♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelly. we are joining you from bloomberg's headquarters in new york. carol: the u.s. and china continue to talk trade, but are they making real progress? jason: it is the one-year anniversary of president trump's tax bill. the big cuts came with big promises, but the jury is out on what they have done for the economy. carol: theresa may promised there would be a vote in parliament this weekend.

on monday morning, she announced the critical vote would be postponed. jason: on wednesday, parliament held a vote of confidence on her leadership. she survives, but time is running out for her to make a deal with the eu. carol: bloomberg's senior executive editor, john fraher, wrote about brexit. he joins us from london. john: what i tried to do with this piece was take a look at 10 years out from now, and imagine and think through the consequences of what sort of country britain might become 10 years after brexit now. a lot of that is how you imagine britain to look in 10 years time. a lot of it depends on what kind of brexit we get. it is probably still the likeliest scenario. despite all of the chaos and helter skelter events that we are seeing in london right now, that is where we will land, with a relatively soft brexit. that does not make many people happy, but it is still the most

pragmatic way to avoid it. that is the scenario we decided to go with. jason: this is a piece, and i will not spoil too much of it, it is at times clever and at times a little bit bleak, especially in terms of britain and the u.k.'s stature in the world. tell us about that. john: that's right. and you see this happening already in the u.k. since brexit, we have seen a real polarization in the political debates. we have seen a resurgence in identity politics. you are seeing a lot of divisions now across the political divide, and also within parties. when you look at what is already happened in the last 2.5 years since brexit happened and you telescope it or would, it makes

you wonder how any future british government could deal with some of the pressing issues, such as rising inequalities, growing angst about globalization and modernization. when you look 10 years in the future, you have to think if trade tensions worsen between the u.s. and china, it will turn the world into three economic superpowers. but the u.k. is outside of it, with the u.k. losing political influence around the world. jason: you do have a little bit of fun from the get-go, although maybe not so fun in the sense that it is a very realistic look. you tell the story through the eyes of king william v. john: that's right. which characters in british society will still be around in 10 years time or will still be famous, that will provide an interesting lens through which to look at this story? we decided william v, who will

be king william v by 2029. the queen would be 104 by that point. prince charles has decided to abdicate to spend more time campaigning against climate change. so, william v is on the throne. there is a bit of a surprise. we reveal who the prime minister of great britain is in 10 years time. that is a secret i tried to keep to myself over the course of that story, and at the end of it, there is a big reveal. hopefully our readers will find that an entertaining and to the story. carol: we know there are so many what if's on brexit. banks are watching this closely. jason: depending on what kind of deal they strike, london may lose its crown as the financial center of the world. or as some might say, it is already happening. carol: ed robinson takes a look at how brexit could impact

london banks. edward: that has been the backdrop for the last two years, widespread assumption that london will have a hard time maintaining the critical mass as the gateway to the european continent for financial services. but what we did is we looked at, what does this mean for the wall street banks? what does this mean for j.p. morgan chase, morgan stanley, bank of america? what is interesting is you cannot lose sight of the fact that it will cleave europe in half. you have the eu 27, and you have the u.k. in a strange way, this is going to provide wall street with an advantage, because it is very easy for those banks, the domicile on the continent as well as remain in london. they will be able to soak up a lot of market share that european banks like lose as they try to adjust to the loss of

london. jason: it has been amazing to watch, ed, and i know you have been watching this closely, because it comes up in interviews and presentations with the big wall street ceos all the time. and you can almost watch the wheels turning in their head. as you say, these are opportunistic people. these banks did not get so big without candidly taking advantage of some dislocation along the way. go a little deeper for us. as they think about the continent, where are they going to be? where are they going to date in to counter what they will lose in london? edward: what we have been seeing over the last couple of years, even outside of brexit, is the wall street banks, which have been reinvigorated after the crash, they have been taking a lot of market share, bond underwriting, m&a advice, other strategic forms of advice. on the continent they have been taking that from the european

