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. juliette: at it those turbulent markets that welcome the new federal reserve chair, jay powell. carol: and inside north korea's army of hackers. julia: all of that ahead on "bloomberg businessweek." ♪ carol: we are here with the editor in chief joel weber. joel, we are going to start in

the finance section markets. 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, it really starts last friday with the jobs report. and so the 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. and then on tuesday, it goes the other way. i think everybody has been a little whipsawed by that. a bigger conversation here, 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. it is so easy to trade now. andit is so easy to trade now. if you think about what it was like even nine years ago to where it is at now, you can do this on the smartphone with a touch of a button, right, and

that is a free thing that is a , free transaction. that builds in really bad behavior. that is part of what we read about this week. even as it is becoming incredibly easy, that behavioral decisions that are bad get baked into that as well. julia: we talked about the complacency in the market and you pointed out a bull run that has been on for years now. and volatility in the markets has been so low. we have been lulled into this false sense of security. the huge shift we saw on monday i think caught everybody off guard. carol: and that is why the inverse vix trade worked for so long. there was no volatility and all of a sudden, it was back in the market. joel: 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. so that builds in all of this weird anxiety into the market and the marketplace is showing that. julia: and the perfect backdrop to all of this and something clearly on investors' mind is

the fact that we had an important transition this week. this is our cover story. jay powell, the new fed chair, what a first day on the job. joel: could you imagine? we wanted to pose that question, how did your first day go? [laughter] julia: tough, in a word. joel: for the most part, he is not really responsible for what is happening in the markets. he is the ultimate backdrop to buthe is the ultimate backdrop to all of this. julia: yes, you're right. joel: and he is now the most important person in charge of basically incy, , the world. julia: inflation, jobs, that is there monday. once again, the markets come to the floor. asset prices come to the floor. joel: something we also talk about is the gigantic punch bowl that has been out there. and the market is starting to now the market is starting to feel anxious that the punch bowl maybe quickery, than anybody wanted. a 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 tension to this, you have that trump-powell thing.

the yellen thing, with trump, that never really came to a head. they had a peaceful coexistence. if there is a change in monetary butif there is a change in monetary policy from the fed, you start to wonder what this trump-powell dynamic will look like. ended that -- and that is what peter coy writes about this week. carol: interesting first day and first week for the fed chairman. we have more from our economics editor 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. [laughter] peter: the point of my story, i started working on this before the market took its big break. but i was thinking, donald trump has been bragging about the ever since he took office. and it has been a good line for him because the market keeps going up and up.

he keeps telling people, check your 401(k)'s. i was thinking, the fed has said it wants to raise interest rates and at some point it wants to make those industries pinch. you know when janet yellen was , raising rates, she was doing the right thing but it was not pinching. the financial conditions overall were very easy because the stock market kept going up, bonds, -- bond yields at the long end of the curve were low. but 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 sometime. i just did not think it was going to happen on powell's first day in office. carol: i love it that on the , first day he comes into office, and we had a story on the bloomberg early saying he comes in and the economy is doing great, everything seems to

be doing really well, maybe getting heated up a little bit, if you will, and bam. the market comes undone. he is in an interesting situation potentially. peter: well, because he -- nobody wants to get into a twitter war with the president of the united states. and i'm sure he won't i don't , think he has a twitter account. hand, he cannot just 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, and we talk about this. but we know from fed testimony and speeches that they are always looking at what is going on in terms of the financial markets and financial market conditions. peter: the logic would be, if you are strictly focused on dual mandate, if the market ticks up

a lot, that would cause froth, that would cause people to overspend. if it goes down a lot, the andif 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 digits. throughout the back end of the interest rate curve, which i think had a lot of people wondering, what is going on here? i guess my question, to get back to what you were saying, 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, where current events overtook perhaps the initial theme. peter: i think the fed will be independent, which means they will turn the knob a little bit, see how the economy reacts. if it is not crashing anything,

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

♪ carol: welcome back to "bloomberg businessweek." i am carol massar. julia: i am julia chatterley.

