♪ carol: welcome to "bloomberg businessweek." i am carol massar. jason: i am jason kelly. carol: as donald trump criticizes the u.s. central bank again, here help paul volcker dealt with presidential pressure. jason: tom barrack went all in for donald trump's campaign but now he has been shut out of the white house.

carol: the investigation into the death of a saudi arabia journalist continues to stir up international outrage. the crisis has gone beyond the single incident, now impacting the political order. the senior reporter for europe and middle east wrote about it. he joined us from london to talk about it. >> he was the president of turkey, a country that has more journalists in jail than any other, which articulated this. it was not as one might have expected, the president of the united states and the white house making this kind of statement about the "washington post" columnist that was killed in what is still unclear but rather grim circumstances. carol: what are people saying about that flip of the role, the u.s. speaking up for human rights and then to have turkey having so many journalists in jail and they are leading the conversation? >> there are all sorts of

reasons why president erdogan would want to do this. it helps him to dispel some of the anger that has been turned at him by western countries, liberal countries and liberal governments about his treatment of journalists. he has obtained leverage in a rivalry he has with saudi arabia. more broadly, it is symbolic of a way in which there are expectations of who does what in the middle east has begun to change. jason: this is largely about the personal relationship between it -- this administration in the united states and the crown prince. if that ruler, if that leadership were to change, how much might that affect the u.s. outlook to saudi arabia?

>> s mohammad bin salman was to be pushed aside, which is highly unlikely, but if he was, you would still have the king in place, his father. there is no particular reason to believe that he would try to jeopardize this relationship. it might well change and it might well become more fragile or conflicted. to really jettison it would be difficult, because both sides consider iran to be the main problem in the region. russia is allied with iran and syria. there are other issues, such as the saudi military. it is heavily based on american and european airpower. carol: things change very slowly in the middle east. business relationships do not come undone that easily.

has much really changed despite the headlines? >> there are risks here. everyone is walking on eggshells. there are political risks. those kinds of things, once they begin, they may take a long time but they can complicate life for all sides for a long time to come. u.s. should be responding to the crisis in saudi arabia, certainly an issue for the upcoming mid terms. carol: with only a week to go before the midterms, there are a host of hot button topics. we talked with josh green in d.c. josh: earlier on in the late summer, it looked like there would be a big wave that put the senate and play. the strategists i have been talking to in the last week or so say that the republicans may pick up a couple of seats. the real ballgame is the house of representatives. if democrats can eke out a 27

seat gain, they can take control and have subpoena power. it will change the entire nation of washington and the trump presidency. however, as tends to happen when the election gets closer, partisans are returning to their corners. republicans are consolidating around republican candidates and democrats are consolidating around democrat candidates. the blue wave race looks tighter. carol: is it the rallies? what are you looking for, for a better indication of what the outcome will be? josh: i am looking at polling averages. polling averages overall tends -- tend to be fairly accurate. that was true in 2015 as well with trump. most polls show hilary clinton winning. she won the popular vote by 3 million. as we all know, that does not get you anything in the

presidential race. you have to win the electoral college. race, yousidential have to get 50% plus one. there are tight races in suburban areas that voted for hillary clinton, but have a republican representative, or higher education areas that have trended democrat that might have a republican representative these are the seats democrats , are looking to win back a majority in the house. these races are very close. jason: help us understand the this.ent's role in all josh: trump is trying to motivate republican voters to turn out november 6. you guys may remember, i got leaked a poll conducted by the rnc in early september that was like a four alarm siren saying, we are in big trouble because our voters -- meaning republican voters -- do not believe publicans are at risk of losing

and may not turn out to vote. one of the reasons they believe that is because donald trump at his rallies was talking about the likelihood of what he called a red wave, that republicans would hold onto their margins in congress and might even expand them. no party strategist believed that was true. the message got to the white house that you need to stop talking about this and instead find a way to mobilize , and energize republican voters. that is something trump is good at. jason: so many political stories, all of them with huge stakes for global business. carol: we talked about this with joel weber. joel: there's a presidential election on sunday in brazil, which everybody is watching. it is supposed to be a landslide for bolsonaro. this would be a major shift for one of the continent's great population centers. brazil is huge.

