♪ >> welcome to bloomberg businessweek. the face of donald trump's fixed permit -- experiment in government has started. overssian television bonds trump as a pop star. oliver: all of that ahead on bloomberg businessweek. >> we are here with the editor and chief megan murphy. here, we have a new president that is very unpredictable.

that should be breaking out the business community but the are all in. >> i was in davos last week. publicly, it was amazing how many global business leaders say that he was going to improve the business environment. privately, many have given page. --y really focus on what when someone is tweeting policy by tweet, we see it in the drug market, we see what he has done to the defense base. you would think that they would think that their business would be targeted. but when they compare and contrast it with obama, it is a point that you're over and over. at least trump is visible about putting business first. he is going to start these dialogues with industry. is going to try to see what the tax landscape -- he is going to to see when the tax landscape needs to be fixed. if you move out of the u.s., there will be repercussions for

that. that is a clarity that there is they hade with and with obama. i think what they hope first and foremost is that they are dealing with a businessman. they are not dealing with a policy maker. if they make their case for their business and their industry and why they do things the way they do, the result may not always be what they want. it will be an exchange. he will be a deal maker. it will be for these businesses. the art of the deal. when does the volatility come? it is really about a means to an end when we know what his proposed and willow bay. the means to get there may be less important. we will find out. about the bond meltdown that you are talking about. megan: what we have is to forgeries. forgeries.

people were worried about forged documents. people are getting concerned about this. liquidity in the chinese market is crucial to keeping these corporate stable. those growthng targets. once you have a little twitchy this in the corporate space, when people are concerned about is if it shrinks in terms of people getting reticent to buy debt. see is more companies exposed to default and what that will mean is a domino effect among the corporate sector. that was the real trouble for them in terms of making good on these ambitious goals. >> let's get to the cover story. wilbur ross -- familiar to bloomberg audiences. this is a huge department that he is picked to run. ofan: there is a huge number responsibilities. what this shows is that trump is picking business people lead

this. this is somebody who hits on a lot of different positions and has a lot of different positions on work. what it delves into is the wilbur ross of the commerce department, will that be the model and the template? it is a fascinating piece. there is a fascinating look at the person that wilbur ross is. we spoke to reporters max abelson. of how he became a billionaire and the story of what he has done since becoming one, i think that is a preview of what we will see over the next four years. the game i was interested in was the fact that this is an experiment in the united states. what rule by plutocrats will look like. we have a cabinet that is worth $6 billion. they are oil executives. they are running the country

now. nobody knows what it will look like. some businessmen are quite competent. people talking about the story are worried as will usher in a era of corruption. or a disregard for the poor. vladimir putin surrounds himself with the group of bureaucrats in the same way. max: we are fearful of oligarchs. verye are skeptical of wealthy people taking control. when we look at that, was there anything in wilbur ross's history that could tell us about the future? could the past tell us about the future? it wasn't obvious question. was when he was an investment banker, he learned about the bankruptcy process. working for the rothschild family dynasty, he became heavy bankruptcy advisers. he would go to a bankrupt airline or a fuel company and advise the bondholders on how to

make money. he was very good at it. he started his own fund inside rothschild. unable to bulls bay -- on april fools' day, he turned this into wilbur ross. called him aays distressed investor. he goes after bankrupt companies, textile, steel, takes them over. sometimes people lose their jobs. massarfound a carol interview where he said i am not able to. he doesn't like the phrase "vulture", i have found many interviews where he has rescinded that. in a lott it of different angles. the theme of being a vulture. he was going into companies --

he became a billionaire because of his fuel investments. reallyht up these willful still companies, combined them, roll them up and sold them to a indian billionaire. here are the things you should know, on the one hand, is all strategy, according to the person in charge of the fuel companies was not just to buy any old steel company. remember, he had been an advisor for years. instead, he was going and buying up bankrupt steel companies and buying only the assets. that way, he wouldn't have to worry about the liabilities. that would be all the obligations that are owed to workers and retirees. money. a lot of it was billions and billions of dollars. in bankruptcy proceedings, oftentimes, that money was taken over by the government. say thewould then tongue -- companies can handle the pension arc nations --