you can find us online at businessweek.com and on our mobile app. carol: in the economic section, a credit squeeze is on in china , just like in other parts of the global economy. julia: but in china specifically, the corporate titans are feeling the pinch. carroll: here is editor christina lindblad. >> in china, authorities have been particularly worried about debt in the corporate sector. rather than use benchmark sorather than use benchmark interest rates, rather than having the people's republic of china raise interest rates they , are using targets to measure the problem 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 bolted them to number two in the global leagues of 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. >> well, 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. in a single year. carol: huge. >> yeah. the debt to gdp, which is a looked-at ratio, went from 159 to 260 in 2016. despite the current campaign, it will probably surpass 300 by 2020 is a bloomberg economics team thinks. julia: that debt keeps rolling over and at some point there isn't that the ability to roll then, do we get some kind of crunch? >> what is happening is the chinese government is forcing some of the big conglomerates -- there is a crash diet.

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

problem. >> it is 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 that ultimately china will not let the company go because they don't want the ripple effect. that seems to be a backstop assumption some of these companies made. do you think that mentality is changing as a result of what we are seeing in the tightening, the shift that we have seen in tone xi jinping? >> no. i think it is a good bet that no large chinese company will be allowed to hit the wall. 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 do not have the sudden switch out that you have sometimes when people see problems, and that punishes everybody. domestic savings are really

and 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, a nationalist government in poland continues to fray ties with nato and the eu. carol: we got more on this from editor matthew philips. matthew: there has been a kind of nationalist fervor sweeping across eastern and central europe for a couple years now. and 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 at all 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 in fact it is doing the exact opposite among allies. israel is not pleased with this. the u.s. is certainly not pleased with this.

and 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 has 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 there are financial linkages and dependency, and yet domestically they are very popular. matthew: that is right. their popularity has soared recently. probably a lot of that has to do with kind of 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 at 4.6%. a lot of this is on the back of this consumer demand that is fueled by welfare payments. but it has been two years since the law and justice party has taken over. they have done this grab on the media and also the courts, and they are upsetting the budget setters inudget brussels who will start looking at next year's budget of the eu, and countries like germany and france are thinking of ways to tie payments the eu will be making to poland to measures of 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 is the origin of this and the kind of momentum it has created within poland?

matthew: a lot of the atrocities that happened around the holocaust happened in poland. that was where auschwitz was. carol: right. matthew: a lot of the jews killed were polish. the heroes that israel has gone to great lengths to recognize were polish. they did a lot to try to get some of these people out. but there were also a lot of people who kind of 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 kind of gaining momentum in eastern europe, i don't know that you can necessarily go that far. but it is eerily similar to some of the sentiment and nationalist fervor that we saw, you know 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: i'm carol massar. you can also listen to us on sirius xm radio and am 1130 in new york, 106.1 in boston, 99 fm in d.c., and a.m. 960 and the bay area. julia: and in london, and in asia on the bloomberg radio plus app. in the features section this week, a pretty sobering look at the homecare industry in the united states. carol: the country's three million home aides are overworked, underfunded, and some are working for free. julia: here is our reporter, tammy kim. >> she is a homecare worker in

new york city. that is not her real name. 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. and she does everything you would expect a worker does for somebody who can really survive on their own. julia: such as? as, tending to them in bed helping them go to the , bathroom, cooking for them, cleaning for them. all the activities of daily living. julia: her shift begins at 8:00 a.m. and ends at 8:00 a.m. the next day. how much sleep is she getting its use tending to someone in that condition. -- in that condition? >> 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? >> the homecare system, there is a lot of unpaid hours, as you might guess. carol: but she is told to be there? >> she is told to be there by her employer and the medicaid system. so this is our public health care system. and 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, so 26 hours out of 48. >> that is correct. the assumption of meal and sleep breaks are, from what i can see 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 to say to their employers, actually i didn't get the sleep those julia: how much hours. does she get paid to do this? >> as minimum wage has increased

