"bloombergto businessweek." the satirical newspaper striking fear into the hearts of french politicians. post-itsthe maker of is doing. and the most expensive mistake for the u.s. military. anchor: we are here with the editor and chief. we want to talk about something in technology.

they can be crucial for stroke recovery but not everybody has access. asked this looks at how these, which are relatively cheap. this is not a huge amount of money. the you have a stroke, speed at which they can get to that, the bleating and the brain, is crucial to recovery. what the article talks about is how the injection of these stents are not common. stroke carely 115 centers in the u.s.. first responders will make a decision, if it is minor, we will take them to a hospital. if it is major, maybe i will escalated to one of the specialist centers. if you don't go to one of the centers, you are more likely to get a drug. stents, if you can get there

quickly, are more effective. even with our aging population, the demographics, we simply don't have enough of these stroke specific centers to get this stent recovery. >> let's go to the global economics section. there is an story a lot of americans don't really know the implication. this publication in france and the impact on the elections. >> use your french here. >> we will just call it "the duck." this is a fascinating story. it has proven to be such a huge effect in this french presidential election. which is super topsy-turvy. the favorites moving down. scandal uncovered. the left making a sudden surge.

also, the other thing that is fascinating, it is a print publication with a minimal digital presence and still makes about 25 million. tois about -- dates back 1915 and has a long tradition. it traffics in tidbits about the league. whether that is the rich, politicians. uncovered -- the uncovered a person paying his wife. they have gone in and taken down how are. they say -- taken down power. they have certainly proven that. there is an article about the f-35 program to read eight years or 10 years and there are still questions about it. >> this is the latest in the

long line of pieces exposing inefficiencies, let's say, in the pentagon process. this is one that has gone through so many iterations. the issue when you are redesigning the large -- whether it is aircraft carriers or the f-35. even air force one. so many people want different demands for what the product is. the f-35, there are basically four service divisions. each of them wanted different capabilities. i cannot believe it when i read this can land like a carry it. -- harriet. land in a hotspot in the battle field. requirements will be price up so much, prolonged of the contract. no one can essentially make this decision. you get to a point where you design seven years ago does not work in the kind of warfare we

are seeing now. >> there are a lot of cool details on attack. also, economic implications. for that, we talked to the reporter. inthe f-35 is perpetually focus because it is the single largest procurement ever. the upkeep of the planes, into the future, we'll approach and possibly exceed $1 trillion. l possibly exceed $1 trillion. president trump has been focusing on it. downplaying it and insulting it. and then, in his fashion, declaring he is involved, it is a fantastic fighter jet and we took a look at whether it is an discovered it has performance problems. >> tell me about those problems. tell me about the costs and how long this has been going on. >> this contract began with a

competition between boeing and in the late 1990's. boeing was declared the winner. the idea was it was a three in one bargain. one common plane that could be tweaked to be suitable for the air force, the marine corps, and the navy. >> one plane fits all with minor changes. >> that was the way the pentagon could afford a massive replacement of cold war era planes. the original plan was for 2400 planes to the build for the three services that fly fighter jets. inevitably, as a plan that large without much play in it in terms of money, it ran into problems. the degree to what the designers call commonality among the variance of the planes turned

out to be something approaching 25%, as opposed to 70-80%. the economies of scale went out the window quickly. costs began to overrun their targets by billions of dollars. delays set income amounted to something like seven years. >> it was let's build one model that can between. it ended up essentially making three different planes to theat contributed price, you have to have all the different changes for each plane. where did that bring the total cost to? where is it right now, in terms of what was supposed to be and how much it actually is? estimates were something like $200 billion. that figure is closer to $380 billion. you have to factor inflation in there. increasebout a 38% when you adjust for inflation. the biggest cost, and the

should bepayers paying attention to, is how much it will cost to sustain the plane. could easily exceed $600 billion over time. >> up next, who is really to blame. and h&m chasing it shoppers parents. ♪

oliver: welcome to "bloomberg businessweek." how changing taste is affecting u.s. car plants. is always a supply and demand issue. it takes years to build these factories. they tried to produce hundreds of thousands of vehicles and they have to project those years out.

