tv Bloomberg Business Week Bloomberg December 26, 2016 8:00pm-9:01pm EST
>> it is 9:00 a.m. in hong kong and midday in sydney. toshepa having a tough time in it. it is opened in tokyo and trading at the lowest levels we have seen in a month. why? it cease a loss at its american nuclear business. that follows the ok situation of a power business by westinghouse last year. there are conflicting estimates of how much, one says $850 million, and others say $4.3 billion. more challenges for the prime minister of japan.
the unemployment rate rose for the first time in three months in november. c. p.i. dropped more than anticipated to six%. a bit of early date from china indicates the economy is finishing the year on a firm note. there seems to be no signs of faltering after tree straight months of 6.7% of groat. companies reporting momentum with mood among execities the best since august of 2014. intelligence saying the expansion picked up to 7% last month. the bundes bank has a warning about italy's banks. they told the newspaper that government fund should be a last resort and that measures should be offered to lenders that are fundamentally healthy. they may need as much as $9.2
billion. that is based on a recent stress test. the pang's board will meet to discuss. its twitter account was hacked nd falsely reported brittany spears' death. officials plame the earlier ttack on nani hackers. super mario's run seems to be coming to an end. the game is only available on longer vices but was no highest grossing and in any done. a week earlier it was the most profittable app. it was still on top in 88 country, down from a peak of 138 on december 17.
we look at the markets at the moment, the once that are trading. asia mostly shut because of the boxing day holiday. have korea, japan, taiwan heading in different weeks. >> welcome to "businessweek." i am carol massar. in this special year end double issue, poland offers donald trump a blueprint for how not to drain the socks. >> and how it is sunny for goldman sachs. >> and wick pasadena dwra wants to become the gold standard for diversity in the work place. >> all that ahead on "bloomberg businessweek." [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org >> we are here with the editor in chief, may began murphy. in opening remarks you look at
technology. you think about the yahoo hacks and the samsung phones, not such great stories, but overall not a bad year. >> this is going to be one of the seminal pieces setting us up for 2017. we can talk about samsung phones catching on fire, hacks or some of the companies that didn't have a great 2016. but the point made in this article is underneath that we have seen things like uber make advancements in self-driving cars. we have seen technology and computers ability to read speech add accelerated levels. what it does is how technology is going to step forward and how it pushes itself to come out of the ago n.s.a.ic political stance. have had a huge confusion about news. is this going to be the moment where tech has to come out from
the shadows or a politicaly neutral stance it has tried to take in terms of privacy and technology and be forced under trump to make a stand. >> and not just tech. this is good business. >> it has been a 2016 full of surprises across western democracies and the world. it is a time to step back and say look, we are facing an unprecedented rise in economic pop has and a rise in threats of terrorism and et cetera. we wanted to point out some of the companies and relationships, some of the parts of the world where people are doing things that you don't know are as good as they are doing. woe want to celebrate that. we want to step back and look at business and say look, we should recognize and tell people who are fighting for sustain ability, fighting for fishing regions in the south china sea and take a holistic
view of business. >> one of the features is on wikipedia and what they are trying to do in terms of making it more diverse. >> this is a fascinating piece. one of the great statistics in this piece, there are like ,300 articles about princess leiah's home planet. whether it is writers, social justice figures, and this goes unthe covers in looking at wikipedia and what efforts are taken to change that. recruiting more towers editors, having people have more access to put in these names and flesh them out. it snoddy easy. 80% of wikipedia's current editors are white and male. many voices are saying this has to change. it is only reflective of a certain segment of society. tinues o change and con
to be a change. it is a look at how this can change and what we are seeing across all areas of technology, pushed up instead of down. >> we spoke with a reporter. >> wikipedia founded in 2001 is an online encyclopedia. it is free to use and free to edit. so anyone in the world, you, me, the president can go on and just start writing encyclopedia entries. then there is this giant community, tens of thousands of editors who then look at that and re-edit it and change the entries. it is this continually self-correcting organic thing that somehow manages to be quite good. 10 years ago people sort of made fun of wikipedia. it was embarrassing to have a wikipedia page open in a news room and you would never admit you looked at it. now it is not perfect, but it
is good. it is about as good as comparable encyclopedias or text books. there are a few areas where it is less good like in terms of prescription drugs, but it is good. >> what about editors who then look at the entries? >> this is where it gets sort of problematic and interesting. wikipedia's original users were open source software geeks. in other words, white guys who are interested in tech. that has left the encyclopedia ith sort of limitations. there are certain areas of expertise that it doesn't have, and there is than much diversity. you have an editor base that is like 90% male, mostly white and from the u.s. so you see gaps in wikipedia. the foundation which manages -- and manages may be a generous term -- but attempts to oversee the encyclopedia is working on
it, but so far they haven't accomplished tons. >> there is no editor in chief. >> exactly. there is no boss who can overrule and article or commission an article or delete something. it has to come from the bottom up. there are different layers of volunteers. there are administrators, but there are something like 1,200 of them. those people are also volunteers. there is no overruling a wikipedia area. >> that gap is a filter bubble problem? >> yes. it is this idea. we tend to think of the internet as being this thing that encourages a diversity of opinion. i can go on and i can read very cogent argues from people on other side of my political beliefs. pretty much endless amounts of content about anything. but we pretty much just find stuff that we agree with.