her wage has gone up. 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 is the law surrounding this? because you mentioned this idea of a split shift, so in theory, you would have two people working 12 hours each and it is more manageable. but then of course i guess that , doubles the cost. >> the unpaid nights are the dirty secret of our system, and anybody knows it is happening. the law says that you have to take those the presumption is hours to be paid for them. but again the presumption is written into contracts that , workers have a hard time rebutting. carol: does she talk about her supervisor, because there is a nurse who checks the situation. takes a look at the patients. what did that supervisor tell her? >> when you are paid to the medicaid system, there is a nurse that comes from medicaid that periodically checks in. there really isn't a supervisor. butthere really isn't a supervisor. the agency has a representative that looks over her. there is also an agency representative from her union but when she made reports to both parties, they said they

just isn't money in the system and you sort of need to hush about these complaints. carol: and you need to be there. >> and you need to be there. julia: are there any kind of union protections for women and men in this situation? >> 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 of the health care industry. julia: we are pursuing a game changer this week. there is a venture capitalist using a combination of venture capital and technology to find a cure for cancer. >> vijay pande is an investor, but unlike a lot of investors,

he actually worked for years as an academic. he talked at stanford and he is a bit of a polymat. he has a background in several disciplines, including chemistry and biology, and has spent a lot -- has done a lot of computer science. that particular combination makes him an unusual venture investor. julia: and he has two degrees in physics and is a coder at the same time. an underachiever. [laughter] >> he can bring this -- he sees across disciplines. he is already applying cross-thinking to his investment strategy. and it is making him a very different, unusual type of investor when it comes to medicine and biosciences. carol: and let's dig a little into that in terms of what kind of investor he is in terms of how it comes to the biotech community. we should point out that

bloomberg lp pointed out he is an investor in the firm he works with. talk to us now about his approach when it comes to biotech. >> his theory is that machine learning, which he knows a lot about through his background in computer science and a project he did called folding at home, he thinks machine learning has the potential to really transform medical research. and so a lot of traditional investors agree to a degree, but he just thinks its going to be exponentially transformative. so a lot of people have heard this type of thing before about computers and medicine, and he really thinks that this time, we will bef advances 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 the prime minister'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 am julia chatterley. carol: i am carol massar. still ahead, why india needs more of what prime minister modi promised. julia: the industrial hacking in -- hacking complex launched in north korea. carol: and bitcoin is a candidate. julia: all that still ahead on "bloomberg businessweek." ♪ julia: we are back with "bloomberg businessweek" editor in chief joel weber. and joel, and 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. beenndia has 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. but yet the reform process is taking longer than everybody has expected. there are other issues at play. and joel: it is the big question mark. can they find real growth that the rest of the world values? not just india, the values it. carol: they are growing, let's be fair. just not to expectations.

joel: exactly. so there are big meta institutional issues that modi has been wrestling with, and has tried to reform and yet it still hasn't done it. julia: but why has he struggled so much? we were talking to years ago with such expectations, as you point out. reforming this country has been a real problem and the labor force in particular 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 and solved yet. there have been massive advances on the technology side. we all think of india we think , of technology. there are so many people there, though. how do you spool up that labor force? carol: you talk about so many people, and if you go to india, some places are much more developed. and there is a lot of deep divisions with the country, and that is a there, the younger generation. joel: and a class thing that is

unlike anything in the world. carol: it is 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 just start to wonder what is going on and why is this taking so long? julia: on of the huge limitations is also the decentralization of power. the region has so much control. even being the prime minister doesn't necessarily mean you can make the changes on the ground level that you would like to. joel: a clunky country to deal with. that is why the reforms haven't quite worked as we anticipated and that is why we have not seen the growth that we thought. carol: 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: this story is incredible. another backdrop, 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 sanctioned up the wazoo, embargoes, all kinds of stuff. yey they still have money because, you can tell within the country that they are able to get money somehow. so there has been this sort of question mark about how this is happened. it turns out, according to our reporting, there is a secret hacking army that north korea has trained within the country over the past decade and change, and they have spooled that into the world. and part of the mission of the hackers is to bring that money back to the country. it is 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 is a must-read. : i couldn't agree more. brad stone has the story. brad: this story starts a couple months ago, when my colleague in

seoul, south korea, sam kim, set out a mission. and the mission was to find a defector who had been a participant in the vaunted and very-much feared hacker corps of the north korean government. 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 servers a couple of years ago after the seth rogan movie "the interview" came out. you know north korea sends the , hackers out where they create havoc and raise money for a company or for a country that is under very heavy sanctions. so sam kim 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 living in north korea from south korea, and he put sam in touch with a couple