and yet, consumer taste can swing dramatically from month to month or year to year. we are seeing sales past the peak, and all of the decline has come from cars. the toyota camry, although court. compact cars kind of large. civics and corollas. ford focuses. they are not selling like they have been selling for years. they have been displaced by suv's to read it has the market out of whack. fusion, down 37 percent. prius, down 29%. give us perspective on those numbers. that is the sedan market. >> mainstream family cars. the malibu and fusion or midsized family sedans. the prius is smaller but has a

large interior. for the handful of truly green motivated car buyers, it provides, it is very often used as a family car. they are being replaced by the compact crossovers. crv or it is a honda toyota rav4. something more like an old station wagon used to be. oliver: if you are donald trump or looking at the industry as an analyst, what does it tell you when the demand shifts? the demand is there for vehicles, it is just going to be different types? what does it mean for american manufacturing? now,hose cars people want coming from somewhere else? break that down. >> the big issue and debate investors have with the market

is whether this is a bit of a softening and a plateau, where we are going to say, we have had record sales in the u.s.. of salesedented streak growth. is it going to be our traditional cyclical contraction? is it going to bump along around 17 million for another three years or so? a lot of the folks in the industry are feeling confident things are going to stay where they are volume basis. maybe eat into some of those profits. we have seen warnings about how much tougher the competition is getting. maybe the volume stays high. but the profitability's shrinks, which is less good for investors. oliver: the supply side of the

equation, how does that actor into this? whether or not the supply is there? they need to the old and new plants, hire new people? because we have seen sales have stopped growing, people are putting the brakes on manufacturing plan. expansions are going forward. they are executing with the announced but no one is announcing new plans to build a $1 billion plant. made a name for itself in teen fashion. now they are going after a mature audience >> they are the second biggest retailer by sales. fashion brand.re big

they became known over the past few decades for being able to runway trends and sell them in their stores in a cheaper version. they also have been known as a value retailer with a low price point where a lot of young consumers go to shop. oliver: there is one below are building. it is a great place to grab a quick shirt. market.there find what is popular, make it accessible. especially to mostly younger people. that is changing right now. right now, they are working on developing other brands with a more premium positioning. attract olderto customers. that can be really interesting. the value space has a lot of competition in it. new stores, the

new products they are moving into, this is going to be under a different branch. us how it breaks down in their organizational structure. i would say most people won't be able to tell the secondary brands owned by h&m are a part of h&m. most people are not aware of this in terms of consumers. this new one, certainly not either. this is a store, it is going to have a higher price positioning. it will have clothes for men, women, and children. as opposed to fashion and trend driven items. they are also going to sell iconic items from other brands, like pepper grinder. >> you go into that etymology behind the name. which means, sheet of paper in swedish. one thing we have heard about

retail, companies like michael kors thought of as being luxury and high end. is the opposite the case here? it doesn't seem like they have to worry about that because they are starting off on the other end of the spectrum. seeing premium niche brands, as well as lifestyle brands. package like a total for certain aesthetic. everything somebody is interested in the outdoors needs. everything a young family in the city that likes things that are clean and minimalist, which is maybe the concept of the new concept. this is where you have more power to create something new. oliver: how to hack your way out of a full-time job. and a lot more. next. ♪

oliver: welcome back to "bloomberg businessweek." you can also catch us on the radio. 99.1 fm in washington dc. london, and in asia on the bloomberg radio plus app. in the technology section, some of the country's top coders have found a way to avoid the nine to five. literally means to put something together out of existing pieces. marathon is like a building session. they last from 24-48 hours. > not all hacking is bad.

