>> logged in to bloomberg businessweek. i'm carol massar. is a puzzle trade work, we are talking about the battle between u.s. and china. volkswagen, skin of an, using our power to fight it. >> builds on about the cost of becoming the first billion-dollar asset. we are talking about tiger woods. >> all of that is ahead on bloomberg businessweek. ♪ >> we are here with the editor

and chief of bloomberg businessweek joe weber. we have to start with remarks. this is my favorite story. it is a history lesson about the relationship between the u.s. and china and the role that the u.s. has made in developing the time we know today. >> we also try to look forward a little bit. i think this really is connecting dots. now, ita skirmish right could very well escalate into a trade war. there is as bigger conversation about what our relationship with china supposed to be. quite what is so interesting is that you go through the history and it is very much informing where we are and what is at stake. >> that gets to where we might go. not in mind, china was used that long ago and the west physically brought it online. as a result, it has made china pretty wealthy.

hello we are seeing from the trump administration is that they are trying to walk a little bit of that back. maybe they came along at our expense. that is where the tariffs are rooted in. what is our relationship going to be? are we going to be partners or is this more of an adversarial relationship? >> this is what the u.s. doesn't terms of its action, how president trump treats china going forward. this could lead to another cold war. >> could happen very quickly because of the stakes. the skirmish right now involves a tit-for-tat. if you put eyes are on that, we will put a car on this. as we do see some of these things evolve, it becomes a matter of whether or not it will ratchet up. i would go to distract you or is it going to become something

like a full on cold war? economics a lot about , the politics as well. while you are having these discussions around trade, you also have this geopolitical element, not the least of which was north korea where president jinping is there. >> what we try to do on businessweek is the intersection of all of this stuff. are all interconnected, you start pulling on one thread and it affects somewhere else. everything is connected. economics, this is why this issue is the must read. that, china is a very big about promoting its own interest. it has its own long-term plan and nothing seems to be able to remove them from that. >> that is why this collision is happening right now.

you have trumps make america great nationalist agenda. both of those things are intended to be long-term visions and i don't see any of those visions being anything that anyone will take a foot up the celebrator about -- optic celebrator about. the volkswagen story, three years since the emissions scandal. the cover is eye-popping with a car emerging from an explosion, what is happening in volkswagen today russian mark >> this is an incredible story. volkswagen almost brought the company down. this is a huge scandal that ended up costing them almost $15 billion in the u.s. alone. , they almostater turned a corner.

it is remarkable, that is why we made it to cover. >> it is a behemoth. it has a firm grip on being the world's number one automaker. this diesel problem has almost been contained and they are really proving that can be a force to be reckoned with with electric vehicles. they send it off toyota and firmly have a hold on this number one position. >> we have more on volkswagen from matthew campbell. >> volkswagen have used software to make around 11 million diesel powered cars look cleaner than they were. these cars would go into an emissions test scenario and start running in a different way from how they are running on the road. that meant these cars were

committing a lot more nitrogen oxide then they were supposed to. that contributed to the smog and respiratory problems and premature death, all the rest of it. this was one of the biggest scandals in the history of the auto industry. it was really bad. >> the cost alone, we are talking about billions of dollars in terms of litigation and cost to the company. 11 million vehicles were affected. >> this is an extranet amount of money. it does get worse than that. the cost for deepwater horizon and mexico are at about $65 billion now. both light still has a long way to go. >> a case study from a public , they saiderspective

this was a rogue element, a small of people were widening and widening. they really could not get ahead of it for a long time. >> this occurs at a large company, this message was that this was the work of a few bad actors, we will assess what occurred, punish those responsible and move on. modelsse, the number of believed to be effective kept on going. a lot of people in the investor community felt his explanations were in attic red, there had to have been more systemic than a few people within the company trying to alter cars performance. ceonded up claiming the martin winterkorn taking a use about top of the volkswagen value and shattering damage to the brand. damage that has amazingly now been repaired. robert muellerd

