tv Bloomberg Business Week Bloomberg January 6, 2018 8:00am-9:00am EST
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>> welcome to bloomberg business week. >> we're inside the magazine head quarters in new york. week's issue, a graphic look at the third shift at slaughterhouses. the night lking shift. >> we are. risk.lso the workers at >> plus the running shoes looking to take on nike. that's ahead on bloomberg business week. we're here with the editor in chief of bloomberg business.
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let's start with politics. cannot wait to see how the magazine covers everything in the world of politics this year. front, t in our home domestic, member of the trump team, mike pompeo. he's had a good year. >> he has. usually you pick out people who years.d you have nikki haley and you have mike pompeo, director of cia. both of those names have been entioned as potentially successor as rex tillerson as secretary of state who has not year.good while talk about his departure has cooled, there's a widespread feeling that his relationship with the president is not stable long term. his circle is very very small.
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one of these things that have come out. how normal is it for the cia director to meet the president day basis? >> it's more than that. ow would they break down the information with the president. i think there's two things about mike pompeo. is ideological. he's been out in defending the about nt in charges whether there's potential collusion with russia during the election, whether it's his stance on iran, the middle east, syria, north korea. this is a guy who is a west oint graduate, harvard law graduate. this is someone who wears the coat of arms, as i call it, that those kind t likes of people. he likes people with a military background. >> cover story, the domestic cover story. subject whichking i think we simply either don't know about or talk about. in some at's going on of the late night shifts in meat processing factories in the united states.
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since i have been editor of the magazine we've fought hard o expose the sort of horrors that are under exposed labor orce sometimes illegal immigrants, sometimes white working class have been marginalized. support their to families on $8 an hour, $12. his story goes into this third shift. it shows the life and death on the lines of this third shift, risking ple are everything for an average of 12 bucks an hour and standing vats of chicken fat and what they're willing to go hrough as sanitation workers hosing down slaughterhouses. very important story. > we've got more from peter waldman, his investigation and what he says points to a very history.ce in u.s. >> the third shift is the graveyard shift. it begins around 11 p.m. maybe sometimes around midnight. in it's the folks who come and clean these poultry plants. these people use high powered hoses. use all kinds of chemical
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cleansers. they generally clean these meat packing machines while they're blades andso there's blenders spinning and paddles. steam is wafting everywhere. these are the folks who come in and clean. immigrants.they're this is not a desirable job. it is sort of the bottom of the united dder in the states. even more often, they're undocumented immigrants. vain, talk to us about martha torres and her experience. story about what happened to her. >> sure. just call her martha because torres was only one of the sur names given to her by several documents that we reviewed. the reason for that is that she undocumented person. we don't know if she's still in the united states or not 'cause couldn't track her down. which is sort of part of the tory, and that's why we begin
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with the mystery surrounding her. she was working at a tyson plant in kansas. and she was cleaning conveyor point and her glove got caught and the conveyor belt in like ay reeled her fish. and it cracked her forearm in two places. bones were literally sticking out of her skin. she was taken to the hospital, emergency surgery and so forth. and where the story gets interesting essentially, unfortunately, there are lots of factory accidents all the time in the united states, but her was a sanitation company called packers wisconsin. out of and they were in charge her.ntially of helping they did cover her medical expenses. but when it came time for her to worker's comp to account for the months and of lost wages and some perhaps cushion for her future isability, because she was
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permanently impaired in the nerves in her hand, they refused. they refuse to cover her, they fired her. not an urns out that's untypical response to workers in perhaps stry and others. in this case yer could prove to a worker's comp accident was martha's fault. basedsas there is a fault worker's comp system. packers and their insurer convinced the judge that she shouldn't have put her arm where it was and that cracking it in two place was her fault cleaning the machine, and they gave her nothing and fired her. there's third shift, often a lot of undocumented workers so if they are injured, unfortunately, it's like they have no recourse. one to speak for
