tv Bloomberg Markets Bloomberg May 30, 2016 10:00am-11:01am EDT
you are watching bloomberg television. let's get to the first word news. treasury 10 year future contracts fell after the federal reserve chair janet yellen said on friday that an interest rate increase is likely in the coming months. the loud, emerging market currencies are heading for the worst month in august. treasury notes, yield and bonds are closed world today. german consumer prices halted their declining may. deflation rates rose from zero after minus point 03% in the previous months. good news to ecb policymakers struggling to revise growth in
the euro area. the ceo of singapore's commodity trader noble group has quit. they have accepted the co-ceotion with replacements. noble has plunged over the past you with questions about the company. alliance trust received a theover approach from capital partner. goal lines trust said no detailed terms of been provided by our i.t. and the camp -- by rit and there is no certainty that the transaction will take place. mobile news powered by our journalist and news bureaus around the world. dark it to close in the u.s. and u.k., -- markets are closed in the u.s. and u.k., but let's check in on markets opened, starting with european equity. the dax up there, the cac 40
posting gains as old. a couple of stocks moving on m&a, so bayer gaining after the sunday times reported they may put forward as early as this week. and out gaining, this after they said they failed to reach an them.ent to buy a surprise after speculation of a merger between the two companies. moving on to currencies, it is all about dollar strength if you look at the fx market. a stronger euro out of unexpected data out of the eurozone today, and the weaker yen. 10 year yields edged higher, this after the treasury yield on friday rose points after janet yellen's comments. treasury markets closed today, but we are seeing movements in europe. old down for a ninth day. the longest losing streak and one year on prospects from the
fed. the vti and brand still lower as canadian producers moved to move output. coming up, "bloomberg's is this week." ♪ -- "bloomberg's business week." carol: welcome to "bloomberg businessweek." david: welcome. carol: and kelly slater finding his perfect wave. david: all of that ahead on "bloomberg businessweek." ♪ david: we are here with the editor-in-chief of "bloomberg businessweek." a great issue this week. carol: you guys talk about mr. fix-it in the auto industry. now, he has to fix mitsubishi. ellen: he first fixed nissan, and now at mitsubishi motors where they have had the scandal
over emissions, he has been brought in to help. it is all because nissan has invested in mitsubishi motors. david: what makes him so good at doing this? he does it time and time again? carol: the picture that you have with him, he looks like wolverine. ellen: he does. i bet you he will like the picture. in france, they called him "le cost killer." he knows how to cut costs, how to make auto industries, auto companies working together share platforms, etc. and he just knows how to do it for less. david: you have a great graphic looking at venture capital, a , lot of circles here. no surprise the internet is a subject of a lot of venture capital investment. what else can we take away from this graphic? ellen: my favorite part is it looked at the recipients of venture capital and where they went to school. the most prevalent was dropping out of school.
so, you have a lot of entrepreneurs who are taking the advice of some of the people in silicon valley -- david: peter thiel among them, -- ellen: peter thiel among them, saying you don't need to go to college. and then, not a big surprise, the next most popular school was stanford. carol: interesting. david: in the backyard. carol: interesting, all the students go to schools, racking up all of this student debt, ultimately, you don't have to go to college. ellen: if you are very smart. that is the lesson. carol: in the global economic session, you talked about puerto rico with a lot of problems. a lot of debt. there is more to be done. they really have to fix their economy. ellen: they do. the problem is they sort of don't have an economy. they relied heavily for a while on the pharma industry. a lot of pharma companies wanted to do business there because there were tax advantages. those tax advantages no longer exist. and so the pharma companies over time have left. they also have attracted finance people because they have tax advantages for finance people. but that has created resentment because people who live there don't have the same advantages.