banks, which are behind in rebounding from the crash. that has already been going on. what is happening now is we see companies in europe tapping jamie dimon's bank for jobs that don't involve accessing the u.s. capital markets, that don't involve a cross-border deal across the atlantic. we now have german mittelstand tapping for deals that don't even leave europe. this has long been the bread and butter for european banks. they have home field advantage when it comes to these companies. suddenly, they start losing share on those kinds of deals to the american banks. that is something new. carol: you have great statistics in your story. you talk about five of the top six institutions handling european transactions, they were american, according to bloomberg data. already, u.s. firms have made

some dramatic inroads. edward: yes, that's true. one of the trends that analysts point to the reason this is coming about is that europe never completed banking union or capital markets union after the crash. so, there was this idea that with the euro, they would form one capital market, they would form one banking sector with uniform regulations. and then it could match the u.s. market when it came to scale. it would be like that like. but they never completed those projects. that has left them deeply frustrated. carol: joel weber joins us now. as we know, brexit front and center this week. we also have to talk about bitcoin. a couple of good stories on brexit. joel: it is the giving tree. it is the story that just keeps giving. it has been very good to us at bloomberg for multiple years now. it is something that we know when we look at it in 2019, it will remain such. but we went to 2029 with this john fraher story.

jason: one of the things i love, john fraher has been a go-to guy. he runs all of our finance global business coverage overseas, all of that. but he is part of a massive team leading this effort that we essentially have a brexit czar. joel: brexit is a story for us that is important. it is about global finance, too, and the future of europe, not just the u.k. we know this story very, very well. it is why we can have some fun with it sometimes. jason: we heard from ed robinson about the applications for not just british banks, but u.s. banks as well. joel: we see an opportunity here, and that is what makes it significant, because it affects the global economy in ways that are so interesting. carol: that john fraher story,

not exactly dystopian, but it makes you think of where we might be in a decade. joel: what america's presence might look like there. for me, it is also about opportunity. on the idea of opportunity, this was an issue that we pivoted to look at crypto and bitcoin. this was one year ago, bitcoin was flirting with 20,000. there was a lot of hype, a lot of wall street got interested in it. and it feels like that tide has retreated. this week, the prices were close to $3300. not exactly the same as $20,000. carol: can i say, you had fun with the cover as well. jason: don't overthink it, and

the cue is the color. joel: exactly. carol: what i love about the magazine, and we will hear from our futures editor about the coverage this week, but you guys continue to undercover stories that we did not know about. i did not know about the one with btm. jason: undercover? uncover. [laughter] jason: uncovering undercover stories. joel: what we wanted to look at was all the different ways that crypto, that we can look at it as a topic. there is a story you will learn about about btm's, which is a form of atm's, but for bitcoin that has been involved in money laundering. that is a story i don't think anybody knew. jason: later in the show, we will dive deeper into cryptocurrencies with max chafkin and matt robinson. everything you wanted to know about bitcoin, but were afraid to ask. carol: what is going on between china and the united states? every day, it is like a different signal and a lot of noise. jason: this is "bloomberg

businessweek." ♪

carol: welcome back to "bloomberg businessweek." jason: join carol and me for "bloomberg businessweek" everyday on the radio from 2:00 to 5:00 p.m. wall street time. catch up on our daily show by catching up on our podcast. get that at itunes, soundcloud, and bloomberg.com. carol: and you can find us online at businessweek.com, and on our mobile app. jason: the u.s.-china trade dispute maybe cooling, at least a little bit. the two sides talked this week

amid reports that china may be willing to lower tariffs on u.s. cars. carol: that happening as president trump suggested he would intervene in the case against huawei's chief financial officer if he thought it would impact trade talks with beijing. jason: shawn donnan, our go-to guy on trade, we caught up with him in washington for the one thing that seems to be certain in these trade talks. it is uncertainty. shawn: when we talk about the trade wars, we talk about tariffs, these tit-for-tat tariffs that we have seen that become this dramatic feature of 2018. but in the background, there is this interesting thing trump has been doing as well, which is weaponizing uncertainty. if you think about it, most presidents have tried desperately to reduce any kind of uncertainty, because uncertainty is bad for business, it is bad for financial markets, it is bad for the economy. companies do not invest when uncertainty is in the air. they want to know their investment will go somewhere. but trump has turned that on its head and used uncertainty to build a case for investing in the united states, for rebuilding the u.s. economy. don't like our tariffs overseas, don't like the way china is looking wobbly? come here and invest in the united states. that might be an argument that flies with some people, but there are also signs, and we have seen this in swings in the financial markets, that people are running out of patience with that weaponizing of uncertainty. they want some certainty. carol: this comes in a week when

