♪ carol: welcome to "bloomberg businessweek." i am carol massar. jason: i am jason kelly. we're here in new york. carol: "bloomberg businessweek" has released its 30th annual ranking of the best schools in the united states. the winner, you will have to stick around for that. jason: the search for serious returns in the decade since the financial crisis is setting up some alarm bells. carol: u.s. midterms.

democrats taking the house, republicans increasing their senate majority. how the new order will impact the next two years of president trump's agenda. jason: josh green joins us. he is author of "the devil's bargain," and this week's opening remarks. thank you for being with us. help us understand. what changes from here? josh: as crazy as the first two years of trump presidency have been with scandals and crises and party fights democrats have , not had any recourse to stop trump. now they do. toy give some subpoena power trouble have a real adversary. carol: the democrats have the republicans to thank for that. josh: yes. traditionally the majority party in congress has always had subpoena power. if you go back 20, 30, 40 years, it was usually a bipartisan affair. subpoenas were used sparingly.

that all changed in the late 1990's under republicans when they decided they wanted to go after bill clinton and gave the chairman of the oversight committee unilateral subpoena power. no real check on him. that power was expanded to go after president obama. republicans wanted to bolster their arsenal. now that arsenal belongs to democrats. you can bet they will use it to go after president trump. jason: you talked to steve bannon in your must-read book. what did he have to say? this in lot of motion politically but this is taking a bit of a turn. josh: he is worried, like most trump supporters. he says this will be like stalingrad. he says he will have subpoenas flying and all of these people in the administration are protected with republicans for a control of the house who will now have to answer or fight a congressional subpoena.

this will be a real thorn in the side of the trump administration. whether it is migrants of the border or the firing of attorney general jeff sessions, this is now something democrats will have the power to investigate. carol: this is an individual that does his own thing. are the subpoenas going to make a difference? josh: traditionally a congressional subpoena has been powerful. but democrats and republicans administrations in the past have stonewalled them. that is why progressives have set up outside groups like judicial watch, which made a name for itself filing lawsuits. that gives the power of the court to these subpoenas. democrats now have their own groups like american oversight who will try to bolster the strength of the subpoenas by using the power of an outside court to try to compel the white

house to release these documents into have officials come and testify. jason: we talked to eric cantor this week. he talked about this massive shift in the suburbs away from the republicans and to the democrats. that was a huge stronghold in 2016 and helped trump get elected. we saw a big shift. what are the applications of the people you talked to? josh: the suburbs used to be the republican stronghold. they were white-collar professionals and sent a steady stream of republicans to congress and the white house. under trump that has now flipped. high income suburbs around cities are now democratic territory. what is interesting is trump has forced that change. there is a corollary effect to the rural areas, which are very important in congressional elections have moved closer to republicans. what you want up with was to separate maps.

in the house it favored emma kratz. they won a fairly sizable majority there but on the senate side, you have greater republican strength than ever. the other interesting thing i don't think we should ignore is if you're going to have a republican caucus in the senate and the house that is even trumpier than before. all the moderates have retired. carol: do things calm down because i'm guessing no? josh the screaming headline in : the new issue of "businessweek" is that things get even crazier from here. it is hard to imagine but now the democrats have that subpoena power, it is all but guaranteed. we saw in trump's press conference this week, he started out by saying maybe this is a good thing. in the next breath he said if they investigate, it's war. i would bet on war. i think most on capitol hill are. jason: that theater the day after the midterms we had trump at the white house doing this press conference, quickly

followed by nancy pelosi, quickly followed by jeff sessions's forced resignation and that was day josh: imagine one. what happens when democrats try to get trumps tax returns? -- trump's tax returns? how angry and upset and contentious american politics is going to get. carol: you said the last two years we have had will be the smoothest of the trump presidency. get ready, everybody. josh: it's almost inevitable. certainly there are areas of policy, maybe an infrastructure bill, for security measures that in theory you can see the parties coming together. all you have to do is look at the democrats' thirst for vengeance and trump's frustration and anger at the outcome of the election and ask if there will really be bipartisan cooperation. carol: do democrats have to be careful with that anger? josh: i think they do. traditionally democrats have

used this power for checks and balances, accountability investigations. the problem is we have seen recent republican chairman to have used this for political theater. the whole benghazi hearings got very extreme. there is a danger for democrats if they abuse this subpoena power to embarrass or humiliate trump officials, it could cost them the 2020 election. jason: 2020 was exactly where i was going next. all of this happens as we move toward the reelect. josh: the reelect started yesterday. we are already in the middle of the 2020 election. framing the backdrop is this fighting in congress, more contentiousness. that is where we are heading. it will be a heck of an election. carol: there are so many political stories in the magazine this week.

