carol: welcome to "bloomberg businessweek." david: in this week's issue -- come online and understand. rnc identity crisis. >> redefining insider trading. >> and kelly slater finding his perfect wave. david: all of that ahead on "bloomberg businessweek." ♪ david: we are here with the editor-in-chief of "bloomberg businessweek." >> yes. you guys talk about mr. fix-it in the auto industry. now, he has to fix mitsubishi. ellen: he first fixed nissan,

and now mitsubishi with fixing their emissions standards. whether they have stated their emissions standards correctly. he has been brought in to try to help fix that. it is all because nissan has invested in mitsubishi motors. david: what makes him so good at doing this he does it time and time again? carol: the picture that you have with him, he looks like wolverine. ellen: he does. i bet you he will like the picture. in france, they called him "le cost killer." he knows how to cut costs, how to make auto industries, auto companies working together share platforms, etc. he knows how to do it for less. david: looking at venture capital, a lot of circles here. no surprise the internet is a subject of a lot of venture capital investment. what else can we take away from this graphic? ellen: my favorite part is it looked at the recipients of venture capital and where they went to school. the most prevalent was dropping

out of school. you have a lot of entrepreneurs who are taking the advice of some of the people in silicon valley -- peter thiel among them, saying you don't need to go to college. not a big surprise, the next most popular school was stanford. carol: interesting. david: in the backyard. carol: interesting, all the students go to schools, racking up all of the student debt, ultimately, you don't have to go to college. ellen: if you are very smart. that is a lesson. carol: in the global economic session, you talked about puerto rico with a lot of problems. a lot of debt. there is more to be done. they really have to fix their economy. ellen: they do. the problem is they don't have an economy. they relied heavily for a while on the pharma industry. a lot of pharma companies wanted to do business there because there were tax advantages. those tax advantages no longer exist. and so the pharma companies over time have left. they have also attracted finance people because they have tax advantages for finance people. that has created resentment

because people who live there don't have the same advantages. and so the question is, what is puerto rico going to be able to live on? david: pharma companies have left. a lot of people have left. ellen: one of the stats we have is the rate at which doctors are leaving. it is a lot of doctors leaving. of course, they are all citizens of the u.s. all they have to do is get on a plane. david: no passport needed. the cover story, the head of the republican national committee is facing a tough task, uniting this party behind the presumptive nominee donald trump. ellen: at first, there was a lot of speculation whether the party would unite behind trump. it is his job to figure out how to make that happen. david: you talked to the reporter who wrote that piece, josh green. josh: initially, the worry is that trump would get beaten and go awol and run a third-party bid. all of these professions of loyalty were originally meant to keep trump in the fold. what has happened instead as he is locked up the nomination and now is trying to consolidate the party.

it has fallen to previous and -- priebus andn to hadgop establishment, who nominee, toferent come together and try to keep everybody on board. carol: it is interesting, too. when he came on board to help reshape the republican party after mitt romney lost, what has changed in terms of the vision, the core of the republican party since he took over until today? josh: his vision, i think it was a smart one after romney lost, there were all sorts of recriminations and backstabbing. he very responsibly one out and took people and did a big study of all that had gone down. the so-called republican autopsy. also looked at how the party ought to refashion itself and be able to compete in the 21st century. the conclusion they came to is that the party needs to soften its tone and moderate.

change the primary calendar a little bit. make an effort to attract nonwhite voters, women, and minorities. i think the anguish that a lot of republican elected officials feel in having trump as the nominee is that he is a wrecking ball to that idea. he has a very different style. trump, as he told me, has a different vision of where he thinks the republican party ought to go. david: you sat down with donald trump in the trump tower. what did he say about his vision and how that jives with what has in mind?s josh: what interested me -- trump won the nomination doing all of us the opposite of what previous -- the republican bigwigs had proposed after 2012. clearly, he is doing something right from the standpoint of winning republican voters. i asked him how does the envision the party changing? what he told me as he is going to put the trump stamp on the republican party in the same way he stamps the trump name on his buildings. what we ought to expect five years from now, he told me, the republican party will be more of a worker's party.

