♪ >> welcome to bloomberg business week. we're joining you from bloomberg headquarters in new york. we dive into the second annual bloomberg 50, the people second change thisiving year. >> first let's get to what was a

rough week for investors. concerns over trade and an inverted yield curve. >> economics editor explains why that is. >> he gave a speech in new york in which he said -- j. powell, the chairman of the fed, gave a speech in new york, in which he said that interest rates were just below neutral. and the stock market took off. dow jones industrials went up over 600 points, a 2.5% gain the reason was, everybody said, oh, maybe that's turning dove that the fed is turning dove-ish. -- the fed is turning dove-ish. everybody started saying, did he mean what he said? are we over interpreting it? >> the neutral rate is an interesting constant.

it is not an exact number. that perfect spot where everything is kind of moving along. stableation is low and and everybody who wants a job has one. right now we are at a goldilocks economy. why do we need stimulus for monetary policy? going the way the fed is through right now. start to flowd back down and figure a recession. >> what interesting coming off of the financial crisis and the great recession, they didn't worry about this. >> neutral was an irrelevant concept.

they were not trying to be neutral at that time. they're putting the finger on the scale trying to stimulate the economy. they come in cells this issue forced tothey are confront a number. >> it was a pretty clear path into 2019 of consistent rate hikes. all of that showed that's the fed. it feels like december is a lock. not necessarily a given. wide dispersion. goldman sachs is still predicting for increases in 2019 . you hear people talking about

2-1. that's yet another element of this whole thing. longer look at the politics and the actively saying he made a mistake appointing jay powell and chairman fed. >> we go from wall street to washington. they were at the root of this week's market jitters. >> from the trait to the mueller probe, there's lots to unpack. josh green joining us now from washington. a lot of things going on as there always is. if you like u.s., china, trade, always front and center.

and a new twist with the rest of a chief financial officer of a big chinese company. what are the implications of >> washington is as riveted by the trade war is markets for a while. there was hope trump would try to strike a more conciliatory tone. real hope, noty amongst political folks. markets and people in both the republican and democratic party were looking for some kind of sign that a trade war wasn't going to worsen. in the near term we got that. john's tweets saying they're basically has been a positive meeting -- trump's saying .here's been a positive meeting it was only a best case reaction.

the chinese didn't come out with me with any of this. hughes on the markets fall, you saw them fall again later in the week. with this arrest it looks like we are getting the opposite of what was the desire affect and a climb back where both sides make concessions, hopefully on the path to something bigger. now a provocation as a result of this arrest that looks like it's going to make this problem worse. >> it feels like the mueller probe is coming to something of a conclusion. what are you hearing from folks? >> mueller is essentially wrapping up loose ends. it's clear he's going to do a series of sentencing memos, we saw one related to michael flynn. it was stunning for two reasons, number one, mueller recommended no jail time for flynn, which was a reflection of the large degree of cooperation.

the other reason i think it was such a shock, at least half of that memo was redacted. there were all sorts of things that flynn talked about that we and the public don't know about yet. clearly it made it apparent there is a lot more coming down the pike in the weeks and possibly months ahead. newsroom, the whole world, the passing of the 41st president, george herbert walker bush. pause ofnterjected a bipartisan economy that's rare. at the markets closed and the world came together to celebrate the life of the former president. within 24 hours, things looked as though they were back to normal. and while bush's funeral did put they weref the fights

coming down in washington, all they did was forestall them for a week or two. click speaking of company's under pressure, toys "r" us -- >> speaking of companies under pressure, toys "r" us -- ♪

>> will come back to bloomberg with business week. -- welcome back to bloomberg businessweek. >> engadget on our daily show with our podcast. carol: find us online at businessweek.com. once an afterthought, general electric's insurance unit is now a big cash drain. accounting methods lead the section. we want to dive into it right now. >> one of the concerns about g.e. is its cash flow, as it sells off assets.