pension augmentations. gretzky was using bankrupt the law to do this -- >> he was using bankruptcy law to do this. max: he didn't higher nearly as many people that worked there before. on the left side, he was relying on the government to take over pension obligations. he wasn't hiring back nearly as many people. it was something like half. youhe other hand, as totally correctly pointed out, the other companies were in bankruptcy. it was fair to say he was bringing back companies from the bank -- break. .- brink it is not black and white. it is fairly great. >> making wilbur ross the cover model was an interesting decision. >> this drives him a very

important point about one of our main stories about wilbur ross. 12's pick -- donald trump's pick. to make a playful way, we have to put it on a make america great again had. he is discarding a hat with a chinese flag on it. >> he looks like an everyman but anyone who knows about wilbur story andread this know this is a very successful multibillionaire. he wears velvet slippers. it is funny to see him with the hat. >> he is bigamy finance world. it is hard to tell how many people in the publicly or actually know about him. this goes into some details people may not know. oliver: this is a focus on two

of our biggest startups in the u.s.. >> we have a very long, good book excerpt on him. we have the total value of over uber and air bnb. >> it looks like a meme is in science. bas in that -- ameo science. to a book.es it is about these two upstarts. we talked about airbnb. >> up next, the number of american auto jobs that would be reveals donald trump nafta. >> and why repealing obamacare

is harder than it sounds. that is next on bloomberg businessweek. ♪

♪ carol: welcome back to bloomberg businessweek. president trump is threatening to undo nafta. oliver: this would have been particularly good for the american auto industry. signposted early on the first week that we will drop tpp and renegotiate nafta. are broad changes in trade policy. we need to make it decision between tpp and nafta. tpp is a free-trade agreement. nafta has become a common market. it is not just about this. it is in 20 years. it is not about lowering tariffs. parents have been so low for so long. we have had such a common understanding of trade with mexico and the united states and canada that we are talking about a common market. as they are discovering and the u.k., leaving that common market

is really difficult. there are a lot of consistent production techniques. consistent standards, rules, most importantly supply chains that you can rip apart. you can't get rid of that by dropping a tariff barrier. oliver: i wanted to know what the similarities and differences are about pulling out of nafta and what is happening with brazen. -- brexit. >> one thing that brexit people hated the most was the european court of justice. they didn't want their parliament to be subservient to another body. they wanted to be sovereign. eu existedthat the trade deal with disagreements. it wasn't just tariffs. sometimes, the french say we have health standards. that means they don't want to buy german chase. -- cheese.

is something that the trump campaign wanted to get rid of and nafta. i think i have that right. it is something to talk about. they certainly talked about it with tpp. the problem is if you want free trade, it is not just about tariffs. it is about all these other things that crop up all sorts of state subsidies and health and safety regulations. it looks like something else but function as a trade barrier. the way you deal with that is by submitting the problem to some sort of independent arbitrator. that is the problem they are having in the u.k.. in the u.s., the problem is slightly different. the courts that were a part of nafta, this resolution mechanism for trade whenever a strong. they were never used in the european court of justice. what we are looking at is a common market in terms of auto parts. so, the seat goes into the car.

the parts for the seat may have come across the border from the u.s. to you mexico -- to mexico. at mexicanly looking production shipping north for mexico city over the course of nafta to the border states. we are looking at deep integration with ontario. the canadian province of adjusting to the north of detroit. we are looking at one single supply chain moving up and down across that alley. the midwest and the u.s., north and south. campbell: i think this is brilliant. these trade agreements are potentially need -- renegotiated. many parties can benefit. mexico, canada and the united states, when you have this common market and everybody is involved in it, there are benefits all around. that is benefits for all of the economies. benefits in terms of the way of jobs and just lots of benefits that are shared around.