we are probably going to see a shift to the right. jason: coming back to the u.s., tom barrack has been around the global finance industry around , the middle east for much of his career, and very much an insider in the trump world. carol: or is he? masterpiece.ory, a barrack was a big reason trump got a lot of wall street interest. he helped put trump into an interesting position. that was why also at and ogg duration, that whole celebration , that wholeion celebration barrack was in charge of that. things seemed to have gone awry. there was this huge company that suffered ever since he put all of his weight behind trump. jason: one of the interesting roles he has played is middleman

between the trump administration all of the middle east's interests, economic and political. saudi arabia continues to dominate headlines. joel: geopolitical elements of this, it almost has a biblical level of intrigue and we are continuing to watch that evolve. what is interesting was that tom barrack played a role because he was the man in the middle east for trump for a long time. this peels back another layer to what is happening in the middle east. carol: the cover story this week, truly a murder mystery, and a great in-depth reporting of looking at this couple that was well-known in the toronto community. joel: the shermans. barry sherman was the founder of a drug empire, became a billionaire. he and his wife were a power

couple and where philanthropists they were found strangled in their house last december. no one knows who did it or why, but everyone has a theory. matt campbell did this masterful tale of basically trying to figure out the different characters and all of the theories. carol: still ahead, president trump ramps up the pressure on jay powell this week. carol: -- jason: a look at tom barrack, one of the first on wall street to truly back president trump's presidency. carol: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i am carol massar. jason: i am jason kennedy. join us every day on the radio from 2:00 p.m. to 5:00 p.m. wall street time, and listen to work -- listen to our podcast. carol: you can find us online

at businessweek.com and our mobile app. inon: tom barrack went all and was the first on wall street to back trump back in 2016. fundraising dinners, he was everywhere. carol: the extent of his devotion went way beyond that, and came at a bit of a price. caleb this is on the blockade of : qatar in the summer of last year. tom's longest standing business partners in the gulf region were the qataris. the trump support of the roddyand emma roddy -- m -- emrati blockade of qatar totally blindsided him, and these were not in the interests of his friends. it was a total flip of u.s. policy in the region where qatar has been a long-standing u.s. ally. jason: qatar has been involved in almost every major deal he

has done. caleb >> miramax, property in : italy that they did together. it always follows the same pattern. they jointly buy it. later on, the qataris buy it outright, normally for a very healthy profit. it was a good relationship for him to have. now the qataris are on the outs with the white house. introduce trump to the saudis and emiratis prior to the presidency. his relationship with the trump organization has put them on edge. with jared kushner, when it comes to saudi arabia? him to thentroduced crown prince of saudi arabia, and the love connection was made and tom has not been involved since. if he is looking to communicate

to investors in the gulf he is plugged in, he has not been able to communicate that in any serious way. carol: he is a friend of trump's but is not necessarily benefiting. his company colony capital is , having problems? caleb quite a few. fund isony distressed their core debt series. they only raised half their $2.5 billion target. tom decides to enter into a merger with northstar. there is really no way to put it other than it was an absolute disaster. a lot of the negotiations were trying to figure out what northstar was worth. tom was not around for because he was doing the campaign, or the inaugural committee. carol: he called it like being a wedding planner, i believe. caleb: yes. shares of the combined firm

dropped 60% during the trump presidency. we have been experiencing today's volatility and this weekend's volatility. notwithstanding, a bull market. jason: i have to ask you about his connection to paul manafort and rick gates, who are at the center of the special counsel investigation. we are told tom barrack was questioned by mueller's team. what is the role the best you can tell? caleb: tom and manafort are friends. a higher associate of manafort's helped tom manage his appearance on television for the trump campaign. that is the sort of favor tom does often. they call it friends of tom at colony. after gates left the campaign, he briefly worked as a

