♪ carol: welcome to "bloomberg businessweek." i'm carol massar. julia: and i'm julia chatterly, and we're inside the magazine's headquarters in new york. carol: in this week's issue, stocks take a bumpy ride and we take a look at why. julia: and those turbulent markets welcome the new federal reserve chair, jay powell. carol: inside north korea's army of hackers. julia: all that the head of uber businessweek. -- bloomberg businessweek. ♪ carol: we are here with the editor in chief joel weber.

and joel, we will start in the finance section. we have to talk about the markets because we all started off the week with a crazy stock market. joel: it has been a wild week. backdrop here really starts last friday with the jobs report. markets come back on monday and there happens to be a new fed chair. that backdrop is a really interesting thing that ends with this major selloff on monday. right? and then on tuesday, it goes the other way. i think everybody has been a little whiplashed by that. a bigger conversation nine years into this epic bull market. a lot of retail investors have only ever seen green and this is their first time seeing red. carol: a lot of millennials, right? joel: the youngs. and it's so easy to trade now. if you think about what it was like nine years ago to where it is at now, you can do this on the smartphone with a touch of a button and that is a free thing, right?

a free transaction. that builds in really bad behavior. that's part of what we read about this week. even as it is becoming incredibly easy, that behavioral -- bad behavioral decisions get baked into that as well. julia: we talked about the complacency in the market and you pointed out a run that has been on for years now. volatility has been so low. that's not just equities. it's everywhere. we have been lulled into this false sense of security. a huge shift higher. it caught everybody off guard. carol: and that is why the inverse vix worked for so long. then it was back in the market. joel: big time, and the backdrop to all this is the new fed chair. we have had the era of easy money, speculation that there will be a rate hike. and so that builds in all of that weird anxiety into the market and the marketplace is showing that. julia: the perfect backdrop to all of this and something clearly on investors' minds as -- was the fact that we had an

important transition this week. jay powell, the new fed chair, what a first day on the job. joel: i mean, could you imagine? we wanted to pose that question, how did your first day go? [laughter] joel: and for the most part, he is not really responsible for what is happening in the markets, right? he's the ultimate backdrop to all of this. he is now the most important person in charge of monetary policy in the world. julia: inflation, jobs, that is their mandate. asset prices come to the floor. joel: something we also talk about is the gigantic punch bowl that has been out there. now the market is starting to feel anxious that the punch bowl gets taken away bigger than anybody wanted. a lot of what we have seen this i thinka lot of what we have seen this week is based on that anxiety. carol: it may be a political play, as well.

joel: that is the other attention to this is you have a trump thing. the yellen thing never came to a head. they had a peaceful coexistence. but if there is a change in monetary policy from the fed, you just have to start to wonder what this trump-powell dynamic will look like. that's what peter coy talked about. carol: interesting first day and first week for the fed chairman. we have more from peter coy. peter: he turned 65 on february 4. assumed the chairmanship on february 5. and on february 5, the market went down by the biggest point drop in history. julia: welcome to the job. peter: so yeah, the point of my story, i started working on this before the market took its big break. i was kind of thinking, donald trump has been bragging about the stock market since he took office. it has been a good line for him because the market keeps going up and up. he is telling people, check your

401(k)'s. and i was thinking, the fed has said it wants to raise interest rates and at some point it wants to make those industries pinch. when janet yellen was raising rates, she was doing the right thing, but it was not pinching. you know the financial , conditions overall were very easy because the stock market kept going up, bond yields, long end of the curve, were low. that has to change at some point because the only way you can stave off inflation is by making financial conditions tighter. which is never going to be good for stocks. it is obviously intended to keep the economy, the job growth from going to extreme levels. so you knew a collision was going to happen. i didn't think it would happen on powell's first day in office. carol: we had a story on the bloomberg early saying he comes in and the economy is doing great, maybe getting a little

heated up, and bam. the market comes undone. and now he is in an interesting situation potentially. peter: because he obviously, nobody wants to get into a twitter war with the president of the united states. i'm sure he won't. i don't think he has a twitter account. another thing, he cannot back off and avoid conflict with the white house because the fed has a dual mandate to keep full employment, but also to keep the value of money stable, which means avoiding excess inflation. carol: what about the markets? the financial markets are not part of that mandate, but we know from fed testimony and speeches that they are always looking at what is going on in terms of the financial market conditions. peter: right, so the logic would be, if you are strictly focused on the dual mandate, well if the