>> i think that is true. the frustration over the course of the campaign. those benefits weren't evenly shared. donald trump has said i want to increase auto production and auto parts production right here in the u.s.. we sell cars in the u.s., we should make them in the u.s.. from his lips to god's years. ears.rs -- nafta, i'mto lose looking at analysis right now, he said that over all, production in the u.s. would decrease by 1%. that is that all the increased production would be counterbalanced by the loss of sales by making production more expensive here in the u.s. from moving all the production home. you can shut all this back in

the box. oliver: up next, it is not only nafta caught in the crosshairs. nato is under threat. that could be good for the arms industry. carol: russian tv seems to love president trump. is that feeling shared? this is bloomberg. ♪

♪ oliver: welcome back to bloomberg businessweek. i am oliver renick. carol: i am carol mather. oliver: you can listen to us in london on the radio. in a global economics section, is skeptical comments about nato

from donald trump. this has forced european countries to buy up their own arms. let's talk about something that donald trump set on the campaign trail. it is about the nato allies that are out there. he said they have not paid their fair share. >> that comment raised some concern because he was -- theing that maybe ds u.s. would put conditions on his willingness to stand up for allies in nato. pointing out that a lot of them aren't paying as much as they should. nato guidelines call for 2% of gdp to be spent. >> i had no idea there were those guidelines. >> it is a fairly new thing. the u.s. has been complaining -- europe not spending enough. a formalized it with a 2%

guideline. ourhis is important to audience. what is important to the bloomberg audience is what is happening in the defense sector. the expectation is that some of these nato members have to meet that 2% standard. there has to be a lot more money spent on defense items. >> this might be a little scary to some countries. maybe it is carol -- counterintuitive. maybe they stand to benefit because if there are questions about whether the united states is going to come and defend its allies, that might force some of these european countries to spend more on their own defense. it is a ceosting, that said he saw a similar thing happen in the middle east during the obama administration as the u.s. pulled out of that and gave a clear message that they needed to pay more for their own defense. on that a big increase in their business. these other companies to saw a big increase in international

sales. they are seeing the same kinds of signs in europe. >> those people had to pick up the flag. >> a lot of these european countries pledged their own defense budgets. oliver: are any major u.s. defense contractors bound by any contracts? do they have a agreement with the u.s. government? candidate build military -- can they build military equipment for other countries question mark >> -- countries? >> yes they can. the f-35 is one good example. there are approval processes for how this all works. do drive acompanies number of them in increasing percentages of their sales from international customers.

carol: more on defense spending, you also have president trump pushing back on some of these defense projects in the united states to rein in the costs. >> it is funny because there is for thesenthusiasm investors. there are clear signs that defense budgets are going out. there looks to be a greater focus on the costs. you have companies like walking martin pledginge- to bring down the cost. there is a trade-off there. we will see. carol: why the kremlin is starting to realize that dealing with president trump may not be so easy. we talked to greg white. reg: donald trump's picks, how has that been viewed across the ocean in russia?

greg: the first testimony in the confirmation hearing by the secretary -- defense secretary matus was much tougher on russia then trump has been publicly. concerns here in moscow. kremlin officials were not sure how to read it, particularly with all the scandals that have electedng on around the support of trump -- the alleged support of trump during the campaign. i think this has raised a lot of alarms among officials. it could complicate relations. go to the's elections. there was a lot of celebrating that donald trump won the november elections here in the united states. what is that relations between donald trump and the russians right now?

>> there is hope. it is a good barometer of the message they want the russian population to be getting. the coverage of trump in the inauguration is unprecedented. the have live coverage of inauguration. also some positive coverage of him and his family. hopely, there is a lot of invested in him and his taking over the presidency. just about everything negative in the u.s.-russian relationship was written off to the obama administration. there is nothing positive in russian media about obama. that is a bit of concern it might not be as good as they were hoping. oliver: when you look at where that might put some of trump's

appointees as they go through these confirmation hearings, billing which has been harder. how do those people feel in terms of aligning themselves with the guy who picked him -- them? and also make it through a sounding toout much like they want to erase what obama has done and get to friendly with russia. friendly with russia? >> we have heard attacking on the part of these appointees to insure confirmation and how much was actually their own views and if they had positions that are different from the president. i think we will see that in the coming weeks. the only response that we got publicly from the trump administration where tweets from trump ahead of the inauguration saying i'm happy to see the diversity of opinions. that is something that has been difficult for foreign partners to read, not just in russia.

also in europe. oliver: also, how uber and airbnb have came out on top of this economy. this bloomberg. -- this is bloomberg. ♪