these are basically engineers building projects. they are doing it as part of sort of a tournament. tell us where these began. >> any place with a large area like an auditorium, any type of conference hall. anyplace with screaming fast wi-fi and bathrooms. oliver: and a steady supply of doritos and red bull. it has talking about how essentially becomes with a replacement for full-time jobs. tell us about the story, who is going to these hackathon's. how they are making money. whether or not it is a replacement to a career. i wouldn't people, say it is super widespread, but there have been a dozen or more people who have been able to hack together a full-time living out of this.

supplementing their start of dreams or contract works. typically what will happen is they will go online or they will hear from friends a hackathon is occurring. is, whetherose it they have to pay for airfare, they will get together a team and bring their sleeping bags. usually not their toothbrushes. and their laptops in their sensors and a ton of power cords. and show up and start hacking for bragging rights. to your point, for prices. some of them can get pretty big. are we talking students currently enrolled? engineers that have graduated? this is their sort of full-time gig? who are the participants? >> i watched. there are two different types. academic hackathon's. that is sponsored through something called major league

happening. -- hacking. i think there were 170 of them scheduled for 2017. universities all around the u.s. and even in the world. 170 of them in north america alone. there are more. that is the academic type. typically, those are more for bragging rights and also to look appealing to recruiters. like tech companies facebook, google, google, microsoft and the like all go to these hackathon's to keep their eyes on the up and rising talent. that is one type. there is another type where large prices are at stake. salesforce famously through one with a $1 million first prize.

his thatntinued because they didn't get what they wanted. other ones have continued. hasbro. let's see, what else, procter and gamble through one. -- threw one. oliver: also in the technology section, taser wants to change what it is known for. >> taser has been around for 20 years. everyone knows it for the stun gun. e me. teasas exactly. a have been trying to come up with a second revenue stream. they finally hit their stride with police body cameras. particularly since the shootings in ferguson and other places. there has been much more public demand for a police body camera.

e one of the first to have a product that could be rolled out. they have a division that makes police body cameras and all of the associated cloud computing software to manage the digital footage people have. that has been the fastest-growing part of the company. they see it as a way to expand. changed the company name. they see the future of the company, they are committed to the taser the weapon, but they see a lot of their growth potential to be from the body cameras. management ofal evidence and the digital life of a police officer. oliver: this is very

interesting. there are very few instances of a company with a product everybody knows. it is a fairly ubiquitous idea. thatwas it along the way made them change? their stockatching jumped after ferguson as they started talking about body cameras. where's the impetus for the change? tase me, bro, is how they got into the body cameras three they were facing lawsuits. there is a lot of debate about the cause and effect or not. they were facing scrutiny regardless. they developed what was called a taser cam. a little camera that popped into the -- onto the gun in itself. it only capture the moment they asing someone.

it was essentially a highlight reel of people getting tased which is not what they were looking for. they wanted to capture what led up to an incident. they developed a standalone body camera. the first one was super clunky. it had three big components to it. it took a while to get what is now the line may have. they have two versions. a body camera that mounts in the middle of the chest and one that mounts on essentially oakley glasses. andng to protect themselves their customers from lawsuits is what first got them into the body camera line. the just finally got the product in a good shape right when ferguson happened and all the greater scrutiny on policing nationwide exploded. it was good timing for them in that sense. next, the state of

carolina says no thanks to fancy money managers. this is "bloomberg businessweek."

welcome back. still ahead, the state of north carolina is eyeing $100 million in savings to read then, 3m decides what is at stake in the market for ankle monitors. all of that ahead. ♪ with meganare back murphy to talk about some must reads. let's go to the market section. going on with the topic you have been exploring.