during the conversation around misinformation or fake news around the election, one of the things people talked about was the idea of filter bubbles. you see an article on facebook that confirms biases that already exist with you. you see donald trump just shot somebody on fifth avenue, you are more likely to share that and that perpetuates this misinformation. wikipedia has the same problem. you have this group of editors that are interested in tech and running an encyclopedia, but aren't familiar with all areas of human knowledge. so you get problems. in 2013, harper lee, one of the greatest american novelists was listed not on a page for erican novelists, but on a page for american women novelists. there will be long entries on
moons in the tar wars universe, but he will be missing key elements of feminism or world history. topics that are important. >> tucker a good business into a good cover was the job of babbitt vargas. >> it is another special issue. it is one of those covers that obviously has to snop size an entire sort of package of features, stories. >> the stories of all over the map. in talking to everybody. it is quite a ring. >> yes. >> so rather than try to cram that all into the cover, we just went with the overall theme of the issue, which is good business. a lot of times we do stories that are slightly critical of businesses we cover. this is in some cases the opposite. so we go with a very positive theme overall. >> is it easier or more difficult when you have a theme particular issues versus one story to put on the cover?
>> it varies. good business is tricky because it is so simple. sometimes we have to tell ourselves it is ok to embrace the simplicity of the idea instead of doing something more con september wal. if we focus on our one story, we have the story on the cover. it can go both waits. >> these are things that are symbols of well done, good business. it is a freaky hand. we have one illustrator on staff, and she has a very unique style that we use on the inside as well. we had her render this slightly odd looking hand. >> the good part is like overkill. it had look good business, great. >> yes. we have a tendency, if we are going to go with something, we do it to an almost byperbolic degree. >> up next, a warning from
>> welcome back to "businessweek." >> in the global economic section, the lessons poland can teach donald trump if he does intend to drain the swamp in washington. >> we spoke to a reporter, mark champion. >> in poland you had a government that came to power in october of last year, and they made some of the same complaints, road to power on some of the same resentments
and issues that donald trump did in the united states. their support base was out in the countryside, the smaller towns, people who felt left behind by globalization and the benefits of joining the european union. they came to power promising to sweep away an elite. now that is a different situation from the u.s. but what the president and the party said was there is a kind conspiracy of ex-communists and lillibridge rat allies who have run and misruled poland since the 1990's. they spent a year. they had promised that they would sweep these people out, and they have gone about doing it. they removed 300 executives from the state-run companies and put in different people.