♪ oliver: welcome back to bloomberg businessweek. .nother new tech company snaps wife its ipo might question the -- hy it's called why its ipo might question the company. that is ahead on bloomberg businessweek. oliver: we are back with bloomberg businessweek editor in chief megan murphy to talk about more must reads in a magazine this week. this is a great exempt from the upcoming book. it is about two of the most

disruptive technologies and companies in silicon valley. is uber and airbnb. how they started and how they build these companies and how it came from solving simple problems in the market. i need a taxicab, i need a place to sleep. these people were intricate to -- theseese people companies happen. he believed they had to have, how they built these true juggernauts. these companies that have changed how we live, how we view the world, the labor market. carol: in terms of how they got through, there is a corporate infrastructure out there. there are regulations. they used me, a lever to fight back the uses of these platforms to really make inroads.

megan: what they were faced with a regulatory landscape. how they drove through these hurdles when people said you need to be licensed to have a taxicab. they said look, you tell them how this benefits them. you tell them why this is a better product. you tell them how it makes your life more efficient. how they built it, bring that user in. these markets in europe -- when regulators had intense scrutiny on them, they pushed through. not only with believing in the approach of their product, it is their loyalty. users believed in them. >> they are very much overlapping in terms of themes. the story and a narrative that takes focus on two individuals, from boomer.

also, on the airbnb side, an interesting story about a programmer. think this is fascinating. it is how they use these individuals and the people behind the scene. in this case, it was someone who grew up and was a prodigy early on. he learned how to use spamming. there were other competitor products. there was craig list, a few other sites on the market. they found a way by using these codes to lure people away from the other platforms and direct airbnb.ard we are talking about every sort of advantage they had when they were pushed back and realized they went over the edge, there were harnesses and a true entrepreneurial spirit. they had this brilliant programmer to drive users to their platform.

>> they were irreverent when they went after it. they had advisers telling him one thing. they did it his own way. megan: we shouldn't underplay the controversial role of uber and airbnb. this is going to lead to a loss of jobs. this is going to lead to the regulatory field not catching up. they are exploiting an unfair playing field. we shouldn't be legitimizing these complaints that we have. that is likely to play out over the ensuing years. they had immense problems in china that we know about. what they really did was they stay true to their beliefs. they offer consumers a better platform. a better way to make use of their money and be more efficient. a way that was user-friendly. how really comes through is much they believed in that driving each dose and driving force in the creation of these platforms.

google always said that we think our product is better. these group of entrepreneurs certainly believe that about their product. focused on technology, snapchat is known for its ultrasecret corporate culture. oliver: we'll that fly leading up to their initial public offering? >> evan spiegel is notoriously secretive about everything. he really keeps things close to the best. he sees it as a way to allow him to change his mind on the road if he wants to be innovative. what this has trickled down to is a culture within the organization where employees are not being sure what is going on. they are very sideload. d. silo' what we have learned recently is that snapchat has threatened its underwriters to cut these if --

if they continue to lead to the press. when an employee saw a commercial about snapchat spectacles, those are the glasses that take 10 second videos, and as i commercial in september. they thought maybe i can ask my bosses about this rumored thing. their bosses quickly clamped down on it. they said you may or may not we mayen something that or may not be working on. i was later, evan spiegel confirmed that this was going on. the company was changing its name to snap incorporated. employees have been told not to use their phones at the nearest party. there are scattered offices in venice, california.

there is a central campus organization here. they don't have meetings as often. snapchat doesn't have a central communication like that. >> that is what i thought was interesting. oliver: there was a lot of secrecy in silicon valley. it is surprising to think about the original products. it is about disappearing messages. investors don't want disappearing or nonexistent fundamental data. how much will this get in the communicatingf with investors about whether company makes and what the company is going to make and their growth? >> snapchat has been very quiet about their ipo so far. it is a confidential process. they can file confidentially as long as they have less than a billion in revenue which they do.