this is specifically about one treasurer taking a more passive approach to a pension fund. he is taking an active approach to making his approach passive. the treasurer of north carolina. his view is, we are being ripped off by these heavy fees we paid for active management funds. we want to take that number down to a maximum of $100 million. we want to shift our management to passive management. we think it is a better spreadsheet. .- strategy we have warren buffett been one of the most public champions of this shift and it is something we have seen in pension funds. just a microcosm of a larger shift in the fund management industry. >> there are long-term contracts

that have locked them in. sees they have investments that do higher returns. are-term contracts that difficult to unwind. i do think when we look at this trend, and we see even the markets doing what they are doing, continuing to be on a pretty good hair. people talking about whether we are going to see the end of the bull market. this debate about what you are actually paying for. roils thething that huge funds we know about. oliver: we always talk about a macro, top-down conversation about active versus passive. let's talk about a story in the future section. role that will

surprise a lot of people, the industry for ankle behcet'-- bracelets. megan: this is a company that we scratch tape.r innovation, engineering wonders. they pioneered the concept of giving employees time off to think about new things. one of the markets they moved this in the middle part of decade, security monitoring. ankle bracelets that inmates are wearing. this is a growing market as prisons try to move the population out. there is a shortage of prison cells. the issue is, the technology they were using simply did not ynch up,-- s particularly in the state of massachusetts. two g model which was

not compatible with some providers. also with a 3g system. offenders would not be registered on the network. when a were not registered, sent out theye were in violation. many times, law enforcement would be so inundated, it led to even more confusion, more arrest warrants. people being put behind bars because of this wrong technology. >> we caught up with more on the story. vast, company is a very multinational industrial company. most people know about the post-it notes and scotch tape. they make several industrial products, from oil and gas mining to medical devices. industries they have gotten into is the safety and security business. as art of that, they have

recently over the past 6.5 years been involved in the electronic monitoring device business which is essentially the ankle monitors used to monitor prisoners, parolees, that type of thing. oliver: as it turns out, maybe they are not as good at making and maintaining ankle bracelets as post-it notes. there is a serious consequence when these do not work. >> it has been an uphill battle for them. this is a business that is maybe a little bit far afield from their core competency. it has been a little bit of a struggle. the technology has evolved over the years. they may be did not adopt the newest technology at the quickest pace, which has put them in a couple of difficult situations.

>> it is a huge business. i think you talk about it being a $6 billion business. take a step back. the situation,x if you will. take us back to clinton, massachusetts, where there were overwhelmed fofor years with problems with these bracelets. it seems to have led to people out on parole, maybe alerts going off when they should not have an being put back in prison. >> this is kind of the pinnacle of the problem may have experienced. right after they acquired the business, the technology they technology.lder on certainible cellular networks. the way the device works is essentially collects satellite signals and stores the data and sends it to the offender

monitoring center via the cellular network. it is almost like placing a phone call to transmit the data. device reallym's was functional or compatible with the at&t network and the t-mobile network. the problem was, there were rapid upgrades in the cellular network system. they were upgrading to 3g. product was not with verizon, which was rapidly becoming one of the largest if not the largest service provider in the state of massachusetts. these offenders were wearing that ankle monitors and not able to connect over the sillier network. able to obtaint a gps satellite signal.

alert thatnerate an would be sent to the monitoring center. they were not necessarily due to the fact the offender was doing something wrong, violating terms of their parole. was as they were trying to figure out how to handle this, a lot of people ended up being arrested. issue arrest warrants because the authorities could not figure out if it was a technical glitch, or because the offender was trying to do something that required them to be in violation of their parole. got to be someas serious legal investigation happening here. in your story, you mentioned some of the lawyers representing offenders who have been subject to a return to jail or a parole

violation because of this technical glitch. what is happening on the legal battle? >> really, it is on a keys basis at this time. a lot of the people -- you need to keep in mind who the audience is. a lot of the people, they are criminals. these are not the most savory bunch of people. a lot of them have committed serious crimes including murder, sex offenses. mostare not the sympathetic crowd. they often don't have the resources to follow through on these types of things. but there are several people, several people who have looked challenged ther accuracy of the monitor in court. anestly, there have not been lot of victories. i think it is too soon to say how this is going to of all areas -- to evolve.

