And why the socalled techlash has only made facebook stronger. Lets start with our global cover. 10 straight weeks of when we really stepped back and thought about, what is a perspective that we can bring to the story that has not been brought . One of the things that came out of the conversation was, wheres this angst coming from right now . And one of the things that we realized was that its actually about 2047. When hong kong was handed back to china, one country, two systems being this guiding idea for how the city would be managed, 2047 is viewed as the Expiration Date of that. When you think about the stakes of this situation, five years out isnt enough time to solve that. 10 years out isnt even enough time. So really our thesis for this story by Matt Campbell was that the angst that were watching, the fury that were watching, is ultimately about 2047 and hong kongs countdown to 2047. Jason when you think about sort of the nexus of business, economics, politics, there are few other places in the world where it happens in such sharp relief as hong kong. Joel exactly. This speaks to the dilemma that president xi has. If you use force right now, obviously the situation could really escalate really quickly. On the other side, if you use a little patience perhaps, maybe the students who are a large portion of the protesters might go back to school in september. There is this dilemma between use force or be patient. The word thats now being dropped is terrorism. Terrorism would be perhaps justification to escalate and have things turn to force sooner rather than later. That obviously, all eyes on hong kong. That would become a much, much bigger challenge for the world. Jason for more, lets check in with dan ten kate. Hes bloombergs managing editor overseeing all of our government coverage in asia. He joins me from hong kong late in the evening. Dan, thank you so much for joining me. Give us a sense of what we have seen there this week in hong kong. Dan this week, we saw unprecedented scenes of the protesters going into the airports and essentially grounding all the flights. In hong kong, this is very unusual. I was in thailand in 2008 when they shut down the airports. That ended in a coup. That is not going to be the case here. Chinas firmly in control of the government here and of the territory as a whole. Taking over the airports is a drastic move. The government were fairly tolerant for the first couple days, allowing them to occupy the terminal. If you were flying into hong kong, you would see masses of people coming in. This severely affected the economy and significantly raised the stakes in this conflict. Jason dan, you provide such great historical perspective, being there on the ground. The story in this weeks magazine takes us all the way, in many ways, to 2047. Help us understand what may be to come. Dan 2047 is the date that the basic law expires. The basic law is what was put in place when the british handed over hong kong to the chinese in 1997. That was actually negotiated in the 1980s under margaret thatcher. The idea was that these two systems would converge and the democratic system would prevail. Right now, we are nearly halfway through that period and that hasnt happened. We have had significantly, over the past couple years, we have seen that system erode. Hong kongers see a future where they are subject to the communist party and they are fighting against it right now. Jason we see these pictures. For people in the Business World, for people in the financial world, this is not the hong kong that they know. This is a place that has been central to the global economy, a home to many expats from around the world. Whats at stake for the Global Financial system here . Dan a lot is at stake. Hong kong is one of the premier financial hubs in asia. It facilitates a lot of the investment that goes into china and that goes out of china. The chinese use hong kong to raise money for state run companies, to invest around the world for the belt and road initiative, which is a massive policy for president xi jinping. To lose hong kong as an International Financial center, to make businesses wary of investing in hong kong because of political stability is a significant worry. It is a huge port that does a lot of business. What we are seeing is that expats, people who have been here a long time, are very, very worried about how this is going to end. Many people think it will end very ugly. There is a lot of money already moving out of this place. Jason dan ten kate, thank you so much. Our other big story this week wall street whiplash. Sell off for stocks and sounding the alarm after the u. S. And the u. K. s yield curves invert. It is historically a harbinger for recession. Here is economics editor peter coy to make sense of it all. He is apologizing for something we wrote before most of us were born. Peter first of all, what is an inverted yield curve . It means that the longterm Interest Rates are lower than the shortterm Interest Rates, which is the reverse of the normal condition. It can be a harbinger of recession. What happened this week we had already had an inversion between the three month and the 10 year. Now the two year and the 10 year inversion, which was a considered stronger signal of impending recession. Not necessarily tomorrow, but maybe in 18 months or so. That was the big news of the week. It was one of the big factors in why the stock market did badly. Jason this is an economic story. It is a business story. It is a market story, but it is also a political story. Peter donald trump is getting nervous because if a recession hits in 2020, it will be bad for his reelection campaign. He has taken off after Federal Reserve chairman jay powell, saying the fed urgently needs to lower Interest Rates. If he did that, if the fed did that, the inversion would go away. Shortterm rates would come down and we would have more of a normal yield curve. Jason talk