they removed about 1,600 people from the civil service and replaced them. they removed 130 or so journalists who either were removed or resigned from the public broadcasters, put the public broadcasters under their volley, the prosecutor's office under their control. so they have been doing that. the interesting part is that as they began to do that, they pushed up pretty quickly gainst checks and balances that are in the democratic process. that has led to a big fight in the constitutional court. >> talk to us about that fight. what is it and where is it going? >> we have a big moment right now. on december 19 the head of the court, his term expired. he has a nine-year term. it expired. he has been blocking a bunch of
changes they have been trying to make for the last year. first of all, they try to put an extra three judges on to the court who they weren't really entitled to put on to the court. there are 15 on the politician court. they weren't the first to do this. the previous government had tried to add an extra two. those were extinguished by the constitutional court itself, found young constitutional. but now justice is trying to appoint five instead of the two that they should be appointing. so they have resisted that. the government has put through six different pieces of legislation determining how the court should run. the upshot of most of that legislation is the court -- made it much harder for the court to scrutinize legislation and declare is constitutional. it is essentially neutering the court. >> if we look at poland, and we
are trying to understand certainly for those folks here in the united states what might happen as our president-elect donald trump talks about draining the swamp. what are lessons learned from what we are seeing in poland potentially? >> well, i think the primary lesson is that when you went to do something really radical. rightly or wrongly, that is really not the question. but when you want to move large numbers of people out, and you want to change the way that the system works, in order to do that very quickly, you tend to come up fairly soon against checks and balances that are inserted into the democratic process in order to make sure that a majority government doesn't run roughshod over the rights of the minority who didn't vote for them.
that is lesson in poland. it is not a prediction of what is going to happen in the u.s. things have changed enough over the recent years that we can no longer say look, those countries in eastern europe, they are completely different. it is a little weird there. they get more radical governments. we are getting pretty radical governments and decisions now in the west. he point of this sort of parable is really to understand where the pressures will come. >> up next, the seemingly midas touch goldman sachs has no matter who wins elections. >> and how some colleges, the so-called little ivys tap into their connections on wall street to deliver top returns.
>> welcome back to "bloomberg businessweek." >> you can listen to us on the radio in several stations. >> and in london on these -- >> in the markets and finance section, how goldman sachs managed to come out on top with the incoming trump administration, even though candidate trump targeted the bank on the campaign trail. >> we spoke to a reporter. >> it has been remarkable. their stock is up something like 35% since donald trump won the u.s. presidential election. some of that -- or a lot of that has to do with trump's policies and the fact that a lot of people think he is going to roll back regulations on wall street. he has talked repealing all of dodd franc. it is at least 1,000 pages.
it is unlikely that all of that is going to get rolled back. volker rule ke the is there. with using o do bank money and others to invest in private equities. >> it is a ban on prop trading and a limitation on stakes in hedge funds and private he could quit funds. both businesses were very big for goldman before the financial crisis. stakes in hedge funds and private equity funds remained big for goldman. they still have roughly $7 billion left they have been working on selling down but haven't sold yet. and then the prop trading, they have been subject to the ban too. it is not clear to us how tightly that ban has been enforced in the last couple of years. >> this has to be one of the
most interesting stories of the year where you have after the trump election, goldman is up, morgan is up, all the financial companies leading the market. but then leading into the election, obviously they weren't exactly portrayed in the best light not only by the public, but by trump specifically. they endorsed hillary clinton. they came out and said that they think she would be a good president. spkly at goldman, there is a relationship between clinton speaking at some of these places that trump supporters put out in the limelight. how is it this happen? are are and trump did an add where he specifically targeted lloyd of goldman sachs and said how terrible they are. >> how does that work? did they won trump to win all along? what is the answer there? >> that is a good question. i wish i had all the answers for you. i am as surprised as you guys are, as a lot of our viewers and listeners are. i think some of it has to do
with the fact that a lot of trump supporters aren't that closely monitoring who his appointments are. i don't know, but my suspicion came are not -- i just off a conversation with somebody down in d.c. who has been watching this pretty closely, and the point he made to me was if the goldman guys at the top of trump's administration create jobs, bring manufacturing back, nobody is going to care that they were goldman guys. they just want their economic livelihoods restored and brought back. so you have a president-elect who is making appointments, it is during the holiday season, maybe the people who got behind trump are not watching really closely. and then come january into february, the rubber will hit the road and they will see wow, we have a couple of goldman guys. let's see what they can do for
me. >> as a reporter, i can't think of anybody who is more ingrained with your sosses. you have been on this beat a while. when you talked to people on wall street, what was the reaction to how their own sector has been favorable to investors the past week? it has been amazingly fascile. it was hours after the trump election and the election rulls came in, and we were already talking to people who said this could be good for us. we could get behind this guy. so the ability for them to quickly switch and sort of get behind the winner, even though i have been doing it a while, was pretty remarkable. >> in the markets and finance section, they may not be ivy league, but small liberal arts colleges in the northeast have big wall street connections. >> sometimes that is good for
endowments, but not always. the little ivys are the designation that people have ven to the wealthy northeast schools, the one where if you couldn't get into harvard, maybe you will go to colby or something like that. >> great schools. >> great schools. but they don't have that same intensely competitive application process. they have dow jones acceptance rates, not single digit. >> how does the notoriety -- it ounds ridiculous, but how does acceptance rate translate to endowment and how much money they have to operate with? >> if you have more applicants, you probably will have a larger class. for these schools, they are smaller, they have a smaller alumni base and they have fewer
alums they can tap and ask for $po million to $100 million for that. >> endowment returns. we have seen endowment returns from a lot of universities. it has not been a year or so, or two. eye out for the little have i. >> it was 2.5%, which object level is a bad year. for the little ivys it was worse at 3.5%. so it was worse than the national average. my reporter and i wanted to look into it. it kind of defied what we would think because you have these prestigious institutions with these investment committees that are chock foul of wall streeters, really smart people. but yet they witness able to cash in on that to produce the same returns as the ivys.
