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tv   Bloomberg Business Week  Bloomberg  June 23, 2018 3:00am-4:00am EDT

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♪ >> welcome to bloomberg businessweek. a big show for you this week. we start in london where we explore that city's future as a financial hub. we go to south carolina where we talk to the although ceo about the new plant there. what it means for that state's economy and for volvo's chinese
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owner. an evolving story about the thousands of immigrant children separated from their families at the u.s.-mexico border. so many facets to this story. we looked into it with editor matthew philips. the lastthe epicenter few weeks has been this one detention center in brownsville, texas, a former walmart turned into a detention center and run by a company called southwest key programs. they are the biggest by far beneficiary or contractor of this government program to take into custody and to care for these children. we ran some data. they will be making probably more than this because the numbers are not current, but on the order of half $1 billion just from the federal government this year. that is a 60% increase from last year. economics.t the
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it's a nonprofit. they are based in austin. they run a dozen of these facilities in texas. they are operating in a handful of other states in the southwest. we looked at the economics and how these companies are set up. they are there to provide health services and custody in care. their main client is the federal government. this obviously has a human level meant -- human element. but we wanted to look at the business side. ceo.u also talk about the the man who runs this organization has gotten nice raises over the last couple of years. >> we are learning about this guy as we go. his name is juan sanchez. his compensation has gone from $200,000 to more than a million dollars last year. we are unclear about all the sources of that income. there is a charter school that he is affiliated with in austin.
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we are also doing reporting right now about some of the other situations in other states. they are set up as a nonprofit. hundreds ofting millions of dollars in revenue to operate these facilities for the federal government. and that is only set to increase. whetherno insight into -- it is a nonprofit, so we are not sure what they're claiming and what they are not. obviously, they are bringing in a ton of revenue from the federal government. >> do we have a sense of how the money is being spent at this facility? >> you can put hard numbers on that. a lot of the data we were able to put together came from the agency that is in charge -- that sits inside health and human services. looking.ery backward
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it does not appear to capture immigrantse of these kids flowing into these centers over the past couple of weeks. so those numbers will only go up. carol: just to build on what jason asked, i don't think they talk to you. you have reached out and they had not said anything. do you have any idea how many caregivers per child? what kind of care? health care? food? the conditions? members of congress have tried to get into the facilities. they have been blocked off. it only added to the controversy and attention put on this. initially, the policy was not to let media inside these places, nor to let lawmakers -- a bunch of lawmakers descended specifically on this one facility in brownsville over the course of a couple of days.
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a number of senators were denied access. audio from this one particular center from immigrant lawyers that is quite heart-wrenching. there have been a couple of two is given to lawmakers. they have loosened up. no cameras are allowed. a couple of members of the media have been a lot inside. reports of being kept in fenced in cages, on the semantics of it, does seem the situation. fed, like they are well well care for it, no one is thirstier hungry. they are air-conditioned. in terms of their physical health, they seem ok. but that does not even touch on the mental health. missiles next, russian everywhere without having been fired. jason: and how the country recaptured its swagger. carol: this is bloomberg businessweek.
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♪ bloombergcome back to businessweek. in the politics section, we take a look at russia's a defense system. it's never been tested in combat. jason: it has never been fired in any sort of how but has provoked skirmishes from eastern europe to the indian ocean. henry: my story focuses on the 0, a missilee s40 defense system that is increasingly popular in the world. russia is in talks with a number of countries that would be seen
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esther traditional u.s. markets, saudi arabia, qatar, and it has signed an agreement with turkey. this is a major concern for the united states. that's why i am focusing specifically on this weapon. obviously, there's wider competition in the arms market. but this weapon has a geopolitical dimension as well as a purely commercial one. jason: physically, what does the system do? what does a purchaser a country look to do with it once they haven't? henry: -- have it? henry: eight protects sooner 50 kilometers. it shoots down any incoming ballistic and cruise missiles. jason: this is associated closely for the last couple of decades with the patriot system. any is something that
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viewer our listener would be familiar with, going back to the gulf war. where does this for the patriot? henry: there are countries which are always going to choose the simply over the s400 because they would not buy russian weapons. what is interesting here is there are markets which you would think the u.s. would have a hold over that now russia is trying to move into, specifically saudi arabia. thes in talks on buying s400, and qatar as well. the patriot is losing some of its edge. and the relative performance of the two systems, they s400 has never been tasked -- the 2400 has never been tested in battle. carol, there are other countries that have already placed orders and taken delivery on this. why are they doing that?
