Bloomberg Businessweek Weekend - December 7th, 2019

And because we're Bloomberg, you've got to be able to measure it. Where else can you talk about Rihanna and the black hole I'm just saying, and a chicken sandwich and a chicken sandwich. It's all here. Plus we've got a growing pushback on stock by backs and a different kind of housing crisis that asked the question, is homelessness a crime? It's an important story. That one really caught

my attention. I loved our conversation with Noah bu Higher in part because you know, this is the story of our time in many ways, because it touches on so many things that are going on in America right now, political, economic, social, and more. But first up, let's talk about our top story this week. NATO. It turned seventy and they were meant to celebrate in London, but turned out to be less of a birthday party, more like a Thanksgiving dinner

Carol for a large dysfunctional family. I have to say it was interesting just to watch all the photo ops uh and watch the body language between all of the world leaders. Definitely something worth covering this week. Not all of them got along. There was a few snide remarks made, but in the end everyone well, they seem to accept that they're kind of stuck with each other. At least that's according to Mark Champion, who covered the summit outside London.

He joins US now, So Mark, what's the latest on NATO? A lot happened this week? It was I mean, the build up was pretty extraordinary. Um, this was supposed to be just a celebration. It wasn't a real summit. It

wasn't a full summit. They do that every two, you know, two to three years, but this one they felt they had to do because it was the seventie uh, and they kept it really short because they specifically didn't want to create a big you know, target for unscripted problems with President Trump, which they've had before, um so, and then all of a sudden in the weeks before, you had the French President mcclan coming out and talking about how he wasn't so sure whether you know the rest

of the NATO allies would go to the defense of Turkey under the Article five Collective Defense clause, which is absolutely at the core of NATO. It caused a huge blow up. And then of course you had Turkey itself, which had begun a military operation in Syria against the

will of most of the other allies. So you know, people were very apprehensive going in about you know this, this thing could just blow up, and instead of being a celebration and demonstration of the union of this uh the unity really of of this alliance, it would be the opposite. Hey, I do want to ask you about Boris Johnson. He was at the summit. He's also the subject of remarks in the magazine this week and more

spec typically his character and his temperament, his anger. Who knew um tell us a little bit about that and how that might impact his campaign and possibly his election. So this has been a really extraordinary campaign. They're very short in the UK. One has to remember that, especially if you're familiar with American ones will go on for more than a year. They're basically a month long, a month or six weeks, you know, in effect, so they're extremely short. Stuff is really packed in in all the

debates and everything. It happens very very fast. We're already towards the last week. But this particular campaign is is really quite extraordinary because you have both parties you know, making big plays in terms of you know, changes in public spending and budgeting and fiscal policy, all these sorts

of things. Um And in the end though, it really comes down to trust in the two main candidates, one of them is Boris Johnson UM and he has always had a big issue with trust and the anger, uh is you know a piece of that um And we had this article to that, you know, in this this issue in Business Week, which is really runs through it very carefully, reminds you of the times when he's really sort of flown off the handle and people already don't

quite trust him because he has a record. You know, he was fired once for not telling the truth, you know, while he was a cabinet minister. He was fired as

a journalist for not telling the truth. And then if you add on top of that the possibility of a blow up because you know he doesn't keep his temper, which has happened before, then you know that that is one of the things that the people who are running campaign, his campaign, are very concerned about, and they've kept they kept campaign on a very tight leash and kept him on a very tight leash, and they've kept his exposure, um, you know, quite limited. All right, Mark Champion, we're gonna

leave it there. Thank you so much, joining us from London. A very busy time between posting NATO and then obviously this a election. Well for more on this week's magazine. Here he is Business Week's editor Joel Weber. The Bloomberg fifty. It's the most wonderful time of the year. Yeah, exactly.

This is like one of our favorite issues of the year where we recognized the fifty people who really defined twenty nineteen and we and we look specifically for things that are measurable because you know, this is Boomberg all industries, I feel like, entertainment, finance, fashion, entertainment, sports. We we really try to look across everything and that's what makes

this one special. You know, like you could have a list of people that are you know, expected names like Warren Buffett could basically be on that list every year. But we're looking for measurable contributions in the year of twenty nineteen. So we go back to January and all the way up through now to find out who really sparkled. And even a chicken sandwich, even a chicken sandwich the you know, this is the Popeye' chicken sandwich. It broke the interest data. Three month supplies sell out in a

matter of days. People even got stabbed over it, which was like, you know the downside of this story, but really it speaks to like the ability for brands to like these things, and a chicken sandwich of all things, you know, with some extra pickles can really break the internet. So, you know, we reach out, you know, around the Bloomberg organization. Everybody pitches ideas and so on and so forth. Is their name that surprised you or that you found was

really this is a big team sport. We pulled from all the bureaus around the world and we're looking for leaders and business people and CEOs. One of my favorite ones was remember the black hole. It's easy to forget all the things that have happened this year, but in science, this is a huge deal. The team that discovered a black hole, so that was one of my favorite ones because you know that's it's a photo of nothingness, is effectively what we all looked at for the first time,

and it really just marked incredible scientific achievements. So I'm honored to have them on the list. And that's editor Joel Weber. I love the enthusiasm that Joel has about this issue. It's a labor of love, for sure, but what a fun exercise to be able to tap into the entire global newsroom of Bloomberg. And a lot of that falls to Brett Began. We're going to hear from him a little bit later on. And a lot of social momentum around this issue as well. You're listening to

