up next, exxon targets of the lawyers they say are conspiring against the company. Julia what is behind the republican change of heart regarding spending. Carol this is bloomberg businessweek. Julia welcome back to bloomberg businessweek. Im julia chatterley. Carol im carol massar. Whatever happened to the deficit hawks in d. C. . Carol how the wwe came to dominate streaming. Julia all of that still ahead on bloomberg businessweek. Julia bloomberg businessweek, in the more must read section we , are honing in on at some mobile, sick to death of the Climate Change<\/a> of lawsuits. It is fighting fire with fire. It is an interesting take. I would call this, a need to know read. What exxon has done here, is change the narrative by going after lawyers. The lawyers that are suing them, they are turned the narrative and they are going after them. We are talking environmental activist and attorney generals. Carol they talk about the la jolla playbook. The lale oil playbook jolla playbook, that is the term. What happened is six years ago, the rockefellers, which have a fund, the irony here is the rockefellers were standard oil. Standard oil is basically exxon today. The rockefellers invited a group of people to la jolla, and exxon has pointed a finger at that and said they were conspiring against us. That is the whole essence of this story. Carol so they were plotting against exxon . Some of the legal experts say this is a moonshot comedy but a moonshot, but a bold it is one. Designed to be a fear tactic. Julia they are going after the attorney general of new york . Massachusetts . To get them to back down. It is an amazing legal maneuver that a lot of people have their eyes on to see if they can poll ll it off. Carol it is amazing, a fear tactic against the rockefellers. It is bigger than that because the rockefellers, it is the brothers fund. This is all about exxon knowing something about Climate Change<\/a>, and doing nothing about it. There are multiple people who would be interested in that side of the conversation. The Rockefeller Brothers<\/a> fund was inviting people to have that conversation. Attorney generals among them, environmental activists among them. That is where exxon is trying to say it is a conspiracy. Julia the whole industry has come under fierce criticism. It would have far larger implications. That is why it is such a need to know. Carol exxon saying they have a right to free speech, this plays into that as well. So much plays into this, because at the same time, while you could call that a strategic meeting, isnt exxon having strategic meetings on the other side of this . It is really such an interesting dynamic, and we will have to see what happens. Right now it is just so many depositions. Carol we will see how this works out. Talk about the interesting dynamics between republicans at right now. This is in the remarks section this week. Anybody who has been covering politics or business news, and government, especially here in the United States<\/a> it has been about reducing deficits, not adding to spending. This narrative around the deficit has been a republican priority since about 2010. The deficit hawks, that was a thing in congress. And the art work we came up for this story is amazing, because that deficit hawk is an extinct species. 22018 ed from about 2010 2018, and you are not hearing about it anymore. The change is they realized voters dont care. Julia the deficit hawk is going the way of the dodo. We watched senator rand paul say, you cant be against deficits and now voting such irony here. Julia he said it it is the definition of hypocrisy. He got up there and delivered a jeremiad for the generations, condemning republicans were being hypocritical. For opposing deficits when obama was in the white house but now embraces them with trump in the white house. Julia to be clear, he is a republican himself. He is condemning his own party, saying it is fiscally irresponsible. He was shrugged off by his own party. After he sat down and voted for 300 billion increase on spending over two years, on the heels of a 1. 5 trillion tax cut. Julia to put some flash on to put some flesh on that, what are some of his colleagues saying . It was called the colossal waste of time. So, the thinking of the republicans is, we want to cut taxes because we want to help the supply side of the economy. Encourage companies to invest. Which will create a greater gdp. All deficits might go up, but they will fall as a share of gdp. That is the laffer curve resurrected. The laffer curve is the idea that the u. S. Economy is so overtaxed, it will actually cut the deficit problem. Julia or at least be deficit neutral. Of course, the institute for Global Markets<\/a> at the university of chicago interviewed 42 prominent economists from the left and right, and asked them, will trumps tax cut pay for itself. And one of the 42 said yes, only one. And it turned out that person made a mistake and meant to say no. So, no one supports that idea. Which is unfortunately the last thing that people like Mick Mulvaney<\/a> who had been a deficit hawk as a South Carolina<\/a> republican congressman, that is the thin read that Mick Mulvaney<\/a> laid claim to. Is, do intrigues me voters care . That is the heart of the story. You would think after rand paul got up there and delivered his speech, the republicans would be cowed. They would be embarrassed and worried about going back to their voters and having to admit to them that after having cared about deficits for years they were now supporting massive deficits. The answer is they can afford to shrug off rand paul as they have come to the conclusion that they came get away with it. In fact, it will be good for them to do this, to cut taxes and raise spending, because that is ultimately what voters want. Julia up next, why chinas baby bump fizzled. Carol and betting on a stem cell breakthrough to treat ms and crones. Julia this is bloomberg businessweek. Julia welcome back to bloomberg businessweek. Im