-- where is he now? what has he done with the company to stabilize it? >> this is selling lots and lots of cars. particularly in china and lots of other places, it is a company that is back on the front foot and the front foot is increasingly electric vehicles. robert mueller was brought in and a battlefield promotion. this has unveiled what is the most ambitious electric bill the program and the global auto industry. this was hybrid versions of every one of its cars by 2030. that is over 300 car models. that is a huge endeavor. ofy are spending tens

dollars of dollars on batteries and new production for electric be opposed. they are taking this extremely seriously. this is really the new volkswagen. >> i understand the amount of is thend time, this diesel brother. >> volkswagen is pushing very hard into ev's land. for now, many are not particularly profitable, batteries are too expensive but elon musk and others are looking to bring the cost curve under control and they're making some progress. in the interim, in the near-term, vw and the other german automakers need to sell diesel. the reason for that is that performars ashley rather well on carbon omission, not so well on nitrogen oxide and in europe which is

volkswagen most important market. carbon is what the regulators are interested in. they need to keep selling diesels even though diesel has a pretty terrible reputation at the moment. >> obviously, a lot of people did not think volkswagen could come back from this huge scandal they had. we really wanted the cover to get at the dramatic turn and we kind of played on this action movie trope of the fireball and the cards flying through it. it is very provocative because this points to a very dramatic chapter for this company, this very story company and also at a time where there were big existential questions about the auto industry. people are not thinking about both light and my now that i think this will definitely bring it back.

>> we have an idea for the future that plays with the idea of doing flower in a tailpipe. that gives it more of the electric car side of the story. this one really plays up the dramatic comebacks. u.k..next, we had to the this is bloomberg businessweek. ♪

♪ i am jasonol massar, kelly. you can find us at businessweek.com. >> this is all about this secretive group in the u.k. that is looking to derail the plans for praise it. >> i love that we are inside the room here. we will talk to matthew philips. >> this is the defector leader of this part.

they then meeting in secret four months. they're coming out of the woodwork and coming public with their campaign. time, they feel like they have a chance to stop this thing. the british are only now starting to realize what this is going to look like, what brings it will look like. by most accounts it will lower gdp. to reallyy suffered bad defeats. she called for the election and lost a lot of seats and when members of her own party turned against her, 11 members of the party went against her in a crucial vote in december. that's has up this make or break vote in october, it allowed vote on the get a contours of this residue that

she is able to negotiate with the eu. running just be her through policy. that change the game entirely. >> tell us about where he came from and what his role may be in these last few months up to october. >> i don't know that he likes this naked but he is known in some circles as the british obama. his father is nigerian and his mother has irish and british ancestry. he is a centrist in the tony blair sense of things. he is not a progressive leftist. nor is he a hard right tory. early, this was something he was pushing two

years ago as they were moving toward the brazen boat. he was squarely in the remaining cap. >> not just a group of guys and gals getting together saying if we did have another referendum and vote, these are guys -- this group is meeting with european leaders. eu officials are talking behind the scenes. >> they have emerged as this crucial back channel to european leaders all over the continent. their kind of privately and publicly the eu has to be very hard in their negotiations with theresa may. they can show any sort of willingness to capitulate. privately, they are very open to softening this. become the preferred back channel. they are going around to brussels and many with high-level negotiators. what they're getting is the

evolution clause, if theresa may suggests publicly her willingness to back down on some of these hard-line's she has put on what she needs out of a deal than the eu would work with her. has emerged as the preferred back channel to that. next talk to us about the timetable here. we know theresa may has been with eu officials and getting ready for a final brexit plan. u.k. lawmakers are getting ready to do a vote with eu officials . that is an important date. >> right, this is all in the about to october. the remainder centralized location. they are all in the same office not far from parliament in this high-rise, they are planning for a super aggressive campaign over the spring and summer to stop this from happening and to try to water down the steel.

