>> in this weeks's issue we talk about the wall between instagram and facebook. >> and walls between the u.s. and mexico. deutsche bank has a new seo but the same old problems. >> all this on "bloomberg businessweek." ♪ a couple of big european

companies, volkswagen was the global cover last week. the other one was deutsche bank. you covered this in the finance section. >> the deutsche bank story has been one of the wall street stories to kick around. it is a story of a company that tried to get really big. it was intended to be a european version of goldman sachs. ever since the financial crisis, it has been receiving. the latest news came out last weekend. it was about the board reconsidering its ceo. and potentially replacing john cryan, which happened. our story picked that up, taylor: they focused on the new ceo who has grown in the ranks. >> he is a homegrown guy.

it could not get more local than this. there is reporting about people internally. it is an interesting choice. deutsche bank has always been hamstrung on this need to have a german ceo, or someone who could speak german. it feels like there are boxes that have to be checked, and this guy checked all of them. maybe it wasn't the best, but it is the next step. carol: it is interesting. the company has gone through a lot. a revolving door. the question is, where does it go? the strategy which john cryan had initiated, and it will double down on it, it is going to be a more deutsche bank. they will look domestically and try to become the german bank. carol: there was a great

headline, more deutsche lesson bank. >> across the financial landscape, that is the take away that is happening. it is what the future of banking looks like. this version is especially boring. taylor: what can they learn from european lenders? which has about ubs focused on their wealth management unit. what is deutsche bank's strategy? all of these choices are strategy choices. where are we going to go? where can we find stability and return on investments that can stabilize our business going forward? deutsche bank has had acquisitions it has to wrestle with. it is its domestic market being its strongest place to grow from. that growth is small.

what is not small is instagram. we heard from mark zuckerberg on capitol hill this week. walk us through instagram. >> fascinating story. facebook, you have heard of it. instagram is another social network. one thing we thought was fascinating about this story, and why it is important to talk about, instagram is approaching a billion users globally. that whenhuge number instagram was purchased by facebook for $1 billion, which looks like a bargain, it had a fraction of that. zuckerberg did not view it as a competitor. reporting, itur is appeared in his eye. peer in his eye. controversy facebook is

surrounded with, this looks like the future. can instagram save facebook? carol: we have more on this story, a lot of details. >> you see an office that is a successful company. wall are dioramas on the that you can pose in, like a sunset theme and a spherical moon. one ofl like you are in the best in silicon valley. the thing you do not see is any sign of facebook, which is the company that owns they sprang, unbeknownst to a majority of users. >> i love this. you talk about how it is a five-minute must drive away. the are physically separate, and that seems to come through in the way employees are, and the different brands are branded. >> it is a totally different culture at instagram. facebook group to prominence by

trying to grow based on what users want. the data showed them what would be popular. they built it. whatever they could build to make facebook more popular and spending more time on, they did. instagram thinks about its product differently. the cto at instagram built the share button early on in the history and never launched it. even though sharing would have made instagram possibly more popular, things could go viral, they thought it would affect the experience in a way that was not what they wanted to create. an intimate artistic cultural environment. facebook has a move fast break things mentality, instagram is looking carefully

at what it adds, and trying not to ruin what they have got. carol: you write that the motto for instagram could be, do not ruin it. it is interesting, because if you go back to the early days when facebook first but instagram, they were more involved, correct? >> they were. instagram had none of the growth muscle that facebook had. the metrics that track how people use the app. why they are coming back, why they are deleting it, what causes them to share and comment more. all of these things that help facebook with its growth strategy and what is working, and fix it quickly, all tracked on it -- board date got from instagram. instagram had to think carefully about the data. there is a point in 2015 when instagram was losing its core audience in the united states,

the young people, that teams -- teens that make the app cool and popular. facebook noticed and said instagram had to do something about it. there is a little more involvement, even though the app is separate in the minds of consumers. carol: facebook is in the news big time. mark zuckerberg was made the cover model. the global story this week is on instagram. it is an important part of facebook. >> for the cover we were thinking about ways to tackle it. we have mark zuckerberg in congress testifying. thatnted to use things apply to this moving facebook story. managed to have capture the filter on the cover. different layers of the filters as we see the progression. >> one of the editors sat down and started to write funny,

