Transcripts For BLOOMBERG Bloomberg BusinessWeek 20161105 :

Its not the sams club we know here in the United States. They have repositioned sams club. They mostly target small businesses. Its known for both purchases and discounts. In china, its about highend alex to affluent consumers who are willing to pay for Luxury Products and even walmart products that are priced higher in china than they are in other markets. Carol we are talking about 3000 for a rice cooker. Ellen my favorite is theres an ironing system that cost 4000 and comes with hours of instructions in your home. Oliver lets talk about this break down of the deal between get that and tronc. Ellen it was an unsolicited offer. It has fallen apart before. This time it fell bigtime. Gannett is the biggest newspaper chain in the country. They want to build a huge chain of newspapers. Tronc is the old tribune a company. They own the los angeles times. He wants to help save journalism. He did not want to give it up. The price was good. In the end, it dragged on for so long that the financing fell through. Carol another story is in the features section. It has to do with whats going on with the nfl and people arent watching as much. Ellen they are having problems on tv and nobody expected it. For broadcasters, it was a bright spot. People are cord cutting. They are streaming video on their devices. The nfl was a dependable source of revenue. Now it looks like fewer people are tuning in this season. It has a lot of people worried and trying to figure out why. Carol we got all of the details. Felix the nfl ratings are way down. For years, the nfl has been the biggest thing on television. It still is, but the ratings for primetime games have been down 19 or 20 . About 1 5 of the audience disappeared. Its a huge deal for the nfl and its media partners. Carol you quote a sports agent. He talks about the money machine. Felix its all dependent on television. The business model, the reason the nfl franchises are worth so much money and the stars of football make these big contracts, its all based on the success of televised football. If that starts weakening, everyone is left wondering what next for the nfl . Carol you mean merchandise . Felix all of it. Its a symbiotic relationship between the big media conglomerates. Oliver whats so particular is about whats happening right now. Its not like this has been a long trend. Its happened very precisely this season. Do they know why . Carol everyone is trying to throw out a hundred different explanations and theories and hypotheses. Felix the biggest thing and what the nfl says is we are in a huge president ial election. Theres a lot of interest in that. The Cable News Networks ratings are up. Once the campaign is over, our ratings will come back. Thats probably partially true. In the past, ratings have gone down, but not by anything close to what we are seeing this fall. Carol the big game was the sunday or monday night football. Now the have thursday night for all, there are a lot of college games. Felix it used to be scarce and people look forward to it. Once a week the teams played. There is a sense of anticipation that built up. Over time, they have eaten up more and more airtime. Its not just sunday afternoon, its sunday night, its monday night, its thursday night. They have games in london that air early in the morning. Maybe its too much. Theyve gotten a little too greedy and there is over saturation. Carol turning in the cover image was a job for rob barton. Rob a lot of times when we do sports stories, they are very specific. This is about many different things. Its hard to represent that visually. We did little bit of research about football watchers. I am not a football watcher. Every sunday night, they have games apparently. They have a very specific look to the graphics. We took one of those graphics and we listed all of the reasons why the story says they are not doing so great. Oliver i feel like that is a significant departure from what the cover is. Its normally very simple and gets its point across. There is a lot going on here. Rob there are so many things and they are so everywhere, everything from millennials two concussions. We are jamming them altogether. Carol there is so much going on. Its like the graphics of a football game. Rob there are robots. Its a very bizarre world for me. Oliver of next, what early voting actually looks like. We sent photographers to battleground states. Carol a donor learns how little 175 million and buy. Oliver welcome back. Carol in the feature section, and advocate for progressive issues inside republican conservative circles. He is a political rookie. He was a successful business guy, he sold the company for 200 million. He decides to devote everything, all his time and money to getting the republicans to shift on Climate Change. He shows up in washington last summer and starts spending money and trying to move the party. My story is about all the obstacles he faced and how much he had to change to find a way to make it work. Carol he went in with a mission of trying to get it on the republican platform. He wants to change the party. Lets start with the grassroots and lets maybe the problem is voters are not hearing it conservative voices talking about this issue. Lets try to reach out to them through a digital ad campaign, facebook and google and