we just wrapped up the midterms it let's bring in the editor of that midterms. -- we just wrapped up the midterms. let's bring in the editor of "bloomberg businessweek," joel weber. you covered this story a lot of different ways. joel: you had a josh green writing that. carol: it will be a heck of a few years. joel: what does this all mean? what does it all mean and what is it going to mean? we will watch this unfold beginning in january. between now and then, we want to also talk about other implications of the election. one big one being trade. that trade, it's ongoing implications. there are a couple of places a came up in this week's issue. one of them was lobsters. the iconic industry in maine that is been affected because

china had this growing appetite for lobsters. when trump announced his tariffs china put tariffs on lobsters. ,all of a sudden china is not buying lobster from maine anymore in a big way. carol: election is a focus but the other focus is about mba schools. years businessweek has ranked business schools. we wanted to make it extra special. i think we deserve extra credit for we did. thousands of people were surveyed for this. we feel it is a different ranking and we are very excited. jason: new methodology and we will get into the show. ready, set, investigate. our coverage of the midterms continues with some thoughts on what they mean for president trump. carol: plus women win a record , number of seats in the house. call it the year of the woman

part two. jason: this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." jason: join us on the radio every day from 2:00 p.m. to 5:00 p.m. wall street time. carol: and you can find us online and on our mobile app. jason: republicans held the demse put that b -- but took the house. president trump will soon be on the receiving end of some pointed questions. carol: it will be a different environment. orders backed up by subpoenas for officials to answer on controversial policies such as the dispatch of thousands of troops to the border. here is our congressional reporter. >> congress has had subpoena powers dating from the teapot dome scandal. -- with republicans in 2015

carol: it got ramped up? billy: the added additional powers for the chairman of the majority party to make decisions on their own without consultation with democrats democrats who opposed that are saying, now that we are going into power, not a bad idea. carol: this could be useful. there was so much speculation about what the democrats would do if they won the house of representatives. they did. what can we expect to come out? billy: some of that speculation came from republicans and the drumbeat was able try to be peace the president. democrats tried to downplay that. we will see how that plays out. democrats have said repeatedly that republicans in the last two years have not used their subpoena power very often for the trump administration on scandals with cabinet officers

or trump policies. they have not hold that many witnesses in before hearings. that many witnesses in before hearings. democrats have said that is a responsibility of congress. carol: is it looking into the president's taxes? is it looking into the relationship the president and his family members had with russia? what are some of the top things? billy: adam schiff suggested we should look at to the syrian ties with the trump family, from khashoggi's slaying. what is up with the administration's response on that? it seems rather muted. or the alleged caravan that is attack the u.s. at any point? they said we have to look at why trump is doing this and what his motivations are.

carol: what about the financial aspect? the new york times put all of this out. we talk to everyone focused on it and then it went away. under a democratically -controlled house do they pursue , this? billy: absolutely. the likely incoming chairwoman has tried for two years to get subpoenas. chairman tourrent subpoena deutsche bank and other bank records. she will waste no time launching that herself. she has saidadly it is payback time for banks, wall street and insurance companies. f pelosiknow i wanted her to say that or what it means. it should be a lot of fireworks. carol: women won more seats than ever before after a record number of fema candidates were on ballots across the country.

jason: but is essentially symbolic or will it impact policymaking? here is rebecca greenfield. >> there is a record number of women in congress and still 75% of the power will be held by men. i just want to put that out there there carol: perspective is important. >> which is why it is important to reelect people and keep the momentum going if you want parity. congress should look like people more, like the u.s. electorate more. it is important to have parity for parity's sake. that is why we have to keep getting people elected. jason: what were the driving factors that got so many women running this time around? rebecca: i think a lot of people pointed to the election of donald trump as a catalyst, and the loss of hillary clinton. i think both of those in tandem. you have a woman who a lot of people thought was qualified, and a man who has said things

that are sexist, or that they don't like, which galvanized women to run. carol: and did lose the popular vote. rebecca: there are a lot of people that disagree with that. if he can do it, why can't i? carol: the #metoo movement had to have a play here as a backdrop. rebecca: definitely. some even said that the movement came out of donald trump a little bit, with the access hollywood tape. it is this moment of women saying their voices have power and should have power because when they don't have power is not coming out that well. ofon: on this theme reelection, with the house turning to democrats you will have a number of prominent women in leadership roles. nancy pelosi, obviously.

