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tv   Bloomberg Business Week  Bloomberg  September 24, 2016 7:00am-8:01am EDT

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>> we are inside the magazine headquarters in new york. investigation of the helicopter killing u.s. troops. >> the mistake samsung made. >> all that ahead on bloomberg businessweek. carol: we're here with ellen pollock. the most look at influential people when it comes
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to the markets. >> this is something bloomberg has done for six years. it has been in markets and we talked to various experts within bloomberg news editors and reporters about who they thought was influential this year. >> there are interesting people outside the world of finance. >> john oliver is among them. if you look at the store he did on puerto rican debt, and got an unbelievable number of hits online. most people know about that of john oliver. hedge funds are not doing so dramatic the well. david: there is a profile of for
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in the global economic section. now they're moving toward article 50. >> there calling her theresa may be because she is contemplating article 50. she says she needs to make decisions. they can come up with a trade deal before they actually exit. carol: it all has to do with the applethey realize was going to have a tremendous
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-- it looks as though it did not turn out so great. it is substantial. there is so much enthusiasm about the product from samsung. carol: and will consumers now want the phone? david: tell us about it. >> chase hit on some magic formula. they reserve to be the hot card.
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it's designed to be the hot card. although not for everybody they are running between plastic. they are working to and the cachet of the card. could the itt card credit card, it could be this. it moves around but chase has got it. they had the last one. this is a $450 annual fee. you will get $300 reimbursed to you every year for travel expenses. it knocks the fee down to 150. you get triple points on dining in travel.
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get 100,000up, you that can be transferred to other airlines or used to book travel, dining, or entertainment. >> is it truly perfect card? >> people that follow the credit card market will sign up for new cards and have been rushing to chase. carol: they do charge an interest rate. >> it is a standard credit card. they are not giving you free money. the same kind of interest rates from other kind of typical cards. 16% to 23%. most pay their balance in full. they are not paying close attention to the interest rates. what they want are the rewards. and that is what chase has served with abundance. even though it has these
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perks, demand is way bigger than they thought it would he. three things have disrupted the order of operations. data14 after the target breach when chase had to reissue millions of newly numbered cards. the second one was in year later. after the car was announced, they use up the entire inventory of link metal cards. they ran out of all of them. carol: it is kind of cool. >> this is not the first card to have that.
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they have been other metal core or fully metal cards is well. it also has the metal core and people seem to like it. who are they going after here? carol: younger. >> it turned out to be younger. they thought this card would trend older because of the fee. be someoneupposed to in 2016 who has a conception of wealth that is perhaps different than 10 or 20 years ago. david: they write about the
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abscess of no's surrounding this credit card. >> we threw in a couple of ideas. we are usually a little more critical. we thought how much these people love their card. that is what we did. we got close to 20 models. and retouching to make their eyes glow after the shoot. carol: you are stealing a line from american express. >> knotting to it.
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says is a chart that american express has gone down in j.p. morgan chase is going up. like i said, we wanted to avoid just having this look like an ad. putting the car on the cover. >> it did not quite work for the cover but we ran it on the ends tied. carol: the parts of nebraska going blue in november. countrynd parts of the facing the first recession since 1991. ♪
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carol: welcome back to bloomberg businessweek. am 960 in the bay area. how hillary clinton aims to take advantage of the fact donald trump is not made much of a footprint in nebraska. carol: you write about the blue dot in nebraska. >> it is the most reliably democratic part. president obama did
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decently there. >> nebraska can split electoral votes. 2008 is when people started to pay attention to it being a democratic stronghold. as far as how far back it's gone, it has. david: after the election is over with, explain what you mean by splitting electoral votes. >> rather than a winner take all portion by congressional district. votes.to electoral beyond that, whoever wins each congressional district gets the vote. votes.apportion three
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it is strategic. obama spends a lot of time in the state compared to previous democratic candidates. a pretty -- i was in nebraska in 2012 and the conversations i was having were with farmers about the keystone xl pipeline. it was a huge political issue for them. what are the big issues that folks care about? bigt seems like trade is a deal.
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the campaign of who is running for the second congressional totrict, they are talking more republican sympathetic voters. the air force base is really close by. redistricted. it is harmful for the democrats because a lot of people, you have a lot of hispanic families. we take a look at the crisis brewing in africa's economic engine. david: we spoke with matt phillips. prices have hurt nigeria but they have a bigger problem. >> cheap oil is an issue for every exporter. double inproblem is
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that production is down's the year. they have targeted pipelines. deals where the government would pay them not to attack this infrastructure but the government doesn't have the ability to do that anymore. they've gotten back into attacking pipeline. put this in the broader context of the oil market. they say nigeria is the x factor. what kind of effect is this having? >> they've gone from 2 million barrels a day to 1.4 million barrels a day. they were producing 2 million barrels. this is a 30 year low for them.