try to get their attention and tell them about the science. It did not work. People did not Pay Attention to it. Oliver did he start as a staunch climate supporter and an advocate of these ideas . Did he start as a republican mary the ideas with that . His dad was a big supporter in republican circles in North Carolina. He grew up and his experience in the Business World confirmed his idea. He is a small government probe business guy. About 15 years ago, he started to get interested in Climate Change and he goes and reads all the research. Oliver it sounds like he first had to convince himself through various means. He heard from business who were concerned and he did his own research. He was able to bring himself over to this knowledge. What were the impasses that he found within the Republican Party . Was it strictly ideology . Why was it so difficult to get other people to have the same experience . Thats a great question. Why is it when you put ads on facebook about Climate Change that liberal people agree with it and conservatives shut down, even if its coming from a conservative voice and above the partisan freight . Fray . When it comes to these issues that are also remote from our daily lives, theres nothing you can do today. Simon change or not. Its all kind of abstract. On issues like this, when people think about the science, they are trying to present a version of their identity that is acceptable to the people around them. Liberals are just as guilty of this where they reject the Scientific Consensus if its on the other side. When it comes to the storage of nuclear waste, there is a consensus that its not that scary. Liberals think it is. Its the same thing on Climate Change for conservatives. Oliver we deployed a Team Photographers to swing states. Carol this is editor allison hoffman. Allison we wanted to do a spread with voters. We realize we could do it before the election. Its been happening since october. Early voting starts in early to mid october. At this point, 22 Million People have already voted. We sent photographers to five swing states, for swing states and one newly contested state. We went to utah. Its a republican state, but voters there are having a tough time with donald trump. Its a state that ted cruz one in the primary. We sent a photographer to provo, utah. It has the lowest percentage of trump and clinton voters. Oliver in such a contentious election, how difficult is it to find people on the street to let you take their photograph. Allison it varied. Our photographers were very sweet about it. We set up a North Carolina race. Black churches have been running a sunday march. They take everybody out of the church use and marched to the nearest polling station. We went to charlotte and the photographer went to services and marched with that group. It was heavily clinton supporters. He did talk to some other people who did not come with that church group. He found some he was very proud that she was a jill stein voter. We had a mix. Carol what about nevada . Allison they voted for president obama twice. They have a democratic senator who is retiring. That state has been the scene of incredible spending in the senate race. Republicans really want to grab that senate seat. You have a mix of people coming out of their and we went to voters all over las vegas and even there, we had one woman who had retired to las vegas from new york and she voted for reagan and republicans in the past. She was voting for hillary. Its interesting to see people who were proud to tell us who. They voted early and did not want to get stuck in alliance. Carol a trip to a mexican supermarket proves all of trump may be right about one thing and oliver we talked to the reporter. There are more and more products in American Stores here every year. All i have seen is growth in this area. More and more starbucks, red lobster, everything you need in the u. S. You can certainly find here in mexico. We decided to chronicle that through the shelves. That is a supermarket here in mexico right outside mexico city. What we found is shelves that are stocked with american goods. Oliver what process brought these american foods into mexico . Was it about factories there . Was it preference . What drives it . Thats a good question. All of these foods, the point is they warrant made by an american factory. They were made in the United States and they were imported to mexico. Mexico imports food from all of the world. 80 comes from the United States. This is clearly a product of nafta clearing has both ways. Thats one part. Another is cultural sharing between the two countries. Carol its in informational piece. What you have shown is there is a lot of u. S. Goods going into mexico and that has resulted in jobs created both on the u. S. Side as well as the mexican side. Exactly. To make a lot of the finished products that are eventually exported, they will cross the border several times, as much as eight times, creating jobs on both sides. The data point from mexico is 40 of all finished products for expert, 40 are made in the u. S. That is a lot of jobs. Carol the product of the heroes of the economy. There is a silver lining. Oliver welcome back to bloomberg businessweek. Carol you can listen to us on radio. We are in new york and boston. In london as well and asia on the bloomberg app. Productivity has been growing at a slower pace. Oliver we found at least one number that coincides with that trend. Peter an economist noticed something thats kind of strange. Across a number of countries, when you have a higher proportion of 40 somethings in the workforce, you get higher activity growth. The most important thing in the worlds productivity growth. This was kind of news. It was also weird. Why . Some people, the National Research council took a look at it. They didnt buy it. The president s council of economic advisers looked into it and they said research has said they were right. There is something going on here. Whats interesting is at the time he did his work, a decade ago, the percentage was kind of falling. That was a drag on u. S. Activity growth. Back then. Now, we are getting to the bottom of that. The share of 40 something workforce is in up way up. Carol we are trying to figure out whats going on with the economy. It feels like we cant get the engine going. Does this explain it . Peter it explains some of it. I wouldve not thought this myself. Thats what the number show. Your next question is why would that be. I asked jason furman, he is president obamas chief economic advisor. Carol hes 46. Peter right in the sweet spot. Its a combination apparently of the experience you get after couple of decades in the workforce being positive and you are still vibrant. I am out of that age group. I can say that without any accusation of tilted it. You have the sweet spot of the best of both worlds is the theory. Oliver in the markets and finance section, americans are dying faster. Ben i looked at a study and actuaries are a profession that this is what they do. This is their main thing. They came out with a new study. The estimates of Life Expectancy are basically about six much six months shorter. Carol that doesnt seem to make sense. We would all think that health care is Getting Better and we know what to eat and what not to eat. The Research Says something different. Ben whats going on here is the health of a certain segment of americans is deteriorating. Middleaged white nonhispanics in america have had a lot of problems with drug overdoses and suicides. This is not uplifting at all. Their Life Expectancy has gone down a little bit. Whats really going on here is the actuaries are predicting the future and they have always assumed in the last decade that Life Expectancy would be good. American started living longer and longer and that slowed down. Its not that people are dying off, its the improvement is not as fast in the future. Oliver heres what i found fascinating. You mentioned some of the identifiable causes behind the trend. They could be controlled or have a choice. You mentioned suicide and liver problems. We think of that being tied to alcohol. Why du think the study gets into those issues are cropping up . Ben the thing is what we see is the inequality story. Its translating into health. If you look at High School Graduates versus College Graduates, College Graduates can live 10 years longer. The top 1 in income can live 14 years longer. Oliver they can expect to live 10 more years, this is a very interesting math. If you look to a certain point, you can expect to ask and beyond. Ben thats a good point. When we talk about Life Expectancy, we look at Life Expectancy at birth. If you look at the statistics, i am only going to live to my late 70s. Actually, if you are 65, you have a chance of living to 86. You have 50 chance of living longer than that. Its important not to get too bogged down in what the birth Life Expectancy is. Oliver we will introduce you to one company that wants to help you live forever. Carol a license to print plastic that could be the future of global currency. Oliver welcome back to bloomberg businessweek. Carol we tell you about the moscow clinic that may hold the key to immortality. Thats all ahead in bloomberg businessweek. Carol theres only more mustread in this weeks issue. You guys have a fascinating story looking at how china make it to the slowdown of stagnation weve seen in japan. Obviously, chinas growth has slowed, but it is still pretty substantial. We look at is what has happened to japan and what it is similar to what can happen in china. Not that many years ago, japan was considered to be growing very fast, catching up with the u. S. And everything looked rosy. And obviously, its been a total fog and there has been deflation. Its been very hard to fix and they been trying for a long time. What we see some of the same patterns. In japan, there was a lot of cooperation between the government and big businesses and favoritism for big businesses, etc. The same kind of thing happens in china. The question is whether they are replicating various problems, including that kind of cooperation, whether they are funding Big Companies what we are now calling zombie companies. Whether there is too much money, and that is a huge problem in china. The question is whether they realize that these are all stumbling blocks that could lead to someplace they dont want to go. Oliver shifting to a story here in the Global Economy section about russia, and specifically, Vladimir Putin in the kremlin. They have a bit of a leak in their own sort of data, and there is a lot of tension right now within the kremlin. Tell us about the story. Ellen in the kremlin, its kremlinesque, there