playing off the various stages of the facebook story. i sat down and figured out what those look like. we start off with no filter. then selloff, regret, and apology. carol: i like the boldfaced type you have. is the big company that owns instagram, but instagram is a force to be reckoned with with a billion users. a different aspect going on, and an idea that instagram can steer around the problems that facebook has. taylor: which filter was the hardest to make? all came naturally. i wanted the last one to be weird. we turned up the volume to 12 on that one. carol: great story, great cover. everyone should check it out. up next, which country may suffer the most in a trade war. taylor: we talk trade in an

exclusive interview with christine lagarde. carol: this is "bloomberg businessweek." ♪

♪ welcome back to "bloomberg businessweek." taylor: you can find us online at is this week.com. carol: opening the magazine this week, talking about the looming threat of a trade war between u.s. and china. the loss of unintended consequences, here is peter. >> the law of unintended consequences is a phrase we think we had forever but was coined in 1936. it says what you think it says. you do one thing, and you think you will get this result, but instead you get this result. the question is if the tariffs trump wants to impose would be like that. taylor: what countries would win

and what countries would lose in the situation we are looking at? >> it looks like both are going to lose. trade wars are not good things to have. i should back up. if we actually do have a trade war. trump says he does not want one, and his advisers say the same thing. that putting out the tariffs is a way to force china to the it isning table, and actually true. the trump team has a good point, china has not been following a lot of the rules. something has to be done. the question is, what? s,e previous president republican and democrat alike, have tried to use the institutions, the wto, he promised as a candidate, he is following through to do something more dramatic.

he is taking a deck of cards and throwing them in the air, and we will see where they fall. carol: we are laughing, but it is not funny. we get feedback about what they might do, and companies are nervous about the implications for them. >> xi jinping, the president of tuesday and he said some stuff which is mildly encouraging. he portrayed it as being in practices,with past but more in the town of opening up. the trump people are looking at this and saying, we got what we wanted. it worked. on thiss still early one. we know that china has a long resentmenta sense of about foreign domination, going back to before the communist revolution. that sits deep with them.

they want to be treated as equals. xi jinping is not want to feel like he is being dictated to by the american president. trump's blustered could potentially backfire. he also mentioned the auto sector, opening that up. what sectors are we looking at? about tech, i.t., which are getting hit the worst? you mention that, and soybeans are the biggest one. all the districts in the united states, congressional districts -- that have the most sweeping elevators are trump districts. he is hitting the heart of his political base. not he is, but china is in retaliation. the u.s. is proposing, and china is aware of that, they know what they are doing, so it will be interesting to see if this

splinters trump's base. taylor: the magazine highlighted bloombergs exclusive interview with christine lagarde. carol: great interview. she talked about protectionism. >> we have secure that growth. we cannot let it be wasted. years to get out of the financial crisis, and we are not at this stage where average growth around the world is what it was pre-financial crisis. let us not rock that boat of growth. let us make sure we have the engine of investment, more of it at the moment, that is good. confidence is key. trade, which has been leading growth recently around the world , continue to actually work for all. every thing is perfect? no. there are issues that need to be fixed. they need to be fixed collectively, globally, because

our economies are interconnected. ,he supply chain is organized and that is the message now. the most important thing is to do more trade than less trade. there is an entire sector that is crippled, the service sector, including e-commerce in particular. the world is becoming more digital. we cannot stay with the barriers of the past. >> what you make of the risk? commerce secretary said there would be no trade deal. i spoke to the finance minister, she said the timing is unfortunate because the asian economy is building on the momentum. >> i do not think we should pass judgment on what is going to happen in the next few weeks and

months. what is clear is that there is a momentum of threat, counter threat, dialogue opening. that is what we should be encouraging. increasing trade, removing barriers, encouraging a level playing field to which everybody should contribute. it has to be done collectively. exceptional done by measures. it has to be collective. taylor: up next, why so many russian oligarchs: the their home. carol: and venezuela's new golddiggers. taylor: this is "bloomberg businessweek." ♪