we look at this chart and you , then the cash goes down dramatically through the series of divestitures. >> this is the quandary that the country is in. the other caught -- the other quandary is how it reports earnings. the earnings picture. so complicated. with ge have to be an analyst and an accountant. because the general accounting principle that the excepted accounting principle is ge's structure and how complicated the business fully is. we have a partner showing gap. report on an adjusted basis you can make the income of positive. really interesting.

when you analyze the company you have a look at profitability. this is why i try to hedge my bets a little bit. play around with the numbers. taylor riggs joining us now. --stumbles as debt buyback creditors get more demanding. >> more on that company, the committee that jack built. .- jack walsh built >> the thing about larry right now as he has possibly the hardest job in american business. it all and put it in the heavens, especially as his predecessor lasted only 14 months on the job. the board is anxious for somebody to get this right.

if you can't get it right fast you are going to be out. they have already tanked this. massive endorsement today, you're crazy to have your retirement there. it is down to one cent. because some investors can't invest income copies that don't have a dividend. he truly doesn't have a lot of rope here. he does have his license to make big changes. a lot of the strategic changes they want to do are going to be constrained by the debt low -- debt load they have paid is estimated -- they have. it's estimated they have $2 billion in my ability. -- in liability. once upon a time ge capital

owned a big insurance business. now they are still on the hook for some of the liabilities from it. one of the things they have as they are on the hook for about 300,000 long-term care insurance policies. just recently ge had to say we have to read -- we had offset reserves a little. that's an amazing amount of hasy for a business that effectively been a major player for a decade. they are trapped in a business that now it's very difficult to sell. really wants to buy a long-term care business because they understand just how you are looking into a blackhole. cooks the other pieces brookes sutherland, who has followed this closely from a columnist and analyst and a reporter's perspective than anyone i've seen. what could happen next from your perspective?

happen should be that he's going to actually figuring out pieces of ge that can be carved out. each one of those positives that bring a lot of cash takes away opportunity for the long-term. some of the more valuable assets longer term are the ones that bring the most on the open market. it sells a piece of the health care business, with relatively healthy parts of the health care business. get $10 billion, $15 billion. the issue is that should be the future. was part of that that that ultimately he makes pete he moves the company from fairfield to a hub of medical technology. thinking he's in the midst of this.

>> that's the plan. he went from being a broad conglomerate. the issue is the focus didn't turn out to be the right -- he didn't focus on the right things. he made a big bet on energy. there were going to be big and energy turbines. they bought a lot of assets. south toness has gone the point where they ended up taking a $22 billion right off in the last year or two just on that business. and people never saw these. with a comanaging partner. we talked a lot of dust talked about a lot of different things. i had to him about this deal and dramatic decision that being in kkr made to essentially make

some good out of the demise of toys "r" us. >> it was 15 years ago we embarked on the journey to support a big-box retailer that at that time really had overbilled. we spent the last 12 years doing everything we could to drive value in the business. a loosely with a dislocation in a lotet e-commerce we met of challenges. -- we had a lot of challenges. chapter 11 come unfortunately. not the decision that the creditors made, the two side -- to decide to liquidate. we should probably figure out a way to support the workers in this context. kkr and us decided that was the right thing to do.

>> coming up, what does income wearing -- incoming congresswoman have in common with -- that's coming up next. >> this is bloomberg businessweek. ♪

♪>> looking back to bloomberg businessweek. >> you can also listen to us on the radio on sirius xm channel 119 and a.m. 11 30 in new york. >> in the bay area and london and the bloomberg business app. our second annual bloomberg 50. it's a look at business, entertainment, finance, politics and science and technology.

compliment, they were particularly noteworthy. families are the people who made the biggest impact. they are not necessarily always people you've heard of. that's what we go for here. >> you point that out because you don't just have the chairman of the federal reserve. you have this cohort. >> there's more than one person making this decision. we were able to sort of look at .hem holistically we wanted to understand the decision-making behind all of their complex processes. instead of going out there and try to be more open in the decision-making, -- >> -- as well as the ceo of patagonia. you are not going to find a lot of those. >> a lot of those are interesting in their own ways.