consultant for colony. you see these constant touches with these guys who are now in a lot of legal trouble but there , are no implications this has reflected poorly on tom. absolute must read on one of the most influential people in global markets over the past 100 years paul volcker. , carol: and why companies cannot afford to fire workers, but instead are retraining. jason: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." i am jason kelly. carol: i am carol massar. you can also listen to us on the radio. a.m. 960 in the bay area and in london on dab digital,

and on the bloomberg business app. carol: president trump blasts the central bank for the intention to keep raising rates. trump says "he may be regrets" regrets" appointing jay powell. jason: but he is hardly the first fed chair to feel the heat from the white house. paul volker's new memo opens a window into how past presidents try to impose their will on the fed. carol: we talked to christine harper. christine: volker instilled for this idea of serving the presidency, he worked with six presidents, obama, nick's income what reagan. he has seen us so much. he is living history. jason: specifically about the federal reserve, the excerpts go right to the heart of that on the -- at times uneasy relationship between the federal reserve and the white house. experienced.he

christine: one of the stories we excerpt it was about him attending a meeting between treasury secretary henry failure martin, famous for calling the fed's job is to take away the punchbowl before the party gets started. he witnessed johnson trying to influence the fed to prevent them from raising rates. he describes that in pretty vivid detail. of aso excerpt an example meeting he went to when he was then federal reserve chairman himself in the 1980's. he had been reappointed by reagan, after carter originally appointed him. he had been

1984 was an election year and it was an election -- and he had a never described before experience. carol: let's describe it, because you say it does not happen in the oval office, it happens in the library. walk us through. christine: what he remembers is being asked to see the president, not in the oval office, which he thought unusual. he wondered why he was being summoned to this library. his memory was that he just saw two people reagan and baker, , then chief of staff jim baker. he remembers reagan seeming a little bit uncomfortable. reagan had been a big supporter of the fed and good about not criticizing, even though they had quite a tough time with the economy because of the high interest rates he was using to squeeze inflation out. now, it's an election year. volcker is brought there. reagan does not say a word. only baker speaks.

he recounts in the book he saw baker say, the president is ordering you not to raise interest rates. he did not know what to say. he had seen johnson, who had no trouble twisting arms. even he had not gone that far. that, you talk about poker had no plans and a way to raise rates so now he is in a bit of a predicament. christine: it was not just an election year. you had one of the biggest banks in the country was collapsing at that point, continental illinois. there were all kinds of problems in the money markets. they went from a restrictive monetary policy to worrying more about keeping the financial institution on its feet. he was not considering raising interest rates. he didn't know what to say in this meeting. he found himself saying, i better not tell anybody. carol: bring this back to today. i am curious what paul volcker had to say about the current

president. is very outspoken. christine: not good. the thing he likes to remind me, and other people about, the president has no say over the fed. it's congress. when volcker was fed chairman, he was unpopular in pockets of congress. there was one democratic senator was calling for his impeachment all the time. constantly submitting regulation to impeach him. he had the broad support of the country. when he was renominated by reagan, he won confirmation by 84-16. the 16 were like the far left and far right. the center of the country believed in what he was doing. so he had that power. he was considered the second most powerful man in the country after reagan, probably to the consternation of some other politicians at the time.

jason: when unemployment was high, companies could afford to fire workers who lacked the necessary skills and replace them with fresh hires when unemployment was high. carol: but with unemployment at a new with more than 7 million unfilled jobs that's impossible. ,we got some input from peter coy. peter: companies have trained employees for centuries. apprenticeships, journeyman. it was on a decline according to the bureau of labor statistics data. in 2009, data showed a pretty steep decline. one of the reasons is that companies were afraid. they put all this money and time into people and they would just be plucked by someone else. today, the evidence is that there has been an uptick in trading, not huge, but it is on and up tens -- an uptrend.