and so the question is, what is puerto rico going to be able to live on? david: pharma companies have left. a lot of people have left as well. ellen: a lot of people have left. one of the stats we have is the rate at which doctors are leaving. and it is a lot of doctors leaving. of course, they are all citizens of the u.s. all they have to do is get on a plane. david: no passport needed. the cover story, the head of the republican national committee is faced with a really tough task, uniting this party behind the presumptive nominee donald trump. ellen: at first, there was a lot of speculation whether the party would unite behind trump. it is his job to figure out how to make that happen. david: you talked to the reporter who wrote that piece, josh green. josh: initially, the worry is that trump would get beaten and go awol and run a third-party bid. so all of these professions of loyalty were originally meant to keep trump in the fold. what has happened instead of course is he has locked up the
nomination and now is trying to consolidate the party. it has fallen to priebus and the gop establishment, who had wanted a different nominee, to come together and try to keep everybody on board. carol: it is interesting, too. when he came on board to kind of help reshape the republican party, certainly after mitt romney lost, what has changed in terms of the vision, the core of the republican party since he took over until today? josh: his vision, i think it was a smart one, after romney lost, there were all sorts of recriminations and backstabbing among republicans blaming each other. he very responsibly went out and took people and did a big study of all that had gone down. the so-called republican autopsy. but also looked at how the party ought to refashion itself and be able to compete in the 21st century. and the conclusion they came to is that the party needs to soften its tone and moderate. change around the debate calendar, the primary calendar a little bit.
make an effort to attract reallymake an effort to attract nonwhite voters, women, and minorities. i think the anguish that a lot of republican elected officials feel in having trump as their nominee is that he is a wrecking ball to that idea. he has a very different style. trump, as he told me, has a different vision of where he thinks the republican party ought to go. david: so, you sat down with donald trump in the trump tower. what did he say about his vision and how that jives with what reince priebus has in mind? josh: what interested me, essentially, trump won the nomination doing all of us the opposite of what the republican bigwigs had proposed after 2012. clearly, he is doing something right from the standpoint of winning republican voters. i asked him how does the envision the party changing? essentially what he told me as he is going to put the trump stamp on the republican party in the same way he stamps the trump name on his buildings. and what we ought to expect five years from now, he told me, the republican party will be more of a worker's party.
that it won't be in hawk to conservative right wing ideology. and he will pursue a lot of the things he talked about on the campaign stage. some of those things republicans will be fine with. he has put out a list of very conservative justices he says he might appoint to the supreme court, but then there are other things like building a wall and deporting 11 million people and ending trade deals, renegotiating trade deals, that aren't going to fly very well with a lot of conservatives. and i think that is why you have seen a lot of resistance to trump along the conservative intellectual class. carol: josh, does priebus like donald trump? [laughter] josh: you would have to dose him with truth serum and even then i'm not sure he would tell the truth. what he says is they speak every day. trump was very kind toward priebus. two months ago, when it looked as though there would be a contested convention, trump essentially was issuing veiled
threats toward republican leaders like priebus about how they were going to try to steal the nomination from him at a rigged convention. his tone has changed. he has even given him a friendly little nickname. he now calls him mr. switzerland. [laughter] carol: for neutrality? josh: well, it is to make peace between trump and the elements of the party who find him obnoxious. clearly, you can see what priebus stands for if he stands for if you read this rnc autopsy. it is not what the republican party is today. it is not really what trump stands for. although priebus is being a good soldier and doing his best to help trump win the white house and get republicans back in power. david: how do you illustrate the job reince priebus has in remaking the republican party? carol: we spoke to the creative director. >> on the cover, the head of the rnc, familiar to a lot of people. how do you decide to go with this photo? >> we had a fair amount of time with him to shoot him, which is
great. we got a lot of different options. we had some options that are more traditional where you see his face and he is standing on a white wall. david: american flag? >> eagles. [laughter] carol: red, white, and blue. >> and we had some options in his office which is kind of what you imagine it to look like. except for the strange ipad pro on a pedestal. the photographer was shooting him and shooting him. he took a phone call. he had a little moment there. we thought that it was like a very authentic-seeming moment of him at work. we had to talk about whether it was weird to have someone be the cover subject for not actually show his face. in the end, we thought the moment was so great and spoke to the situation right now with the republican party that it was the right way to go. carol: you do. you look at the cover and realize the frustration going on inside him internally. do ever think about that when you do a cover like this how the subject is going to feel when they see it on the newsstand?
