>> welcome to bloomberg businessweek. in this issue, goldman sachs, falling star. >> johnson & johnson problems. >> and microsoft's next act. >> let's go meet the editor. i am here with the editor of "bloomberg businessweek ellen pollock. aboutonvenient truth trade, and it talked about a ton on the campaign trail. >> it is a hot topic.

it is all about people losing jobs and sometimes thinking they lost jobs to people abroad. makes a point that while economists are almost , there is free trade a reality that people lose their jobs through jobs going abroad. low-wage jobs are moving to places like china where things can be produced more cheaply. things are moving out of china to vietnam where they can be produced more cheaply still. they had these programs where workers are compensated when they lose their jobs to trade but they have not been that effective. to economists, the idea is when you loose your job to trade, if the markets are efficient, you will find another

through some new business coming up. >> a really incredible feature in this issue, how to hack an election. introduce us to the man at the center of that profile. >> he is in custody in columbia. a rare interview. this is the first time that he told his full story. him in aiewed courtyard deep in columbia. he is talking now because he would like to say how he has turned good and he will help turn states evidence. he would like this sentence reduced. >> what does he say he has done? >> he says that he has interfered through various methods of hacking in many elections in latin america.

that.is evidence he is telling the truth. there are people who say he isn't. he has some evidence that he has hacked many elections in latin america. >> there are critics who say the story isn't true. what are they saying? >> he says that he works for a gentleman named mr. rendon who has a home in miami. him,n says i worked with but in a limited way. i was never involved in anything illegal. he has never been charged. he says he was not involved in a lot of these activities. some of them involved fake calls inccounts, robo the middle of the night to suppose it reporters and those angry- supporters were so they were being awoken at 3:00

in the morning that maybe they did not vote for the candidate. intelligence gathering so they knew who they were voting for before the person across the hall new. of candidatesy that had information and votes for candidates. will becover story familiar to some of us who have used word processors. about how thes relatively new ceo at microsoft is betting big on artificial intelligence and what he is trying to do is bring to the four chat box that will supposedly help you in a variety of apps and business activities. some of this was introduced at a conference they had earlier this week.

>> it showed up before then were a bot did not act the way they thought. >> they had a bot they released early. she,if you can call her has the personality of a teenage girl. since they learn what people see them, people fed the nasty stuff. racist,out there being talking about things you would not want your bot to talk about. they took her down. microsoft has been working at ai for a while in things like cloud and security. but they are now focused on what they think will be the next major platform shift in computing. moving us away from a world of apps toward what they see as conversation as a platform. in particular, these things called chat bots. -- an aiprogramf

program that will handle interactions for you. >> people have been playing with their new chat bot. i know you played with it as well. what was it like? >> it is basically modeled on a teenager. it is in reverent and profane and sometimes i did not understand what it was saying at all. selfie of myself and it called me old because i'm outside the target demographic. i mentioned once that i was stressed and she responded, don't worry, it will be all right. of course i didn't get anywhere near the results of some people last week which caused microsoft a pulldown today after some people manage to program it to respond with racist, inappropriate, sexist comments. >> big controversy for microsoft.

you mentioned that you said you think chat bots will replace apps. microsoft is behind the curve on apps, why believe they are ahead of the curve on this? >> i spoke to the ceo who said it is a little self-serving to say we are moving on from apps because microsoft did so poorly. there are a fair amount of analysts and other companies looking at this idea of bots. they're not the only people who want to play here. facebook has been working on bots, google is reported to be working on this. some of the original work on .his is we chat some of the microsoft executives had looked at it and thought it was an interesting paradigm. doesn'ticrosoft ceo even use it, does he? >> i asked and that any said that he doesn't because the teenager speak is so in copper

hence that it may as well be french, but to him that is sort of the point. there will be in his view a lot of different bots that will be tailored to different personalities and needs. you have some which are aimed at a target demographic of 18-24 and some that talk to you if you are not a millennial in a different way. there are customer service bots and a variety of implementations. he feels there should be a lot of different options. x i guess that's what microsoft is betting on. they want to be the platform that owns it all. they want the platform that others use to make their own. was historically built when bill gates and paul allen started writing developer tools for the first home computer kit. want iscase what they for people to take their software, and their tools, and use it to build their own bots.