there was a story -- apple is considering moving iphone output if the tariffs went up. they may be thinking about, maybe we need to bring things back home. maybe we will keep a watch on it more closely. shawn: absolutely. back home is one of the thoughts, and another thought is the bigger thought that most companies are having, is simply move out of china to somewhere else in asia. somewhere like vietnam, malaysia, or cambodia where they can take advantage of cheap production and still get that back into the u.s. market without hitting these tariffs. we saw that with gopro this week, which announced it will move some production out of china. this is the interesting part. it was going to move the production for the u.s. market, which is i think about 40% of their sales, out of china and. to somewhere else it had not decided where. but it was going to keep most of

its production in china for the rest of the world. that is the cleaving we are seeing in the supply chains. that is a big emerging trend that we will be watching into 2019. that is part of the goal of the trump administration. there is an argument in the white house, and we heard from white house advisers like peter navarro, that the u.s. has become too dependent on supply chains that go through china, and that at the very least you need to look at some alternatives. if it is not coming home, maybe it is mexico, or maybe it is

vietnam, or it is coming back to japan or korea or taiwan. jason: one of the most interesting elements of this story this week was the recent arrest of the cfo of huawei, and the administration's initial thought, or initial statement, repeatedly that this was separate from that trade negotiations. then, here comes the president midweek saying that, in fact, he might take actions related to that case if it were to help the trade negotiation. help us through that. shawn: there are two things at play here. the first is we need to think about the trade war not just as a trade about soybeans, which is often the way it is framed, or about steel or cars. it is really about an innovation war going on between the u.s. and china. huawei is one of the key pieces there, particularly in an area of 5g and mobile networks, where the chinese are trying to set new standards for those, and huawei is their leading company. there has been for years, and this goes back to the obama

administration and the administration of george w. bush, there are concerns about huawei and its relationship with the chinese military and how it is putting telecom equipment around the world that chinese intelligence can use to spy on people here in the u.s. the spooks go up to capitol hill and tell congressmen, do not use a huawei handset, stick with your iphone. that is one big piece. the second big piece is the way trump is upsetting the norms again on trade. for years, the u.s. has tried really hard to separate criminal justice cases, particularly involving foreign companies, from economic policy and trade agreements, and a trump has jumped in and undone years of work, not just by his own administration in recent days, we are trying very hard to separate these cases, but also

years of economic diplomacy by the u.s. carol: coming up, the tax cuts and jobs act celebrating its first anniversary. jason: it might be too early to judge its impact, but there is plenty of data to look at so far. this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." i am jason kelly. carol: i am carol massar. you can also listen to us on the radio on siriux xm, channel 119. and on a.m. 1130 in new york, 106.1 in boston, 99.1 f.m. in washington dc. jason: and a.m. 960 in the bay area. and in london on dab digital, and on the bloomberg business app. carol: president trump signed the tax cuts and jobs act one year ago, and since then, the u.s. economy has been -- jason: the correlation is not causation, going back to your english and economics classes.

what economic effects, positive or negative, can we actually trace back to the tax cuts? we have a chart for that. carol: a good chart this weekend. it takes a look at gdp growth accelerates, but at the same time, less tax revenue coming in. jason: the deficit ballooning. that plays through to businesses. they are paying less in the, and -- paying less in taxes, and so, what does it need for earnings? for that, we go to taylor riggs. taylor: if you pay less in taxes, you have more earnings to retain for your shareholders. one way that played out in the markets was boosting the earnings-per-share. this is a really cool chart. this is that seasonality chart. we normalized it back to january, and you can see 2015-2016, you had revisions lower. 2016, you saw some higher. 2018 with the tax cuts. take a look at that. almost 18. interestingly enough, as we talk about moving the story forward a little bit to 2019, a lot of