[laughter] >> if we thought about that, our covers would be very, very -- [laughter] carol: black cover and that is it. >> it wasn't -- it is by no means purposely unflattering. this is something we all experience in our daily life. carol: it tells the story really well. it really does it perfectly. >> yes, it is a very natural moment, i would say. it was not posed or planned out. david: i imagine part of the calculus, too, is some the movie is and some do not. you can disguise the face of bill clinton and that silhouette would be still known to a lot more people than this one. where you thinking about that as well? >> we were a little bit. as an image, there is something interesting about how mundane it is, that it is not a celebrity seen in a different way. when we have situations like that where it is not someone immediately recognizable, we take care of it with the language and we make sure to mention his name, the fact that he is remaking the republican party and the headline "the hardest job in america" speaks to the feel of the photo. carol: when you did this, did you do other things like he is standing, or you just decide we
are going to put him behind his desk? >> personally, when i saw the photo, i fell in love with it. we tried a bunch of cover lines, we tried one that kind of played against it. it was kind of funny, the joy of being the rnc chair. we kind of like for a while but , we felt the photo was so great that the type needed to stand aside a bit. david: up next, trump redraws the map in terms of campaign ad spending. that has some tv executives scared. carol: plus, could janet yellen be replaced by an algorithm? what central bankers are saying about ai. david: and the snapchat account that some in hollywood think could be the future of tv. carol: all of that ahead on "bloomberg businessweek." ♪
♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. david: and i'm david gura. you can find us on the radio on sirius xm channel 119. carol: and also on boston 300 -- boston 1200 and bay area 960. david: and the politics and policy section, look at the free publicity donald trump has gone from the news media and social media. carol: we asked what that means for tv executives planning on campaigning advertising dollars that have not materialized. we spoke to tim hager. tim: he has millions of followers, and he tweets something out and it is free advertising essentially, to millions of people. often times, he says something so incendiary it gets picked up
on local news or cable network tv and a goes viral and we're all talking about it in ways that paid advertising doesn't really break through. he definitely has a strategy with working with the media and he is a master at pulling the strings to kind of generate coverage. one estimate is that he has received almost $3 billion worth of free media or earned media which is a staggering amount and far exceeds any of the other republicans in the primary and it really exceeds what the democrats are getting, as well. to break through that, we have seen his competitors have to spend a lot of money to try to even get the kind of attention he is getting. and it hasn't been successful. we look at the super pac right to rise usa, which backed jeb bush, spent an estimated $70 million on tv advertising, and he didn't win. so, that raises the question of how candidates are going to do going forward. are they going to continue
spending or not? david: you dug into that. what are you inclined to think what the candidates are going to do going forward? tim: not everybody is donald trump. [laughter] carol: whew. tim: you look at a candidate like hillary clinton. even she gets a lot of media attention. but she is not leaving anything to chance, or at least, her supporters are not. super pac backing her has reserved $100 million worth of tv advertising between now and the election. that is a staggering amount, and it is probably an amount that will only grow as we get closer. they would argue that republicans waited too long and did too little to combat trump. so they want to get a good head start on it. you know, also, if we look down ballot, we see some hot senate races and gubernatorial races. tv executives think that those candidates are going to have to spend a lot to break through and get their message out in a hot political season.
perhaps try to differentiate themselves from the top of the ticket on the republican side or even on the democratic side. carol: up next, the new technology determining how valuable a professional basketball player's shoulder might be. david: and the machines that could soemeday be running the world's central banks. carol: all of that ahead on "bloomberg businessweek." ♪
carol: welcome back to "bloomberg businessweek." i'm carol massar. david: and i'm david gura. this week's global economic section, how advances in artificial intelligence could make janet yellen have to look for a new job soon. carol: well, maybe not soon, but automation is not just being applied to manufacturing anymore. chris: machine learning is the dominant subfield in artificial intelligence. basically, it refers to the technology that allows a computer to acquire knowledge or skills without being explicitly programmed for that skill. carol: we see amazon and netflix already doing this. right? amazon kind of has their algorithms. analyzing what we are doing in terms of purchasing. maybe they can suggest something that we may be likely to buy. netflix does it with movies. right? chris: that's right. when you go on netflix and ask for recommendations, they are applying machine learning to everything it knows about you and people like you to make a prediction about what kind of movie you might want to see.