defectors who have to remain anonymous, who had participated in the north korea hacker program. one of them is the person whose story sam really based his article this week on, and he had this extraordinary life story. carol: 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 leadership of the north korean government is a steady ramp up. we thing of the hacking prowess of north korea like a wing of its military. what surprised me about sam's 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 that are on the

government. he described his life story, it was very tragic. he grew up in pyongyang, he wanted to be a doctor. the government let him in a computer security program, and and van, just 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 basically told do what you have to do to , make money. so it was very representative of the kind of thing these hackers are being told to do. and in this case, 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. and 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 -- and then sell the information

to another player. he said he was making almost $100,000 a year sending most of , the money back to the government. carol: up next, a political campaign funded with bitcoin. julia: and tesla gets some serious competition in china. carol: this is "bloomberg businessweek." ♪ ♪

julia: welcome back to "bloomberg businessweek." i am julia chatterley. carol: i am carol massar. you can also find us online at businessweek.com. julia: and on the 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's reporter josh green. josh: brian ford is a young, former senior adviser for technology in barack obama's white house. his return to his hometown in orange county, california, he is running for a very important

congressional seat there currently held by a republican. but what is interesting about his candidacy is that almost all dollarsarquee, bitcoin and enthusiasts have piled in to support him because after he left the white house, he became head of the digital currency initiative at mit's lab. so he's basically a cryptocurrency evangelist. if you look at all that has been andif 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: right. and if you google him, a lot of videos come up and he is espousing various matters when it comes to digital currencies. he is out there talking it up. josh: his campaign pitch could essentially double as a ted talk

on the benefits of blockchain 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, senator dianne feinstein and science -- and senator charles grassley, that appeared as if it would outlaw owning concealed cryptocurrency. there is a real thirst among sothere is 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 at this stage is the sheer volatility we have seen in bitcoin. and we are talking about really big names. they are well-known in this sector. has the sheer volatility impacted the support they are

providing him, or just made that support all the more necessary? josh: very much the latter. all of these candidates, and i list 10 or so in the story, have all maxed out to ford. they have given the federal maximum limit. $2700 to his general election and primary campaigns. what is interesting as a side point is that some of them have donated actual bitcoins. and there is a part in my piece about how the federal election commission doesn't know how to grapple with this. [laughter] carol: i bet. josh: it is not like dollars, it is something that has changed in value quite a bit. i think the bursting of the bitcoin bubble, though has added , urgency to the group of people who have got a lot of people wrapped up in this technology. and you know 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 price has plummeted since december and

caused a scare in some regulators who suddenly feel like a lot of retail investors , could get hurt by this, we don't really know what it is. we need to jump in and start issuing regulations, although it is 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 sec, whose chief jay clayton was described last week as washington's chief cryptocurrency skeptic. there is a real difference in opinion on what should be done so about cryptocurrency. at the same time, there is increasing urgency to do something about it as the price falls. carol: in the technology section, why every electric vehicle supplier should fear catl. julia: and we are not talking cows.

tell us about the city of ningde. known for fishing and farming, things are changing. explain. >> for the past seven years or so, it is small by chinese standards but 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 become the most dominant, capacity-wise, electric-vehicle battery maker in china. it is 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 the rest of the world with batteries? jeff: outside of the city proper, across from an existing headquarters, it takes a half hour to get across by shuttle bus or bmw powered by catl battery cells. julia: this is the sheer size of their facility.

its huge. jeff: across the way from that, on a landfilled month flats next they are at work on a $1.3 billion facility set to open in 2020. itself, it will be the number largest battery facility on -two earth, next to elon musk's giga factory rising in the desert of nevada. but combined with the company's other capacities, it will make it a company to be feared by anybody, elon included. carol: the company is catl. ok, so this is the company we are tell us about the background talking about, we are focusing on. tell us about the background of the company. i am always interested when it comes to a chinese company looking to be dominant globally. how much backing are they getting from the government, which has been on an initiative to really improve and grow chinese industries?