market takes a big -- goes up a lot, that would cause people to overspend. it goes down a lot, the opposite would chill the economy. that would be a reason, not because you are trying to protect any particular person's gains in the markets. julia: what we saw the week before last was a reset as far as interest rates were concerned. we saw a dramatic steepening. so back end yields coming up double-digit's. throughout the back end of the interest rate curve, which i think had a lot of people wondering, what's going on here? the question is, how much tightening effectively can the financial markets and stocks withstand, and how much tightening can president trump withstand? because there are two themes in your story. overtookurrent events perhaps the initial theme. peter: i think they will turn the knob a little bit, see how the economy reacts.

if it's not crashing anything, turn a little more, because they do believe that rates are below the equilibrium level. now that's a tricky process, though, because very often, tightening cycles end in tears. they end in recession. not intended, but the federal funds are a blunt instrument and it's hard to calibrate scalpel like precision. julia: up next, who is on the receiving end when china tightens the screws on stimulus? carol: and some revisionist history threatens poland. julia: this is "bloomberg businessweek."

♪ carol: welcome back to

"bloomberg businessweek." i'm carol massar. julia: and i'm julia chatterley. you can find us online. carol: in the economic section, a credit squeeze is on in china just like other parts of the global economy. julia: but in china specifically, the corporate titans are feeling the pinch. carol: here is editor christina lindblad. christina: in china, authorities have been particularly worried about debt in the corporate sector. rather than use benchmark interest rates, rather than use them, they are using targeted measures so as to not compromise growth. so, i think the alarm bells started sounding in 2016 when chinese companies went on a huge m&a binge that wilted them to number two in the global m&a. behind the u.s. that was a wake-up to chinese policymakers. a lot of these deals were happening abroad.

and a lot of them were debt funded. carol: talk to us about the levels of debt. we have had short-sellers come on and talk about the chinese debt. put it into perspective for us. cristina: there is a mind blowing number. between 2008 and 2016, chinese debt increased by $22.4 trillion. that is bigger than the economic output of the u.s. carol: huge. cristina: yeah. the debt to gdp, which is a common looked at ratio, went from 159 to 260 in 2016. and despite this current campaign, it's probably going to surpass 300 by 2020 is what bloomberg economics team -- julia: that debt keeps rolling over and at some point there isn't that the ability to roll over. and then come up to get some kind of crunch? ristina: what's happening is

the chinese government is forcing some of the big conglomerates -- there is a crash diet. you're told you have to sell off some of these assets at hna, which is a company that has received a lot of attention, which some people have compared to ing because of the level of , you know, relationships getting hot. nothing becomes quite clear until things get bad. so they are definitely on a huge , push to sell assets. they basically disposed of real estate projects like they have in london and australia. they were in the middle of this big luxury real estate push. julia: and they have stakes in really well-known companies. deutsche bank, hilton, 3rd avenue and park avenue. in terms of the assets they have piehere, the fingers in the are well-known, large, and have global implications if there is a problem.

cristina: it's true. the question always remains, how far would the chinese government go? we saw in europe and the u.s., governments went quite far in ensuring that companies would not collapse entirely. julia: there is an implicit backstop. these guys think the chinese company will not let the company go because they don't want the ripple effect. that seems to be a backstop assumption. do you think that mentality is changing as a result of what we are seeing in the tightening, the shift from xi jinping? cristina: no, i think it is a pretty good bet that no large chinese company will be allowed to fail. and also we have to remember, , this is an economy that is very different from others. capital controls mean hot money is not an issue, really. so we don't have the sudden swish out when people see problems. that punishes everybody. and domestic savings are really

high. i have said personally that i could see a scenario in which the government, if it had to, would confiscate money from those savings to mop up a crisis. julia: in the politics section, the nationalist government in poland continues to break ties with both nato and the eu. carol: we got more on this from our editor,. matthew: there has been a nationalist fervor sweeping across eastern and central europe for a couple years now. in poland, the most recent example of that is a new law they have just signed that makes it a crime, punishable up to three years, to imply that poland was complicit in any sort of crimes related to the holocaust. their point is they are trying to clean up the country's image abroad, but it is doing the exact opposite among allies. israel is not pleased with this. the u.s. is not pleased with this. this is a time when poland is