julia chatterley. Carol im carol massar. You can find us online at businessweek. Com. In the economic section, the baby boom or bump, china experienced after its one child policy seems to have been shortlived. Carol it is proving to be challenging to get couples to have more children. There was a mini baby bump, not quite a baby boom. Births went up 8 in 2016. Which was the first full year. Then they went back down last year. Carol for decades, it was a one child policy to control population growth. They wanted to put the brakes on it. That was in place for a long time. When they made this change, it was startling. But they were doing it to help the population and economic demographics. They were concerned china would start graying too fast. And that will have economic implications. Carol like japan. Right. Ratio the number , of young people it takes to support every asian person is going to start tipping into a point where it is unsustainable. Julia it is really bad. You put figures on it. Population is expected to peak in 2030, and then decline. The workforce has already started shrinking. I think about 5 million last year. So, this was supposed to be a baby boom, and launch a different trajectory. We see them going back down. Carol why is it difficult to have more than one child in china . Basically the short answer is that life in the city is so expensive. A Government Official<\/a> came out this year and said they did a survey, and 80 of couples cited financial worries about not having a second child. In places like shanghai, the cost of a 1000 square foot apartment is 90 times the median salary. Julia compare that to new york. In new york it is about 25 . Also, education costs are high in the cities. Julia you have people focusing on the couple, and they were excited about having a second child, and the may look at it and said we would have to move, we are struggling now with education costs, it is not feasible. Thats right, they ran the numbers and they said no. It is not going to work for us. What is china doing about this . Can china change this . That is the big issue. They have been trying to bolster, make it easier for mothers, adding and expanding maternity wards, adding seats to kindergarten. There is not universal public at kindergartens. Maternity leave is five months paid leave nationwide. But the people we talked to said china is too far along is Ts Development<\/a> trajectory for these policies to make a difference. Julia what do you mean by that . It is on its way to becoming a first world country, and what we see in countries at that point in development is that opportunity costs of having children is factored in. The woman has a career. Financially, it does not look as attractive. Carol in a technology section, a stem cell pioneer hopes his next breakthrough comes from placentas. Julia here is a reporter with the story. Hes a jet certified pilot and stem cell pioneer who suggests we will live longer if we treat our bodies like we treat planes, with a more regular maintenance schedule. Most people will tell you planes are longer lived than a few decades ago. Julia dont wait for things to go wrong. Make sure you are tinkering with the body and that it is working on a continual basis . He is a cofounder of human longevity. Until recently, chief scientific officer of biotech giant cell genes, a cell 30 sup syria cell theory subsidiary. Julia he is a specialist in stem cell therapy, but what theyre going to do is specific. Cellularity is going to do something quite specific. Explain what they are focused on. They are focused largely on therapies derived from stem cells from discarded placentas. The theory goes that these cells which are similar to the stem cells that a lot of scientists have been pitching as Regenerative Medicine<\/a> for years from discarded umbilical cords are a better way to apply therapies to a much wider swath of the population. Julia how does he think that differs from what you say, and what we have seen talked about for many years, which is taking cells and blood from the umbilical cord and using that as a medical tool . Scientists and doctors have been telling parents for 20 years, if you freeze your umbilical cord blood to help your baby live longer later in life as more therapies are derived. So far, the umbilical cord cells have only proven useful in a few in rare conditions. What cellularity aims to do in the next four years is developed therapies that can treat all kinds of immune disorders, and eventually the hope is it will be more generalized longevity for everybody. Julia it is not just about the family members, or those connected to the people the cells have been taken from, this is a broader cure they are talking about. This would be so groundbreaking if successful. They are talking about doing it in a few years. Yes, by the end of 2022. Julia how does it help the regenerative function of the body . Because stem cells in placentas are so purpose built for regenerative functions, they are then better suited then stem cells from other places in the body to mimic regenerative cells that are at risk, or the death of which is a primary symptom of these kinds of immune diseases. Carol up next, we go inside the lucrative halls of World Wrestling<\/a> entertainment. Julia how careful timing and Perfect Timing<\/a> will land black panther at the top of the box office. Carol this is bloomberg businessweek. Carol welcome back to best of bloomberg technology. Im carol massar. Julia im julia chatterley. You can find us on the radio on sirius xm. And also in new york. Carol and in london. And in asia on the Bloomberg Radio<\/a> plus app. In the feature section, World Wrestling<\/a> entertainment, or wwe is on a roll. Julia shares are trading at an alltime high. They are taking some big risks. Carol our reporter took a trip to the company to hear about its plans about world domination. Right now wwe is doing really well. We looked into why that was. A lot of it has to do with a decision the company