this is starting to slow down a little bit. you are hearing some analysts starting to pull back the forecasts as we wait and see how the deficit plays into how companies feel. carol: concerns about the growth outcome. thank you, so much. jason: in the economic section, editor peter coy takes a look at the tax cuts and what their impacts might be in the year ahead. peter: it is still early, right? a year is not really long enough to gauge the full effects of a cut. people are still arguing the impact of the 1986 tax reform act under reagan. carol: amazing. peter: but i think it is early enough to say some things. what we have seen is the impact has been stimulated on the demand side of the economy, which makes it more of a keynesian style of cuts. people talk about a sugar high.

it fuels growth, but it does not last. carol: why doesn't it last? if you are continually getting a tax cut year after year? peter: let's say you're spending is here. now you have a tax cut and it brings your spending up to here. that is it. you are not going to get -- your taxes are not going to go down. they went down, that is it. it's gone. it is nice, but ok. when you can see that in the gdp numbers, the second quarter was very strong, 4.2%. third quarter, 3.5%. those are both well above the history of growth from the end of the last recession in 2009 to the end of 2017. carol: can we say that is all because of the tax cuts? peter: no, we cannot.

the congressional budget office has estimated 0.3 percentage points. another 0.3 -- people forget about this. trump lifted the spending caps which were put in place to eliminate deficits. he lifted those. with the agreement of republicans and democrats in congress. that is another 0.3%. then you get about 0.2% out of emergency relief for disasters, hurricanes, wild fires, and so on. carol: that is a full percentage point almost. peter: you are getting up there. that explains the bulk of the jump in gdp. the fourth quarter, the one we are in now, is coming in a bit lower still. we are at 3.5%, maybe down toward 3%. by the end of 2019, the economists who were surveyed by bloomberg predict that the

fourth quarter of 2019 is around 2% growth, which is kind of ordinary. it is fine, but it does not feel like -- not an ongoing increase. nothing like what trump promised. carol: what you say would have more of an impact is capital expenditures. we talked to our guests, and i do not feel i have a real handle. some say companies are spending. others say it is not showing up in the data. peter: it did show up. the second quarter was very strong. but then, it rapidly started receding towards more normal levels. that was pretty dismaying to the people who thought the big supply side effects. what happened? why are you still investing? carol: still ahead, one of the world's leading brands

celebrates the beauty of philanthropy. a gala honoring women of worth. jason: something that has not held its value quite so much is bitcoin. the rise and fall of cryptocurrencies is this week's cover stories. carol: this is "bloomberg businessweek." ♪

jason: welcome back to bloomberg businessweek. i'm jason kelly. carol: and i'm carol massar. if you have a a few extra million, elite universities will be last to invest it for you. we look at the rise of donor advised funds. jason: and he might have some extra time to read over the holidays. we have a book review in pursuits. carol: and our cover story on cryptocurrencies, we touched on it earlier with joel weber.

there is a lot more to say about it. jason: max chafkin was in charge of this section, and we got his perspective on cryptocurrency's rise and fall. max: i will take you back to wind the price of the coin $20,000 in 2017. for everyone, that was a crazy moment because it is this assets that does not really mean anything, is not worth anything, that was suddenly bought not just by institutions, but regular people. people were quitting their jobs -- people i knew were quitting their jobs and doing things in crypto. the price has come way down and we wanted to take a minute after the crash and assess what happened, and basically commissioned some stories that tried to make sense of both the bubble up but also the busting of the crypto bubble. >> to be fair, it was a crash,

but the folks that went in a couple years ago still made a ton of money. max: the current price of bitcoin, around $3300, that is still a lot of money. way more than two years ago. it still has been pretty bad when you look at a lot of the activity that has happened over the past year. we have a great piece about ico's, initial coin offerings, that were all the rage about a year ago. we had one of the crypto reporters here at bloomberg do an analysis of the biggest ico's over the last two years, and it is ugly. if you bought into any of these you are losing money, and many of these companies have colorful problems. >> tracy alloway talks a little bit in her overview of this about some of the characters who have come in and out of this, and at times there are some dodgy corners of this. max: absolutely.