it is all living up to this vote in october and they're going to try to pick up conservative members of parliament and force them into a situation that will really have them define their like:, whether that looks new referendum or calling for a working around the margins of the steel can soften a, it is unclear what this ultimately looks like. theresa may'smade job any easier, that is for sure. >> up next, warren buffett's strategy to attacking big deficit. this is bloomberg businessweek. ♪

♪ >> logo back to bloomberg businessweek. i'm jason kelly. you can listen to us on reddit on sirius xm channel 119 and on

am 11 three out in new york, while 61 in boston, 91 fm in washington dc and and 60 in the bay area. >> and in asia on the bloomberg radio plus app. session, we have peter talking about new ideas, after some old ideas about trade deficits and have to fight them. >> warren buffett talked about this. here is peter. have 4% unemployment, that is as low as it gets. it would seem that the trade deficits are less serious in the u.s.. has we have a president who made this one of his signature campaign issues. >> you have trade deficits and trade surpluses. look at the u.s., they have added trade deficit ongoing year after year. maybe it is worth taking a look at. >> it is worth paying attention

to, 100%. i am with the president on that top to bottom. the question is what you do. that is where the division comes. trump's approach is very much about tariffs and it is about calling out cheaters. that is the word uses again and again. problemind you have trade deficit, solution, get the cheaters. but i am saying is that is a lot more competent than that. there are cases where you can have no trade deficit with a country even though the country is cheating, let's take china for example, the trade deficit with china has come down quite a bit. the problems with china are very real. the said estimate intellectual property. this could be a jays and composition of trade with china. we will be sitting more more low value-added stuff. we would have a big problem even as ah it wouldn't appear

trade deficit problem, conversely you can have a trade deficit with a company even though it is behaving perfectly honestly. break the need to link is between cheating and deficits. so what would you propose? it is not me, it is what i'm doing -- i'm corralling a lot of ideas out there. warren buffett had an important one. yet, over a decade ago and people keep coming back to that idea. it is basically import certificates. if you want to import something, you need a piece of paper saying that you have exported something and if you have and it will number of import, export its advocates, you should have a trade balance. >> it is interesting, for the first time in a decade we're looking at global central banks tapping into currency.

>> a lot of people on wall street are making the case for the euro. >> the euro hasn't gotten a lot of love from central banks in the last decade. that is going to change. we talked with some foreign exchange strategist who talk legally with managers who are in charge of the allocation for reserved. it was like a tipping point may be this fear of trump starting a trade war with china. people give the euro another look. and theentioned trump public statement about the dollar have also been kind of confusing, how much did that play into the relative strength? has brokenstration with a long policy i'll always talking about a strong dollar, suggesting that a weaker dollar may be advantageous to

manufacturers and that is playing into the calculations as central bank. havenk what it is is there been a number of factors that underpinned an improvement in how the euro looks from the perspective of investors. that economy of europe is beginning to fire on all cylinders. that way it hasn't for a decade. that is allowing european central bank to start talking about winding down this quantitative easing program. that will lift yields because no central bank wants to be holding instruments that are not paying any interest rate. so that is also making bureau more attractive. >> in the immediate aftermath of brexit, people were not super excited about the prospects for

europe and now it seems to be gaining momentum. >> brings it was really a moment of reckoning because there was a lot of questions about whether and theopean experiment european union was going to survive. they were a series of crises, there was greg's it. had italy, portugal and spain with the debt crisis. there were these series of humiliations for the euro. the people is 20% which was in 2009. that was a decade after it was introduced. it was done to 20% at most recent meeting. the central guys are making decisions and that would

increase by 25% the allocation so, that is a big deal and it has repercussions were other currencies. >> the trade rhetoric has obviously played he's into this as well while the u.s. is taking a much more nationalistic and seemingly protectionist stance, europe is doing quite the opposite. it is reaching out in a new and different way. >> it is continuing to cut trade it's on trade with china over theased markedly last to a point where it was at the cost of this place in the u.s.. >> that moment must have ramifications. >> up next, can anthony nota bring his magic to his new startup?

this is bloomberg businessweek. ♪

♪ welcome back to bloomberg businessweek. we are talking about anthony noda. we are talking about his latest company. >> wall street, twitter and nested loans are also really excited to get into robert mercer. this is the guy who has backed political candidates, is a hedge fund billionaire and he has been a police officer in new mexico. >> we will take a look at the latest season. all of that ahead on bloomberg businessweek.