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henry: there are reasons for that. in the case of turkey, why they have gone for the system is durkee's relationship is deteriorating with the united states and nato and it is trying to find -- because turkey's relationship is deteriorating with the united states and nato and it is trying to find a new level of relationship when you have a weapons purchase of this kind. i don't think turkey wants to give up its relationship with the u.s. but it wants to have different possibilities. carol: what about the u.s. sanctions that would punish anybody doing business with russia in terms of buying any kind of defense systems? shouldn't that have an impact? why is it not? henry: clearly, it is a concern. the language of the sanctions bill was that there would be reprisals against any significant transactions with
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the russian defense sector. it's a question of how you define that. it's interesting that countries up thesehing possibilities on both sides and are willing to go for something that potential he could have negative consequences for them. jason: in the economic section, not a lot of happy news on that front, except for spain where there's 3% growth. carol: that is pretty impressive considering that it shrank from 2013. jason: we asked what they are doing right. >> the economy has fully recovered above the level that it was at before the crisis. in italy, the recovery smart paper. the economy output has not recovered to precrisis levels. one of the things that was different, spain did labor reform. in spain, companies were forced by the crisis to look abroad for new markets. and is something that small
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medium-sized businesses have not traditionally done. carol: this is a big thing. mindset. yeah, it's a we talked with companies about what that meant for them. there is a company that has a very interesting concept. it is sexy. they recycle sea plastic into clothes. half their sales come from abroad. carroll: the primacy has been the prime -- carol: minister has been kicked out. oi deserves a lot of credit for re-steering spain. -- and it has not been very clear about what its agenda is overall. one of the things they have talked about his strengthening the bargaining power of unions in collecting this collective
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bargaining. in collective bargaining. salaries recovering, rising consumption, and even the real estate market is seeing positive trends. it's above levels where things are doing well. economy looks like it is going to 3% growth this year. exports were up 9% last year. exports of cars also include tourism revenue. we already stories last year, last summer about barcelona and all these cities being a capacity -- at capacity. those are some of the positive indicators. unemployment is still 16%. that is high. spain has a structural unemployment issue. carol: it's down.
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yeah, down from the crisis when it was 26%. carol: spain is looking to be a buyer and seller to the world. cristina: people forget that they have certain advantages, like europe's second-biggest automaker. there is an industrial know-how. so they've been able to mobilize that. howtaly, it is less clear they can leverage their assets already. carol: we talked to volvos ceo about trump's tariffs and opening its new manufacturing plant in the u.s. and the future for london and the u.k. carol: this is bloomberg businessweek. ♪
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jason: welcome back to bloomberg businessweek. carol: you can listen to us on radio. jason: and in london and asia. haveng the magazine, we remarks from the editor and chief emeritus. he was in london back in the 1980's. carol: he was there when margaret thatcher was helping to make london they financial epicenter back in the day. jason: brexit is poised to undo all of that. london before the big bang, which was the deregulation of very cold, distillers, and antiquated financial system, was sort of from hunger. hunger in the sense that
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, hidebound,as poor lacking vitality, dark. london seemed darker. and what big bang did more than anything else was open the country to everybody in the world. that's really what it did. everybody itself to in the world not only transformed the financial system, but everything in london. carol: you said a powerful expression, the big bang, a powerful expression in the faith to improve lives. that we seeing challenged over and over again, the pushback on globalization. >> yeah, it is very sad. carol: what is the lesson to learn what is happening with london. they are pushing back to because of the exit. >> what it is really all about,
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if we just open ourselves up to the other, we will all benefit. what has happened with the populism, whether it is trump emma with her it is the opposite of that. it's fear of the other. when you have fear, people doing things out of fear, this request are themselves. they become smaller, not bigger. big bang was about becoming bigger because it wasn't about -- it was about and the other in every which way. margaret thatcher was all about i don't care who gets the job done, whether it is americans or our british boys here as long as we get the job done. that was radical. carol: that's a tough sell, right? >> it was a tough sell, but she had performance on her side. the u.k. economy, after big bang, became the leader in europe. prior to big bang, in the decades preceding big bang, it was a laggard. what she did was unlock all this
