Have a plan to make up that money. Jason there is editor joel weber on what to look on in the double issue. Joe the cover story is all about teslas autopilot which may be you have heard about it because it is a advanced Cruise Control that might put tesla on a path towards having self driving vehicles. Carol questions about how to get there. Tesla has a rough draft of something it things will become the future. When you are driving next to a tesla, the driver could be an autopilot already. Because of that there has been death. The deaths dont look like normal deaths. But there is a bigger ethical question which maybe it is all worth it. China, in theto headlines, who is selling what to whom. You have got a resurgent merchant. Joel one you have not heard of in the west. Clay thompson signed two years ago a huge deal with this company. It is so interesting. We can talk about trade war and the nba being the most recent one. We were talking about what is a different way we can talk about china and the trade war and the nba . It came up because it is a company that is uniquely chinese, only been around since 1991. Can it scale internally in china and see it grow internationally . Carol now china really wants to present brands to the world. Homespun brand and doesnt have the same history nike or a deed as has. How can you create something from the ground up . Carol what is up with that . Joel these are correspondents. He found highspeed internet in alaska. The Northwest Passage. Not everything is as it seems. Turns out the real entrepreneur and driving force behind the project was good at forging signatures to the tune of 1 billion in contracts. Carol a lot. Jason this is a going concern even though the founder is in jail. Joel she is doing time, but turns out the idea was good and now people are able to get highspeed internet in a place they would not have had it. Carol lets get to a breakdown of the president ial debate in ohio. With is here back to help us understand everything that is going on. Great to have you back. Big week for the democrats and notably the first of the democratic president ial debates where the i word took center stage. Ryan the first part of the debate was an inkind contribution to the impeachment effort. Everyone agreed donald trump should be impeached. They had slightly different takes. Some of them talked to ukraine. Bernie sanders brought up in monuments. They all have strong feelings. Tom steyer and elizabeth warren, people pushing for it the longest, should have benefited more but did not appear to. A lot of timeent talking about impeachment. I also feel it is a big shift from september. Everyone going after elizabeth warren. If you did not think she was the front runner according to the polls, you definitely thought she was in terms of how many people through haymakers at her. They came out swinging against her proposals, questioned her directly. She got into a back and forth h buttigieg, geithner biden, clover charter. There were people attacking biden and even direct defending biden. Cory booker saying his son had done nothing wrong. Think so what do we happens next in terms of the winnowing of the field or at least clarity about what the front pack looks like . Ryan this race will be frozen for a while while the impeachment plays out. It is sucking all of the oxygen out of the room and it is hard for the candidates to unveil anything new or get policy. That could benefit those of them who like going door to door and doing the grassroots stuff, states like iowa where that helps. The National Conversation now is completely distracted. Jason it could be the worst thing the u. S. Economy have to itself. Fear something we have heard about from the likes of the biggest bank ceos. Carol we will look at the risk of recession. If you thought the bank of japan pulled out all of the stops, it is taking a stab at pushing up on you. Jason this is Bloomberg Businessweek. Jason welcome back. I am jason kelly. Day on the us every radio at 2 00 wall street time. You can catch up on our daily show checking out our podcast. Jason you can find us online at business week. Com and the mobile app. Carol to the economics section, the question of recession, when will it arrive and how bad will it be . Jason there are signs this long expansion may is starting to lose steam. Economists are not seeing the fundamental indicators that predict the downturn. Carol it seems to be all about sentiment. We spoke to our editor about what makes this different. From history we know they are triggered by a spike in inflation followed by a spike in Interest Rates. Oft causes and unwinding either economic successes or financial excesses. , thetime inflation is low fed is cutting and we dont see any bubbles, stock prices dont seem to be out of sync considering late rates are still low. Why is there so much talk about recession . As we joked around, it is geopolitics, stupid. It is an external shock that is selfinduced because we started this trade war but it is causing uncertainty that business investors are not investing. They are not spending and creating new capacity because they are afraid supply chains will start unwinding. Rates bywer interest the federal reserve. They are already low but lowering them will not give businesses confidence. Christina it doesnt change the outlook. A good weekend that it could weaken the dollar but it doesnt change materially. We talk so much about the strength of the consumer amid all of this. There is this notion that at some point businesses curtail spending. They curtail hiring. People start to get more worried about their jobs or promotions. R bonuses or raises but we dont see any signs of that yet. How is the consumer looking . Christina the consumer is feeling good because they were late to harvest the fruits of this tenure expansion. Itpanies and investors felt first. Wage growth has been picking up in the recent year. Hiring