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them. these individuals are afraid to come forward. they're afraid to whistle blow. >> we have little picture of what they do. anecdotal evidence here and there such as what happened to martha. another case where an employee, undocumented employee sanitation made a claim for injuries in arkansas. claim.worker's comp packers fought them under the reasoning that they were not a legitimate authorized worker. and in that case, the state appeals court of arkansas decision and kers told packers, hey, you have to pay for that person's worker's comp, whether or not they were a documented worker. but this is just little snap shots we have. in general, these people melt into our society if they're still able to work, perhaps they go to another place and work. not, perhaps they head back
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>> welcome back to bloomberg business week. >> you can find us online at businessweek.com. mobile app. in the politics section, the wave of anti-government protests in iran. the men and women who are taking to the streets there are areas. from rural ere's our editor matthew phillips. >> the green movement which came re-election puted of the then president. ou saw millions take to the
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streets. it was concentrated in the capital of tehran. and large being led by the upper class, the ntelligence who were reform minded. they wanted political reforms. what we're seeing right now, seeing fewer people in the street, it is more dispersed and it is concentrated the outskirts of iran, not necessarily in tehran. of the en in kind smaller midsize towned in the rural parts of the country. really about the economy the ow, you know, after nuclear deal was signed, a lot was promised in terms of hasn't success and it necessarily been delivered. people are feeling it in their pockets and they're taking to the streets. ab what we've seen. we've all seen headlines, agricultural prices. you point out a 50% rise in the price of eggs, for example. that's crippling for ordinary iranians. what's going on? what's driving this?
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expect to see some kind of reaction. it.we see >> that's right. ou know, the economy is not doing very well. i mean, unemployment is at 12%. inflation though down still 10%. you are seeing a big spike in for things rices like eggs and agricultural goods. concerns have broadened to a much wider demonstration about essence of iran's political establishment, which theocracy and the iranian republic that is led by the that have ultimate control over the country. >> let's talk about this. is a second term for iran's president. inflation was as high as 40%. down to 10%.t it one thing that has been slow to come back to the country, and foreign investment. that is what many see as helping out the economy there. right.t's
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that was part of his -- of the deal he sold the iranian people 2015 nuclear deal. that it was going to remove and ions from world powers lead to a huge investment from foreign companies, multinationals in government. it hasn't really played out like that. and the degree that it has, hasn't really impacted the average iranian. of that, there's also a banking crisis. prices are still pretty cheap, below $60. concern and ith strife even among his supporters, who are by and large of moderate reform. by ertainly being opposed your hard line conservative, many among them, you know, the clerics. >> you have to feel that nuclear deal, when that was agreed, it try and enacte to reforms that he was reforms th
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>> there are a couple of things to us.ally stuck out really social trends. me, i was talking to a party. we are talking about is economic. called up some of my favorite economists and chatted with them bout what happened that struck them similarly as odd. what they came up with? with? >> i couldn't. >> it's interesting. google it. lot of pink and purple and blue. people bought it. bucks or t like 5 something? >> what struck me about this. it's $5 a pop. a really expensive drink. people were just buying them like crazy. of this treat yourself phenomenon that we to.lly have come >> kim kardashian drinking it
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maybe. >> i think it's also part and to this entire sort of small extravagances that we've seen among younger consumers. or her it's avacado toast unicorn cappachino. one hand it's consumer confidence. n the other hand, it could be worrying if people don't move on to bigger purchases. spending $5 on unicorn consistently and not saving up buy that house. >> another story in the economy is vacations. they are surging. >> so one thing that i really travel spending is it really moves off and falls off a recession. sometimes it's a leading indicator. what we're seeing is travel is going gang busters. people are traveling abroad. e saw a record number of out bound trips in 2016.
