is manus: carol: welcome to bloomberg businessweek. we dive into the second annual bloomberg 50, the people driving change this year. plus, the cash trade dragging down general

electric. carol: with the financial markets in turmoil. jason: federal reserve officials are in search of the neutral rates. we explain what that is and why it matters. the chairman of the fed gave a speech in new york in which he said, interest rates were just below neutral. the stock market took off. the dow jones went up more than 600 points. everybody said, maybe the fed is turning dovish, maybe there will be fewer hikes for the interest rate than expected. saying, did heed really mean what he said? carol: the neutral rate is not an exact number.

we hear this with our guests, about a goldilocks economy, the spot where everything is moving along. inflation is low and stable. everyone who wants a job has one. we are at a goldilocks economy. why do we need a stimulus anymore? that is the debate the fed is going through right now. inflation could start to fall back down and trigger a recession. this was all about, let's just stimulate the economy. concept.rvival was the

peter: they were not trying to be neutral at the time. they foundceeded, themselves in this issue where any are forced to confront unknowable number. jason: it was a pretty clear path into 2019 of consistent rate hikes. the dots and all of that showed that is where the fed had its mind. december feels like a lock. 2019, continually raising interest rates is not necessarily a given. there is a wide dispersion of views about this. you are hearing other people two of, one, some are

even saying zero. that is the element of this thing. you can no longer just look at economics. you have to look at politics of the united states, seeing there could be a mistake appointing jay powell chairman of the fed, he worries interest rate decreases are going to kill recovery. jason: president trump's tweets on trade policy with china, and the subsequent walk backs, fueled this week's market jitters. for the robert mueller probe, there is a lot to unpack. josh, a lot of things going on. like u.s. and china trade

are obviously front and center. what are the implications of this? washington is now as riveted i the trade war as the -- by the trade war as the markets have been for quite a while. there was not any real hope among political folks that there would be any meaningful trade deal. parties were looking for some sign the trade war was going to worsen in advance. we got back in the in your term. -- near term. claims that the u.s. auto tariffs had been removed. it was a best case reaction.

the chinese did not agree a day later. markets fell. arrest, it looks as if we are getting the opposite of the desired effect. we've got a truce, what looks more like bad feelings between the two countries and a provocation as a result of the arrest. jason: it feels like the robert mueller probe is coming to something of a conclusion. josh: he is wrapping up loose ends. he is going to do a series of sentencing memos. we saw the one related to michael flynn, earlier this week. it was stunning for two reasons. he recommended no jail time at all for michael flynn. it was a reflection of the large

degree of cooperation. the other reason it was such a shock, half of that memo was redacted. there were all sorts of things he talked about the public don't know yet. -- doesn't know yet. there is a lot more coming down the pike. our newsroom was focused on the passing of george h.w. bush. a moment ofrjected bipartisan harmony that is rare. markets were closed. the world came together to celebrate the life of the former president. within 24 hours, things looked as if they were back to normal. onlyral and morning

forestalled them for a week. carol: coming up, what is dragging down general electric. jason: and the demise of toys "r" us. carol: this is "bloomberg businessweek." ♪

carol: welcome back. jason: you can join us every day on the radio. and catch up with our podcast. atol: find us online businessweek.com. general electric this is bloomberg. insurance isric's a big cash drain. jason: as it sells off assets,

you see in black the cash thrown off i portfolios. -- by portfolios. h gets thrown off dramatically through these planned investments. carol: the other quandary is how it reports earnings. aylor forto tailor -- t another take. taylor: the generally accepted accounting principles gets very generalted because of electric's structure and how complicated their business is. we show that income incomebility -- net profitability. that income look

positive if you report it on an adjusted basis. bitied to hedge my bets a and to start at the top line. thecan't play around with numbers. carol: great stuff. as ge stumbles, we saw debt buyback under threat as creditors begin to get more demanding. jason: we have more on the company that jack welch built. thate thing right now is he has possibly the hardest job in american business. he has to take a falling star and put it back into the heavens. his predecessor only lasted 14 months on the job. the board is anxious for

somebody to get this right. if you can't get it right, you are going to be out. investors are very upset. to want toe crazy have your retirement there. dividends are down to one sent. -- cent. he truly does not have a lot of rope. the thing he has is a license to make big changes. he is going to have to do that quickly. strategic changes he might want to do are going to be constrained by the debt load. to $100ht have up billion in liabilities. a lot of that stems from the long-term care insurance business. ge capital once owned a big

