♪ carol: welcome to "bloomberg businessweek." i am carol massar. oliver: i am oliver renick. and we are coming to you from inside the magazine in new york. carol: hackathon hustlers making a living from coding contests. what life is really like on the border between the united states and mexico. oliver: all that ahead on "bloomberg businessweek." ♪ carol: we are with "bloomberg businessweek" editor-in-chief megan murphy. so many stories, double-issue. and the technology section, you look at hackathons. megan: there is also a way to make enough money to only work on the circuit.

look, we looked at people using these marathon coding sessions to test a product or take it to the next level. think about things they are not thinking of. and offer rewards, sometimes cash, swag. we find people whose entire apartment is littered with tvs, printers, shoes, anything you can think of from participating in these hackathon sessions. oliver: the idea was popularized in the social network. it's a very real thing. oliver: these guys are top of line and could work for major companies, but choose not to. megan: one thing i think that is great about this story, is that it is almost this cycle, this rite of passage, when you are young and don't have a lot of obligations, you probably feel

free to go off and have an all-night hackathon and come back to your gross apartment. what just are thinking of longer-term goals, i am not sure hackathons are all that appealing. oliver: maybe not the most sustainable. in the market section, let's talk about a very interesting story, these different means of communications through texting on platforms that are hard to track. megan: yeah, i mean, one thing that has come out through the litany of scandals since the crisis was that a lot of these activity of alleged collusion between traders was happening in chat rooms, and we should say that bloomberg also runs proprietary chat services. this moves into this social chat services which are known to disappear and can't be tracked. basically unmonitored. carol: great for compliance. megan: those compliance people love it -- but actually, how they are using these services to explicitly go around compliance. banks have worked so hard to get ahead, financial services company, data companies, have worked so hard to get ahead and monitor these conversations.

bankers are no different than anybody else. they will migrate to the platform that provides them privacy. whether that is to get ahead in work or send images they don't want to be seen sharing. carol: some companies are aware it's going on and are turning a blind eye a little bit. megan: i think it is just -- we talk about this with uber, airbnb, the migration towards disruptive technology and how regulators and executives are just always one step behind. yes, they are trying to get ahead of it and know it will be an issue, but they are only as good as the technology. someone is always going to invent something that makes it

that much more difficult to monitor. carol: let's talk about the cover story. i found this really moving, it is a photo essay. we talk about building a wall along the border with mexico. i feel like these pictures tell a true story of what is going on. megan: you know, this is one part of the country that i am not familiar with. it is the area we call north of the border, south of the wall. there is a large amount of area, that actually, whether that is farming, trade, trucks across the bridges, children's, family, playgrounds, territory caught in the middle of where the wall will go and where the border with mexico will be. one of the things that is most fascinating about this story is not only the livelihood and places where they potentially let these people come over, that there are huge gaps in the existing fence, specifically to facilitate these people to come across where they legally live

on united states soil but are south of where that wall would run. it is powerful imagery. oliver: it really is fascinating. we talked to the photo editor, clayton carville, about those photos. >> one of the main points of interest is you are looking at the border patrol manning an opening, but for the most part, these fences are not manned, so you have openings so that land owners can access their land. >> that is an important point. because where this wall, there are farmers, golf courses. i mean, people own this land. >> state and national parks.

>> there is life. there is activity going on. >> yes, and there has to be access to these places because it is owned and use. and so what happens in most cases, the wall is punctuated by these openings -- fences that are like you see later in the essay, built on levees which were fortified when this project took place around 2006, so part of the buy in on the part of the land owners is that the levees would he made -- were going to be made better, because it is a floodplain. so she found one man who was dove hunting on a friends private land, undocumented workers harvesting spinach and beets. there is a public park that has actually become a hotspot for finding migrants trying to cross. >> right. >> and the other piece of it is that $500 million in commerce is facilitated by the border crossings. in mcallen and reynoso, --