carol: financial firms are doing the same thing in terms of its predictive abilities? chris: there are. there are several hedge funds that are employing machine learning to one extent or another to try to help them make picks, stock picks, or other security picks. they tend not to talk a lot about what they are doing. there is a lot of secret sauce involved. but there are several hedge funds involved in the kind of work. carol: but it is tricky, it is one thing if they are checking my buying patterns and telling me you might like this book or this product. but when you are dealing with something like the fed, the whole idea of whether or not this is going to be ultimately able to go through all of this information and predict what the fed can do, that is a giant leap, correct? chris: it is massively complicated. the world economy is a much more complex system than a group of customers for a company, or even
the stock market. the number of variables that are involved in the uncertainty involved certainly makes it a harder task. but there are computer scientists -- i spoke with andrew lowe, a well-known ai specialist at m.i.t., who believes we are getting very close to the point where the technology will be good enough to match humans. and then, not too further down the road, to surpass the ability of humans. carol: the bank of england has been playing with this a little bit, already, right? chris: they are. within the world of central banking, from what i can gather, although central banks are quite shy, i've found, to speak about this, from what i can sense, the bank of england is really out in front of other central banks. their chief economist is very keen on this topic. they have set aside a new unit called their advanced analytics
unit that is already building and testing algorithms for solving certain problems, including those within macroeconomic forecasting. they are not using it quite yet to brief their policymakers, to advise their policymakers. but they are getting there. and the head of that unit told me he thinks that within five years, it will be used to some extent in meaningfully helping their policymaking. carol: speaking of smart machines, in the magazine, there is a profile of a company whose visual search technology is being used by both the fbi and mba. david: we spoke to the reporter. >> it is kind of like you see in a jason bourne movie. a lot of us thought this was already out there and easy to do. but you cut and paste, really, or drag-and-drop what you want to find. it could be a person's face, a white pickup truck, a logo. and you say find it and give it the source material, whatever it is. hours and hours of surveillance
video, a game broadcast. you say, find this within that. it scans the pixels and within a matter of seconds, and feeds back the results. carol: so, you could do it quickly. talk about the guy behind all of this. tom. who is he and how did he come up with all of this? >> he is a buffalo native who has been doing machine learning stuff since college. he is a deeply knowledgeable geek about this stuff. he had done a couple of other -- worked at companies and started one that codified facial expressions to look for signs of deception. but that wound up having an advertising use, too, because now, when you look at a video screen at an airport, they know who is looking at it by using this kind of technology. but anyway, he had done that kind of stuff and knew from that work that intelligence agencies were just buried in surveillance video. actually, it wasn't that sophisticated. a lot of times, it was people staring at it for hours and trying to find threats, or that they would have this technology that needed whole rooms full of
servers to work. just because it is really a complicated process. he set about trying to simplify it. he knows, for instance, when drones come back from their flight, sometimes, they have 12 hours of high resolution video. they put that up against the nerve system to find out what's there. he doesn't actually see it happen. carol: you talk in the story, you go through a whole yankee season quickly. >> seconds. that is hundreds of hours. and depending on how data rich the source is and how many queries you want to do, it is seconds. i asked him to do a brief search of three hours of cnn for hillary and trump, like at primetime night. [laughter] they sent me a clip of them pressing go and the results. it is literally just -- bang, they pop up. carol: amazing. >> yeah, it is out of hollywood. david: were they wary at all -- about getting into what they
do? >> no because they develop the technology themselves. they decided to fund themselves until they had a thing they could sell. so, while they can't say and don't even know what the government exactly is doing with it, they are at liberty to talk about their technology. i was curious about whether as this becomes affordable and more widespread, do you want everybody to be able to do this? but, for them, and a way, they are selling it. carol: up next, the big, big, big money china is spending onto virtual reality. david: plus, the courts redefine insider trading. ♪
>> you are watching bloomberg television. let's get straight to the bloomberg first word news. can your futures contracts fell by the most in almost two weeks after federal reserve chair janet yellen said on friday interest rate increases are likely in coming months. emerging-market currencies are heading for their worst month since august. treasury bills, notes and bonds closing worldwide today. euro area economic confidence rose for a second straight month in may, beating estimates. they came at 1.47, the highest level in four months. they were boosted by strengthening sentiment and
improvement in the retail and construction sectors. is offeringionaire $4.4 billion to buy out and privatize its hong kong listed property unit. alliance trust said it has received a takeover approach from jacob roth while -- rothchild. alliance said no terms of been provided by rit and they can be no certainty that a transaction will take place. global news -- global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. markets are closed in the u.s. and the u.k. today for the memorial day and spring bank holiday respectively. let's check on the market that are open now. starting with european equities, dax higher at 4/10 of 1%. cac 40 holding gains as well. we have stocks moving on m&a news. higher today after the sunday
times reported it might put an approved officer for monsanto as early as this week. gaining afteren they said they failed to agree on terms for combining. this is announcement followed speculation of an imminent merger between the post and postnl. switching up to currencies, it's all about dollar strength today. comments from janet yellen on friday. we are seeing a stronger euro, a bit of expected data out of the euro zone we had today. sterling pretty much unchanged as we have got a weaker yen. at .16.en we saw the u.s. treasury 10 year rise two basis points on friday after janet yellen spoke. in europe, we are seeing yields move higher both in the core and periphery.