Bloomberg Business Week coming up. Older Women Are the Beauty Industry's Next gold Mine is a fascinating story. This is work. So there's a few stories in the Business section that we did want to highlight this week, and the editor of the section, Jamalysis here, well, any excuse to talk to gem LSC. It's always on the leading edge. And what's interesting is I want to start with Chanelle because obviously an incredibly well known brand, and you actually start

this story with sort of this portrait of Paris. Uh. And they're going after a market where Marty has failed, right, I mean basically, um, And we start out the story looking at Chanelle's boutique on the Plasta van Dam and Paris, and it's facing all these other sort of well known names and watches like Rolex and Pouget and um. And we're and and there's Chanelle, which is normally thought of as a female centered brand that's big in real fashion

and also in fragrance and um. You think of the blazers and the purses, but you don't really think about watches as much, even though they've been in the watch business. Well now they've decided to make a really big push into it. Now that's tricky simply because the brand is really associated with a very feminine, um sort of fashion orientation,

and that's not where the biggest watch companies are. The biggest watch companies are things that you know, men buy, and it's a male focused in the business and um, you know, this is a tough way for these Uh. You know, you know, people to sort of we shoulder their way in. So is it all about going after men specifically or men and women? Are they all in

on watching? It's it's all in. I mean they short it out with a watch it's been successful called the J twelve and it's a unisex watch and means so it's sized and styled in a way that it looks good on both men and women, and um, well it

has done well. However, you know, it's just the beginning, because the thing is that other companies have had, you know, a hundred years or a couple of hundred years and watches, and this is definitely a hundred year, hundred year old brand, but it's one that's been associated with fashion, and among true watch aficionados, the notion of a fashion watch is sort of a that's not a compliment. Yeah, I mean, watches are such a funny little corner of the market.

I mean, we've talked a lot about the watch trade, as it were, with Chris Rouser, who runs the Pursuit section, who I imagine was somehow consulted in all of this. But you know, I do wonder why, you know, not to be too Centcalo about Chanelle, but like what makes them so special? You know that they can figure scial Okay,

they have been um. You know, that's something that they've had to, you know, sort of contend with among the the inside watch crowd, and they've been um, not just people who wanted to sell watches, but they wanted to make better watches, and so they have invested in UM making their own movements, which is the real hard part of watchmaking, not just putting a quartz movement on something, but instead saying, you know, they're going to have a

mechanical you know, sort of specialists in Switzerland who are actually making their watches. They also own uh you know, minority ownership and very expensive Swiss watch companies, and so they actually know how to make watches. And it's been um, you know, it has been shown. They won the UM uh what sort of the oscars of watches UM in Geneva the last two years for best Women's Watch and UM and so one of them was extremely technical. So there,

you know, they have the product. The issue is can you break into something where people have typically thought of as being sort of controlled by a few other companies, particularly at a price point that a luxury company needs to charge. Well. I do think there's a lot of stuff going on, like LVMH buying Tiffany and they were doing that to really get into the jewelry space and

so on. So for though, I do think that there's a re emphasis whether it's on jewelry or watches, and I think that's a market that can be continued to be tapped. I think upscale brands and upscale burns are continually looking a new ways to get growth. And if you're not in some segment that you know, sort of ties into the high priced world, you try to get into it. So Chanel okay, so going after watches big time.

They already have a cosmetics line. I don't know if they have been looking into tapping the elderly consumer market, but if you go to Japan, apparently cosmetics for the elderly that's a that's a thing. This was a weight what story for me? I have to say, I did

not see this one coming. Tell us what's going on? Well, it's um, you know, we all know that Japan is the oldest, you know, has the oldest populist of any country right now, and so it wasn't a big stretch for consumer product companies to say, oh, the elderly, there may be a good market. But normally when you think about cosmetics, it's aimed at the young, sort of use young people as in all your advertising, and you sort of target everything about looking like your twenty with skin

of twenty year olds. And instead, in Japan, we're almost half the women now are over fifty, and by elderly, I'm just but okay, in another fifteen twenty years, more than half of the over sixty. I mean, this is a really really aging population. And so all of a sudden people have said they shouldn't be ignored that we there's money here. There's an affluent population too, and so therefore if we pump products aimed at that market, we can sell a lot more. And so companies are sort

of coming out with lines that look at that. So shadoh um, polar orbis ks um, you know, they're doing that, and they're also using older influencers as well. Well. That was one of the things that really jumped out at me is, you know, in the same issue where we are celebrating rightly in the Bloomberg fifty, Kylie Jenner at the right buled age of twenty two with her line

that she now does a deal with Cody. Here we have throwback to you know, my era, Kate Moss Kate five years old years old as the spokesperson for cose and um you know, and that is, you know, forty five, while it seems young to me, is not young in that world. And so therefore what they're saying is that, you know, we are talking about your skin more mature skin.

And one of the really interesting things in the story is that UM polar Orbits, which is one of the biggest cussing companies in Japan, is using one of its UM influencers is a woman who is the world's oldest beauty consultant. She's years old. She works for polar Orbits, and she's been sort of helping women with their skin for well forever, and UM, it was really interesting to see that. Um, you know, there are all sorts of tricks. That tricks are strategies that people use when they're dealing

with older customers. It means that the bottles have to have larger text so that they can um you know sort of it doesn't strain your eyes as much. It also means that use wax on some of the eye products because it then doesn't hurt the thinning skin. And um Soseto is even selling comb special combs that have little dots of black dye on the end of the teeth. Go for your for the roots of the hair that's

turning gray. I mean, there's all sorts of things that people are using now to say, Okay, I understand that you're aging, but you can still be your best person. You look your best way, and we're going to help you with that and thank you, spend money with my company. That's Jamli is the editor of the business section. Two great stories about companies and industries looking to really kind of, you know, create more revenue lines. For Chanelle, of course

it's about high end watches, but for cosmetics. Uh, that industry going after an older population, right, and the demographics underneath this whole trend fascinating. Obviously, Japan is something of a test case, giving how they have that aging population, but you have to thank Europe is next, and then we're getting older here in the United States as well. You're listening to Bloomberg business Week coming up an experiment in Tennessee to offer free tuition while it boosted enrollment,

but dropout rates still remain high. Yeah, no one size fits all going on here when it comes to solving that conundrum of higher education. This is bloomberg. Several presidential candidates have proposals to defray the cost of higher education. But Jason, I think it's safe to say one size is not fit all. Well, I think it's also fair to say you and I both have teenagers. This is front of mind for so many parents across the country and for so many would be students. The affordability of

higher education. Uh, it is. I think the technical term is bananas the cost of higher education. Read pickartt joins us from Washington, d C. With the story take us to Tennessee. The thing about Tennessee, so they were the first state to implement a statewide free tuition program for every high school graduating senior, and they could go to community college or technical college completely for free. That started

in but it started as an economic program. So the idea was that Tennessee took a look around its workforce and realized within an increasingly skilled economy and an advancing economy,

but they weren't going to have enough skilled workers. So as a result, they came up with Tennessee Promise and a complementary program for adults called Tennessee Reconnect that works towards getting Tennessee AND's to have a post secondary education, so whether that's a technical certificate or a community college degree, or whatever it may be. And the results have been really promising. You've seen college going rates increase, You've seen

enrollment and community colleges increase. You've seen graduation rates at community colleges improve. But at the same time, the dropout rates, while improving, still could use a little bit of improvement. It's almost of students are dropping out after three years using the program. We talked to us because you actually introduced us to one student in particular, and I do feel like, based on your reporting that if you're a low income students, this is a tougher truck for you.