it won't be hawk to conservative right wing ideology. he will pursue a lot of the things he talked about on the campaign stage. some of those things republicans will be fine with. he has put out a list of very conservative justices he says he might appoint to the supreme but then there are other things like building a wall and deporting 11 million people and ending trade deals, renegotiating trade deals that aren't going to fly very well with a lot of conservatives. i think that is why you have seen a lot of resistance to trump along the conservative intellectual class. carol: does priebus like trump? josh: you would have to dose him with truth serum and even then i'm not sure he would tell the truth. what he says is they speak every day. trump was very kind toward him. two months ago, when it looked as though there were be a contested convention, trump essentially was issuing veiled threats toward republican

priebus about how they were going to try to steal the nomination at a rigged convention. his tone has changed. he has even given him a friendly little nickname. he now calls him mr. switzerland. carol: for neutrality? josh: it is to make peace between trump and the elements of the party to find him obnoxious. clearly, you can see what he stands for if he stands for if you read this rnc autopsy. it is not what the republican party is today. it is not really what trump stands for. although he is being a good soldier and doing his best to help trump when the white house and get republicans back in power. david: how do you illustrate the job the head of the rnc has in remaking the republican party? on the cover, the head of the rnc, familiar to a lot of

people. how do you decide to go with this photo? >> we had a fair amount of time with him which is great. we got a lot of different options. we had some options that are more traditional where you see his face and he is standing on a white wall. david: american flag? >> eagles. [laughter] carol: red, white, and blue. >> and we had pictures of his office which is kind of what you imagine it to look like. ipad pror the strange on a pedestal. the photographer was shooting him and shooting him. he took a phone call. he had a little moment there. we thought that it was a very authentic moment of him at work. we had to talk about whether it was weird to have someone be the cover subject for not show his face. in the end, without the moment the moment was so great and spoke to the situation right now with the republican party that it was the right way to go.

carol: you do. you look at the cover and realize the frustration going on inside him internally. do ever think about when you do a cover like this how the subject is going to feel when they see it on the newsstand? >> if we thought about that, our covers would be very, very -- [laughter] >> it wasn't -- it is by no means purposely unflattering. this is something we all experience in our daily life. carol: it tells the story really well. >> yes, it is a very natural moment, i would say. it was not posed or planned out. david: i imagine part of the is, you can disguise the face of bill clinton and that silhouette would be known to a lot more people than this one. where you thinking about that? >> we were a little bit. as an image, there is something interesting about how mundane it is, that it is not a celebrity seen in a different way. when we have situations like that, someone not immediately recognizable, we take care of it with the language and we make sure to mention his name, the fact that he is remaking the republican party and the headline "the hardest job in america" speaks to the photo. carol: when you did this, did

you do other things like he is standing, and you just decide we are going to put him behind his desk? >> personally, when i saw the photo, i fell in love with it. we tried a bunch of cover lines, we tried when it played against one that kind of played against it. we felt the photo was so great that the type needed to stand aside a bit. david: up next, trump redraw the map in terms of campaign ad spending. that has tv executives scared. carol: plus, could janet yellen be replaced by an algorithm? what central bankers are saying about ai. david: and the snapchat account that some in hollywood think could be the future of tv. carol: all of that ahead on "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar.

david: i'm david gura. you can find us on the radio on sirius xm channel 119. carol: and on boston 300 and bay area 960. david: look at the free publicity donald trump has gone from the news media and social media. carol: we asked what that means for tv executives planning on campaigning advertising dollars that have not materialized. >> you have millions of followers, and he tweets something out and it is free advertising essentially, to millions of people. often times, he says something so incendiary a gets picked up on local news or cable network tv and a goes viral and we're all talking about it in ways that paid advertising doesn't really break through. >> he definitely has a strategy with working with the media and he is a master at pulling the strings to generate coverage. one estimate is that he is received almost $3 billion worth of free media or earned media which is a staggering amount and far exceeds any of the other republicans in the primary and exceeds what the democrats are

getting, as well. to break through that, we have seen his competitors have to spend a lot of money to try to even get the kind of attention he is getting. it hasn't been successful. we look at the super pac right to rise usa which backed jeb bush, spent an estimated $70 million on tv advertising, and he didn't win. that raises the question of how candidates are going to do going forward. are they going to continue spending? david: you dug into that. what are you inclined to think what the candidates are going to do going forward? >> not everybody is donald trump. [laughter] whew. >> you look at a candidate like

hillary clinton. she gets a lot of media attention. she is not leaving anything to chance, or at least, her supporters are not. they super pac backing her has reserved $100 million worth of tv advertising between now and the election. that is a staggering amount and it is probably an amount that will only grow as we are closer. they would argue that republicans waited too long and did too little to combat trump. they want to get a good head start on it. also, if we look down ballot, we see hot senate races and gubernatorial races. tv executives think that those candidates are going to have to spend a lot to break through, get their message out in a hot political season. perhaps try to differentiate themselves from the top of the ticket on the republican side or even on the democratic side. carol: up next, the new technology determining how valuable a professional basketball player's shoulder might be. david: and the machines that may be someday be running the world's central banks. carol: all of that ahead on "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." david: this week's global economic section, how advances in artificial intelligence could make janet yellen have to look for a new job soon. carol: well, maybe not soon, but ai is not just being applied to manufacturing anymore. >> machine learning is the dominant subfield in artificial intelligence. it refers to the technology that allows a computer to acquire knowledge or skills without being explicitly programmed for that skill. carol: we see amazon and netflix already doing this. right? amazon has their algorithms. analyzing what we are doing in terms of purchasing. maybe they can suggest something