the ivy legs, who have a similar type of base, they returned a negative .8. so better than the national average and a big difference from the little ivys. >> do they usually track the same in terms of performance? >> they are typically closer. we are the first people who tracked the little ivys as a cloakive group. they typically do track similarly. that is because this push toward the yale model, instead of doing stocks and bonds, they private equity, venture capital. they do these things differ.
this year didn't pay off though. . >> up next, one of the world's most powerful fashion companies is turning his supply chain green. green. >> green. >> i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers.
private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. >> it's just about 9:30 here in hong kong. i am rishaad salamat at the latest. willis a historic visit commemorate the victims of the attack on pearl harbor in 1941. it will be the first japanese prime minister to visit the memorial. he is set to meet later with president obama, who earlier this year visited the site of the bombing at hiroshima. they have said shinzo abe will pay respect the dead, but will not apologize. a storm killed at least six people in several provinces. several thousand were forced to abandon holiday celebrations.
it made landfall on christmas day. the initial inquiry into the air crash shows a series of human errors for the disaster. plan did not meet international standards and the play was not carrying enough fuel to make the destination. addition, the plane was also significantly overweight. course, many parts of the region due to the cream -- due to the christmas holiday. it is lurching higher after starting the session half with some decline. costly up as well. kospi up as well.
manila up by a quarter of 1%. about 4/10 ofing a present in decline. oliver: welcome back. i'm oliver renick. carol: and i'm carol massar. still had come the men behind urentrocks -- saint la doubling down on being environmentally friendly. oliver: investors are lining up to get behind green infrastructure products. we will tell you about the man behind the trend. and, robot babies. oliver: all of that is ahead on "bloomberg businessweek." ♪ oliver: we are with businessweek editor-in-chief megan murphy to talk about some more important issues in the magazine. must-reads. let's talk about the markets and the finance section which is about litigating in germany.
megan: this is quite common across western europe and the difficulty of pushing forward and it goes into the impediment that you face and run that kind of litigation in germany. it is talking about volkswagen in terms of getting consumers and people who bought these the w cars who had she systems built in on emissions. this guy running this case and trying to generate this big class-action. one of the biggest impediments actually in germany is that the lawyers do not get a cut. so, there is no incentive for them to get this huge slice of the settlement fees. we see in the u.s., the settlement of the u.s. cake -- the vw case taking a $175 million cut. that is not to say they are profiteering, it is just that our system incentivizes consumer lawyers.ivizes
the system is not the same in germany and it is not the same across europe. carol: and if you lose, you have to pay the court costs. megan: yes. it is a big deal. carol: the currency has collapsed and created problems in the country. megan: there is a nice chart that talks about hyperinflation in venezuela. and how much it has depreciated. like zimbabwe and by our germany. by our ranking, venezuela is the 23rd most severe period of sort of how much of the currency has deflated overtime. carol: it goes back to 1795. oliver: that is incredible. you can see trends within it as well. ok, let's talk about the story in the business section which is focused on industry not having good sustainability. megan: we take a look at what has been done a cost high super luxury brands and there is a section that talks about they are looking at how to make tight -- pythons in their fashion more sustainable and part of that is
if you are going to grow or have or maintain a sustainable source. this is important stuff. fashion is one of the industries we frequently look at. think of leather, access and luxury. together tipped tail across these brands and really look at where you can change this, where you can make an impact. everything from driving workers wages up to making less permanent environmental damage is something that is very important and other companies have realized is a example. carol: we spoke with them. >> caring has stood out on the sustainability front. a lot of fashion companies think about it but i don't know if they go forward with enough. enough changes to what they are doing on the backend. carol: you have talk about what caring is because i didn't
realize they changed the name. it is a very well-known company. and some really extreme lux brands. >> kering's biggest brand is gucci. they also have puma, a bunch of other stuff. they are a company that runs these luxury brands. in order to get big, they have to have multiple brands. carol: formally ppr. >> francios pino is now the ceo. >> about four years ago, they said we will do x, y, z measures to be more sustainable. where are they now? how have they made progress on that? >> in 2012, they looked at everything in their supply chain. where they get their precious skins and furs from, from the
