♪ carol: welcome to bloomberg businessweek. jason: tom barrack 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. the senior reporter for europe and middle east wrote about it. he joins us to talk. >> it was the president of turkey. this is a country that has more journalists in jail than any other. it was not as expected, the president of the united states, the white house, the statement made about the washington post columnist that was killed and rather grim circumstances. carol: what are people saying about the u.s. not speaking up for human rights and then to have turkey leading the conversation? >> there are all sorts of reasons why president erdogan would want to do this.

his own interests. 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 our expectations about what happens in the middle east has changed. >> this is largely about the personal relationship between this administration in the united states and the crown prince. if that leadership were to change, how much might that affect the u.s. outlook to saudi arabia?

>> if muhammad bin salman were to be pushed aside, the u.s. would have to deal with his father. there is no particular reason to believe that he would try to jeopardize this relationship. it might well become more fragile or conflicted. but both sides consider iran to be the main problem in the region. russia has aligned with iran and syria. there are other issues, such as the saudi military. it is heavily based on european and american airpower. carol: things do change very slowly in the middle east. this is an interesting

relationship. has much really changed despite the headlines? >> there are risks here. which is why everyone is walking on eggshells. there are political risks. this can complicate life for all sides for a long time to come. >> it is a case for the upcoming midterm election. carol: with only a week to go before the midterms, there are a host of hot button topics driving the midterm election. we talked with josh green in d.c. josh: early on, during the summer, it looked like it would put the senate in play. the senators 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. the democrats can take control and have subpoena power. it will change the entire nation

-- nature of washington and the trump presidency. however, as tends to happen when elections get closer, partisans are returning to their corners. republicans are consolidating around republican candidates. democrats are consolidating around democratic candidates. there could be a huge blue wave in the house. it now looks tighter. carol: is it the rallies? is it the early voting? what are you looking for for a better indication? josh: polling averages. no one single pole will give us a reliable glimpse of any race. but if you look at polling averages overall, they tend to be fairly accurate. that was true in 2016 as well with trump. most polls showed hilary clinton winning. not by a wide margin, but by a narrow margin. she won the popular vote by 3 million. that doesn't get you anywhere in

a presidential race. you have to win the electoral college. but in the midterms, all you have to do is win 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. these are the seats democrats are looking to win back. by and large, these races are very close across the country. jason: help us understand the president's role in all of this. josh: trump is trying to motivate republican voters to turn out november 6. you may remember, i got leaked an internal republican party paul conducted by the rnc in early september that was like a four alarm siren that said republicans don't believe there is a risk of losing in congress and may not turn out to vote.

interestingly, one of the reasons they believed that was because donald trump was talking about the likelihood of what he called the red wave, that republicans would hold onto their margins and expand them. no strategist in either party believed that was true. i think the message got to the white house you need to stop talking about this and instead, you need to find a way to mobilize republican voters. that is something trump is good at what he puts his mind to it. jason: huge stakes for global business. carol: we talked about all of them with joel weber. joel: there is a presidential braziln on sunday in which everyone is watching -- is watching and is supposed to be landslide for bolsonaro. it would be a major shift for one of the continent's great population centers. brazil is great.

we are probably going to see a shift to the right. what we will see is a shift to the right with him. jessica leeds back to the white house. barrettan insider, tom who's been around the middle , east for much of his career and an insider in the trump world. carol: or is he? joel: tom barrack was a big reason trump got a lot of wall street interest. he helped put trump into an interesting position. that was also at inauguration and a whole celebration, tom was in charge. ever since then, things seemed to have gone totally awry. comey, we talked about this huge company that has suffered ever since he put all of his weight behind trump. jason: he played middleman between the trump administration

and all the middle east interests, both economic and political. saudi arabia continues to dominate the headlines across the world. joel: the geopolitical elements of this almost have a biblical level of intrigue to it. we continue to watch that evolve. barrack play role because he was the man in the middle east for trump for a long time. we have the story and it is so near the news and this peels back another layer to what is actually happened in the middle east. carol: the cover story this week, truly a murder mystery, and great in-depth reporting, taking a look at this couple well-known in the toronto community. joel: yes, the shermans, barry sherman was the founder of a generic drug empire. he became a billionaire. he and his wife were billionaires, a power couple.