they also wanted to use them within their own products. build theirople to tools. one of the interesting things that have developed is it will let you automatically deploy these bots to if a righty different platforms including those who are not made by microsoft. >> so she wrote the cover story but the man responsible for the art on the cover of that story is robert vargas, the creative director. how to come up with it? >> it came from an early conversation with alan pollack. we were talking about how to represent a new generation of ai bots that microsoft is creating. you think of what artificial intelligence is, it does not have a body. it is existence based. so it thought of what the first representation of an ai bot for

microsoft was which wasn't quite ai but deftly a bot. characterpping, this in the 90's it didn't do so well for them. he came in a tory us figure but really has somehow persisted to the years as kind of a symbol for this thing that microsoft tried out the did not work so well. regardless, we took him as a character. he is clearly recognizable with a paperclip body and large bulging eyes. toive this to an illustrator determine how this would work in the future. he give him a large brain to make them smarter. he has some kind of optical device. he is basically like a smarter clipping. >> it's cool they on skype so it's a whole vision idea. >> how much do you think about how this would be interpreted

are what some we might think of it? >> it varies a lot. sometimes you have a basic idea and then we pair the idea with the right artist and tell them to go with it and see what we get back. and when we get back make sure there are no problems with it. if there aren't we let them fly and don't think too hard about being literal with every component associate to that territory your back to being a microchip. >> you ever think about the ceo of microsoft and what he might think? >> given all that has happened with my christophe recently, he is probably a guy with a sense of humor. so i think he would like it in a think it is a pretty flattering portrait. >> next up, johnson & johnson had to court again after allegations that baby powder causes cancer. agreewhite funds cannot

how much some unicorns are worth. ♪

>> welcome back to "bloomberg businessweek. >> in the market and finance section, with tech a look it's one of top u.s. mutual funds. >> why they can't agree what private startups are worth. unicorns these private are waiting for the right time to go public. they still need liquidity. so they have been raising capital in the private markets and one of the sources for that capital has been mutual funds ramping up in the last year or two. they need to turn around and provide a share price for the habit companies to their publicly held traders. --how much is dropbox

dropbox worth? you ask these mutual funds and you will get a different answer in a matter which one you talk to. >> think of startups and immediately you think of venture startups -- venture capitalists. is this a new thing and what are the particular challenges? >> it is not necessarily new but what is new is the rate at which these fundings -- funds are investing in private companies. if you compare it to a venture capital firm, their shares are not publicly traded. if you are not a venture capitalist you don't really care if their valuation drops because you are waiting for the longer game. these are publicly held, publicly traded mutual funds. >> you hope to have transparency. >> yes, there is very little. -- they will speak very generally.

they will similar can the indices and the other values. but their actual methodology is none of our business. >> is there a push for more transparency because of that? a lot of people want to know is the valuation of dropbox what it is supposed to be? >> you have a lot of people on the private side and the public markets trying to figure out what they should say where the market is trying to figure out what these copies are actually worth and long time. the discrepancies we see across these mutual funds and how they value these companies is reflective of that. >> next, california wine country gets stiff -- stiff competition from unlikely places. >> and we will take you inside the grand prix of magic the gathering. ♪

>> welcome back to "bloomberg businessweek. >> have you heard of magic the gathering? game thattrading card has been around since 1993. just had the grand prix and washington, d.c. a couple weeks ago. there are some incredible pictures of 4000 plus devoted fans. thousands of dollars at stake. in high school there were classmates of mine who played it. it's like fantasy meets collectible. some of them are worth a ton of money. it started in 1993 and became popular. game. it ist the

still popular, 20 -- 20 years later. you can still buy them but now there are 5000 cards. etc. sectionek's you can read about new competition to the wine industry. >> dan has written a book called "american wino." >> the former nightlife columnist did what they do which is drink a lot. for whatever reason, wine never did it for him so in 2014 he set out to remedy that. he drove around america going to at least one winery in all 50 states. wineryidea there was a in all 50 states but they are making wine in all 50. he went to one in every state. he went to four in miami.

basically what he was trying to wine look at the state of in america 40 years after the judgment in paris which is went up skewer american wine bested these famous french vintages and his conclusion is that california is still king but 40 years from now we may drink wine from nebraska. winery he visited, the grapes have to adjust to soil temperatures that ran from -10 degrees to 90 degrees. this obviously will take 40 years to figure out. some of them are being made in extreme climates and really at this point many of them are functional and making money but a lot of them are still passion projects. >> do you get a sense of why they are putting these wineries in places where they are not natural places for one gross? -- for wine gross?

groves? >> they are in vermont, and annex ibm executive. some of them are second careers. >> outside california, washington and oregon, this anyplace standout is the place you would be surprised to find decent or good one -- wine? >> texas is huge, nebraska, wyoming. states you would not necessarily think of would be growing grapes are doing it. >> next on bloomberg businessweek, goldman sachs sacks its top -- with the ui -- we will tell you why.