carol: how come? is it such a tight labor market? peter: as unhappy as they are about the possibility of someone free riding on them and poaching their people, they have no alternative but to provide some of their own training. jason: what does it look like on the ground from what you can tell? what are companies doing that is working when they put these lands in place? peter: the big theme is experiential learning. a lot of people are not good at classroom kind of education and they learn better when they do stuff this idea of an , apprenticeship. it is not just entry-level work. it is on up. it's rotations. bloomberg has that. you rotate through various jobs and gain a wide variety of skills. it can also be harnessing computer assisted learning. there is a little bit, there is

sometimes a bit of a classroom aspect that can be done in a computer assisted method. carol: i feel like there has been this conversation going on, speaking with heads of universities about kids graduating today and do they have the right skills for the workforce. who's responsibility is it to enter the workforce successfully? is it up to the university, or the employer? peter: there is constantly a clash over that. companies complain, and it is true, by the way, that employees are coming to them unprepared. according to a survey by the countries millenials , in the united states were 15th of 22nd in literacy and tied for the bottom in numeracy. in preparation for technology rich environments, problem solving. jason: coming up a true crime , story centered on the unsolved

murder of an unconventional billionaire and his wife. carol: this cover story may have you scratching your head. this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." carol: still ahead, if you thought luxury air travel was a thing of the past, first class is making a comeback. jason: plus, alibaba's attempt to keep its lead in china's cloud market with chips. carol: let's get to our cover story.

digs deeper into the unsolved murder of a billionaire. jason: he and his wife were strangled in their toronto home last year. no one knows who did it or why. matt: this was the biggest story in the country by a mile. there was nothing to compare it to in terms of the unexplained murder of two of the most prominent people in the country. in their home together. it is just inconceivable. they had a public memorial service a week later. had about 6000 people at it, including prime minister trudeau. these were two people at the center of public life. the reaction to their deaths reflected that. carol: the police initially thought it was a suicide? is that correct? >> the theory that was leaked

the first 24in hours by police was that this was potentially a murder-suicide, that barry had murdered his wife and killed himself. that is something that immediately made his adult children upset. they pushed back very hard against that notion. they hired a high profile criminal lawyer to help them put together a private investigation. that investigation began looking into the forensic details of the scene, the evidence that could be gleaned from the place they here they died, to try to refute that it could not have been a murder-suicide.

the toronto police stated publicly they agreed with that after a month. they agreed they were killed and targeted. jason: you start to do some reporting and you dig into who this guy was. he made his money in generic pharmaceuticals, a fairly sharp elbowed way to make a fortune. tell us about his business past, and maybe some of the roads that that took you down. barry was an incredibly successful pharmaceutical salesman. it's a fairly aggressive business, a fairly zero-sum business.

you don't make a lot of friends if you succeed. if you succeed as a generics company, you are taking away revenue and market share from the pfizers and bristols of the world. he was a tough operator. very litigious. but, very good to his employees. a lot of people stayed with him for a long time. barry's story departs from what you might expect of his someone of his biography and level of wealth. for a long time, going back 20 or 30 years, he entered into side businesses with a quite incredible cast of characters. a canadian magazine described it as the cast of a coen brothers film. a mix of convicted fraudsters, people who would later be convicted of fraud, strange investments, strange businesses that never worked out, often ending up in court with barry sherman demanding his money

back, claiming he'd been deceived or defrauded in some way. it happens again and again. his colleagues found this very alarming. but, he kept on doing it until the end of his life. it was a quirk of this very wealthy man. was hishe money, it money, and that was what he wanted to do with a portion of his money. jason: and you spent some time with a family member when you went back to toronto. tell us about the dispute. matt: there's a dispute regarding the acquisition of a company barry bought and operated. he bought it from the estate of an uncle who had suddenly died. the children of that uncle maintained he concealed an agreement that would have allowed them to purchase 20% of that company.

they argued in lawsuits they should be entitled to a billion one billion canadian dollars. these legal arguments were consistently dismissed. the cousins lost a few times. however, this is a very raw discussion for them and the most is veryn of the cousins angry with his late cousin. he believes the police were wrong to discard the theory of a murder suicide. he believes barry was responsible. carol: do we know what happened? , and i'm we don't

not sure we ever will. a newspaper that has been trying to force police to show progress on the investigation has been unsuccessful. it has been silent. there is dna evidence, people can come forward many years later, but the longer it goes, it does not help the odds. jason: a compelling story, told and written with a lot of passion and insight. we looked to our creative director to come up with a cover to illustrate this mystery. >> we wanted something that would get you into it, pull you into the mystery of it. the art side was playing with the editorial and making sure the words were right. once we had that line, we wanted to create something with a pot lot of tension. we got this really nice red

background. it kind of pulls you into the story and gets you reading. ♪

carol: welcome back to "bloomberg businessweek." "bloomberg us for businessweek" every day from 2:00 p.m. to 5:00 p.m. wall street time. carol: you can also find us online and on the mobile app. we have a story that talks about first class air travel this week

