♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. we're here at bloomberg headquarters in new york. carol: this week's issue, "bloomberg businessweek" releasing its 30th annual ranking of the best business schools in the united states. the winner? you'll have to stick around for that. jason: wall street's new risk machine. the search for serious returns in the decades since the financial crisis is setting off some alarm bells. carol: first up u.s. midterms

democrats taking the house and republicans increase their senate majority. how is the new order will impact the next two years of president trump's agenda? jason: josh green joins us. he's the national correspondent for "business week" and author of the devil's bargain and this week's "bloomberg businessweek" opening remarks. josh, thanks for being with us. josh: great to be here. jason: help us understand this. hat changes from here? josh: what changes from here is as crazy as the first two years of trump's presidency have been, with scandals and crises and intraparty fights democrats haven't actually had any recourse to stop trump. now they do. they won back the house. that gives them oversight power. and most importantly of all, it gives them subpoena powers and trump now is going to have a real adversary. carol: and the democrats have the republicans to thank for that. that amped up subpoena power. josh: they have that amped up subpoena power, yes. traditionally, the majority party in congress has always had subpoena power. but if you go back 20 years, 30 years, 40 years, it was usually a bipartisan affair. subpoenas were used very 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 a couple of years ago to go after president obama. republicans wanted to bolster their arsenal. well, now that arsenal belongs to democrats. and you can bet that they're going to use it to go after president trump and the republicans. jason: you talked to steve bannon who you chronicle in your fantastic must read book, as everyone hopefully knows, but what does he have to say? he set a lot of this in motion politically but this is taking a bit of a turn. josh: like most trump supporters, he is worried. he told me this is going to be like stalingrad that you'll have subpoenas flying. and all these people in the administration who are protected when republicans controlled the house are now going to have to answer or fight a congressional subpoena. that's going to be a real thorn in the side of the trump administration. and whether it is -- you know,

migrants at the border or the firing of attorney general jeff sessions, this is now something that the democrats are going to have the power to investigate. carol: josh, what about the president specifically? if he is the target of certain subpoenas, this is an individual as we all know does his own thing. are the subpoenas going to make a difference? josh: you know, it's a good question. traditionally, a congressional subpoena has been pretty powerful. however, administrations both democrat and republican in the past have stonewalled them. that's one reason why progressives have set up outside groups, i'm sure you guys have heard of the conservative organizations, judicial watch, which made a name for itself filing lawsuits which gives the power of the court to these subpoenas. democrats now have their own groups like american oversight is one that i spoke to for this piece who are going to try and bolster the strength of these subpoenas by using the power of an outside court to try and compel the white house to release these documents and to have officials come and testify o democrats.

jason: we talked to eric kanter earlier this week and he was talking to us about this massive shift in the suburbs away from the republicans to the democrats. that was a huge stronghold in 2016. and really helped get trump elected. we saw a big shift there. what are the implications of that for the people you talked to? josh: so fascinating. the suburbs used to be the republican stronghold, right? these were white collar professionals who cared about economic issues and sent a steady stream of republicans to congress and the white house. under trump, that has now flipped. high income suburbs are -- around all sorts of cities are now we can see from the elections democratic territory. what's interesting, trump has forced that change. there's a corollary effect and that is the rural areas which are very important in congressional elections are also sometimes in the electoral college have moved closer to

republicans. and so what you wound one really with two separate maps. in the house, a map that very much favored democrats. and won a fairly sizable majority it looks like it's going to be. but on the republican side on the senate side, you have greater republican strength than ever in the other interesting thing i don't think we should ignore is that you're going to have a republican caucus both in the senate and in the house that is even trumpier if we can call it that than before. because all the moderates have retired. carol: what do they get done and do things calm down? i'm guessing no. josh: no, they don't. the screaming headline in the new issue of "business week" is that things get even crazier from here. it's hard to imagine but now that democrats have the subpoena power, it's all but guaranteed. we saw in trump's press conference this week he started out by saying yeah, maybe this is a good thing and we can make deals and i'll be friends with the democrats and in the next breath he said if they investigate me, it's all out war. if i were a betting man, i would bet on all out war. i think most people on capitol hill are, too. jason: and even the day after the midterms when you had trump sort of unchained. there at the white house. doing this press conference. quickly followed by nancy pelosi, quickly followed by jeff