there are criminal defense attorneys who have represented these cases. primarily, they just try to get them off rather than trying to challenge the accuracy of the device. they have just in trying to challenge the accuracy of the device saying my guy does not deserve to be in violation of parole. he should not have spent the night in shell -- jail. oliver: up next, the complex and multipronged investigation into the trump administration's ties with russia. ♪

oliver: welcome back to "bloomberg businessweek." in the politics and policy section, the investigation into interference in the

election has become the main story. >> in january, the intelligence community, by order of the obama administration, concluded russia did attempt to interfere with the election and did so to benefit president trump. it is the job up -- now we have two congressional investigations fbit is the job -- and the -- it is the job of these investigators to answer the question whether there is any evidence that suggests trump associates, either affiliated with the campaign or a ministry, hadhe administration, anything to do with these facts that yes, russia willfully interfered with our election. the real dynamite will be whether they find any evidence that ties this directly back to

the president. questionsa lot of that exist beneath that about whether any of his associates, the campaign or the administration, had any knowledge of or dealings with these russian hacks. part of theink general confusion in the public, trying to suss out what is mentioned,is as you these parallel investigations that are happening. one congress and the other in the fbi. what doing all about the differences between the two? >> we have two congressional investigations, both armed with subpoena power. which gives people authority to ofthe house has lost a lot credibility because of the committee chairman, devin nunes, who was a member of the trump transition and has been trying to, it seems, pull this investigation away from the

questions about russia and trump associates into the realm of looking at the allegations trump willabout president obama wiretapping him. he is trying to pull this into dot direction, having to with unmasking perhaps done by -- >> it is unusual for the head of a committee to go to the white house and brief the president and not leave members of the committee. >> it raises all kinds of questions about who he is serving. is he serving as a member of congress? or is he serving executives? >> this makes the senate committee investigation that much more important. thehe two chairman, chairman is richard burr, of north carolina. is democratic cochairman mark warner. they have a pretty good relationship. they have been out front saying they want to be as transparent as possible.

they thought this was going to wrap up of my summer or so but those thoughts are long gone. this is going to take months and months. we are not going to have any report before the end of the year. what is interesting, their ability to access this raw intelligence that exists within the cia is very limited. every day, the senate investigators, we have about seven staffers that work for this committee, by our reporting suggests they are going to the cia to a secure room and they go through binders. very thick binders of what is probably some of the most secret information that exists within the intelligence community. a lot of this intelligence is probably transcripts intercepted by the nsa. they can bring no electronic devices into this room. they are literally going through by hand, hard documents, reading them. this takes months. they are negotiating with the cia to try to get a computer put

into the room. the level of low-tech analysis the senate is having to rely on. oliver: you have a story that goes with this that talks about the details of the investigation. those folks in that room, pouring over binders and folders, what are they looking for? are questions i don't to. they are looking for evidence that suggests -- they are trying to wrap their heads around what the intelligence says. some of this is raw intelligence that is actually intercepted. transcripts of phone calls. some of it is analysis. they are trying to get their heads around the totality of it. what they are probably also looking for is incidental names popping up. people who are associated with trump who happen to be on the phone with say targets of the surveillance, which typically

were russian agents. oliver: up next, the sometimes gray area between lenders and loan sharks. and big ideas for cameras. this is "bloomberg businessweek." ♪

oliver: welcome back to "bloomberg businessweek you can also catch us on the radio. and 1200 in boston. am 960 in the bay area. in asia on the bloomberg radio plus app. book, "loane new

sharks." loansharking is charging high interest rates on loans. at it from thes civil war up through the depression. he calls it the birth of predatory lending. this time, taking us from the industrialization of america to the great depression. thatr: to what degree does get mixed in with a capacity for risk-taking? you are going to want a higher interest rate if you are going to take on more risk? >> that gets to my take on the books which is he does not quite real it. -- nail it. look atcause i economics, i look at supply and demand to be the key determinants of price. i tend to think what is causing the rates to be this high on loans?