i was reminded that my representatives of the westchester county is poised to have an incredibly powerful position that underscores the thesis of your piece, the notion for long-term change you have got to hang around. rebecca: i think it is an underdiscusssed aspect. women who aren't the fresh and new people running are gaining significant power. nita lowey will likely try the appropriations committee which will have power of the current congress. appropriations, how the budget is doled out is an important way democrats will get anything they want. for people who have been in congress for decades, getting reelected, amassing power having , the right relationships, that is how women are going to make their mark.

carol: google and the great firewall. the company's controversial plan to bring its search engine to china again. jason: and the recent silicon valley selloffs. was shocktober and overcorrection or is this the new state of the tech market? carol: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i and jason kelly. carol: and i'm carol massar. you can also listen to was on the radio, in new york, boston, washington, d.c. -- and on the bloomberg business app. carol: google and the great firewall of china, in the feature section this week. google is blocked by the great firewall. this is a program of government

censorship. google decided to have to edit links was unacceptable. jason: has google now reconsidered that? >> the plan was they were going to make a series of compromises with the chinese government. it is important to say the chinese internet is obviously very different from our internet. if you do business there, you basically have to deal with the government on a continuing basis. you have to agree to more or less censor certain topics and make sure various stories toe the party line, as it were. google went ahead with this and as mark reports in the story, the chinese government around the time of the beijing olympics increased its pressure on the company. at first they were censoring 100 or so words.

by 2008, it is tens of thousands of of sources. alledge attack of google's servers in china. jason: now to the source code of google? max: the chinese intelligence agencies were allegedly looking for information about dissidents. google has been trying to protect those people. as he reports, there was a secret meeting and a place known as helm's deep. if you are a lord of the rings fan, you will get the reference to it is a last bastion for humanity. jason: where the eye of sauron cannot reach. carol: you guys are such nerds. max: i hope you're not mangling that. there was this big argument. the two main sides, what -- one was led by eric schmidt, the ceo who was in favor of google

in gauging globally. the other side was sergei brin. sergei brin was born in the soviet union. he had very strong feelings about censorship. his position ultimately won out. google left china. that is where things have stood for the last eight years. carol: 2016, they start trickling back in? max: there were lots of little attempt happening even before that. the big effort which includes this thing called dragonfly started in 2016. the main player in the story is google's current ceo. jason: he started this running android. max even before 2016, there had : been teams in china. pichai wasndar involved in was android. androids are in china.

this shift was basically they started paying attention to the usage in china. there was an effort known as sidewinder to develop a chinese android app store. that is something apple has but google did not have. the hope internally was that this would be away in, a side door into china. it did not pan out. fang: will the so-called stocks bounce back or is this a sign of a new era for the tech market? jason: here is michael regan. michael: in "caddyshack," april -- a girl throws a baby ruth candy bar into the pool that's mistaken for something else. there is a mad paniced rush to the exit. these tech stocks, especially the faang stocks, they have

become a crowded trade, and much like the swimming pool there was this sort of panic exit from the trade. i think it is important to go back and explain how it became so crowded. obviously these are the main influences on the stock market. not only that. if you look at the lists of the most important positions, the hedge funds, goldman sachs has a list of bnp list -- vip lists. they are more heavily weighted than their weights in the s&p 500. these are key stocks for hedge funds. but also if you look at factor investing which has become super popular, trying to build a better mousetrap when it comes to picking stocks. carol: we talked about the run-up in the market. so much of the gains were in a few big tech names.

not just in the u.s. but also big global tech companies. we saw it in chinese companies. michael: they have followed the same trajectory. if you look at alibaba and tencent. sort of similar names in china. very consumer internet oriented. they have their own idiosyncratic issues in china. it is kind of the same story, to some degree. the question is -- we saw this meltdown in tech names, close to $1 trillion wiped off the value. carol: a true correction. michael in some cases, facebook, : down more than 30%. the faang complex in a bear market. it is such a sharp reversal. that is the peril of a crowded trade. when there are signs of weakness , stuff floating in the waters, it is a rush to the exit. jason: the big reveal. our 30th annual ranking of the best u.s. business schools.

carol: now trump's trade war. even lobsters seem to be trapped . jason: this is "bloomberg businessweek." ♪ . .

jason: welcome back. carol: still ahead, wall street's new risk machine. jason: and trump tariffs have inflicted economic pain on maine's most iconic industry, the lobster. carol: first up, bloomberg businessweek releasing its 30th annual rankings of the best business schools.