arguably more reliant on aid from the eu and security from the u.s. than ever before, and they are testing that relationship on both fronts. julia: it's also upset the eu, who has been wrangling with poland over the power grab we have seen with the judicial system, the suppression of the media here too. , as you point out the financial linkages and dependency, yet domestically they are very popular. matthew: that's right. their popularity has soared recently. probably a lot of that has to do with this nationalist fervor they have taken hold of. transfer payments are up. they have increased the social welfare system for their citizens. you are paid something on the order of $148 per month. if you have more than one child per child. and their economy is doing

pretty well, it is growing. a lot of this is on the back of this consumer demand that is fueled by welfare payments. but it's been two years since the law and justice party has taken over. they have done this grab on the media and the courts, and they are upsetting the budget centers in brussels who will start looking at next year's budget of the eu, and countries like germany and france are thinking the eu to tie payments will be making to poland to measure rule of law and democratic freedoms. carol: take a step back, because i had no idea this law that was put forth and signed by poland's president, making it a criminal offense to suggest poland had any responsibility for the holocaust. what's the origin of this and the momentum it has created within poland?

matthew: well, look, a lot of the atrocities that happened in the holocaust happened in poland. that was where auschwitz was. a lot of the jews killed were polish. a lot of the heroes that israel has gone to great lengths to recognize were polish. they did a lot to get some of these people out. but there were also a lot of people who outed the jews who were in hiding, and that is what they are trying to put a stop to. whether you can say this is part of a broader anti-semitic movement that is gaining momentum in eastern europe, i don't know that you can necessarily go that far. but it's eerily similar to some of the sentiment and nationalist fervor we saw 70, 80 years ago. carol: up next, the governments

gamble with a fragile yet devoted homecare industry. julia: and the investing machine learning to find a cure for cancer. carol: this is "bloomberg businessweek." ♪

♪ julia: welcome back to "bloomberg businessweek." i'm julia chatterley. carol: and i'm carol massar. you can also listen to us on radio on sirius xm radio and am 1130 in new york, 106.1 in boston, and a.m. 960 and the bay area. julia: and in london on dab and in asia on the bloomberg radio plus app. in the futures section this week, we take a sobering look at the homecare industry in the united states. carol: the country's three million home aides are underworked, underfunded, and some are working for free. >> she is a homecare worker.

it's not her real name. i should say that. many of the workers i spoke with fear retaliation, so on the condition of anonymity, she spoke with me. she let me follow her around for about a year on and off. she is someone who works overnight shifts, 24 hours in a row, and in the case of right now, she works 48 hours in a row in the home of someone who is elderly and disabled. she tends to them in bed, helping them go to the bathroom, cooking for them, cleaning for them. really all the activities of daily living. shift begins at 8:00 a.m. and ends at 8:00 a.m. the next day. how much sleep is she getting? tammy: right, the point of the story is a lot of night hours are unaccounted for and unpaid. she works a 48 hours shift and told me she rarely sleeps more than two to three hours, but is not paid for the night.

carol: how is that possible? tammy: so, the homecare system, there is a lot of unpaid hours, as you might guess. carol: but she's told to be there? tammy: right, she is told to be there by her employer and the medicaid system. there are contracts that basically say, we are going to assume that workers are eating and sleeping for 11 hours a day, so we are going to pull that out of their paycheck. julia: she gets paid for 13 hours a day, 26 hours out of 48. tammy: that's correct in the case of her shift. the assumption of meal and sleep breaks are unrealistic. i spoke with 20 workers in the course of the year, and nobody said they were ever educated as to how to log hours they were off or say to employers they didn't sleep. julia: how much does she get paid per to do this? tammy: right now, she is

making $13. when i first met her, she was making $10. like most homecare workers in the medicaid system, they are making the minimum wage plus a few benefits. julia: what's the law surrounding this? you mentioned this idea of a split shift, so in theory, you would have two people working 12 hours each and it's more manageable. tammy: the unpaid nights are the dirty secret of our system. and the law knows that it happens. but again, the presumption is written into contracts that workers have a hard time rebutting. carol: there is a nurse that comes and checks the situation. what did that supervisor tell her? tammy: when you are paid to the medicaid system, there is a nurse that checks in. there really isn't a supervisor. the agency has a representative that sort of looks over her. there's also an agency