it is great. we are so lucky as journalists to have bitcoin because you can't make this stuff up. the idea that this technology that is simultaneously embraced by drug dealers and like no graph -- and mike n -- and legendary hedge fund managers and traders. we have a wonderful piece by matt robinson on btm's, bitcoin atm's which i vaguely knew about -- >> i didn't. give us a tease about what that is all about? max: everyone vaguely knows that crypto is useful when you are trying to hide dirty money. what i did not realize is there are these machines in pretty much every neighborhood, in every major city in the united states and around the world, and they are used by some shady characters and there are some crazy things, it is straight out of true country be -- true crime tv going on, and i will let max fill you in on that. >> but what i think is

interesting as well, and digs into where regulators are are how companies in the sector trying to get a one up on competitors are saying, see with these guys are doing? they are doing it badly. but i feel like you do not necessarily have a story dedicated to regulatory oversight because they are still finding their way. max: in the think we have been waiting for years and years for regulators to bless this and they haven't. it is hard to know why that is, but i think the most obvious explanation is that there is still a lot of shady stuff out there and while this technology is really important and potentially world changing, it is also a little bit scary. you mentioned the story about

the marshall islands, another story where you have kind of an unlikely group, the republic of this tiny country in the middle of the pacific embracing a cryptocurrency, and it appears, getting burned on it. jason: as we heard from max, one of the most fascinating cryptocurrency stories in this issue is btm's, atm that take cash in exchange for bitcoin or other digital currencies. carol: i love this story -- meaning for customers, but also for criminals who launder money. we spoke with one of the stories authors. matt: the first one came out in 2013 and now there are about or thousand worldwide, the most of which are in the u.s.. you got about 100 in new york, and there's one on 2nd avenue right now, you can go -- not too far from our office here. they have really sprouted up, and what is interesting about this industry is although bitcoin has been basically going down all this year, another of -- a number of new machines are going up, about five a day. so they are continuing to grow.

>> how does this happen in terms of the regulatory oversight? is this ok, is this legal? matt: -- -- matt: a lot of other issues is you have state and federal laws, a lot of other laws to follow. the overarching theme is that if you were to start a business, if you wanted to, it is not that hard but you have to make sure you know who your customers are. if you put up a machine, you can not just take money without knowing -- >> do you have to have a license or information? matt: reasonable policies and procedures to know who this person is. if you walked into a bank with $50,000 cash, they are going to ask you some questions about who you are, where did you get the money, that kind of thing. >> what is the btm going to ask? matt: that's the question. if you go over $10,000, even if you do it in five different transactions and it goes over that amount, that has to be reported to the treasury. so there are things that you

have to make sure that no one is laundering money on your machines. that is really on the owner and the person starting the business, they call it kyc policies and procedures. >> know your customer. matt: laundering money -- it is pretty unique to do with you know what you are doing when you use these machines, and it has become pretty popular. we know that bitcoin in general is pretty popular in the underworld, as it were. why? >> is in parts more transparent because you can see all the transactions, but it is still the currency of choice in the criminal underworld because you can transact pretty quickly and easily, and you know it is there, it is a verified transaction. >> you went along -- this is pretty cool -- tell us about

what you saw, because you went to a bodega uptown? matt: to be honest, before doing the story i probably walked by a bunch of them. they are actual atm machines but with different software. how often do you look at an atm and say ok, what kind of an atm is that? from there, you talk to folks -- oftentimes a store owner will get presented -- hey, can i put the machine here, i will give you a certain percentage or a certain amount to month. maybe some or foot traffic, people use it, and that is kind of it. >> people by a coke, couple twinkies and they are on their way. >> and he talked about cottonwood vending. are they one of the big players here? matt: one of the biggest in new york. what is interesting, only about 5% of the whole market, even the biggest is quite small. we highlighted another company in l.a. that advertises that they do not take information. >> so they are already saying hey, we are not abiding with the law.