sessions, forced resignation. that was day one. josh: that's our next two years. and imagine, guys, imagine what is going to happen when democrats try and get trump's tax returns, how angry and upset, contentious american politics is going to get then. carol: i love how you start off your story and you basically said the last two years that we've had will be the smoothest of the trump presidency, right? get ready, everybody. josh: jarring to think of it that way but almost inevitable. there are areas of policy and maybe infrastructure bill. border security measures that in theory you could see the two parties coming together on. but in practice, all you have to do is look at the democrats' thirst for vengeance, look at trump's frustration and anger at the outcome of the election and ask yourself, do we really think there's going to be bipartisan cooperation? carol: josh, do the democrats have to be careful with that anger? josh: i think they do, yeah. traditionally, democrats have used this power to do checks and balances, accountability

investigations, these sort of things. there's a lot of material to work with there in the trump administration. the problem is we've seen chairmen in the past and some of the recent republican ones have used this for political theater. hearings got very extreme and out there. i think there's -- a danger for democrats if they abuse this subpoena power to embarrass or humiliate trump official that is there could be a backlash and that this could cost them in the 2020 election. jason: and let's not forget, 2020. that's exactly where i was going next. all of this happened as we move toward the re-elect. josh: and what is -- this is going to make you guys happy but the re-elect started yesterday. nd this is already carol: feel it. josh: we're in the middle of the 2020 election. so framing the backdrop is this fight in congress and more contentiousness and where we are headed two years from now and a heck of an election. carol: thank you very much. great stuff. josh. and there are so many political stories in the magazine this

week. makes sense, right? we wrapped up the midterms. let's bring in the editor of "bloomberg businessweek" joe webber. our story and you guys covered it in a lot of different ways. >> a, the cover story, right? had to be. you got josh green writing that. it's like -- let's do that on the cover. carol: we just heard from him. and it's going to be a different next few years. >> really what we wanted to do is how do we take this forward? and everybody knows the outcome but what does it all mean and what is it going to mean? and it's going to be something that we will really watch unfold beginning in january, right? but between now and then, we want to also talk about some other implications of the election. one big one being trade. right? this -- the trade war, it's ongoing implications, and just something we can't take our eyes off because we're a business magazine. so a couple of places that it came up in this week's issue. one was about lobsters. even lobsters get caught in the trade war. jason: lobsters. why not? >> maine. this iconic industry in maine that's really been affected and

china had this growing appetite for lobsters. and what happened when trump announced his tariffs china put tariffs on lobsters and all of a sudden china is not buying the lobsters from the u.s. anymore. carol: the other focus of the magazine is about m.b.a. schools. >> for 30 years "business week" has ranked business schools and we wanted to make it extra special. and we deserve extra credit for what we did. like thousands of people were surveyed for this so we feel it's a very definitive ranking and we're really excited about it. jason: it's amazing. new methodology. and we'll get into that later in the show with the big reveal for his number one. joel weber. thank you so much. 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."

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carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelly. join us for "bloomberg businessweek" every week on the -- every day on the radio from 2:00 to 5:00 wall street time. carol: and you can find us online on businessweek.com and our mobile app. jason: the cover story the results of the u.s. midterms. republicans held the senate but the dems take the house that means president trump will soon be on the receiving end of some pointed questions. something carol he didn't get much of from the g.o.p.-led congress. carol: it will be a different environment. orders backed up by subpoenas for officials to answer questions on controversial policies such as the dispatch of thousands of troops to the u.s.-mexican border. here's u.s. congressional reporter. >> congress has had subpoena powers from the teapot dome

scandal but with republicans in 2015 -- carol: got ramped up a little bit? >> they added additional powers for the chairmen, the majority party, to make the decisions on their own and not many cases without consultation with democrats. so now democrats who opposed that back then are saying hmmm, now that we're going into power, not a bad idea. carol: this could be useful. >> absolutely. carol: i feel there has been so much speculation or so much speculation heading into the midterms about what the democrats would do if they won the house of representatives. they did. so what can we expect to come out? >> well, soon the speculation came from republicans. and the drum beat was they're going to try to impeach the president. they're going to try to impeach the president. democrats including nancy pelosi. democratic party are trying to downplay that. we'll see how that plays out. but one thing we do know democrats have said repeatedly is that republicans in the last two years have not used their subpoena power very often for the trump administration on scandals with the cabinet officers or the trump policies

looking at a trump policy they have not hauled that many witnesses in before earings. and democrats have said that that is basic responsibility of congress and they're going to -- they're going to ramp up that. carol: impeachment proceedings aside, one of the big things is that looking into what, the president's taxes, is it looking into the relationship at the -- that the president and his family members have had with russia, what are some of the top things? >> for instance, in the headlines right now, intelligence chairman adam schiff has suggested we should look into the syrian ties with the trump family spilling out of the khashoggi slaying. and what's up with the administration's response on that? it seems rather muted. or the alleged -- attack the u.s. at any point and judiciary chairman nadler have said we have to look at what why trump is doing this and what the motivations are.