they are very activist, they are defenders of the environment. they have sued over the decision this year. younger consumers expect this of you. you want to have millennial loyalty. she said people go to the source now just for their activism. she's really fascinating. their bestey've had year ever. >> brian roberts is probably one of the most influential in terms of content. and maybe content distribution. >> the thing with comcast is in the u.s., obviously they are dealing with core cutting.

this they moved to protect themselves against that. >> talk about the thoughts that were on that list. >> this is really a year not just in politics, but specifically in politics. you have people like alexandria cortez. everybody saw that image of her finding out she had one thing the primary -- had won the primary. we also think about and talk about -- we did an expose next year. you wouldn't think you would be included in this. , he'sally going back

the world's foremost expert in disaster areas. .> ease also the chef and owner >> in the wake of wildfires in california is hurricane struck the united states, they've served more than 2.5 million meals to victims and first responders. >> arriving to washington dc in 1993, i met a man called robert who had a very simple mission. the food could be the beginning , training them to feeding the hungry, giving opportunity to many americans. >> you have brought food to summary different people. plates of food to so many, as we mentioned haiti, california, the

wildfires. north carolina, florida, guatemala. >> only in the last year alone over 6one probably million, 7 million meals. it's not by the person, it's we the people. the american people decided to do something about people going hungry. remember, from one kitchen to almost 26. we went from 20 friends the to more than 25,000 volunteers.

in puerto rico we want up to 150,000 mils per day. >> you've given almost $400,000 to small businesses. you help them get back on their feet. >> more is planned. what i think the government is doing a good job. we need to make sure they are have tog so they don't be coming from always outside the island. helping the locals, small farmers, infrastructure is strong. when the farmers come we begin giving grants -- grants.

>> switching gears, you recently offered help to another individual on our bloomberg 50 list. alexandriaing cortez. you offered her a place to stay after you said i don't -- after she said she couldn't afford a place to stay. why did you do that? wife first, because she's in charge of my home. it's a gesture of saying, and -- saying, some of the needs help, we are always here to help. she's coming to washington to show that the tony for sentry is very much going to be run by women. -- some in on wall street, they're using it as a pretext to shut women out. >> plus eyeing up properties in in jersey and -- new jersey

so-called opportunity zones. ♪

♪ welcome back, i'm jason kelly. tax break for, you because company step the property and be shut -- and be front-- and beach opportunity zones. we begin with one of the red stories, one that has

unfortunately become a wall street will for the me too era. women at alld cost. no more dinners for female colleagues, once it next to them on flights, and avoid one-on-one meetings. here's our bloomberg reporter. >> the men are avoiding women entirely. concernome sort of that's something they would do would be misunderstood or there could be a false accusation launched against them. and in aan behaving more respect for unconscious manner, they are cutting women out of their personal relationship. not going to get after work -- not closing the door during a person, bringing a third along to something that should be a private meeting.

i heard of one story of a woman .etting kicked out of a meeting we heard blanket rules, no getting dinner with women under 35, which is slightly offensive on many levels. those a rule someone had established with their wife. it seems like there's a gender segregation going on. it's not like i'm not going to get things with men and women after work, is just about the women. that's just when to perpetuate gender imbalance. >> perpetuating it potentially to a point where in order to , theseexual harassment men and firms open themselves up to gender discrimination. to that someng thing to prove in small doses. it's hard to sales left out of

that meeting. -- say i was left out of that meeting. if you can actually look at how one manager deals with multiple subordinates, you could potentially end up with a lawsuit that's easier to prove than a sexual harassment case. >> just remind us about a comment from the vice president. a his comment went viral couple of years ago around the election. this is a comment that vice president mike pence made. he said he doesn't have dinner with any woman who is not his wife. it can be something men are employing regardless of the controversy. -- in othernder industries does being fearful of

an accusation of something happening. >> it's a lot of fear. it's not just wall street. it's consulting, it's legal, it's everywhere. microscopetake the to finance this large gender imbalance. and what you are really risking here is keeping that imbalance forever. >> some of these financial firms, what are they saying? >> and like to call it death by thousand paper cuts. it's about starting a conversation and acknowledging this is happening. we spoke with an employment attorney for our story and these one-off hr meetings, a lot of them aren't even optional. class, you do a

powerpoint and it's over. you need to have a conversation about this icing out and the backlash. you need to have a conversation orut the things that men bosses may be doing. o'rourke -- that they recognize are threatening to ruin. >> snapping up opportunity zones with tax breaks. >> will come to distress new jersey. zones, those were created in president donald trump's 2017 tax bill. of that is to a scent is to incentivize business investment best to incentivize -- the idea is to incentivize business investment.