>> the bridge that goes between mexico -- >> it is actually like an incredible chunk of international commerce taking place here. and i think kiersten is smart to recognize this is a huge economic story, and one that we say the topography runs against the rhetoric of what this wall should be. oliver: just looking through this, you capture a great deal of the labor that happens in this sliver that is north of the border and south of the wall. this photo here of undocumented immigrants working, they are basically able to move back-and-forth and border security pretty much looks the other way. because they understand this is just how it works. >> again, private land, private commerce. there are tacit arrangements built around trust between the border patrol and landowners, so

it is not to say anybody is doing anything wrong, but there is a presumption of giving people access to the land they own. carol: at the same time you have immigrants trying to come across. >> apprehensions. yeah, so one of the pictures is a photograph of the border patrol agents as they got a call about a car that was trying to run across, and there was a concern this was a migrant vehicle. what the vehicle did was to sort of make a run for the river and try to hit water. and in fact, the car crashed and exploded, so he ended up running on foot to get across the border. there is also real action taking place. at the bridge, people cross frequently and present

themselves requesting asylum a lot of times from central america. el salvador and nicaragua. carol: using these photos was the job of rob vargas. >> we knew we wanted a picture of the fence. it was taken from various angles. some photographs were at an angle and the fence looked like this thin strip of the landscape, and some sort of at an angle, offense looked solid, but we thought this one was at a good distance, and we could tell what the fence looked like, and it also has an opening. part of the reason we did the photo essay was to explain why the fence needs to be porous. in order for commerce to happen. etcetera, etc. oliver: i feel like it is a very unimposing photo. i thought it was interesting the

way you used to the space, the arrangement of the photo. >> a lot of the fence is unmonitored. so this photographer explored this 55 mile stretch, and there -- in that stretch, there are lots of openings that are devoid you know, of any, you know, border patrol or anything like that, so this also gets at that. it is impossible to have people stationed at all points of this enormous fence. carol: i also love that you do put out front and center north of the border, south of the, because there is this land behind the wall that is u.s. land because you cannot put a wall between the two nations. it just does not work like that. >> a fence seems like a simple thing, but there are nuanced parts to it. oliver: up next, the real motive behind donald trump's registry of crimes committed by undocumented immigrants. carol: this is bloomberg. ♪ ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. oliver: and i'm oliver renick. carol: in the politics and policies section, a look at president trump's efforts to document stories from alleged victims of crimes committed by undocumented immigrants. oliver: we talked to our group dairy is brought in. >> voice stands for victims of immigration crime engagement. it was called for in an executive order by donald trump and elaborated on by a memo by homeland security secretary john kelly. i heard about this organization and was intrigued by the acronym, so i reached out to ice. and we don't -- the agency is not operable yet, and there are still a lot of uncertainties about what it will look like, but ostensibly being

sold as an organization to engage with victims of crimes committed by undocumented immigrants. the memo by john kelly calls for funding for the program to come from services that previously had been devoted to advocating on behalf of of undocumented immigrants going through the enforcement system. now, ice has said this is about serving victims, but some of the actions and statements made by the administration also allude to another purpose for this agency. donald trump said in his first address to the joint session of congress that it was about giving a voice to people forgotten by the mainstream media. oliver: these community relations officers, how different will their role be from those previous officials who were in charge of facilitating relationships and getting to know the community? are they now -- will it be separate people? who will be in charge of finding

these instances? >> we do know that the community relations officers working with voice are drawn from the same pool of community relations officers currently doing their work. we don't know what their job will entail. the voice program will issue a quarterly report and weekly report compiling instances of crimes committed by undocumented immigrants. carol: they started doing that in february. >> they put out their first weekly report, which i should be clear it is not explicitly tied to the voice program, but was mentioned in the same executive order that called for the creation of the voice program. the quarterly report is explicitly part of voice. we also know they will have a system in place for notifying victims of alleged crimes when

an undocumented immigrant is released from a detention facility or has a court date or is supported. carol: it feels like so much is now focused on the victims of crimes from undocumented immigrants versus maybe kind of helping the kind of undocumented immigrant community assimilate. >> ostensibly this is about helping victims, but when the president announced the creation of this in his speech to congress, he said it was about giving a voice to those maligned by the mainstream media and then immediately went into sort of highlighting these sort of inflammatory cases of crimes committed by undocumented immigrants, so there is this disconnect between the press release and the actions of the department are indicating. from what we can tell, it seems like a huge part of this mission is sort of influencing narrative as much as influencing policy.

