Of england governor. That is right. Michael lewis, the author of liars poker, the big short does a book review of mervyn kings new book. In the process, he talks about what a great professor he was because he was his teacher, but he also talks about this one plan that mervyn king comes up with that would really help the Banking System in his view by simplifying what gets bailed out, what doesnt and protects banks and in a much simpler way, kind of seemst of so simple, hard to believe that people are not already talking about it. Arol it is not like he wrote book about pay, this is what it is like to be the head of the bank of england but he wrote something useful to avoid another financial crisis. Mervyn king says anybody can write a book about how they save the world and what he wanted to do was talk about what he had learned and possible solutions, so one of the things he talks about is separating the boring parts of the bank, as he puts it, from the more exciting in oneso deposits, etc. Part of the bank. He doesnt say they have to be separate institutions but they have to be split up from the sexier investor banking parts with assets are much riskier. Carol some great advice. In the markets and finance section, you guys really take a look at what has been going well at hedge funds because it has not been a good year for these guys. , there aree funds many more as time goes on, yet, they are not doing so well. In some cases, they are not keeping up with the s p 500 has done. It varies a lot, but just when you go into a hedge fund, you are paying usually 2 of assets, plus, a portion of the profits. It is just harder to make money as a hedge fund these days. Usually, hedge funds have exploited a certain trading philosophy or algorithm and it is just there are so many in the market and they are steering away from some of the riskier Asset Classes and they are also did looking at equities and no one has come up with a special sauce or not enough that come up with a special sauce for them to look like an attractive alternative. Carol you kind of ask the question, is the hedge fund model broken and you go into that. And politicsy section, a take a look at Princeton University and neighbors who have gotten perks from the university but the neighbors are saying, enough, i want you to pay more taxes back to the city. Ellen universities are nonprofits and they do not have property,l taxes on etc. , and people in princeton are saying, we want to do pay more taxes. You have so much money and you are making money and you need to chip in more. We are paying incredible property taxes, 17,000 a year, whatever it is, and they think princeton should chip in more. Carol we are talking millions of dollars more. Ellen we are talking a lot of money more and princeton does not think it should have to, but you even have somebody who is a former princeton professor in the story saying, i think they should pay more and this has come up in other places. Similar battles are coming up in new haven with yale. It comes up every two years. Carol lets talk about the cover story. They are looking to break their addiction to sugar. It is kind of the backbone for somebody for some many of their products. Ellen nestle does lots of things. Carol haagendazs bars, right . Oh henrys, lots of good stuff, and they have other businesses, too, it is pretty diversified. A make instant formula, but one of the things they invest in now are products that would basically cure you once you have problems because of your sugar addiction. These things are all in the works. You will not find them on the shelves now, although, they have some products that are meant to help you on the shelves now, but a research lab set up in switzerland and they have a lab to test these possible products. They see it as the future. Carol there are lots of details and i spoke to Matt Campbell about it. Matt as we say in this story, this is built on a foundation of sugar. Stle is built on sugar but there is a war on sugar if you look at what governments are doing. They are looking at companies that make sugarbased products. What is going on specifically . Matt it is not news to anyone that there is an obesity epidemic in the world, europe, developing countries, latin america and asia. Governments are seeing Health Care Costs spiral out of control and they are starting to think about sugar over the bit like to think of tobacco. There are significant differences, but i think there is significant fear in the Food Industry that big food is the next they tobacco, if you like. Carol what is the impact on nestle . s candyles and nestle business, chocolate, cookies, candy bars, has shrunken for the last three years and there is a shift going on in Consumer Behavior and that is driving nestle to look for new ways to grow and new ways to keep the. Ata they have built it has become europes most viable corporation, which is an amazing accomplishment. They do not want to let that go. Carol so what are they doing . Theyre looking to invent and sell medicine, tell me what they are doing. Is spending a lot of money to turn itself into something that looks a lot more like a Pharmaceutical Company benefited company. Research extensive operation in switzerland that machine,ome sequencing brain labs with laser powered microscopes, very Sophisticated Research being done by people far, far more intelligent than i am. They are looking into the gastrointestinal system, metabolic health, and the idea is to develop medicines and therapies that are derived from food and delivered by food, so it is a revolutionary way of looking at medicine and food. May potentially come with a prescription required from a doctor, some overthecounter and some on sale already. Matt that is right. There is a slate of these products available from nestle already. They have invested in the company in colorado which makes ona, aing called exc powdered milk shake, that they say can