in commodity markets, gold is been moving lower on the prospect of more rate hikes from the fed and down for the night they, the longest losing streak in a year. crude and brent up. up next, it is bloomberg businessweek. carol: we are inside the magazine headquarters in new york city. david: still ahead in this week's issue, available online and on newsstands now, a new era for insider trading. carol: coal is the new hot coffee. it is all ahead on "bloomberg businessweek." carol: we are here with editor ellen pollack. and there are so many must-reads, ellen, in the magazine. you talk about south africa, growth slowing down in the country. there is some momentum for president zuma to step down. ellen: the story is really
interesting because it compares the situation in south africa with india, where the reporter who wrote the story used to be stationed. and it basically raises question about whether the african national congress can keep going and staying as the dominant party and talks about how they have not solved all the problems and there is growing discontent with them. it means that down the line, if possible, they will start losing some important elections. david: this term, we talk about political optics a lot in this country. laying out how a lot of candidates are speaking. you can gauge how much support they have by how crowded is the audience is behind them. ellen: it is like a new way of reading it. just look at how empty or full the stadiums are. it is really cool. david: in the marketing and finance section, a look here at new banks popping up in indonesia, trash banks, as ways of encouraging people to stop littering and develop financial solvency. to start putting money in the bank and saving.
ellen: it is really an interesting idea. the idea is you bring your trash to the bank then they pay you for your trash and they can recycle some of it. and you can leave your money there and bank it. you can take money out of your bank. but it means that the trash is not going into huge landfills that are littering some communities. and it also creates a real banking system. it has been tried elsewhere, too. carol: creating a financial system for people who do not have an awful lot of money. ellen: exactly. carol: interesting. in the technology section, you talk about virtual reality in chinese companies. what is interesting is they are not going after the hardware side of it, right? they are more interested in content. ellen: they are trying to figure out a way to get into virtual reality without having to commit to one kind of headset. it is obviously a race to make vr a real thing. here, you have lots of different headsets emerging. and they realize that will be the case. so they are like, ok, whenever headset, we will create content
for you. there are a lot of small companies trying to do it and some big ones, as well. david: with china the numbers , are so big, the potential for this market is huge. ellen: it is absolutely huge. david: in the features section, you look at insider trading, how the definition of insider trading has been eroded or changed over time. ellen: it has changed a lot since ivan boesky was the star of the insider trading follies decades ago. what we look at is why it is so hard to prosecute insider trading. that is because insider trading's definition, to the extent it even has one, has really changed. carol: we spoke to a reporter about the story. >> there have been a series of cases that have come out of the raj rajaratnam series of prosecutions in new york where a number of traders have appealed to higher and higher courts and ultimately, a couple of traders who were charged in 2012 had their convictions overturned. and the appeals court kind of redefined what insider trading is and what the government has
to prove in order to kind of, successfully prosecute someone. david: it has to do with it who is giving you the info, right? >> it has to do with how much you know about the original source of information, whether they got a benefit in return for leaking out this information, and then there is some more debate about what that benefit had to have been. and part of the reason this definition even exists is because they don't want people who are, say, whistleblowers trying to report fraud to a report fraud to a reporter to the outside world, who aren't doing it for any personal gain. they don't want to silence those people. there are times when you can legitimately disclose confidential corporate information and you should not be accused of insider trading if someone else even overhears you and goes and trades on it. carol: what do legal experts think about this? it feels like a shift in terms of figuring out insider trading. >> well, they are divided. a lot of defense lawyers raise some pretty good points and say