It's a tougher track, and being a low income student and Tennessee or any other state in America is is a tougher track. But the thing about this program is that it's a last dollar scholarship, so it means that it covers the cost of tuition that federal pell grants

don't cover, or other state aid doesn't cover. So for students who are low income and perhaps would already have the majority of their college paid for UM from through federal pell grants, you know, they're getting a smaller proportion of their tuition paid for by this program versus UM students who earn our come from families with a bit

of a higher income. So the idea is that, you know, you look at these dropout rates and tuition is not a factor, but the other cost of college that this that a financial aid program doesn't address, like transportation or housing or the cost of books, are really weighing on these low income students. What has been learned in Tennessee that can and cannot be applicable to other states. So so for Tennessee, it has its own program. It was the first to offer to all students of that we're

graduating from high school. But other states have their own versions of programs. Some have residency requirements, like New York requires you to live in the state after you receive the aid UM. Other states offer it for for your education, while some offer it for two or for specific areas

or income brackets. But I guess what the lesson that I have heard from UM experts in this area, is that one size fits all approach is really challenging, especially in something like higher education, where each state is different and each state has come up with their own program to serve to serve them. UM. So looking at it from a one size fits all approaches is really challenging. UM. But that that is different than having a federal framework and then giving states a little more wiggle room to

decide what's best for themselves. Well and read, as Carol pointed, doubt, I mean it becomes sort of complicated and difficult economically for a lot of the students, especially in the lower income brackets, because they may need to work to support themselves, to support their family for all hosts of reasons. And part of it is the money, but part of it is the way that even the classes are structured and the and the educational offerings are structured. Is there any

sort of creativity being applied to that part of the equation. Oh, absolutely so. Community colleges are going out of their way to make themselves available to students. They're holding office hours outside of with professors, outside of normal hours. They're offering night classes, they're offering weekend classes, They're doing everything that they can. The problem is that the Promise program requires students to go to school full time. It requires them

to take a full class load. And in the case of a student who's working forty hours a week, that can seem like a lot, but but it makes sense a lot of ways because you know, in general, dropout rates tend to be better when students are going to school full time than when they're going part time. Well, and what's interesting, and I think states are dealing with this a lot, and employers within states is that they need workers, and they need workers with the right skills. So, um,

that's at play here as well. Correct, correct, And you're seeing it. You're seeing it work. I mean, since the programs was announcing and then implemented for the first group in and looking at the unemployment rate, since it's half of what it was, the media and household income has reached nearly thirty percent of what it was. And that's read Picker, such a smart story, a look inside what's

going on in Tennessee. And you know, it reminds me of something we talked about with people like Peter Coy all the time, that the data can tell you one thing, but real life tends to intervene when you're trying to solve what seemed to be intractable problems. You're listening to Bloomberg Business Week coming up the people who defined that's right, we're talking about the Bloomberg fifty. We're going to take you inside that list. This is Bloomberg. So the magazine

this week is about the Bloomberg fifty. The people in business, entertainment, finance, politics, and science and technology. Who's accomplishments, merit, recognition, applause, so much more. Jason, this is a cool list. We love this every year we get to be a part of it. The big event that's happening in New York City next week. But the man who's behind it all, who's really at the crux of it, are partnering crime and the impresario, as it were. Brett began here with us in New

York City. This is such a cool list, But remind us how it gets put together? Well, it's actually it's amazing. Basically, I send an email to the entire company and I say, Hey, who's on your radar or who might be on your radar later this year? So we're looking sometimes for this starts months ago. Yeah, yes, we start this in like April. Here we are and I don't remember one month December, it's all day. Um. Yeah, we started a long time ago.

And you know what we say is basically, in your areas of expertise, who are the people that are doing sort of provably well this year that the general lay reader person out there might not know about. So we try to mix that with people that are a little bit more famous, right, because we want them on the list to um And yeah, So it starts months and months and months ago, and what I do is basically feel the submissions and then make a determination about who

are the most interesting of these people? Well, and I'm glad you said provable, because that's a very bloomberg thing, right. It's not totally subjected like this is applying data and everybody essentially with their nominations has to come armed with a metric, right, some sort that's exactly right, so to get on the list. It's not really a lifetime achievement award.

And there's many, many, many people that I want to put on this list every year, but they don't really have a data, any data or a metric to sort of prove um why we should include them. So a lot of it is sort of looking at the numbers, looking at the figures and saying, Okay, they did have a great year, and we can actually show this through a stock price growing up, or an acquisition or a

million other ways we try to measure it. But I'm always curious about the kind of debates that you guys have as you're discussing all of these names, because I'm sure people are like, his name has to be on this list, and you're like, no, it doesn't have to be on this list. There is a lot of that.

There are a lot of people you look at and say, hey, this person, of course is going to be on the Listen every year, I think, oh, this person is definitely gonna be on the list, and then we get to the end and they wind up not on it um And that sort of happens because we decide either that the metric isn't strong enough, that it wasn't basically important enough.