even though there has been a wobble, still a high, sustained pace. We dont see yet the consumer has lost their nerve. That is going to be one of the things people are looking at. And how companies, the feeling is that at some point the trade war may cause to start dialing back on hiring. Carol we have more on sizing up the recession risk. Where chart that shows us we stand, looking at the economics recession indicator. The probability of a downturn in the next 12 months. Relative to this time last year we are slightly elevated, but if we take it back and look at a historical basis, specifically the Great Recession of 2007, the odds are lower. Risk could be higher but at the end of the day it is not time to fully panic. Look it is stark when you back at the previous recessions, the spike was more pronounced leading into it. Thank you so much. When you are worried about unconventional recession, you wonder if conventional Monetary Policy can do anything to stop it. Carol the bank of japan has tried everything to get their economy moving and they are not done. Editor kris kringle inbred. Christie lynn brent. Desperate innovation because it is like by necessity they are leading the world into this new area and trying to basically nudge up growth. This is a country that brought us negative Interest Rates and qe, quantitative easing. Now they are doing something which could be a possible. Carol dont tell us that yet. Tell us how long japan and why they are the negative poster rate child. They have been doing this a long time. Sending rates negative. When they did not succeed, they did qe in 2001. Way ahead of everybody else. Remind us also because it is important the economic backdrop for japan, because when we think back, you go back to was anly 1990s, this economic behemoth americans were terrified of in many ways. Intervening couple decades have been ugly. Christina there was a big property bubble, asset bubble and then deflation set in. They have been fighting deflation. Not just deflation but the country is aging. It is downshifting. Growth has downshifted in a permanent way. They have been trying to kind of sort of juice the economy by any means possible and they have succeeded. That used to be this pattern of falling into recession every other year. Basicallytest attempt is designed to attack a problem that is basically twofold very one of them is confidence, consumer and business. Yields on longterm bonds have fallen to a level where it basically, the message that gives the market to consumers is that out in the longterm we still dont see any inflation. We dont see much growth. Bank of japan wants to bring up longterm yields also for another reason. There are 40 million pensioners in japan. That number will keep growing. Those people are being utilized in their savings by the low yields. The question is how can you bring up longterm, yields on maturities while at the same time telling the markets you are in a stimulus position and want to keep shortterm rates low . It is an experiment. But some people believe it cannot be done because the thing is the boj has said they are willing to even stop buying certain kinds of bonds with maturity of 20 years and over. When they do that, other actors would step in to buy. Then they will be spoiling their attempts to have prices go down and you go off. Carol keeping longterm rates so low, the signal it sends to the world at large and the folks in their economy, the outlook is not great. They are savers rather than spenders which you cant jumpstart the economy. Christina if it is flat on its back for that long, you got to think is my retirement safe . Carol everybody is watching. We have this low rate and negative rate world. The u. S. Has not gotten there yet but we wonder how we come out of this time of negative or low rates and what is the outcome . Christina we all used to be afraid of japan as a competitor. Now we are afraid we will become japan. Jason trading commissions are dead but you traders will live on. Diversity and investment banking, there is an algorithm for that. Jason this is Bloomberg Businessweek. Jason welcome back. I am jason kelly. Carol you can listen to us on the radio, sirius xm channel 119 and a. M. 11 30 in new york, 1061 in boston, washington, dc. Jason and in london on dab digital and the Bloomberg Business app. Big shakeup in the world of online stock trading. Commissions are going to zero. Carol that is a big hit to revenue but the companies have other ways to make money. Towardss been trending zero. When you think back to the 70s. T cost 200 to trade a stock it is mindboggling today. Schwab came in, there was the 1970schange in which ended this fixed price commissions and allowed brokerages to set their own commissions. Schwab said i am going to cut mine. He said i will be 70 and the was born. Rokerage Era Computers took over in the 90s and it chiseled away at the fees. It was like 13 to trade on schwab in 2005, five dollars recently. You startups were coming in. Robin hood allowed investors to trade for free. Allowingerages started etfs. It was clear the pressure was building. The interesting thing if you are are theyr is how making money . They are not charging commission. That is what we get in to in the story. We did not see the stock prices go down but how are they making money . They have other ways. Dont worry about them. Howif you dont know company is making money, chances are you are the product. It is what is true of facebook and google, Free Services but you, your eyeballs and personal data is valuable. Schwab, for one of them one of the most important ways they make money is on the cash you currently do not have invested. Jason they make money with your money. With your spare powder. Inwab has 3. 7 trillion client assets on its platform. As of august. 265 alien dollars is cash. 265 billion is cash. That allows schwab to invest it and make money off of that cash. interesthe clients on that cash. It is relatively low. 0. 