we don't expect they will be giving a lot of forward-looking information when they are on their roadshow. what we do think they will emphasize is just how essential their act is to the lives of their users and how quickly they are using it. how often they are using the camera or the messaging service or any number of things. they did at a recent analyst meeting, i don't know that those will be regular metrics that they disclose every quarter. i do think we will see a lot of future looking stuff from staff. the way that analysts frame this to me is -- secrecy is fine as long as you are making as much money as we think you are. as long as enough revenue is -- and you are deserving of this 20 plus evaluation that you are said to be looking for. if you are secretive and doing great, that is great. if there are cracks in the

metrics and people will be looking for cracks given their iporience with twittering's , then there will be asking for more. allegations of student loans treating buyers. on donald trump' early of obamacare while still keeping everybody in short. this is bloomberg. ♪

♪ oliver: welcome back to bloomberg businessweek, i am oliver renick. carol: i carol massar. oliver: student loans have been systematically cheating borrowers. is a world that is very big. $1.4 trillion big. that it used to be a part of sally may.

navient used to be a part of sallie mae. they said in the obama administration that they need to split into two. navient left. sallie mae state. -- stayed. they answer questions, they are the conduit between the borrower and the lender. nt,en, in the case of navie the federal government is the lender. they touch about one in four of all student borrowers. $300 million in student loans, that is what they are dealing with. it is very confusing if you are a borrower. you graduate college and six months later, you have a six

grace. , you start playing -- paying on your loan. there are a whole array of options that borrowers have for the federal loans the call -- are called income based repayment. even to sophisticated borrowers, it may not be clear what program to enter. nt ishing that neveavie accused of doing is making things harder in a confusing system. i spoke with a borrower who was struggling in the income-based repayment program. you have to recertify your income every year to make sure you are still not making enough money to make people payment. that makes sense. or april on january 1 15. it is on a year after you entered and approved for the program. sent this borrower communication that was check your gmail. you have to log into their own

internal messaging system to be the email. the way he described it, he gets a mouse. some are statements and some are changes. it is hard to discern if this is an important event. he didn't recertify his income and he was knocked back to the original payment. he said that interest accrued and capitalized another seven or $8,000 added onto his loan total. it is very confusing if you are a borrower. there were supposed to be there to help farmers. there were not only accused of making it worse for borrowers but costly. interest accrued and then capitalized. when they should have been terrorist -- telling borrowers what to do, they made it more confusing. president trump has promised health care for all after obamacare is repealed. but republicans are having a tough time coming up with a replacement.

>> the executive order is one of the first things president trump did when he took office. it is two things. it is a very strong declaration that he was the affordable care act to be repealed. act in office, i want this gone. the second thing it does is a little more nebulous. i think anybody knows what it means but what it says is we the agencies, the irs, the department of health and human services, treasury to do whatever they can to eliminate the burdens of obamacare. that is the question, very vague. the first place to start with the dissection they see is the burdens. >> the thing about executive orders are that you can't use them to repeal a law. but now they can go and use this order to chip away at obamacare.

this require commercial action as well? >> repealing obamacare and replacing obamacare has to come from congress. there are four plants that are being worked out right now in terms of how we get rid of this thing. how do we replace it, what does that look like question mark what happens to or three years down the road? there are a lot of moving places right now. >> this goes across many different the purpose of the government. under any particular players? there are some people being confirmed. the you get the on presidential order, who will be leading this charge? will it be any particular department or person? price -- a georgia congressman was picked to lead the department of health and human services will play a key role in this. in terms of crafting a replacement. taking actions on the

affordable care act. as long as republicans stick together, he will be confirmed. >> we have heard some dialogue conditions existing and kids stand on the insurance plan. do you know any specifics? >> some of the parts of the affordable care act that they like our that if you are sick, you can buy health insurance, people with pre-existing conditions are covered. kids can plan -- stay on plant until they are 26. -- on plans until they are 26. oliver: on the actual specifics of repealing, is it a simple lifting up and it is done? or is it looking at some portions an element of it? he was to repeal it, that has been his talking point.

is it symbolic or can you rip it up and start a new? very hard to take the obamacare acts out and with it up and go back to 2010. big pieces of the law would go away, not the whole thing. the question becomes what do you replace it with? there are about 20 million people who get health insurance under this law, no one wants them to lose coverage. the question is what do you do about that? what do you do about it three years from now? how do you set up a new system where people can buy health insurance or get it through the government or something else? >> up next, the pot industry makes a new method that could feed permit areas -- urban areas. >> this is bloomberg. ♪