>> welcome to "bloomberg businessweek." coming up, highlights from this week's issue. >> i am back with alan pollack, the editor of bloomberg businessweek. there are so many great must reads. there's this about the $15 minimum wage. that number 15 has taken on significance here. >> it really has. a nation like moved to get low-wage workers and fast food restaurants up to $15 an hour. it has happened in seattle and

los angeles where, by 2020 it will go up to $15 an hour and last week, jerry brown from california announced that eventually it would go to $15 an hour for the whole state. there's been a big push by unions around the country. $15 wonder where that number came from. >> it's kind of been a push from the union and its president mary kay henry who has really gone all in on this and poured millions of dollars into it. it's kind of a controversial move because these people she once to help are not actually union members so the question is will it help her union? people who believe she is correct say you have to think differently about unions. maybe these people become members of the union even though they are not working for union shops. meanwhile, union membership is way down. so can she save the union by

helping people who are not members? it is a complicated topic. give us a sense of what you could get this guy to do for you. what would you have to pay to get him to do what he can do? >> there were different packages. it was how to order cable tv. for $12,000 a month, you could get e-mails sent, rudimentary hacking. if you wanted to pay $20,000 a month, you got all that plus the encryption and more advanced hacking. you can pick your package. about thell talking u.s. presidential election. does he think this election is being hacked? >> he is sure the u.s. election is being hacked.

after you read the story, he really started wondering. story, he doeshe say he was contacted by someone in the trunk campaign. the trump campaign of course says we have never heard of this guy but he is certain this conductivity goes on. >> the last question i want to ask you is about johnson and johnson. widely known for its baby powder. she reports on a string of lawsuits against johnson and johnson alleging that powder is carcinogenic. >> it's a sad story. a woman namedout jacqueline fox who has died of ovarian cancer. the question is whether use of the powder for hygienic reasons way-- is associated in some with ovarian cancer. it is not as though they are saying it causes it. ist these limits are arguing that johnson and johnson kind of

covered up at the risk. it is all about risk and whether they should have been more open about these risks. >> we have to be careful here. these -- there has been nothing conclusive here. the company still saying there is not a strong enough link. >> absolutely. one about's family $72 million. it's one of the early cases in this big pool of 1000 cases. after the verdict, many women contacted her attorney. this is the beginning of a string of at least 1000 women who are alleging this. again, there is no established link what these women are arguing. they are arguing there was a risk that johnson and johnson was an upfront about and of

course they think it's safe and they are arguing furiously in court. >> i spoke to susan about the article. >> there is more than 1000 cases pending against johnson and johnson and the women and their families are arguing that johnson and johnson knew of scientific research of that kind of association. not a cause but an association between using talcum powder genitally and a variant cancer. for many decades, they did not warn women about this possible risk. >> what has johnson and johnson said? what do they say about the sun? science is the inconclusive, the association is weak, the data is underlying -- unreliable. they don't see there is any way that ovarian cancer could because by talcum powder. they didn't see any need ever to

warn women about it. again thiscourt month. what has happened in the past with these suits? >> there have been two trials. the first one found johnson and johnson liable of negligence, didn't award any damages to the women diagnosed with a varying cancer in remission at the time of the trial in south dakota. -- with ovarian cancer in remission at the time of the trial in south dakota. in the second one, the woman had died. the family was carrying on the case. in st. louis, they awarded the family $72 million. that was more even than the lawyers were asking for. >> how important is this a brand, this well known company, powdermportant is baby for them? >> it is the foundation for their entire baby products line.