♪ taylor: welcome back to "bloomberg businessweek." carol: you can also listen to us

on radio on sirius 119. 106 in boston. and in london. and in asia on the radio plus app. moving over to the politics section, london is starting to worry about it reputation of being home to russian oligarchs. carol: and as a playground for billionaires. have riseny tensions substantially since last month on it russiangent spy and his daughter. since then, you have repercussions. you have dozens of russian diplomat's who have been expelled by quite a lot of countries, more than 25 led by the united kingdom.

russia responded in kind. on the other side, you got the announcement of new u.s. sanctions against russia which happened on friday. it is not directly linked to the spy, but more ex- to do with russian meddling in the u.s. election. this was seen as a bad development in moscow. it targeted a number of sominent billionaires, getting to london, the situation in the u.k. is that it has been a big center for russian money for many years. particular since the year 2000 went to came to power. -- when putin came to power. it was seen as a safe destination, and because they were not asking too many

questions. taylor: it has been a safe destination for them read why isn't the u.k. doing more to tighten up the control? >> the u.k., london is one of the worlds biggest financial centers. the regulation has been quite light. not beens they have putting too many checks on this money. a lot of it comes in from offshore companies. it is not always possible to identify the owners. essentially, there is a big industry in london of financial consultants, lawyers, which are making a lot of money from this. reason not main enough has been done to make sure it is all clean money. carol: you talk about the different russian oligarchs living in the u.k. they raised their families

there, they love the schools. but now they are reaching -- some of them do not have damaging reputations, and they are reaching out to lawyers to show they are clean. fore spoke to the lawyer amongssian billionaires, the top 20 richest, who commissioned audits from the auditing companies in the world to go to their taxes and income for the last 15 years to prove their money is clean. the level of concern is very high. this is before friday's announcement of the latest sanctions. i want to talk a little about that because the fact that was targeted who is a businessman who has a good reputation in europe and the u.s., and is not seen as someone close to the kremlin, that he

got included on that list is a big shock. after that people thought it can happen to anyone. an economic section, we go to venezuela. gave up thero economy to the military. arear reporter went to an near the orinoco river that is the center of the gold-mining trade. a militarizedis zone. it was taken over by gangs at one point after the government nationalized the gold-mining industry, and pushed it away for investors. i did not have the companies to take over gold-mining, so what happened is it became an area of wildcatters. in 2016, they said this is crazy, we are losing these resources. we are not collecting royalties

from these miners. he turned the area over to the military. the military has brought the gangs under its control, and the miners toko. life is doubly worse, because they answer to the gangs and the military. there is a lot of right taking at every level, and the gangs still operate, they have not been completely pushed out area people are getting caught in the crossfire between these two groups. has beenesident maduro giving more of the economy to the military. talk about what he is doing and why. chaveze his mentor hugo was a paratrooper, maduro does not come from the military. he has through various strategies cemented loyalty within the ranks. one of the ways he has done that parts ofting -- ceding

the economy to the armed forces. the ports are a great opportunity for bribe taking. all the goods coming in and out of the country. also, the distribution of food is controlled by the armed forces. 14 of 32 cabinet posts are held by former military officers. the ranks of the national oil company are filled with members of the armed forces. carol: he needs this, because he does not have support from the broader population. hases, popular support eroded badly. there is no doubt maduro will get reelected barring some unprecedented violence. he needsact is that the support of the military to ensure he stays in office once he wins. carol: up next, the truth about

the border wall between united states and mexico. taylor: burning man stepped out of the desert and into the art gallery. carol: this is "bloomberg businessweek." ♪

