carol: welcome to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. we are here at bloomberg headquarters in new york. carol: this week, what rupert murdoch's kids plan to do after the media mogul cashes out to disney. jason: plus, a special focus on real estate, including plans to create the world's largest home flipping operation the world has ever seen. carol: the trouble building

homes for low-income residents of new orleans. jason: and we begin with the long reach of the last economic crash. bloomberg businessweek editor joel weber joins us now. so much to dig into here. it has been 10 years. joel: we want to take all of your real estate dreams and anxieties and just put them in one place and contain them for you. and we did. then: it is amazing, stories to tell in this case? -- jason: it is amazing, the scope of this. how do you choose what stories to tell in this case? joel: you have to start with the long reach of the last crash. all right? because we are barely 10 years after that and we are still feeling the effects of that, as peter coley writes in the opening essay. and that is primarily a phenomenon that comes from the lack of homebuilding. that has also led to a derth of inventory. and that has also pushed prices to a point that a lot of people cannot afford to actually get in the game. carol: that is that is it in a nutshell, right, joel? from 10 years, we went from kind of oversupply, which led to hea -- to here we

are, undersupply. joel: the overhouse phenomenon is what that is all about. other opportunities. i love the zillow story. it's a company -- if you got the release date of death real bug,e -- real estate you cannot stop looking at what your house is worth, what your neighbor's house is worth. carol: the zestimate. joel: this is a company that has made a strategic choice to actually get into the home buying game. they have rolled out this phenomenon in 14 u.s. cities. there is an instant cash offer so that you can sell your house and no longer have a broker. so this is a real disruptive force. they are not alone in it. and pat clark did a great job of looking at what this phenomenon might mean for u.s. housing overall. jason: as you say, it all goes back to that crash we saw 10 years ago. a lot has changed, and maybe some things haven't. carol: joel weber, thank you so much. we have more on this overall story with editor bret begun. bret: we are not about to have another crash like we just did. when that happened, you had overbuilding and you had a lot

of very speculative pricing that was not really taking the overbuilding into account. that combination does not exist right now. what we actually have at this point is under building. we are actually underhoused in america. and that really comes from the fact the large builders the last time were all but almost wiped out. and the smaller builders, if they wanted to try to build more, they really can't. they don't want to build on spec. right? they don't want to be stuck with homes that no one wants, and they can't get the loans, frankly, to build at that rate. so we are sort of seeing a different issue now, which is that when you don't have enough homes for people, the existing stock becomes more expensive and people are getting priced out. carol: right, and we talk about this so often. i feel like the magazine has covered this so well, whether it is silicon valley, whether it is up in portland, seattle -- some of these markets have certainly gotten so expensive for many of the people who live and work there. or try to live there.

bret: san francisco, l.a., in many of those areas and cities, it is all but impossible for somebody to buy a house. they are just basically getting priced out of those markets. and you see that sort of happening really -- the only city in america that is considered undervalued right now -- so if you are thinking about moving -- would be chicago. that would even be before the polar vortex. carol: even more so now. so we talk about could we have another housing bubble? and yeah, i guess at some point, but that is really not the worry, as you said, it is the undersupply. and there is a lot of other factors, right? tight workforce. builders, it is a hard thing to find workers. bret: that's right. it is very hard to hire right now, the labor market is very tight. the other thing happens is with interest rate hikes -- as interest rates go up, you are thinking about moving in your -- moving and your mortgage might have been more expensive, you're not really going to move. so you are not moving, you are not making your house available to somebody who would want to

move. so you've got a lot of stagnancy there because of that. carol: and i think it is interesting to that there is this whole concept of nimby, or not in my back yard, in terms of building. bret: you've got new zoning regulations that have popped up in the last 10 years. national association of homebuilders have had a lot of complaints about regulations that have sprung up really since the last housing crisis. so those are definitely having an effect on the number of available lots that are even there to build on, even if you wanted to. carol: some things have changed. we are still feeling the effects in some ways because some of those bad loans have been yet to -- have yet to be cleaned up. bret: that's right. the government is still dealing with these, especially some of these federal housing loans. again, the long reach of the last crash extends in many ways, and that is definitely one of them. there have been issues with some of those loans. you also have -- we are not free of bubbles here. i mean, ubs does this global listing. there are many, many, many cities that we hear about often where basically it is impossible.

hong kong is number one. in the u.s., san francisco is the only city in the top 10. carol: up next, the challenges brad pitt has faced building houses for low-income residents of new orleans. jason: plus, the world's most popular mid-rise building. this is a story inspired by a road trip. carol: it's really cool. this is "bloomberg businessweek." ♪

carol: welcome back to

"bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. join carol and me for bloomberg businessweek every day on the radio from 2:00 to 5:00 p.m. wall street time -- also catch up on the daily show by listening to our podcast. subscribe at itunes, soundcloud, and bloomberg.com. carol: and you can find us online at businessweek.com and on our mobile app. movie star brad pitt faces an uphill battle helping new orleans build after hurricane katrina back in 2005. jason: his make it right foundation is being sued by residents of its homes for allegedly using substandard materials. carol: right, jason, and the foundation is suing its lead architect. jason: so take a look at this map. it illustrates where make it right has built homes in new orleans' lower ninth ward. carol: those black buildings, right? that is exactly where make it right has done some redevelopment and brought back some new homes. it is an interesting story and a lot going on, some controversy. we caught up with the editor for more. dimitra: there are these houses

that have been built by a foundation called the make it right foundation, which is one of the nonprofits that went in. it was started by brad pitt. he had been in new orleans, you know, loved new orleans. had come to know it through various movie shoots. invested in some property there, bought a home there, and a year after katrina as he was going on a tour on parts of the city, he was struck by the fact nothing had happened to the lower ninth ward. jason: the initial response from the community was pretty enthusiastic, right? dimitra: very enthusiastic. again, because they wanted to stay. people were interested in better homes in the area. you know, they were really sold on this idea of new homes that would be built. they committed to build 150 homes. at the end of the day, they built 109. carol: he was trying to really replace their homes, but even make them better. dimitra: homes that people could be excited about, feel good about, and again, that would be energy-efficient, greater

affordability. they were priced very affordably. they were subsidized. one of the sources in our story is a woman who talked to rob about -- the problems which we can touch on, she was able to get her home for $130,000 with some subsidies, and the going rate was about $150,000 and that quite less than what it cost to build these houses. colorful homes. homes that would really instill just some pride. and there is great homeowner pride in that neighborhood. jason: and what happened? dimitra: and so, you know, within a matter of just a few years of houses being up and moved into and people settling into their homes, there are several, several homeowners of the 109 or so -- it is 106 houses and then three condo sort of townhouse units. i don't remember the precise numbers, but there have been many problems with the houses and serious problems. serious. jason: yeah, not everyday maintenance type things but mold issues.

dimitra: mold issues, mushrooms and mold growing in houses. carol: was it a case of, all right, these folks had good intentions. they built a lot of homes, came close to what they said they would. there were problems and they have been fixed or haven't been fixed? where are we? dimitra: well, some that we are aware of were addressed, but then there were ultimately decisions, like one house was demolished last summer completely. it got a lot of play locally in the local press and it was portrayed as really like the entire organization, completely missing in action. that is -- one of the important things we are really emphasizing in the story is that the best of intentions won't help you if the organization is not structured in a way to be prepared for anything that might come in the years, in the many years after these houses are built. we offer the example of another

nonprofit and effort because it seemed what they intended to do was just less conspicuous, much simpler, but a structure and an organization in place to ensure that there is follow-up and follow-through and you don't have residents feeling, as many do now, abandoned and nowhere to go. there are some people, kamaria allen is a resident that rob has interviewed, and she is now living in a house that her parents owned. she bought one of her own but had to move out of it because of the problems -- and she is living in the home that her parents bought in that neighborhood and is encouraging her parents to simply walk away from it. it has gotten to that point, where they are not getting the responsiveness they want. she just thinks, let's just find some place else to live, because why are we going through this? which is tragic when you think about losing a home to begin with and potentially losing one again. so it is really -- it is a very sad story.

we did not go into this thinking we were going to tell a super uplifting story, but we wanted to highlight something where intentions, by almost all counts -- i mean, you have some residents who are still very committed to both the work of make it right and what they did. robert green, who says they build houses, i will not argue with that. i at least have a house i can point at and tell you that is my house. and there was no house before. jason: also in the special real estate section, how monotonous five-floor apartment buildings have conquered america. carol: it's definitely a trend. reporter justin fox telling us about the forgettable, yet unavoidable five over one phenomenon. justin: five floors of wood framed building over one floor of concrete. but they can be -- i mean, there are buildings that have the general look that are only three stories high and the tallest are five over two. five stories over concrete. and they are basically -- i came across somebody on a blog comment calling them stumpys.

i would really like to push that, that is really good. jason: i'm at the stumpy on the corner. carol: yeah, yeah. justin: but they are limited in height by building code. -- iwas initially driven mean, it is partly structural concerns that you cannot build a 30 story building out of two by fours, but it is partly fire concerns. there is actually this movement to build taller buildings out of wood, but it is a very different kind of wood. hulking pieces, not two by fours put up in the same way as single-family houses are traditionally built in this country. jason: as you dug into this, are there specific people, either architecturally or construction-wise who are especially successful, who have made this a big part of their business? justin: i kept trying to find the group that was pushing it. clearly, there are big apartment developers.

there are big -- avalon bay has a lot of these buildings all over the country, but so does equity. it is like it is not one particular group driving it. humphreys and partners in dallas is probably the biggest multifamily architectural firm. they have lots of buildings with this look, but there are lots of buildings that look like it that are not by them. carol: an interesting aspect is the use of wood. i think for a while, we have gotten away from it because of some horrendous fires that wiped out cities and areas. actually, most recently, even in new jersey here. so tell us a little bit about the use of wood. justin: basically by the early 20th century, you pretty much were not allowed to build lightweight wood frame buildings at all in central areas of some cities. carol: right. justin: and above two stories pretty much anywhere. and so it was pretty much relegated back to single-family home construction. and kind of bit by bit over time, partly because of innovations like fire

sprinklers, which make these buildings a lot safer than they would have been before, but also just by pushing and nudging of various building trade groups and wood industry groups and others, we have gotten to this point where you can build five stories of lightweight wood frame. carol: up next, does the u.s. need another stock exchange? we will tell you why some heavyweights on wall street -- they think so. jason: they certainly do. plus, hot new trends in regulation -- or rather, deregulation. what you need to know about financial sandboxes. carol: this is "bloomberg businessweek." ♪

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 on sirius xm channel 119 and on am 1130 in new york, 1061

in boston, 991 fm in washington, d.c. -- jason: in the bay area, london on dab digital, and the bloomberg business app. in the finance section, wall street's biggest traders are beginning their own exchange. carol: they are indeed. the goal of the proposed members exchange is meant to help traders win the battle for lower fees. jason: nick baker brought us the story. nick: this has a shot of taking some good market share and that is part of who is behind it -- nine huge firms, some of the biggest traders out there. so they've got lots of trades they could, in theory, start directing to this market. so, this is a business that could take off. now, it is still preliminary. they have not filed for regulatory approval. we are probably maybe a year away from it existing, but it is still early yet. but the reason why it exists it is these firms -- basically everybody on wall street other than exchanges are angry at the exchanges, the current ones, because they believe those exchanges charge too much. carol: it is not like they can disconnect from the new york stock exchange. they are going to still have to be connected, but but what they can do, these owners of the new exchange or the backers of the new exchange, they can direct trades they are doing to their

new exchange, correct? nick: right. i mean, they will not be able to ignore the other exchanges. this space just adds more complexity to an already complex marketplace. you've got one more place to plug into. this company called the members exchange, once it opens. so it does add to the complication, but the owners of the exchange have a ton of order flow that they could in theory start sending there. so it means they can start doing a lot of business. jason: are we in a moment where that is, shall we say, ripe for this kind of disruption? nick: the members exchange is in theory, it is part of the solution. they are a small part of the market, only 2% to 3% of the market, but charged dramatically less for things, a variety of things, than the big incumbents. they are in a way aligned with the members exchange, but they are really small. if anyone remembers the book "flash boys" and the marketing campaign around that -- investment exchanges alienated a lot of potential customers with some of their rhetoric.

so i think the members exchange, just because they have not alienated themselves against some of the folks, they may have a better shot. the investors exchange is not fighting the good fight in some respects. in this battle, there were a lot of folks that were turned off by some of the rhetoric over the years. so the members exchange, they may have a better shot. jason: these are real names that people know on the trading sites. citadel, virtue obviously being the biggest. but also some well-known brokerage houses as well. they could get some real volume here. nick: when you talk to folks who are associated with this company, it is clear they don't want this to just be a retail market. but that is kind of -- much of the order flows they are bringing to this exchange is retail order flow potentially. but i think for the exchange to succeed, it will have to have a diversity of order flows. you will have to have big investors trading there, little investors trading there. having their orders sent there. so it will be interesting to see how this plays out. to be clear, right now this is

all preliminary. this is -- in talking to some folks, even a threat of this the point.ing maybe the thing in theory does not even have to open if they get concessions from the big exchanges. carol: that is what i wonder, ultimately, right? if it is about forcing the big exchanges to cut their costs and fees here. nick: that is one theory. of course, for it to be a threat, it cannot be an empty threat. they actually have to go through the motions of creating the thing, so if you set that aside, if they create it, it gives them a more tangible voice in the industry. and even though there is this threat, in theory, it could be a success even if it does not open, if the exchanges cut fees. i think them creating it does ultimately give them a stronger voice in the industry. carol: also in the finance section, some countries around the world are finding a new way to deregulate. jason: so-called financial sandboxes like in china, canada and even arizona. they are supposed to give fin tech space to grow. carol: but they may also remove

some key consumer protections. jason: taylor riggs talked to paul it wire. dwyer.aula paula: it is like a playhouse for financial technology companies. generally, these are startups that are doing something digital. and the idea is they will compete with the big banks or the big wealth management firms. but to get started, it is very hard because they don't have all the legal and regulatory traps set up. so they don't have lawyers, and they don't have regulatory advisors, so they need to get started up very quickly. so sandboxes are a place where they can work in a controlled environment but under relaxed rules. taylor: walk me through how many regulations they are able to avoid in this scenario. paula: what they are doing is a company in their sandbox will not have to follow things like the truth in lending act or the equal credit act. all sorts of things. and they will be immune from federal lawsuits, state lawsuits and private lawsuits. so consumer groups are saying that is pretty scary. and so we are going to have to

rely on them to say that this is a deregulatory environment, but also keep a close watch on these companies. so which is it? they are either deregulated or they are not. so there is a lot of apprehension about this program. taylor: give me an example. what is one company here you have been following in your story? paula: there are no companies yet, not in the united states, because the sandbox that exists right now is in arizona. there are only three companies that have been approved in that sandbox. one of them is called sweet bridge. and it is a combination of a blockchain company with a type of cryptocurrency that they call a token. it is completely digital. what they do is they allow you to make, to borrow against the title of your car. so this is a thing called title lending. consumer groups are very wary of title lending. it is a lot like payday lending. so it sounds very risky to consumer groups. the company says no, no, no, it

is not risky at all. we have all sorts of controls. the arizona attorney general, which will be overseeing this experiment, says no, no, no, it is not risky at all. don't worry. but it has not started yet. we cannot see what any of the results are. we cannot see what their marketing materials are. we cannot see if any of the consumers who have used the service have defaulted on their loans and what has happened to them. taylor: is this just a big lobbying effort on them to sort of cut out the competition or are there legitimate concerns about the lack of consumer protections that they are really trying to highlight? paula: the big banks and big wealth management companies at first were very wary of these things called sandboxes. it has been going on in the united kingdom for several years now and it is considered the model. about 100 companies have gone through that sandbox. but in the u.k., they monitor them very closely. in fact, sometimes they are even more scrutinized than a regular financial company. they have not relaxed the

regulations or laws. in the u.s., it is different. it is more relaxation of laws and rules that are envisioned. but the big banks and big wealth management companies at first were very wary of this, but now i think they have bought in because they can start sandboxes of their own, so they can play in the sandbox too. and the startups that are more nimble may or may not have an advantage, although i think that is one of the upsides of sandboxes. you have the financial industry in the united states and globally in the hands of very few companies now. a handful of big banks. a handful of wealth management companies. and more competition is welcome, so if sandboxes can do that, then that is a good thing. but it has to be done so that consumers are not abused or we don't set up another financial crisis like what we had in 2008. carol: up next, zillow finds a new use for its home pricing algorithm. jason: the famous zestimates, and also ahead, supercar maker

koenigsegg wants to go mainstream. check this car out. carol: i think i want one. jason: you deserve it. carol: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelly. carol: and i'm carol massar. still ahead, saudi arabia does valentine's day. jason: also, the shine coming off of justin trudeau. carol: and in the special real estate section, the next evolution of zillow. jason: so many of us were familiar with the real estate website and we used it to price homes and spy on neighbors.

carol: now, zillow plans to start buying homes and then reselling them at a profit. we have a great graphic to show you just that. what you are looking at, of course, the country, but these maps show you where they plan to be buying and selling homes. jason: and they are not alone, those red circles are redfin, another real estate company in that space. zillow, which has had a lock on those estimates, is getting into a much more competitive business. we talked to patrick clerk who dug into what is going on. patrick: you can go to their website, give them your address and entry information. that all together public records, whatever else and they quickly come up with a number they are willing to offer you for your house. carol: that's it, take this number, we'll give you cash right here.

you are out of your house. patrick: almost, they will send a person the house and make sure that is not a whole the roof and everything looks right. there will also have a local real estate expert in phoenix, whatever other markets. they will be in about a dozen soon. they will have an expert eyeball it and make sure your and then -- make sure this isn't crazy and then they will offer to you. and in the value proposition is that you can transact today, two weeks, you get to pick your closing. carol: and zillow gets a fee for it. jason: a little higher than what you would typically pay. patrick: indeed, 6-9%. they may also make a little bit of money by selling home for what they buy it for. they're saying they're aiming to not make money on appreciation, but make money by charging the fee. carol: they have become a big homebuyer in areas like phoenix. patrick: that's right, they're

buying hundreds of homes. they will have to borrow a lot of money to do it. each of these purchases are a line item. in cash, they have to hire tons on the ground employees, but does employees that have to manage teams of contractors. speed is of the essence for zillow because the longer they hold the home, the more they are paying financing costs, homeowner association fees, taxes, insurance, all that. they are trying to get a rapid return. jason: why they feel the need to get into this business? patrick: other people were doing it. there is this long-term competitive risk for them. which is if this becomes the way people really want to sell their a lot of people start doing it, and you can't do it on

zillow of his other website, you have no use for zillow. only other website becomes the starting point for this process. but there are other reasons as well, zillow has always carved out a business by selling advertising to agents who represent homebuyers. it is hard for them to reach people selling their homes, that's another universe zillow can now access by going in this direction. and you go to zillow and get an offer and then say i would never sell for that, zillow's going to then try to connect you with a traditional real estate agent who will manage the process, and eventually, not selling these as leads, but eventually they will sell leads to the agent. the theory is that these will be quality leads, people who have already entertained and there -- in their mind the idea of selling. it is better than somebody who is starting to think about it. jason: one of the challenges

does appear to be that the algorithm has to be right. as much as they are making money on the fees, if they are routinely not selling a house for as much as they think they say, either they hold it for too long and sound the carrying costs or they are just not making the margin they need. how confident are they they can get this technology right? patrick there are famous : examples of the estimates the way off. the ceo wants sold his house for a significant discount than his estimate, which is fun for everybody who has complained. jason: and they got a new home at a high premium to these estimates. patrick: is and was also off by a bit. -- and that was also off by a bit. it was tough. they have different levers they

can pull and i have a lot of data, they are getting a lot of data. they think they can read with -- where the market is going and if the market looks risky, they can charge more, right? if the market looks risky, they can just stop buying homes. but there is the risk they will wind up holding hundreds of thousands of homes on the books and they are going to realize the market has turned on the m and they can't sell them for what they thought they could come and i will be sticky. carol: taylor riggs is here with another look. taylor: expanding the business model and how that is transferring onto their income statement. they go into loans and flipping homes, that is an expensive business but they have done it to get ahead of competitors. it is putting pressure on margins, so what i have chart here are earnings before the

appreciation and a morteza asian. amortization. those margins are turning negative, as you can see. long-term, it might pay off. carol: and you have heard this from the investment community. jason: really smart take where this goes next. taylor riggs, next. where the murdoch empire goes after the merger. carroll: canada's justin trudeau keeps tripping over himself. jason: this is "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 two-5 p.m. wall street time. you can also catch up on our daily show on itunes, soundcloud, and bloomberg.com. jason: and find us online. in the business news, rupert murdoch sells most of his business media empire. the sale to disney is coming soon. carol: the murdoch family fortune is about to balloon. jason: our reporter tells us what to expect from rupert's next-generation. >> the question was whoever would take over rupert murdoch's empire? and looking at this, it is this great bit of a state planning. so rather than give the keys the -- keys to the empire to one of my children i will sell most of , it to disney and the that position them to build their own empires. once this deal with disney closes, and it's getting pretty close, they will have a huge amount of money to play with.

carol: how much? >> about $12 billion will be coming out to the family. they will be pretty well-positioned. carroll: and there are three siblings? >> three siblings from his second marriage. much who people are keeping an eye on. it is kind of fascinating. from the start, he positioned locklin to take over what is fox.f 21st century it is still a third of the size of the previous company, but it will probably grow. he has said we will be out there, buying stuff, making acquisitions. the question is what is his taste? jason: and james? >> he will set of his own investment company. maybe a little incubator. the question is what is he interested in? people are like he's looking at

live streaming tv space, but he's also really into environmental causes. he also had a lot of success in asia, in india in particular and has a lot of relationships there. he has been sitting on the tesla board, and people are thinking of any of the siblings, jean -- james seems the most likely. he is in his mid-to late 40's at this point, a lot of runway in front of him, a lot of money. he might be making some big investments that could be surprising. carol: what about elizabeth? >> after she sold her production company to her father's company back in 2011, she set up her own investment vehicle, and she has been making investments in kind of the production, artistic creative side of the media industry, animation.

company in los angeles called vertical networks which makes short form video for snapchat, facebook, and youtube. i think people expect her to do that, only on a bigger scale. carol: do we know if this was his original mission? how much time have a talk about who's going to be his successor? >> it is also such a contrast to other big succession stories is what happened with the redstone. that just evolved into this huge, massive competing lawsuits and acrimony. and maybe rupert murdoch saw that and was like, i don't want to end up there, let's take care of this. he is 87 years old. he positions himself and his children well for the future. carroll: in the politics section this week, justin trudeau is

facing a general election. jason: but the prime minister has been causing headaches for his liberal party. >> trudeau was elected in 2015, and it was a surprise win at least the scale was surprising. at the time, canadian seemed -- canadians seemed pretty comfortable with it. his numbers soared and he had at -- he had allies at the provincial level. since then, he has had these accumulated controversies incumbents often have. so the tables have turned. he once had a large lead over his next closest rival in canada's multiparty system. that has shrunk to maybe a percentage point or so to now a razor thin lead. he is dealing with a lot of controversies, the most recent one, pretty explosive about whether he pressured his justice minister and attorney general to intervene on behalf.

>> that justice minister was helping to oversee rural areas that have a lot of big-city mistrust. how important has that scandal and unfolding been to justin trudeau? >> the justice minister is argan writing, but all of the changes were part of an effort to affect urban voters. she was shuffled from justice to veterans affairs, which is substantially less prestigious. it raised eyebrows at the time. fast-forward a month later we , have is revolution that this newspaper is reporting that trudeau had been leaning on his justice minister to play ball with this company. this has been a huge, explosive question. now, he has a lot of problems that are scattered regionally across canada. ruraltrying to calm

voters, many of whom bristle at very urban, liberal, downtown party reruns. he's trying to save seeds out west, an important region, that is where the justice minister is from. and he is trying to court quebec. so all of these things are crossing together as he looks at his electoral map and thinks how can i scrape together enough to have another majority? taylor: you talk about other parties, and then enter is in -- andrew scheer, who looks as sort of the main competition to trudeau this fall. >> sheer is an interesting guy, fairly mainstream as far as conservative parties go. he flirts a little bit with skepticism around parts of globalization supporting brexit, , going out of his way to remind people he supports it given the current controversy around it. he is skeptical about the u.n. a migration path, which we see

lots of right-wing parties motivating supporters. it would definitely be a shift to the right if he won power, but it is steadily those two parties that have governed canada historically. trudeau's liberals, who are in the middle and sheer on the right. the big question is the third party on the left, the new democrats. they are in a bit of a freefall now which will be good news for trudeau, because their voters will favor him over sheer. carol: up next, how one might say i love you in saudi arabia. jason: plus, sweden's supercar dreams. this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. jason kelly and i'm jason kelly. you can listen to us on the radio on sirius xm it in new york, boston, washington, d.c. --

carol: the bay area, in london, and on the bloomberg business app. in the business section this week the superrich have a super , secret, a supercar they love to drive. jason: we are talking about the swedish carmaker that makes million dollars sports cars. carol: they are looking to go mainstream. taylor riggs talked to editor jim ellis. >> they have come up with a car that is, right now, the fastest street legal car you can buy in the world. it hits 249 miles per hour, but it also sells for $2.1 million. it is not the kind of thing to run down to the dealership and pick up, this is something that aims at the truly superrich. we thought it was an interesting place to take a look at, because the company has decided they do not just target superrich, they want to make things for just rich.

so they're coming up with a new car that will sell for a million dollars, or a little over $1 million, putting him squarely in competition with the super luxury cars that a lot of us have heard of. taylor: what are the business aspects of this car, trying to reduce it to $1 million? butari is a competitor, does he want to achieve? >> ferrari is considered to be the most profitable on a per car basis of any in the world. it's estimated you have about $80,000 of profit in each car. you say, well, is that a lot of money? yes, that is a lot of money. typically, on a regular luxury car, mercedes, audi, you are thinking about $17,000 in profit, lesson $20,000. the thing about a ferrari's you

is you can go back into the history books and bring in and reintroduce models that collectors want, update them. it has got a brand that people understand they want. so what koenigsegg wants to do is to get to that. to do that, they will have to change the manufacturing. taylor: tell me how they are doing that. >> they are joining forces with another company, remember saab? they are now on hiatus and not building cars, but the company has been bought by a chinese businessman who has maintained the factory, has kept going and operating by doing testing work for other carmakers that has let him keep about 700 people working at the factory. it has kept the factory ready to saab's again.

part of the crazy plan they have is to get ready for that, he will joint venture to deal the new car. and then, they will have the factor outbuilding more cars and then on the side, they will start rebuilding and eventually rebuild the factory. saab factory was actually very large, even though it is hardly doing any work now, it go for years doing both. so give them a real facility and at least a jumpstart to get the so give them a real facility and old saab factory working again. they're both in southern sweden and both near one another, such makes a lot of sense. jason: in the economic section valentine's day used to be tense , in saudi arabia. carol: the holiday was banned, but attitudes are shifting. jason: that means a potential new market for red roses and greeting cards. >> valentine's day has been banned in saudi arabia, never officially, but in practice of people who tried to buy and sell merchandise, you know, they were

punished. but there have been lots of changes socially under the de facto ruler of the country. this year, i think businesses felt a little emboldened to push the envelope. another thing that hadn't happened that has happened in previous years, there have been outright edicts warning florists not to sell red flowers in the days leading up and the days immediately following the holiday. carol: they talk often about opening up the market, releasing some of the restrictions and, of course, we know we have some really atrocious things have -- things that have been going on as well. day, inds to downtimes terms of restrictions and easing, what is going on really? >> this is a tension at the heart of leadership in that country that has relaxed a lot

of social mores, but in other areas, has tightened a lot. dissent has been sanctioned. we've all heard in various different ways. so i think that that is that as i think that the bet is that as people feel like in their personal lives they enjoy more freedoms, that they will not be pressing so much for democracy or what we see in other countries. carol: there are some a thing as we take for granted, silly holidays are celebrating birthdays. and if we do a strict interpretation of the muslim religion these are things they , don't -- >> i was not aware until i edited the story that there are some a muslim holidays that they do not allowed to be celebrated. no birthdays, no imports from the christian religion. so we did talk to some people, consumers, who said it is not for me.

they weren't against having stores selling merchandise and people going to restaurants celebrating valentine's day, but they said not for me. jason: this gets to the heart of the idea that this is an economy that has to be diversified, and so much of that plays into the politics and relationship with the ruler and people. >> that's right, and they have had a hard time because there has been this government austerity program. the bigger goal of trying to steer the economy away and develop other industries. we did a story last year about how many, any businesses were going out of business. it is important that they allow these spaces. it reminds me a little of cuba,

there, they say the government grips andrelaxes, relaxes. the idea is sort of in times of great economic strain, the authorities, they look the other way. they aren't saying we sanction this, go ahead. carol: "bloomberg businessweek" is available on newsstands now. jason: must read this week, i have to go with this real estate section. zillow jumped out to me as i love things like estimates, everyone uses them. but zillow getting into the home buying and selling business. that is a whole new twist. carol: talking about strategy, what is next for the murdoch family? they have sold off so much from the company empire and media empire, so now you wonder about the next generation. what will they do with the billions of dollars in what kind of investments will they make? jason: gillette told that story so well.

carroll: you can find more stories on businessweek.com. so check that out. jason: and check out our podcast. carol: more bloomberg television starts right now. ♪

haslinda: hello, i am haslinda amin in singapore. she has been called vietnam's billion-dollar girl, who, together with her father, turned down a $2.5 billion offer from coca-cola. instead, they decided to continue their mission to build thp beverage, vietnam's largest privately owned drinks company. phuong uyen tran is today's high flyer. born in the aftermath of the