. in the magazine. it's around those long haul routes. jason: but different cities than it was in the golden age of air travel. carol: they definitely set the tone and standards when it comes to first class air travel. first class air travel is making a comeback. jason: many airlines cut back on seats in thepricey wake of the financial crisis, but demand is on the upswing. our editor joins us from berlin. david: first class is back. after the financial crisis, it started in 1999, when ba introduced the lie-flat seat. all of a sudden, it was like, do

i really want to pay twice as much to get a better wine list and extra legroom? most said no. companies are saying, you are flying in business. the airlines started ripping out there first class seats. r first-class seats. there has been a dramatic decline over the last decade or so. now, they're saying, you've gone too far. there's a lot of rich people with money to spend. jason: this is being led in part by some of the big middle eastern brands and asian brands. david: emirates has showers in the first class. several of them have private cabins, almost like a train compartment. some of them have fixed walls. you are isolated in what looks like a bedroom. carol: what does it cost a

customer to get a first-class seat on a flight? how does it compare to coach? what are the mathematics of what makes first-class work? david: experts say as a rule, if you payaking, $200 for coach, multiply that you will pay $600 for business first-class, multiply that times ten for what 10 for what it costs. a factor of twelve, broadly speaking, over coach for first class, and double for business. each first seat only takes up the space of five economy seats. you are getting twelve times as much money for only five times

as much space. in business, the math works out , too, assuminga they can fill those seats with paying passengers. carol: chinese internet companies are starting to make their own semiconductors. jason: what is new in the restaurant business, thanks to uber. ♪

jason: welcome back to "bloomberg businessweek." carol: you can also listen to us on the radio on siriux xm, channel 119. a.m. 1130 in new york, 106.1 in boston, 99.1 f.m. in washington, d.c. jason: and a.m. 960 in the bay area. as well as in london on dab digital, and the bloomberg business app. the solution section this week takes us into the cloud. some of the world's biggest companies are battling for dominance in this exploding technology frontier.

amazon, microsoft, and ibm are seeing growth and cloud services. chinese firms led by alibaba are carving an innovative path to compete into the market. >> you have these big tech companies that are already using huge amounts of computing power. they want to control the whole hardware stack. which means developing chips. china is really hot on the idea of artificial intelligence. this is a policy that starts with the government going down to these giant tech companies, including alibaba. jason: what are they going to use this for come ultimately? ultimately?for, >> china thinks there are potential military advantages and economic ones. for alibaba, there's this idea

that you are going to be able to walk on to the subways and a camera will scan your face and take the money out of your alibaba account. no token, no metro card, no nothing. it is just facial recognition. they are developing these chips to do that. carol: you need super high-tech , sophisticated chips to be able to do this. max: intel and nvdia are dominating this. you need them both for ai. even with this new effort from alibaba, you will still need the chips. but, if alibaba is successful, in the short-term, it means they will not need to buy as many intel and nvidia chips. alibaba wants to cut the u.s. semiconductor companies out altogether.

carol: intel and nvidia, watch out? max: watch out. carol: how does donald trump play into all of this? max: the u.s. government got huawei andh zte. zte was not able to buy american components. zte and every chinese company is dependent on american modems to make cell phones and connect to the internet. mark writes 75% of the semiconductors are coming from outside the country. so without a domestic chip , industry, china will be totally dependent on the united states. this is a long-term effort to reduce its dependence on america. jason: you do start to think about the relationship a consumer has with a company like alibaba. part of the reason they were doing this is because it will come right out of your alipay