made in 2014, they were looking into what they want to do in the future with digital products, and i noticed their fans were subscribing to netflix and hulu. They thought, we should try launching our own video streaming app product. Julia risky. Bold call. Yes, at the time everyone watched it, if you are a big of wwe fan, you would turn on cable and watch these weekly shows, and a couple times a year you would subscribe to a payperview event like wrestlemania and pay your Cable Provider<\/a> 40 or 50 to watch the big matches. Wwe said, we will take those big matches and make those available on this video streaming app. You pay a monthly fee, and we will give you the big events, and give you interview shows, documentaries, additional archival wrestling matches. And they put this together at a time when all those video streaming apps were like netflix , they were aggregators. They were not individual brands. There was a lot of skepticism. People thought, is that a good idea . Not surprisingly, it irritated their partners in cable tv, who got a cut every time you signed up for wrestlemania. They were not too thrilled. Carol this was a risky move but it paid off. It did. They have 1. 5 million monthly subscribers. Carol is that good . Give us a comparison to the others. It is the 11th most Popular Video<\/a> streaming app in the country, of about 220 of these that exist. It is the second most in sports related categories. Only Major League Baseball<\/a> has a more popular streaming. Julia this is important to ordinary viewers. You pay, 9. 99 a month, and there is a huge amount of material on there. They have their cruiserweight division. They have a weekly show. The Developmental League<\/a> has a weekly show exclusively on this app. It has proven to them, one thing that made the Company Exciting<\/a> to investors, it has proven they can move their audience from place to place. The audience will follow them, and they are willing to pay. Julia the numbers are intriguing. What percentage of their viewership is coming from international versus the amount of money they draw from these places . There is a disconnect of their. There is a disconnect there. A lot of the viewership takes place overseas, and yet most of the revenue still comes from the United States<\/a>. They think, what we need to do is a better job monetizing that. It is like having the wwe network helps. Most Wwe Network Streaming<\/a> product is, the content is in english. Part of what they are thinking, we have the big events like wrestlemania to broadcast in eight languages. Part of what they are doing is figuring out, we can sell one product around the world, we just need to tweak it. We need to make sure matches are available in different languages. We have wrestlers from different regions, some good guys and some bad guys. They are in the midst of figuring that out. Julia in the pursuit section, marvels new superhero movie black panther, carol it sold more tickets than any superhero movie ever. Julia it basically is having a perfect moment. It the movie of the year. Maybe one of the movies of the decade. It is a big deal. Julia we talk about it being unapologetically afrocentric. The timing couldnt be more pertinent. What we write about in our is, it feels of the moment with black lives matter, and what donald trump has said about africa. It takes its African Heritage<\/a> and wraps itself in its. The designs are afrocentric, the clothes and architecture. It is a powerful statement at this moment. They have been planning this movie for years. D. C. Comics said they need to diversify their comics. And the kind of superheroes we have, and what they look like. They have been planning this a long time, and have been smart about having women characters, characters of color. Characters people have not heard of. Black panther is not a huge superhero. Going down this path was a great decision. Julia it wasnt one of the big superheroes. Wakanda, which is a technologically advanced nation, and there is speculation that he could be a contender for a future black james bond. Idris alba, step aside. People are wondering when are we going to get a bond of color. Idris elba has been mentioned, and approached, but Chadwick Bozeman<\/a> is so good. He is so amazing at the action sequences, you cant believe it. He is going to be the new action hero. Julia his bodyguards are all women, and make kick bottom bottom betterck than anything we saw in wonder woman. There are incredible woman women in this. Everybody in it is good. It is empowering on a lot of levels. Carol you would have thought that would create an baby boom in china. Not exactly. Julia so much excitement in 2016. Carol now they are worried about population growth, and aging population, having a future workforce. They talk about a demographic time bomb. I love this story. Julia the problem is having more children is expensive. Implications for housing. Education. Families are realizing they cannot afford to do it. Now china needs to have a rethink, how to adapt this policy. Carol some of the policies have not created the effects they wanted. Julia one of my favorite stories, black panther, beating all records at the box office. Bloomberg television is up next. Show me the olympic winter games like ive never seen before. Xfinity x1, yeah, i always know the scor. Triple corks in 4k. Lookin so sick. Stream live on every screen, every win, every trick. 2000 hours of coverage, get your mind blown. 50 olympic channels, yup, youre in the zone. And if theres something that you want to see, pick up that voice remote and just say show me. Experience nbcuniversals coverage of the olympic winter games like never before with xfinity. Proud partner of team usa. Emily im emily chang and this is the best of bloomberg technology, where we bring you all of our top interviews from this week in tech. Coming up, we will hear from Goldman Sachs<\/a> president and co t coo. Dick costolo joins us. 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