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

itself on the world stage, and they are unproven in other markets. that is a fair question that the analysts would tell you that catl is a few years behind the world leaders on this stuff, the panasonic's and lg's of the world. but given the resources behind this company and the incredible amount it is pouring into research and development, they are likely to catch up. julia: how much are they investing in r&d? jeff: it is about, at this as of point, our last financials, about 11% of total available cash. carol: about $100 million. that is a lot of money so they can create a better product. jeff: by contrast the typical , points ratio is 3%, 4%. julia: 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 trend. julia: this is "bloomberg businessweek." ♪ ♪

carol: welcome back to "bloomberg businessweek." i am carol massar. julia: i am julia chatterley. you can listen to us on the andyou can listen to us on the radio on sirius xm channel 119 and also on a.m. 1130 in new your, 106.1 in boston, 90.1 in -- 99.1 in washington, d.c., and a.m. 960 in the bay area. carol: and in london and asia on the bloomberg radio plus app. and the features section, -- in the features section, robinhood is a stock trading app that caters to millennials. julia: 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, basically 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. carol: sounds great. >> yes, it is what silicon valley did for music or for media or bunch of industries, they are trying to do it to financial services, which is a pretty interesting development. julia: who is they? >> robinhood are these two cofounders. they are ex-academic types. they both have masters degrees in math, one from stanford, one from ucla. what is sort of interesting and fun about this story is that they were hedge fund guys and they got kind of 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. start thisided to

thing, robin hood, to correct that. if year the name robin hood, stealing from the rich, giving to the poor. they are the stockbroker for the 99%, that is the sales pitch. and it has been very effective thus far. carol: how effective? >> 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. it is growing very quickly. andit is growing very quickly. julia: how do you invest, then? if we are talking to millennials, how do they go about investing with these guys or trading with these guys? carol: it is kind of tinder-esque. >> exactly. the first time i met them, they were pitching the fact they just got a website. julia: they were trading in the didn't have 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 basically swipe up to buy and the feeling is almost like you are watching a movie or you are swiping on tender or something that is part of the . and that is part of the appeal. over the last 10 years or so, we have learned that even tiny improvements in convenience can be disruptive. it is also, you could argue maybe problematic. because it is forcing people it , is causing people to think about investing as if they are dating on tinder, and this is real money we are talking about. carol: you mean it is too easy. julia: what is the average trade we are talking about? >> after 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 rouser.

>> the latest trend in fashion isn't vintage, it is archival, which is kind of a new buzzword that is coming out this year. it is when big fashion brands re-release old designs from their archives and sell them as new. so like, versailles g for example, sent a whole lot of old new vintage looks down the runway this year. julia: is it playing to that in some ways? >> the clothing retail business is an $18 million business. i did not realize it was so big. and now, more than $2 billion of that is trendy new startups, which are sending expensive vintage clothing online. this is stuff people are searching after. millennial thing because a lot of people are finding things that other people can't have, and it has 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. they are getting them in the purchase from them that way. carol: celebrities have often been bringing out old chanel on the red carpet. you see this trend. you see dbf doing it, them bringing back their original designs. who else is doing it? >> the wave was led by bags and jewelry. those were things that, before regular close were popular to wear in a vintage way they were , always being carried around. coach is doing this with their so bags, gap is doing it with clothing, ralph lauren is re-releasing a line that was popular during a wu tang video. julia: its a few -- it is a huge reinvention of themselves. that is, a lot of older products coming back to the market. >> they are bringing back old patterns, prints, they are re-releasing shoes that are 30 years old. julia: it is painful for some of these brands, trying to play to their strengths, but isn't this a tough retail environment? unfortunately if you cannot beat

them, you go with them. >> you look at j.crew and they have been struggling over the last years, and they are rereleasing their role- her's 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 and on businessweek.com. 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 for several years. he has now defected from the country, but we really get an inside look at how they operated. julia: and he was operating in china, but they are also in india, cambodia as well. and while he was very successful sending money back home, others weren't and their conditions were shocking.

carroll: pretty tough conditions. and you said it, it is all key about sending money home to north korea. julia: as far as sanctions are concerned, they do not apply here. plenty more bloomberg television coming up next. ♪

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