representative from her union but when she made reports to both, there isn't money in the system and you need to hush, and you need to be there. julia: what about unions? are there any kind of union protections for women and men in this situation? tammy: so, the main union is a very large workers union and they have done an extraordinary job of leading the fight for $15 and organizing low-wage workers. most homecare workers in this space for medicaid in states like new york, progressive states are unionized, but the contracts still write in the possession of taking the breaks. carol: now to a potentially brighter side in the health industry. julia: he is using venture capital and machine learning to find a cure for cancer. manus: here is reporter -- carol: here is reporter sarah mcbride. vijay pande is an investor,

but unlike a lot of investors, he worked for years as an academic. he is a bit of a polymat. he has a background in several different disciplines, including chemistry and biology, and has -- he has done a lot of time in computer science. that particular combination makes him an unusual venture investor. carol: he has two degrees in civics and he is a coder at the same time. >> he can bring -- he sees across disciplines. although he's only been there for a few years, he is already applying cross-thinking to his investment strategy. and it's making him a very different, unusual type of investor when it comes to medicine and biosciences. carol: and let's dig a little bit into that in terms of what kind of investor he is in terms of how it comes to the community.

we should point out that bloomberg lp is an investor in the firm he works with. talk to us now about his approach when it comes to biotech. >> well, his theory is that machine learning, which he knows a lot about in his background in computer science and a project he did -- he thinks machine learning has the potential to really transform medical research. a lot of traditional investors agree to a degree, but he just thinks it's going to be exponentially transformative. a lot of people have heard this type of thing before about computers and medicine, and he really thinks this time, the types of advancements we will be able to make by running things like genomic sequences are going to enable all kinds of discoveries in medicine and how our bodies react to medicine. julia: up next, the consequences

of prime minister modi's retrenching in india. carol: and a day in the life of north korea's army of hackers. julia: this is "bloomberg businessweek." ♪

julia: welcome back to "bloomberg businessweek." i'm julia kerley. carol: -- i'm julia chatterley. carol: and i'm carol massar. still ahead, why india needs more of what prime minister modi promised. julia: the industrial hacking in north korea. all that still ahead on "bloomberg businessweek." ♪ julia: we are back with "bloomberg businessweek" editor in chief joel weber. and joel, in the remarks

section this week, we are honing in on india and posing the question, are they ready to be a regional stabilizer, a global power? joel: there has been a lot of optimism about india. there is also this other narrative of china and india. india is basically viewed as it could eventually overtake china as the big growth engine of the world. and actually, so far, that has not proven to be true. and that is what we explored. carol: i feel like we have been talking about this happening for an awfully long time, expecting india to take over. and yet, the reform process is taking longer than anyone has expected. there are other issues at play. joel: yep, and that's the big question mark. can they find real growth that the rest of the world values? not just india. carol: they are growing, let's be fair.

but it's not living up to the expectation. joel: exactly. there are big meta institutional issues that modi has been wrestling with and yet it still hasn't done it. julia: but why has he struggled so much? we were talking two years ago with such expectations. reforming this country has been a real problem and the labor force in particular, some shocking stats about the sheer quantity of people joining the labor force. the problem is they can't find jobs. joel: totally, and how do you wrestle with that? that is why it has not been solved yet. there have been massive advances on the technology side. we think of india, we think of technology. there are so many people there, though. how do you spool up that labor force? carol: if you go to india, some places are much more developed. some places are still not. and there is a lot of deep divisions within the country. and that's still here. the younger generation. joel: and a class thing that is

unlike anything in the world. carol: it's holding them back. joel: and that is what the world sees. we haven't seen that growth like everyone has expected. from an international investor perspective, you start to wonder what is going on and why is this taking so long? julia: one of the huge limitations is also the decentralization of power. the region has so much control. being the prime minister doesn't necessarily mean you can make the changes you want to make. joel: a clunky country to deal with. that's why we have not seen the growth that we thought. carol: exactly, let's go to another part of asia, around the world, and this is the international cover story. we love this story. you talk about the army of north korean hackers that has been built up over the years. joel: yeah, so this story is incredible. another reason why we are doing this is the olympics is happening right now. the story is about a defector who left north korea, and we got