insurance business and now they are still on the hook for the liabilities from it. they have 300,000 long-term care insurance policies. ge had to say, we have reserves, $15 billion more set aside. that is an amazing amount of money. they have not been a major player in this field for a decade. they are trapped in a business that is now difficult to sell. no one wants to buy a long-term care business. they understand you are looking into a black hole. someone had some big opinions about what could happen next. be: what could happen should

starts figuring out pieces of ge that could be carved out. each piece that brings in a lot of cash takes away opportunities for the company for the long-term. these are the ones that will bring the most money on the open market. if they sell the healthy parts of the health care business, they could get $10 billion. that should be the future. are you doing that to make it now? jason: there was an example of moving one company from connecticut to boston. jim: that is supposed to be the

plan. they went from being a broad conglomerate to an industrial company. the focus was not on the right things. he made a big bet on energy. they were going to be big in energy turbines. they bought a lot of assets. that business has gone south. taking a $22 billion write-off in the last year or two. amazing how many bad moves were made. jason: i caught up with bain capital's comanaging partner. we talked about a lot of different things. i had to ask them about the dramatic decision made to make

some good out of the demise of toys "r" us. people forget it was 15 years ago we embarked on a journey to support retail. spent over 12 years trying to do everything we could to drive that business. there were challenges with the internet. the decision we wanted to try and do a recapitalization. this was not the decision that competitors made. the should probably try to figure out a way to support the workers in this context. alexandria ores

casio cortez having conflict with netflix's ceo? jason: this is "bloomberg businessweek."

jason: welcome back. onol: you can listen to us the radio on sirius xm, in new york, boston, washington dc -- , and on they area bloomberg business app. our look at the bloomberg 50.

the 2018, -- accomplishments particularly noteworthy. >> these people really made the biggest impact. they are not always heard of. ason: you don't just have jay powell. you have the cohorts. more than one person making these decisions. .here is a brain trust we wanted to understand the decision-making behind these complex processes. instead of going out -- that was one of the things we wanted to do instead of explaining their decision-making.

we have the ceo of patagonia. they are defenders of the environment. her take is, younger consumers expect this. if you want to have millennial loyalty, you cannot just sit back. people go to stores just for the activism. it has not hurt business. she said they have had their best year. roberts is probably one of the most influential in terms of content distribution. an amazing year for him. comcast, ining with the u.s. they are dealing with cord-cutting.

it's become a huge issue. in europe, they are adding subscribers. this is a move to insulate themselves against that. about talk to us politics. ert: in politics, you had people like alexandria everyone saw that image of her looking shocked when she won the primary. that was a bellwether for the midterms. ef, a michelinch chef with 31 restaurants. hurricane in puerto

rico, and going back to the earthquake and haiti, he is the world's foremost expert on how to feed people in disaster areas. jose is also the owner of the think food group. his nonprofit has served more than 2.5 million meals to victims and first responders. inarriving to washington dc i saw d.c. central kitchen with a very simple mission, taking homeless off the streets, feeding the hungry in the .rocess carol: you have bought food to so many different people.

thanksgiving near the california wildfires. how difficult is it to serve thousands at once? jose: i am now going back eight years. over 6 million or 7 million meals. no "i". it is "we the people". the american people of puerto rico decided to do something about people going hungry. from 20 the first day, to more than 25,000 volunteers.

1000 meals the first day and then we went up to 150,000. carol: you have given almost $400,000 to small businesses on the island of puerto rico. you are feeding these people. helping them get back on their feet. jose: we are doing what puerto rico needs. we are pushing for it. food doesn't always have to be coming from outside the island. we want to be present in puerto rico for many more years. the small farmers and infrastructure to be strong. when the farmers come, we began giving grants.

we are supporting 25 small farmers in puerto rico alone. arol: you offered help to who isria ocasio-cortez, also on our bloomberg 50. said, i don't know that i can afford a place to stay in washington when i joined congress in january. why did you do that? stay.fered her a place to if someone needs help, we are always here. i think the congresswoman does not need the help of anyone. she is going to show the 21st century is very much going to be run by women. up, some men on wall street may be shutting women out. jason: and opportunity zones in

new jersey. carol: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." ahead, a real estate company snaps up beachfront opportunities. a robotic startup helping amazon's rivals narrow the delivery gap. carol: what has become a wall