are a lot of people with diverting interests and they are fighting each other, etc. This Opposition Leader who is posting highlevel gossip on his website, which points to excess and mismanagement, etc. Is perceived that one party got favoritism over another. But its things like carol the show dogs. Ellen dogs flying on planes, paid for by companies. Just incredible excess. Oliver this is the candidate that may be coming up against putin. Ellen he ran for mayor of moscow did not succeed. This is riling up a lot of accusations of mismanagement of money, etc. And yes, there is a dog angle. Carol we dont normally hear about the private dealing with the kremlin. In features as well, you have a story about russia, checking out cryonics berm cryonics firm that is doing great things. Ellen there were lots of stories about freezing bodies with the hopes that later, people would be revived. Diseases would be cured, a baseball player ted williams was one of them. This was also developing in a big way in russia, through this one company we write about. As part of a transhumanist movement, the idea is to see if you can live forever or a very long time. The thought is they are going to freeze bodies, sometimes just the head, with the hope that people can survive in their brains can be downloaded into computers. This is getting some traction, these people are really serious. One of the big problems is how to unfreeze. They are using a chemical process that they actually do not know how to reverse yet. Its not just can you revive people, its how do you undo what youve done to preserve the brain. Oliver its almost something you have to see to believe. We spoke to josh, who saw the facility for himself. Josh i wrote about this Company Based in moscow, one of only three cryonics companies in the world. Two of them really United States, one arizona, when michigan. Carol what exactly are they doing . Josh most basically, they are freezing people after they die. Visible more obligated than that, its not like they throw them in a freezer and thats the end of it. When you freeze tissue, it causes damage. There is water in our cells that expands. Whatever has killed you, perhaps sometimes down the line, the disease will be curable or nanotechnology will allow reconstruction of cells. The unbelief is that something called the singer larry or brain the singularity, or brain uploads will be possible. Whatever constitutes our personality, which is memories and we dont even really know, its all stored in the brain. At some point, the brain, which is some kind of hard drive, will be able to upload onto the machine. So then he can live forever virtually. Carol or someone who is brilliant, like a scientist, the thinking is bring back their brain. Josh they essentially turned tissue into glass. Then you get put in a tank and you are cooled with dry ice. Oliver how closely paralleled is this what we see in Science Fiction movies or, to movies . How about austin powers, cultural examples where this kind of things exist. How much science is there being done here . Josh in the movies, they always wake up. At the moment, they gotten pretty good at preserving people. Not good at all about thawing people. The most basic problem is you cant reverse this easily. Its considered toxic. The answer they will give you is we realize there are flaws and right now, we cant bring you back. But technology is advancing at an expert rate, so down the line, we going to figure it out. Typically, the answer is we will figure it out. But if you dont do this, you wont have a chance. Carol the technology section, we investigate the company thats making 99 of the worlds plastic cash. They started making cellophane, but over the years, it expanded and now a corner the market on plastic banknotes. Plastic cash is becoming much more popular around the world. Mexico, canada, australia and now the u. K. Are adopting it because its more durable and harder to counterfeit. With the history and plastic, theyve been able to carve out a niche for themselves. Oliver run us through who is leading the front on this type of currency right now. Adam australia was the first to do it. Some time ago, in the 1980s, and the result of that was they needed something that was more durable than paper bills that could withstand the heat, and so they went to know via and created these bills. More and morecountries have been adopting. Carol what is a plastic note . What is the Science Behind it . What is it made of . Adam it looks like a regular bill, but it feels a bit like wax paper and has a bit of a sheen to it. Some people have shown you can use it like a vinyl record needle. But the way that it is made is really interesting. We went up to Northern England to see how its done. It starts out as these Little Popcorn kernels of plastic. The 10 Story Building and at the top, they put in this plastic that is heated and melted. It comes down into the sheets of plastic, where does melted down incredibly flat. As it moves down the factory, it becomes thinner and thinner come until the end, it flattens out even more and they had holograms and the ink in its cut into reams in which 60 bills each can go on to. And before long, it ends up in peoples wallets. Oliver is amazons Cloud Service to powerful . Here is why some retailers want to ditch it. Carol and a posts human investment