♪ >> we have back with the editor and chief of boomer business week, so many must reads in the magazine. i love the story about anthony noda. goldman to twitter to sophia, what is the story here? >> they argued with lending and with students, social finance. thatave student debt, keeps going up. guy whoounded by a exited under not so great circumstances. this is a disruptor and what it can go from not only managing -- helping people manage their debt

-- >> this element here is fascinating. he goes to silicon valley, he was to run a tech company. that was his number two job at twitter. theres a pretty good job but then he gets a top job which puts him right back in the competition with his old loss. we have heard a lot about this and they're really going to head -- go head-to-head. >> that is what it will get interesting. you have this guy in charge of social finance who has a really interesting user base. you have goldman which is doubling down on consumer lending with markets. it will be interesting to watch this space and see how it plays out. i think coming from twitter is an interesting advantage. they are really similar with that silicon valley space.

lacks the story talks about the marketing cost that sophia is spending to go after and get customers. this is the celebrations, all of this cost them a lot of money. >> it will put the business model in question. right now they're not putting things on the balance sheet which is ok. >> i am so glad that the story pointed that out. while sofi has this customer base, goldman sachs has the balance sheet. >> that will be the thing to watch, how nodo handles this balance sheet. if he figures that out, they could compete. thing that would test the strategy the most. >> who knew this was going on? asert mercer, well-known running the hedge fund, in the

political world, who knew he was off in law enforcement? >> many must reads. it was written by zach and zach has done a lot of reporting about robert mercer before. he was a really reclusive, almost billionaire. he became really famous for renaissance technologies. highly one of the most profitable hedge funds ever. he left recently. it became very noteworthy because of his support of president trump during the campaign. he also helped back right part, bennett and cambridge analytica. what is really interesting about that he also has a certain interest in guns and also, law enforcement.

that is how he ended up in new mexico. >> he told is a lot more about it, we talked to him here. >> mercer became a police in new in a tiny town mexico, a town of 433 people. for most of the past six years he has been serving as a reserve police officer in the town of lake arthur, new mexico. it appears to be from all indications a way for him and some people close to him to be able to carry a concealed weapon. >> there is a 2004 law, the law enforcement safety act which is designed to make sure that across the country, regardless of local law, any police officer , even if they are off duty and in many cases, even if they are retired have the right to carry

a concealed weapon at all times. in new york which has been strict gun laws, under the federal law it doesn't matter whether you have a license to carry in new york city. if you are a law enforcement officer, you can carry a weapon in new york even if you're off duty. enforcement law officer, it is nelly mr. mercer is in lake arthur, new mexico. he is in there every day, every week. >> not there every day and every week. it was difficult for us to determine how many hours of patrol work he did. the department requires its officers to remain in good ofnding to complete 96 hours patrol or other police officer work. that is like six days of double-shift. we weren't able to determine exactly how much but the officer downer said mercer showed up and

did his work. town is not alone, this has been something of a magnet for people with just this type of idea, right? ? correct >>. has created this reserve program that had as many as 150 men from all over the country, also from hundreds or thousands of miles away. minimal patrole requirements, at any time he would have one or two guys in --n, completely playing paying their own bills, their own room and board, supplying their own gear. he didn't have to go out on caused by himself, you have somebody. >> i drove round lake arthur, new mexico with cheap norwood and we talked about what was going on there.