they seem specifically designed to benefit real estate developers. how they were chosen was a little odd. it turns out to be a little odd. 25%rnor scott to nominate of their impoverished zones under the law. a couple of different ways you can do that. casesn't always been the as we have looked at these maps in the places that need it the most. >> let's roll in the kushner companies. as you said they are involved in this and building a luxury hotel . >> there's a lot built that a lot more to go. since the bill was enacted no 13 --2017, they spent

enacted november twice of a teen spent $13 million. and specifically those old houses on the beachfront. we are not sure what plants they had yet. something is going to replace them. developmentround-up though it be perfect for getting these opportunities. i expect you'll be hearing a lot more about opportunities -- opportunity zones for real estate developers to take full advantage of the tax breaks. they're going to want to buy their property in the zones prior to december 2019 to get full advantage of these tax breaks. >> they also have to invest big-time into those areas. buy a idea is you property for $2 million, you

need to spend $2 million more significantly improving it. that's where investment in the community comes from. then you want to hold it for a long period of time. you have to prefer capital gains that get into this zone. you get a discount on those permanently. whatever capital gain you only get with this new investment you get a capital gains tax. >> there are a lot of moving pieces in the connection between the kushner family and jared kushner. talk to me as you dug into it. >> we can look at a map of the zones that are designated. you can see towns like long branch where you go. >> that's how we can across this.

trying to answer the question of how different zones got these designations because governors are making these decisions. are somete developers of the most important political donors. and political influences generally. there's a lot of open questions about how some of these decisions got made. >> to create what an opportunity zone -- there needs to be a certain poverty print. it was a little bit above that designation. areas there a secondary standard you can use kumal which is 80% of median income for the area. that's even less impoverished areas in long branch. thinge other interesting is you have seasonal residents.

>> a drug smuggler built a a lending company. >> this is bloomberg businessweek.

>> welcome back to bloomberg businessweek. i'm jason kelly. >> i'm carol massar.

he can also catch up on our daily show and check out our podcast at bloomberg.com. >> you can find us online at businessweek.com and all manner mobile app. the title of a bloomberg and at the gate lending. >> the uncovered financial abuse in a new york court system to squeeze small business borrowers and expose new york city officials that earn $1.7 million last year in fees recovering debt. join us reporting team on their latest story about a drug smuggler who built a predatory lending empire. crisis,s the financial the industry has been booming. walk offerple who money to small businesses. comes overnight but the interest rates are really high.

as you can imagine this is super profitable. it's totally unregulated. all the shady characters were getting into the industry. howard able to charge 4% on loan. because it's not actually technically alone. there's one publication besides the alternative business -- 50 million a year. how can they charge 4% interest? generally,y can do a they will say that it is not alone. it is a sale of future receipts of the business. if you are a coffee shop selling in advance a share of the payments the customers are going to make. reason it's a factoring

agreement. >> you guys get into some very personal stories and small business owners like janel duncan and how she realizes money she borrowed came with some condition she wasn't aware of. >> they had a real estate brokerage near tampa florida. they got one of these cash advances not even intending to get one. a broker offered in $800,000 term loan. they were interested in that. kind of as a tryout he said, i'm going to give you this merging cash advance and make a few payments though give you the big loan you need. they go ahead and do that.

after a month they asked about what about the term loan? bean ball something goes wrong. the company yellowstone capital andsed them of defaulting making payments every day. after they got that money was their first payment of $800. day that bank account, clearing transfer didn't happen. they had no idea, there was money in the account. they didn't even know about any of this. thel gets a call out of blue one day from a debt counselor who says yellowstone capital is going to go to court.