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energy, all this potential. we saw it manifested, especially in the 1990's, and it continued right to the 21st century. jason: part of what she did was britishatization of telecom, british steel, british airways. that is history that is not too long ago that a lot of people have forgotten. >> when british telecom went public, when it became a public company, it was the proudest possession of britain, i share of british telecom. people were so proud back then to own a shared british telecom. that's how big a deal it was. that was a transformation in the way people thought. up until that point, britain had become very statist, very pessimistic about his future because none of these state-owned enterprises were doing anything that was successful. they were going to die
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eventually unless something else happened. and of course, big bang was the vehicle for unlocking the rebirth of british capitalism. -- andand economic unlocking so much economic growth. >> one of the things that she did simultaneously was she spearheaded this drive with private funding to build a theme known as the tunnel, train that connected france and britain. jason: that really connected britain to the continent in a new way. >> totally spectacular. that coincided with big bang. it was in 1986 when it was started. that train we all take for granted today actually was transformational. britain became or london were particularly became the destination of choice for people across europe. this is where people wanted to be.
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it was more excited culturally, economically, more dynamic than any other city in europe. and also london became an example for new york and hong kong. it became an example for all of the major cities in the world. jason: what happens now? there is a state of existential crisis, not to overstate it, for london and its place in the world. goes through in whatever form our fashion, it is chipping away at all the big rings that -- all the things that big bang achieved. it is not adding to them. it is making you -- the u.k. less of what it was. jason: we have an update of a very cool cover about volvo and its ambitions fueled by the chinese. rol: part of those ambitions was opening up their first manufacturing plant right here in the united states. >> we are a truly global country. we will build them in europe,
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build them in america, and build them in china. completes the global production structure. that we are local in the u.s. is absolutely the intention to grow naturally. brand, your now owned by a chinese company add manufacturing here in the united states. talk to me about this growing wave of protectionism. obviously,
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back and forth and the imposition of terrace between the united states and china and others, what does that mean for you folks? you are planning to export a lot from this facility in south carolina. >> now that we have the factory in the u.s., we have a good step forward. we believe in free trade. we also believe it should be fair trade in both ways. that is also what we brought here to demonstrate. this factory, when it is fully years time,nd a few we will export as many cars as we import into the u.s.. we will have a balanced trade in about three years. carol: give me an idea of how much will come out of the south carolina facility. much do you plan to produce and how much do you plan to grow that production? >> the first step is about one
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shift operation about 50,000 cars. that's where we start. within three years time, we will on anduce a new generati to holdextra capacity 4050 a year. number, that is the same we would import out of europe and china and into the u.s. and we would have a balanced trade. carol: we did a cover story all about volvo and the highs and lows coming off the crisis, the ford ownership, and being owned by julie -- by gili. it's quite a remarkable comeback. where do you see volvo in the next few years? you guys have been pretty
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aggressive when it comes to driverless car's, electric cars. give me an idea where you see the company in two to three years. >> we will continue growing. we will be a major player. focus onally going to the challenges for our business. we need to do something about our carbon footprint. as a safety brand, we need also to the leaders in the autonomous side because that is the next step. we are putting a lot of effort into those areas. perhaps, we will make volvo stronger for the future and march are active for consumers of the future. jason: just ahead, the ceo of airbus ventures. carol: plus, getting inside the nintendo headquarters in kyoto
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is not easy, but our order did it. jason: this is bloomberg businessweek. ♪
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♪ jason: welcome back. ahead, artificial intelligence to the rescue at hospitals. jason: we also go into the g league, which could be the salvation for college basketball. carroll column and a deep dive into nintendo. jason: one of our top reporters walked his way -- talked his way
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into the headquarters in kyoto. carol: they are getting ready for a new head. incredible boom and bust cycles they go through. likenk of it like almost the american movie business or the blockbuster business. every three or four years, nintendo comes out with a new platform, a new gaming console. and you have to get all your fans to move over to this console before you can start selling new versions of the games. and then when it works, it is this incredible cycle that feeds into itself. carol: the initial wii worked really well. felix: the follow-up, the cycle did not go well. that was 2012. and 2017, when they released their new console, there was a lot of doubts about the company.