over 20,000 students, alumni, and recruiters were interviewed. jason: there is a new methodology looking at networking and entrepreneurship. the school with the best drinking, stanford university -- best ranking, stanford university. >> it is great to be ranked number one. yossi: this is something that captures the mindset of creating new values. this is what we teach. graduates will go on and create these new values. carol: everyone at bloomberg has been talking about the world being disrupted. that includes education. you had to adapt and change

programs. yossi: absolutely. it's not only traditional industries being disrupted. if the rate of disruption that accelerating -- it's the rate of disruption that is accelerating. carol: what have you had to change in the last couple of years? yossi: there are certain things you want to keep. you want to have a rigorous basis for everything you teach. you want to ensure that as analytics become more central, there are students with new skills. you have to constantly change

the curriculum in that way. >> we're here, at the heart of entrepreneurship, innovation. people have this romantic view of two guys in a garage, creating something. you focus a lot on corporate entrepreneurship as well. how do you train someone to be an entrepreneur within a big organization? yossi: its openness to new ideas and the drive to create new values. you think about the leaders that have to strive to create new values. that is central. but this has to be a leader that has empathy and compassion and humility, so that values become

even more important as technology evolves. jason: we spend so much time talking about big tech. when you think about how this environment has changed, and the big questions we are facing, the leaders of technology companies are based miles from here. yossi: as they come here, personal development and the community, it is being part of a community that strives to do well, and do better for the world, not only for themselves. >> thinking about the whole world at large, diversity is always important. students are very important to stanford. it is getting tougher for corporate visas to be processed

for some foreign students. yossi: the global trend in applications is -- carol: slowing down? yossi: something we see. the opportunities graduates have are still fantastic. the industry is still looking for amazing talent. the other part of it, opportunities globally are increasing all the time. we talk about edge of ownership -- entreprenuership. the accelerated pace of change. carol: stanford is followed by the wharton school, harvard, m.i.t.-sloane, and chicago's booth school.

jason: taylor riggs helps us break down the scores. taylor: let's do this live in real time. you can see the compensation you get when you graduate, the learning experience, and the entrepreneurship, so when you get out, you can start euro and company -- your own company. harvard has the largest endowment. dig in deeper. you can see how they rank relative to all of the other business schools. everyone should go online and check this out. carol: there are all these

different metrics. jason: and you can compare and contrast. thanks. carol: for more, we have our bloomberg senior editor. caleb: we did something completely different. most entities that frank rank business schools go, this and this and this is important. we asked alumni who has been out of school a couple of years and corporate recruiters, what is most important to you. compensation was overwhelmingly the most important thing. rankings are mostly rated to compensation. what are you earning when you get out of school? do you get a bonus? carol: what are the other indices you looked at?

>> networking is linked to compensation. how close are the alumni to you? as an alumnus, is the alumni network a real thing, or just this myth? what was the halo impact of one degree versus another? that was the networking index. the other two are learning. and for alumni, how valuable was what you learned in school? jason: the pitch for private debt, ahead. carol: and cracking open the impact on the lobster industry. jason: this is "bloomberg businessweek."

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carol: welcome back. jason: join us every day for bloomberg businessweek on the radio from 2:00 p.m.-5 p.m., wall street time. carol: you can also join us on the mobile app. >> it might gets worse -- get worse, before it gets better. the way this trade issue will be resolved are difficult. there are not that many usual channels we can use. >> i don't think there is an instant remedy for the trade issue. i wish i could say, after the midterms, the white house understands they have to seoul trade issues -- salt trade

issues want god -- salt trade issues. jason: making china comrades again. this is a bot how moscow and beijing are as close as any time in their 400 years in their shared history. >> it's been an on and off relationship for centuries. since 1972, when nixon famously went to china, the u.s. and china have had a very good working relationship, very engaged. they were ideological opposites, but they always had a good relationship. that was directed really at the soviet union. at the time, there was a chinese port of war in 1969, around the

water, with a soviet -- with the soviet union. it was a massive change and anna nordqvist when for the united states. almost without us noticing, russia and china have now reversed that. that kind of triangle, in which the soviet union was so far distant, that is not the same. sanctions are now on both countries. you have a trade war with china. there is a big discussion now in washington about how bad news is this for the united states?

carol: help us understand the role the current u.s. administration has played as a catalyst. it feels like a new development. >> there are two things to say. it is not all president trump's fault. this is something that began under mikael gorbachev. a long time ago. it did not really amount to a great deal until around 2014. then you had this crisis between

the west and russia over ukraine. russia, very consciously, tried to pivot to china. they started negotiating to build a gas pipeline. it made perfect sense, but they had been negotiating for decades. they could not agree on price. and then there was the annexation of crimea. they could not come to an agreement with the chinese. from there, they were gradually building more pipelines. the russia in 2015 overtook saudi arabia. these are really big changes, geopolitical changes. once you build that pipeline, it takes a long time. this is true with both of the oil pipelines and the gas pipelines that it takes 30 years or more to build. jason: there has been some unintended consequences with president trump's economic relationships in the united states.