That's the other thing that happens. A lot of people have metrics, but you sort of look at the how business shapes up and you say, actually, you know, if you think about it, this doesn't really marrit inclusions. So is there anybody this year of the Bloomberg fifty that a lot of people were like, Okay, this person, no

doubt about it, has to be on the list. You know, one person that we said that about um that actually did wind up on the list this year is like Kylie Jenner, right, so the world's youngest gen z's first billion air And that was someone who pretty early on we said, you know, like there's a really good chance she'll be on the list, and she is in fact

on the list. And Rihanna is the other person that we thought earlier well have to go back to yeah, because I feel like she probably had a very strong case earlier in the year, and then just a few weeks ago she capstones it, as it were, with this huge deal, six hundred million dollar deal with Cody, which actually increased the valuation of the company from about one

point one to about one one point two. And the way we measure is that she owns you know, basically makes her a billionaire because of that, because of the original deal. So and I love like the more we find out about that store of Christie owns the bulk of the company, right, but then mom mom owns the moms the rest she's a piece of everything. Yeah, and it's an amazing I mean, she's twenty two to be a billionaire at twenty two. Granted, how to you know, how to little help a little bit of a jog

jogging platform, absolutely, but still pretty amazing. Um, she knows that essentially, if she puts something on her Instagram account, which has a hundred and fifty millions most followers, that that people are gonna do it. They're gonna buy that product. They're gonna go to the old Dough or Cody and go buy that product. So she has an amazing power. She's an incredible influencer. She's probably one of the most important people in terms of determining fashion and style in

this country. All right, so talk to us about Rihanna, because we can't get too far away from that. I mean, that's a name that really does stand out from a lot of her peers in a lot of ways. And also because of a tie up that she has in the broader business. Well, and you know, fenty is her brand. It started, you know, basically they did five hundred and sixty million dollars worth of makeup sales. And LVAM said this, this seems to be working caught our attention here, and

her big thing with that was the shelf. He had forty shades, which had never really been done before, and now everybody offers forty ship's really every major company. So she's now doing clothing, which makes total sense, and in doing so she became a number of first usually the the first woman to create an original fashion brand and v image, among many many other accolades this year. So she was she was also pretty much a shoeing So is there name on the list that might surprise people

that's not necessarily a household name like Kylie Jenner Orianna. Yeah, there are a lot of them actually, and that's kind of what makes the list fun is that for every Kylie or or Orihanna, there's actually a lot of people in here that you've probably never heard of. Um, you know, someone like retash Auger Wolf to me is a really really interesting story. So he's a nineteen year old He decides to travel around India as a budget traveler and says,

this is terrible. You know, all these hotels have roaches and its foam blocks from mattresses. What if I were to take hotels that our hundred and fifty rooms are smaller and so standardized, so have hot water in the showers, have actual mattresses, right, eliminate the bugs in the room. So said, oh, I'll give this shot. He's twenty six now is worth more than a billion dollars. His Odio hotel chain is adding seventy two eighty hotels a day,

which is absolutely insane. And they are by room now the number two hotel in the world and are poised to overtake Marriott pretty much early next year. So that story found amazing. The most amazing little tidbit in there is that the way they use data and analytics to try to figure out what works, and they found that if they put portraits of Maryland Monroe in the rooms, that people consider those hotels now boutique and that actually

increases increases revenue per available room ten to eleven per hotel. Wow, you know when it's not always just single people. And I want to talk a little bit because it's one of our favorite storylines the year US when its national team a shoe into some extent on the list, in part because this was much more than just winning the World Cup. So there their magic actually is that the number of people that watched set records for any game, not just you know, for for women playing for men

for women. Um, but they're also on the list because of their pay equity battle and um, you know they have uh they're now basically this is going to come to trial next year and they are they are one of the groups on there that is fighting very hard for pay equity. And their argument is a pretty you know good one, which is that, um, they actually playing more and more games. They won four World Cups. Um,

don't we deserve a little bit more here? And we we're seeing actually elsewhere in the world that is happening. Australia actually just granted their women's team in the same amount of money as their men's team. I also always wonder on this list when you guys think about something that Business Week covers so well, and that is big business, corporate stories or business trend Who among the business community was worth being on this list this year. Hum, that's

a great question. Um. You know somebody that I love is Ethan Brown. Right, if you look at business this year, really hard to overlook the world of fake meat. Right beyond meat is his company You've got you know, impossible and now you've got pretty much every other company doing this well, but their stock price up about two hundred percent UM since it launched this year. It was a successful, huge, huge I p o UM, and it's just a space that is going to be worth so like hundreds of

billions of dollars in the coming years. So he was kind of a shoe in for that. Um. That's just also an area that we've covered, you know, at length. Kevin Mayer um over at Disney with the launch of Disney Plus, I mean, signing up nearly ten million people, you know, almost right away. And one of the themes throughout this list is you see we have Kevin Mayer on the list. Um. Yeah. Also on the list is

Kevin Faiy of Marvel. Um obviously Marvel Avengers and Game this year again the most successful movie of all time two point eight billion dollars in ticket sales. Yeah, a couple of Kevin's really running the show over Disney exactly. And then you have people, you know, like a Starnoff at Warner Brothers, right who's charged with basically making HBO Max works. So you're seeing a ton in the streaming world this year. A lot of people on the list

basically really responsible for reshaping how we watch TV. That's Brett began. He's the editor of The Bloomberg fifties, so he's responsible for talking to everyone around the Bloomberg organization to help come up with this lest the Bloomberg fifty. Well, and it starts months and months and months in advance. It becomes this massive project with people pitching and him asking for more information. Because what's at the heart of all this is you got to prove it. So you

can't just say, yeah, it's a really great guy. You've got to be able to say this person grew market share or made a massive acquisition measurable to some extent, right, Or in the case of Kylie Jenner, you know, sort of had it two ways in the sense of becoming a billionaire and then doing this massive deal with Cody that I think sealed her place on the Bloomberg right or in the case of a chicken sandwich running out of buns and lines, you know, for people standing in

lines to get a sandwich. Well, and one of the most fun things about the Bloomberg fifty every year is that we get to co host the Big d It's coming up early next week. Here in New York City. We're going to be literally on the Red Carpet or just adjacent to it. Will be on the Red Carpet at some point where we'll be nearby it. We'll be interviewing a number of the folks who made the list, some other notable folks who will be stopping by. It's a great event. It's very funny in a lot of ways,

and we get to honor all these folks. Bottom line, what it is, it's fifty people that you need to know about because they're doing things already and they're going to continue doing things in the coming year, so it's really important to know who they are well. And one of my favorite parts of it is the ones to watch. We get to honor them as well. And you think about our buddy Paul Rabel. He was one to watch last week and lo and behold he went and created

a massive new professional league. Well, that wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Jason Kelly and I'm Carol Mass are plenty in our next hour, including a pushback on the c suite pumping up their pay with buy backs, that is a league good story. Plus Soros. Yeah, we're talking about George Soros and his fund. Sort of a different take these days. He used to be one of the biggest risk takers out there. Now his fun more conservative.