the tell-all about his story, being part of this north korean hacking army. north korea we know sanctioned up the wazoo, embargoes, all kinds of stuff. yet they still have money because they are able to get it somehow. there has been this question mark about how this is happened. -- how that's happened. there is a secret hacking army that north korea has trained within the country over the past decade and change, and they have actually spooled that into the world. and part of the mission of the hackers is to bring that money back to the country. it's an incredible story. and no one else has covered it like this before, and to have this firsthand knowledge of it just is sensational. it's a must-read. julia: brad stone has the story. brad: this story starts a couple months ago, when my colleague in

seoul, south korea set out a mission. and the mission was to find a defector who had been a participant in the very much feared hacker corps of the north korean government. now as you know, north korea has gotten a lot of credit, a lot of blame for some very high-profile hacks. the wannacry ransomware attack last year, the attack on sony service a couple years ago after the seth rogan movie "the interview" came out. hackersrea sends these sam new out into these neighboring countries where they create havoc and raise money for a company -- or a country that is under very heavy sanctions. he was talking to sources and got connected with a local fixer whose trust he had to earn, and the fixer put him in touch with a couple defectors. there are 30,000 defectors from

north korea living and south korea. and he put sam in touch with a couple defectors who have remained anonymous. one of them is the person whose story sam based his article this week on, and he had this extraordinary life story. carol: so, ok, tell us a little bit about how this hacker army got created and the work they were doing. because it goes back a few years. brad: it really does, but i think what we have seen under the particular leadership of the north korean government is a steady ramp up. and you know, we got the hacking prowess of north korea like a wing of its military. what surprised me about the story is it is not completely the case. this is a way for the north korean government to make money, to evade, to circumvent some of these incredibly restrictive sanctions. he described his life story, it was very tragic.

he grew up in pyongyang, he wanted to be a doctor. the government put him in a computer security program, and as he was starting his career said go do your duty for the country. he was basically sent to a border city in china, where obviously they have internet access and unfettered internet access. he lived in a three-story house with a bunch of other male north korean hackers and was told, do what you have to do to make money. so it's representative of the kind of thing these hackers are being asked to do. he was cracking computer programs, selling them on the open market. he was creating characters to play in games to make money in the games so they could sell those characters on the open market. then my favorite one from sam's story is they would hack online gambling sites. they would look at the player's cards and send the information to another player. he said he was making almost

$100,000 a year. sending most of that money back onto the government. carol: up next, a political campaign funded with bitcoin. julia: and tesla gets some fierce competition in china. carol: this is "bloomberg businessweek." ♪

♪ julia: welcome back to "bloomberg businessweek." i'm julia chatterley. carol: and i'm carol massar. you can also find us online at businessweek.com. julia: and on our mobile app. in the politics section, some cryptocurrency investors are getting a little political. carol: supporting a first-time democratic congressional candidate. julia: brian ford is funding his campaign in part with bitcoin. carol: here is reporter josh green. josh: brian ford is a young, former senior adviser for technology in barack obama's white house who has returned to

his hometown in orange county, california. he is running for an important seat there held by a republican. what is interesting about his candidacy is that almost all of the marquee donors and enthusiasts have piled in to support him because after he left the white house, he became the head of the digital currency initiative at mit's media lab. so he is currently a cryptocurrency evangelist. if you look at all that has been going on with cryptocurrencies and the fact that washington regulators are becoming increasingly important, the bitcoin community is very eager to have someone who understands their issue in congress, where most people are in their 60's, 70's, and 80's, and perhaps not up-to-date on cutting-edge technologies. carol: if you google him, a lot of videos come up and he is espousing various matters when it comes to digital currencies. koran blockchain. he's out there talking it up.