account. max: you would need to have the app on your phone. the chinese consumer is using a chinese app, chinese payment platform, run on chinese hardware. this government driving a futuristic vision of the world is going to create a bottom value and make these chinese -- create a lot of value and make these chinese tech giants even stronger. jason: one company is looking to prevent election meddling with the midterms coming in just over a week. carol: this story starts at a facebook led telecommunications summit in london last month. sarah: if we get to a place where facebook has taken

responsibility for the problems of the last few years, what that should look like in an ideal world is something within the process of building up these products. it is not just about growing, but about thinking about ways to build in protections as you grow. jason: facebook is trying to put a better face on how it reacts specifically to elections. the idea of meddling, this concept of a war room has come to the floor as we've seen elections in brazil. what are you hearing from their plans? sarah: facebook has brought a bunch of journalists into their war room. they have a bunch of monitors tracking what stories are going viral, how the ad spend is looking, all of these factors

they need to figure out where the odd activity might be. the damaging activity that they might need to take down or escalate. engineers worked together, but the question is whether this will be enough. steadyyou have this drift of senior executives saying, "peace, i'm going to do something else." sarah: the former ceo of oculus has left. his departure is significant in the context of these other founders leaving. the co-founders of instagram left this fall, and the ceo of whatsapp left. the only ceo left is zuckerberg,

the person who will chart the path forward, and he always was the last word, but now, the future of facebook is so much more dependent on these other properties. perhaps facebook's interests in figuring out how to make money off of them is what caused a bit of discomfort for these founders. welcome to the age of virtual restaurants. uber eats. carol: first, we have to go back in time, with the new big business of selling old watches. >> when the global economy went south, watch brands went south. they are really back. it is a luxury. people love having them on their

wrist. it is like a fancy car. it tells people something about you. it is useful. these vintage ones can be really beautiful. jason: the prominence of the watch does seem to matter to a lot of people. sometimes people like this idea that it is a little worn. >> you want to have the box and the papers. there are little elements that may take a nice vintage watch to an amazing one. you have a time when cartier was split into three companies. a watch from that period is special. carol: special to me is getting food delivered at home.

let's go to the food section. she talks about "the app that ate your phone." what is she talking about? >> uber eats uses the data they have, based on what people are requesting and order, to create virtual restaurants. you have a neighborhood with a bunch of sushi, but no poke. uber will reach out to one of the sushi places and say, start serving poke. they will have the materials on hand. pokewill have a secret restaurant that only exists on ubereats. they are crowdsourcing what people are hungry for. in some cases, they can change how the restaurant is facing out

to the world. if tons of people are requesting brunch, they'll start serving. it's changing the face of dining. carol: these virtual once ubereats says , uber will you need take a piece of their kitchen and devote it to the other food? >> if people are requesting wings at a pizza place, a little part of their kitchen will only make wings for people and sell through uber eats. carol: and this is seeing a lot of growth? >> yes, and it is all over the world. it is in new zealand and australia and india and thailand and montana. this is happening everywhere. carol: "bloomberg businessweek" is available on newsstands now. jason: your must-read? the story on tomrol:

barrack, the guy from the financial community that came out first to support donald trump. it's an in-depth story that examines the relationship between him and trump and asks whether he is really a trump insider. jason: this relationship stretches over decades. when christine harper went to write this book with volcker, i was so excited, and it delivers and it is so timely given everything happening right now with the federal reserve. carol: on saturday, we have a story about a small dna technology company originally founded to make pharmaceuticals, but shifted its focus briefly to solving old murders. check out ourujason: podcast.

last week, we talked to retired general bristol about the difference between myth and reality. also, a new lacrosse league was all the talk in my house this week. carol: were bloomberg television -- carol: more bloomberg television starts now. ♪

♪ david: when you're the head of the imf, i will recognize you. how did you get to be the head of the entire firm? ms. lagarde: it's often in those situations that a woman arises. david: with synchronized swimming, you became a member of the national team of friends. ms. lagarde: headed european championship and then international events. david: did you experience a lot of discrimination? ms. lagarde: and i interviewed with law firms where i was told back in those days i would never make partnership because i was a woman. >> will you fix your tie please? david: people wou n