carol: what about the financial aspect? i think of the "new york times" story. that put all of this out. and we kind of talked in the newsroom how everybody focused on it and then it went away. but i do wonder under -- a democratically controlled house, do they now pursue that? >> oh, absolutely. and the incoming -- the likely incoming chairwoman of the financial services committee has tried for two years to get subpoenas. and subpoena power, to get current chairman jeb hensarling of texas to subpoena deutsche bank and other bank records. she will waste no time launching that herself. even broad -- more broadly, she has already said it's payback time for banks, wall street, and insurance companies. i don't know if pelosi wanted her to say that. or what exactly that means. carol: right. >> so it should be a lot of fireworks. carol: another result of the u.s. midterms of course was that women won more seats than ever before after a record number of female candidates were on ballots across the country. jason: is the growing presence of women in politics symbolic or

will it impact policy making? here's reporter rebecca greenfield. >> just to put it in context, there's a record number of women who are going to be in congress nd still 75% of the power will be held by men. so i just want to put that -- carol: raining on our parade. >> perspective is important. which is why it's important to re-elect people and keep the momentum going if you want parity which i think we need to say that. it's -- the congress should look like people more. like the u.s. electorate more. so it is important to have parity -- for parity's sake and that's why we have to keep getting people elected over and over. jason: what were the driving factors that got so many women unning this time around? >> i think a lot of people will point to the election of donald trump as a catalyst for a lot of women and the loss of hillary clinton.

i think both of those things in tandem. you have a woman who a lot of people thought was qualified losing and then a man who has said things that are sexist and passed legislation that a lot of women don't like or has been for legislation that they don't like. and that galvanized women to run. and then -- carol: and didn't lose the popular vote. >> so there are a lot of people who disagree with that. and said if he can do it, why can't i? arol: but the me too generation, movement, excuse me. that had to have a play here too, right? as a backdrop? >> definitely. and some people even say me too came out of donald trump a little bit with the access hollywood tape. but yeah. it's this moment of women saying that their voices have power and should have power. because when they don't have power, it's not coming out that well. jason: let's talk about power. because on this theme of re-election, you know, with the house turning to democrats, you were going to have a number of prominent women in leadership roles, nancy pelosi being an

obvious one, but reading your piece, i was reminded that nia lowy, my representative in westchester county, is poised to have an incredibly powerful portion which only underscores the thesis of your piece, this notion that really for long term change, you got to hang around. >> yeah. i think that's an -- an under discussed aspect of this year of the woman. and women who aren't -- you know, the fresh new people running are gaining some significant power. like you mentioned, nia lowy will likely chair the appropriations committee which is going to have significant power in the current congress because of who holds power mostly republicans. so appropriations, how the budget is doled out is going to be an important way that democrats get anything that they want. so yeah, just people who have been in congress for decades getting re-elected, amassing power, having the right relationships, that is now women are really going to make their mark. carol: still ahead, google and the great firewall. the company's controversial plan

to bring its search engine to china once again. jason: plus also the recent silicon valley selloff was shocktober as some calling it. an overcorrection or the new state of the tech market? carol: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. you can also listen to us on the radio on sirius x.m. channel 119 and on a.m. 1130 on new york, 601 in boston. in washington, d.c. jason: a.m. 9 60 in the bay area and on london d.a.b. digital and on the bloomberg business app. carol: this week's feature section google and the great firewall of china. facebook, twitter and wikipedia, blocked and this is the government of censorship. google decided in 2010 that having to edit controversial

links out of search results as the government in beijing requires they decided it was unacceptable. jason: is google now reconsidering that? here's editor max kapkan on the future of google in china. >> the plan was that they were going to make a series of compromises with the chinese government and it's important to say that the chinese internet very different from our internet. if you do business there, you basically have to deal with the government on a continuing basis. and you have to agree to more or less censor certain topics and basically make sure that, you know, various stories toe the party line. as it were. so google went ahead with this and as mark reports in the story, basically the chinese overnment around the time of