The times they certainly are changing. This is Bloomberg. Hello, I'm Carol Massar and I'm Jason Kelly. Plenty ahead for you in this hour of the weekend edition of Bloomberg Business Week. We're gonna talk a little bit more about the Bloomberg fifty. That's right, folks. You need to know about an entertainment, business, politics, finance, science and technology. That's all to come. Plus we take a look at a different kind of housing crisis. We asked the question, is

homelessness a crime? That is an issue, Carol, that may actually come before the Supreme Court before too long and may help define or dictate how America deals with this huge public crisis. Plus Vota phone, it's looking at a

greener take on the smartphone. But first, Carol. Story in the finance section of the magazine this week about Soros fund management, and yes we mean that of or some long time investor George So that George Sorrows arguably one of the world's best known investors, but his namesake fund not the same without him or his family directly involved. Don Fitzpatrick, she's the c i O. Cathy Burton has the story of her tenure so far hasn't been awesome.

To use a technical term, everything is not awesome everything now it has not. They've struggled pretty mightily with performance over the past three years since Dawn started in and remind us who she is, where she came from, and how she got to this job. She came from UBS. She ran the hedge fund business there as well as the equities businesses and some other businesses at the asset

management part of UH. You of UBS, and she was chosen to run this new Sourros Fund Management, which is UH managing the money for the foundation, not for George and his family. Well, that's to take us to back, because I feel like there was a long period where George Soros could only do really smart things in terms of investments, right, and if you could work there, it was a really cool thing. So remind us of his

kind of past. Sure, So, as you said, it used to be the major best performing hedge fund in the world, and George sat on top of it, he had great traders. They made tons of money, and then in sen he transferred most of his wealth to his foundation, and that meant the foundation was no longer managing money for George whipping it around. They had to be much more conservative because I didn't want to lose money. They just have to ensure that they can fund all their their projects

every year. And that's such a key point because if you go back to the culture and the ethos of the original Soros, it was big, big bets. I mean huge bets that paid off in many cases unbelievably, but swinging for the fences a lot of ways. Right, Yes, absolutely absolutely. They made so many big bets. The biggest, most famous one was George betting against the pound. George and Stan drecon Miller betting against the pound in They

made a billion dollars on that bet. And they bet ten billion dollars ten millions, ten billion dollars on that bet, and they wanted to bet fifteen. They just couldn't get it done, all right. So that's where George strows is so fast forward. And let's be fair, like the hedge fund world has changed dramatically and we've seen a lot of hedge funds either shut down or folks take the money, you know, kind of give it back to investors and just kind of have their own family offices, right, I

mean the world has changed dramatically. Yes, it's much harder to make money. And now this isn't a hedge fund. It's been in a family office for several years now. Um. But now it even has to be more conservative because of the foundation, because it's the foundation's money. And that's where Don Fitzpatrick comes in. And that's exactly what you've been doing, because your story really reads well. I mean, she's gotten rid of a lot of managers. She's done

a lot of big things already. Yes, she got rid of a lot of external managers because, um, for one, they weren't making a lot of money. And for two, she wanted to have more control of the capital. She wanted to be able to if there is a market dislocation, she says, she wants to be able to pounce on that. What does this tell us about almost like this generation of managers. Yes, we have seen that that that change

going on in other parts of the industry. We have people who have left hedge funds because the clients have said, hey, your man, you have so much of your own money in here, and you're managing it like it's your money and you're too conservative. So we see that a lot. There is this transition of people who are getting ready to retire and as you say, have different needs and

and that is changing the industry a lot well. And in terms of changes, I love how this story kind of kicks off that if you kind of want a job to go work with Don Right, you can maybe get it through a podcast, or at least they promoted getting a good job on a podcast. It was kind of unheard of, right, it was the past. It was very surprising. People said to me that they were very surprised when they heard about that or so, so that's what happened. Um that, Uh, Dawn came in and had

this interview with Ted. Sid's a old hedge fund hand and and she wanted the message out there that that they were looking for talent. And it seemed very unusual that Soros Fund Management would ever need to advertise. This would have been a place that years ago people would have murdered other people to like get a job or even just get an interview. Um at Soros. So it's amazing how times has changed. So what happens next, Like, is this something where Dawn Fitzpatrick just sort of kind

of weathers this storm and goes on. What was the sense you got from talking to her? Uh? The sense from her is that the board wants to look at her performance over five or seven in years. So and also I think that now that George is not involved in the money management, as long as she can more or less make the billion dollars that they need to spend every year, Um, she'll have the backing of the board. Has she done it so far? How long has she been there? She has been there since April, so almost

three years. And she didn't do it last year. She's not She's maybe going to do it this year. And the first year was there they had a little surplus, so not net. They're probably just in line over those three years. And that's Kathy Burton. She knows all about hedge funds. Literally wrote the book on it, hedge Hunters back in the day where she profiled people like George Soros and really took stock of the industry. Then looked ahead and man, the industry has changed. Now you're listening

to Bloomberg Business Week. Coming up, the Supreme Court is considering hearing a case that could make homelessness a crime. This is Bloomberg homelessness. You see it in a lot of major cities, especially where the cost of housing has become unaffordable for so many Jason, a current court case that could create a different kind of housing crisis. It

feels like the government, businesses people just human beings. Residents of major cities especially are starting to look at this problem as much more complex than we did for a long time. No Abu Hier joins us from Seattle with the latest on this case and what it may mean for what certainly has become a crisis. So tell us

about this case to start. Yeah, it's a It's a case that started about a decade ago in in Boise, Idaho, and UM six uh homeless people brought a case against the city basically saying that the UM the local ban on on camping in public places was on constitutional that represented cruel and unusual punishment because um basically there was