what happened is 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 trying to figure out who the different characters and all the different areas are. carol: president trump round of the pressure up on jay powell this week. jason: and tom barrack, one of the first amendment on wall street to truly back president's presidential bid. >> this is bloomberg businessweek. ♪

carol: welcome back to "bloomberg businessweek." jason: join us every day on the radio from 2 p.m. to 5 p.m. wall street time, and listen to work by listening to our podcast. carol: you can find us online and our mobile app.

jason: in the features section, tom barrack was the first on wall street to back president trump in 2016. fundraising dinners, all well known because he was everywhere. carol: the extent of his devotion went way beyond that, and came out a bit of a price. here is our reporter. --sud this story focuses on >> this story focuses on qatar. tom's longest standing business partners in the gulf region were the qataris. the trump support of the saudi blockade of qatar totally blindsided him. it was not in his interest at all or the best interest of his friends. it was a total flip of u.s. policy in the region. qatar has been a long-standing u.s. ally. jason: qatar has been involved in almost every major deal he has done. >> you are looking at miramax,

there is some of property in italy they did it together and it always followed the same pattern. they jointly buy it. later on, the qataris buy it outright, usually for a good profit. it was a very good relationship for him and their firms -- firm to have. now the qataris are on the outs with the white house. tom helped introduce trump to the saudi's and emiratis prior to his presidency. but his relationship with trump administration has put the saudis and emiratis on edge. carroll: and replaced by jared kushner when it comes to saudi arabia. >> that is true. and he helped introduce of them. you know the love connection was , made and tom has a involved -- has not been involved in's. he hasn't been able to

communicate to investors he's plugged in. carroll: let at the same time, that is going on and a friend of trump's is not benefiting. colony capital is having problems? >> quite a few. first thing, 2015, raising a major debt fund, the colony distressed fund is like there core debt series, they only raised half their $2.5 billion for that. then told decided to enter into a merger with northstar. that was an absolute disaster. a lot of the negotiations were trying to figure out what worth and tom was not around for. he was busy and it are doing the campaign or the inaugural committee which he did for trump. carol: he was called the wedding planner? >> yes. shares of the combined firm dropped 60% during the trump

presidency. of course, we are experiencing the volatility and a bull market. jason: i have to ask you about his connection to paul manafort and rick gates. they are obviously at the center of the special counsel investigation here. we are told that tom barrack was questioned by mueller's team. what is the role as best you can tell? >> tom and paul manafort are friends. we report in the story that one of the things he did for manafort was hire and associate -- higher and associate of -- hire an associate of manafort to manage his appearance on television for the trump campaign. after gates left the campaign, he briefly worked as a consultant for colony.

so you see these constant touches with these guys who are now in a lot of legal trouble. but there is no indication that legal trouble has reflected poorly on tom as of yet. jason: a must read of what the most influential people in the past 100 years paul volcker. , carol: and why companies cannot afford to fire workers, and are instead retraining. jason: "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." carol: you can also listen to us on the radio. jason: and in the bloomberg business app. carol: federal reserve independence has been a hot topic this month as president

trump blasts the central bank for the intention to keep raising rates. this week, trump said he may be regrets appointing jay powell. jason: but he is hardly the first fed chair to feel the heat from the white house. there is a fascinating excerpt from paul volcker's new memoir, it opens a window into how past presidents try to impose their will on the fed. carol: wanted to the history with christine harper. christine: paul volker has -- was instilled with this sense of serving his country. he has worked for six a jfkents started with and ending with all obama including some and reagan. he has seen us so much. he is living history. jason: specifically about the federal reserve and the excerpts in the magazine go to the heart of the relationship, that sometimes uneasy relationship between the federal reserve and the white house. tell us what he experienced.

christine: back in the day when he was serving the johnson administration one of the , stories is about him attending a meeting between henry fowler and chairman of the federal reserve william mcchesney martin, who is famous for calling the fed's job is to take away the punchbowl before the party gets started. president johnson am a what he witnessed in that meeting which was private and the white house was watching president johnson trying to influence the fed to prevent them from raising rates. he describes that in vivid detail. we also excerpt an example when he was on the federal reserve himself in the he had been 1980's. reappointed by reagan after carter had initially elected him in 1983. in 1984, an election year, and he was summoned to the white house and had a surprising experience. carol: let's describe it.

because it is fascinating. you do 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 was unusual and wondered why he was being summoned to this library. his memory was that he just saw 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 at not criticizing the fed, although they had 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. reagan doesn't say a word. it is only baker that speaks. what he recounts in the book is

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

say about the current president and his criticism about the fed. he is so outspoken about it. christine: it's not good, right? but the thing he likes to remind me and other people about is the president has no say over the fed. it's congress. so when volcker was fed chairman, he was unpopular in pockets of congress. there was one democratic senator who was calling for his impeachment all the time, constantly submitting legislation to impeach him. but he had the broad support of the country. when he was renominated by reagan, he won confirmation by 84-16. the 16 where the far left and the far right. so the center of the country believed in what he was doing. he was considered the second most powerful man in the country after reagan, probably to the 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 off the street. carol: but with unemployment at a new low, that's impossible. so what are companies doing? we got some thoughts from economic senator peter coy. peter: the idea of training companies -- employees is something companies have been doing for centuries. apprenticeships, journeyman. it fell into decline according to the bureau of labor statistics for long time. most recent figures showed a steep decline. one reason for that is that companies were afraid they would put on this money and time into people and train them up and they would just be plucked by somebody else. i'm looking at what is happening today. the evidence is that there has been an uptick in training, not huge, but it is on an uptrend. carol: how come? is it such a tight labor market? peter: yeah.

as unhappy as they are about the possibility of someone free-riding on them, they have no alternative but to provide some of their own training. jason: what does it look like on the ground? what are companies doing that is working when these plans are in place? peter: people learn better when they do stuff, this idea of an apprenticeship. it's not just entry-level work. it's on up. it's rotations. bloomberg has that. you rotate through various jobs and gain a variety of skills. it can also be harnessing computer assisted learning. 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. we spoke to heads of universities about if kids have the 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. companies complain. and it's true, by the way, that employees are coming unprepared. according to a survey by the oecd, out of 22 countries, millenials in the united states were 15th of 22nd in literacy and tied for the bottom in numeracy. and in preparation for technology rich environments, problem-solving. jessica lange a true crime story centered on the murder of an unconventional billionaire and his wife.

carol: it reads like fiction but it is not. this cover story may have you scratching your head. this is "bloomberg businessweek." ♪ .. ..

♪ jason: welcome back. carol: still ahead, if you thought luxury air travel was a thing of the past, first class is making a comeback. jason: and alibaba's attempt to keep its lead in china's cloud market with chips. carol: this story takes deep -- digs deep into the unsolved murder of a billionaire.

jason: lester a canadian pharmaceutical executive and his wife were strangled in their toronto home. no one knows who did it and why. but everyone has a theory. the murder of two of the most prominent people in the entire country, it's inconceivable. they had a public memorial service about a week later, had about 6000 people added, including prime minister trudeau. these were two people at the center of public life. the reaction to their deaths reflected that. carol: you looked into this to figure out what happened. the police initially thought it was a suicide? >> the theory that was leaked very rapidly 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 for dual -- his four adult children very 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 died, to try to refute the conclusion, that it could not have been a murder-suicide. ultimately, after a little over a month, 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. his business dealings. 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 took you down. matt: there are some fascinating things about barry sherman and yes, he was an incredibly successful pharmaceutical entrepreneur. it's a fairly aggressive business. if you succeed as a generics company, you are necessarily achingly revenue, taking away market share from the pfizers and the bristols of the world. you don't make a lot of friends if you succeed. he was a tough operator. very litigious.