the beijing olympics really increased its pressure on the company. at first, they were censoring 100 or so words according to mark bergen sources and by 2008 it's up to in the tens of thousands of sources. and then in 2010, things really hit the fan with this alleged hack of google's servers in china. jason: down to the source code. of google. >> yeah. so basically as mark reports google discovered that they -- that the chinese intelligence agencies were allegedly looking for information about dissidents. google had been trying to protect those people. and you know, as he reports in the story, there was this secret meeting in a place known as helm's deep which if fewer a -- if you're a "lord of the rings" faneuil get the reference. but it's this idea of sort of a last bastion for humanity. jason: where the eye of zoran cannot reach. >> even the eye of zoran. carol: you guys are such nerds. >> i hope we're not manning willing that. in helm's deep there was this big argument, the two main sides of it, one side was led by eric schmidt who at the time was the c.e.o. he was somebody who was in favor of google engaging globally including in china. the other side was sergey brin

who was taking the other side of the position. sergey brin is from the -- was born in the soviet union and had several strong feelings about censorship. and his position ultimately went -- won out and google left china. that's kind of where things have stood for the last eight years or so. carol: so 2006 they start. 2010 they back out again. 2016 from what i understand they start trickling back in. >> and as mark reports there were lots of little attempts that were happening even before that. but the real sort of big effort which includes this thing called dragonfly started in 2016. the main player in this story is google's current c.e.o., sindar pachay. jason: from his previous job he started running android. >> there had been little -- there had been teams in china. and one area that pachay was involved in is android. android on phones all around the world including in china and a shift according to mark's

reporting was he started pairing attention to the usage in china. and there was an effort known as sidewinder to develop basically a chinese android app store which is something that apple has but google did not have. and the hope internally was that, you know, this would be a way in, kind of a side door in to china. and it did not pan out. carol: will those so-called fang stocks bounce back or this month's selloff sign of a new era for the tech market? jason: we'll see. senior markets editor mark reegen. >> i started talking about the scene in caddyshack and a big crowd in the swimming pool and everybody is splashing and having fun. and then a girl throws a baby ruth candy bar into the pool and everyone mistakes it for something else. and we won't say what and there's a mad panic rush to the exit. and the comparison i'm trying to make is that these tech stocks, especially the fangs, facebook, amazon, netflix, google, some people will lump apple and microsoft in there, too, they

become what's known on wall street as a crowded trade. much like the swimming pool in caddyshack and there was this sort of panic exit from the trade. and i think it's important to sort of -- you know, go back a step and explain how it became so crowded. these are the major influences on the stock market. but not only that, if you look at sort of these lists of -- the most important positions to -- hedge funds. goldman sachs a v.i.p. list they call it. not only are they at the top of those -- even more heavily weighted than their weights in the s&p 500. so these were the key stocks for hedge funds but also with -- if you look at factor investing. which has become super popular. carol: right. >> trying to build a better mousetrap when it comes to picking stocks. carol: when we talked about the run-up in the market before this selloff, before shocktober we talked about the breadth of the market and so much of the gains was in a few big tech names. and we saw that not just in the u.s. in terms of the u.s. tech names but also big global tech companies.

we saw it in chinese tech companies. >> absolutely. and they followed the same trajectory. if it's -- looking at alibaba or baidu and sort of similar names in china. very consumer internet oriented. and they sort of have their own idiosyncratic issues in china. but it's the same story to some degree. you know, so the question is, we saw just this meltdown in tech ames about -- close to a trillion dollars wiped off of the value of just -- carol: a true correction. >> right. right. i mean, in some cases facebook down more than 30%. carol: yeah. wow. >> the fang complex. pretty much in a bear market. now, granted still up for the year because they got off to such a strong year but a sharp reversal. so it's clear -- that's the peril of a crowded trade is that when there are signs of weakness, when there's stuff to worry about, stuff floating in the water as i say, then it's this rush to the exit. jason: coming up, carol, the big reveal. bloomberg -- "bloomberg businessweek" 30th annual ranking of the best u.s. business schools. stay tuned for the winner. carol: looking forward to that

and trump's trade war and now lobsters seem to be trapped. jason: this is "bloomberg businessweek." ♪ [ phone rings ] what?!