benefit people with alzheimers disease. The fda had some things to say about that a couple appears ago and they were not thrilled about some of those claims. There are lots of questions about the efficacy of other products nestle might introduce in the future, but there is an existing stable of these products. Carol could we ultimately have a company, nestle, that is selling kind of a problem on one hand and then kind of a solution on the other . Matt i think that is exactly what we may have, carol. Lastly, while it is certainly trying to do things like reduce sugar, salt and fat in existing core businesses, it will never get rid of those businesses. In largel always be part the candy company, but it also wants to sell medicine so you can spend part of him are consuming nestle candy and then later consuming nestle medicine, while i will leave others to speculate about the ethical implications, it sounds like an interesting business opportunity. Carol have you tried medicines available . Matt i have not. The ones that are available so far are very specific for things like major surgery, people with very obscure Metabolic Diseases and not for me yet. I have had plenty of kict kats in my day, though. Toid respect to we spoke the photographer. Nestle has just been pumping is full of sugar or as long as andof us can remember contrasting that with the fact that they now want to get into health food. Carol it is such a contrast. I think of that and look at my candy bag, going out stuff under my bed for many months and this is what they are known for. The whole part of photographer as a direction, imagine this is halloween and youre going through your bag, eating things, dropping them on the floor and moving on to the next thing. David what were the concepts before this one in particular . Have three total. The other ones were less straightforward. We wanted to get across that these products they want to get into the medicine cabinet, certain things to get in the drugstore. So we had this medicine cabinet with the stuff in there are bandaids, toothbrushes and things like that but spilling out around the candy bars. The other one we played with was as if you were in the vitamin aisle and you see the little bottles with pills but all the labels are replaced with kind of nestle candy bars. We loved both the images and ended up using them in the inside, poet. For the cover, you wanted a bit of that immediacy and just loads of sugar in your face. Carol up next, alaskas future without oil. David also, exxons fall. Carol and the new generation of psycho fanatics. David all that ahead on bloomberg businessweek. Carol welcome back to bloomberg businessweek. I am carol massar. David im david gura. A look at alaska. It has so long relied on oil. The price of oil has gone down so much lately that it has left the state in bad shape and they are running out of oil. Carol it is amazing to think about alaska that has had so much money coming into the state and now it has a 4 billion deficit, so they are thinking of measures they have never thought about. Things like income tax, and they are trying to get it to legislature. David the governor of the state has rand plans on what to do it this date and unable to do any of that because of how dire the situation is there right now. Theyre talking about putting taxes on Oil Companies that have paid small taxes for a long time. 2rol we talked about the billion barrels of oil coming out at a day, but that has come to the end of the lifecycle. David it will be interesting to see what happens under the leadership of the walker. Look at exxon mobil, which lost its aaa Credit Rating since the Great Depression that has been held since the Great Depression. Carol what they are doing to keep that cold standard Credit Rating. There are only two Companies Left that have aaa ratings. Carol we are talking about Credit Ratings. Andrites, Johnson Johnson microsoft. Until recently, exxon mobil, but and theyowngraded them were not happy about it, but they did not do everything in their power to clink to it either. Carol which is surprising because you talk to the ceo and they would hold that up for the triplea Credit Rating company and that meant something. It also meant that when they borrowed, they could do it at cheap rates. Peter if you are going from aaa to aa, it does not mean you are at risk of default. It is a matter of the prestige value of having a aaa. Right now, it isnt only 13 basis point difference, which means point 13 Percentage Points. 13 Percentage Points makes the difference. Carol not much of a difference. Peter not much reason to do it because you want to have a little more that sometimes. Also look at leverage ratios for companies and you are looking at that typically go that to equity ratios and what have we seen the past two years . Peter we have seen more debt. Sincepretty noticeable 2006, this top up and how much Debt Companies feel company feel comfortable carrying on their debt sheets. Carol what made you want to look at this . Peter the news was exxon mobil getting downgraded and i went the ceo looked at what said back in march and he was still saying, i hope they do not downgrade us and sure enough they did. Himl it is important to and reputation. Peter it matter to him, but what mattered more was maintaining the spending projects he had and continuing the Shareholder Program of buying back shares and raising dividends. Carol i think you and i have talked about a lot of bloomberg and this cool idea that it borrowed a lot of money and the issued buybacks. Investors have left it in terms of what it does to reducing shares. It makes the company look so much better, but at some point, it has to play catchup, all the debt on the balance sheet. Peter i do not worry about a company that has fallen all the way down to aa. Plus, that is not where the problem is. The problem is more like, we see a big increase in the s p 500 and triple cs and that is the problem. The benefits of trying to start a comeback after a host of legal and ethical challenges. David and he was afraid of a bloodthirsty sociopath . Why people still love american psycho. Welcome back. I am david gura. Carol i am carol massar. A look at the rise and fall and future benefits. David the company that automates payroll for businesses. Carol members allegedly sold insurance without a license. As a turbotaxof for human resources, so it is a program that automates everything from health insurance, payroll, vacation requests and it is a onestop shop for businesses to manage the company. Carol it cut the attention of venture capitalists and became a pretty good size and it has worked its way to about 4. 