matt: so my broadpoint, even if you have four machines, you can launder a lot of money if you are doing it that way. jason: coming it up -- coming up, a new twist on charitable giving. instead of writing a check to your college, let the manager money. they will take a cut, though. carol: and loyal was women also thriving with fabulous gala to celebrate loyola living. jason: that's next on "bloomberg businessweek."

jason: welcome back to bloomberg businessweek. i'm jason kelly. carol: and i'm carol massar. join us every day on the radio from 2:00 to 5:00 p.m. wall street time. you can also listen to our podcast on itunes, soundcloud, and bloomberg.com. jason: you can also find is that businessweek.com and on our mobile app.

many companies with community programs are saluting those who make a difference. carol: i attended the gala for l'oreal's women of worth initiative. there were so many brand ambassadors, including julianne moore, and these are simply women who do extraordinary things in their community. carol: we spoke with -- jason: we spoke with more and euros in -- nielsen about the women of worth program. maura: we have always believed in the intrinsic worth and beauty of all women. we wanted to come up with a philanthropic endeavor that would recognize those women and the extraordinary impact they make on their communities. carol: and these are everyday women? maura: something happens to them, and they want to make something better. oftentimes, the organizations they have found it come from great hardship, where they are able to dig inside and go deep,

take that pain and make it a mission that they sought to contribute into the world. carol: i want to highlight one of the women i got introduced, she is really interesting and really taking food that is left over from the vents and through a sharing economy, being able to bring it to organizations and people who need it. mora: she was probably one of the breakout stars. she really saw herself in terms of food scarcity and saw herself somewhat as intervening to the problem, as a college student, going to nyu at the end of big meetings, seeing tons of pizza boxes, and said, this isn't fair. there is a scarcity issue in new york city. so she was able to, as she described it, come up with a food service app that operates like uber and picks up food that

corporations or organizations are done with and redistributed to homeless shelters. tell us about -- jason: tell us about the national honorary, carry silver. what powerful story. what in your estimation made her stand out even more from this amazing group of nominees? mora: the honor is ultimately chosen by public vote, and so many people could not imagine suffering the loss of a child. in a way that is so traumatic and one that can also be quite predictive, with a simple ekg you are able to determine in upwards of 70% of cases whether or not there is a heart defect that could lead to saturn cardiac arrest -- sudden cardiac arrest. so that was the organization she founded, based on the loss of her son. it was so moving to so many people. jason: one of the things i found so powerful about her story was the very specific action that

she was able to take. carol: and i think the idea of volunteerism or starting your own philanthropic organization seems so daunting. so many of the stories from this year's honorees were doing something within one or two people, starting small, and seeing it slowly grow. there was a hopefulness and encouragement in so many of those stories like christie's. staying with the theme of giving back, this is the prime time of year for colleges and universities to get the gift from major donors. jason: in the finance section, donor advised funds with a twist. we learned about these investment vehicles that spread their returns to worthy causes, including some of the world's best-known universities. >> let's say you want to give away money to charity. this time of year, you are thinking of giving by the year's end, but if you have a donor advised fund, you do not have to make that decision anytime.

you give your money to a university you are typically affiliated with, or could give it to a schwab or vanguard or the like. you get an immediate tax deduction, and the charitable arms of these investment firms will help you. if you have appreciated assets, stock, complex assets if they will take care of all of that for you, and you give away the money as you see fit and do not have to do it immediately. you could do it over time. there are not a lot of constraints. the charities that manage these funds have to approve it. so you are giving it to a real 501(c)(3). but you do not have to give it away immediately, you can do it over time. carol: some of them say you can do it over time, but you have to be doing it. if you don't they will do it for you. >> dartmouth college requires 5% every year that you have to be

giving away. there is a criticism that you get immediate deductions, but the charities might not get this money for a long time, if ever. some of the schwab's of the world, the charitable, they do have parameters. so if you have not spent money in a couple of years, they will not you and by five years, they will have some parameters -- fidelity may close your account or others might take 5%. carol: but if you create this donor advised fund, ultimately the money will go to some charity, right? if you don't do it and you are not proactive about it, the body that is overseeing the money, whether it is a university or fidelity or schwab, they are going to do it. >> there are some printers on some donor advised funds. in the entire universe, it is about $110 billion. carol: with the money go back to you? >> no, because then you would have a lot of tax and locations.