no place for them to go. There weren't enough spaces and shelters UM and effectively they were being uh penalized for being homeless, which is something you can't do under the loft. This is so, this is this is wild And I think it could change dramatically based on your reporting in this court case of how we think about housing, because it really gets to righte Noah, the idea that housing is a basic rate. Yeah, I mean that's that's a larger question that looms over this case. It's the

legal issue is much narrower. But just to complete the story, huh, the Boisey one in the in the at the district court level, but then it was appealed to the Ninth Circuit UM, which covers, you know, a giant swath of the US West from Alaska to Arizona, and the appellate court found UM in the favor of the homeless folks. So as a result, you have a ruling out there right now that UM says that these sorts of bands

on public camping are unconstitutional. And it's it's a big deal because it's a ruling that goes far beyond boys now. It's something that matters to cities like Los Angeles and Seattle, and it's created a lot of discussion in UM cities throughout the West about how uh they can tackle this

giant problem of homelessness well. And in your story, no uh, you do talk about some of what various cities have done, some of those cities you mentioned have done to try and combat this, especially at a time where if you talk to people in Los Angeles, San Francisco, Seattle, they talk about, even anecdotally, just this massive rise in homelessness, which obviously has something to do a large part to

do with the affordability of housing. What have we seen those individual cities due to try and combat this so far? What you've seen, broadly on a national level is an uptick in these laws that that criminalize you know, camping or sleeping and in public. Now, this the the Ninth Circuit decision really really calls some of those into question, and it's it's made a lot of cities um back

away from from those bands. Um. The question, though, long term, like the bigger question that looms over this case, is how are you going to solve homelessness. I think a lot of people in the in the West and across the country recognize that it's a problem, but there's a very robust and active debate about what you do about it. And you know, on the one side, the folks who are arguing on behalf of the homeless folks from Boise. They say that criminalizing people for sleeping on the streets

when they have no other alternative is really counterproductive. There are tons of studies out there that show that if you take the cost of policing, emergency room visits and other UM costs on society into account, it's a lot less cost effective to basically approach chronic homelessness that way. It's much better to get people a house and then start working on mental health issues or substance abuse issues. All right, So, no, there's this Ninth Circuit Court decision.

The thing at issue here is whether or not this is gonna go all the way to the Supreme Court, correct, right, So that could be decided as soon as this month. UM. There was a request for review that UM A legal team representing Boise, including UM ted Olson of Bush v. Gore Fame UM, filed in UH in August or September, I believe, and the Supreme Court UM could decide as soon as this month whether they're gonna hear that review and what ultimately are people doing or in the interim.

You know, you mentioned that some cities and municipalities and states are trying to to sort of figure this out in the context of this decision. What could potentially happen. Are we talked more shelters. Are we talking about more affordable housing the cities or states or the federal government would force to be built. What are the potential solutions here?

I think the reality on the ground right now there's a lot of uncertainty, and cities are approaching it in different ways because they don't want to run a foul of the Ninth Circuit's decision. They don't want to be sued and told, you know, and have a court find that their their ban is unconstitutional and they need to pay damages to to UM people who bring those suits. So UM on on a very basic level, you're you're seeing UM a questioning and a rethinking of how they

approach these particular bands. Apart from that, I mean, it's not like places that have these bands weren't working on homelessness to begin with. There's a lot of work underway UM. But the proponents of UM the Ninth Circuit's decision basically say that it's an opportunity for cities to think about other ways of solving their crisis, which, as you said, it's a complex issue. It goes directly to housing of portability in a lot of these places, and there are

other tools in the toolkit. UM. These advocates say, for for sities to deal with this, they can relax zoning rules so you can build more and cheaper apartments through UM cities where there's a lot of demand for housing. UH. You can increase subsidies so that people can you know, afford to live in places that have where the rents

have gone up. And it's interesting too when you think about what it will mean nationally, you know, all of a sudden or not all of a sudden, but we're in a situation where these cities that are at the core of the economy in many ways, especially when you think about the importance of Los Angeles, Seattle, UH, San Francisco out there in the west, Las Vegas being another. You know, so much innovation, so much business and growth in economic growth has happened there, but it obviously has

come at a cost. I think you see it right there in your backyard right now, right. I mean, I think there's a pretty wide acceptance now that booming economies are um. Part of the problem here. You don't have the sort of runaway growth and homeless populations without uh. You know, in Seattle, a thriving texting where you've seen the population grow by in a in a short number of years. Uh. Same for l A, where rents have gone up just a dramatic amount because um, the city

has chronically underbuilt for its population growth. That's no buu hire. And of course, Jason joining us from Seattle, where we know homelessness is a really big problem. We see this in these major cities where there's been a lot of development. It's gotten so expensive to live there, and as a result, homelessness is on the rise. And especially when you think about the western part of the United States, this is a defining issue of our time, and you do wonder

whether this will be a defining case for that issue. Yeah, asking a very important question if housing is a basic human right. You're listening to Bloomberg Business Week coming up after for and flight sham a phone shaming Carol. Maybe

next it's all about a greener environment. This is Bloomberg, a green smartphone that you can repair yourself, not science fiction apparently, Jason Kelly, I love this idea because I am completely perplexed by my mobile phone and never opened it up and check it out inside, even more upset about how much I have to pay to get it fixed when it breaks. Stephan Nicola joins us from Berlin. He's got the answer to some extent. It's called the

fair phone. What's going on? Well, the fair phone is uh yeah, the sustainable answer to all the other smartphones out there. Um, smartphones in general are pretty pretty bad when it comes to sustainability. They are, um, you know, built in questionable environments. They're using metals and minerals, mind in war zones, and it's basically impossible to recycle them or repair them, um meaning you know, they'll they'll they'll often get tossed and and that's not a good thing

as we all know. Alright. So Stephen, I'm thinking that in this moment and movement, if you will, where I feel like folks are looking for greener solutions to everything. I'm curious why this hasn't happened sooner or taken off more. Tell us about kind of put it in perspective, because we sell what more than a billion smartphones kind of around the world. Yet this is just a small part of the market. Yes, the fairphone is still a niche product.