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then we saw really high travel essentially means americans spending on travel abroad and travel products abroad. surged in the first ten months of 2017 which is what we for so far. i thought that struck me as interesting. >> we are seeing the wage gains that we were expecting in the cycle. it is pointing to at least a growing confidence rather than reward, response. >> absolutely. we have pretty much seen wages 2%, 2.5%, long at hich is keeping up slightly over inflation. now, some people are hoping happen in 2017. or 2018. a what we saw in 2017 was lot of nonwage benefits. the collection of anecdotal the country around really speaks to employers at ring things like perks
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work. in your ut things pantry, benefits. these nonwage compensation as a gains.get around wage so it will be really interesting to see whether that holds in 018 or whether employers have to start spending a little more. >> staying in economics. both the u.s. treasury yield phillips curve are flattening and that makes it a tough job for federal reserve decide when and how to raise rates. explain. let peter coy >> the yield curve and the phillips curve is very different. the only thing that unifies them in my story is that people, some eople looking at these two are saying that the federal reserve and other central banks as well not worry so much about inflation and still keep growth s on getting going. and in my article i'm kind of saying not really sure. i think we still do need to that about the fact
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inflation could start accelerating in 2018. >> okay. take a step back. talking aboute're here. what is the split curve and what s it saying to us at this moment t relationship between the factors? a new named after zealand economist, a.w. phillip, 1958. it's a very y -- simple idea. there's a tradeoff between unemployment. you have high inflation, tends to be associated with low and vice versa. now, milton freeman and some 1960s sort of poked holes in the phillips in the longing that run, there's no free lunch. central banks can't buy stronger growth and lower unemployment on permanent basis by low inflation. hort term there is at least in theory this sort of, there's a
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slope, if you imagine inflation unemployment and on the other. the problem is that it hasn't proven out in the real world. he curve instead of being sloped has been flat. >> u.s. economy is increasing job handover this. we haven't seen inflation. janet yellen said, even to the year maybe you can explain it. now we're confused. where is inflation and why getting wage growth. >> it remains below the fed target. measure is a our 1.5 opinion or 1.7%. even as the unemployment rate as november reading is down to 4.1%. so there are people who are phillips curve is broken and we can ignore it. article aying in this is, i think the under lying sensible, right? you would think, economy heats up, at some point workers will demand. demand higher wages.
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wages go up and translates into price overall. >> you've written about this over the last year. whether it's globalization, not having as much power. technology having a factor. workers are satisfied with where they are. >> there are all these reasons. a point where for all the excuses and explanation e come up with, at some point you would think we would start to fight. >> are we just impatient and it start? >> i do think over the coming year, hasn't happened yet, but it never will happen. i don't want to leave a yield this. out of >> bring that in. just look at the shape of the economy. about it's essly been the flattest it's been in a decade. if people are expecting stronger inflation, the back end of the curve will be higher. >> that's the other conundrum. the yield curve just to back it up is the idea that if you look of say aturities
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treasury bonds, the short ones, overnight onth whatever have the lowest interest rate. and then the curve goes up like the long term ten-year note, 30-year bond have higher yields. to be people want rewarded for tying up their money for longer periods of time. that's a normal shape of the field curve. every time the yield curve tips say the ten year note is less than two year, pick your strong it's pretty precursor of a recession. there are people who are arning now that because it is flattening, we need to get out of recession. is if we were indeed inverted. if the yield curve had tipped i would be worried. inverted. we have a positively sloping yield curve. there's no guarantee that we invert.r we may stay like this for a long time. will it take to
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welcome back. still ahead in this week's issue, zimbabwe looks for way to resurrect itself in a post mugabe era. >> and a billion dollar upgrade. all that still ahead on bloomberg business week. we are back with the editor in chief of bloomberg business chief. must read section, great feature here that political turmoil in zimbabwe
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future of change? you focus on some of the companies that have struggled in face of all the economic challenges in the country. >> this is a great piece by matt campbell. with all the other turmoil that's engulfing the world, mugabe's nd robert downfall has drifted off into again.de shows be what is so important, why this piece really stands out is the economic devastation that's not only through the companies that have struggled as the company tries to get back its economic bearing, but the reasons why exists. it's not as simple as people think which is exploitation and of natural resources. they have a lot of lithium, resources r bad government corruption. it's also a very specific currency issue that is crippling these countries, these companies, who longer pay for much needed, whether that's sort of to move their goods abroad, pay
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equipment they need to harvest their crops to make a ort of 21st century go of things. it is a system attic look at all of the problems that have this ed together to make economic devastation so real there. >> you see a real problem. liquidity for even companies that are financially viable, hey're having problems accessing money to run their businesses. the 100body knows about trillion dollar zimbabwe notes hat existed and issues like inflation that was running at 98% per day. people know less about is this creation of what is called the zollar. parallel currency. now, much of the audience may its economy runs on u.s. dollars because it frankly lost the ability to rint money during the hyper inflation in the mid 2000's, late 2000's. that.do they pegged it to a virtual currency.