for a galley mercer, one clue we have is to what the thinking behind becoming an officer was, , theymonths after mercer all join on the same day. the same kind of group sets up a nonprofit in georgia whose sole purpose is to advocate on behalf of the rights of police officers to carry concealed weapons. is givens there $400,000 in a two-year. to these two related organizations that they set up. >> you detail all of his involvement and we know he likes guns. there is nothing wrong with that. he has a warehouse out in queens, he has a bunker here, it sounds like you can go and see his gun collection. >> he bought a gun dealer that was one of the most impressive

collections of machine guns in the world. of machineany kind gun that has ever been there. they had a functioning copy there. for that and for research and also for training. it is very easy if you are special forces are more special forces commando to get training on any weapon on our side. it might be more difficult to really get to know weapons you might face in the field. have exists, they probably one. class up next, how spotify might be changing the way companies go public. this is bloomberg businessweek. ♪

♪

welcome back to bloomberg businessweek. i'm jason kelly. you can find us online at businessweek.com and on our mobile app. in the finance section, here is the pope of this market. she's admitted no one is going public. alex: the private funding cycle has changed so much. when you talk to people who are deep in the industry, they pointed 2013, 2014 and 2015 as when you saw a lot of cash from mutual funds, what we call the tour's investors coming to the ecosystem. we have all these people who are dealing with an environment of really low interest rates. they're looking to the tech companies to see this. >> how this spotify play into this whole discussion? >> spotify is doing something

very different to get public. is thatideal process they hire their advisors, they models,their valuation they said terms and go on a marketing roadshow. they go out and pitch investors and they have a valuation in mind and they judge, demand and set ipo price. spotify is giving most of that. most important, they're not doing an evaluation setting. sellad of an ipo where you shares to shareholders, the night before you start trading, there is no valuation set, this is the price that they will trade at and it will be based on a normal open ways the who wants to sell, who wants to buy and what price. >> that is intentional on spotify's part.

they have filed registration documents. not as much as you would get with a typical ipo filing but they did include past, private transaction valuations. meant this is they as guidance for investors in the public market to set valuation but it ranges from the beginning of 2017 to the first few months of 2018 from a low of about 6.3 billion to a high of 24 billion. good lord is what i would be saying. spotted by a south is a music streaming service that has a unique business model. not only are they asking investors to further throw their hat in the ring for this process but they're asking them to bet on a new type of business. >> the $2 trillion question, ramco, what are people saying about it? >> is still seems like they are looking at 2018 with a local listing first.

there have been reports from bloomberg and others saying that an international listing may happen, there are still questions around the exact timing and whether or not it will be a single venue or if it will do a dual listing and international listing to be determined at a later date. works this is a hundred billion dollars ipo, the company and the government is taking the valuation at 2 trillion. that would be the biggest factor over alibaba which raised 5 billion when it listed. nassar sat down with jonathan ferro. question,d the big the big existential question, the two chewing dollar question, when will the oil giant go public? i think there are lots of questions and media is what you see that.

there is a lot of demand for the listing of ramco in terms of performance, we go on the roadshow. how is our performance and , thee the highest producer most efficient, this is a great .ompany >> when i speak to people, they're not talking about when is will happen, they're not talking about if this will happen, perhaps feel ipo goes into the deep freeze and doesn't happen at all. >> this is a lot of work that is still ongoing, the company and government did all the work to make this january 2018. that is an indication that the ipo is ongoing endeavor stopped.

we should be as we always said, as a company for listing in the second half of 2018. ,e are doing a lot of work their committees from the government that overlook what we are doing. we are trying to make for the company is ready for listing. >> do have a set of accounts? is that done? for the whole company? >> note, the requirement for is what is required by the listing venues. this is all the necessary documents. quest the timing is the government, don't forget that this is a very complex process.

this is complexity, something that requires time. >> up next, becoming the first billion-dollar athlete cost tiger woods. quest get for the third season of showtime's land. ♪

♪ >> welcome back to bloomberg businessweek, i am carol massar. jason: you can listen to us on the radio on channel 119.