sources of the other raw materials. how much plastics they have going into what they are doing. and, so far they have managed to reach a lot of those targets. in those four years. carol: i love the detail you go into but you talk about they created a sustainability committee at the board level and also some of the conversation is tied into sustainability and the success of sustainability. >> everybody has targets. every brand within his company has to be on board. he forced them to be on board. if they don't do it, it will cost them a little compensation. oliver: what is it about the fashion industry in terms of where the materials come from, related to animals, related to labor. is this an industry where this is particularly in focus and sort of important to assess? >> fashion is one of the most
polluting industries in the world. people do not think of that too much because it is really opaque. the supply chains at most of these companies are really opaque. you don't know where your clothing is coming from. sometimes the companies do not know because they subcontract out to smaller factories and so on and don't even know where their own things are being made. it is about margins and a large extent. labor is very cheap and very easy to move. to move where you are creating your stuff. i mean, most clothing is made by a person sitting at a desk with a sewing machine. if we are not walking into factories in bangladesh, we do not know that. carol: the man who pioneered the no money down formula now wants to spread it to other high-tech industries. oliver: we spoke to chris martin about generate capital.
>> generate capital was founded about two years ago by the founder of another company. carol: we have heard of that. >> interesting guy. he founded it with the idea that we need to work asked her to -- faster to avoid the worst parts of climate change. and to wean the world off using fossil fuels that are causing the climate to warm. he sold the business, edison and that was back in 2007. he was wondering what to do next even as his company was taking off. so he hooked up with a couple of buddies and they formed this company called generate which is designed to accelerate investments that will reduce use of fossil fuels. carol: smaller investments?
>> yes, what big banks do not care about because they are too small. they do not generate enough fees. and there is a lot of due diligence because these are new technologies that few people know about. carol: i love what you said in your story to wean the world off is one million-dollar projects -- is -- rather than 1000 $1 billion projects. >> right. like i said, these technologies are being nor by the general -- ignored by the general banking industry. they started looking into what types of technologies would do the most for the least amount of money. one of the early ones was battery designer and installer. called stem inc and they had been getting some success applying this no money down leasing model.
battery systems for hotel chains in california. a hotel, they helped lower their electricity bills. as well as drop less power from the grid. another one they started with early on was this brand. it came out of m.i.t. -- a technology-using electric microbes that take water waste and convert it to basically clean it by eating what is in the wastewater and converting it to methane to produce power. oliver: what makes it advantageous i guess for them to use this sort of program instead of saying this is a technology we will buy and implement it. because they do not know how much they will get back from it? is there risk associated with it? >> a lot of reasons. the first one is cost. they are a brewing company. they don't typically have a lot of cash line around to invest in
something they don't know a lot about which is wastewater treatment plant. yet, they needed one so they agreed to set aside some money for this technology, to try this technology. in part because you know, it is a simple process. you don't have to build this wastewater treatment plant. it comes on a truck, a container. using that single container, they can expand. they can expand as the beer sales expand. oliver: what was going inside yahoo! when hackers stole information from one billion accounts. carol: european e-commerce site struggling to fight back competition from amazon. this is bloomberg. ♪
oliver: welcome back. i'm oliver renick. carol: and i'm carol massar. in the technology section, the recent yahoo! hack was worse than it sounds. oliver: it included victims from the fbi, cia, nsa, and white house staffers. we spoke to a reporter. >> back in september, as yahoo! was just announcing they were going to be acquired by verizon, yahoo! announced a really big breach. it was 500 million user accounts, basically half their user base. by any standard, that is a really big deal, and it kicked off a round of conversations with verizon on whether that price, which was $4.8 billion, should be negotiated down because of the liability of that breach. last week, yahoo! announces an even bigger breach, which is a billion user accounts. that's how many users they have. that is basically the entire company.