to me about the story you have this week. You go all the way back to a businessweek cover story 40 years ago. Peter 40 years ago, august 1979, businessweek a cover story called the death of equities. People are still giving us a hard time about it because, of course, equities have done quite nicely. The article came out at a time when inflation was very high. What we were observing was that stocks did not seem to be a very good hedge against inflation. What was a good hedge was gold, diamonds, singlefamily homes, and, my favorite, stamps. Jason that was my favorite too. I cannot believe that was a thing. Peter can you imagine . What happened after that is that the article was right for three years because of stocks continued to go down and down. In 1982, after paul volcker, the chairman of the Federal Reserve, managed to squeeze inflation out of the system through two punishing backtoback recessions, the conditions were set for the rebound. If you look at the market now, the s p, if you invested in dividends over that period of time, we have 7000 since that article came out. Not bad for a corpse. Jason a story right in the shortterm but very wrong in the long term. Glad that our readers are keeping us honest and that we are owning up to it. Peter coy, thank you. Coming up, as that 2020 election approaches, are the polls prepared for hackers . Plus, rebirth in baltimore. Ecommerce reviving the american citys neglected industrial hub. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Im jason kelly. Join us for Bloomberg Businessweek every day on the radio from 2 00 to 5 00 p. M. Wall street time. Also, catch up on our daily show. Listen, subscribe to our podcast. Get that at itunes, soundcloud, and bloomberg. Com. You can also find us online at businessweek. Com and on our mobile app. As the 2020 election approaches, it is democracy versus the hackers. This weeks solution section exposes how efforts in illinois to protect its voting systems show how vulnerable states are still to outside attacks. Here is editor dimitra kessenides. Dimitra we got a little preview when Robert Mueller went before congress a few weeks ago to testify. Putting aside Everything Else about that event, he kept hitting on this message, that this is a very, very serious threat that we are confronting. That is what the takeaway was from that report first and foremost. I think when we get into the details like we do in this story that Kartikay Mehrotra has written about focusing on illinois, but thats emblematic of what is happening across the country. It is a huge problem that is becoming bigger and that is really hard to contend with for a number of reasons. Jason illinois got hacked. Dimitra one of two states that were clearly singled out in muellers report and that is really owning up to the hacking and really trying to say this is what happened to us and we do not want to repeat this. We really want to be prepared. What is happening is there is a concern that the hacking of 2016 was almost like a practice run for what they are going to do in 2020. The number of parties is going to be more. The number of countries that are doing these kinds of geopolitical moves we are aware now it is not just russia. It is north korea and its china. The resources you need to contend with this are tremendous. While a lot of resources have been devoted, it is a fraction of what is necessary. Jason we are talking low double digits percentagewise of what a state like illinois would need. Lets talk about the electoral system. One of the things i was reminded of in this story as well is it is incredibly complicated and it is really decentralized in a lot of ways. Dimitra it is statebystate. It is localities. You have election boards and secretaries of state that deal with it. You have different positions and you really have to figure out how you are going to persuade, since it is not centralized, all of those people about the necessity to really invest. The first thing this comes down to is money. A lot of them do not have the money and they are not getting quite as much as they need from the federal government. When you are saying try to find the money, 30 million more than what you are devoting to actually contend with this, they look at it and say, well, who are we and why would anybody want to hack us . Jason that is exactly right. That was such an important point of this. You have local officials that are essentially saying, i know they might go after voting in chicago or the state of florida. That is the ground zero for a lot of this and you talked to the governor of that state, ron desantis, as well. But a small county in kansas or town in kansas, theyre going to be like, who cares . Dimitra but a lot of damage can be done there. It is not just messing with the voting machine. It is getting at databases ahead of time, messing with the roles, with the names of voters. Ways that they have that will just really create a lot of chaos. No confidence in the system ultimately. What you are also doing is a psychological kind of war. Which is going to lead people to say, why should i vote when this is all happening . Jason from illinois, lets go east to maryland, specifically baltimore. A renaissance story that may set a template for other American Cities hollowed out by forces of globalization. Here is reporter tom maloney on a 3100 acre fixerupper. Tom this is a story about Tradepoint Atlantic, which is a development thats on the edge of baltimore city. It used to be called sparrows point. It used to be one of the biggest steel mills in the world, at its peak employed more than 30,000 people. Then started falling on hard times at beginning of the 21st century like a lot of other steel sites in the u. S. And went through a series of owners. It finally went bankrupt in 2012 and was bought out by this company hilco, which is really more of an asset stripper. After spending some time at the site, a couple of years, i realized it could be incredible valuable as a logistics center, which is what it is becoming today. Jason you have some big names, wellknown names in the Business World who have been betting big on this, not the least of which is kevin plank from under armour. Has been one of the biggest champions of the hometown of his company. How does he play into this narrative . Tom under armour opened a facility there very recently. It is 1. 