carol: it's interesting that you point out, because isn't it, doesn't the data show that undocumented immigrants don't do the majority of crimes? >> yes. i mean despite the assertion that illegal immigrants routinely victimize americans, research show this is not a particularly crime prone cohort. you know, there is no correlation between high immigrant areas and high instances of crime. there is research that suggests that nativeborn americans are twice as likely to be incarcerated as undocumented immigrants. and in fact, if you remove the undocumented immigrants from detention facilities, native born americans are three times as likely to be incarcerated. oliver: up next, how the bank of canada inspires some fed governors. carol: the strategies competing for the big slice of a $10 trillion market in actively managed funds. oliver: this is "bloomberg businessweek." ♪

♪ oliver: welcome back to "bloomberg businessweek." i'm oliver renick. carol: and i'm carol massar. you can also listen to us on sirius xm, new york, boston, and washington, d.c. oliver: in the global economic section, new york federal reserve bank chairman bill dudley has a special trick when it comes to monetary policy.

he looks north for inspiration. >> this story goes back 20 years to when he was chief economist at goldman sachs before he joined the fed. he has been on a crusade to get central bankers focused on the stock market and how that sort of interacts with interest rates, and so what he tries to say is that if the stock market continues to go up when we are raising rates, that does not necessarily mean conditions are getting tighter even though we might be trying to tighten them, and so the reason why it has become relevant in 2017 and this current tightening cycle, this idea that goes back 20 years, is that is what we have seen so far this year since the election, the fed raising interest rates, raised rates twice over the last three months or so, but stocks keep going up, so on balance, conditions have been getting easier so that raises the question do they need to start raising rates faster to

counteract that at some point. oliver: how far does this go back? is this bill dudley's theory? >> so, bill borrowed it from the bank of canada in the early 1990's. at the time, the bank of canada was having a similar issue where they were setting interest rates, but they were being subjected to big swings in the canadian dollar because of the time there were a lot of international investors, capital flows, a lot of the problem's we deal with today, but they needed to figure it how to communicate that. they needed to adjust interest rates based on these moves in the exchange rate, so they combined interest rates and the canadian dollar exchange rate into a single index so that people could see actually see net-net whether conditions were getting easier or getting tighter regardless what they were doing with interest rates, then that could get investor to expect them to respond in kind with interest rates to what was happening with the exchange rate. carol: it shows there is another

thing we as investors have to think about when it comes to the fed and monetary policy. they have this dual mandate, but it shows through bill dudley and his thinking and impact on the fed that there is more at work here. >> that's right. this goes beyond the traditional notion of central banking, if we raise the interest rates, we are tightening. if we reduce interest rates, we are easing. it gets a little more complicated than that, you have to look at everything else going on in the world. in 1996, he was saying it is not enough to judge the stance of monetary policy based on where the interest rate currently is because we cannot observe that so-called equilibrium interest rate that fed officials have been obsessed with trying to figure out, so he says you need to look at the stock market, broader financial conditions, to see, to guide your next steps. carol: in the markets and

finance section, the race to corner the market in etf's. oliver: we talked to reporter rachel evans. >> with the active etf's being proposed, we have a situation where passive investments have been taking more market share from active management. you see flows into exchange traded funds. where you are seeing outflows and stagnation is the active mutual funds. really, these active etf's are a hybrid between mutual funds and etf's to stop the rot. carol: it is a story we have been talking about a lot at bloomberg. why do folks see active etf's as a good solution? >> right, it's a story we have been talking a lot about here at bloomberg. >> it is an interesting question, because i think the fund provider see it as a good solution to their situation. they're seeing a lot of outflows into etf. carol: that does not mean it is good for the investor. >> that is the real question.