but very good to his employees. a lot of people stayed with him for a long time. this is the thing about barry sherman where his story somewhat the parts from what you might expect of his biography and level of influence and wealth. for a very long time, going back 20 or 30 years, if not longer, he entered into side businesses with a quite incredible cast of characters. a canadian magazine described it as a cast of a cohen 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 had 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 even though they counseled him to stop doing it. it was a quirk of this very wealthy man. 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. essentially, the children of that uncle maintained he concealed an agreement that would have allowed them to purchase 20% of that company. in turn, they argued in lawsuits

they should be entitled to a 20% of the company, a billion canadian dollars, probably. these legal arguments were consistently dismissed. this is a very raw discussion for them and the most outspoken of the cousins, a guy named gary winter, i spent some time with for the reporting of this story, he is very angry with his late cousin. even now. 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? matt: no and i'm not sure we ever will.

one of the toronto papers has been in court, trying to force the police to disclose documents on their progress of the investigation. that paper has been largely unsuccessful. it has been silent. there are many ways to solve a murder here and there is dna evidence. people can come forward many years later. but the longer it goes, it does not help the odds of ever finding out who did this. jason: a compelling story, told and written with a lot of ashen and insight by matthew campbell. -- passion and insight by matthew campbell. we looked to our creative director to come up with a cover to illustrate this mystery. >> we wanted something that would get you right into it, pull you into the mystery of it. this is one of those covers where the art is playing with the editorial and making sure the words are right and making that kind of like we really like. we wanted to create something that had a lot of tension.

it is a little offkilter. we got this nice red background. it grabs you and pulls you into the story and gets you reading. ♪

♪ carol: welcome back to "bloomberg businessweek." jason: join us at bloomberg businessweek every day from 2 p.m. to 5 p.m. wall street time. you can also catch up on that daily show by listening to our hard cast. carol: you can also find us online and on the mobile app. we do have a story this week in the magazine that talks about first-class air travel. it is taking a look at the

busiest route for first-class travel. no surprise that it is around those long halls. jason: but different cities than it was in the golden age of air travel. carol: they definitely set the tone. in the business section, frequent flyers may be happening here that first class air travel is making a comeback. jason: many airlines cut back on those cushy seats in the wake of the financial crisis, but demand is on the upswing. our editor joins us from berlin. david: first class is back. that is what they are telling us. after the financial crisis, it started in 1999, when ba introduced the lie-flat seat. from new york to london. 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. then the crisis comes in and companies are saying, sorry, dude, you are flying in business. so airlines have been pulling their 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 even have fixed walls where you are isolated in what looks like a bedroom and it is more like a luxury hotel room than an airline seat. 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: we spoke to some experts. broadly speaking, if you pay $100 for a coach seat, $300 for a premium economy, and 1200 for first-class. multiply that times 10 to get to what it really cost your in other words, you're talking like a factor of twelve, broadly speaking, over coach for first class, and double for business. but if you do the math, 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 pretty well, too, assuming they can fill those seats with paying passengers, which isn't always easy. carol: chinese internet companies are starting to make their own semiconductors. jason: and what is new in the restaurant business, thanks to uber. carol: this is "bloomberg businessweek." ♪

jason: welcome back. carol: you can also listen to us on the radio in boston, new york, in washington, d.c.. jason: and in the bay area and london. 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. carol: amazon, microsoft, and ibm are seeing growth in cloud services. and chinese firms led by alibaba are carving an innovative path to compete into the market. the company is starting to make its own chips. >> you have these big tech companies that are already using massive computing power. they want to sort of control of the in tire sort of hardware stack, as people say, which means developing chips. china is really hot on the idea of ai. this is a policy that starts with the government and goes down to these large tech companies, including alibaba. jason: what are they going to use this for? >> china, as a strategic program, they want to control it because they think there are potential military advantages and economic ones. it's also part of the made in