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♪ jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. still ahead in this week's issue wall street's new risk machine investors diving into private loans. jason: trump's economic pain on names most iconic industry. the lobster. carol: right. but first up, the best b schools. "bloomberg businessweek" releasing its 30th annual ranking of the best u.s. business schools and surveyed over 26,000 m.b.a. students, alumni and recruiters

and sifted through a lot of stuff including compensation and job placement data from 92 full-time m.b.a. programs. jason: that's right. a whole new methodology also looking at networking and especially entrepreneurship. and the school with the best ranking. stanford university. we went to campus and spoke exclusively with stanford business school senior associate dean and professor yossi feinberg. >> it's wonderful to have you here. and obviously it's great to be ranked number one. jason: number one. you won. >> thank you so much. carol: congratulations. >> and entrepreneurship is for us not only a field. it's really something that we think about holistically as something that captures the mindset of creating new value. so it applies in every organization. and every leadership role. and i think this is what we teach and this is what we believe in, that our graduates will go on and create new value that will better all of us. carol: and jason and i spend so

much time and everybody at bloomberg talking about the world being disrupted. and so many industries being disrupted and that includes education. you guys have had to adapt, right, and change programs to meet the growing needs of companies that are out there. >> absolutely. i think that it's not only that traditional industries are being disrupted. it's the rate of disruption that's accelerating. so you have to be extremely nimble. and i think management, education, is no different. it has to adapt quickly. carol: what have you had to change specifically? in the last couple of years? >> yeah. it's a great question. and this is the tricky part. there are certain things that you want to keep. you want to have a scientific, rigorous, basis for everything that you teach. but at the same time, you want to make sure that as analytics becomes more central, that you equip, you know, the students with those tools which is new skills. so you have to constantly change the curriculum in that way. carol: i'm thinking a.i. and

things like that play into it, right? >> absolutely. absolutely. jason: and we are at the heart of entrepreneurship, innovation in a lot of ways and people have this romantic view of two guys in a garage. you know, creating something. but you focus a lot on corporate entrepreneurship as well. how do you build a student, essentially? how do you train someone to be an entrepreneur within a big organization? >> i think it combines both the openness to new ideas and the drive to create new value. and if you think about that, in every organization, a leader that has -- to strive to create new value is the most central thing. at the same time, it has to be a leader that has empathy and compassion. and humility. so the values become even more important as the technology evolves. and we see it all around us. jason: that's such an

interesting thing that you bring up. and we spend so much time talking about big tech at this point. and you think about how this environment has changed. and the big questions that are facing some of the leaders of technology companies. many of whom based miles from here. carol: social media. search companies. >> absolutely. and i think that's -- that's at the core of creating principle leaders. as they come here, the personal development and the community, it's not a personal, individual process. it's being part of a community that strives not to do only well but really do -- do better for the world and do well for the world. not only for themselves. carol: and it's so great you talk about world global. thinking about the whole world at large. diversity is always important. foreign students are very important to stanford. you guys have a lot of folks here at the m.b.a. program and getting tougher for some of those corporate visas to be

processed. and i'm curious if you're seeing a slowdown in applicants as a result of that. >> so i think there's a global trend in applications from global students to u.s. schools. and that's something i think -- carol: slowing down? >> yeah. that something that we see. i think in terms of the opportunities -- the opportunities that our graduates have are still fantastic. and i think that the industry is looking for amazing talent whether it's from overseas or from the u.s. the other part of it i think the opportunity globally are now increasing all the time. and we talked about entrepreneurship. and change and innovation, that accelerated pace of change, really means that our graduates are in high demand. carol: in this year's business school rankings, stanford is followed by the wharton school university of pennsylvania which comes in at number two, harvard

at number three, and m.i.t. sloan at number four and chicago's business school they come in at number five. jason: bloomberg also released a tool that breaks down the scores. here's taylor riggs so take us through it. >> this is really cool. and this is actually really popular feature that we have. i'm in grad school myself so come with me. we're going to do this live in real time. we can break this down. i'll hover over here and you can see the compensation that you can get when you graduate. and the learning experience of course, networking, we all know how important that is. and entrepreneurship. so that when you get out you can see -- if you can really start your own company. now, harvard, let's just pick on them, for example. we know that they do have the largest endowment, for example, so what's -- let's scroll down here. and you can really dig into deeper here, the highest score to tuition and how they rank relative to all of the other business schools. so i'm fascinated by this. really interactive, really cool. and everyone should go online and check it out.