essentiallys it as it must be some kind of weird prank call or salesman. she asked her lawyer, asked her of them said that didn't make any sense, that can't possibly be true. company was able to take $50,000 out of their bank accounts. it's more money than they ever got. we know they didn't stop payments on the loan because no one can really explain why it in go through. it continues to make payments after that. it came out every day after that period up to the point where the bank account was frozen. >> i want to emphasize the crazy thing about this is she is just sitting there thinking that about business. she doesn't know any of this is

happening. one goes to axis her bank account and she can't. the loan company has filed a court case. no one ever told her that was going on. >> tell us about this, it involves something that these borrowers -- these borrowers signed. >> in the loan application there is a page called the confession of judgment. admitting if you are in advance that if the lender says later that you didn't pay they are right, and you are giving up your right to challenge them in court. you're basically allowing them to take this confession, ticket to a court, get it rubberstamped and seized your assets. and you're giving up any right to any sort of notice or hearing. you don't have to provide any proof you have fallen behind. said ihave basically

have given away my rights. >> is like signing an arbitration agreement. >> these courts are ok with doing this? >> with interesting is it doesn't ever come before that judge. it's a member of the county clerk staff received this paperwork electronically from the cash advance company. fee.collect a $225 they make it an official judgment of the court. the official judgment can be used by the cash advancement big -- to go after their their bank account. >> its customers in a global dream job. >> that story coming up next.

welcome back. >> you can also listen to us on the radio and on am 11 30 in new york, 1061 in boston, 99.1 and f -- 99.1 fm in washington dc. >> and in london on d eight b -- dab digital. >> so much to cover in this week's technology section am including a company creating robots to help retailers compete with amazon. and the chinese government is putting restrictions on gene editing. carol: and one startup -- a lot of them go bust and sometimes when they fail there are real consequences for their customers.

we asked our reporter to explain. >> it was sort of a remote travel startup. except that they fly you to a new city every month and set you up and housing with a co-working space all for two grand per month plus a deposit for the airfare. company, which was more or less debt-financed bites two cofounders ran a real cash similarly named companies. as a result sign-ups purdy quickly dwindled. customersa lot of its more or less surrounded -- more or less stranded. >> they fail as companies.

some startups, it is an apt failing. bigger consequences for the customers. >> people can have more on the line. five and negotiated with their bosses for. now they are out. in many cases thousands of dollars. they are last in line. >> another element of cinematic tech robots. amazon that a lot of headlines. coming into the four with a lot of competitors as well. is basicallygray pitching and amazon contender i

can think of. robots are designed to imagine that in some cases. its robotic grabber arm seems to be able to mimic them you make -- mimic the human hand. >> there's a story about a chinese researcher who actually did gene editing, took some thing out and created two babies. we are talking about this concept of designer babies playing around with a genetic composition. this is a story that blew our mind. but it blew the mind of the chinese government. >> the government is really cracking down hard here. in ways that were a little surprising coming from china. they shut down his lab from the time being.

if they find any violations of 2000had been before this, -- 2003 law. the thick whatever action they can. on our mobileble app. >> in must-read on the bloomberg terminal throughout the week. what interesting is what happening through wall street is a pushback on the fear. really across the country, all different industries. some of it has been good consequences. there are also some negative consequences. stories, of ongoing this investigation are still in the midst of having real .onsequences at the state keep watching this.

more stories on businessweek.com over the weekend. >> and on itunes soundcloud and bloomberg.com. >> is a must read for those thinking about fitting in in this ever-changing world. >> we look ahead to wellness in 2019. >> and join us live monday for a special live broadcast for the bloomberg 50 celebration, where we will speak from some on this year's list. -- speak with some on this year's list.

>> looking to daybreak australia. sophie: and i'm sophie kamaruddin hong kong. we're counting down to asia's major market open. haidi: here are the stories we are covering in the next hour. beijing threatens to retaliate if -- the imf repeats his warnings about trade. the u.s. china spat threatens global growth,