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maybe they can survive anymore. maybe all of gaming is moving to smart phones. this home console business is outdated. they will never be able to do it again. . though and behold, they did it again. you write their unusual ability to recalibrate. they have seen the at sundance and they figure it out -- they have seen these ups and downs and they figure it out. felix: they were there at the start of the videogame business. making0's, they started donkey conk him of the first hit game. is creator of donkey kong, their most famous game maker. he is still at the company. all the game designers and developers and producers have all worked under him. the next level of game makers from college come in and they
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continue that. jason: it felt like a genius market move. people lined up to get the new version of the original console that wet people's appetite. felix: what is interesting about the cycle is people wondered how they would market in this new world. it has changed a lot since the 1980's. there are so many digital distractions out there. can you still create the same fervor around your products? they did a really good job of crime in the art is for the release of the switch in part by releasing a rebooted version of the 1980's console. carol: nes. felix: they did not make that many of them. all the games are built-in, but it did an incredible job. people in social media were going crazy. where do i get one? i really want one of these. the demand built up. they created that prior the to
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the release of the switch. carol: i wondering why your didn the story now. it is not easy to get to the japanese headquarters. why tell the story now? have been trying to get access to the company and get over to kyoto and see their headquarters for a couple of years. part of it is also to try and explain the cycle they are going through. right now, they feel on top of the world. carol: making lots of money, right? >> and going through a change of leadership. justurrent president announced he would be standing down, handing over the reins to the next generation. and also this notion of trying to really create the last evolutionary leap for a videogame console, which is trying to reach non-hard-core gamers, just run -- just general fans.
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jason: now we are here to talk about the cover mario, the most iconic image for nintendo. >> he was the first go to. we were able to photograph at our headquarters and it is very austere. we wanted to bring the characters into that. that is how we arrived at the cover. all the different characters in the universe are battling it out for the company. not is the original concept. >> we wanted something it would grab the reader and show them familiar characters, bringing a bit of attention to it. it is abstract but you have this classic mario villain. a gets attention. it is a celebratory moment for them and we wanted that to come across first.
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carroll: up next, a pioneer a flexible work schedules. the ceo of work. band -- the big bets and even bigger plans for gue.g leaug this is bloomberg businessweek. ♪
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♪ jason: welcome back to bloomberg businessweek. online at can find us the worship is up and attendance is popular around the world. carol: but there is a talent problem. leaguethat's where g comes in. -- >> the g stands for gatorade.
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if he can get the top talent of next nba players. carol: we see that it is tough getting some top talent. , whois kid, darius baisley was supposed to go to senate -- the syracuse, could be a decided pick. not go too, i will syracuse. i'm going to go to the g league. this is the first time someone has turned down the big time college scholarship for the g league instead. the pay a small. next year, it will be raised to --000 four five-month season for a five-month season. i want a more direct path of the nba. the place to do that is the g
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league. and if you ask the g league, they will say the same thing. 53% of players in the nba have some g league experience. they are pushing this to become a full-fledged minor-league aired carol: how do the colleges feel about this? >> it is in their interest. they had this scandal where federal prosecutors decided going after coaches and agents and sneaker company executives who were paying bribes to players and their families to steer them to certain colleges. jason: that's the black market. >> recruiters and coaches who want them to come to their program, start loyalty early before these players turn pro. they are paying tens of thousands of dollars to the families and to these and players. carol: and that's not allowed. >> by is the aa rules. now, it -- by ncaa rules. now it is a crime. that is raising the stakes.