that we may be likely to buy. netflix does it with movies. right? >> that's right. when you go on netflix and ask for recommendations, they are applying machine learning to everything it knows about you and people like you to make a prediction about what kind of movie you might want to see. carol: financial firms are doing the same thing in terms of its predictive abilities? >> there are several hedge funds that are employing machine learning to one extent or another to try to help them make picks, stock picks, or other security picks. they tend not to talk a lot about what they are doing. there is a lot of secret sauce involved. there are several hedge funds involved in the kind of work. carol: what is tricky, it is one thing if they are checking my buying patterns and telling me you might like this book or this product. when you are dealing with something like the fed, the whole idea that whether or not this is going to be ultimately able to go through all of this information and predict what the fed can do, that is a giant leap, correct? >> it is massively complicated. the world economy is a much more complex system then a group of customers for a company, or even the stock market. the number of variables that are

involved in the uncertainty involved makes it a harder task. there are computer scientists -- i spoke with andrew lowe, a well-known ai specialist at m.i.t., who believes we are getting very close to the point where the technology will be good enough to match humans. and then, not too further down the road, to surpass the ability of humans. carol: the bank of england has been playing with this a little bit, already, right? chris: they are. within the world of central banking, from what i can gather, although central banks are quite shy, i've found, to speak about this, from what i can sense, the bank of england is out in front of other central banks. their chief economist is very

keen on this topic. they have set aside a new unit called their advanced analytics unit that is already building and testing algorithms for solving certain problems, including those within macroeconomic forecasting. they are not using it quite yet to brief their policymakers, to advise their policymakers. they are getting there. the head of that unit told me he thinks that within five years, it will be used to some extent in meaningfully helping their policymaking. carol: speaking of smart machines, in the magazine, there is a profile of a company whose visual search technology is being used by the fbi and mba. david: we spoke to the reporter. >> it is kind of like you see in a jason bourne movie. a lot of us thought this was already out there and easy to do. you cut and paste, or drag-and-drop what you want to find. it could be a person's face, a white pickup truck, a logo. you say find it and give it the source material, whatever it is. hours of surveillance video, a

game broadcast. you say find this within that. it scans the pixels and within a matter of seconds, feedback the results. carol: so, you could do it quickly. talk about the guy behind all of this. tom. who is he and how did he come up with all of this? >> he is a buffalo native who has been doing machine learning stuff since college. he is a deeply knowledgeable geek about this stuff. he had done a couple of -- worked at companies and started one that codified facial expressions to look for signs of deception. that wound up having an advertising use, too, because now, when you look at a vide screen at an airport, they know who is looking at it by using this kind of technology. anyway, he had done that kind of stuff and new from network that intelligence agencies were buried in surveillance video. actually, it wasn't that sophisticated. a lot of times, it was people staring at it for hours and trying to find threats, or they would have this technology that needed rooms full of servers to work.

just because it is really a complicated process. he just said about trying to simplify it. he knows, for instance, when drones come back from their flight, sometimes, they have 12 hours of high residue. resolution video. they put that up against the nerve system to find out what's there. >> you talk in the story, you go through a whole yankee season quickly. >> seconds. that is hundreds of hours. depending on how data rich the source is and how many queries you want to do, it is seconds. i asked him to do a brief search of three hours of cnn for hillary and trump at night. they sent me a clip of them results.go and the it is literally just -- bang,

they pop up. carol: amazing. >> yeah, it is out of hollywood. david: were they wary at all about getting into what they do? >> they develop the technology themselves. they decided to fund themselves until they had a thing they could sell. while they can't say and don't even know what the government exactly is doing, they are at liberty to talk about their technology. i was curious about whether as this becomes affordable and more widespread, do you want everybody to be able to do this? for them, and a way, they are selling it. carol: up next, the big money china is spending onto virtual reality. david: plus, the courts redefine insider trading. ♪ carol: we are inside the magazine headquarters in new york city. david: still ahead in this week's issue -- available online and on newsstands everywhere -- a new era for insider trading. ♪

carol: coal is the new hot coffee. it is all ahead on "bloomberg businessweek." ♪ carol: we are here with editor ellen pollack. there are so many must-reads in the magazine. you talk about south africa, growth slowing down in the country. there is some momentum for president zuma to step down. ellen: the story is interesting because it compares the situation in south africa where india, where the reporter who wrote the story used to be stationed. it raises question about whether the african national congress can keep going and staying the dominant party and talks about how they have not solved all the problems and there is growing discontent with them. it remains possible that down the line, if possible, they will start losing some important elections.