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making thathose and viable for these companies that need access to liquidity, need cash, whether it's to buy supply, buy farming, keep over season to season to season has become virtually impossible for them. is o easy segue except this another feature. we want to talk about a sneaker by warren t's owned buffet. >> no easy segue here. this story. i don't know if you are runners, but this is -- who runs.n a person >> neither. >> this is a company very niche in the running world. you're a runner, you know them. run, you probably don't wear the shoes. great tale of how a company reinvents itself. it is now looking to the people who hate to do what its shoes do. great story. >> are you a runner? runner?look like a no. >> one of the things that i
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when i ally interesting was working on this story, there are sports and athletic industry associations who track this sort of stuff. since 2001, about 13 million running, e taken up which is sort of the equivalent of the entire state of illinois. talk about why you are writing about this company. i told you before i got started it.ad never heard of my husband had a foot injury. bought one of these. it's been around for a long time. give us a history. had some troubles but it's come back strong. >> yeah. around since n 1914. it's been owned by many different people over the years. private equity, right? >> yeah, yeah yeah. think arted making i baseball cleats and these like slippers era bathing is what they call them. the shoeious wear to the beach. running markethe in the '70s when jogging took off. they had a shoe that was
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popular. bouncey. made with this springy foam. ll these people started buying it. at the time they were manufactured in puerto rico and really facturer didn't know how to handle that size orders so they ended up shipping defective shoes and people returned brooks. there were some other issues company. it went bankrupt in 1981. passed through a number of different owners. other le all these sneaker company, nike growing, adidas growing and brooks sort like -- and then it turned 2001.d in >> talk to us about today. the ownership. > in 2001, jim weber, ceo now, came on board and said, we're not going to make any of this ther stuff, just serious running shoes 'cause that's what we do well. berkshire hathaway, actually fruit of the loom,
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hathaway, bought brooks. arren buffet does not run but he has a bunch of managers who run. you've got this shoe company doing really well. so he met with weber, weber running, only all running. no cross trainer. no cheap shoes at wal-mart. $180, $150 high end shoes. it worked. doubling in y is size every three years. >> not currently. it was at that time. growing.'s still >> it's ab half billion dollars now. think their goal is to double it over the next two years. >> how? >> welsh that's what i asked. especially with nike out there, adidas out there. there's a lot of competition. i think there's two ways to do this. ne, you get more people into running or you could make other products aside from running. they've decided to stick with running. so they are just trying to get more people who are more casual
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finance section how some boston office landlords are and g to woo startups armies of new workers. >> our reporter experienced it hand. >> the idea is that the financial district, a lot of leaving and going to areas sort of pwur ginning areas are going up, s so they're losing tenants. they're trying to get some of startups to fill in the gaps. so they've opened up second amenities room. kind of a bar, game room, coffee house where everything is free. video games, pool table, beer, wine, lattes made by baristas. >> it's like a club. sounds like fun. these are the guys doing it. landlord., a huge >> right. his is their equity office division. and, yeah, they're not the only
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company doing this. landlords are sort of crambling to appeal to this millennial generation and the younger gen x people. expectations are different. when they're choosing a job, what kindven consider of office they'll be moving into. so this helps with recruiting. it helps with retaining. it helps the landlords fill vacancies. at least that's the hope. >> this is not just happening in boston though. happening all over the country. new york, chicago, l.a. landlords around the country are going. if you want the best tall len make the work force speak to them. >> that's right. guess the idea is if you're hiring really talented people to you're expecting them work long hours, maybe they're much they don't have as time outside of the office, so
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let's try to make the office fun. so even while -- if you're working ten hour, maybe you stop for an hour and have a beer down on the second floor and come up and continue working. >> what's interesting, too, like we t companies were, where you could go and and it's ome space open spaces with couches and amenities. traditional landlords and office owner, office space they're having to compete with companies like that. >> yes. withnly are they competing each other, they're competing with new construction. lot of these new buildings have plans and, you know, ndustrial looks with high ceilings and collaborative spaces and lots of fun stuff. you know, they have that. they're competing with those new buildings. they're also competing with
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other places ese that are temporary space. startups start at we work and they look for something more permanent as they grow. landlords want to be there to provide that. in the ing of startup, technology section, hq has a hit on its hands. having one or two hurdles on its path to growth. intermedia labs looks like a tech company. they make an app. here are a bunch of software engineers working at open plan desks. as i noticed when i came there, annoyance, because i was trying to record some audio, it's rather noisy. whirling.fan it's an old new york city building which is strange houses a studio for this show, or sort of a show called trivia hq. >> what is trivia hq? >> it's a game show. kind of looks like --