there is the demand, and borrowers who are in some cases desperate. and then the supply from lenders who may or may not have enough money to supply. why would rates the high? you can think of two reasons. there is not enough money around, which is usually not the case. the other is the person who is borrowing is a risky prospect. is median paired in some way so they are not able to get a better deal. maybe they are an alcoholic. that was a huge problem few writes about. -- that he writes about. or maybe there is a new immigrant that doesn't speak the language. >> i want to take you back to the birth of predatory lending. as america moved west, the settlers preceded the banks. there were no organized banks out west of the ohio, all the

way out to california. people got money wherever they could. loan sharks spring up supply loans. where conventional banks would not lend or had not yet begun to. >> -- gotten to. you have lenders and sharks. there is a gray area in between. it in the book, how do css at what point you become a sharp? -- shark? >> one problem that embedded -- abetted the loan sharks is states set a ceiling on lending rates, 6% or 7%. you have to take inflation into account. but the high inflation rate, that is nothing, especially for a small loan. the carrying costs, the processing. it was not high enough for the standard lenders to make any money, so they kind of left the

field the loan sharks -- left the field open. the loan sharks were the only ones supplying money. they came up with a uniform small lending law which tried to deal with that. it said, states, we are not going to tell you to abolish these laws you have on the books. give sort of a waiver in certain cases that would allow the rate to go up as high as 40%, which is pretty high. theas enough so conventional, established lenders with good lending toctices, they were able supply the market. who werehe loan sharks charging hundreds of percent. techr: also, a superstar

designer was inspired by smartphones when he designed a camera. talkingompany we are about is called light to read what they are trying to do is revolutionize the way we think about sophisticated camera technology. most of us use our phones. those are kind of limiting if you actually care about photography in terms of zooming or low light. what they have the to do was have you take the dslr and put it into more of a smartphone or smart tablet format. the concept is really interesting. essentially what happened, we took photos in a certain way with cameras. point and shoot. and the advent of the smartphone came along. is this about the pendulum -- we swung to where people were taking photos with their phones.

now it is swinging back to the middle somewhere. >> that is the way they are hoping people will interpret this. if you think about our ability to share digital imagery, there were something like 1.3 trillion digital images produced recently. most of the images, as you know from your histogram feet, are pretty bad -- instagram feed, are pretty bad. if you care about photography, the idea they had is we can do better. the problem is the packaging. if you think about a dslr camera, you have to's drop it over your shoulder. you have these additional lenses and a bag. with they are trying to figure out how to do is how do we illuminate that? -- eliminate that? oliver: these guys, let's talk about who they are. they are sweeney pendulum the other way. who is in charge of this company? it is a breakdown between

engineering and design. >> they are guys in their 50's. photo enthusiasts. he said, we have a great idea, how are we going to make this thing into a product people want to buy? kind of a big question. , he is auited a guy industrial designer. probably best known for doing the nest thermostat in 2011 to ofd he has worked on a lot other products including letter stages of gopro. they said, figure out how to package it. >oliver: what is his background? you mentioned nest. >> if you know nest, he is very much the person associated with that. he designed gopro cameras, the three players. -- mp3 players.

nest was his breakthrough. businessweek"berg is available on newsstands and also online. ♪

♪ david: the live audience does not intimidate you, right? oprah: not a bit. david: no? ok. you came from very modest circumstances. oprah: modest is not the word. david: very few people in the world are known by one name. oprah: they started me with a campaign called "what is an oprah?" david: you are a big shareholder in weight watchers. oprah: that is a sign, when weight watchers says, let us help you. [laughter] david: have you ever thought you could actually run for president? oprah: i thought, oh, gee, i don't have the experience. i don't know enough. i don't know and now i am thinking, oh? [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