we have seen $100 million for low in two funds, drop in the ocean compared to the amount of money that flowed into exchange traded funds at the same time. so where the real disconnect comes is, we have these fund managers who want to keep the money and active funds, but we have the investors who are more and more moving into passive funds because they see those as better value for money, so there is an interesting disconnect between the supply and demand for these products. that question really has not been answered. we haven't seen demand pickup to show there is a point to these funds. oliver: now when you say a mutual fund sort of wrapped in a package that looks like an etf, how do they get the disclosure to trade intraday? >> so when it comes to etf pricing, and etf is still a passive etf, meaning it will probably still be cheaper. an exchange traded fund has tax efficiencies a mutual fund does not have and brings the costs down.

when you get to the disclosure side, the way they get around this is they are trying to give the regulators, give investors a different type of disclosure, so it varies from structure to structure, but the way they are trying to approach this is rather than disclose holdings day in and day out, they are hoping they can do that once a month or once a quarter and give the markets and intraday value. this gives people an idea of what might be in the fund. carol: you write in your story, transparency risks exposing the secret sauce that active managers use. that's the whole idea, not disclosing what is in the fund, and that is where the active side comes in. maybe that will help them be the markets. >> exactly. and when it comes to active

etf's, what they have done so far is disclose their holdings every day. carol: so you know exactly what is in the fund. >> the problem with that means you can potentially if you are another investor, you can front run those funds. or you can replicate those strategies and not pay the fee. these new structures are trying to get around that by not disclosing day in and day out, so you cannot front run them, but in order to do that and get regulatory approval, they need to give something else in return. carol: up next, toronto's hot housing market. oliver: this is "bloomberg businessweek." ♪

carol: how much to just ignore -- data being crunched by ♪ oliver: we are back with bloomberg businessweek editor-in-chief megan murphy to talk about some must reads in this magazine. let's talk about housing. this is a big focal point on the economic recovery here. you looking -- you are looking

in canada at a shorting of -- rigid housing. >> i will just give you the average home price in american dollars of a toronto house right now. is rivaling some of the most expensive metropolitan areas in the united states. this story takes it to wear up -- to whereople people are so willing to get a yes there ignoring the housing section. while you are seeing a huge race for these properties, some of the leading houses sectors are seeing and patching requests -- inspection requests drop 30%. these are people who are desperate to get these offers expect it -- accepted. this can actually knocked down the line. and consumers do not seem to care, but it will open up a

lot of problems later on. carol: so much about knowing what you are buying. it is happening in other cities, even in the united states work you are skipping inspection of the housing market is so tight. when we look at these trends, a level that might be about to -- bubble that might be about to pop, this is one of them. it is speculative of a boom. canada has been speculative as well of these areas coming overheated property markets. the issues is that foreign money keeps flowing in and we have a tron -- ton of asian money and european money coming in, and it is keeping this prize levels heavily, heavily inflated. the uselet's talk about of big data. this is a big internal topic like about how to be the market.

>> that is what i love so much about this piece. the author of this piece has such a way of dissecting some of balloon talk and getting the reality. people are frustrated that they are getting told about alpha, told how hedge fund managers are going to get the better returns, they are finding at throwing at a dartboard at stocks may produce a better return for them. what he really tackles in this piece is the usage of whether it is an anomaly, going through the data and extrapolating it and trying to find that connection that a lot of it is no better then picking one at random. carol: we have more from peter. smart data is what everyone talks about these days. it is a great idea. the idea of standard index funds is a problem, because you chase the performance of the market.