this campaign in new york led by all these hedge funds ultimately overreached. they point to this one case that sort of led to this redefinition, these two traders, todd newman and anthony chiason, two hedge funds in new york, one in connecticut, actually. they were at the end of a long chain of people who were sharing information about dell. so there was a guy who worked in investor relations at dell, who told his friend at an asset management firm who used to work with him at dell, and then that friend told a guy who worked at a hedge fund. david: a lucrative game of telephone. >> exactly. eventually, these guys at the end hear this and they trade and they argued, we did not know where this came from. we didn't know this was illegal. this came from investor relations. is that even possible that that was inside information? the government said, look, you clearly have knowledge of this with market moving information. you made all of this money. there were things that were a little disturbing, in some cases, they had been paying some of the sources. but ultimately, they were successfully arguing that they
did not know if that original leaker, the original tipper who worked at dell got anything. was he just gossiping or did he actually get something of value which would mean he had betrayed the trust of the company? and they succeeded. now, we are waiting for the supreme court to look at another case and perhaps clarify some of the questions around it. david: what is the attitude toward this within the sec? they must be greatly frustrated. >> they are very frustrated. [laughter] >> they are often frustrated, that is their natural state. no, of course, as soon as this happened, the phone started to ring. defense lawyers, i want to undo my settlement, i want my money back. i paid you all of these fines. i don't have an exact count. i think there have been many, many cases where people have gone back and tried to undo things and said, well, i didn't know. the benefit was too weak. it wasn't a strong benefit. it wasn't money. you know, so there is a lot of
that going on. on the criminal side, prosecutors had to vacate a number of convictions and guilty pleas of traders and analysts because of this. carol: at this point, will this make it tough to prosecute or go after insider trading going forward? >> it definitely will make it harder. certain types of cases, i will quote my colleague here again -- they will go unpunished, basically. of course, there are some people who argue that maybe some of those cases were ones that shouldn't have been. there is a lot of gossiping and information sharing going on in the market every day. where do you draw the line as to what is criminal? people do need to know really clearly, is this going to get me in jail or is this just a typical day trading at a hedge fund and i'm just listening to what everyone else is listening to? there is certainly that argument, but there are certain groups of people who are getting the information secondhand and
you could see a scenario where a firm adopted officially or unofficially a don't ask don't tell policy. and that would insulate all of the higher-ups. david: up next, self-publishing goes from the fringe to mainstream. carol: and what a snapchat account may tell us about the future of tv. david: can kelly slater sell his new wave machine to the world? that is ahead on "bloomberg businessweek." ♪
♪ david: welme back to "bloomberg businessweek." i'm david gura. carol: and i'm carol massar. you can find us on radio, on sirius xm channel 119. david: also in new york on bloomberg 1130, boston 1200, washington, dc 991, and bay area 960. a look at the wave machine designed by surfing legend kelly slater. carol: could it make the sport mainstream? we talked to the reporter. josh: there has been a quest for an artificial wave that was more or less like what the pros experience in the ocean. there have been a lot of tries and there are wave pools around the world, but nothing that really felt to professionals -- carol: in december, he posts the video on youtube, kelly slater. what was that video? josh: he posted a teaser on his instagram feed first, which was him, a shot of this perfect wave, and then it cuts to him
looking extremely happy, jumping up and down. and then you see him on this wave and it is revealed this is an artificial wave. i think his voiceover says this is the greatest man-made wave ever made. turns out it is his wave. he, for the last 10 years, has been working with a company and a team of scientists on a wave that looks like an ocean wave. the surf world immediately sort of celebrated this thing and said, oh, my god, kelly slater has done it. carol: he has racked up millions of views and user comments. where is this wave, where did he do it? he did it under secrecy, didn't he? josh: it is exactly were you wouldn't expect. carroll: is it landlocked? josh: it is in california, but it is in the san joaquin valley. fresno would be the nearest thing you would've heard of. it is in farm country. there are a couple reasons for that. a lot of people said this is for secrecy reasons. they wanted to do it where no one was looking for it. that was true, but it is a 20 acre lot with 700 yard long pool, an artificial lake, basically. if you were to buy that around
san diego, l.a., that would cost $30 million. so, really, financial reasons had as much to do with it as secrecy. right? they found a plot they could afford. carol: how complicated was it? there is science, technology involved in making this happen. josh: extremely complicated. engineers and scientists have an working on this for two, three, four decades. not all of the time and the world's best minds, the professional surfers have always tried to find people who could crack the code. it turned out to be really complicated. they spent 10 years on it. they started with scale models and computer models and eventually, in 2014, started building it. it is a proprietary design. they use a hydrofoil, which is the best way to think of it is like an airplane wing under the water that basically pushes it and creates a swell. the contours of the bottom of the pool, just like the floor of the ocean is what causes the wave to break. this is how the ocean works. swells come in, then the coral
