it's a new kind of network designed to save you money. click, call, or visit a store today. carol: welcome to "bloomberg businessweek." jason: we are here at bloomberg headquarters in new york. carol: general motors signing a winning strategy in china. jason: i don't think many people have heard of it outside of china. carol: exactly. jason: first we get to a really interesting story about a deal that died. a $6 billion bill, and a cast of

characters. carol: i bunch of companies, on-again, off-again deal. >> he bought his shares in xerox in 2016. xerox had gotten into the outsourcing business by buying a company that been started by another colorful billionaire who will be a character in our tale. he bought his shares thinking there was an opportunity, that basically these companies it should split. they did, and the standalone xerox is basically left as a pure play copy maker. before we get too deep into the who carol icahn is? >> he has made a name for himself by taking over these

companies. sometimes that involves selling off assets, sometimes that involves taking over the companies, sometimes it requires demanding stock buybacks. he is very successful and willing to be very confrontational. whenhappened here is that your ago he had a dinner with the new ceo of xerox. he basically told the new ceo that he thought he was not very good at his job and that he needed to sell the company or he would be fired. that kicks off this year of intrigue and bumbling the ends up with xerox selling itself to this long-time strategic partner, fujifilm in japan, and unseunsettling itself -- lling itself. carol: who was in charge, though? it feels like you had the ceo

thinking one thing, the board thinking one thing. >> one of the most remarkable things about this process is that the new ceo is fired by the board midway through the talks. the board pretty quickly decides he is not the man for the job and starts looking for his placement. they tell him that he is basically being dismissed, but then he basically pleads to be able to continue these negotiations, saying that without him there is no deal. at that point he has been talking with fujifilm about a potential deal? >> right. jason: he has set with another colorful figure, went to japan, and they have hatched this scheme that to some extent he sees as a lifeline for him. >> right. it is reasonable to assume that he saw this as some sort of reprieve. if he could get a good deal that

maybe he could keep his job. the lawsuit that was brought strongly argues that basically to jacobson it no longer mattered if it was a good deal or bad deal. they're just had to be a deal. teamnt over to fujifilm's and started negotiating on their behalf to get a deal that they would like rather than a dual that would make sense for xerox shareholders. carol: why higher oil prices do not sting the way that they used to. this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." jason: you can also find us online at businessweek.com.

jason: and on normal -- carol: and on our mobile app. we have to keep an i on oil prices. confusing, all of the movement, who is winning, who is losing, what is at stake, and where. carol: we got more from our editor. >> the imf is forecasting global growth to pick up to 3.9%. that is one of the factors driving demand, in fact. importantly, the global economy is not as energy intensive as it was in 2008, which was the first time where we get $100 oil. that is a big difference. industry in the developing world, less energy intensive industries, more energy choices in the last decade. more solar, more biofuels, or renewables. carol: let's talk about china. they are the world's largest importer of oil.

this can potentially hit them harder than others. >> it will certainly have an effect on inflation. that is the first place we usually see effects. already forecasters have anticipated the inflation in china was going to pick up to something like 3.2% this year, i think it was 1.7 last year. we may see that number go higher than that. developing countries have voice te meet -- ways to mu that affects on consumption. in developing countries there are subsidies and other ways that government can mute the effect. carol: i thought it was interesting in terms of europe, because we already see growth moderating there. >> europe is definitely vulnerable, because we see the pace of industrial production and growth slowing. jason: while you talk about how it may hurt the importers, it

may hurt producers as well. >> in some countries. russia has a mechanism where it has to suck a weight oil revenue at a certain price. the government will not get as big of a windfall that they can spend. arabia is going to -- saudi arabia is definitely going to benefit. although they have been in the middle of an austerity program. this will be a temptation and we will see how the government navigate that. jason: that is a really interesting point, given all of the noise that the crown prince has made about this diversification, sort of more political openness. >> right. people have had to except in the public sector, salary cuts -- ac cept in the public sector, salary cuts. jason: i feel like not a day

goes by when we are not talking about venezuela. obviously the elections last weekend. it is incredibly important from an oil perspective. >> it has been more than a year since that country has been on the margins -- that that country has been on the margins in the oil market. production has fallen to a 30 year low. it can go lower given that the trump administration has threatened oil embargo. phillips is maneuvering to get a judgment in its favor and forced -- enforc ed. it was one of the several companies expropriated by the regime. settlement and have been trying to take oil stored in caribbean terminals, witty to be processed -- waiting to be processed.