think more important, johnson and johnson in a lot of people's mind is the baby company vanilla and represents a very small portion of their overall sales. mostly, they sell medical devices and drugs. baby powder has a certain scent, people know it. i think for the company, it's very symbolically important. >> i think is a conflict here between branding and science may be internally within the company. >> there have been other cases where johnson and johnson decided they will set aside the science because they recognize consumers are concerned. they took out a lot of chemicals from a lot of their baby products. there was a big uproar a couple years ago. formaldehyde was found to be in their baby shampoo. then they said very clearly, we think it's safe in the amounts we were using it but we understand you are a little concerned and we want our

customers to have peace of mind. >> what about the history here? in some of the suits, plaintiffs alleged certain groups were targeted by johnson & johnson, that they were encouraged to buy baby powder for the use you described. that i is something think is very troubling from a public relations point of view in particular right now. there are documents introduced into the trial from the 1990's where johnson and johnson said we recognize there is some concerns in the health community talcumhe link between matter and of varying cancer. at the same time, we see opportunities to sell more baby powder to blacks and hispanics and that is because they were already pretty good customers of the product. and they wanted to sell them more. johnson and johnson says that document was just an indication of how carefully it looks that

all its customers and really once to know who was buying their products. sachst, a former goldman executive with ties to a fund in asia. >> and cash crops for american farmers. . ♪

>> welcome back to "bloomberg business week." >> he talks about another 3-d printing company. i don't know if you saw this story. >> i have seen another 3-d printing company that actually fool's me and made a ball player in my image. pieces of plastic sort of layered on top of each other. he is doing something different here. >> uses easy light. it is supposed to be a faster process and a different way of doing injectable molding.

he is also attracting a lot of venture capital money from google ventures. a lot of silicon valley folks involved. there are some skeptics. --what ishat interesting is to see whether or get the skeptics of 3-d printing. i guess time will tell on this. >> i love the line from this piece. "we don't print, we grow." bloomberg businessweek profiles tim leistner. >> that against a corruption scandal in malaysia. >> really important goldman sachs banker. >> that's a big job. >> he doesn't have that job anymore. what did he do? >> has been accused of no

specific wrongdoing but i think it's fair to say his trajectory and what was fun to write about is this guy rose really high, was one of the true big men in goldman sachs, and his career at the firm is over. he rose high, also kind of highflying. he is married to -- >> the model. he put together some of the biggest deals in malaysia over the last two decades in malaysia is an important country in southeast asia. sort of messed up in singapore, which is a neighbor to malaysia, because they offended the families who controlled singapore's banking. that happened just before tim leistner was promoted to be the head of finger for investment banking and 2002. he didn't let a mistake like that happen during his rise. you really put together some of

the biggest deals controlled by some of the biggest billionaires and that, needed with a deal. >> it is a mutual fund? a it is sort of like sovereign wealth fund. it was controlled by a state in malaysia but the federal theynment took it over and issued debt with goldman sachs. $6.5 billion worth of debt. goldman got a thanh of money. something more than $500 million. government work, usually don't get that kind of money. force people were upset that goldman sachs made that money. the next thing people were upset about is that money seemed to be missing. the prime minister who oversees one mdb suddenly got very rich. about $600 million showed up in his bank account. there are a ton of investigations. goldman sachs is investigating itself. the malaysian attorney

general just said he cleared the prime minister of any wrongdoing but the swiss thanks for billion dollars is missing and he was investigators subpoenaed 10 leistner. , he important to point out was amazing at connections. he really will himself into the fabric of money and power in malaysia and those connections were an amazing thing and he got paid a lot of money. those connections were also what help to bring him down. >> how odd of keeping is this what the goldman sachs style? not a lot of flash and publicity. i remember speaking with john whitehead, a former cohead. he wrote this list that started as a memo, a formal -- an informal list of commandments. was important people like important people.

are you one? [laughter] -- one thing you liked about the story is when goldman exports that recipe into emerging markets, those connections have become pretty complicated pretty quickly. the prime minister of malaysia was also the head of one mdb and was a friend of 10 license. ties become complex, especially when $600 million shows up in the prime minister's bank account. they has spoken publicly. it's fair to point out he has defended himself completely. he said that money is not connected to one mdb. he says it's a gift from the saudi royal family. >> we look at a growing market for american farmers, india. >> india is buying evermore qualities of his and lentils

predominately grown on the northern plains. they are a key part of india's diet. this could be something shaping world who demand for years. >> that's interesting. it sounds like they're very important to u.s. farmers. >> and potentially creating a cropping change that we have not seen for a couple decades. .hina has been the big pusher they like soybeans and to a lesser extent, corn. india doesn't need as many of those crops so global markets respond. >> how long does it take for a farmer to make a shift like this, to start growing what folks in india want versus china? about thetalking marketing streams, new infrastructure. the way these shows tend to work as they become gradual over years. they start in areas where the crop is already grown so you may have an elevator to sell to and frankly learn how to use it.