reef or shallower water causes that wave to break. that is when surfers ride. carol: you went to see it. josh: i did. carol: what did it look like? josh: it looks amazing in video but in person, it is even more impressive. it is hard to say -- it is hard to appreciate the power of it. it is big. it is not huge, because he didn't want it to be huge. it's not supposed to be pipeline. carol: it has to be manageable. josh: it is big and it sounds like a wave. when it comes by you, and it acts like a wave and you hear the roar. if you close your eyes, you would have no idea you were in fresno, california. there is a goat ranch next door. david: speaking of going mainstream, the focus on section this week is about small businesses. carol: it is a look at how the self-publishing industry is coming of age. we talked to the editor. >> we're seeing the start of something that people have the options. these publishers are actually
really becoming aggressive about targeting people, often mid-list authors who are frustrated by the kind of neglect they feel they are experiencing. they are giving them attractive deals, sharing revenue. and one of the things they're letting them do is keep the copyrights. so, that is important for a lot of people. in some cases, what we are seeing is authors whose novels who have gone out of print and they are turning to these platforms to republish. carol: are all the platforms the same or do they vary? >> no, they all have different revenue models. some of them are just marketplaces where people can find talent and contract with these people, then the marketplace takes a cut of those deals. some of them have more sophisticated tools where people can do collaborative work, not e-mailing files back and forth, but actually there is a technology platform there that you can access. others are sort of soup to nuts. they will put you in touch with
an editor, a designer, they have separate pr arms. david: how much of this is about the advent of the e-reader? that it is fairly cheap to disseminate a book that way? there are companies here printing books, as well. >> right, it definitely is. but i think what it is is an evolution. right now, something like half of all books on kindle direct are self published books. david: half of them? >> yeah. and the five publishing houses account for one quarter of books on that platform. and so -- but there is one note of caution. we talked to a consultant who said that digital books may have peaked in 2014. they fell back as a share of the overall books out there. and he thinks there is a bit of fatigue, that people perhaps at the end of the day, sitting in front of a computer all day, want to go back to print. carol: up next, how cold coffee is overtaking hot coffee and the
section, a report on how the cold coffee business is booming and how everyone wants in on the action. we talked to reporter jenny kaplan. jenny: more and more people are drinking their coffee cold year-round. i mean, it seems like according to some of the experts we spoke to, there are a lot of coffee houses these days where they are actually serving more cold drinks than hot, even in the winter months. carol: like a starbucks or peet's coffee? jenny: yes, but even more so, some of the craftier coffee places. the cool hipster place in brooklyn. carol: and you are getting prepackaged cold coffee in demand. jenny: right, that is the boom i'm talking about here. that is where starbucks and pepsico have a partnership for their grocery store products, coca-cola, and dr. pepper recently announced a partnership, they are all getting in on this ready to drink bottled and canned coffee that is served cold. carol: tell us about the market size. how big is the market size compared to conventional coffee? the warm coffee we all kind of like? jenny: it has been growing
double digits since 2011. according to euromonitor, it is supposed to hit $3.6 billion by 2020. it is growing rapidly, but it is still not a huge market compared to coffee overall. carol: what is the demand globally? jenny: globally, it was at 18 billion in 2015. carol: is there any market in particular where you are really seeing growth? jenny: japan is huge. carol: japan? jenny: yeah. they love their bottled coffee there, i guess. they have vending machines there that serve all different kinds of bottled coffee beverages. actually, coca-cola's presence in that market is so large that they are actually the number one player globally, even though in the u.s., starbucks and pepsi are really dominant. carol: what surprised you when you started working on the story and looking into it? jenny: i personally drank, liked iced coffee more than hot coffee, even. i drink it in the winter. i was fascinated by the fact that i'm not the only one. this is something that -- not only are there tons of startups getting into this, but it is really big players.