♪ carroll: welcome back to

bloomberg businessweek, i am carol massar. i oliver renick. you can catch us on these channels. carol: in the companies and industry section, a farming in addition that comes from a onto the norm. oliver: we talked to jenny kaplan. these guys show the picks and shovels necessary for the legal marijuana business. they grow the things needed to grow pots indoors. -- pot indoors. this is a stepping stone towards changing the way we farm food. oliver: that is because basically, if we have further legalization of marijuana, it will become more of an industry in which people are pouring

technology into it. what i missed to the technology when it is more involved? >> people are growing pot indoors that a growing food indoors. isyou look at the price, it something like $.49 for cattle and whole food -- kale and hope. is $100 per ounce for cannabis. typically, pot is grown inside. that the cannabis growers are in a place where they can adopt this technology, figure out how it works, how to make it better and as the price of weed comes down which is already happening since it became legal, they will push for cheaper tools to grow indoors. that will benefit indoor growing for food. byrd, what isrick

his vision in terms of vertical farming and moving it beyond cannabis? >> hisis vision -- vision is that vertical farming can change the food industry. it takes 1500 to 1700 miles on average for potus to get to your plate if you live in an urban center like your city. -- new york city. the environmental problems are a problem. that is something he was to fix. there are matters of the changing climate. it is not what despicable these days to grow crops outdoors. a lot of his critics have said you are wasting free things like favor ofnd rain in putting crops inside. but having to pay for the rain and the sun -- is --y, what his argument these companies are using less water.

they are reducing their carbon footprint to an extent that it is beneficial, especially given the fact that our climate is unclear these days. prince the music icon held a tight control of music throughout his career. sometimes it was not profitable. >> here is reported lucas shaw on how they want to change that. lucas: prince became famous in hislater life for idiosyncrasies and inscrutability for the music he makes. most of the big songs of prints are from the 80's. the 80's was his pay. he was this artist who refused .o bend his will he wanted to control his music and put it out however he saw fit and however he felt that he maintained that control and benefit the most. in his death, he is unable to do so because you left no will --

he left no will. they are trying to extract as much money as possible without complete late -- completely selling his legacy. prince the artist is now in the hands of people who don't know him very well and can do what they want. in terms of the money, it is anywhere from 50 million to 200 million. valuing the estate can be very hard because these catalogs can be immensely valuable if they are treated properly and if you find a way to make that artist stay relevant and current culture. there are some people who paid away. you tend to hope that someone like prince stays around. we really don't know. there are cases like michael jackson and the beatles that you have an idea that they will be famous for years and years after their death. this is a run for two beneath beneath rung or two that. >> prince broke from his record

label. he yanked his songs from music services. now that he has passed away, it is up to lawyers. what is the lawyer that is driving what will happen with prince and all that is prince now? >> the two people who are appointed to make all the deals for the prince estate where charlie kaufman. has developed a reputation for excelling with these estates. the two of them are in charge of them right now. they have made a series of deals that will be valid. there has been a move by princes to make vansister jones the head of the estate.

how all this plays out is unclear. at the moment, london mcmillan is trying to get all the deals done. of theeaming deals changes also. >> bloomberg businessweek is available now. >> also online on bloomberg.com. >> i love the excerpt from redstone's new book. it is on the upstart. these companies have similarities and it all comes back to an inauguration day of president obama. that is a interesting way to tell the story. back companies have pushed against the hospitality industries and the taxi industry. i loved it, i can't wait to read more. i'm going to go if nato because i think it is an interesting point about how to

dissect the affects of all these agreements, whether they are trade or geopolitical agreement. they are coming under question and what the real effects might be. >> it was a great issue. >> more bloomberg television starts right now. ♪ . .

>> coming up, the stories that shape week in business around the world. the trump administration hits the ground running. >> he wants to create jobs in the u.s.. >> we are going to start by getting fair shakes with our trading partners. >> a lot of people thought he was going to start with taxcutting and tax reform. >> we ask what is in a number? >> we are inspecting can ipos in the next week. >> greed comes back. >> parliament will get to vote on brexit. >> it is similar to a foil