carol: it's great. you can dig deeper into how had he scored on these different metrics. jason: and compare and contrast and figure out what the strengths and weaknesses of all the individual schools are. great stuff. thanks, taylor. carol: and for more on the methodology behind this year's ranking we caught up with caleb solomon. >> what we did our rankings this year is we asked, we did something completely different. most entities that rank the business schools go, ok, this is important. this thing is important. this is important. and then they make a decision based on the weightings and other things. what we did is we asked, graduating students, we asked alumni who have been out of school a couple of years and we asked corporate recruiters who recruit from business school what is most important to you. carol: right. >> about the business school education. number one was compensation. that's what was overwhelming the most important thing and that's how our ranking is mostly weighted. what do you earn when you get out of school and what kind of bonus in your first year and a couple of other factors.

carol: what other issues you look at? four in total. >> exactly. the other one is networking which you can say is linked to compensation. so networking means you go to a business school as a student. and what interaction -- what do you learn from the other students? how close are the alumni to you? do they help you a lot or not? as an alumnus is the alumni network a real thing or this myth? do other alumni help you in getting -- and your career and from recruiters, what's really critical was so what -- what is the halo impact of one degree versus another? how many does this school's m.b.a. open versus this school? that was the networking index. jason: what are the other two? >> the other two are learning and pretty straightforward. you did learn the things you needed to learn and wanted to learn and for alumni, now you're a bunch of years out of school and what you learned in school and how valuable was that? >> still ahead looking for higher yields. try lending money. the pitch for private debt. carol: plus even lobsters can't escape trump's trade war. we crashing open the impact on the industry.

jason: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. join carol and me every day for "bloomberg businessweek" on the radio 2:00 to 5:00 carol: and find us online at businessweek.com and on our mobile app. due to trump's trade war a hot topic at the bloomberg new economy forum in singapore. >> it might get worse before it gets better. and i think that -- you know, the ways in which this trade issue will be resolved are also difficult. because there are not many usual channels that we can use given the circumstances and the character. >> i don't think there's an instant cure for the trade issue. i really don't. i wish that i could sit here and say after the midterm elections

the white house and the administration understand they got to solve trade issues. i think china would like to solve the trade issue. >> we're not in a cold war now. people that say it's a cold war it's overblown. but we have -- the very real threat of a cold war if we continue down this trajectory. it's -- it's a dangerous trajectory. jason: trajectory that's making russia and china comrades again, carol. here's mark champion in london with a "business week" story you can find online and how moscow and beijing now as close as at any time in their 400 years of shared history. >> you had -- there's been this on and off relationship for centuries. and then since 1972, when nixon famously went to china, and the u.s. and china have had a fairly -- very good working relationship. and very engaged and weren't of course analyzed in the sense of nato allies or anything of that nature.

they're ideological opposites. but they always had a good relationship. since 1972. and that was directed really at the soviet union which at the time was -- the chinese the war in 1969 along the border with the soviet union. and it was a massive change. and a massive shift at the time. and an enormous win really for the united states. so fast forward to after the cold war, and almost without us noticing in a way, russia and china have now reversed that. so that that kind of triangle which had the soviet union far distant from the russians and the americans who were close together, that's kind of reversed now. and you got the russians and chinese very close together and you have the u.s. much more distant. it's imposed sanctions on both countries. it's got a trade war with china. and there's a big discussion now in washington about, you know,

just how bad news is this for the u.s.? >> so mark, help us understand the role that the current u.s. administration has played as a catalyst here. because this does feel like a new pivot of sorts or a new development. >> yes. you know, there are two things to say about this. the first is it's not all trump's fault. you know, this is something that actually rapprochement and a natural rapprochement began under gorbachev a long time ago and bubbled along and didn't amount to a great deal and turn around to 2014. and then you had the crisis between the west and russia over ukraine. and russia very consciously kind of tried to pivot to china. and they started -- you know, they negotiated to build a gas pipeline.

kind that they have several to europe and wanted to build one to china and made perfect sense. but they've been negotiating for a decade to get this pipeline without great success. because they couldn't agree on price. and so on. and then all of a sudden month after the annexation of crimea, sanctions are slapped on, and the russians come to an agreement with the chinese. basically they fold on price. and from there, they've been gradually building more pipelines, oil pipelines in particular, and that -- and russia in 2015 overtook saudi arabia as china's biggest supplier of oil. and neither really big changes. geopolitical changes. because once you build that pipeline it takes a long time to build. once you build it, you've changed the facts on the ground for the next 30 years or more. and that's true now both with the oil pipelines and with the gas pipelines.