♪ welcome back to taylor: "bloomberg businessweek." carol: we got the u.k. bookmaker making its big that on america. taylor: all of this ahead on "bloomberg businessweek." ♪ carol: we're back with the editor in chief, the finance

section, tell us about the long-term stock exchange. >> it has been bubbling for a while as an idea. looking at the stock exchange, what is there a different way that rewarded long-term investors. so much of what we talk about is the market has been rigged in favor of short-termism. was put into motion, and it turns out the long-term stock exchange takes a really long time. taylor: what is it long-term? you are still reporting quarterly, but how do you reward? >> to be clear, this remains a theory. he would like it to become something, but there is no timetable. the idea is one that instead of being judged on daily fluctuations, it would reward

someone -- i have been investing with you for five plus years, let's change the horizon of what investments argued over. give the shareholder who sticks around a bigger voice. carol: talk about the tricky part of this. >> one thing that has happened, the question is, do investors really care about that? it is no longer looking a ceo in the eye and saying, i trust this guy. i trust his management decisions. it is less about that then, show us the numbers. but the numbers speak. all this quantitative investing that has happened, let's look at the data. taylor: giving wall street something they might not know they want or not want. >> it is an open question. his thesis is one that the marketplace should have a chance to decide.

carol: it also takes executive compensation, longer investing. >> all of it, it opens up everything. what happens though, it brings to market, a stock exchange is a lot of paperwork. iex is the closest thing we have to idea, it took a long time. nasdaq, the new york stock exchange held it up for a long time before it came out. reis hase things eric done is to partner with ies. that has given -- partner with iex. it is still just a theory. taylor: sticking with the tech theme, we talk about the concrete wall, but the story in the features section we talk about electronic wall on the border with mexico. >> the wall being president

we all favorite, which are familiar with, he wants to build a wall. it turns out there is a version of a wall in place that is a virtual one. it has been there for a long time. it has never been successful. one thing that has happened, because you could not get the funding for a concrete wall, one thing that could happen is a massive rush of money to upgrade the technology in the virtual wall that is already there. that is where the story picks up. that a hodgepodge quilt sometimes has worked ok, and most of the time it has not. it is about to have a massive inflow of investment. carol: a lot of money has been spent. turns out the government has been trying to use surveillance on the border for half a century. it goes back to the vietnam war era. there is currently and has been

program after program trying to survey a the border, almost 2000 miles along the mexico border using sensors, drums, surveillance towers, greater, camera, you name it. the government has tried it. it spent billions of dollars we do not hear about, because it is largely invisible. carol: we are talking about five decades they have been working on this, how much money have a committed to a virtual wall? >> billions of dollars over the past half-century. the current budget included another $400 million for technology. carol: has it been effective? >> generally, no. generally, the government has struggled to get the surveillance technologies to work well. there are iteration, programs that have been affected, or do work well, but

the department of homeland security does not have a good way of tracking it. they have a database when they are supposed to say when they use technology in different apprehensions, and a database is not accurate. they admit this. they have times where they will say this program helped in these 500 apprehensions in texas, when that program is not implemented in texas at all. it has been a struggle for the government to implement it, and make it all come together. in theory, it should work. put up some radar and have some drones, and they can talk to each other. about we constantly talk the advancements in technology. where are the tech companies, and what are they doing? they have to be salivating to get this money to help build out this virtual wall. >> a lot of the people who work on the virtual wall come from the defense contracting, which

in many ways have to become like tech companies. so much of defense spending is moving toward electronic warfare. highestame time, one's and lowest profile focus on the border wall, an effort by the founder of oculus who made the are a thing, he has funding from thiel, but-- peter he is secretive about what is happening. there is not much information about what they are actually doing. themselves.ing they are working on it. they would bring a more consumer product type of background, whereas a lot of this comes from defense contractor backgrounds. the interfaces are not as slick. things like that.

one thing you have to contend with on the border is the harshness and a variety of the border. surveillance, you have regimes and the mountains, you have insects who eat through electronics. you have the wind gusts 30 miles per hour. that is different than making a app fora -- making an an iphone. carol: up next, betting on sports betting in america. and the effort to keep the scandal plagued scott pruitt head of the epa. taylor: this is "bloomberg businessweek." ♪

♪ taylor: welcome back to "bloomberg businessweek." carol: you can also find us online at this this week.com. taylor: and on our mobile app.