1 . F 1 big balances, yield is low, you can make better return on your cash elsewhere in Money Market Fund and Traditional Bank deposit accounts. It is not convenient for a traitor. Some amount ofp cash in case they see a stock and want to buy. Schwab is happy to take it and reinvest it. Carol they make loans to folks that want to do trade. Marginal lending if you want to lever up, there is Services Like that. You want to short a stock, they will loan you the securities and charge you on that. One of the interesting ways these Companies Make money and it is controversial, payment for order flow. Place orders to buy and sell certain stocks, there are Companies Like citadel, virtue financial, electric market makers, they would be referred to as highfrequency traders, they will buy up to order flow from these companies and match it internally. They dont take it to the stock market. Foryou want to buy a stock it for you are selling 9. 99. They will internalize that and make a cent per share. You do enough, the pennies add up. That is one example of the evolving relationship between technology and finance. Carol there is another fascinating story. Dni, try to do better on they are turning to ai. Erik schatzker joined us to explain. Erik it is about time someone intelligenceicial to the recruiting process because this industry, for all of its efforts, is still dominated by white men who are typically elite college educated. That is going to need to change. It needs to not just because if because of changing times but because these firms recognize the bigger your talent pool, the better the quality of your recruiting and ultimately the better your employees. We are talking of investment bankers, mergers and acquisitions, restructuring. The same logic as i say it applies to Companies Worldwide applies to wall street. The challenge is volume. It is difficult to fan out across hundreds of universities in the United States and opened the recruiting process to the degree that it can capture everybody unless you put technology to work. That is what this is designed to do. It is a screening process that surfaces candidates regardless of skin color, background or any other traits that might sway a recruiter. Tell us about the algorithm. You said it takes out any kind of color, ethnic background, sex. Bias is thecious were used in the recruiting industry because if you sit down might finde, you that person appealing for reasons other than qualifications. That person may sound like you. That person may enjoy some of the things you enjoy. That person may have played lacrosse. If you play lacrosse, you might be inclined to hire them. The person may not have the right attributes to become a topperforming banker. They might be appealing to you as a human being. That is not a good way to recruit. You bring Artificial Intelligence into the process by designing a model. The model is built using the characteristics of the topperforming employees at each firm, having candidates fill out profiles and then running the profiles against the models. That is the algorithm in action and it brings out a score or the higher the score, the better the fit the candidate is for that individual firm. The models change by firm. Not every firm is looking for the same things or values the same things. Firm do theat one same things as bankers at another. You need to customize it to make it effective. Jason tesla is on the cover and it is all about whether regulators should be steering their effort to test Autonomous Cars. Carol highspeed internet to the arctic, sounds like a good idea but in the hands of one entrepreneur it became a scam. Jason this is Bloomberg Businessweek. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. Plus, get 250 back when you buy an eligible phone. Thats simple. Easy. Awesome. Call, click, or visit a store today. Carol welcome back to Bloomberg Businessweek. Jason still ahead, while china battles the nba, a chinese Sportswear Company is getting set to take on nike. Carol for those who like to ski, who doesnt . Pursuits looked at the hottest hotels in the coldest places. Jason tesla wants to be the First Company to put an Autonomous Car on the market. They have been putting their Self Driving Software in cars since back in 2015. Carol that means Experimental Technology is getting a test on a real road with fatal results. Our reporter says there is no easy way to quantify the risks it poses. You would think it would be relatively easy to tell because there are so many miles they have got under their belt. Tesla has such good data about what these cars are doing. But it is actually a mystery to outsiders exactly how dangerous this technology is. Regulators have basically, up until now, not taken any action. They opened a defect investigation that closed without ordering a recall or forcing tesla to make any changes. Hard tos actually quite figure out how safe these cars are. The kind of positive case is that tesla says, look, humans are always supervising these cars. You have all the safety of a human driver, its just that the car is doing things to help you. Almost like interlock breaks or something. Am an additive safety feature. But the skeptical case is when you take so much responsibility from the driver, they get lulled into a sense of complacency and get distracted. It is actually very difficult to when hention supervising system appears to be working perfectly well. This is a problem airlines have had for a long time. Autopilot on airplanes is so good that they sometimes just get distracted. The pilots zone out. Jason you mentioned regulators. What is the issue . Have a just not caught up to where the technology is . Can they not fully comprehend where to go . What happens with them . This is a very different federal carhe ones regulars are used to. A more straightforward problem , you know, a Company Makes tires