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jeopardy-esque except you play phone.your smart maybe a bit lower rent. here's a single host, single camera. it's recorded in basically amounts as a closet. makes it kind of participatory.t's the viewers are competing. your smart me on phone are answering questions. >> two shows a day. how many people are trying to involved in this? >> hundreds of thousands. there's a 3:00 p.m. eastern show 9:00 p.m. eastern show. primetime show. >> who is paying? work? at >> there are entire offices shutting down. in fact, people familiar with matter told me even at bloomberg that there are people workday to play this game show. the sort of midday show is between 400,000 and 500,000 people. the primetime show we're talking 600 on new year's day they had 750,000 playing.
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actually 1 at million people tried to play. for ese are big numbers live video. >> it's competitive. it to the nfl. >> it's easy to see a few hundred thousand. much oesn't sound like because we see these big 10 million views on you tube or something. views.re cumulative so concurrent live views, which s a really important thing for advertisers. the numbers are a lot lower on the internet. the thursday night nfl game that amazon, the first one in september, attracted like an average audience. now, it's not totally comparable three that nfl game is hours long. trivia hq is 15 minutes. o give you a sense, if you can attract half million people at the same time in the same place on an app, that's valuable. that the kind of thing can be monetized. >> okay. so are they there? >> no. monetizing? >> no. they are not monetizing it.
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silicon valley. >> lots of years, right? valley are smart silicon run by a couple veterans. was one russ, the ceo, of the founders of vine. probably decided, wisely, could turn out to be not wisely, to not monetize it yet. said, it does seem pretty obvious that there would be ways to bring advertisers into this. you have a two minute window before the show starts. right now there's just a clock.wn you can imagine. you can also imagine sponsored questions. question brought to you by proctor and gamble or something. clear, i'm just speculating on the sponsored question thing, but it is pretty of anticipate how they might try to make money. > up next, why the consumer electronics show in las vegas matters again. >> and going to the greek isles
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>> welcome back to "bloomberg business week." the u can listen to us on and 1130 irius xm119 in new york, 106.1 in boston, 99.1 fm in washington, d.c. >> and in london and in asia on the bloomberg radio plus app. section, consumer electronics show kicks off in las vegas next week. the at's where you'll find latest in hardware, software, ai and virtual reality. girman lked to mark about what to expect and why it's back in vogue again. used to be the hottest tech show of the year in the 2000's.early
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in 2001, the palm pris a big i phone competitor announced in 2009. since then it's slowed down here companies like microsoft included, apple and samsung and google have taken to starting up events that vate they hold with media and special people that they invite toward holiday season. >> let me just jump in. i have been there a couple times it was chaotic. it was crazy. everybody was there. microsoft even had their own venue. it really was a huge event. so it's really come down off a from that kind of high level. >> peak. >> from its peak. >> yeah, absolutely. major companies are what really drove people toward ces early years. now that they have their own events, obviously that's going o slow down traction and visitor numbers. but that's starting to change in
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the last couple of years, specially this year, as our story talks about. >> social media, where mobile apps are king, everyone can scoff at ces. fast forward to today and we're eeing internet companies in particular focusing more and more on hardware. expecting this time around? >> so this time around the companies aren't really going to be presenting. apple's not going to have a booth. google actually will for the time. all of the big players will be there behind the scenes trying o strike deals in order to get the components they need to unlock the next wave of major technologies. big companies are working on self-driving cars, augmented reality glasses and speakers. and what they need are the smaller hardware maker, the europe t makers out of an asia to provide them with the tools in order to build these devices and sell them on their in the coming years. >> that's the point, right, mark? you're not necessarily going to reality glasses or things like that because these
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guys are hunting for those components that they can make their own devices with. whether apple, facebook. pick your name. >> that's right. you're gonna see these technologies from smaller companies that you and i have really heard of, but what you're gonna see are the apples f the world, googles of the world, amazon, samsungs hunting down these component makers in them to strike deals with to buy the lens, the chips, the oftware they need to make the next range of ai device, ar glasses. you described this as a make or break year for virtual reality. toy struggled to get it down size, to make it main stream. how are they going to achieve they nd what do you think learned from getting everybody together this time around? >> yeah. or're right, it is a make it break it year. what we've seen so far from oculus, google, the other platform r is a niche in terms of the next technology.