Last year alone, one point four five billion smartphones were sold around the world, and the fair Phone has a modest target of selling one and fifty thousand models next year. Um. However, um, you know these products are catching on. The fairphone is special because its sources um sustainable minerals, from fair fair trade sources and from places where they ensure that there's

no child labor or arm conflicts involved. It's using recycled plastics, and you can very easily take this phone out and and open it up and repair it yourself for a fraction of the cost you know getting your iPhone or Samsung Galaxy repaired. That alone blows my mind. So let's talk about that specific element to it, because that was the thing really jumped out of me exactly. I mean, so, how did they make something that one can actually fix oneself? Yeah?

So basically, um, they have the problem which is, you know, when you have your iPhone broken, When your iPhone is broken and you want to repair it yourself, that's basically impossible. Not only will you not be able to open it, but also you'll avoid the warranty If you do it. So they try to come up with an entirely new

modular design that makes that possible. You know, the phone chips with a tiny screwdriver that you can used to open the device and and very simply, very easily replace seven key components from the screen that we all know breaks easily, to the camera, to the battery, to all kinds of key components that usually you won't see or touch in other smartphones. So, Stephan, I think everybody who's listening and watching this interview wants to know, Okay, Jason's

got two smartphones here, I've got one. We've got pretty probably close to the latest and greatest models that are out there. Um, So how does this compare, this green smartphone compared to kind of the smartphones we've all gotten used to. Of course, it doesn't compare when it comes to the you know, text backs with the latest iPhone all the flagship Samson Galaxy. It's a it's a step behind. It's it's a decent mid level phone, um at a

price that slightly higher than mid level. It's said it will cost you four hundred and fifty euros um, but that you know, is a bit higher than comparable phones. Um. The screen is a decent screen that you know you would have seen maybe a year ago and in other models. UM. But the battery gets you through the day, UM. And the processor is UM. Yeah, also maybe from a phone that you would have brent you last year. But all in all, it's it can get you anywhere, it can

do all the things you need. UM. And you have a sustainable alternative if that's what you're looking for. Well. And what I find so interesting about this story, Stephen, is this notion that while this phone has been hanging around for a while and people have essentially been ignoring it from a broad perspective, we are in this moment right now where people seem to be willing to pay up. People seem much more concerned about where their stuff comes from.

How much will they be able to take advantage of this moment? Yeah, exactly. That that's the the whole, the big difference right now. UM. The fair Phone three, that's that's how the phone is called. Uh. And that that already suggests that there was a fair Phone one and a fair Phone to UM that that was introduced years ago, and they didn't sell that much of those, but they did sell them to a very committed community. And now things are changing as you As you said, consumers are

becoming more aware of the sustainability in their products. And now voter Phone, Europe's biggest wireless carrier, has agreed to sell the smartphone in five of its key European markets where it has eighty million subscribers in total. So that's a big sales push for the fair Phone, and it gets the phone out in front of the consumer much more than it used to be. I mean that's another big difference, right that they finally have one of the

biggest wireless carriers out there. I think they're the fourth biggest actually supporting them, right, that could be a game changer for them. Yeah, yeah, I mean, motor Phone is a key player in Europe. Uh, there's so many millions

of wireless subscribers across the continent. And of course it has physical shops and stores where you can see the fair phone and touch it and and really you know, see that there and feel that there is a sustainable alternative out there and one that may get you through the day as well. Right well, And what's so interesting is ultimately this is going to be about I do like the idea of at least having the option to

fix it myself. But what's interesting, Stefan, is this notion that ultimately you have to get the big phone makers behind it because a for availability and distribution, but also because their business model to date has really been built on cellphone. It wears out, we'll sell you another phone. I mean, this has been a volume game for to a large extent. Yes, it has, and of course the

industry is still playing that game. Now there's pressure rising pressure, i'd say, on the industry to change that game somewhat, to change the rules a bit and and give me, you know, leave that buy and toss model every year a new smartphone or every two years at the latest, and that you know that model is seriously coming under pressure. So you know that's also a move by Voter Phone to have an alternative in its portfolio and show that

it's you know, beginning to tackle some of those issues. Yeah, this whole idea of buying TASS right is just I think we've got to change it or what they call commercial electronic sustainability and be a little bit more official. Um, Stefan, thank you so much, great story, Thank you, good job, great job, really well. Thank you, thanks for being patient with us that the concept. Oh thank you so much for having me take care of We'll see you next time.

So stocks often move higher on news of a buy back, and there are immediate benefits to shareholders, especially those on the inside. Jason, Well, that is the key point to this. They've always been seen to be good for shareholders, at least academically. But this is more complicated maybe than folks have thought about, and the SEC is thinking about it now more. At least one commissioner, Peter coy is here with us with the inside scoop. This is really fascinating

because buy backs, they've been all the rage. They sure have. Buy Backs are more important than dividends. There's a way for companies to use their operating earnings to benefit shareholders, and they have been very quarter since something like fifty percent of operating earnings in the last short while have gone towards buy backs. And again, what we're talking about here is companies going into the open market buying their

own shares well. And I feel like when a company announces it, think about it so many times after the closing bell, we're reporting it in our daily show and immediately see you see the stock kick up in the after hours and remind us of the mechanics of it again and sort of what what the effect of a buy back is? Well, what it does is we moves shares from the market so that the there's fear outstanding shares, operating earners haven't changed, so the earnings per share go up.

And that's can be attractive to investors, and it's right, it's why investors like it. There's a lot of debate though about is that the best use of a company's money versus maybe investing in R and D, you're investing in their workers and so new plant or whatever. So there are two general criticisms of buy backs. The one you hear about a lot is exactly what you're saying here that companies should be doing other things with their money, is like, don't you have anything better to do with

your money than just buy back your own shares? Don't you have a plant you ought to be building, some invention you ought to be making, and or don't you just pay you employees more? And so the liberal Democrats are very much on this theme, including two of our leading presidential candidates, Senators Elizabeth Warren and Bernie Sanders have signed on to legislation that would actually prohibit companies from buying back their own shares. So that's out there, kind

of a known criticism. I'm not focusing on that there. I'll just say one thing though, is that there is a response to that. Um, the people will say, uh, you know, companies can really do bad things with their money.

Sometimes it's better to take it away from the management, give it back to the shareholders, and let them deploy that money as I see fit, perhaps into fast growing startups that need money more than some old cash count because as you say, one of the benefits of this is that earnings per share go up, and that is ultimately what people are investing in, is that company's future earnings. So but but again that's not the focus of the story.