you see this acreage area expand. you have seen it in the les and canada. over time, you see these slow transformations in american agriculture were someday you are driving down a rural road and you said never seen that look that way before. [laughter] somethingnd, is it that will be around for a wild? will u.s. farmers be involved in sending their crops to india for sometime? >> i've been talking with an analyst and he says the future really belongs to india. india is an interesting case in terms of global markets because they very much push food self sufficiency but as the , their foodrows demand increases. there is a little room for wealth development. china is already consuming about the global average in terms of calorie per person. india is still 17% below. there is room for the population and waistlines to expand.

>> next up, how weekend warriors are becoming a lead athletes. bignd movie of studios see profits using the bible as inspiration. that's ahead. ♪

>> welcome to "bloomberg businessweek." >> jason kelly looks at how big data is helping weekend warriors become elite athletes. >> you give them some blood in they come back with is highly personalized 50 pages coming page being this different biomarker. it's talking about things you have heard of like vitamin d and other things like bilirubin, which measures your ability to re-create red blood cells. it's a deep dive into your body. >> you're into running

marathons. you got these metrics. what do you do with it that information? >> as i have talked to experts about this, as i've been reporting this story, is one of these things where as with the data that you would get from your heart rate monitor, you want more and more. i think youhings would end up doing what it is around diet and nutrition. one thing they tend to measures any food allergies you have. i found i had a minor banana allergy, which is a little distressing for someone involved in endurance sports. things onrt of change the margins and you started think more and more about how you feel before, during, after a workout. >> why this particular market? >> what they saw was his opportunity with endurance athletes because endurance toletes are very willing

spend a lot of money and it's a very high income demographic. when you look at the average income for say environment participant, it's upwards of $250,000 a year. this is a very affluent population that again is willing to spend on bikes and gear and pull time and all these different things. and all the gadgets that go along with it. >> a new player in the blood testing field is fairness -- phernos. they're trying to take testing out of the hands of the medical industry and put it in the hands of people like you and me. how big a market overall is blood testing? it's only going to become bigger and bigger in the sense of what you're talking about. it's highly personalized and the , as the diagnostics

become easier and easier, as the information gets easier to understand, it becomes a bigger and bigger business because it becomes less intimidating. part of what we see in this age of customized health care is people wanting to really cut through a lot of the red tape around their own bodies. this is the age of the internet where any time you have any a core pain, the first thing you do is google it. people show up to their doctors and increasingly to the clinics where they get their blood drawn knowing a lot more than they would have certainly 20 or 30 years ago. the risen read about of faith-based films. >> taking the script from scripture. we are seeing a bit of a trend here. that's right. we have seen this throughout history but we are in a pretty intense period of it now.

a couple movies came out recently, "americans from heaven." a girl falls out of the tree and is basically miraculously cured of the list she had. another movie called "risen." another one out april 1 called "god not dead 2." they end up making a bunch of money based on how much it cost to make them. >> you can call to go with your church group to go with these films. they are making money off of going not. is there much crossover here or are these people going to see these movies generally christians? >> for the most part, these are believers who want movies that stick pretty close to scripture. some of the studios have run into problems when they try to these disaster movies. in 2014, there was a movie called "noah."

these movies cost a lot to make. they're are basically disaster movies and the faith-based crowd said we see what you are doing here. who are trying to get us in to see these movies because they have crossover appeal and they end up costing a lot and not making a lot. >> what is the economics of making these? our studios spending a lot? doing is notre really investing in stars that demand that much money. a lot of these movies coming out now, the people in them hit their stride in the 1990's frankly. they are not current big stars. very smartally are about the message. they really understand their audience, go after that audience, and they are not really interested in trying to appeal to a wider audience, thus well not making astronomical money, they are making really good money with some of their stuff. >> see you back here next week.

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