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it has to do with the decline. it makes up more than a third of their economy. carol: they sell oil and it rings dollars into the country to pay for food. >> corruption and mismanagement has always been a problem. with cheap oil as it is. it makes things a whole lot worse. they can pay for things like rice and manufactured goods. it is fallen since june. for long-term investors,
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a lot of optimism. are they beginning to pull out of nigeria? >> this is a country that grew of high oil and high commodities. dollars in foreign money. big construction companies doing deals with the government. they are now concerned about taking government contracts because they don't think they are going to get paid. civil servants are being told that the work week was cut from five days to three days. the government is telling civil servants to go out and farm. carol: the links that retailers determine that your cotton sheets are egyptian cotton sheets. david: and the search for the family jewels. ♪
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david: welcome back to bloomberg is this week. -- is this week. carol: verifying the quality of cotton they are selling. talk to us about applied dna scientist. >> a small biotech company that is completely unsuspecting. 90 minutes from new york. inside, they are doing dna the samen cotton with sort of rigor and precision that you would find at an fbi crime lab looking for dna of a
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criminal at a crime scene. the dna they are looking for is to determine if a retailer is egyptianhe premium cotton that they are telling customers they are getting. or if they are getting the more common mainstream cotton. this company's mission is cotton detective.- reminds me of the olive oil scandal from a few years back. the sort of open secret in the cotton industry is that as egyptian cotton production has been decreasing because of poor management after the egyptian there was a few rough years in the u.s.. .ut there was still demand there is a pressure to lower
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prices. gettingam cotton was mixed in. it was not at all or only part. applied dna sciences. they developed a way to test cotton species to give retailers and assurance that what they are getting is what they are telling. a study donewas that a lot of cotton product is mislabeled. 83% of cotton labeled is not 100%. some sort of blend or mixture. this if it i notice
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went out and bought them? what i tell the difference? depends on if you are a cotton into xia's. -- enthusiast. they believe it has longer fiber. you are spinning into a thread, you get a tiny thread. you can't get it with upland cotton. it would be softer because it would be more threads, fewer threads. can you tell the difference? >> i can't. carol: you pay a premium. >> a lot of this came about thatse target found out
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it's egyptian cotton sheets were not as they were claiming. target egyptian cotton sheets sell for three times the amount. customers were paying a really hefty premium because they believed these would be softer and customers say they last longer. retailers were paying more for it. consumers were paying more for it. the middleman, someone was shaving cost. david: a new type of underwear that gives men the support they need down under. you often look at how accessories for a certain brand take off. is a particular brand of men's underwear. saxx, they have an innovation
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in underwear. i'm going to let these guys go on. david: not a ton of info -- innovation. what they have done is they have tried to insert mesh panels to make them more comfortable. the founder was fishing for and saying i need to reinvent men's underwear. $20,000 into this company and it has been selling pretty well. it is pretty big business. others are coming in as well. >> others try to innovate as it happens so glacially that the consumer must be ready to buy something new. that theyin said
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could make a cool looking brief. makers are seeing the opportunity. they want to make it more comfortable. the five out there is that men's under well -- underwear is uncomfortable. but it might be time for an informal survey. david: they are catching on? nordstrom started to ship globally in the past spring. there are other competitors, some that worked for the company. a company called my package is the name of the company. they are trying to innovate around the look and feel of these underwear. carol: then as well as government is still in power despite the massive chaos. david: and one tragic congress
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-- consequence of the budget standoff. ♪
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involvings candle league encourages bigger -- the scandal involving vegan craig is bigger than expected. david: welcome back. frome here with alan polly bloomberg businessweek. ellen pollock.
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the ceo was called to washington. he was grilled by senator elizabeth warren and he's in the bank created all kinds of fake customer accounts to make them look better in a certain quarter. they fired a lot of employees -- what they do -- what did they do with the executives? david: elizabeth warren stressed that executives should have something taken away. became a bigcks thing after the financial crisis. in the united states and europe around that time, we do a story that in the context of what's going on at wells fargo, talk about how difficult it is to clawbacks and the various ways it can be done but it's not as simple as it seems. if there david: is litigation,
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is not necessarily worth it. is going through hard times. people there are hungry. thereryone is expecting to be some kind of blow up or change in leadership but maduro is in there firmly. and ask the question, why is he still there and the answer is, he's not likely to go anyplace anytime soon. aat's in part because he has lot of control over the judiciary and military. this country has been suffering because of the price of oil? >> the price of oil is down they rely on that. they import food and a lot of people are suffering as a result. one of your staff writers go down to washington, d.c. and look set to military hospital -- helicopters that are in pretty bad shape. this has to do with sequestration from a few years ago. there were some pretty tragic
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accidents involving these massive helicopters which can pick up a hungry -- a humvee. they are massive pieces of equipment and they have been used for a long time. the result is they are getting old and not functioning as well as they should be. there have been some really tragic crashes. the question is why in a lot of it comes down to maintenance. david: the budget for maintenance was curtailed .ecause of the budget cuts you talk to generals in the pentagon who says there is no easy solution. there is no question it's a maintenance issue. they say they will come up with the money and have increased the budget but this has been going on a long time and it does not look like it will be replaced anytime long.