josh: his campaign pitch could essentially double as a ted talk on the benefits of centralization. here in washington where i live and work, technology issues are often very difficult for congress to grapple with. there was a bill introduced in december that sent a scare through the cryptocurrency community. it was introduced by two 84-year-old senators that appeared as if it would outlaw owning concealed cryptocurrency. and so there's a real thirst among people who are serious about this technology to get someone into congress who understands what it is and won't inadvertently squelch what looks to be a growing and emerging u.s. industry. julia: one thing we have to point out is the sheer volatility we have seen in bitcoin. we are talking about really big names. the winkle lost brothers, of course. they are well-known in this

sector. has the sheer volatility impacted the support they are providing him, or has it made the support all the more necessary? josh: i think very much the latter. all of these candidates, and i list 10 in the story, have maxed out to ford. they have given the federal maximum limit. $2700 to his general election campaign. what's interesting as a side point here is that some of them have donated actual bitcoins. there is a part in my piece about how the federal election commission doesn't know how to grapple with this. it's not like dollars, like you said. it's something that has changed in value quite a bit. i think the bursting of the bitcoin bubble has added urgency to the group of people who have got a lot of people wrapped up in this technology. and you take someone like the winklevoss brothers who have been pushing for a couple years to get the fec to give them permission to open a bitcoin etf.

the prices plummeted since december and caused a scare in some regulators who believe that a lot of retail investors could get hurt by this, we don't really know what it is. we need to jump and and start issuing regulations. although it's not clear that a lot of people in washington understand the technology or that regulators are in lockstep on what to do with it. we have seen very different movements from the cftc on the one hand which have allowed for , bitcoin futures to start trading in december, and the fec on the other hand whose , chief jay clayton was described last week as washington's chief cryptocurrency skeptic. there's a real difference in so opinion on what should be done about cryptocurrency. at the same time, there's increasing urgency to do something about it as the price falls. carol: and the technology section, why every electric vehicle supplier should hear catl. julia: and we are not talking cows. here is editor jeff muska's.

julia: tell us about the city of ningde. things are changing. explain. jeff: for the past seven years or so, it is a metro area of about 4 million people, it has been home to catl, a spinoff of a japanese consumer electronics battery maker that has become the dominant capacity wise electric vehicle battery maker in china. become it's now setting its sights on the rest of the world. carol: how dominant are they in china? how aggressive are they trying to take over in the rest of the world when it comes to batteries? jeff: in the city proper, from an existing headquarters, it takes a half hour to get across by shuttle bus or bmw powered by catl battery cells.

that the company has on offer. julia: this is the sheer size of their facility. it's huge. jeff: so, across the way from that, on this moss flat next door, there is a $1.3 billion facility set to open in 2020. by itself would be the number two largest battery facility on earth, next to elon musk's giga factory. but combined with the company's other production capacities, it will make it a company to be feared by anybody, elon included. carol: wow, so the company is catl. tell us about the background of the company. i'm always interested when it comes to a chinese company looking to be dominant globally. how much are they getting from the government, which has been on an initiative to improve and grow chinese industries?

jeff: that's definitely a piece of this. the firm has become the anointed representative of chinese interests in the dealings abroad, as far as electric vehicle batteries go. there is a good deal of state support alongside another prominent banker. but yeah, the company seems to be aiming for an ipo sometime in the next year and change, valuing at about $21 billion. they are opening at about 10%. julia: they have got their eyes on the u.s. they have their eyes on europe i guess as well. , but you point out that 99% of their business is done domestically. even with all the subsidies we are talking about from the chinese government, how good is the product they are producing? jeff: right, this is the classic problem with any chinese company trying to make a bigger name for itself on the world stage. they are unproven in other markets.

that's a fair question that the analysts would tell you that catl is a few years behind the world leaders, the panasonic's and lg's of the world. but they say, by the same token given the resources behind it , and the incredible math it is pouring into research and development, they are likely to catch up. julia: how much are they investing in r&d? jeff: at this point, as of our last financials, about 11% of total available cash. carol: about $100 million. jeff: that's right. carol: that's a lot of money so they can create a better product. jeff: in contrast, the typical points ratio is 3%, 4%. julia: up next, the company that wants to be the stockbroker for the 99%. carol: plus, don't call it used. call it archival.