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impaneled this commission. the first thing you need to do is get rid of this one and done rule. you need the league and the union to agree to change the age minimum. carol: so you do one year of college. >> when they made the 19-year rule, all of these layers started playing one year at -- playing one year at these major schools and then went to the nba. these kids are the biggest targets for this bribery market. they would love to see this movie over. i think their products survives without it. carroll: what is a potential for the geely to become big business -- carol: what is the potential ue to become big
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business? >> it is if you have global market for those rights. you have tickets. a lot of these teams are owned by the parent nba team. so sponsorships bundled with the big club and a newly viable property. jason: the connection between the franchises, the nba franchises, is much tighter in this model. >> this is what they have been pushing. malcolm turner, the head of the g league, has been trying to get all of the teams to own their g league team. it is a tight thing. they are basically training the next coaches, their next trainers, the next players. carol: dwyane wade stop to buy. jason: yeah, people just drop by up.mberg to catch
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it was a wide-ranging conversation about lots of things that dwyane wade is interested in. off to court -- off the court, he has been big in business. he talks about his son going off to college. he also talked about florida, parkland specifically. that shooting happened right in his backyard. he was very engaged in a lot of activism. carol: to read more -- you can read more of that interview in the magazine. time for this week's game changer. jason: elevating flexible working to the executive branch. >> a number of different dimensions. it's about customizing the work day to meet everybody's needs. we are not one-size-fits-all. why is work one-size-fits-all? there are strategic dimensions to help people modify their work week. talk about time of day, where you are, where you are doing the work, but also how ad hoc or
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preset that schedule is. if you look at the data, one of the most surprising things you have learned about how people work or when they worker with a need? >> there's three drivers in the need for flexibility. caregiving is one. but also health and wellness needs. we have a population that needs to stay healthy. we have some rain health-care costs. we have people they're trying to ask is preventative health but can't. and the third driver is actually all around productivity. we sent to nothing about flexibility that increases productivity. but we don't all unseemly and there are all these disciplines about the science of learning. why are we thinking that we work differently? >> we also work with companies. what is the dialogue? >> we have been around for two years in the conversation has dramatically shifted. companieshelp
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understand that flexibility or lack thereof, some things are obvious, like diversity, retention, the ability to hire quickly. that's a tough factor for millennials. for what about health and wellness, innovation, all these things that are controlled by a lack of flexibility? if people can operate the way they want to and need to be productive, you can factor in real estate costs. we have a database assessment that helps companies better understand the needs of their population. needs, not wants. what would enable you to work best. it is an algorithmic assessment. it helps them please understand have bigger problem is. what type of flexibility would address the problem? and what operational metrics is that job driving? it comes down to dollars and cents. jason: you alluded to this.
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the conversation has changed. what was the catalyst for that? ceos and people who manage these operations everyday. >> number one, labor productivity has been stagnant. there was a great research report that shows productivity is at 4.5%. we cannot ring the towel anymore. we can i get more out of our people. companies are -- we cannot get more out of our people. companies are asking how they manage that overtime. i think there is a social conversation. it is hard to deny what is happening in the public sphere in terms of diversity, women in leadership. i like to think of it that the light is on for leadership. there's a lot of forces that are driving profitability, but also a lot of social forces that allow this to happen. carroll: up next, the computer
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that talks. jason: the ceo of airbus ventures tells us about his new venture and -- his new investment in space catapult. carol: this is bloomberg businessweek. ♪
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♪ carol: welcome back to bloomberg businessweek. jason: you can also listen to us on the radio. carol: and in london and in asia. in the technology section, airbus ventures, alphabet, and geithner perkins is training a cup -- and kleiner perkins is setting up a company. we are doing investment in
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early-stage companies, from seed stage. we do characteristics. we are investing globally. so we do capital in the u.s. come in silicon valley, where we are headquartered. t so in europe, israel, and asia come out of tokyo, japan, where we also have a business office. and we operate independently from airbus. carol: i imagine you are into all kinds of transportation travel. what kind of trends are you seeing in companies that you are investing in? >> yes, we definitely see a trend which is pretty much the, backbone of our investment thesis, a disruption along the vertical axis. ande are many companies products and services, hardware, software, that try to challenge not just the world of mobility,
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but conductivity and communications and innovation. , aol: one company particular silicon valley startup, you guys, along with kleiner perkins, and alphabet google, are invested in it. why? >> the short and simple answer to your question is possible. the word possible for us means a lot. we believe in the new possible. -- things that are used once are used used to be impossible. changes inmaterial, computer science, and andectivity and collective connecting intelligence, there are a lot of things that make those things possible. carroll: it is not using some sort of fuel, kerosene or intohing, to get a rocket space, but using kinetic energy, like spinning something around and propelling it. that is such a different way of
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getting something into space. >> it is a different way. at the same time, it does respect the laws of physics, the notion of possible. when you think about the wright brothers and how they challenged than airept of heavier can't fly, they look at the biomechanics of birds, the different elements of fabric or material and also a new engine system. but they didn't really invent anything. it was a combination of a different way to look at things in a way that it can be possible. carol: they are building a prototype, right? what was it that held promise to you and you heard their pitch and thought this was an interesting idea? >> i think we start the market. there is the convergence of a new economy. we talk about the small settling market. set, nana said, things that are the size of a printer are calculating the lowest orbits.