china 2025 plan. for alibaba, there's this idea 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. so no token, no metro card, no nothing. it is just facial recognition. they are developing these chips to do that. carol: that's the point, right? this is super high-tech and you need a super high-tech chips to be able to do that. max: intel and nvdia are dominating this. intel makes server chips and nvidia makes video. even with this new effort from alibaba, you will still need the chips. but if alibaba is successful, they will not need to buy as many intel and nvidia chips. they want to be able to cut out the big u.s. semiconductor companies altogether. carol: so watch out. how does donald trump play into

all of this? >> the u.s. government got into it with 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. if you look at china as a whole, i think mark writes 75% of the semiconductors are coming from outside the country. without a domestic chip industry, china will be totally dependent on the united states. so this is a long-term effort to reduce its dependence on america. jason: you also think about the relationship a consumer has with a company like alibaba.

as you said, part of the reason they were doing this is because it will come right out of your alipay account. >> and you would need to have their app on your phone. in this vision of the chinese future, the chinese consumer is using a chinese app and it is being run on chinese made hardware. this government driving a futuristic vision of the world is going to create a bottom -- a lot of value and make these chinese tech giants even stronger. jason: and now in the technology section, the ongoing problem for facebook. how it is looking to prevent election meddling with the midterms coming in just over a week. carol: this story starts at a facebook like a telecommunications summit in london last month. sarah: if we get to a place

where facebook has learned from its lessons, has really taken responsibility for the problems of the last few years, what that looks like in an ideal world is something within the process of building up these products. it is not just about growing, but ways to build in protections as you grow. jason: facebook is trying to put a better face on how it reacts -- reacting specifically to elections. this concept of a war room has come to the floor. 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, all of these factors they need to figure out where the odd activity might be.

where the damaging activity might be where they might need to take down or take action. and the team, the engineers, the policy people, they are in this room working together. the question is whether this will be enough. jason: you have this steady drip 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 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 and make them creative to the overall core business is what caused discomfort for these founders that ended up leaving. jason: welcome to virtual restaurants, uber eats! carol: we have to go back in time, with the new big business of selling old watches. >> mechanical watches are very much back. when the global economy went south, watch brands went south. but they are back. it's a luxury. people love having them on their wrist. it is like a fancy car.

you don't need a fancy car, but, if you cannot afford it, you want to wear it. it tells people something about you and these can be really beautiful. jason: and the prominence of the watch -- 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 in the papers. that is a big art of it aired but -- of it. but there are little elements that may take us to an amazing watch. you have a time when cartier was split into three companies. if you have line from london with the london stand, that is very special. if you have the tiffany stamm, that is very special. carol: special to me is getting food delivered at home.

let's go to the food section. what do we talk about with "the app that ate your phone"? >> uber eats uses the data they have, based on what people are requesting and order, to create virtual restaurants. say you've got a sushi place, 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. and they will have the materials on hand and they will have a secret poke restaurant that you don't see. so people will walk by and see this restaurant that only exists on ubereats. they are crowdsourcing what people are hungry for. literally. in some cases, they can change how the restaurant is facing out

to the world. so if a place that did not serve brunch, if tons of people are requesting brunch, they'll start serving. it's changing the face of dining. carol: so these virtual restaurants, uber will 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. it's actually a real department within uber eats. carol: and this is seeing a lot of growth? >> yes, and it is all over the world. it is in india, thailand, montana. it is happening everywhere. carol: bloomberg businessweek is available on newsstands now. jason: must-read? carol: tom barrack, the guy from

the financial community that came out first to endorse then candidate donald trump. it's an in-depth story that examines the relationship between him and the trump and asks whether he is really a trump insider? jason: this relationship stretches over decades. carol: your must-read? jason: 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. carroll: very relevant. you can find more stories on bloombergbusinessweek.com. 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. jason: and check out our daily business week 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: more bloomberg television starts now. ♪

♪ emily: i'm emily chang in san francisco. this is the "best of bloomberg technology." we bring you the top interviews from the week in tech. coming up, what a week it was for big tech earnings. we break down the highlights and low lights. plus, truly historic is how elon musk is describing tesla's third quarter. the company reports their first profit in five years. can they do it again and again? and why the head of softbank was a no-show in the desert, and what this means for the future