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ar is where it's at. aculus coming out with a $200 head set that doesn't require anything. alone device. you don't need a phone in it. you don't need to connect to it a $1,000 computer. so we're really going to be banking on that $200 stand alone head set to see if this vr theme has potential. bviously, apple's on the back burner. that's the big shadow here. apple makes tons of money. of phones.ons they dictate the technology industry. if apple said, hey, we're not to do a vr head set, we're going to do an ar head set, that will mess up the plans of the other companies. >> if you're not able to get to covered., we have you >> we talk to nikki epstein about where and when to travel 2018. >> we always look at kind of the entire year ahead. hotels that we're really excited about. museums, institution that are
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about to open and change the landscapes of their destination. really looking for places that are in sort of an will be , places that right here, right now, perfect timing. >> i love the fact that you sayally make a calendar and this is the best time to go to these places. 100%. 100%. so, we arrive at the where to go look at when we to go. we know everybody has limited vacation days. optimize all t to of your time away from home. we're going to help you do that. you look at the story in print or online, we pulled data rom travel specialists who are experts in each of the destinations we've chosen. sense of whenus a is the peak season, shoulder season is what we call it in our industry. not as crowded and when the value is really good. exactly the right time to be there. matched it up with hotel prices. >> how about mexico? so, cabo san lucas, people
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as a party destination. it's also the lap of luxury. places of my favorite on earth. why 2018? it has seen a billion dollars of coming in 2018. >> there's that much demand? >> there's that much demand. this is a year where st. bart's is off line. zika e are worried about still. cabo is benefitting by not being in the eye of the storm. hate to use that pun. t really has the perfect world scenario, beautiful new properties. there's a ritz carlton, only the fourth one in the world opening year. basically any brand that you can imagine that you want to stay season, montage, nobu. they will all be there in 2018. exciting. >> little differently, too, from high end. you could camp on the moon. >> i love this. >> yeah. incredible, right? so, there are these bubble domes desert in le of the
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jordan. it literally looks like the moon. bubbles have formed eco camps. he eco camps are made up of bubbles. there are clear ceilings. you can look up at the sky after hiking, see a sky full of stars from your bed. wake up in the morning, get on a camel, explore the desert. it is magical. it expedition.ile >> one destination. part of a new trail. this is absolutely correct. a 400 mile trail. think of it as the appalachian trail of the middle east. break it up or do the whole darn thing if you want to. >> thinking about going on europe, italy, spain, perhaps not georgia would be the top of your list, yet you've this. talk us through this. >> the republic of georgia, it's definitely not on everybody's list. we think this year it should be. f you think about berlin, germany, maybe mid 2000. just starting to catch on to its
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cool night life vibe. that's what's happening in the capital of georgia right now. some really young up and coming hotels that are doing really cool things. a great list. so much information. go online, get the magazine. thank you very much for giving it. taste of >> thank you. >> "bloomberg business week" is available on newsstands now. >> i know which story you're going to pick. talked about this. that is the cover story by peter waldman. investigate the dark places in the united states. in this case he's looking at the meatpacking industry. >> lot of these workers are undocumented immigrants. getting injured and they don't have the incentive, in a sense, to whistle blow and talk the conditions they're working in. > there's a lot of rift shifting on to the sanitation companies. lot of aspects to this. given that ritical we've got congress deciding how
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