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that is not -- that is new. we see this booming economy popping up. how do you put the thousands and thousands of satellites with the right price points in space? carol: in the next three to five years, as you get involved, airbus franchise gets involved, and other countries -- companies, tell me what we might see in terms of going up into space or even it's a lower orbit, what we might see that is not there today? >> you have to look at this vertical axis again, from the ground to a deep space. each and every altitude population did -- populated with different types of vehicles. so not just aircraft and helicopters, but like a flying taxi. the joan industry is booming.
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all of that will populate this vertical axis up to space where we can see activities, manufacturing activities, and new types of businesses being lifted up completely in the air. from the final frontier to a french are closer to home. the solution section this week to race a look at sooner than you think technologies related to health care. carol: we spoke up -- we caught up with the editor. >> we wanted to take a look at a it isl of ways in which just being used right now. carol: it works? hospitals and health facilities have decided we like what we see of the results. and it's technology we can easily possess. there's so much technology and hospitals already. you don't want to overload it with more. yet technology is the answer. is look at three ways th
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plays out. carroll: they are dealing with alarm fatigue. >> everything being measured your new as a nurse or a clinician might become desensitized to some of those sounds. cubans is in space, right down the road from camino hospital, they just rolled out this program, this fall prevention software. they are looking at data, using data and developed a software program that also factors in machine learning and prods nurses 12 or so hours before a fall might happen or something else might happen because maybe they were not as focused on that alarm as they should have been. jason: let's talk about courting. -- cordy. cordy in denmark is listening to the voice, picking up on other signals and what it is saying about the person.
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for ems,was it because it is often instances of cardiac address. but people don't know how to recognize it. cordy has developed a system that actually leases the odds -- toually increases the odds say that this person on the other end of the phone is in the middle of a heart attack and -- heartedicting attack. jason: predicting unexpected death. >> this is where companies and universities are involved. google and microsoft are doing some work. johns hopkins are doing some work. -- tore tried to do fine define the tipping point. trying to figure out was there a point when the doctor -- we can identify for the doctor and see as the -- and say it seems as though you have the situation.
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attors have been looking this and they know that, in all the things they collect, your vitals, your medication history, and everything else they are collecting while you're there and you are hoped up to a bunch of machines, the answer is in all that. what is green now is that computers and machines are being very affected and are helping people to find those points. -- carol: business week is on stands right now. london,kler going into when he was there several decades ago, before the big bang, which really turned london into this international financial hub. i love his perspective. jason: it was my must-read as well. i love sitting down with matt and get in the perspective. he took us back to a 1982 version of himself, right up to the present, and more importantly, with the future
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might hold for london as a financial center that is so important for the world seeing some pressure right now. more bloomberg television starts right now. ♪
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♪ emily: i'm emily chang. this is the best of bloomberg technology. coming up, the battle with the as. border over mexico delicate balance between immigration reform and big-money government contracts ahead. the u.s. senate voted overwhelmingly to reinstate penalties for the cte -- zte. potentially upending the deal


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