british bookmaker playing the odds. carol: that is the opportunity of a lifetime and eventually big business. time now, almost 20 years, sports gambling in america has been restricted to las vegas. the only place that has legalized sports books in the casinos across the strip. new jersey 45 years has been trying desperately to allow its locations, it's casinos and racetracks to allow legalized sports gambling. they have tried in many courts and have lost everyone. ayer at the supreme court right now. we are days away from a decision for whether new jersey is allowed to offer sports gambling. that could open the floodgates across the country. carol: it is not just about new jersey, but across the united states. >> new jersey is the first doing

it, but there are a number of states passing laws that if new jersey wins, there will be many more after that. --ol: william hill is a name your listeners will know. it is the oldest bookmaker. carol: they are huge. >> yes, massive overseas. they did not have a u.s. presence until a few years ago. a factor into this story because they are going to be the first mover in new jersey. a number of years ago they cut a deal with the racetrack in new jersey. they paid a million dollars for exclusive rights to be the sports betting provider. as new jersey went through this process, since they will be the first state, william hill positioned himself to be in the first date. taylor: they are playing the long game here.

they are coming in as the underdog, banking on this ruling to open up the door. >> exactly, and right now it looks like a pretty savvy business play. it is it -- it is a good deal. the odds are good. they made it clear if they cut this deal now, they would have got more money. because william hill was there are or six years ago, they got sweetheart terms. if the supreme court rules next monday that new jersey wins, you could see gambling under the william hill banner in a matter of days or weeks. carol: is there competition to these guys? >> yes, everybody will descend on this. the casinos and properties in atlantic city, mgm, for example, they will move quickly. you have everything from the daily fantasy companies to other casinos, other racetracks in the

state, to anybody really. we wrote a story, verizon is looking into it when it is more nationwide, they will get involved. they have the mobile network, directv, etc.. carol: there is a lot of money at stake. what is the estimate? >> the rough estimate for the isunt of money from the u.s. $60 billion per year. they are not going to bring that all over to the regulated market. this reasonable to think could be a $10 billion industry in a couple of years after states pushed their way through it. ,arol: and the politics section one story we are following, scott pruitt is still the head of the epa. taylor: still, because of connections he have with business leaders. >> scott pruitt is the former attorney general of oklahoma.

he sued the epa that he now runs. he is seen as the most effective trump cabinet official when it comes to putting in place the pro-business deregulation agenda. he has gotten into a lot of trouble. he was controversial from the start, one because of his politics, and he discredits a lot of climate science. things that seem untoward about his excessive security detail, the fact he put booth in000 soundproof his office that he was on insisting on flying first class everywhere. then we seem to cross a line at the end of march, we started getting details about this deal ithad to lease a bedroom and -- in an apartment from the wife of a lobbyist. that seemed to kick off a push

to oust prewitt. we look at how the business community and activists rallied quickly from washington to texas to oklahoma, to save their guy. carol: who was coming out to support him at this point? >> all kinds. you have lobbyists in washington, conservative think , one got it started with an email bass -- email blast. you have business executives, oil and gas executives. the billionaire fracking legend from oklahoma. you have tea party core , who have politicians written op-ed's. you have them calling the president last week. it seemed to have worked, because saturday night we got a

tweet from the president that says, the security detail is expensive, the deal for the apartment was inbounds with market prices, so good job, scott. it looked like it worked. next, one museum is taking burning man seriously. taylor: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." taylor: you can listen to us on the radio, sirius xm 119. 106.1 in boston. in the bay area. carol: and in asia on the bloomberg radio app.

in the focus on section, a fun story, we look at a startup museum that is working with the world's top galleries. taylor: while helping them connect with first-time visitors. hack started out as a hobby that turned into a business. it is a company that organizes quirky and irreverent tours of museums. in the process of doing that, with some of the leading art museums, it started to realize these guys know something about getting younger people into the museums. as with everything else, we want millennials. millennials might not be interested in the same things in art museums that people two generations ago were. they want to take selfies or find the one object that is cool or irreverent. museum hack started bringing in these crowds. use the m's were like, can you help us tailor certain things?

it is a tour company and consulting firm. carol: talk about some of the tour's they come up with. ass bitches, bad is the name of one of them where they will look at a collection and find women in paintings, or women artists who were ahead of their time. the other one i am thinking of, on highlights. this in the you see last decade or more, to try to make a museum more accessible, they have created highlights of the museum to read you can go into that one room, and you know what you need to know to go to a cocktail party. again, eating in, and figuring out what we have in the collection, what is unusual or weird, what has a backstory, is there drama to the artist. younger folks going in, they are

appealing to all ages, they like this idea that it will be an event. it will be an adventure. you will learn something, but you will be like, wow. everyone can see the highlights, but i know about this one. taylor: tell us about the target audiences. who go severalne times a year, but getting those who never go in the door. >> that is the experience of the founder. freelancer who has worked for us before, and he had been talking about something else. in the process he learned about this business. he just did not like museums. that might seem strange to you or me, because you think who does not love art? him, so he cold to thought there must be other people like me, who are not drawn to these big rooms with stuff hanging in them.

they are targeting people who have not gone in. logically, that audience will be a younger audience. although, you find exceptions. when they talk about who they are trying to reach, they will not limited to millennials. the types of tours they are doing, the way it is friendly, exploring it in a different way, is something that is especially appealing. carol: did he start the company, he went out on a date -- out on a date, and she tailored the museum to where she would take him to a room, i love this painting, this is why i love it. here is a detailed nobody knows about. that is what she did on the date. he said, wow, this can translate to something. taylor: speaking of museums, we are talking about burning man.

they have the fans and critics. carol: the smithsonian in washington dc is showcasing art from the festival. >> the challenge with re-creating burning man is that burning man is a 70,000 person festival that occurs in the middle of nowhere in the desert. it is a city built from nothing. week, people are festive for a week. then it is all taken out. i went last year. it is the craziest thing you will ever see. it defies description. in the desert where the people are, in the encampments there is all this art. it is gigantic. you are biking around and you see a gothic cathedral. you see huge stones hanging from a structure that you can swing on. all this stuff is cool, but no one else gets to see it. the smithsonian felt this was a big part of american culture. that see if we can rebuild it on

the mall. not aboutis re-creating the experience of being at burning man, it is enjoying the art that is there. >> yes. the curator has realized this. you cannot re-create what happens in the desert. it is too crazy. you can re-create interacting with the art. you can climb into it. you can make it do stuff. you can push buttons and it will react to you. eke as of that, it is fun for kids. it is a cool interactive exhibit. the smithsonian has been successful where other people have tried and failed. >> you cannot re-create --ething in a spontaneous that is not something that can be artificially redone. feelingdoes evoke the of being with the art. it is impressive. it is fun area of our art writer

went down, and some say the art at burning man is not serious has it is in the desert and crazy. but a lot of it is successful art. it has things to say. it does work in a museum context. it is a little cheesy. it is not meant to not be cheesy. if you see a train in the desert has a movie theater, that is a crazy thing to see. you see it in a museum, and it feels gimmicky and does not work. most of the art is fun and interesting. it is not stuff that would be in moma. taylor: my biggest burning question, at burning man at the end they burn it down. what is happening after the smithsonian? where do they take it? >> a lot of the stuff is a smaller version of the original

big art. a lot of the art that is wooden is burned. the smaller replica of the woman in the desert, it is in the gallery in d.c.. it looks like a disco ball. is like any other art, it will be in galleries and travel. they are not burning the stuff. taylor: "bloomberg businessweek ," is available on newsstands now. what was your top story? carol: the global story on instagram. facebook was in the news this week. what i loved about this story, is instagram facebook's greatest hope? instagram is a powerful company on its own. it has a billion users. maybe it is fast forward for facebook. how about your favorite? taylor: it has to be the russian

oligarch story. it was eye-opening for me. more bloomberg television starts now. ♪ ♪ retail.

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♪ chang, and this is "the best of bloomberg technology," where we bring you the best interviews from this week in tech. this week, mark zuckerberg wraps up his grilling before congress. the biggest takeaways from those who hold the power in washington. plus, a bloomberg exquisite. our conversation with anthony noto on his plans to rewrite the rules in the online loan refinance errors, and revamp the culture. and it's the big apple versus silicon valley. the new york texting,