♪ carol: welcome to "bloomberg businessweek." i'm carol nassar. we are inside the magazine's headquarters here in new york. this week's cover story, the global challenges facing the auto industry. from car production to efforts to reduce emissions and the growing popularity of ridesharing. we've got a question for you, have we reached peak car? also in the magazine this week, what if you worked for a ceo that required you to exercise on the job and with the ceo?

we will tell you about that swedish company. and we begin this week in remarks. and what america's history of trade negotiations in china tells us about the current standoff in beijing. we are here with joel weber -- i feel like there was a chance to step back and think about the bigger implications here. joel: he does a nice job of connecting some dots. this is a dialogue that has been happening for months now, and now the deadline has been pushed back and afforded the opportunity to say that even after this thing might reach a moment of compromise, there will be some implications that none of us have actually started talking about yet. carol: that is something to think about. it is not just the u.s. and china negotiating alone, everybody else in the world is watching. we even see agreements with the european region starting to come up. joel: china and the u.s., they are economic superpowers. and when they come together on whatever this ends up looking like, it creates a new version of what global trade alliances will look like.

that is what hasn't been taken into account. we have all been talking about u.s., china, but what about everybody else? what happens for them? carol: because everyone is watching so closely. editor joel weber, thank you so much. i sat down with our reporter for more. >> we are hearing from europe, japan, and other places. a lot of concern over how particularly the way the u.s. and china are kind of locking up the series of purchases by china to address the trade deficit. how that might affect the way trade flows around the world and also how it may undermine this system that the u.s. spent decades trying to get in place. carol: let's talk about this system of trade. because you mentioned managed trade, maybe folks are getting a little more worried about managed trade. what has been the system in place come and give us some of the history here, the history lesson of how things kind of got

put into place a few decades ago? how we've followed that script since. shawn: when you look at the history, the themes that he has put out there, the focus on a more transactional approach to trade, the idea that a president should really be kind of a salesman in chief for the u.s. -- that is something that has been there through history. if you go back to -- we often forget the boston tea party was not just about british taxes. it was also about chinese tea. that was the tea in question. presidents and politicians in washington have been trying to define that relationship with china for a long time. since world war ii, though -- this was a debate that was resolved in the 1930's during franklin delano roosevelt's presidency -- there has been a focus on setting rules in the world and then allowing the market to get to work. that is where we get the idea of free trade from.

let's set some rules, and let's let people compete under those rules. and what donald trump is increasingly doing is focusing on an old-fashioned version of him and trade, a much more him and trade, a much more 19th-century version of trade, which is managed trade by the purists. the idea that the government can negotiate specific purchases for specific goods with another government and the that will set the framework for a trade relationship. carol: we have trade agreement's coming up with the european region as well, and you wonder what might be the implications for that. shawn: if there is a big series of purchases of aircraft by china as part of a trade agreement with donald trump, that is going to result in a loss of market for airbus. the big european competitor. and the eu would have the right to say, hang on a second, that is not fair. you are not playing under the

rules that we have in the global trading system. you are negotiating this mercantilist deal. and we are going to challenge that. that is one way it can affect things. the second thing is we are already seeing the way the trump administration is trying to take this managed trade approach to the european relationship. and it is now threatening auto tariffs, for example. that is very much aimed at reducing the imports from the eu of cars. of mercedes, bmw, etc. and that is a way of managing trade that is a very old-fashioned and a mercantilist approach to trade. the europeans object to that strenuously. we saw angela merkel at the recent munich security conference really talk about this as an existential issue for

the german economy, which is a very export-dependent economy. so it is worth thinking about that transatlantic alliance and how donald trump is testing that. carol: for another perspective, let's bring in taylor riggs. you are taking us inside the bloomberg. taylor: one way we think about trade is looking at the effects on the economy, and china's economy in particular. in this terminal, china's manufacturing pmi. this started last summer in june of 2018. red means lower, green means a little bit higher. as you can see, red, red, red all the way down. white are the estimates. concerns about how trade is impacting global economies. carol: pretty dramatic in terms of the downturn we have seen in china. good stuff, taylor. thank you so much. coming up next, we talk about japan nudging the door open when it comes to immigration. plus, why a bankrupt and distrusted utility with a