david: this week's etc. section, a look at what some say is the future of television. carol: for now, a snapchat account called arsenic tv. >> arsenic is a snapchat account which sounds weird because it isn't exactly a business, it isn't a media company, it only exists inside of the snapchat app. it is basically a lab mag where scantily clad models -- david: provocatively dressed. >> they do provocative things on camera. it sounds crazy, but it is in a lot of ways, the hottest thing in media right now. "playboy" tried to buy them. i had a conversation with the "playboy" ceo the other day. he candidly admitted they were rebuffed and continued to say i'm very interested. everyone is very excited about this thing although it is very weird. carol: it is only women who go on the tv and jump in the hot tub? >> it is all women for now, but by the founders have said they have ambitions that go beyond this. they see this as the beginning of an mtv or vice.
you look back on vice, which is by valuation, the biggest digital media company. it was pretty sleazy back in the day. yeah, and they just widened their content focus and arsenic, i think, could do the same thing, although it is a long shot. david: you mentioned the founders, who are they? >> billy hawkins who is minorly famous as being spike lee's agent and amanda, who is a movie producer. they were starting a different company, a rent the runway kind of thing. then this grew as a side project and took on a life of its own. carol: how are they making money off of this? >> in some ways, nobody is making money. arsenic has no revenue. however, the models, who are unpaid, are making money because they are getting paid by smaller companies, protein shakes and clothing or whatever, to basically record little ads on instagram. and the main model in the story,
caitlin o'connor, is making between something like between $6,000 and $10,000 a month. carol: because she has followers. >> she has followers and followers are worth money. there is some question about whether this is going to be a sustainable business. some people think once real celebrities kind of get in the game doing product placements and that sort of thing on social media, this whole economy will collapse. but for now, you have these b, c list celebrities who are able to kind of make a decent living inside of instagram. david: their goal cannot be just to make a decent living. this is -- speaking of where our culture is right now -- this is the platform or moment to elevate yourself kardashian-style to fame and fortune. >> there is some question as to -- [laughter] david: put it all out there. >> what fame is, one of the sources i talked to says everyone thinks i will do this snapchat thing and then i will become famous for real. in a lot of ways, i think the
snapchat stars are the stars. if you ask a 16-year-old, like, who are the most famous people, half of them, some percentage of them would be people you have heard of, and some percentage would be these influencers. and so, i think we are in kind of a moment of flux. it is hard to tell how it will all shake out. carol: why aren't they making money off of snapchat, but they are off instagram? >> that has to do with the fact that snapchat is so new. it is hard to tell what is happening inside of the app. if you are an advertiser, you don't know how many people are looking at a snap. and as a result, there is basically no money yet, although there could be very soon if snapchat releases what is known as an api which would be a way for advertisers to get information about what is going on. carol: "bloomberg businessweek" is available on newsstands now. david: and online. what was your favorite part of the issue out this week? carol: i found it fascinating what is going on in indonesia and the banks that allow people to bring in trash and get money and create account at the bank.
it gives them money to buy something, things they need at home. it is creating a financial system. i find that fascinating. david: i like the cover story by josh green about reince priebus, something i had heard about, new a bit about, had a sense of the job he has to undertake to unify the republican party. josh brings into crystalline focus. it was a really great piece. carol: i feel like the cover tells the story perfectly. david: absolutely. carol: we will see you next week. ♪
>> let's get straight to the bloomberg first world news. ten-year future contracts fell by the nose -- most in over two weeks after janet yellen said on friday that an interest rate increase is likely in the coming months. emerging-market currencies are heading for their worst month since august. treasury bills, notes and bonds are closed worldwide today. german consumer prices unexpectedly halted their decline in may. the inflation rate rose to zero. news to ecbers good policymakers struggling to revive price wrote