5 billion. That is not kind of where it is today. Tell the tale a little bit of zenefits. Zenefits makes most money to commission that Insurance Companies pay when they sell an insurance plan. Insurance brokers are the name of the people who did this and this is the Software Version and it piggybacks on the oldstyle industries so Silicon Valley loves that. The problem is it is highly regulated. Carol with good reason. Yes, you want someone deciding insurance that knows about insurance, so every state has an insurance exam, requirements and as you are licensed in one state, you can get the reciprocal license in another state but you have to be licensed in whenever state you are selling insurance and. Carol and that is where they ran into trouble. They ran into trouble on that and and they have run into trouble in california, which is where they are located, san francisco. Says whatder and ceo they created, called the macro, which would allow people to bypass this one Online Training course, an aspect of it, and that you had to be on it for 52 hours and it allowed people not to be on it for 52 hours. Carol so they should not have . Done it thats so they should not have done it . Rights. Carol it is interesting. The company that was not doing anything wrong now seems to be doing not very many things right. Carol they got they got in trouble in and theya, washington, say other states have followed suit but they will not say which ones and they are facing millions of dollars in fines. Carol this involves wellknown players. You think of the venture capitalists to hind, airbnb and david sachs came in to help run the company. He is another wellknown investor that has been involved in paypal and so forth. What was his role . On the richly as chief operating officer and he was going to work with conrad and help zenefits grow into a better company. All of this came to light and conrad had to resign and david sachs was ceo and he is past with the turnaround. Carol what is the future of zenefits . What is conrad . Is he sitting on the couch somewhere . He probably is, but he is already planning his next company, although, we do not know what that is. We have heard some people say they want to get in touch with them. He grew this company to 60 million in three years and that is nothing small to laugh at in Silicon Valley. Carol he is revered to some extent. Does zenefits have a future . I talked to a number of customers that are frustrated, but i think so. David a look at the new generation of american psycho fans. There is a musical on american psycho, based on the book about a serial killer. When of the reporters goes to a show with yale is this school students. What do they make of the show . They kind of come out being conflicted. They go in, they like it, and we whoally quote one person said something to the effect that it changed his mind set and they spent the next day shopping for duty products. David why is this show out now . Piece from thed 1990s, created controversy, why is it out now . Of a broader trend. There have been a lot of Broadway Musicals that were recognizable movies and tv shows, so it taps into that. I think it is also coming out now because we are in the opposite error that Something Like this will stand out more than it would have 10 years or 20 years ago. David up next, the growing influence of Donald Trumps son in law. Carol and how that Tourism Industry depends on criss angel. David i am david gura. Carol i am carol massar. We are inside the magazine headquarters in new york. David Donald Trumps powerful soninlaw. Carol and the plan to out netflix netflix. David and which virtual device is right for you . Carol it is all ahead on bloombergs business week. Carol we are here with ellen pollock. There are many more must reads in the magazine and that includes the in focus on section with a deep dive into energy. We took a look at louisiana congressman. Is the majority whip and mr. Oil and gas and he is fighting against obamas proposed rules against oil drilling on offshore drilling, and he is doing things like taking democrats and republicans on helicopter trips so they can see the offshore drilling and Oil Platforms and he is sort of a big ally oil and gas. David he takes folks on trips and taking in a lot of money. Ellen he is. The industry is the biggest under for his campaign. David you look at Artificial Intelligence. There are all these startups with bots and there is a dirty secret about this. A lot are powered by human beings. Not by robots. Ellen thats right. Were talking about the bots that are personal assistance. You can ask them to do things for you, set up your schedule, and it turns out some of these companies, and they are all younger, there are human beings behind the scenes taking sure they understood the instructions and carry them out correctly. The bot is trying to act human, but behind the bot is a human pretending to be bot. David you have to think about that for a minute. Carol so the Artificial Intelligence is artificial . Ellen artificial and kind of intelligent. David a number of the companies are starting out and people were crazy hours because these schools field requests at any hour of th