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there are two helicopters in your piece. the sea dragon is the largest, most powerful helicopter in the military fleet and drags minesweeping equipment at it has been an used since the 1980's. aircraftld war era that is quite old. carol: then there is the super stallion? that is for the marine corps and is used to transport marines and heavy equipment. lift, itext are not can lift 26,000 pounds. it's a strong aircraft. my understanding of helicopters are the small ones that hold a handful of people but this is a different scale. >> these helicopters are 100 feet long, 30 feet high, carol: and can hold how many people? >> the super stallion can hold
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55 marines. david: you detail a number of instances involving these aircraft. what have we seen happening? a verye has been worrying number of fatal crashes. a number of them were because the aircraft are very old. things like wires are rubbing up against fuel lines and causing the escape of fuel and leading to internal fires that lead to a crash. in january of this year, 2 of the marine super stallions ran into each other a couple of miles off the coast of hawaii and went down and killed 12 marines and one incident and that episode is being investigated and we don't know exactly what went wrong there. before that accident, the commanding officer of the go because thet
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squadron was not prepared enough for this general mission. old.: the equipment is why hasn't the government replaced it? >> different reasons in different instances. the navy sea dragon has this very particular mission of dragging minesweeping equipment. the navy has not come up with a better technology to do that.smaller helicopters are not strong enough to drag this equipment and robotic devices that have been designed to operate off of new warships have not been proven effective. the helicopter stays in use but what they call the community, the pilots and maintainers, that community has not been adequately invested in as the navy admitted during my reporting. they admit there has been degradation of the community.
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carol: there is also a deeper look at the controversy surrounding hampton creek. >> hampton creek is a company that has the mission of withcing animal proteins plant proteins. on a global scale, that's an incredible concept. grows world's population and developing economies continue to grow, the appetite for animal protein is so large it might be unsustainable. hampton creek is jumped on that mission to try to solve that problem. many people are thinking about this problem like bill gates and peter thiel. right place but how they are getting there is very interesting. this is a silicon valley darling that was well on its way to becoming a unicorn, very revered and respected. absolutely, the ceo told his
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staff he was moments away from $1 billion valuation but that has been put on hold with the criminal investigations. figure out ifto there is any movement but our senses there has not been. strokes, giveoad us a sense of the criminal investigation. there is a criminal investigation as well as an sec inquiry. our understanding is they are looking into whether or not the company purchased its own product and did not disclose that to investors which is something bloomberg first reported in august. you are talking about buybacks but they were actually buying back products in their was a group of people that josh k, the founder called them creekers?
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who are they and what did they do? the program is over 100 people. these are people who were hired to do in-store demos to help with the company's outreach. it's the guerrilla marketing of the company to be in stores across the company talking to theomers to get them to try product. it was a robust program that had success. we have a lot of e-mails and receipts that shows that these people were paid to purchase the product. usually, the entire shelf of the product in order to boost sales. they had two jobs at one job they were the hampton creek uniform and the other they did not and were told to lie about what they were doing. company making a it possible to buy a self -- to build a self driving car.
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carol: you can also catch us on the radio and a.m. 11 30 in new york. if apple and uber start building a car, they might start at magna international. >> it's basically a car parts supplier. they've got a bunch of different units. they are a six-year-old canadian company but the interesting part of that business for this new
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generation of cars is that contract assembly business. they help ease production bottlenecks for other car companies. means they are interesting to anyone trying to get into the automotive industry have no experience in building cars. new interest in san francisco in building cars, what's the niche this company has found? the value proposition is not only the do they build the cars but they help you develop them if you want to create a new vehicle. they will have engineers sit there with you to develop process and source the components you need and work out how to do it cost-effectively and they specialize in high-end vehicles. that's why they work with the likes of bmw and mercedes and jaguar.
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given the kind of players we could see come to market like apple, these are premium brands and therefore that's why magna might have a good sales proposition. they are the fourth largest among automotive suppliers or i'm wondering about the first three. do they have to worry about competition? now, magna is the fourth biggest but it's the biggest contract assembler. the bigger companies in the can supply automotive components. they do not have the expertise of building a whole car not yet. they might think this is attracted to get into. the other players in the contract assembly business, they are quite small and do not have big engineering teams.