metoo era? for the avoid women at all costs. jason: it is a fascinating story. >> some men are avoiding women entirely out of some sort of concern something they do is going to be misunderstood or that there could be a false accusation watched against them. lodged against them. they are cutting weapon out entirely from their professional relationships. they are not going to get after-work drinks with them. they are not closing a door during a meeting. they are bringing a third person

along to something that should be a private meeting. a woman got kicked out of a meeting because the meeting was about another woman. we heard stories about blanket rules. no getting dinner with women under 35. someone a rule established. these are pretty problematic. there is a gender segregation going on. about the women. there is a gender imbalance we already have on wall street. in an effort to avoid the sexual harassment, these men and firms may open themselves up to gender discrimination. katia: that is something hard to prove in small doses. that is one of the difficulties we found in reporting. it is hard to prove a negative.

when you start aggregating and looking over the course of a long time, if you can look at how one manager deals with multiple subordinates, you can potentially end up with a lawsuit that is easier to prove. remind us about a comment from the vice president in the story. katia: his comment 20 50 a couple of years ago. -- went viral a couple of years ago. he does not have dinner with anybody, any woman that is not his wife, even for professional purposes. it caused an uproar at the time. men are employing this. many other industries are

fearful of an accusation or something happening. everywhere. we want to take the microscope to finance because of this large gender imbalance and because there are so few women at the top. if you go to the corporate human relations, what are women at these financial firms saying? katia: death by a thousand paper cuts. how do you keep tabs on this? it is about acknowledging this is happening. we spoke with unemployment attorney and he was saying there are these one-off meetings, a lot of them are not even -- are optional. you take a class and it is over. check the box.

impact.t a lasting you need to have a conversation about this backlash. you need to have a conversation about some of the things that men or bosses may be doing that are threatening to women that they don't recognize are threatening to women. kushner real estate company that is snapping up property in opportunity zones with tax breaks. carol: our reporter has all the details. caleb: this was created in president trump 2017 tax bill. idea is to incentivize business investment in parts of the country that need it. offering really nice tax breaks for people who do that.

they seem specifically designed to benefit real estate developers. carol: the president is a real estate developer. how the zones were chosen has turned out to be odd. has nominated 25% of the impoverished zones under the law. there are different ways to do that. cases not always been the whether the places that need it most are getting these opportunities own designations. talk about the luxury hotel next to this pier village. caleb: since the bill was spent $13hey have million buying more property in

this opportunity zone, the kus companies, specifically old houses along the beachfront. some sort of developments are going on there. this is the story of ground-up development that would be perfect for getting these opportunities intact. carol: these are not the only developer snapping up properties in this area. caleb: here a lot more about opportunities own throughout 2019. developers are going to want to buy their property in the zones throughout 2019. carol: to take advantage of these tax breaks, they have to invest a certain amount of money. you buy a property for $2 million and need to spend at

least $2 million more, significantly improving it. that is where the idea of investment in the community comes from. you hold it for a long time and if you do that, you get a double whammy of capital gains tax breaks. you can get a discount on those permanently. whatever capital gains you get on the new investment, if you hold it for a decade, you will get a capital gains tax break. carol: why did the story gets more attention -- get your attention? a map ofu can look at the zones that are designated. especially new jersey. parts of new jersey and new york that need stuff like this. you can see towns where you go, how did that happen? more.ct we will be doing

we are trying to look at how different zones copies designations. real estate developers are some of the most important political donors and influences. lot of open questions about how these decisions got made. carol: the designation is interesting, to create an opportunity zone, they have to look at the poverty rate. urban areas, there is a secondary standard, 80% of median income for the area. it is have less impoverished theirin long branch got designations you have seasonal residents and

they are not getting counted with that census data. a drug smuggler builds a predatory lending company while free on bail. from: and china shirinks a.i.ca in the era of jason: "bloomberg businessweek." ♪ jason: welcome back.

carol: join us for bloomberg

businessweek every day on the radio. podcast. out our aton: you can find us online businessweek.com and on our mobile app. we have a bloomberg investigative series on predatory lending. they have uncovered firms who use the courts of new york state to squeeze small business borrowers. team join reporting us on their latest story about a drug smuggler who built a predatory lending empire out on bail. this is people who offer fast money to small businesses. the money comes overnight. high as rates are as

400%. this is super profitable. it is totally unregulated. all of these shady characters are getting into the industry. carol: how are they able to charge 400% on loans? >> there aren't any great numbers about the industry because it is not regulated. one industry publication one industry publication describes a merchant cash advance of $15 billion a year. the way they charged that amount they will say it it is a sale of future receipts of the business. a coffee shop, you are selling ended pants a share of the payments customers are going to make to you.

