♪ carol: welcome to "bloomberg businessweek." i'm carol masser. jason: we are here at the bloomberg headquarters in new york. carol: in this week's issue u.s.-china trade talks front and center. jason: the magazine has several stories enter into a relationship with big tech and its impact on the digital economy. carol: on the cover the technology giant, we're talking about zte. jason: can paypal survive on

its own. carol: recession fears, it isn't inevitable. jason: but there are some things that might crush this u.s. expansion. carol: we put a up with -- we caught up with economic expert peter coy. die and why do they end? right now, you've seen since october the stock market has come down quite a bit. people think the good times will stop rolling, yet on friday we had a great jobs report. how can people be talking about a recession an at the -- recession and at the same time, you have all evidence of, current indicators are quite strong. >> because one of the arguments there is that's a lagging indicator. the stock market is forward looking, sees around the corner, and here's what c.e.o.'s and others are saying, good times may be

running out. what do you hear? >> that's true. the stock market, if you think why is it a forward looking indicator? look, if you think something is going to happen that's going to cause stocks to go down six months from now why would you wait for that to happen? you would sell now to beat the crowd, lock in at the current high price and because everybody does that, whatever was going to happen in six months from now happens right now. that's markets. >> this is the animal spirits to some extent. >> the animal spirits is a very closely related idea and kristin forbes, from mid someone i spoke , to in atlanta, actually uses that expression. c.e.o.s, business people, investors, and consumers are moved by emotion, and one of those emotions is confidence.

fear and greed. so you can spend all the time you want looking at sort of the monetary aggregate and every other indicators, but one of the most important, but least tangible is this confidence in animal spirits. so even if things do look pretty good right now, if the emotions change, then it is conceivable to have a recession. >> ultimately, though, maybe some people think janet yellen is wrong that recessions do die of old age? we see this play out ultimately. could she be right? do consumers at some point get tapped out in terms of buying too much debt. companies, the same thing, and that creates the cycle. >> what you see sometimes is that expansion looks like it's going to die. it's building all of these

imbalances but it somehow comes out of it. to a soft landing, and balance is restored and growth comes back. and this is an exceptionally long expansion right now. >> right. >> and if it reaches june it will be 10 years old. and that would equal the length of the longest expansion in history going back to 1854. the month after that, it would become a record. so, we have seen the average length of expansion has increased over the last couple of decades. so something is going on here. i don't know if we can credit the federal reserve or something about the nature of the economy, but we seem to be managing to extend these expansions longer. they are not dying of old age. at least the longevity is increasing, let's put it that way. jason: if you are worried about a bear market after hearing that, don't be. carol: we talked to pat rainier

about how investors can take stock of their portfolio without overreacting. >> this is nothing like the last go around so it's a time to say, if i haven't been paying attention to this maybe i pay a little bit of attention, but we're sort of advocating after talking to advisers, do a look at your portfolio and make sure in a world where volatility is a part of the game you have the amount of volatility that you're expecting to get in your portfolio. carol: also interesting in this story, think about what you're investing in because you might be buying a lot of etf's, index funds the broader , market, getting exposure to everything but some of your big tech names have become overly weighted in these indexes. you might have more exposure to big tech than you want. >> if you're invested in s&p 500, you're a tech investor. you have about a fifth to a quarter of your portfolio is in tech stocks, which is fine. if you're going against that, if you decide to want

to have less than that you're making a contrarian anti-market bet which isn't particularly easy to do but what you do want to watch out for, if you've added and actively managed funds, if you're one of those, buy what you know and a lot of those companies are tech stocks, you not only got maybe in your core index fund, a big chunk of tech, you've added to tech with, you know, your shares of fidelity contra fund with that facebook stock you picked up a while ago or that apple stock you bought because you feel like that's a company you understand. so you want to make sure you haven't doubled down on what's turning out to be the biggest momentum play of the last few years. you may have more tech than when you just look at certain companies. if you're a great believer in warren buffet, what does he invest in, his publicly traded portfolio? he likes apple. jason: much to his shareholders

detriment. an everyday investor probably says, well, bonds are for when i'm old. you know, i'm much more risk adverse but in a market like this how does it play in? >> what they are, and this is assuming you're buying the kinds of bonds that are intermediate interest rate risk, high quality what they are sitting there for is to be a stabilizer and maybe a little bit of a psychological stabilizer. at almost any age, it's no fun to look at your statement and see that everything you invested in lost money all at the same time. bonds, as you know, bonds funds can lose money. we're entering into a rising interest rate environment which means that if you have a bond fund you could see your bond fund lose some value although it will also be picking up extra income. it sits there as a stabilizer and then when you're starting to look at short term bonds that can also be very important in an emergency.

one of the things that we learned the last time we had a big bear market is that financial bear markets and mainstream financial emergencies go together. i mean, i remember very well watching my 401-k fall at the same time i was thinking about how long is my job going to last? very common experience so you definitely want to have, you know, short term assets like cash and or very short term bonds in a portfolio, probably outside your 401-k. honestly, you may even want to have some inside your 401-k. you can't always build up all of our financial cushion outside our 401-k and it's good to know that the money you've saved up for the future is steady. carol: later on in the program, why now may be a buyer's market when it comes to luxury homes. jason: up next, a cautionary tale for every global tech company, how zte was spared from trump's trade war with china. carol: this is "bloomberg

businessweek."

♪ carol: welcome back to "bloomberg businessweek." jason: join us for "bloomberg businessweek" every day on the radio 2:00 to 5:00 p.m. wall street time. you can also listen to our podcast. get that at itunes, soundcloud and at bloomberg.com. carol: you can find us online at businessweek.com. and on the mobile app. cte, the cautionary tale. -- zte. jason: this is one of china's biggest tech companies. carol: it nearly became a casualty with president trump's trade war with china. zte managed to avoid a crippling ban. jason: that ban has been labeled a death penalty. carol: global technology

companies are studying this story very closely. jason: here's more. >> zte last spring, a company that some people had heard of, few people understood, was announcing that it was basically at risk of going out of business because the u.s. commerce department had done something to it. i thought that was a really interesting illustration of just the way that the united states and the chinese economies and technology industries are tied together in ways that we don't really understand. and that create a lot of vulnerabilities, and just interesting wrinkles for the way that this tension is going to play out. zte being an important but somewhat misunderstood company, really an un-understood company, i thought it would be a good place to dig in. carol: what's un-understood? >> which is not a word, but i just don't think it's a company that many people think much about. zte at one point, i think,

was like the fourth largest smartphone manufacturer in the u.s. but it's like way down there. it makes phones but its main business is making telecommunications equipment, the things that you put up to have your phone networks. carol: which makes officials nervous because the communications equipment, you wonder what access, for the people who buy those components, what access what kind of security, might not be, or might be at risk as a result of these companies, chinese company making it, correct? >> absolutely. huawei the bigger , chinese telecom manufacturer, they are putting in equipment that power the networks in many countries. and they both have ties to the chinese state and there are questions about, are there going to be backdoors in this equipment? will companies be pressured by the chinese government to do things? it is a symbol of the discomfort that the west has with the sort of rise of china.

carol: did zte come out and say they did evade sanctions, and paid penalties, so they have skirted the law at least when it comes to u.s. requirements. >> absolutely. the way that a chinese company ends up skirting u.s. sanctions by doing business with another company, as i said, it gets complicated, zte relies on the united states for many of its components. some of the most important inputs are u.s. made technology. so you're not allowed to take that u.s. equipment and ship it to iran, even if it's a chinese branded telecom piece of equipment. carol: and they did do that? >> they did do that. they admitted to it. they paid a very large fine. carol: $1.4 billion? >> in 2017 it was as much as $1.2 billion. a year later, it seemed like the situation was over.

a year later the commerce department came out and said you violated the agreement we reached and we're now going to put a complete ban on your ability to import american technology. it looked like it could drive zte out of business because it wouldn't be able to make its equipment at all. jason: close to home here in the u.s., there is this company, zte's u.s. headquarters down there in dallas a , couple of hundred employees who, during that time period, didn't really have any idea what was going on. they were kind of wandering around trying to figure out what does this mean for my job? our company? and maybe not getting a whole lot of guidance from their bosses. >> absolutely. when we think about the u.s. and china it's such a big story that you always focus object most macro-thing -- focus on the most macro-thing positive. the interesting parts was hearing from people on the ground both, you know, in dallas, as you said, or, you know, in the zte in china. they were confused about what

this meant. was it a big deal? the people in texas, basically just stopped hearing from their bosses for weeks because they didn't know if their jobs would continue. it seemed like a very surreal situation. carol: we heard about the story. let's think about the images. putting zte on the cover this week, tell us about at -- tell us about the discussion in the newsroom about the cover image. >> so we had a lot of ideas about this idea of sort of something more conceptual. how the global tech companies are behind this, but it was sort of complex and i think we sort of were more drawn to this idea of showing the zte headquarters, which we shot in this beautiful light, and we overlaid with it just this really strong headline and it has a poster quality to it and pulled you into the story. jason: once you get into the story, as we heard, you really realize this is just an office building in dallas that held some people who did not know what was happening next. it brought it home in a lot

of ways. >> yeah. you know, the building, we actually did a little bit of research on google maps, saw what the building looks like because there are some american flags hanging next to it. we thought that could make an interesting image, to get attention to it. carol: it's like globalization of technology. this huge chinese company in america. we are seeing it around the world. >> it gave us a nice drama and pulled you in. jason: thank you so much. up next, more on china's tech sector, why some developing countries are thinking twice about making tech deals with beijing. carol: later on in the broadcast, the hottest entertainment game, fortnite. jason: how it provides a digital model of globalization. carol: a fascinating story. this is bloomberg business week. ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: i'm carol massar. you can listen to us in new york, 106.1 in boston. channel9, siriusxm -- 119, sirius xm radio. jason: a.m. 960 in the bay area and the bloomberg business app. carol: we've been focusing on the u.s.-china talks this week. chinese companies are continuing to expand their global footprint and the chinese government's influence. jason: they are installing fiber-optic surveillance systems around the world. cool chart in the technology section that maps beijing's reach. if you're looking at a map of the world, it shows where there are internet cables. colored spots show where

chinese companies have had an impact, are selling their services, their products. you've got smart city initiatives and other things. jason: it's interesting. you see areas where they are especially interested, the united states, we saw that with zte clearly, that's a focus. but also africa, if you look at the internet cable, blue. you see a lot going on, on that continent. carol: that's where we're seeing a lot of focus. emerging economies has been a big story for them. jason: africa is front and center in the technology sector. sherrill is based in hong kong. she went to zambia to tell the story there. carol: the promises and challenges of buying into china's vision of the internet. >> countries like zambia are in need of development. they see china as a great way of funding projects. so, for example, in zambia, china is funding a big new airport in the capital. it's also funded some

smaller regional airports as well. roads that go directly to the copper belt, zambia is rich in cobalt and copper both. so the total debt they have to china right now is about $3 billion, which the imf is becoming concerned about, calling that a high risk of debt distress. $30 billion is on these -- one third of that spending, $1 billion is on these technology products. so zambia wants to increase its mobile reach, its broadband reach to the country broadly, but also, with that technology also comes the means of control that we see sometimes inside of china. >> let's talk about that, because you went to zambia and you encountered government officials, one in particular, who was educated in the united states but he's all in china. tell us about that. >> i met the transporting communications minister who

is in charge of zambia's technology upgrade. i had a discussion with him, it starts out like it does with a lot of ministers in zambia. what they say is, actually, what has the west ever done for us except colonize? zambia was formerly northern rhodesia, a british colony. they say china has always been our friend. they are here helping us develop. western aid in africa, the united states, is the largest donor to africa. most of those projects have to do with healthcare. so h.i.v. prevention. clean water. it's not quite as visible as a big shiny airport terminal. carol: what's interesting, too, you wonder about what china's mission is, they want access to commodities and things like that, and this country or other countries in africa, too, can provide this but you do wonder if it's about increasing their footprint

around the world. is that part of what some people are speculating, that that's what china is up to? >> that's certainly true. the in $1 trillion spending that china is currently embarking on, on a worldwide basis, is buying it enormous influence and lots of new friends. that's certainly a part of their foreign policy agenda and it's certainly something the u.s. needs to be more aware of. we've seen a few initiatives by the trump administration to push a little bit more on the infrastructure spending side to counter the massive chinese spending but what we've done so far is not nearly enough. jason: and one of the elements that's important to point out in your reporting here, is that they like the equipment, as you say, they like the shiny airports, the ability to use cell phones, effortlessly and what not. but there is also an appreciation for kind of the chinese way of governing, too. in terms of, maybe like

keeping a little more control over people, especially as there are more calls for democracy, maybe. they kind of like what they see in the model. >> yeah. what's very interesting actually, in order to find a test country for where this is actually happening i had to pick a multiparty democracy, because, like zambia. there is a lot of kind of repression equipment and stuff being sold in more repressive places but you can't see the impact of that as easily as you can in a place like zambia, which does have a multiparty democracy and ostensibly free press and then you get people complaining about it. look what is happening to us. we're starting to be repressed. you see the measure of freedom of expression declining. more and more of this chinese influence comes in. what china is offering, a model development of stimulus spending. try to grow the economy and

bring people out of poverty. it's worked in china. it's very appealing for african countries to do that. at the same time, that model comes with the china model of less free expression, so the press, for example, in china, is meant to be an instrument of the government. it fosters development. it helps push the government's agenda, and policy lines. not act as a critique. and so in the west we have a very different model of what that's supposed to look like but people in some countries, leaders in some countries, as you mentioned, are seeing that china model and saying, hey, that works for us, too. carol: let's bring in taylor riggs. another look at the chinese technology market. so what are you focusing on? taylor: when we talk about china we talk about trade. i wanted to shift and look purely at the markets. chinese and u.s. stocks, correlation, it's a good day when i can make some correlation. so coming to my terminal, we

have chinese technology etf's all the big stocks, and then , the invesco qqq etf, a u.s. technology, like all the stocks, apple, microsoft and intel. on the bottom of the screen is where it gets interesting. you move positively together. we are at .8. that's a high correlation meaning they are starting to move together. i think it's globalization. carol: you saw suppliers around the world react to the negative apple news. jason: maybe they are connected in ways that we didn't fully anticipate across borders. we heard that from tim cook. taylor: i think it's supply chain. like you were saying they can all move up together and they can all move down together. carol: it's definitely worth watching. thanks. coming up next, how paypal escaped obscurity by embracing its competitors. jason: refitting vintage cars with electric

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jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: still ahead, nancy pelosi's dealmaker reputation is being put to the test. jason: and real estate experts see deals ahead. carol: paypal is as well known for who founded it as what it does. jason: the company has had a good couple years. carol: drake bennett has more.

>> they are better known for the paypal mafia. they were involved with the early years of the company and went on to do totally different things and for a lot of people, paypal is still associated with ebay auctions and a button on a website but at this point, it has become a much bigger company. it has its fingers in every part of the sprawling digital payment ecosystem. jason: for a certain segment of the audience out there, they probably have not heard of paypal but they have heard of vennmo. in my everyday life when i am talking to the kids, they are talking about venmo. and they are talking about that much more than paypal. a couple of acquisitions that have framed the company in a different way. >> braintree processes payments for uber, stubhub, a lot of these instantaneous mobile phone transactions you are not aware of. airbnb. braintree does that and that is part of paypal.

paypal also owns venmo which was created to handle informal social payments like buying a round of drinks. get well present for a friend. i will pay you later. >> the stuff that used to not require a payback. now, you can bill friends on vennmo. the enemy of cheapskates everywhere. carol: but it is not profitable. >> a common problem. very popular especially with millennials but paypal is trying to figure out how to make money off this thing which was born in a social atmosphere. they are trying to move it to partnerships and stores. carol: let us talk about partnerships. this is key. whether you have a visa or mastercard, or the banks out there wanting to process transactions. to make money. paypal has become smart at

learning how to partner with them. >> it was a very concerted effort on the part of the current ceo. when he came in the default was , that it would go to your bank account. you could switch it to a credit card but it was confusing and hard which was by design. paypal takes a cut from the merchant of the payment, and when that payment is made to your credit card, a lot of the cut goes back to the credit card companies. paypal did not like that but it made credit card companies incredibly angry at paypal. and shulman decided to forgo some of that profit and starting to play nice with the banks and card networks and it has worked. visa and mastercard for a while

were trying to create a paypal killer. now they are not doing that anymore. apple, samsung, the tech companies that have pay options also see paypal as a partner to drive more transactions through their payment platform. carol: a pal you might say. with us now is joel weber. and we just heard from drake bennett, a smart story on paypal and on how you have to work with your enemies to get ahead. >> i love that paypal is still a story. the dream of the 1990's is still alive. the story is one of how paypal escaped the palm pilot and then escaped ebay and then managed to turn all of these foes into friends. jason: it feels like the quintessential "bloomberg businessweek" story with the paypal mafia. monarch in silicon valley born out of paypal.

when you think about the big themes this week, china finds its way into so many different features and segments of the magazine. >> how can it not? as trade talks continue, this initial round we expect more on , the trade talks ahead and we wanted to use that as a way to look at the relationship between u.s. and china in different ways. technology figures prominently in the trade talks because that is one of the reasons why we are even having the trade talks. that is why zte is on the cover this week. carol: fascinating and a reminder of the connectivity among global technology. >> we call this a bank shot off the news. huawei has been dominating the news lately. it affords us an ability to look spring was inlast the headlines when donald trump -- the company on sin ice thin ice. carol: we talked to our reporter on the ground in hong kong. we know china has been big in

making investments for commodities and infrastructure in emerging markets but they are also building a digital silk road. >> it is part of the silk road initiative. they have been very successful in making inroads into africa. the technology section this week's looks specifically at one country grappling with the consequences of this relationship now. jason: up next, the key to nancy pelosi's legislative agenda. carol: and fighting in schools over chocolate milk. jason: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i am jason kelly.

carol: join us every day on the radio from 2:00 until 5:00 wall street time. you can also check out our podcast. jason: and you can find us online at bloomberg -- businessweek.com. over to the politics section, house speaker nancy pelosi faces multiple challenges. carol: she has to address the issues that helped democrats win the house. >> she was also speaker of the house from 2007 until 2011. she was effective. she kept her caucus in line and made sure everyone stayed together. that means they were able to pass things like the affordable care act also known as obamacare. now, she is speaker again and it is a different washington. we have a president that tweets policy announcements, opinions,

taiex -- attacks and she also has freshmen members of her caucus that also tweet their opinion and are not shy about tweeting their criticism. it is going to be a very different way she will have to employ the skills she honed before. this is a new negotiating environment. carol: there are a couple of things that we should break down. it is mind-boggling that the democrats are not really a unified party. >> you would expect any party to have a faction. we are a diverse country. a democrat from new york city would look different from one from illinois. within that kind of caucus, you -- conference, you have nancy pelosi who is very good at pelosi who is very good at building consensus and a very good listener. making sure that they can present to their voters progress for the country. you have progressive members who would like a more ambitious agenda on health care for all,

universal health care, universal higher education, universal pre-k pre-education. and you also have some moderates that will be more worried about fiscal issues and making sure that they are in a position to take the mantle of fiscal discipline from republicans who have abandoned that. carol: what is also interesting is that there is a balance for nancy pelosi she has to think about those issues that got democrats in the first place elected during the midterms. she has to balance those issues with what is coming up in 2020, the presidential election and maybe gaining back the senate. there is a balance here. >> when you look at the subject issue areas, there are a few policy approaches that have been approved of by voters and were very popular. if we look at health care, voters overwhelmingly say they think people with pre-existing conditions should be protected

from having their insurance taken away or their rates rising. if democrats can protect that element of the affordable care act, that would be a very popular thing with voters. similarly with gun control. there is widespread support for universal background checks. if you abandon a more sweeping gun-control measure that would include an assault rifle ban and even more restrictions on what kinds of arms can be purchased and focus on universal background checks, you can get those incremental wins. that is where we will see nancy pelosi focusing on a divided government. carol: staying focused on politics, this summer the agricultural department will put chocolate milk back on school menus. it is controversial. jason: who knew? it is part of a rollback of former first lady michelle obama's signature effort. it mandated fewer salty snacks and more vegetables in school

lunch rooms. carol: i have to say that the change means big dairy is thrilled. >> these wars are not unheard of. it goes back to ketchup arguments from the reagan era. there was a huge debate over the hunger free kids act, which made drastic changes to lunges and was requiring more whole grains -- lunches and requiring more whole grains including skim , chocolate milk. that 1% versus skim turned out to be a big issue for the dairy because skim does not taste as good and a lot of kids were passing on the chocolate milk. as i found out in the reporting, the fattier milk is what drives customers and it keeps people coming back to milk. sonny perdue was raised on a dairy farm and has been in agribusiness his whole life.

within a week of being appointed, he came in and announced a change and the first change was to put 1% chocolate milk back in lunchrooms. and he said i would not be here today without chocolate milk. jason: why and how radical was the change that the trump administration made especially given how it was a centerpiece of michelle obama's time at the white house? >> there was definitely an element of politics because it was so soon after sonny perdue had been confirmed and he made a point of saying in the press release that he would make rules that would make school lunches great again. in practice, the changes could have been more radical but the big change that i talked to people about is the sodium levels.

the sodium levels were a cudgel to force processed food companies to lower the sodium levels. i spoke with one consultant in the industry who described it as a cheese apocalypse. within a few years, you would not be able to have macaroni and cheese or a cheeseburger and the scale of that was apparent to the food industry and when the administration changed, they had the opportunity to stop that change from happening. carol: up next, a videogame truly going global. and we're talking about fortnite. jason: no fun and games for luxury home sellers but it could be different for homebuyers. carol: and embracing the green world. drive a mean green vintage machine. jason: this is bloomberg. ♪

carol: welcome back to "bloomberg businessweek." i am carol massar. jason: i'm jason kelly. you can listen to us on sirius xm 119. also 106 in boston. carol: and 960 in the bay area area and in london and of course on the bloomberg business app. in the economic section, how the hottest videogame on the planet is emblematic of a new digital mile of digitalization. jason: fortnite! carol: who knew? >> at some point over the summer, my son started talking about something that he and his friends were doing and that was gaming globalization. he did not call it that but they were changing the server they were using to brazil or asia to try to take on what they saw as weaker players, build up some

wins and build some kind of teenage playground/street credit if you will. what he did not realize what he was doing there was leveraging the internet, leveraging the new form of globalization that we all live with every day and it reminded me that we kind of forget that the new world of globalization is a very digital one and it is one that has become not just a daily one but an hourly one that we deal with. carol: i think this will resonate with our audience. digital arbitrage. this is what they were doing. >> they spied an opportunity to make some profits in the form of wins, easy profits by simply changing the regions they were playing and it turns out there was a whole cottage industry that has sprung up in youtube videos and chat rooms explaining these tips and tricks. my son and his buddies were not alone in doing this.

this was a real phenomenon going on around the fortnite universe. jason: it is a multiplayer game where you start with, keep me honest, you start with 100 or so players and it is a fight to the death, a virtual death as you squad up and do all sorts of things and essentially try to become the winner of each individual session. do i have it mostly right? >> you are doing a good job of dadsplaining it. carol: [laughter] >> the truth is it is an old shoot it up kind of game including some fun dancing but -- great characters -- but also importantly, it is free and that is the big business revolution here. that is what has turned this game out of the studio in north

carolina, epic games, into a global phenomena. there are 200 million registered users of fortnite. it is a country bigger than brazil. it is the old-fashioned shoot it up kind of game that has become a cultural phenomenon. all those baseball players doing the funny dances last season -- they were doing fortnite dances. it is a huge business story. jason: how 2019 could be the year of the discount. carol: especially when it comes to luxury homes. >> we are entering a difficult time for sellers. 2018 was not great for anyone, buyers or sellers and now it looks like prices will go down, inventory is going up and buyers could get a discount. carol: what is going on? >> microeconomic trends and macroeconomic trends are causing issues. from new york to london, each of

these have different economic impacts of affecting them but we are seeing a bit of a hangover from the housing boom and people are calling it a bit of a bubble. carol: a lot of building? >> too much building. in london, massive amounts of condos in new york city, large houses in los angeles and in london, massive amounts of both even as there is extreme sensitivity to brexit. jason: with a brexit chaser to make it more painful. there is a great chart that shows the delta of essentially. -- the delta, essentially. vancouver taking a massive hit apparently. that was by all accounts a bubble, right? >> yes, it had a lot of foreign investment coming into the city that ultimately slowed down because there is a finite number of people that want to spend tens of thousands of dollars on an apartment in vancouver.

. . york has been slowing down for a couple of years and we are seeing in 2019 or we will see a tremendous amount of inventory held back. these developers have already built it but they have not been able to sell it. it is coming on the market now and there are also several thousands of new units hitting the market. carol: a recent story talked about the medium price of new york going below $1 million. that is a significant drop. >> completely. it is impacting every single level of the markets. and that is the slow down you will see for pretty much everyone. carol: from discounts to luxury homes to retrofit of luxury cars. jason: it is a new trend in vintage cars. people are electrifying them.

carol: who knew? >> it has been something you do from the 60's, taking the engine out of a car and putting in a battery. people have been taking an engine but with tesla, it is becoming more popular. there are garages around the world that will help people do that. they will take out the engine from a classic car and put in a tesla battery or another kind of battery and now you have a car that is more powerful, faster, and sometimes safer. jason: it has gotten a lot easier. as you describe in the story, back in the day, it involved a lot of jerry-rigging to make it work. stacking batteries on top of batteries. >> the front of a volkswagen. and now, it is a lot easier. the technology is better. and you are plugging in your porsche. jason: and demand is huge. >> in the last three years, companies we talked to say they are getting demand from all over the world. we spoke with a company in wales

and in japan, a lot of different companies are doing this. carol: someone took a volkswagen bug 1970 and it was converted and it went from 40 horsepower up to 400. huge change. >> we wondered if it was safe? carol: did the car start to disintegrate? >> you're just dealing with the motor and the axles. the cars can be retrofitted to be safe and they are actually more nimble now. that old beetle did not have the acceleration to pull more quickly onto the highway but now it will. more power. safer. jason: and a lot quieter. talking about someone pulling up next to one of those cars, anyone that has been next to a beetle in the old days and it is super loud.

now it glides through. carol: what does it cost? >> the can cost under $20,000 and up to $100,000 depending on the car but a lot of people we spoke to are doing it in the range. $20,000it takes six weeks. carol: what was fascinating was one person doing it set up shop and learned how to do it by watching youtube videos. >> it is a big thing on youtube. you can do it yourself. i probably would not. but one could. jason: let's be clear. none of us around this table would do it by ourselves. carol: come on. >> classic cars at the end of the day are annoying. they break down. they are difficult. these are super reliable though. for a lot of people that are classic purists, this is something they never thought

they would be into but suddenly their car is not a problem anymore. carol: businessweek is available on newsstands now. jason: and on the mobile app. carol: our reporter in hong kong is understanding what is going on in china reminding us that with all of our focus on the trade talks, what is going on in china is making significant inroads in terms of investment but also influence over some emerging economies and this week we focus on zambia. jason: it was such an interesting follow the money story. it took us somewhere where we did not expect to go. carol: definitely a must-read. what was yours? jason: it is fortnite, you probably could have guessed that. it is like catnip. totally different context. globalizing. carol: you look at trade differently after reading that

story. jason: check out our daily business week podcast. carol: more bloomberg television starts right now. ♪

♪ david: when you have problems with the weather, do you ever communicate directly with god? pm netanyahu: all the time. we used to say it is a local call, but the internet changed all that. david: what is the pleasure of being prime minister? pm netanyahu: oh, investigation. [laughter] [laughter] david: the israeli economy is doing quite well. pm netanyahu: if you're not investing in israel, anyone here not investing in israel? invest in israel. >> would you fix your tie, please? david: people wouldn't recognize me if my tie was fixed but ok. just leave it this way. all right.