as soon as the stock goes up in price, capitalization rises. the manager who is trying to track the performance has to buy more of it. you are buying high and then you have to sell when everything goes down. selling low. that is not too smart. smart data is intended to break that link between the performance of your own fund, and you can go a long way by breaking that link. what happens is the people try to get smarter. i have a quote from the musical you have to get a gimmick. that is what everyone is doing. every little twist and turn on smart data, and this is not just smart beta, but a wide range of products. i will devise a strategy and tested out on historical data. how would it have performed over the ups and downs of the markets over the past 10-40 years? back testing.

it can look fantastic. why? you keep twisting the knobs on your strategy until you have the direct -- correct combination that does well on historical data. when you let it loose in the itself,ld to fend for splat. nothing. it may perform worse in the market. oliver: we had research affiliates who had some interesting studies looking at that very specific point. it could give you something worth. >> i talked to him for this article, and he is right. what he found performed quite relevant in recent leaders -- quite well in recent years. it was performing well because that particular asset that you hitched your wagon to went up too high. thing that will happen when you go live with that? it will regress to the mean and

underperform the market area and will be worse off than if used with something -- then if you stuck with something else. oliver: you have to look to the past to some degree to find trends and what performs under different economic or business cycles, at what point does it get too tricky and creative? long-running big, debate in finance about whether you can beat the market at all? model -- threer factor model, which a lot of viewers and listeners probably learned about in business school -- we will tell you there are certain things like buying value , ands or small capital other people talk about momentum. that finances professors make a living and gain tenure by going out and looking for even more factors. people have found hundreds of factors. john cochrane called it a zoo of

factors. and they do not all really work. it is not just finance professors, asset managers and finance professors going for tenure, but the asset managers are going for funds. people have a huge incentive to invent a product that they tell you will outperform. carol: up next, a tech incubator founded by a cincinnati mega-church. oliver: plus, the oldest tour operator decides to let its clients collaborate with other cultures.

♪ oliver: welcome back to "bloomberg businessweek." i am oliver renick. carol: i am carol massar. in the global economic section the world's oldest tour , operator, thomas cook, is changing a long-standing policy. he is now allowing multi-nation lodging. oliver: we talked to reporter christopher jasper. christopher: there is still a customer that would like everything booked for them rather than go onto the internet and book a hotel separately from a flight and so on, go to the

likes of thomas cook. they will still even look in brochures, believe it or not. they will go into a shop on high street and come away with a package that includes pretty much everything, flight, the room, the bus transfer from the airport. it may include most meals as well and most of their bar bill. depending on if they tend to stay in the hotel most nights. carol: typically they would do chores that group people from the same country altogether, but they are changing the policy. what is going on? christopher: if you go back to their origin in the 1960's and 1970's, traveling abroad in europe was still an alien concept then. people were nervous about it. they were also not really used to eating foreign foods, so the tour operators would arrange for

specialists hotels to cater for different nationalities. so brits in spain could look forward to british food in the evenings, whether look forward is quite the right phrase, i am not sure. germans going to german hotels, they might be able to talk into bratwurst and so on at their place. because they were so specialist even as time went on , and people became more cosmopolitan, the industry tended to concentrate them in the same hotels. there were individual brands for individual countries, so it was rare that the two would mix. you would get a hotel predominately british or one that was predominantly german, and 2-3 decades ago, if a brit ended up in a german hotel or vice versa, they would marry often complain to the -- very often complain to the

holiday company. oliver: and another sign of adapting to a changing marketplace -- in the future section -- carol: how cincinnati megachurch crossroads developed a side-gig as a tech incubator. >> cincinnati is a pretty religious city. it is in the bible belt, so to speak. and there were some people within proctor and gamble who were pretty high ranking marketing executives there that started a bible study, and it was a mix of proctor and gamble people and other people in the community, and it grew really quickly. and some of the people who started that were brand managers for products like clearasil and pantene. so, these are people who really understood how to build brands, reach people, and communicate. and one day, one of the core of this had an epiphany of sorts