that kicked off a round of furious negotiations about liability basically and what should the final price to verizon be for a company that will face years of lawsuits. carol: i feel like britney spears. oops, i did it again. this was another hack that was a few years ago. what was also interesting, as you point out, it was military employees, government employees, intelligence employees. it was who got tapped into which makes this a more serious story. >> that is right, yes. an interesting back story. yahoo! announced its first breach in september. it was from 2014. we had been working with a cyber security researcher who actually acquired the stolen yahoo! database. as we were analyzing it, what we discovered was the leaked information did not match up. it included backup email addresses that many yahoo! users
give to the company in case they were locked out of their account. the story we were preparing was on how many u.s. government and military employees gave their official work addresses, which for criminal hackers, that is a bonanza, because you are able to identify people with very little work who worked for military intelligence. you know, the nsa, cia, dod. that is the story we were preparing. in the course of asking yahoo! a bunch of questions about that discrepancy, something nobody saw coming, yahoo! disclosed the second breach of that data, again involving one billion accounts. it is a huge deal. oliver: when we talk about the deal here between yahoo! and verizon, why did they raise the price of yahoo!? i can think of one reason people might leave. my dad it uses yahoo!, and he is going to freak out when he watches the show. people like that, are they going
to leave? are they going to lose eyeballs and their advertising? will that drive the price down? >> one concern, of course, if yahoo! users start fleeing in droves, that will be a problem for verizon, but that is not the primary problem. when verizon is looking at are two things. one, these data breach lawsuits could be extraordinarily expensive, especially when you are talking about loss on the scale of yahoo! there is an interesting angle. when the vast majority companies that are breached today, the first thing the general counsel tells them to do is to issue and pay for identity theft protection services for all their users. you know, this not out of the goodwill of their hearts. this is because it is an insulation, an inoculation against, you know, future lawsuits. and the second reason is
potentially more distressing for verizon. if there was theft of intellectual property from yahoo!, which yahoo! is not required to disclose, that is a big deal. verizon is buying the user base and the advertising technology, the advertising clients that yahoo! has for their banner ads. both of those things take a serious hit. oliver: one european e-commerce website is struggling to keep up with amazon. carol: that is not stopping them from trying. >> this company is a german -- they wanted it to be like zappos. remember them from a few years ago that amazon ultimately bought? the shoe retailer. they started as that but moved very heavily into fashion, and they have done a really good job here. they have got 6% of the market across europe, i believe. the problem is they have amazon in the rearview mirror and it does not look pretty.
amazon moved up to 5.7%. just behind them. they are both behind one slightly larger player, but it is kind of an older mail order house. they will get ahead of auto and the next couple quarters. carol: is it high fashion? for those of us not familiar with this online fashion site. >> it is high-ish fashion. it is the kind of -- you know, they have got nice stuff but not super high-end. it is not one of the luxury houses. they have good stuff. they tend to have more up-to-date fashion than amazon. one thing that -- we have got a report from bernstein that talks about the relative, kind of, penetration of the brands they have got. you will see that they have got something like half of the top 20 fashion brands in the u.k., whereas amazon has about four of them.