also on am leben 30 in new york. 1061 in boston, 91 fm in washington dc and a m naik 60 in the bay area. >> in is on the bloomberg radio plus. out, it isa new book all about the highs and lows of the comic tiger woods. >> this is the fascinating journey to what it really took to be the first billion-dollar athlete. here is chris. >> a new biography called tiger woods comes out this week and it really looks at his life from beginning to end and kind of that all thetoll amazing, incredible intensity of that happened to tiger woods, the toll it has taken on him personally and how we are all seeing him involved in the public eye. even his success has added an incredible amount of pressure on him and the book gives you a sense of sympathy for him that

you may not have had. >> this started at a very young age. this was with his dad and you wonder what that does to an individual that starts so young. >> the book talks about the stuff that we know about his dad and the amount of pressure he put on him. also it says how cutthroat his mother was and she said get on -- get out on the course and kill. really intense stuff. that shapes you and it really looks at that. >> it is the fascinating element woods,business of tiger the first nine dollars -- billion-dollar athlete. nike came in and got behind them in such a massive way. he really changed the trajectory of the game of golf in a lot of ways. he brought in a whole new generation of people to a sport that was starting to decline a little bit. it was so disillusioning with

his personal life came out. he was put on such a pedestal that it was most absurd. now he is coming into this come back and we're looking at him through different lenses, we see an imperfect vehicle. we see someone incredibly talented. >> a book like this tends to reveal the complicated relationship we has -- have as fans with athletes. it seems like there is no better example out there than tiger woods was put on such a pedestal and yet was taken down with such ferocity. >> during the worst of that. of time where the affairs were coming up, vanity fair put him on the cover looking like a son. it was bad, the press was horrible. he was implying that badly. that wasn't a bad time in his career.

it was interesting that when his personal i went into total turmoil, that was affecting him. >> we did beat him up when he was down but it was amazing that people are ready for him to come back. we think about viewership when it comes to golf matches, when he plays, people watch. >> if he is going in favor, it were rooting for him, they want to see that, they want to see what is happening. bloomberg.com, billions, season three. >> spoiler alert, we have a pretty. >> is the third season and what made billions so popular with so inside finance and outside is the fact that they were actually pretty sophisticated, the show's creators are pretty sophisticated in their depictions of how finance works. >> i was interviewing mark earlier, he was a consultant, he

shows up in the first episode, they really do go and spend time with actual practitioners and asked them was of questions about how this works, what you feel, it does ring true to a lot of people. >> now they have expanded that all the other ancillary aspect of being in finance, the restaurants, the art, there is robert motherwell, jasper johns, all of this is peppered throughout offices and apartments. they are also name checking all of these restaurants and places throughout new york that are not necessarily tour spots and aren't necessarily things that anyone outside of new york circles would understand. to governor sex and the city left off.

it was crazy. i said they could literally is the sex and the city line where new york is a character. >> what would be the magnolia bakery? christ makes a cameo that some people may have mixed reviews of. -- he makes a cameo that some people have mixed reviews of. , simply because people have gotten tired. these are long episodes, they are hour-long episodes. there is only so much man on man that can happen with the two main characters. one is a high powered hedge fund billionaire. paul giamatti is a u.s. attorney hell-bent on taking him down,

there is this grudge match that happens over and over again. in the third season they really step back and a lot of the ancillary characters sort of rise up and have their own storylines. it is really refreshing but also it threatens to be bogged down by all of the different pot that are now duking it out for privacy. >> bloomberg businessweek is available on stand right now. what is your must-read? role takes a look at the of the u.s., israel in making it the economic powerhouse it is today. >> i loved it because it named czechia bunch of u.s. presidents and talk about the political and economic levers from carter to reagan to trump. if ozma this,e as robert mercer, billionaire, hedge fund founder, philanthropists, political donor

, cap in new mexico. the deal is a prizewinner, you have to read it. >> more bloomberg television starts right now. ♪ retail.

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>> extent acquisition, we speak to the ceo of your next hesitates on the irish stock exchange. what does he make of this? brexit negotiations, as the one-year countdown to brexit begins, we look at what financial services coming spec. ceo snubbed you cap parliament and decides testify on capitol hill. the committee announces new privacy measures.