core founders -- core founders of this had an epiphany of sorts about whether or not they should take a bible study to the next level and start a church. carol: the church actually has an incubator and investment fund. i mean, they are helping to create or trying to create entrepreneurs. >> yes. so, when i talked to the sort of senior leadership, including scott weiss, a former corporate executive the got his start at p&g, has come back to cincinnati to voluntarily serve as ceo of what is called the ocean accelerator, which got -- which was launched, which got its start in 2015, and with some funds from a for-profit venture capital firm which was started by church members called ocean $25,000 iney offered

seed money to a class of entrepreneurs that applied to be in this incubator. carol: they actually compete, right? they make their pitch, people review it, and they get chosen hopefully. >> yes, but there is a pitch contest that is part of their entrepreneurship conference, but that is different than this ocean accelerator, which is a 30 intense 4-5 month program. these entrepreneurs have to be there every day. it is not a casual thing. they are there every day 9-5, they have bible study, mentorship, a full staff that is guiding them through building their companies, and there is a lot of -- there are hundreds of accelerators in the country. that is not a new thing. but what is unique about the

ocean accelerator and its association with crossroads is they have this bible-based curriculum and the way they see the growth of a startup is uniquely tied to two all the founders spiritual growth as well. it is very much about thinking through the ethics of raising money, the ethics of your company's business model, and that was really interesting to kind of watch and report on. oliver: let's talk about the actual products they are putting forward. their mission is to "increase god's place within the marketplace." does that mean the entrepreneurs are limited in terms of the products they are presenting? did they have to be religious focused, christian-oriented, applied to a christian audience, or is there a fair amount of independence? >> there is a tremendous amount of independence. the class that i followed, only

one was explicitly targeted towards the christian market. the rest of them, if you did not know that these founders were christians, you probably would not be able to intuit that from reading about their company's product model they are offering. carol: up next, silicon valley's fear of president trump feels a -- fuels a push to mexico. oliver: and the drone maker working overtime to edge out the competition. carol: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. oliver: and i'm oliver renick. you can also catch us on sirius xm radio. new york, am 1200 in boston, 99.1 fm in washington dc, and am 960 in the bay area. carol: and in asia on the bloomberg radio plus app.

oliver: silicon valley executives are being wooed by a tech friendly mexican governor. carol: we talked to reporter andrea navarro. >> we have a governor who is governor of the hometown of mexico's second-largest city. right there, he has been making a pitch to companies in silicon valley and the west coast in general, telling them to bring their workers here. they have a plan to receive as many workers as tech companies want to send. they have been open to receiving more investment for these companies to set up shop there, and he will gladly take anyone who runs into any issues with their h-1b visas and the u.s. carol: i love that he has actually been taking his pitch to silicon valley. so he has gone there. tell me, do we know at all in

terms of who he has been meeting with? is this all of the big tech companies? what are the specifics on this? >> he said he met with as many as 40 companies, many of which decided to remain off the record and he could not name them, but we do have some names, facebook, tesla, even microsoft. they declined to comment on whether or not they met and what happened in that meeting, but we do know he has been very active since february. he also put out an article in several newspapers, claiming to be open to anyone who wants to come here. and it is also important to know that guadalajara is a booming tech hub. it is not like it is brand-new to many of these companies. carol: tell me more about what is going on there.

we think of tech communities around the world, silicon valley, some other cities doing things, but tell me more about guadalajara as a tech hub. i mean, how long have companies like intel and others been there? >> it is very interesting because it started many decades ago around the 1970's and 1980's. we had hp, kodak, but at the first stage it was just for manufacturing, so they would just produce stuff there and export them to the u.s., but now it has been evolving into becoming a design city, and a production -- taking the next step to not only being a manufacturing center. and now, we also have a bunch of startups setting up shop there. there was one i visited, a software development company