reason, it is not regulated. you get into some very personal stories. the story where one woman realized the money she borrowed came with conditions she was not aware of. remax franchise near tampa, florida. they got one of these cash advances, not even really intending to get one. they had been solicited by a broker who offered an $800,000 loan at an attractive rate. he said i will give you this cash advance as a trial. they do that. after a month, they ask about

the term loan and do not hear back. something goes wrong. yellowstone capital, accused them of defaulting. they have to make payments every day. they borrowed $36,000. their first payment of $800 was due the day after they got that money. it was taken directly from their bank account. of the clearing transfer from the bank account did not happen. wstone accused them of defaulting because they did not get that $800. they had no idea. they said, it was not us. she gets a call out of the blue from a debt counselor who says, ital will takep

all the money out of your bank. as, this mustthis be some kind of prank call. it did not make any sense. she asked her lawyer and the bank. both of them said, this could not be true. it was. the company was able to take $50,000 out of their account. it is more money than they ever got. they did not stop payments on the sloan. loan.s they continued to make payments after that, up to the point where their account was frozen by the cash advance company. thinking sitting there

, she doesn't know any of this is happening. one day she goes to access her bank account and she cannot. the loan company has filed a court case. no one told her. you have what is going on in these courts in upstate new york. tell us about this. this involves something these borrowers sign. >> there is a page called the confession of judgment. you are admitting in advance that if the lender says you did not pay, they are right. you are giving up your right to challenge them in court. you are allowing them to take this confession to court and edit rubberstamped and sees your bberstampedet it ru and seize your assets.

the lender does not have to provide proof. >> this is like signing an arbitration agreement. the courts are okay with doing this? >> it doesn't ever come before a judge. a member of the county clerk staff receives these paperwork electronically -- this paperwork electronically. they rubberstamp it. and makeected $225 fee an official judgment of the court. that official judgment can be used by the cash advance company say, after customers and there is an official judgment. you have to comply. one startup promised customers a global dream job and left them with no way home. carol: this is "bloomberg businessweek." ♪

carol: welcome back. jason: you can listen to us on xm, inio on sirius boston, washington dc -- londonhe bay area and in and the bloomberg business app. so much fascinating stuff to cover in this week's technology section. robots toy is making help retailers compete with amazon. and the chinese government is putting restrictions on gene editing. startup -- and

startups go bust. we asked our reporter to explain. fly you tortup would a new destination every month, no questions asked, and would set you up. they were debt financed by their two cofounders and ran into a real cash crunch. in february.ebrand sign-ups quickly dwindled. it found itself with little cash on hand. it left a lot of its customers stranded without a real path home. carol: startups don't actually come to fruition.

with weroam, there are bigger consequences. a lot of these customers found themselves stranded. they put aside a year of their lives for this. out thousands of dollars in many cases. another element, cinematic -- robots. gotten headlines for all it has done in its distribution centers. now robots are coming to the fore for their competitors. pitching startup is any amazon competitor it can

think of its own robots. this is to help them take the lead in front of amazon. it's robotic arms seem to mimic the human hand. carol: one chinese researcher babies, we're talking about designer babies, playing around with genetic composition. it blew the minds of the chinese government. they were not happy. jeff: the government has cracked down hard in ways that were surprising coming from china. they shut down his lab. they are looking at a full investigation to find out

violations. rules, there were vague in this manner. carol: bloomberg businessweek is available on newsstands now. jason: and on her mobile apps -- our mobile app. carol: my must read is the pushback of the #metoo era. the broader implications of what is happening across all different industries and the #metooences of the era. that this investigation our reporters are in the midst of, investigations at the state and city level of predatory lending.

keep watching the space. check out our daily podcast available. carol: we talk with the former ge vice chairman. a must read for those thinking about fitting in. we look ahead to wellness and fitness. we caught up with the ceo of s trava. carol: join us for a live broadcast at 6 p.m. wall street time for the bloomberg 50 celebration. jason: more bloomberg television starts right now. ♪

emily: i'm emily chang and this is "best of bloomberg technology ." coming up, trade truce tensions? presidents trump and xi by a letdown for 90 days, but trump's tweets sent markets on a wild ride. what did they agree on? to temporarily halt the trade war. i, arrested bywe

can