the latest runway trends. julia: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. julia: and i'm julia chatterley. and you can listen to us on the radio on sirius xm channel 119 and also on a.m. 1130 in new york, 90.1 in washington dc, and a.m. 960 in the bay area. carol: and in london and asia on the bloomberg radio plus app. in the features section, robinhood is a stock trading at that caters to millennials. julia: and a let's be clear. the company's ambitions do not stop there. >> robinhood is a venture, it is a palo alto-based, app-based online brokerage. they target people under 30 and the twist, the thing that has made them grow really quickly -- they are almost as big as

e*trade in terms of accounts, is that trades are free. typically between $5 and $50. robinhood does it with zero cost. it's what silicon valley did for music or for media or a bunch of industries. they are trying to do it to financial services, which is a pretty interesting development. julia: who is they? mark: robinhood are these two cofounders. they are ex-academic types. they have masters degrees in math, one from stanford, one from ucla. what's sort of interesting and fun about this story is that they were hedge fund guys and they got swept up in the occupy movement. they started to think the work they were doing, which is around high-frequency trading, was part of the problem. so they decided to start this thing.

to correct that. stealing from the rich, giving to the poor. they are the stockbroker for the 99%. that is the sales pitch. it has been very effective thus far. carol: how effective? max: so, as i said 3 million , accounts. in terms of the number of accounts, it is almost as big as e*trade. the caveat is their investors are investing small amounts of money because they are people who are basically in their 20's. and it's growing very quickly. julia: how do you invest? if they are targeting millennials how do they go about , investing with these guys or trading with these guys? carol: it's kind of tinder-esque. max: yes the first time i met , them, they were pitching the fact they just got a website. they were trading on their mobile app, which was basically the only way they could do it. you create an account on your smart phone and it is a few taps and a swipe.

you swipe up to buy and the feeling is almost like you are watching a movie or you are swiping on tinder. and that's like part of the appeal. over the last 10 years or so, even tiny improvements in kind of convenience can be disruptive. it's also, you could argue may be problematic. it's causing people to think about investing as if they are dating on tinder, and this is real money we are talking about. julia: what is the average trade we are talking about? max: off the top of my head i , don't know the exact figures. the average age is 28. i think half the people who are investing in robin hood have never invested before. we are talking small, small amounts of money. julia: in pursuits, the fashion industry has decided what is old can be new again. carol: but don't dare call it old.

here is editor chris rouse her. chris: the latest trend in fashion isn't vintage, it is archival, which is a new buzzword. it's when big fashion brands re-release old designs from their archives and sell them as new. versace, for example, is sending a lot of old trends down the runway. julia: is it playing to that in some ways? chris: yes, so the clothing retail business is an $18 million business. more than $2 billion is trendy new startups, which are sending expensive vintage clothing online. this is stuff people are searching after. it's a total millennial thing because you are finding objects people don't have and a lot of people have a story behind it already. this is a growing business. fashion brands are looking at this and seeing, someone is

buying a versace dress for $200 online, they are already a versace customer. so they are getting them on the purchase that way. carol: think about the celebrities that have often been bringing out old chanel on the red carpet. you see this trend. dbf is doing it, bringing back their original designs. who else is doing it? chris: the way it was led by bags and jewelry. before regular clothes were popular to wear in a vintage way, they were always being carried around. coach is doing this with their bags, gap is doing it with clothing, ralph lauren is releasing a line that was made famous by a wu tang video. in the 1990's. julia: that is a lot of older products coming back to the market. chris: totally. they are bringing back full patterns, prints, they are re-releasing shoes that are 30 years old. julia: these brands are trying to play to their strengths, but isn't this a tough retail environment?

unfortunately if you cannot beat them, you go with them. chris: you look at j.crew and they are releasing their rugby shirts. things that are what j.crew was. they are realizing that trying new things in this uncertain time maybe isn't the best thing. maybe they should retreat to their core strength. carol: "bloomberg businessweek" is available on news stands now. julia: and online and the mobile app. carol, a whole array of stories this week, what is your favorite story? carol: we talked a lot about the north korean army of hackers. our reporter was able to track one of these guys down who works for the north korean hacker army. he's now defected from the country, but we get an inside look at how they operated. julia: he was operating in china, but they are also in other countries to, like india, cambodia as well. while he was very successful sending money back home, others weren't and their conditions were shocking. carol: pretty tough conditions

and you said it, it is all about sending money home to north korea. julia: plenty more bloomberg television coming up next. ♪

emily: i'm emily chang, and this is "the best of bloomberg technology." soars in, snaap trading after smashing estimates. we break down the first earnings victory since it went public. plus, after reporting fourth-quarter earnings, tesla still sees its model 3 production leading weekly goals. we will break down the earnings numbers. and our exclusive conversation with sheryl sandberg, and why she says the #metoo