also, it has quite a bit more up-to-date stuff. amazon, most of their stuff or a lot of their stuff tends to be kind of last season things so they discount it. they look more like a discounter. it looks more like a full price store. carol: when i think about amazon, i think about a lot of things, but i don't think about high fashion-ish, but is that a new area they are going into? >> they are definitely trying to get there. the head of amazon's fashion push in europe, who just moved from seattle to london, she tells us she was meeting with the ceo of hugo boss, trying to help them sort through winnowing the brands. they are trying to move upscale. they say they don't want to be the place you go for cheap fashion online. they are trying to be a place where you go for trendy stuff. they hired some models and booked an italian blogger. some american socialite who is
in ads with her dog. they are trying to become hip and cool. not just the place to go for cheap. carol: amazon is nipping at their heels over in europe. zalando, i assume, is not taking this lying down. >> not at all. no, they have kind of worked on shoring up their relations with the companies that they have got, a lot of the brands they have been working on for several years. they are kind of improving the quality of their photos on their website to increase the appeal of the merchandise they have got. carol: why one company thinks its robot babies will prevent teen pregnancy. oliver: this is bloomberg. ♪
carol: welcome back to bloomberg businessweek. i'm carol massar. oliver: and i am oliver renick. you can catch us on the radio on sirius xm channel 119. and on a.m. 1130 in new york. 1200 in boston. 991 in washington, d.c. and a.m. 960 in the bay area. carol: in london and in asia on the bloomberg radio plus app. oliver: in the good business section, a company in wisconsin says it's, $700 robotic baby can teach kids not to be pregnant. carol pot but a medical journal disagrees. here is our reporter. >> they focus on reality works. it is a private company in wisconsin. they make these robotic infant simulators. they invented them in 1992, and it has become a staple of american education there. the problem for the company came in august when this prominent british medical journal put out a study that showed they surveyed girls in australia that had taken these babies home as
part of their teen pregnancy prevention curriculum, and they found that the girls who took the baby's home, as opposed to those who did not, they actually were twice as likely to get pregnant. for the company, that sent them into turmoil. there were negative headlines around the world and the media really grabbed onto that. part of the idea of these babies is they will freak kids out eventually into becoming parents. they will not become parents after taking this baby home because it is so exhausting. for the study to show the exact opposite really posed a very real threat to their bottom line. carol: first of all, for those that might not know about these robotic babies -- i was shocked to find out they were in two-thirds of schools, which kind of blew my mind. how do they work? you tagged along with one student who was babysitting, if
you will. >> i did. so the babies, you know, it kind of looks as real as it can, like a newborn baby. it weighs seven pounds. it comes in a variety of skin tones. these babies, they cry, they need to have their diapers changed, they need to be fed. it has a network of sensors, so it is a very technologically advanced item. i went to south dakota and followed a long with a 15-year-old girl, and she went to rapid city central high school and had to take the baby home for her child developing class. that was the assignment for the weekend. i just hung out with her as she went about her daily life. we went to her grandfather's house for dinner. we went to walmart for christmas shopping because it was just this month. just a little while ago. she just had to take care of this baby as if it were a newborn baby. the cries are actual recordings of real babies. it is time to real infant schedules. the company tries to make it as
realistic as possible. carol: when the baby cries or needs a diaper change, they have to respond and actually do something with the baby. all that information goes back to the school. >> exactly. the students, and it is not just girls, by the way. i followed along with a girl because it was the most relevant to the story because we are talking about teen pregnancy, but the boys do it, as well. the student wears a bracelet. they cannot take it off for the whole weekend. it has a sensor in it. so they have two minutes if the baby starts crying. if you are in the middle of walmart shopping, you have to stop what you are doing. you have to swipe your bracelet over the baby's stomach and let them know you are responding. you have to figure out what it needs. does it just me to be held? does it need to be fed. sometimes the baby needs to be rocked like a real baby. there is no desire for anything other than that the babies are. very technologically advanced.
they store all the data in their bodies, in their circuit boards, and at the end of the weekend, the teacher downloads the data to assess how a student did. carol: bloomberg businessweek is available on newsstands now. oliver: and also online. what is your favorite story? caroline: i really liked the story we just heard about robot babies. they are made by a company called reality works. i had no idea about the company. they pretty much on the market, -- only market and these robotic , babies are used in about two-thirds of the school districts in the country. the whole idea is hoping to prevent teenage pregnancy. a study came out saying, maybe not so fast. they are not working. the company is fighting back. i found out a lot about the company. oliver: i liked the goldman story, because i think it is one of the most interesting stories of the year surrounding the election. you obviously have very vocal support for secretary clinton from goldman but then donald trump has their stocks popping. i think it will be interesting story.
♪ evening in00 in the new york city. i'm rishaad salamat with the latest first word news. china's economy is finishing the with signs of faltering after three quarters of 7% growth. climbed.metal prices earnings on the way up to $111 billion. a chinese economic group picked up to 7% last month. a surgeon trading volume on the yuan.e you on -- jan --