5 million square feet warehouse. That is the size of 23 football fields or Something Like that. Just an enormous ecommerce facility. What was interesting speaking to the guys at Tradepoint Atlantic, they said even though kevin plank is a really big baltimore booster, he was looking across the east coast for this facility and he just saw that Tradepoint Atlantic is unique in a lot of ways. What made it attractive as a steelmaking facility, being right on the water and close to rail and the interstate highways, isthe same thing that makes it ideal as an ecommerce logistics facility. They can have ships unloading goods right there and then get them straight onto trains, straight onto the highway. 24 hours from about a third of the u. S. Population. Jason still to come, my exclusive interview with private equity legend don gogel on how to invest in a period of chaos. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. I am jason kelly. You can also listen to us on the radio on sirius xm channel 119, also a. M. 1130 in new york, 106. 1 in boston, 99. 1 in washington, d. C. , am 960 in the bay area, and london on dab digital and through the Bloomberg Business app. Now to a businessweek exclusive. Don gogel has worked at private equity firm cd r for three decades. He became the companys ceo back in 1998, overseeing about 18 billion in assets. He has seen some things in his time. In todays period of chaos, hong kong, brexit, volatility here in the u. S. , i asked him what role pe plays right now. Don i think private equity can be a bit of a buffer during these periods. To be fair, private equity firms, virtually all of them, are not foolhardy and they do not say, well, we are going to buy on a downturn. One of the challenges that private equity has now to play that buffer role is it is harder now to deploy capital than it has been in a while. I say that because, notwithstanding the chaos, valuations and private equity transactions have remained stubbornly high. They have been growing over the last four or five years. You cannot reverse the laws of supply and demand. With all of the money that has been raised, as you know, this dry powder that is available, the animal instincts of good private equity firms are trying to put it to work. The equity values, valuations, have moved up and up and it is harder to put money to work. The only way you justify it is if you see this not unbroken but longterm trend up. Given the chaos in a number of industries caused by factors that we do not need to enumerate now, all you need to do is watch bloomberg and you find out those factors, it is harder to put money to work. Some of the technical factors are still favorable, although High Yield Fund flows have been diminished. I think there has been 38 straight weeks of people taking money out of High Yield Funds. There is Still Available capital. It is a profitable product line. There is still investor demand. The capital will still be there. There is plenty of equity there. It is a matter of selectivity, but in these periods of time, there is a rush to businesses that seem to have a lower risk profile. Then the price gets bid up. For us and many others, navigating your way to find the right transaction, the right risk reward, the right capital structure, the right management team, the right prospects, the right path through regulatory maze, if it is a business Like Health Care where we invest often, it is complicated. I still view it as a flexible buffer that can normalize economies and companies when needed. Jason you have the ability and probably the need to be talking to ceos all the time, both ceos of companies you control, ceos of companies you might want to control. You have a whole network at your disposal. If you can generalize how the leaders of Big Companies and maybe Small Companies are feeling right now, what would you say . Don there is high anxiety, appropriately so. Anxiety about the economic and macroeconomic political conditions that you described. I think Public Company ceos feel under more pressure than ever to show at least some level of performance improvement. Its a function both of stock market, which gives you a report card every day, activists that come in and let you know exactly what youre doing wrong and what they think you should be doing right, boards that feel that they have to respond to a lot of those pressures. If you look at the statistics, i am going to phrase it in a way that sounds shocking but it is just math, if you recognize it, about one in five s p 500 ceos change every year, that means that there is the ceo change in the s p 500 about every four or five days. That is just math. If you are the ceo, you are looking at those numbers and youre looking to the left, the right. You like to have eyes behind you and it is not that you do not trust your board or that people are not going to give you some time, but it is a measure of the environment that it is tough and ceo tenure is being reduced and ceos have a tough job in Public Companies. It is tough everywhere. Leadership is always hard. Now, the scrutiny social media, activists, shareholders, 24 7 global makes it very hard to be a Public Company ceo. Jason for my entire conversation with don gogel, including what he has learned from hiring and firing literally dozens of ceos over the years, check out our businessweek extra podcast wherever you get your podcasts. We turn now from anxiety in the board room to anxious students and graduates and the lasting burden of student debt. Here is the bus