-- a lot of tax implications. but say you went to stanford or yale and wanted to create a donor advised fund at your school. not every school's endowment is big enough to handle something like this. so there is a pretty steep minimum, you have to give at least $5 million and have to give at least half of it to yale. most of the schools that sponsor these have those parameters, because they are doing work on your behalf. for the other half, they are making those donations and doing the due diligence and some administrative work. the upshot is well, your money is invested with david swenson. how cool is that? your charitable money is growing at the rate of the yale endowment. that was a big draw for some people. at notre dame, the idea that you could capture these returns and give bigger bucks to your local parish or charity. jason: straight ahead, modesty is making a fashion statement. the pursuit section looks at how brands are expanding the concept of chic. ♪

carol: welcome back to bloomberg businessweek. i'm carol massar. jason: and i'm jason kelly. you can listen to us on the radio in new york, boston, 90 91 fm in washington, d.c. carol: and in london on dab digital and also on the bloomberg business app. it pursuits this week, a new book that will give you insights into the seedy side of global business. it's called >> -- jason: it's called kick, and we were given a review. >> there is an argument for bribery, and the argument is it is pro-business, it helps businesses in many countries keep and grow their own businesses by greasing whatever

channel they need in a place where there is not necessarily pre-articulated bureaucracy. that is the justification that a lot of companies use, and a lot of companies have paid tremendous the large settlements -- tremendously large settlements for rides along these lines and reasons for that. jason: and through the course of reviewing this book, you are not talking about people who have never heard of the shadowy underworld, these are brand-name companies who have fairly openly in some cases used bribes to great advantage, especially in emerging markets around the world. >> after the 2003 invasion of iraq, the u.s. military discovered that through the united nations, there was a tremendously large kickback scheme involving thousands of companies paying massive sums to saddam hussein -- although, johnson & johnson, huge

companies -- siemens was ending up paying $1.6 billion in settlements to parties in the u.s. and germany. carol: so they are not advocating for rides, but the point is it greases the wheels and gives access necessarily to establish companies in emerging markets that provide products services to folks that might not otherwise have them. that is the plus side? >> the downside is in two parts -- one, it is unjust. it is effectively a tax on the poor because it ends up trickling down in increased cost to the public. the top of that society, people receiving kickbacks are the ones that make more money off of it. that is one part. the other part is anticapitalist. in a market where there is basically no competition, inferior products come onto the market and are allowed to stay there, when in a capitalist society there is innovation, competition, and that will breed efficiency.

carol: we also caught up with chris rouse her about an interesting trend in apparel. jason: for the many cultures and religions that value modesty, fashion brands are making close that are simple, but are not well. >> a lot of muslim dressing, conservative dressing has been incorporated but not high-fashion for the past few years. designers are releasing those collections and fashions that where those -- and models who wear those are becoming influential on instagram. ones like oscar de la renta, valentino, burberry, because they realize it is a huge market and they realize a should be in it. a huge market in the middle east, parts of europe, asia, and even here in the united states as well. high-fashion designers only do

it if there is a market. muslim dressing in particular was a $250 billion market in 2016, and they expected to get up to $350 billion, second only to the consumer market in the u.s. has china. that is a huge group of people and they want to cater to it. carol: and it is not boring or plain, it looks unbelievable. it looks like high-fashion. >> our model is an influencer and wearing valentino on the cover of the section. and a lot of these designers are not marketing them to a modest audience. it is jackets and dresses with sleeves, not stuff you think of as being particularly modest. it is not like a pilgrim look, it is not, it is beautiful, and this is a market that has not been catered to, from muslims

the orthodox jews to catholics, and they want beautiful things but want to dress a certain way. carol: bloomberg businessweek is available on new stands now. jason: what is your favorite read? carol: what life is like in london, the u.k. after brexit. it is not quite dystopian but it is all the implications that could play out. could play out. jason: it is very dickensian,

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