criminal past is crucial to california's plan to slow climate change. this is "bloomberg businessweek." s carol: welcome back to --

carol: welcome back to "bloomberg businessweek." i'm carol massar. join jason kelly and me everyday on the radio from 2:00 p.m. to 5:00 p.m. wall street time. you can also catch up on our daily show, just check out our podcast at itunes, soundcloud, and bloomberg.com. you can also find us online at businessweek.com and our mobile app. in the economics section, as donald trump and other leaders in the west move to erect barriers to immigration, japan

is moving in the opposite direction, but don't call the new guest worker program a policy change. here's cristina lindblad. cristina: the country is reluctantly coming to terms with the idea that it needs foreigners to combat this demographic problem. its workforce is going to shrink by a quarter over the next 25 years, and already, there is a lot of jobs where they forecast they need about half a million caregivers to take care of mostly the elderly in the next 25 years. who will do this work? carol: tell us a little bit about this program. it has been said that it is a temporary program. cristina: the government has stressed that. they have said this is not a change in immigration policy, this is a new kind of visa. so they think up to 350,000 people come in on these five-year residency permits. there is very vague language attached to the idea that they may be able to apply to be a

permanent resident, which is unlike the trainee program, which is much more difficult to establish permanent residency. and but we know from the experience of germany, which had a guest worker program that began in the 1950's, mostly taking people from the former yugoslavia and turkey, that people did put down roots in germany, and germany has a sizable turkish population today, turkish born or dissented from turkish people. so we anticipate that the country is sort of -- i mean, japan is kind of not actually understanding in the way some of the applications in the long term. carol: i think it is so interesting, because here we have president trump and western leaders pushing back against immigration policies and japan is saying, come on in. cristina: and in japan, it is sort of a last-ditch effort.

-- the country has done a lot in recent years to try to boost participation in the workforce, try to expand the labor pool without doing this. and automatization. carol: but it is not enough, right? cristina: right. so this is an admission that we need another source. carol: i think what is interesting too, i do wonder about when we talk about economic growth, there are different ways to do it. basically two, increase productivity or increase the size of the labor force. i wonder about japan, which has had such a hard time getting its economy going. what the economic implications might be by being able to have a larger workforce? cristina: i think it is a positive for the country as a whole, and we will just have to see what kind of pushback there might be socially or politically later on. but so far, the government has been able to use its majority to sort of tamp down any kind of debate about this.

carol: where are the workers coming from and what jobs are they doing? cristina: they are often coming from the poorer parts of asia, vietnam, the philippines, china. a lot of the doing these jobs now are students, for example, allowed to work even though they are on student visas and people in this technical trainee program. but they are really kind of bottom rung jobs. they are working in convenience stores, working in hotels doing housekeeping, caregivers, and factories. but we know from the history of immigration almost anywhere else, this is how you start. carol: in the features section, pg&e's role in california's devastating camp fire last november around paradise, north of san francisco.

the worst blaze in the state of the history. while the giant utility pg&e serves most of the area and warned the sec that it may have accidentally started the fire. reporter drake bennett investigated and tells us how this case illustrates how unprepared policymakers and utilities are for the consequences of climate change. drake: there is a man named lane mason, who i talked to, his job description is a troubleman, he is a lineman for pg&e but specializes in fixing things when they go wrong. he was in the company's yard in chico when he got the call to go to this town of paradise. it is nearby, in the foothills of the sierra nevada. carol: and this is all california? drake: that's right. pg&e is one of the big utilities there. he gets up there and starts seeing smoke and a stream of cars going the other way. he gets to town right as this giant fire that started just a few minutes before arrives in town and would end up destroying the town, killing over 80 people. and he was there basically trying to deal with all of the

broken, sort of downed infrastructure of the pg&e infrastructure to let firefighters through to try to help people get out. so he, i thought, was an interesting lane to the story, because he is a pg&e employee and he was on the front lines when the fire came through. trying to protect people, trying to help manage the problem. but at the same time, that very morning, pg&e filed this report with its regulators, saying we may have started the fire. our equipment, which is a fairly common occurence, power lines in the dry conditions in the california summer will send sparks into the vegetation and start fires. pg&e files a report that says we had an outage on this particular hillside where the fire seems to have started. lane was in town for a couple of weeks working, and he gets this mixed reception. some people are happy to see him, others are yelling profanities when they see this truck because they really blame this company for, as you said, the worst fire in california history.

carol: where do we go with all of this? drake: the situation in california is going to have to change, because s&p came out with this report recently that said, you know, there is another fire season coming up this summer. they will not be surprised if a second california utility declares bankruptcy if they get hit with a big fire. so we have to figure out -- there clearly need to be these questions -- if a company has been negligent, we need to figure it out and address that. but there are broader issues too, where we need the power to stay on and there to be some stability for these companies. the current regime, especially in california, for this combination of a changing climate a legal and regulatory regime that really wasn't built for this climate. it was built for a climate, climate climate and business

climate, where forest fires weren't this bad, weren't this common or easy to start. carol: what are we hearing from various policymakers, from regulators and politicians on this? drake: it is a difficult thing. nobody wants to be seen bailing out a company that may have been negligent, but at the same time, you are starting to see some legislators in california talk about setting up a wildfire insurance fund. basically trying to spread around the risk the same way. it is interesting, they are modeling it on a hurricane insurance fund, a public hurricane insurance fund in florida. you see this problem cropping up in different ways in different parts of the country as climate change is screwing around with the weather and making these once rare catastrophes more run of the mill. carol: when all is said and done with pg&e, have we figured out,

ultimately, responsibility? drake: we have not figured it out yet. there are a lot of stakeholders. one of the interesting angles that will need to be worked out is that california has been pretty out front in using its utilities to try to mitigate future climate change. carol: pushing forward renewables. drake: yeah, exactly. so now that pg&e has declared bankruptcy, we might see a bankruptcy judge try to get them out of some of these renewable contracts that are very expensive, but were key in helping california become a greener place. carol: and there are implications for investors in the renewable world because of that. coming up, we had to berlin and the largest capital management event. we will hear from the ceo of ares capital management and the co-ceo of the carlyle group. michael aragettti and kewsong lee, they are up next. this is "bloomberg businessweek." ♪ carol: welcome back to

"bloomberg businessweek." i'm carol massar. you can also listen to us on the radeon sirius xm channel 119 and in new york, on 106.1 in boston, in washington, d.c. and the bay area, in london on dab digital and of course on the bloomberg business app. my co-anchor jason kelly is at the super return private equity and venture capital event. jason joins us now. first of all, tell us what is this event about? jason: carol, every february, the private equity world descends on berlin. who does not want to be in berlin at the end of february every year? 2500 people show up, and there is just a buzz this year because private equity is doing pretty great. carol: all right, that is good to hear. you spoke with specific players, including michael arougheti. who is he? jason: he is the ceo of ares, the big direct lender. they do private equity, but they are really best known for private credit. they have a window into the economy that not many other

people do because they are lending to all sorts of companies. here is what he had to say. michael: like any asset class that has developed and evolved, more people are in it, competition increases. that is the natural evolution. i am not experiencing the competition as compromising the opportunity in the asset classes. a lot of people that are allocating tend to be smaller first-time funds with a little bit more of a focused strategy than what we pursue at ares. jason: and still a hearty appetite on the part of institutional investors for this specific type of assets? michael: in addition to the illiquidity, the other thing that there is an insatiable appetite for is yield. when you look at private credit, whether you are talking about corporate lending or real estate lending or structured and asset-backed credit, the

opportunity to generate current yields, senior secured, the floating rate, it is very, very effective to investors and i don't expect that to change. jason: how much do you worry about interest rates rising? michael: i worry if they are rising for the wrong reasons. obviously when rates are going up because the economy is fundamentally sound, that is constructive for credit. it means that earnings are moving in the right direction. about 80% of the credit assets we manage at ares are floating rates. generally, when interest rates go up, our returns go up. the offset to that is if rates go up too fast or too much, it can strain cash flow and ultimately could lead to stress. it is something we keep an eye on, but on balance, it is a positive. jason: biggest worry for 2019 going forward? michael: boy, i just feel there's so much geopolitical uncertainty and movement. when you saw in q4 of 2018, that technical shock that worked its way through the market, i think that's a great reminder that the markets, just based on structure and tone are still a little fragile under the surface. there is still enough risk of

exogenous shock. as a credit manager, we have to be prepared. jason: briefly, because you mentioned the end of 2018, there was shock, but it seems so long ago. are we due for another one? michael: i don't know. i kind of hope so. it was a kind of appetizer. those are the types of markets where ares actually performs the best. when a retail investor is moving out of the market and the daily liquidity is having assets trade at values below their intrinsic value. that is when ares can come in and be a liquidity provider in those markets. so it was an enjoyable couple of months. carol: you also caught up with kewsong lee at the carlyle group. jason: that's right. kewsong, or kew, as he is known to his friends, is the newish ceo taking over carlyle group, the founder david rubenstein, probably being the best known of those. so they have a pretty big task ahead of them, getting their arms around this big global

enterprise. he and i talked about what happens going forward in 2019. here is what he had to say. kewsong: we are seeing growth moderate, but it is not stalling. and there is enough momentum in the economies around the world that we don't foresee a recession in 2019, but i would be remiss if i did not say that there is a little bit of uncertainty about what happens after 2019 -- what happens in 2021. a lot of it will depend on policy responses as well as how geopolitical events unfold. jason: so what do you make of the case, the argument that private equity could use a little bit more uncertainty, a little bit more volatility in the market? you know, maybe bring some valuations down and brought in -- broaden the opportunities a little bit? kewsong: i am actually more of a fan of that argument than i'm not. i think that recalibration is

healthy. we have all been conditioned to an absence of volatility. the central banks are very, very accommodative. global economies are all growing together, so there was an absence of volatility. now the volatility is back. and it does mean, more likely than not, that returns will disperse. because when times get tougher and it gets harder to do things, you will see separation of performance from those institutions that can really deliver performance in good times and bad. and maybe there is a little bit more of the rising tide that generated the returns in the recent past. so i think this recalibration, resetting the price feels clear. i think it will help to manage through soft economic times. all of that is probably better than not in terms of recalibrating and helping to reset expectations. jason: what is the heartiest appetite for? at this moment and this part of the cycle? kewsong: i think the desire for illiquid private equity and the superior recent return that the asset class has generated relative outperformance against

public market indices consistently, three, 5, 10, 25 years -- no matter how you measure it -- that continues to be in demand. i do think the lp's will think about, how i concentrate more investing dollars with fewer general partners, and what are the institutions i can get behind and develop strategic relationships with? i think the private credit asset class is also expanding. people are realizing that maybe there is a benefit in doing things more directly and disintermediating the public markets via private capital. i think those types of investing strategies are becoming more and more of interest. carol: jason, what a great interview. i love hearing from these pe guys. we will get back to you in just a moment. coming up, why automakers may not be able to count on china. and just how difficult is it to buy a car in beijing? this is "bloomberg businessweek." ♪

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carol: welcome back to "bloomberg businessweek." i'm carol massar. still ahead in this week's issue, just how physically fit you need to be in order to work at sweden sportswear maker bjorn borg. also, can selling lift tickets make skiing in viable business? and back to our cover story, are we at peak car? i have not heard this phrase, peak car, but it makes sense.

>> what it means to us, there are 1.3 billion automobiles on the planet. the automobile is a 100 year old idea. maybe it's time for something new. that is sort of where car companies have reached a realization, saying we have hit peak car. we can continue to do this, but the future of our industry will not look like the past. carol: and i love how you break this down into some of the major cities or regions of the world, whether it is germany, china, or the u.s. >> and everyone of these, because of the future of where we live is probably going to be more in urban areas than in rural ones. what we are seeing in cities is people are not buying cars, cars are getting more expensive, and they are using things like mobility services. so that will be a shift, this massive shift, almost a revolution, if you will, with how we use cars. carol: it is really dramatic. i love this story. joel, thank you so much. i got more with jim ellis. jim: autos are the largest industry in germany.

it also employs almost one million germans. carol: wow. jim: it is a huge piece of their economy, and the thought that you sort of top out in the number of unit cars sold suddenly has this sort of chilling effect in a place like that. they are having to deal with the notion already of switching from internal combustion engines to electric vehicles. and that's important, simply because electric vehicles take fewer people to make. therefore, employment was going to go down anyway as you go through this shift. but you take it to the next level, which is longer-term, we are talking about fewer cars overall. regardless of type of cars. that has an impact in germany, simply because a big piece of their middle-class -- carol: i love this part of the story. jim: yeah. a big piece of their middle class is built on non-college-educated people who can go to work in the auto business and basically have middle-class lifestyles. it is sort of what the u.s. was in the 1960's and 1970's with detroit before detroit basically got rid of the unions.

carol: right, a ticket to the middle class. so what's germany doing? they are not at -- they are not a nation to take things lying down. jim: they are working on the idea of preparing people for the shift, the initial shift toward electric vehicles, but overall, there is not a lot you can do when so much of your economy is built on basically pushing metal. a big piece of the german corporate idea is that they have >> -- decided to become huge, or even bigger in the markets where cars are still expected to grow, most notably china. i mean, china is the largest auto market in the world. volkswagen is the biggest company, you know, its biggest part of its business in china. carol: you took my segue. that is what i wanted to talk about. the world's biggest auto manufacturer to the world's biggest market. how does china play into all of this? this has been the area of the world where so many global

automakers have been kind of salivating over, that's where we are going to see our growth. but china is dealing with some things that may be pushing car sales down ultimately. jim: right. so many people thought no matter what happens, it's hard not to say that developed markets are mature from an auto standpoint. and therefore -- i mean, there are only so many cars you can drive at one time, but you can certainly own a lot of cars at one time, and that has been one of the things that has helped the auto business in the u.s., where multiple autos per household is a commonplace thing. carol: but it's expensive to own a car. jim: it's expensive in china. china has been making it more expensive to have a car. china had a really big growth spurt in cars between 2007 and 2017. the auto market grew at a 12% annual rate. that's huge. double-digit growth in that type of business is sort of unheard of, except in developing markets.

so that was great. however, last year, the chinese auto market shrank by over 4%. carol: big change. jim: big change. something has happened. one of the big things is the uncertainty over trade, but it's more than that. a big thing that happened is the notion that mobility services have taken off there much more than here. when we talk about uber and lyft, there's a company in china called didi. it's a ride-hailing service -- it's massive. carol: there is a stat that jumped out at me, 30 million active users per day last year, almost all of them in china. jim: correct, it is the uber in china, but they bested uber and ran uber out of china. did had more rides in china than uber had globally. this is an amazing business for them, and so many people ride share in china because china has become a big place for massive

urbanization. carol: let's just talk about beijing really quickly. beijing has a lottery. unless you win a lottery, you cannot have a car in beijing. jim: it is very difficult. and they have a lottery. in a city with over 20 million people, they are only allowing 100,000 new cars to be registered this year. so you go -- carol: small percentage. jim: small percentage. you win the lottery and often it takes years and years to win a spot on the lottery. they also allow you not to have to go in the lottery if you buy an electric car. however, you have to get in line and wait. currently, the wait is about eight years to be able to buy a car if you live in the city. carol: taylor riggs used a terminal to show us what is going on with the global auto industry. you have more. taylor: the question is if we are at peak auto sales, and i have been able to chart this on the bloomberg table. on the left axis in white, i am looking at u.s. auto sales on

the left and on the right axis, european auto sales. a lot of concerns, carol, as it has been sort of stagnating in europe falling recently. is it a consumer story? maybe consumers are not confident buying new cars. if it's changing habits. if you are doing more ride-hailing versus purchasing your own car. a lot of questions about if we are at the peak of the cycle? carol: coming up next, what titans of private equity are saying about dealmaking and real estate. we will hear from the ceo of brookfield asset management, and blackstone's global head of private equity when "bloomberg businessweek" returns. ♪ carol: welcome back to

"bloomberg businessweek." i am carol massar. join jason kelly and me for bloomberg businessweek every day on the radio from 2:00 p.m. to 5:00 p.m. wall street time. you can also catch up on our daily show by listening to our podcast. you can find that at itunes, soundcloud, and bloomberg.com. you can also find us online at businessweek.com and on our mobile app. my colleague jason kelly is in

berlin for the super return conference, that's where the biggest names in private equity and venture capital are gathered. jason: if there is such a thing as a hidden tycoon, it is bruce flat. $350 billion under management brookfield has. they are well known in the real estate world. they own a big chunk of cannery wharf, a big part of lower manhattan, but they are also in private equity and the infrastructure businesses. here is what he had to say about his outlook. bruce: there is all this opportunity, and there is a lot of consternation and politics and things out there. but the world is generally in a pretty good place right now. the economies of the world are either good, or actually some of them are improving. if you look back over many years, it's pretty good in the world and the environment. jason: in the news obviously is brexit. maybe happening, maybe not. you are a huge landowner, landlord there in london, with

canary wharf. how do you play all this? bruce: look, this is a long game. we invest for many, many years. we make investments assuming you will have issues when you go through it. this one just happens to be political. we just don't pay attention to the short-term news. it will be what it will be. we assume everything will work out in the long-term, and i'm quite positive it will in one direction or the other. and i think london is a great place, a great global place to invest, and it will be for a long, long period of time. jason: what is the biggest thing people are worried about as we go through 2019? what are you most worried about? bruce: look, we are 10 years into a cycle. at some point, this cycle is not going to be as good as it is today. it always turns. they have not been repealed. that's number one. number two is interest rates, if

they go up a lot, that's an issue just with all asset classes. and we don't think that will be the case, but those are two things that we worry about that are really not controllable. now, we control some things. we finance our businesses as prudently as possible. we can ensure everything we buy is going to go through recession at some point in time, but you can't control that. jason: given all that we have talked about, are you a net buyer or net seller in the world right now? bruce: last year we invested $35 billion, we sold $12 billion. this year i bet we will sell more than that. i don't know we will invest that much. last year was a bigger year. on balance we are more conservative than we were a number of years ago. carol: jason, you caught up with

so many well-known names in the world of private equity, including joe baratta over at blackstone. jason: blackstone, they are the king. and joe baratta is the prince of private equity in a lot of ways. everyone is gunning for them. he made his name doing big deals around merlin entertainment. that is how he got the job. we talked a little bit about that and what blackstone sees ahead. joe: as we look at our portfolio, there are small pockets of weakness. maybe the auto build in china and europe and at some point in the u.s. housing is strong, consumer spending seems to be strong, employment is strong. there is certainly a deceleration in topline growth. some of our companies we are seeing in the overall market, but we are not seeing the telltale signs of a recession in the near-term.

jason: so europe is especially interesting, obviously to people here, but also to you. you made your bones in a lot of ways in london, you ran europe for blackstone, did some of the seminal deals for blackstone. legoland, madame tussauds, himlegoland, madame tussauds, -- putting it all together, merlin entertainment. you are intimately knowledgeable about that market. brexit is obviously high on the mind over there. how do you look at europe right now? joe: i think europe, the recovery of europe has been a bit of a disappointment in terms of the amount of economic growth. brexit was unforeseen and is an issue. i think if you look at the u.k., we want to price things with a little more margin for error. we are investing in the u.k. we think it's a great economy, but there are some unpredictabilities. so maybe you are going to pay a lower price than you would have in a pre-brexit world. for us, europe is a selective market. we have to find a company we can really do something fundamentally to transform its growth, which will be harder to come by in the european economies and in the u.s. jason: so i checked four years ago, and you name checked warren

buffett on the stage. you talked about long-term capital. how is that process going? sort of raising money that you hold for longer and still are able to deliver the returns your investors expect? joe: well, we began the discussion with our investors about six years ago, about a different structure to hold a different kind of assets. every other asset class, credit, real estate, has multiple structures to own different kind of assets. safer assets are afforded a lower cost of capital. private equity has one structure. you hope to generate 20 plus percent returns. we created a vehicle and raised about $5 billion three years ago to buy really high-quality companies with high predictability and hold them for a decade plus. and it has gone really well. we have made three investments. we are about to make our fourth. and i'm sure we will be back out with another vehicle. jason: you talked a little about valuations in europe. take us back to the united states. are you seeing any weakness there? because prices have been pretty

high for some time. joe: i think in the last year, wide swaths of the market have been repriced. smaller gdp growth businesses, industrial concerns were trading 20% to 30% higher a year ago than they were today. even with the recovery in january and february from the december lows. so i think some sectors have been repriced. and it takes a while for that to translate into the private markets, and i think sellers of assets, of certain kinds of assets have to realize prices have come down. carol: what a great bunch of interviews. jason, thank you. coming up next, when a ceo forces you to keep up with his workout routine, and hot spring hopping in idaho -- sounds like fun to me. this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. you can also listen to us on the radio on sirius xm channel 119, and on a.m. 11 30 in new york, 991 fm in washington, d.c., am 960 in the bay area, and the bloomberg business app. in the features section, no one skips sports hour at swedish sportswear maker bjorn borg. you heard me right, we are talking about sports hour. the company's ceo has made fitness mandatory. it's a great story. here's reporter josh steve. josh: he's a former swedish special forces sergeant who then set a record skiing to the north pole, became a business consultant sort of talking about that experience, and has sort of imposed what seems like a strict philosophy and what he calls framework onto his businesses, which is all about setting and achieving goals. but a big part of it is, it is not just about your work. it's about wellness overall and fitness is a part of that. bjorn borg is a fitness company, so he really pushes this fitness

to the extent that on fridays, every friday morning the company shuts down and everybody in the company works out together. carol: all of its offices? josh: for an hour. carol: wherever they are. there are a lot of management books out there. i'm sure you're aware of them. there are all these different philosophies. his it seems to be very disciplined, one, when it comes to time, working out, goals, all that stuff. josh: it seems extreme, but the people there seem to like it. they also have all kinds of seminars. you can meditate if you want. they have life coaches coming in. you know, there is healthy food, but they also leave at a decent hour. one of the things, if you follow a schedule and get done what you say you are going to get done, you should be able to leave at a normal hour and have a personal life. swedes have a lot of vacation. they take august off, like july in sweden. carol: is this just a story about a cool guy with a cool management philosophy and what

he does with his employees? or is it somebody who does this and gets results? josh: he does get results. and even though it does not seem to be for everybody, the people who work there seem to really like it. people read this and say, i i don't like this, but you don't have to work there. i did not get the sense they are putting on an act for me. people seem to be into it. carol: we need to know where we are going, where we are, what to do, how we are, and why we are here doing this. that kind of guides so much? josh: it does. it's very formalized. they have a software program where you set a series of goals based on that framework that are reviewed with your supervisor every month, or with someone very senior at the end of the year and they are not just professional goals. some of them are supposed to be personal, like i need to work out more, spend time with my children, be a better husband or wife. so it is meant to be overall wellness, making you a better person, which makes you a better employee. carol: also in the features section this week, resorts are going head-to-head, snapping up ski resorts left and right. the question is, can they save skiing and make selling lift

tickets a viable business? kyle: the thinking was always to get that daily lift ticket price high as possible, right? but with the cheaper pass, they were giving up some revenue seemingly, but getting people to come in early. so they take some of the lumpiness out of the business model, get a bunch of revenue over the summer, frankly, their slowest time, and get people committed to skiing before the snow even starts falling. carol: so they know the revenue ahead of the season, essentially? kyle: right. so they stop selling those around thanksgiving, and have locked-in a huge chunk of the revenue for the year, whether it snows or not. it was kind of contrarian thinking when it came out in the mid-1990's, but it has shaken out. carol: tell us about the guy behind this? kyle: wharton educated, a very wall street guy who came out of private equity. he had a bit of a life

reevaluation after 9/11 and moved out west. he had been on the board of vail, become ceo, a very smart, very focused guy. the original epic pass, which was vail's products, was sort of his idea and kind of changed the industry. from there, all the other resorts that were independently owned trying to cobble together something similar, forming coalitions, tried to partner, but were not able to sort of match the gravity of vail until two years ago. carol: so tell us about alterra, the other big player? kyle: it is basically three companies that each own a couple ski resorts. then there was a fourth company called intrawest, which i think was seven or eight resorts at the time, that was private equity owned, had been in trouble and they were looking for an exit. these three companies got together and said hey, let's smoosh our mountains together,

buy this fourth company. overnight there is a company the size and scale of vail. carol: and they too have a pass. kyle: they too have a pass. this winter is there first. -- their first. carol: reading the story, it felt like there were a lot of folks that wanted to partner with the second company and go up against vail. kyle: alterra is run by rusty gregor. kind of a ski bum vibe. he came out of university of washington. he was a linebacker, is a very laid-back guy. he knows everybody in the industry, very friendly dude. carol: and he was working, right, at a ski resort? kyle: yes. he was a lifty out of college. kind of worked his way up, obviously a very intelligent man. carol: and now he is part owner? kyle: now part owner and ceo of alterra. when this company kind of formed, he takes the reins and starts going through his rolodex, calling on his ski buddies through the industry.

there is a sense that alterra says hey, we don't mind if we don't buy the mountain, we want to work with you. vail generally likes to own the mountain. carol: a different reason to check up a mountain, at least in idaho. i talked to chris rouser about discovering your own private hot spring. chris: we sent our writer to go find these hot springs and sit around simmering and learn about this little trip. so he took this book, which is called the complete guide to idaho hot springs and went around in the area between idaho falls and boise, and found these great places hidden in the woods in the mountains, where there are only one or two people, no other people, and you can sit and enjoy nature. carol: how easy are they to access? some of these you have to hike a little bit to get to. chris: you can drive to some of them. some are on the side of the road, and people have built pipes into what is essentially a giant human cauldron.

some you have to hike up into the woods. he had to hike up, not climbing like this, but was walking up through the snow to get to these places. no matter how hard it was, he would find people up there. carol: tell me about kind of the one that everybody goes to find. chris: so the one he was most excited about was called goldbug. it was a little further up north, up a switchback trail. and it's a bunch of pools. we got a great picture of it in the magazine. it is a series of little pools, totally hot. carol: gorgeous. chris: and then you are looking out at the rockies with pine trees, snow, and then of course when you get in and out when you have this cold moments, but when you are in there, it's utterly peaceful. carol: that's what i love about this story, that you kind of

give this is what should buy, where you should go, where you should stay. not every spring is warm, right? chris: he went to one that cooled down, and actually one was too hot. it was 125 degrees and they did not have any ice to cool it down. the best times to go are summer, fall, and winter. even if it's cold, it's great to do this. spring is the one time when the melt can overwhelm the pool. carol: and we are in a sharing economy so you will have some folks there. chris: you will have to make some conversation. most people wear bathing suits, not everyone does. carol: warning. chris: it's a natural experience. something that makes you think you have to treasure these things before climate change might change this. carol: he makes the point that the environment could be changing, whether it's climate change or mining, that it could impact these springs the future. chris: yeah, these springs are heated by plate tectonics, but the surface of the land could be really affected by mining, affected by overflow, deforestation, so these things may not always be there. carol: "bloomberg businessweek" is available on newsstands, also available online and on our mobile app. check out our daily businessweek podcast. that's available at itunes, soundcloud, and bloomberg.com.

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welcome to "bloomberg daybreak: australia." i'm sophie kamaruddin in hong kong. we are counting down to asia's major market open. haidi: here are the top stories we are covering in the next hour. talking trade. sources in washington say the u.s. and china are in the finals stages of a trade deal that will see tariffs lifted. president trump lashes out again. he says the dollar is too strong