Of the focus is on this other thing which has gotten less attention, which is what executives do when there's a buy back. And Robert Jackson is one of the commissioners, the sec not the chairman. He has commissioned his own staff to look into this, and what he found is that, as Carol said before Stockston to go put a buy back is announced, it's an expression of confidence by management in the future of a company. Right, So it's no wonder the stock goes up a bit. But what do

executives do. They are more likely to sell their shares an immediate aftermath of this buy back announcement, taking advantage of that pop in the stock. So if you're a real cynic, you would say this is sort of a legal version of serving illegal pump and dump stock manipulation, right, right, So this is insiders, usually senior corporate executives, right, and directors that are taking advantage. So we're so there's been research out there that's showing that the insiders are selling

right after the inction of a biback. There's always a steady dribble of selling by executives. You know, they're catching in the stock options on. What you see is a big jump, like fivefold increase in the dollar value of the stock sales right after eight days after a buyback announcement versus before, and the number of executives doing so is also up. So what does Jackson want to do

about this? He has a very narrow tailored solution which seems kind of unobjectionable, which is no bar executives and directors other insiders from selling in the immediate aftermath of a buyback. He doesn't say exactly how very many days that should be, but as he says, you know who thinks it's a good idea for executives been doing this right after buybacks announced? Who who benefits from that? Except for those people? Because they are already restrictions right on

when insiders can buy and sell chairs. Yeah, and so this would be knew then that they would not be allowed to do. How likely is Mr Jackson's change to be implemented? Well, I mean, I think what he's betting on is that articles and oppressed like this one Washington Post had a story on this recently, will start to generate some uh interest in this in the general public. So far, the Chairman of the SEC, Jake Clayton, has

not gone along with this. He was asked about it by Senator Chris van Holland last year and kind of demurred, you know, I'm still willing to talk about this. I don't want to have a big roundtable about it. But you know, he's uh susceptible to political pressures like anybody else, and if the pressure amounts, you know, change and it comes at an interesting moment right where people are asking bigger and kndidly more complicated questions about who's got what

at stake? Are executives really doing things in a holistic way that benefit everyone or is there just enrichment going on their own benefits precisely So, I mean it seems to me like a worthy topic that Robert Jackson has brought up. Yeah, I agree with you. I was thinking about that. Just this greater emphasis on either governance issues all of the stakeholders involved, and I think, you know, I think this is going to be something that people

will be looking at more closely. Hey, I do want to ask you since we've got you the issue about the Bloomberg fifty and you nominated somebody and interviewed somebody for the GETA GETA. Gopinath is the chief economist of the International Monetary Fund in Washington. She's raised in India, um first woman to have the job as research director chief Economists of the i m F. She's a Harvard professor, has been since two thousand five. Got her PhD at Princeton.

One of her advisers was Ben Bernanky. So she's got tree. Oh, she's super smart and she's been doing stuff too. She's just finishing her first year in the job and she's she's not slowing down. I mean she she dove right into some pretty serious issues. Well, and one of her main areas of interest is around the dollar, and it's sort of rolling the world. Tell us about that. Yeah, this is probably one of her key research, probably going

back to before she joined the IMF. So the quick quick version is that lots of transactions in international commerce are denominated in dollars, even when neither the buying nor the selling nation uses the dollars. Some other country um so oil for examples, price in dollars. So there's a

downside to that. If you're a fragile um say, emerging market country, and you your products of priced in dollars, are you're buying stuff in dollars, then your currency goes down Suddenly imports become more expensive, right, that's what happens. But your exports, because they're price in dollars, don't change in price there. You know, they're just dollars you're getting. So you you get hit on one end without any

benefit on the other. And uh, it's it can be a real squeeze on some of these vulnerable countries, and like Peru and Brazil among other countries have gotten hit by this. So she's not out there advocating for any particular policy, because that's not her job. She's a research person. But it is interesting that she's pinpoint a real vulnerability

that the dominance of the dollar creates well. And I think it's also interesting, especially in a year where we've been so focused on the U S. China trade wars, some of the research she did about who really bears the cost of higher tariffs, if you will, on Chinese imports and that that cost is being borne by US consumers and importers. Now that's almost become a commonplace in recent months. Other people have duplicated that research and found the same thing. But I m F was fairly early

and making that point well. And she is an appointee or she was putting this job by Christine Legard, who, well, Christine Lagarde, you know, recommend her for the job, and she got approved and Christine Legard of Courses moved on. She's uh, but Legard obviously had faith in her as being the kind of person who could handle a job like that. I love to that part of her job she sees is kind of increasing the number of women

who are economists and high profile positions. I mean, sound profession is one where women have not gotten their fair share. And uh, it's pretty clear that Janet yell And and and others have taken this on as a cause. And so she's she's one of the people you hope I become a role model for young women who might consider enter the profession. That's our economics editor, Peter Koy. I'm so glad we were able to talk to him about a couple of things. Of course, that very important story about

stock by backs. We talked about it all the time here at Bloomberg. There's definitely arguments to be made for doing them and for not necessarily doing them, So I think it's important that we talked about. And then, of course, well, and you know, looking at one of the most influential economists out there, you know, someone who's really setting a different sort of tone, a designate in some ways of

Christine Legarde. So you do wonder whether not just the tone of economics, but the look of economics may be changing long overdo Jason. She was the I m f s first female chief economist, and of course she's part of the Bloomberg fifty, a great list of people. We on Monday are going to be at the Bloomberg fifty event. We're gonna be at the red carpet doing a live radio broadcast speaking to many of the folks that are on that list. That's right. We'll be live six pm

Wall Street time here in New York City. And if you don't catch us live, check out next weekend show. We're going to have the best of those interviews. Well, that's gonna wrap up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Jason Kelly and I'm Carol Masser. Be sure to tune into Bloomberg Business Week Radio live Monday through Friday

starting at two pm Wall Street Time. And I can't catch us lide check out our daily podcast and get that at Bloomberg dot com or wherever you get your podcasts. And of course you can get this week's edition of the magazine. It is on newsstands now. We'll be back right here next week at the same time. This is Bloomberg