that started out in silicon valley, then moved its offices to guadalajara because the costs there are lower and they have many advantages like nice weather, so it has been evolving a four hour flight from silicon valley, so it is now a booming tech hub that includes many of the world's most important companies as well as smaller startups. carol: it is interesting when you talk about the cost equation. that is the reason why companies move offshore out of the united states where they can find cheaper ways of doing business. you talk about wages in guadalajara for wiseline are about three times less. that is significant for a company. >> it is significant. and what the founder of the company was telling me is that it is not only the labor cost itself, but other costs, renting the place, transportation for its employees, and the lifestyle there are also allows people to

stay there and not have as much rotation as one would see in silicon valley, where prices for apartments are too high and people have to move out eventually, so it makes for an easier lifestyle for people, and that is part of what has been, has helped make the city more attractive. it also has a great beach, so it has a lot of things going for it. oliver: china's dji is the world's leading commercial drone maker. carol: but how do they keep growing? >> a chinese company called dji has been the leading maker of nonmilitary hobbyist or drones for the last few years, a $10 billion company. they make about 65% of the market, but they are worried about growth, so now they have

the factories set up and prototyping set up so they can bring a new drone from start to finish they say in about six months. their first stop is agriculture. carol: that was interesting. they sound like they are controlling the whole process and spending a lot on r&d in terms of efforts to figure out new ways to use drones. >> they say, again, the company is now worth a few billion and controlling, taking in a few billion in revenue off the drone market, and they say of their 8000 staffers, about 2000 are working on r&d or engineering. carol: they do film making, surveying, spreading out to different areas. >> that's right. they are telling customer that whatever you need to do, we can make a drone to do it. oliver: we have been talking about all the different uses for drones in the agricultural

spence -- sense tell us how it is being for used for farmers, who's controlling it, what it is replacing. because it is pretty interesting. >> on the ground, the agricultural drone has been used mostly for crop spraying come up -- but the efficiency advantage is significant. the anecdote in the lead of the story in this week's issue says two guys in the space of a morning can controlling the drones remotely get more done than 4-5 guys with the old-fashioned, you know, crank- operated pesticide dispensers. that took a week. carol: how did they get to be there? when i think of high-tech, i often think of german engineering, a u.s. company leading the way -- this is a chinese company home grown, and they really own this market. >> the company got its start selling to drone hobbyists in north america and europe and they have done a good job in the last couple years of keeping growth moving by getting their

phantom line of drones, which are mostly high impact camera photography and to about 400 apple stores in the west. oliver: is it because countries like the u.s. is more concerned with the drones for their militaristic capabilities? as you point out, this is not military use. this is recreational. perhaps they cornered that part of the market when we were concerned with other uses. >> i think that is part of it. there are some civilian drone making companies in the u.s. that have been less successful in the last couple of years for a variety of reasons, but dji has kept its growth going. carol: the drone market is a big market, and it is growing rapidly. there is competition at the high end and low end. >> that is what they are worried about and trying to head off with rapid prototyping with promises that on the low end, particularly china, there are a handful of companies that can make toy drones for about $100.

which is a lot cheaper than what most go for. increasingly, there are companies particularly in china that make drones good enough to compete with dji, to they are worried about specialization is a way to differentiate themselves. carol: "bloomberg businessweek" is on newsstands now. oliver: and also online at bloomberg.com. carol, great issue. double issue. what was your favorite story? carol: i enjoyed the story about the church in cincinnati. an offshoot of procter and gamble. who knew? you have a church combining religion but also creating entrepreneurs. they had an accelerator. i felt like it was a slice of american life i knew nothing about. how about you? oliver: the photo essay. the cover image, the area north of the border between mexico and the u.s., but south of the wall, an entire community back there , farms that go back-and-forth. really speaks to potentially what could be disrupted if we do put a wall directly on the border. carol: right.

that will certainly stay with me as well. oliver: more bloomberg television starts right now. ♪

♪ >> coming up on "bloomberg best," the stories that shaped the week around the world. xi comed face-to-face. headlines abound in jamie dimon's letter to shareholders. >> the bank is preparing for a hard brexit. >> we will find a way to improve -- improve and increase our commercial relations. >> jack lew speaks his mind in another exclusive. >> i think it would be a big