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the business as a whole, contract assembly, has been in decline for much of the past decade until this prospect of new technology and trends. david: how did they decide to get into this? this contract assembly business is something they have been doing a while and it's around a company -- a factory in austria going back 16 years or so which was building cars already under contracts for other people. it was part of chrysler for a while and they got rid of the factory and mangino bought it and kept building mercedes g class automobiles. they are telling shareholders this could be a big opportunity and they could be the foxconn of north american auto industry.
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carol: what does it mean for the large car manufacturers out there? these guys work with magna. one of the big product lines is automotive cameras which are used in self driving vehicles and they supply those two ford and gm and a number of others. there is a slight shift of economics in the car industry. the value in the traditional car industry was the drivetrain. now, the value is slightly different, more in the software. to be the core confidence at bmw or ford or gm to build the engine and now that will be increasingly commoditized moving to electric vehicles and they will add their value with the software.
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competees it tough to with new entrants because software is their expertise and has been for decades. there is a huge talent race to ensure that carmakers have the best software program and to create the most compelling future experience. up next, the brains before spot -- behind spotify. ♪
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welcome back, the 50
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most influential market movers. we said dam with the editor. let's start at the top of the list. theresa may is number one? >> we will be talking about brexit for a long time. this is a woman who almost by accident and now the fate of europe's biggest financial center rest largely in our hands. when she trickled -- triggers article 50, of the key things will be whether all the financial firms that made their headquarters in london will be able to continue doing business in europe freely and that will be a big negotiation. a prominent woman at number one and 2 -- hillary clinton is number two. do you think about that when you are putting this list together?
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>> initially, we were looking at the polls and wondering if her number two. are a tie and people looking at hillary clinton to see which camp has more influence over her whether it's her wall street benefactors and her previous jobs or whether it's the bernie sanders people she has been courting. we know of hillary clinton and donald trump and theresa may but what was your criteria for picking the folks who made this list? how do you get on this list? >> we start by going around bloomberg in new york and our bureaus and asking for nominations. we end up with a list of 100-150 people and then we pick a smaller panel of people and we asked them to vote in the names and then we went out it down to
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50. art thanng is more science. with an emphasis on performance in the last year. this is not a lifetime achievement award. rol: even if they screwed up in the last six months? >> yes, and some people were on last year who are not this year. you will notice that there are not that many hedge fund managers. that industry is not having a great year. david: there is a profile of making spotify a success. issue with streaming music as you can listen to almost any song that has been recorded immediately on your phone but it's too much music and you are overwhelmed. most people listen to the same old stuff and how do you wind up listening to new music? that's what spotify is coming up with. they put a recommend new music
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every week that you would actually like. i think the recommendation services, you might've heard of before but it's like the old amazon. david: they are recommending things via algorithms. >> amazon uses algorithms as well but they recommend music you have met her by artists you but theyamiliar with have a system where they pay attention to what you are listening to and they have a andbase full of music analysis of peoples play lists. they have 2 billion playlists. they have a good database to draw from.
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they really thought about their discover play list. they do it once a week on monday and it's curated. i mentioned this at a meeting a couple of people came up to me and said i love that service and that's why i stayed a subscriber. i had not looked at spotify in about a year. i joined apple music. it is kind of amazing. they add a couple of songs like covers or artists you are familiar with. contagious. 40 million users have tried it during the time that discover weekly has been around. they have gained something like 25 million new users. why are not saying that's that happened but it must've had
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something to do with that. david: who is running this for them? 36-year-old whose career has been a music discovery. he worked at the echo nest of that developed lots of algorithms. that henot claim invented this thing that he is the guy who is a product to guy. that is a term. out how to help people want to use this thing. givee at spotify said to everyone a personal playlist every day. you don't want to hear 30 or 40 new songs each day so they came up with monday and 30 songs. some people wanted to recommend 100 songs.
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it digestible and approachable and that's sometimes the problem with the services is they can work but you get overwhelmed. this is different. in your story you talk about an automobile worker becomes a dj. thanks to spotify, he is now touring europe. they find new, new music. they say it's not the people spending more time on spotify weekly ishe discover popular but they are spending time with artists and listening to newer artists. that's good if you are an automobile worker in sweden.
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it has ramifications for the broader music industry and who will be the gatekeeper of the future. carol: i'm going to talk about magna international. this company supplies automobile manufacturers with everything. at driverlessng cars and how they might be ultimately working with apple or over or google perhaps. uber or google. david: i thought the spotify story was great. it's finding a way to make sense of music and it's a great piece. carol: a lot of great stories in this issue of business -- bloomberg businessweek on stands now. ♪
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,l
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thatming up, the stories shaped the region business around the world. central banks in tokyo and washington are in the spotlight and on the spot. >> i don't think it's a pledge from janet yellen anymore. > paper with r enjoying this environment but is the sustainable over the long term? >> no. speak franklyate about their opportunities. all report says it's terrible. we are cautiously optimistic

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