jason: so carol, as president trump rewrites america's economic relationships there have been some unintended consequences here in the u.s. as well. carol: there certainly have been. and some of the country's most prized exports. we're talking about kentucky bourbon, harley davidson motorcycles and midwestern soybeans and maine lobsters have become retaliatory targets. here's reporter sean donnan on how lobster is tracked in trump's trade war. >> trade wars don't happen in isolation. they happen in conjunction with a lot of other forces. and one of the things that i started learning is -- as i scratched the surface in terms of the lobster industry is they're getting hit hard by the tariffs. but they're also getting hit shard by the tariffs at a time when things are really good in the lobster industry and are things really good? that's a combination of factors from climate change to globalization. carol: wait, wait. slow down. you got to dig into this. there were things i had no idea. talk to us about climate changes and beneficial to the lobster industry because that doesn't make sense to me. jason: and lobster eaters. carol: yeah. exactly.

>> so it's a fascinating phenomenon. you look at lobster production in maine, the number of lobsters -- from world war ii into the 1980's it's pretty steady at about 20 million pounds a year. and then all of a sudden what starts happening is the gulf of maine starts to warm up in a way. and that means that you get this kind of peak temperature, the peak lobster temperature, in terms of reproduction that hits gulf of maine and some really productive fisheries and the population just starts to boom up in maine. while it's booming off of maine, it's actually dying further south. in places like long island sound. and so 2016, that 20 million pounds that you saw from the 19 -- from world war ii to the 1980's all of a sudden, you're seeing the lobster production that's five times that. 120 million. jason: that's incredible. carol: yeah. it is. jason: incredible. what are the trade wars doing to this business? because you take us right there with some very specific

lobstermen who -- this is hitting their top and bottom lines in a very meaningful way. >> so one thing that's happened is that population surge is coincided with the opening up of china as a big export market. and so three or four years ago, the u.s. was exporting something $30 million of lobsters to china. that's up to over $100 million in the first nine months of this year. and then it took a real dive after the tariffs hit. what -- this is -- the lobsters are one of these classic kind of -- what's the word, collateral damage products when it comes to the trade wars. in july, the chinese started imposing a 25% tariff on live lobsters from the u.s. and that immediately raised prices for the chinese. and chinese buyers started -- the maine lobster dealers who had been building this business over -- over recent years, to kind of look at the surplus capacity and send it to china. and started saying hang on a second. that's too expensive.

we can get it cheaper from canada. jason: coming up, how legislation since the financial crisis is allowing investors to lend money to businesses directly. has some risky consequences. carol: plus it's that time of the year again already. the 2018 pursuit holiday gift guide. jason: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. you can also listen to us on the radio on sirius x.m. channel 119 and on a.m. 1130 in new york. 106. in boston. 99.1 in d.c. jason: a.m. 9 60 in the bay area and loan con on d.a.b. digital and on the bloomberg business app. this week's financial section the pitch for private debt. big banks have been pulling back while pension finances and endowments and hedge funds and the like have plenty money to play with and why not have investors lend money to businesses directly? carol: good question. blackstone, carlisle and k.k.r.

have jumped in to philadelphia the gap. but that comes with risk as there are signs of trouble ahead. here's editor pat mcneer. >> they are in the lending business but don't run a bank. they run what are called business development corporations. which is -- it's often a kind of stock. and you think of like a closed end fund for a reit and trades like a stock and what you get for most part is a portfolio. of investments. with a reit it would be in real estate. with b.d.c.'s. it's primarily in corporate debt. and it's generally corporate debt to the kinds of companies that might not be able to get it from a bank. so you're looking at sort of -- you know, riskier debt. often to smaller and mid market companies. and then a way -- a lot of institutions maybe invest in this kind of thing. as you mentioned a lot of

private equity funds are really getting into this business. but the way that's sort of main street investors could possibly have access to this is they can buy a publicly traded b.d.c. jason: that's what i find so fascinating about this. is this has long been considered the holy grail, right? on both sides. that retail investors somehow get access to these great returns that the private equity managers tend to deliver. the most successful ones do. and at the same time, the -- the private equity guys and other investment managers get access to this much bigger pool of investors. but as you say, it's not without some significant risk. why? >> well, so these things have like really enticing yields. we're talking about double digit yields and it's just a given that when you see a big yield, you should ask yourself what kind of risk am i taking to get that yield? carol: too good to be true. >> that's right. always a market among individual investors for high yielding investments and they don't necessarily pay as much attention to how is my principal eroding while i'm getting this yield? and so you know, these are companies, you know, making investments in riskier smaller