carol: what about the united states pulling out of iran nuclear deal? how does that impact stuff? and verys a wildcard big producer. we know that the oil embargo that preceded the nuclear deal was quite successful in holding down around exports -- iran's exports. what remains to be seen is when sanctions come back, as the trump administration has threatened they will, whether china will abide by that effort. we think they will not. india is the number two buyer nian oil. oil -- ira what will they do? jason: oil prices are going to factor into potential inflation, which factors into decision-making on the fed.

how do you see that playing out, especially as it relates to inflation? >> it is it going -- it is going to be more difficult asian countries. in the u.s. it is not as big. what is going on in the u.s. is that this trend is most interesting for the u.s. because in the span of the last decade the u.s. is almost at the tipping point of becoming a net exporter of oil. that means that the country used to get hurt by higher oil prices. now it is on the margin and it will benefit. jason: the shale revolution. >> that's right. the fed already has a measure that strips out energy prices, and food prices sometimes added noise to inflation. we don't anticipate that the feds schedule a tightening will be affected just yet -- of

tightening will be affected just yet, but in other countries for sure. jason: we have an interesting story about millennials. hi home prices, tough to find jobs. carol: the birth rate is the lowest in a decade. >> the birth rate in the u.s. fell again in 2017 back down to its lowest levels since the 1970's. this is a surprise, because the birth rate fell back in the financial crisis of 2007, 2008, 2009. it was widely expected that it would recover along with the economy. now we have the unemployment rate down to 3.9%, the second longest expansion in history, and yet the birthrate is continuing to go down. why? that is what the story is about.

i have tried to argue that it is because the general health of the economy is very good, but that masks problems with the young people, who of course are the ones who should be having the baby's. carol: are we blaming the millennials again? >> they are actually the victim in this. where it shows up is the employment of the -- employment a population ratio -- of population ratio. people are staying in school longer. 20-24 age group and the 25-29 age group, the employment to population ratio is nearly two percentage points down from where it wasn't 2007 -- was in 2007. jason: you also point out that

when people do not move out on their own and move in with their parents after college, it is less likely to start a family. a little awkward. >> it is very awkward. that was one of the most surprising statistics. these are real numbers, not just anecdotal data. real, he is practicing empirical journalism. [laughter] carol: all right. bow down. >> the figures from the census bureau show that the ratio of young people who live with their parents -- not only is it not rebounded -- has it not gone back down the way it was expected to, it is actually at a record high. the record is going back to 1960.

if you are living in the bedroom that you grew up in, you're probably not in the mood to start a family. carol: the other thing that i think is important is the amount of student debt that people have. i can see people hold off until they feel they can do it the way that they want to do it, or can afford to. >> this is a chain of events starting with states cutting back on financing for schools. most people go to public colleges that are supported by states. when they cut back, the burden fell on students. tuition went up, students cannot afford it, they borrowed money. according to the new york federal reserve bank, the amount of student loan debt carried by young people under age 30 is up 75% going back to 2007, which was the last business cycle peak. that is a lot. >> you all -- jason: you also argue that the longer it is not rebound, the less likely it is to. >> right. think about it.

if you are a 25-year-old woman who says she is not quite ready to have a baby, fine. you can have it when you're 30. to 35, 40,ushing up your window shrinking. older ageates for the up.ps, 35-39, 40-44, are they are not enough to compensate for the decline in the younger ages. carol: so do we become -- i mean, we see the numbers in china and what that has met for their workforce -- meant for their workforce. jason: a policy they are thinking about changing. >> right. the situation is nowhere near as severe as china's. they had a strict one child policy that they again to ease up. they are talking about getting rid of it altogether. china has a huge problem mounting in the coming years.

they are going to be aging while they are still a fairly middle income to poor country. germany has an interesting story. they have extremely low fertility, but over the past years thanks in part to immigration, and also thanks in part to more child friendly policies, their birth rate is the highest 20 years -- in 20 years. carol: is that what the u.s. should do? i think about immigration and how it might potentially help the situation. >> it does to some degree. it helps the size of the population overall. what sense to happen is that families that come from other countries that tend to have higher fertility rates than the u.s. tend to converge on the u.s. rate. when of the biggest declines in the birth rate is among hispanics. they came over here in their babies, butand had

of they are having -- nativeborn americans. jason: general motors find its stride with china's middle class. this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." carol: you can also find us on radio on sirius xm channel 119 and in new york, boston, washington, d.c., and the bay area. jason: and also in london and asia on the bloomberg radio plus app.

this brand, a big hit for gm. sales have increased tenfold since 2016. carol: it is all due to an increasing middle class in china. >> we have a rapidly growing brand. they make small cars and make b's which isger np like a minivan over there. it has grown 10 times since 2013. it is up to about one million units per year. buick has kind of stalled out and that is really their big brand. so has it chevrolet -- has chevrolet. the brands that are growing our cadillac.- are in china, that center part of the market were buick competes against brand like volkswagen and others are is still growth. this is china after all, but most of the growth that you will see next year will come on the

lower end and higher and -- end. the fact that gm has a domestic brand, a chinese brand. it is a good place for gm to beat with the middle class growing up. the brand itself is starting to get better prices and put out more expensive vehicles. this is a nice story for gm. it is just that these are not hugely profitable vehicles because they are small and pretty cheap. carol: that's what i thought was interesting. aojun,ou talk about b this is a $6,000 a car that they are selling. baojun started out in 2010 selling the small, cheap cars. the first one was a small hatchback that sells for $6,000. a full-size selling

suv that goes for about 10,000 or $11,000. they have the seven passenger van that sells close to $20,000. the vehicles are getting more expensive, and from a profit standpoint, the other part about this is that they make them in somewhere that is about a two hour flight from beijing. the supply chain is cheaper there. the vehicles of still not the same margins as you get on say a buick suv, or a cadillac, but the president of the company described as a solidly profitable business for them. they expect to see a lot more growth. a company called lmc automotive's sees the chinese market growing in the next five years. i the rest of them will be on the luxury end where cadillac

is. gm is in the right place to compete for the growth. carol: this week one of the biggest global stories is political uncertainty in italy increasing volatility in global markets. jason: that's right. we went out looking for the best voices. mixnine lacqua had a exclusive -- an exclusive interview. >> i think the selloff is not justified. we are in a situation right now where the fundamentals of italy are very good. the economy is growing at a good pace, the corporate's positive, and the consumers are positive as well. of course there is political uncertainty, but i think the ceo -- the idea of italy leaving the eurozone are overdone. we should go back to reality. italy will not leave the eurozone. we need to look at the good

fundamentals of the country. francine: how much is your exposure to italian sovereign debt? and are you changing any of the exposure? >> exposure to italian sovereign ,ebt is around 42 billion euros which is less than our total capital. has lessexposure that than a three-year duration, so it is short-term exposure. we are very comfortable with it. francine: is there anything that politicians can do? is there anything that bankers can do to appease the markets right now? >> i think it is important that we pass the proper message to the market, that the current situation in italy is actually stable. the economy is growing very well . every corporate giant that i see --ls me that they are not

they have got better quarters than they have had for the past 11 years. has of the crisis in italy been turned on the situation is actually very good. italian companies are exporting at a rate that is higher than other countries. they are gaining market shares. in italy, the retail clients are consuming very well as well. when you look at the fundamentals, there is no reason to be worried. carol: up next, an indonesian mobile is that trump deals m gul learns that trumps deals come with -- strings. jason: this is "bloomberg businessweek."

♪ jason: welcome back to "bloomberg businessweek." carol: we are going to talk about u.s. sanctions and why they may have reached their limit. jason: also, we dig into indonesia and president trump's partner there. carol: i love this story. this is a man that is similar to president trump in many ways, and you would have thought that

working together would have been a lot of fun, but maybe not. >> in 2015, just as trump was starting his presidential bid, he was still doing business with billionaires around the globe. one of them was this indonesian partner of his. he decided to do two developments with trump. branded hotels and a, one south of jakarta, and another in bali, overlooking an agent hindu temple -- ancient hindu temple. both of those developments paid trump as much as $10.5 million between 2015-2017 according to trumps financial disclosures. withhe signed this a deal trump he thought he was signing a deal with just trump the is this man -- the businessman. that situation has

changed since then and complicated situation in indonesia. carol: let's talk about those complications, because you are right, now it is president trump. talk about the complications that exist for him now. in a 2016 he brought couple of chinese state-owned companies to help with the resort. first of all, the resort is not just a trump golf course and a hotel, and a clubhouse, but he is building a mini city there with a theme park, and a couple of other hotels. he brought in a chinese state-owned construction company to begin the construction and do some of the infrastructure. at the same time, he signed a letter of intent with a chinese financial institution to provide about 400 million worth of credit guarantees. he later in october 2016, as the presidential race heats up, he traveled to china and met with

bank of china officials didn't that financing going -- to get that financing going. now it looks uncomfortable for president trump to still be profiting from that deal he did in indonesia, that is benefiting -- although not directly, indirectly chinese state-owned companies. that people are criticizing in violationng of a clause in the constitution rs government officials from accepting gifts are benefiting in any way from their governments. jason: his role as a businessman and investor, but also as political figure as well. >> right. the interesting thing about him s a political party behind him. he has built his own political party in indonesia.

it is the world's most populous muslim majority country. he has his own party and made a failed attempt to run as he buys presidential candidate in the indonesian elections of 2014. after trump won, he started making was about him becoming president of indonesia just like trump could. i think that complicated his situation and is standing within indonesia. he was backing political opponents of the current then aian president, and few months after that he ended up facing a series of allegations that he was involved in tax fraud a company that he once owned, and he sent threatening text messages to a prosecutor, and he was restricted from traveling for a while as those cases ruled on.

.- rolled on he came out and said he would the president's bid. he has now been formally jacoi.d it has certainly helped his standing in indonesia by backing the current leadership. carol: up next, a story about an off the books operation that may have helped put trump in the white house. jason: and signs that the global economy may not be boston around by the u.s. forever -- bossed around by the u.s. forever. carol: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." carol: you can also find us online at businessweek.com. jason: and on our mobile app. online, an investigation into steve bannon and a guy that he hired for the trump campaign, a black activist named bruce carter. carol: the idea was to persuade voters to vote for trump or sit out the election. campaign finance laws are pretty strict about these things. >> bruce carter was an african-american businessman who gets very excited very early , and starts sanders

to do a lot of activism among the african-american community to try and get them to come out and vote. e's challenge of hillary clinton fades, he begins to connect with the trump campaign in a series of interesting ways. he ends up going on the road and doing a lot of outreach for donald trump to the african-american community. layers and back layers, it tells an interesting tale of how the trump campaign worked. he was basically recruited by a breitbart reporter who at first ned interest in interviewing him, but then started talking about coming over to trump, and how trump could do a lot for urban communities. he connects with steve bannon,

who by this time his running trump's campaign. he coordinates with him on what places to reach out to the african-american community. in their analysis, it was great if you could get a black voter who would normally vote for a democrat to vote for trump, but it was almost as good if you could get them to stay home and not vote for hillary clinton. campaign ofbecame a voter suppression to try to convince the black communities just not to vote -- support hillary clinton. jason: i am glad you mentioned that. that was a fastening -- fascinating piece of the story. if you could get them not to vote at all, it is at least plus one, and if you get them to vote for trump, it is plus two. it helped to turn the election, right? >> absolutely. it is one of the untold stories of the election.

if you look at a handful of states like florida, north carolina, and pennsylvania, all of which trump won by slim margins, the african-american community plays a really important role, because it did not turn out in the same levels that it didn't 2008 and 2012. that essentially was a math problem that the campaign was really aware of. they knew that if -- in order to win, they not only had to create , but theyferent map had to get blacks not to come out in the same way that they differ obama -- did for obama. carol: you also talk about campaign finance. this is a case that may be looked at, in terms of what bruce carter did, and whether or not there were violations. >> it is a look exactly at how ad hoc the trump campaign was in

the way that it was operating. and how it really did not care much about what the federal election laws set. there is a basic tenet of federal election law that if you are campaigning you cannot coordinate your activities with independent groups that are funded in very different ways. in this case, we go through emails and other documents, we are able to show that there was a very close coordination between carter's efforts and the trump campaign through been in effectively -- steve bannon effectively, but also to other forces -- through other forces. all of the money that was going to carter's campaign was a coordinated contribution. no one paid attention to the election laws, the limits, and the fact that individuals could only donate very limited amounts under that scheme. they did not really care.

we talked to an election expert who said that look, this is basically the way that trump does business. they did not really care what the laws of said. a look at u.s. sanctions power. jason: or the lack of sanctions power. >> we wanted to look at the past 15 years, the increased use of sanctions as a political and economic tool to get what we wanted over the past 15 years. you really see it ratcheting up after 9/11 for a way to go after terrorists. , and thegs us to today news that the president is going to pull out of the around nuclear deal -- iran deal. we thought it was useful to look of increasedera sanctions and look at whether they were still the best tool to use to get what we want out of the world, and whether they were losing any of their power in the

way that allies react to them, and the way the rest of the world reacts to them. particularly, the use of the dollar as the currency in the world. jason: let's go back one step briefly. you mentioned that 9/11 really ushered in this era of much stronger, much more frequent sanctions -- financial sanctions. what did we do before? >> [laughter] countries.e invaded we worked with our allies. it was particularly calibrated as it were to go after hezbollah, or countries that were harboring terrorists, and to cut some of these off the grid networks of terrorists, make them even more off the grid. it was pretty useful. it isolated them even more. i mean, that was a problem that had been percolating for years

and years, but really came to , and wasafter 9/11 something that the treasury department really built an entire unit around. carol: right. that is the point, right? it is pretty effective. you have the u.s. currency is kind of the global currency. it is the global currency. you have so much of the global financial system working its way through the u.s. system. does the united states not still have that leverage? >> we still do, but it is not preordained that it will be forever so. this depends on two key ingredients. the fact that our allies are going to go with us on this, and that the entire global financial system will use the dollar as a reserve currency. we are starting to see both of those start to wane a little bit. we see a lot of sniping of europe about the u.s. pulling deal, and then

we see china basically doing a lot to build up its currency, and build up some of its ability to become -- maybe not a o ne-to-one competitor with the dollar, but to become more of a reserve currency. jason: on the topic of european views of this, this is about to come to a head in a very -- a couple of very specific ways, correct? there are the pipelines and the cross-border payment system. this could really come to a head very quickly. >> when we look at what we have an, it is ir different from what we all went in and 2012, 2013. by we i mean the european allies and the u.s. it cut its banks offer from the

swiss cross-border bank system which is the international standardized way that bank transactions processed. from that, them off that was a huge blow to the economy. it meant that they cannot export their oil and get paid in dollars. it made life miserable for them. now because we are not joined by the europeans, the russians, and the chinese, that remains. even though the trump administration is talking tough about these being the strongest sanctions ever imposed on iran, they are not going to have nearly the punch that they had several years ago. we will introduce you to the best lab track racer in america. carol: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." listen to usn also on the radio on sirius xm york,l 119, in new boston, washington, d.c., and the bay area. carol: and in london and in asia app.e bloomberg radio plus jason: we caught up with our bloomberg editor-in-chief. earol: we're talking booz and copy. -- coffee. >> there is this other thing that people have thrown away for years as trash. turns out the husk is turning g big business.

seven dollars a pound for this stuff. that this little accent people are using because as this flavor. carol: hibiscus. >> papaya, green apple. these little nuances that coffee heads have always associated with coffee, the has has some of those -- husk had some of those characteristics. it is a beverage that can complement the copy or stand on its own -- coffee or stand on its own. it is going mainstream. this is what the coffee growers always through the. carol: there are some folks that think it could be a fad. we just do not know yet. >> the economics of this is actually the best part of the story. when trash becomes more valuable than the thing that you're growing. jason: they are getting their

drink on in a different way, in a different -- different way and it will bite technology -- enabled by technology. >> the cocktail story is about how when you go into a bar, we don't actually know that much about your behavior, what you order and what you do not order. appsare starting to back that chart to give you an incentive to share who you are and what you're drinking. there is an application that if you share your name, gender, you know address, you can friedrichs -- you get free drinks. jason: i would imagine that is catching on with the kids these days. carol: it is also catching on with some beverage companies. >> allows consumer behavior to be monitored in a new way where maybe we can figure out if there

are new cocktail trends, new liquor trends that a company like them might be able to create new products, or interact with customers in a new way. carol: i had to write it down, because there is competition. there is not just one application. >> no. one of the things that is interesting about this is that there are already new models. one of them is free and another is subscription based. maybe there is another model about how you interact with bars . maybe the bar could get disrupted, but that might be where we are going here. carol: we have got a story about a woman who might be the best bike racer in america. >> she is from pennsylvania, 27 years old, five feet, and that is interesting, because she can barely touch the ground when she is on a bicycle. she has been doing very well in races, and so i went down and

spent time with her. she has grown up flat track racing and is emerging as someone to watch. >> you watched her, right? what issue like -- is she like? >> very nervy. she is a person of few words, but not because she is shy. she is very deliberate when she speaks. she is not flashy at all, you have to watch for her, but she is so nervy. she will find a little spot to get in front of people, and over the course of the race you see her kind of quietly work her way to the front. by the end of the race she is usually in second or third, very far up. jason: how did you find her in the first place? >> to be honest, social media. i ride motorcycles and am

friends with a lot of people who are interested in flat track, and her name kept coming up. people out in texas, ohio, california at these evening during tracks. it is very americana, very cool. people are out there, drinking beer. her name kept coming up. it is unexpected. usually she is only woman in the race, sometimes there is another woman, but usually it is a field tournament and her -- 20 guys and her. >> and she is winning >> she is in -- she is winning? >> she is in fifth place for points and had the fastest lap of anyone the entire day. -- us about this jason: tell us about this. you ride motorcycles. >> an instructor let me ride

with him around texas motor speedway. he let me ride multiple laps with him. i sat in front of him like a toddler and had my hands on the handlebars. he told me to hold onto the handlebars, don't do anything else. helmets,full gear on, the suit and a reading -- everything. carol: how fast did you go? >> maybe 60 miles per hour. it is enough to give you a feel for the track, and it is really interesting. you can feel the variation in the dirt as a go around the track, how sticky it is, how wet it is, how deep. it is really exciting. carol: bloomberg businessweek is available on newsstands now. jason: and on businessweek.com and our mobile app. carol: i enjoyed spending time with our editor matthew philips

and the use of sanctions by the united states. it could be a powerful tool, but maybe not if you have europe and china pushing back. we kind of talked about the shift in global power. jason: that's right. it is very much in the news on a week we're talking about north korea, tariffs. i love a great deal saga. this xerox and fujifilm deal, a lot has happened and a lot may still happen. more bloomberg television starts now. ♪ >> 45% of the s&p 500 members. ♪

emily: i'm emily chang and this is "best of bloomberg technology." we bring you all of top interviews from this week in tech. coming up, amazon held its annual shareholderer meeting. we're on the ground in seattle. the price of bitcoin remains well off its december highs and regulatory concerns have slowed down i.c.o.'s. that is the crypto phase out of steam. why google may