guide. All designs are robots. This is bloomberg businessweek. Carol welcome back to bloomberg businessweek. Im carol massar. Oliver im oliver renick. Carol some retailers are getting worried about the reach of amazon. The flagship part of amazon has very low margins. Its a very competitive business. The Cloud Business has a much richer margin. This is a comment that this startup made a conference saying look, youre giving these guys business and helping them subsidize the ecommerce part of the business with the Cloud Business. You are fortifying a competitor, you should look elsewhere for Cloud Services. Carol that leads us to the next part. There are others doing this. Amazon is one of the major players, but microsoft is doing something. And so are a few other companies. The choices are more reasons. Amazon web Services Still has more than 40 of the market. Increasingly what you see people doing is divvying up little parts and giving it to Different Companies and not putting all their eggs in one basket, which is what people are scared about. After we heard this comments, we went around and talked to the i. T. Executives of Major Companies and we found that did resonate. Home depot, for example, said it was absolutely a consideration when they were weighing who to give some of their Cloud Business too. They said, for example, if we said tomorrow that we were renting server capacity from lowes, people would laugh. For that reason, we went with somebody else besides amazon web services. Oliver in the technology section, the nba is setting the record as the first professional sports digger shot of virtual reality. Carol a little more than a week ago, something happened at an nba game and you were there. It was a vr broadcast. Carol meeting virtual reality. Yes, the jargon. Its not the first time it happened at an nba game, but this year, the league is committing to do one a week for 25 weeks. It started with sacramento and their brandnew arena against the spurs on thursday the 27th. Oliver whos is going to have access to this program . How do they get involved and pick the games . Ira you have to be a league pass subscriber. Its 200 for the season. If you have that, you can do the vr at no additional charge. You then have to have it this point, a gear vr headset, compatible samsung phone, a pretty good wifi connection, and then it added on. You go through, working with a Company Called next vr, which specializes in Live Streaming sports and events to produce these. Use your league pass login at the next vr out app to watch the game. They are hoping to expand. Oliver there are few moving parts. Carol and if you hundred dollars involved. You actually went to the game and got to put on the headset and experience the game, even though the real game was ira a couple hundred feet away. Carol what was that like . Ira i had only seen a couple of minutes of vr, not mask about. But delivers on the immersive experience, and you forget where you are. They are working out the kinks. In this particular case, they are trying to do a tv style broadcast. They have eight rigs stationed around the station. They move you around with these three are cameras that give you 180 degree views. They have announcers and graphics on screen, so if you want to see the score, you look down and it seems to be below you. This is the first time theyve done it that way. For best ballgame. So when they whip from one camera to another, you are disoriented and dont know where to look. If the vr cant quite focus in the way or i can, whats far away and whats close, with your eyes, you automatically refocus. In vr, they are still dealing with that problem. Whats far away can be fuzzy. Its fascinating. You find yourself twisting your head to look over at the coach while the action is going on and he seems to be right there. At one point, im seeing the referee walk right up to the scorers table where they have the cameras set up and he is standing right next to you. Its a novelty at this point, but you can see the promise of what this could be. The replays are fascinating. Thats going to be a great feature, watching the play again in immersive perspective. Carol in the markets and finance section, Money Managers are pitching a new type of portfolio run by a committee of robots. Oliver heres reporter dani burger. Dani its looking at characteristics of stocks, rather than companies are fundamentals. Whether they are peak, they dont swing very much, or whether they have momentum. You can already buy etfs that isolate those single factors. What multifactor does is takes all of those and steps as many as they can into one etf wrapper. You buy one product that is low volatility and quality stocks, all those together. Oliver that sounds like a lot of things to fit into one cohesive strategy. What makes it appealing . Dani is appealing because first of all, there are the tax reasons. The classic etf, that they are cheaper. Investors want these four core product, at least, thats what they are billed for. Rather than owning the s p 500 is your main core thing you hold on for a while, you will him to this. You dont need to buy a bunch of different etfs. Carol it controls are for polio automatically. Dani its almost geared to a retail lot he ends, its like hey, dont worry about it. We have this math builds portfolio for you. Oliver why are we talking about multifactor strategy right now . Is it because its been a difficult market the past 12 months for active managers to make money in . Is it a trend to passive investing . What is making it right now . Dani all the points you raised are valid. Be due to the general flow from active to passive right now. Another trend thats going on is the idea that because active managers are having a tough time, perhaps more mathematicallybased investors can do this better. You put those two things together, its definitely an idea whose time is come. Oliver what is so cool about the skimm, and why its a mustread for millennials. Carol we tell you about an ice cream you can eat after your workout. Oliver you can also listen to us on sirius xm, channel 119. And on am 1130 in new york, am 1200 and boston, and am 960 in the bay area. Carol in london on da bmux three and on asia on the and bloomberg west app. If you are a millennial, chances are you are aware of the skins. Oliver why do so popular among readers and investors. Two roommates, in their mid20s at the time, former nbc producers who basically were trying to start a newsletter that would summarize the news for their friends. The idea that millennials, while they are not huge consumers of newspapers or network news are in fact, contrary to popular belief, they want to do with going on. Its a straightforward summary, compared it to the original time magazine. Its very broad it doesnt go into a lot of depth. He gives you a good foundational knowledge of whats happening. And its written in snappy millennial language. Carol what do you mean . Max a lot of jokes go on over my head. It uses acronyms like irl, etc. , etc. Carol they are having some fun with it. Max its youthful. Oliver i was on the subway looking over the shoulder of the person next to me and i saw the headline, a major news event. I was like what is this . I said in reading more and the content when you got past the snark was very straightforward and very objective, which surprised me. Max we are having an editorial meeting the other day, i it brought up like six stories in the regular business meeting. Three of them were in the skimm this morning. It makes you feel old. It is the news. Was Pretty Amazing about it is its growing really quickly. We have 4 million subscribers, 24 century fox with a . 5 Million Investment and the New York Times company. Its a weird niche thing that might ask attorney to something big. Carol a new healthy weight need a whole pint of ice cream. Count me in. Oliver as long as you give me ask you. A scoop. You can a pint of this ice cream anywhere between 240 and 280 calories, which to give you some perspective, ben jerrys chunky monkey, which is amazing is 1200 calories for a pint. Oliver it also has the added benefits of full protein. What exactly is going into this socalled ice cream . They replaced all the bad things with things that taste pretty good, that arent as bad for you. There is no proteins to make up for the lack of fat. They are using a no calorie sweetener in stevia. And theres a sugar alcohol, which sounds, located in gross, but it will not get you drunk and tastes fine. Carol this was created by a lawyer who had concerns and health problems. 2011, he buys an ice cream maker off amazon. He tinkers with a recipe and finally get something to taste good. By 2014, its in kroger and whole foods, everywhere. Oliver he stumbles on a recipe that works and brings it to big retailers. Who is investing in this and wheres the money coming from to keep this going . Bret they are disclosing a lot of the nittygritty financial stuff. They dont like to talk about the process. One of the really interesting things early on they were basically told my people buying it at the ice cream tasted chalking. Chalkey. When it freezes and refreezes during this duration, develops a chalky texture. They have figured out a fix that. Carol bloomberg businessweek, is on newsstands now. Oliver and online. Carol i love the story of sams club in china, its different in terms of product mix. You will see a 3000 rice cooker, a 28,000 curved tv. You can buy pricey red wine. Interesting in terms of the strategy in china. Theyre going after the aspirational shopper and the shopper in china likes these imported goods. It seems to be a good strategy for sams club. Oliver they are all really expensive. There was a surprise element that we are talking about chinese economic growth, its getting weaker, but you think about the actual consumer, they are willing to turn on some bucks. Carol especially the growing middle class. Your favorite story . Oliver the two stories of longevity in life after death, the story about how americans are dying younger, which is an interesting economic its not too bad. Theres this idea that maybe we are not medicating properly. At the same time, you will russia and this great story about a cryonics company that is freezing peoples brains. Carol more Bloomberg Television starts right now. And the opinions expressed are not reflect those of bloomberg lp, its affiliates, or employees. Importanting is an paid program about humana Prescription Drug plans. , locum to the program that guides you through the medicare option available from humana. There are Many Medicare choices today. Are you sure you have the right plan . Do you wonder if you can save money with a different plan