companies that sometimes have financial problems and -- >> because they're lending money to them. >> they are lending money to them. and you as an investor in had a company are participating in that risk. jason: let's pivot to pursuits. it's that time of the year again. the holiday gift guide. carol: time to make a shopping list. don't let your loved ones suffer. we caught up with editor chris rouser with the 47 gifts that take luxury to a higher level. >> this year, we decided our theme should be leveling up. so your friends may have -- you know, they might have a nice pair of gloves. but we want to give you the perfect montclair gloves which is like level up flair winter wardrobe and level up their gym and level up their den and some really fun to put together. jason: so where do we start? what's your favorite leveling up? >> so my favorite item is actually not one of the most expensive ones. it's this live all bike helmet. it's a smart bike helmet.

it's connected to your phone. and also connected to a little remote on your manley bars. it can play music for you. because i hate it when i see people with headphones biking in the city. that's so dangerous. it can give you turn by turn directions and also has light up signals on either side. so cars can see you in the dark which way you're going to turn. carol: oh, my god. >> press something on your handle bar -- >> yes. press left. right. play. you can answer phone calls. i've answered phone calls with it in the office. and on the road. carol: do you still hear what's going on around you? >> it's not in your ears. a little speaker in the helmet. carol: what does it go for? >> $169. you will pay $60 or $07 for normal nonsmart helmets so this is pretty good. carol: and you brought us some things here. this looks like -- >> yes. i was excited to not -- and then excited again. it's called mr. black. cold brew. and like coffee. great. and says coffee liqueur. carol: and then got interested. >> got interested. jason: so i'm a huge cold brew person. and i was very excited when this came around. it is literally a liqueur that tastes brewed coffee but it's like a very rich flavor. and you know, we were looking for -- i would drink it

straight. but they recommend some cocktails with it and said ok, have it with mescao which sounded disgusting. jason: wo. >> actually, it's good. the flavor of coffee -- carol: have you tried it? >> the flavor of coffee and mescao, worked together and smokiness and versatile. liqueur. and everyone that we've given to and tested it really likes it. carol: what does it go for? >> $40. carol: bargain, bargain. jason: what are you leveling up there? your liqueur? >> your coffee. jason: that's how it is on the pursuit row. carol: and nobody wants this, i'll take it. >> yeah. so carol has a new christmas present. that is a $670 lemaire ultra luxury cream and infused with 20 carat gold. carol: of course it is. >> the level up your bathroom is one of my favorite sections because i'm a total skin care junkie and half interest in my bathroom and i'm wearing the clay that we recommended right

now. but we got some really great stuff. carol: "bloomberg businessweek" is available on newsstands now. jason: and also online at businessweek.com and on our mobile app. what's your must read? carol: let's read the story about google in china. mark bergen wrote it and we talked to max about it. but they were in google -- google was in china a while ago. they backed out of it. they didn't -- the chinese censorship but they then working their way back in and it's created some controversy. a lot of conversation around this. jason: so timely and especially a lot of questions around those big tech stocks. where they go from here. how investors should be thinking about them as global powerhouses. carol: i know what your must read is. jason: the cover story. josh green really taking us into the implications of the midterms. he talked to steve bannon. he really examined the trump administration as it heads toward a potential re-election. spoiler alert. it's bananas. carol: get ready, everybody. you can of course find more stories on businessweek.com over the weekend. our podcast available on itunes,

and at bloomberg.com. jason: more bloomberg television starts right now. ♪ show me movies a grinch would love.

[ barking ] nu uh, i'm picking the movie tonight. [ whimpers ] be sad, i enjoy it. show me grinchy movies. oh, goody. [ whimpers ] mmm, fine! show me movies max would like. see the grinch in theaters by saying... "get grinch tickets" into your xfinity x1 voice remote. [ laughs ] uh oh. [ laughs ] something in my throat.

♪ nejra: jpmorgan's secret punishment. america's biggest bank was shackled by washington for years after the crisis. bloomberg has learned about the restrictions. different advisors, different rules. the fed proposes a softer oversight regime for all but the biggest u.s. banks. and who is investing sustainably? a new report says high net worth millennials are putting the most into investments. welcome to bloomberg markets: rules and returns. this is the show where we delve into the regulatory challenges and opportunities for financial markets ar