carol: private exports -- bourbon, motorcycles, and maine lobsters has become retaliatory targets. >> trade wars do not happen in isolation. other forces. one thing i started learning, this has only scratched the surface in terms of the lobster industry. while are things really good in the lobster industry? carol: slow down. i've had no idea about any of this. >> if you look at lobster production in maine, it's about 20 million pounds a year.

then what happens, the golf starts to warm up. you get this kind of lobster temperature, in terms of reproduction, that hits really productive fisheries, in the population just starts to boom. 2016, that 20 million pounds you saw, you are seeing 120 million pounds of lobster. jason: what are the trade war is doing to this business? -- trade wars doing to this business? >> that population surge has coincided with big export markets in china. the u.s. was exporting something like $30 billion worth of lobsters to china. that is $100 million in the first nine months of this year. then it took a dive. the lobsters are classic

collateral damage products when it comes to the trade wars. china started imposing a 25% tariffs on lobsters from the u.s.. they immediately raised prices on the chinese. now china has said, "cheaper from canada. -- we can get this cheaper from canada. jason: lending money to businesses directly is having consequences. carol: and the holiday gift guide. jason: this is "bloomberg businessweek." ♪

jason: welcome back. carol: you can also listen to us on the radio on sirius xm, and in new york, boston, washington, d.c. -- >> in the bay area and in london, and the app. big banks have been pulling back on loans. funds have plenty of money to play with. why should funds not lend money to businesses directly? carol: jumping in to fill the gap. here is our editor. pat: they run business development corporations.

it's often a kind of stock. what you were really getting is a portfolio of investments. it is primarily in corporate debt. it is corporate debt to the kinds of companies that might not be able to get it from a bank. you are looking at riskier debt and midmarket companies. a lot of institutions may be invest in this kind of thing. a lot of private equity funds are getting into this. investors could buy a publicly traded bdc. jason: this has long been considered the holy grail on both sides. retail investors somehow of access to these great returns.

the private equity guys and other investment managers get access to a much bigger pool of investors. but it is not without some significant risk. pat: things have really enticing yields. when you see a big yield, you should ask yourself about the kind of risk you are taking. but there has always been a month -- market among high-yielding investments. they don't pay as much attention to, how is my principal eroding? they are making investments in riskier, smaller companies. they are lending money to them. you as an investor are participating.

jason: it is that time of the year. the holiday gift guide. carol: we caught up with our editor to take luxury to a higher level. >> our theme is "leveling up." if you have a pair of gloves, we want to give you the perfect gloves. it was really fun to put together. jason: what's your favorite? chris: it's this bke he -- bike helmet connected to your phone and remote on dollar -- your handlebars. it can give you turn by turn directions and light up signals on either side so cars driving in the dark can see which way you are going to turn.

you can answer phone calls. carol: do you still here with going on around you? chris: yes. it goes for $169. carol: another one? chris: it's called mr. black. it's cold brew, coffee liqueur. i'm a huge cold brew person. it's a liqueur that tastes like cold brew coffee, with a rich flavor. they recommended cocktails with

it. they said have it with mescal, but it's actually really good. the flavors really work together. this is really versatile. everyone we've given it to really likes it. it goes for $40. jason: you are levelling up -- leveling up your liqueur? chris: coffee. carol has a new christmas present. this is a $670 ultraluxury cream. the leveling up your bathroom was one of my favorite sections. i am wearing the claim he recommended right now -- clay we recommended right now.

carol: bloomberg businessweek is available on newsstands. jason: and online and the mobile app. carol: the must read was max's story. google was in china a while ago, backed out of it, and they've been working their way back in. a lot of conversation around it. jason: so tightly, especially given questions around the big tech stocks -- timely, especially given questions around the big tech stocks. josh green is taking us into the implications of the midterms. he examines the trump administration as it heads toward a potential reelection. it is bananas. carol: you can find more stories on businessweek.com over the weekend.

jason: more bloomberg television starts right now. ♪

♪ david: you met your wife in high school? michael: we met in seventh grade. david: you didn't date around in the seventh grade? [laughter] david: explain how you invented high-yield bonds. michael: to de-risk america, you don't want to be dependent on banks. david: you came down with prostate cancer? michael: i lost 10 relatives. david: what is it that you did that helped to change how we finance -- michael: first you collect the data. david: do you have regrets in your financial career? michael: sure. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright.