carol: welcome to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. we're here at bloomberg headquarters in new york. carol: 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 zinet president trump spared,, 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. arol: we caught up with economic expert peter coy. >> why do they die and why do they end? right now, you've seen since october the stock market has come down quite a bit. it's because people are afraid the good times will stop rolling, yet on friday we had a great jobs report. ow can people be talking about 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. if you think why is the stock market 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 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 consume aerts are not

automatons. they are moved by emotion, fear, and greed and one of those emotions is confidence. 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 yell season 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 taken on. 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. it's 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 expansions 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. and they're not dying of old age or at least their longevity is increasing, 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. >> you're probably seeing some losses if your portfolio. this is still 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, it talked about 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 some of these indexes. so 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 -- an toffoli managed fund to your port photo. 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 accidentally 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? e likes apple.

jason: yeah, much to his shareholders' detriment. at least of late over the last couple of weeks. 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 really are, and this is assuming you're buying the kinds of bonds that are intermediate interest rate risk, high quality. what they're 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 alue although it will also be picking up extra income as it goes as rates rise.

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 hat financial bear markets and main street financial emergencies the 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, sexosh 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 in the direst of emergency is -- emergencies, 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." i'm carol massar. jason: and i'm jason kelly. join carol and myself 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. on the cover this week, z. t.e.'s cautionary tale. jason: this is one of china's biggest tech companies. carol: it nearly became a casualty with president trump's trade war with china. jason: this centers on china's wireless in 5-g

technology. carol: 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 matcherer in the united states but it's like way down there. so 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, a chinese company making it, correct? >> absolutely. zte and 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. and 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 in 2007. carol: $1.4 billion? >> in 2017 it was as much as $1.2 billion. but then 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 had 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 a couple 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, what does this mean for 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 tory that you always focus on the most macrothing possible. 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 even meant. bout was it a wig -- big deal? the people in texas said they 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. -- behind putting zte on the cover this week. in us about the discussion 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. and it really 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 give attention to it. carol: it's like globalization of technology. this huge chinese company in america. we are seeing it around the world. >> it came together when we had the image. it gave it this really 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 roadcast, the economics of the world's hottest video game, we're talking about 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: and i'm carol massar. you can also listen to us on the radio, and in new york, 106.1 in boston. jenna 119, siriusxm -- channel 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 its influence. jason: they are installing fiber-optic surveillance systems around the world. carol: cool chart in the technology section that maps beijing's reach. you're looking at a map of the world, it shows where there are internet cables.

those 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 obviously one and we see that. 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 when it comes to the chinese economy. 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: right, and found out about the promises and the perils 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. a third of that spending or about $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 is, to coin a phrase, he is all in china, it seems.

tell us about that. >> i met the transporting communications minister who is in charge of zambia's technology upgrade. a discussion with him 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 us? zambia was formerly northern rodeesha, used to be 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. isso 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. certainly 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 whether 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 $1 trillion in spending that china is currently embarking on, on a worldwide basis, is buying it enormous influence and lots of new friends in new places. that is 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 trenal try to unusual 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 bility to use cell spones

effortlessly and whatnot 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 ambia. 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 tremendous esexress therefore you get people starting to campaign about it, look what's 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

a development model 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. she's got look at the chinese technology market. so what are you focusing on? taylor: so much when we talk about china, we talk look 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

show a really cool chart. 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. that is correlation. one is you move perfectly, positively together. we are at .8. that's a high correlation meaning these stocks are really starting to move together. i think it's globalization. carol: you saw suppliers around the world react to the negative apple news. jason: and you get the sense that these companies are connected in ways that maybe we didn't fully amendment 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 so much for that. coming up next, how paypal

escaped obscurity by embracing its competitors. jason: also, refitting vintage cars with electric batteries. carol: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. still ahead in this week's issue, nancy pelosi's dealmaker reputation is being put to the test. jason: and real estate experts see deals ahead for luxury home buyers. carol: paypal is as well known for who founded it as what it does. jason: the company has had a very good couple of years.

carol: drake bennett has more. >> they are better known for the so-called 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. and it's got its if i thinkers in basically every part of the sprawling digital payment ecosystem. jason: for a certain segment of the audience out there, they pal, but heard of pay they've heard of vennmo. a couple of -- 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 stubhub, air bnb, 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. the stuff that you know -- i'll pay you back. i only have a 20, sorry. carol: i will pay you later. >> the stuff that used to not require a payback. now, you can bill friends on vennmo. jason: it's the enemy of cheapskates everywhere. carol: but it is not profitable. >> a common problem. it's 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 spear -- sphere, so now they're 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. because there's how you make

money. paypal has become smart at learning how to partner with them. >> yes, and that was a very the part of h on 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 her choonlt of these -- more when of these payments and 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 ncredibly angry at paypal. and shulman decided to forgo some of that profit but start playing 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 now is alsoalso see paypal as a partner to -- now also see paypal as a partner to drive more transactions through their payment platform. carol: a pal you might say. with us is the editor of the magazine 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. >> first of all, i love that paypal is still a story. it's like the dream of the 1990's is still alive 20 years later. the story is one of how paypal escaped the palm pilot and then escaped ebay and then managed to turn all of its foes into patchwork find the profit. 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 these trade talks continue -- his was an initial round happening this week. 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. but it also affords us an ability to look at zte, which last spring was in the headlines when trump effectively put them on 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. >> thearkt. it's part to have belton road initiative and they've been very successful in making inroads into africa. he technology section this week 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: also, big dairy is about to flood u.s. schools with chocolate milk. jason: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek."

i am jason kelly. carol whichen -- carol: and i'll carol karl. 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 businessweek.com. and on our mobile app. over to the politics section, house speaker nancy pelosi faces multiple challenges, to say the least. carol: that's for sure. she first has to address the issues that helped democrats win the house. >> she was also speaker of the house from 2007 until 2011. by all accounts she was a very effective speaker, very good at keeping her caucus in line and making sure everyone stayed together and voting the way that leadership wanted them to vote. . 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, political attacks, but she also

has freshmen members of her caucus that also tweet their opinion and are not shy about tweeting their criticism about whatever piece of legislation of democratic movement the democrats are working on. 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. they aren't. >> any party would expect to have factions. we are a diverse country. a democrat from new york city would look different from one from illinois. but within that kind of conference, you have nancy pelosi who is very good at building consensus and a very good listener. hearing what they need in order 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 kind of adan -- 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 that voters voted on and wanted and she also has to think about what's coming up in 2020, the presidential election and maybe gaining back the senate. there is a balance here. >> right and when you look within the subject area issues, there are a few policy approaches that have been approved of by voters and were ery popular.

-- very popular in the 2018 midterm. 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's 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 it 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, trump's agriculture 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. here's reporter peter robson. >> lunchroom wars are nothing new in america. it goes back to ketchup arguments from the reagan era. there was a huge debate over the obama healthy hunger-free kids act, which had made some drastic changes to lunches and was requiring more whole grains, and mportantly, skim chocolate milk. not 1% 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. so within the first week after he was appointed, he came in and announced a change and the first change was to put 1% chocolate milk back in lunchrooms. and as he said, i wouldn't be as big 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 in 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 his rules would make school lunches great again. in practice, the changes are -- could have been more radical, but the big change that i talked to

people about is the sodium levels. what was happening with the sodium levels was that it was gel 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 now you can drive a mean green vintage machine and embrace the new world. jason: this is bloomberg.

♪

carol: welcome back to "bloomberg businessweek." i am carol massar. jason: i'm jason kelly. you can also listen to us on the radio, 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 ottest videogame on the planet is emblematic of a new digital mile of digitalization. jason: fortnite! carol: who knew? >> at some point over the summer as my son was playing fortnite, he started talking about something he and his friends were doing, which was gaming globalization. he didn't 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 to 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 love in your stories, i'm thinking this is going to resonate with our audience. digital arbitrage. this is what they were doing. >> absolutely. 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 that there was a whole cottage industry that has sprung up in youtube videos and chat rooms explaining these tips and tricks.

and that my son and his buddies were not alone in doing this. this was a real phenomenon happening oompled the fortnite universe. jason: fortnite is a mom phenomenon. created by a north carolina company. 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 fashioned, shoot 'em up game, including some 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. fortnite is a country that's bigger than brazil. it's that old-fashioned shoot 'em up game that has become a cultural phenomenon. all those baseball players doing the funny dances last season -- they were doing fortnite dances when they got a hit. 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 actually might be able to get a discount. carol: what is going on? > macro and micro economic trends are causing issues for

everyone around the world. 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 boo. some people are culling it a bit of a bubble. carol: a lot of building? >> too much building. >> massive amounts of condos in new york city, large houses in los angeles and in ondon, massive amounts of both , even with the extreme uncertainty about brexit. jason: with a brexit chaser to make it more painful. here is a great chart that hows the debta, essential. -- 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. new york has been slowing down for a couple of years and we are seeing in 2019, or we will see in 2019, a tremendous amount of inventory that's been 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. which is considered pretty significant, that that was a pretty big 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 thomas retro fits of vintage cars, it's all in pursuits this week.

jason: it is a new trend in vintage cars. people are electrifying them. carol: who knew? >> it has been something you do since be the 1960's, people just 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: and it is an incredible thing that's gotten a lot easier, to your point. 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. >> oh, yeah. batteries on batteries in the front of a vollings wagon. and now, it is a lot easier. the technology is better. and you are plugging in your porsche. jason: and demand is huge. >> and it's really been in the past three years that companies

we talked to say they are getting demand from all over the world. we spoke with a company in wales , just outside of tokyo, in new york. just a lot of people doing it. carol: someone took a volkswagen bug 1970 and it was converted and it went from 40 horsepower up to 400. this is a huge change in horsepower. >> exactly. we were like is this safe? carolina: doesn't the car start to fall apart? disindependent grate? >> yeah, so basically what ou're dealing with then is 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. so it is a little bit safer and definitely more power. 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 sort of glides through the light. it's amazing. 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 talked to are doing it in the $20,000 range. it can take only a cup of months. two months, six weeks. it doesn't have to take that long. 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 wouldn't do it myself but one could do it. jason: let's be clear. none of us around this table would do it by ourselves. carol: come on. >> classic cars are annoying. at the independence of the day they break down.

they have difficult parts. 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. what's your must-read this week? rol: really liked sheridan prasso's story. our reporter in hong kong. she's 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 a great story, 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 absolutely just like catnip for anyone but in a total i different context, fortnight -- fortnite as globalizing

force. i loved it. 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. ♪ place, the xfinity xfi gateway.

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>> on today show, the latest interactive movie from netflix is changing the way we watch tv. yes, it's cool, but if you think netflix is doing this just to entertain us, you went missing a really important point. they have plenty to gain from your human interaction. plus, i'm going to tell you what we can all learn from the quick using smartphones to catch carjackers. want to know what you can get for $5,000 a night and a