>> welcome to "bloomberg businessweek." >> we are joining your from bloomberg headquarters here in new york. >> this week, the ceo of lloyd's of london response to our investigation into how women are treated inside the firm. >> he tells us how they will stamp out sexual harassment. >> plus, how microsoft plans to beat google and appl. >> and a of unicorns on the

cover about to go public. >> and by unicorns, we are talking about startups valued at $1 billion or more. >> check out this chart that shows the total value of ipo issuance for stocks listed in the united states. what a peek we are about to hit. >> we are talking about unicorns like uber, interest, so many different ipos, we are near the highest, record levels for ipo's. michael regan writes about this, and says it could be a signal that the bull market is ending. >> the fed surprised people by basically in their projections for rate increases for the rest of the year, they are basically projecting no more rate increases. people think the fed knows something we don't know, something that is coming. not too long after that, the three-month, 10 year yield curve inverted.

basically that is when rates on three-month treasury is are higher than rates on ten-year treasuries, which without getting into all the bond market maps -- it's a worrisome sign. >> it is not the way it is supposed to be, right? >> right. you are supposed to get compensated for taking on the longer period of risk. if you are investing in a bond that matures in 10 years, the idea is you get paid more. when those yields come down it means people are buying them heavily, and the thinking is that people are worried about the near-term, about either recession or the deflationary environment, something that will drive bond prices higher in yields lower. they are willing to get out of riskier assets in the pile into that longer on. >> and you know this so well -- is the equity market right or does the bond market know something?

>> the eternal struggle, who knows something and he was right? the cover in the story really discusses these unicorns, all the big startups that are finally, after years of anticipation, coming to the public market. lyft and uber, that will be the big ipo of the year. but there's a bunch of others, obviously. airbnb is expected. the list goes on and on. you can read the story. i'm sure everyone knows what they are. pinterest interest all of a sudden came out, you mentioned airbnb, post made, slack. we talked about it in 2018, this could be a big year for ipo's. >> and it is. and the projections are written in pencil and being erased and revised, to a point that renaissance capital is a firm that specializes in ipo

research, and they have an etf that tracks ipos. maybe $100 billion in ipos this year, which would put it -- it is not a record, but close to a record pace. that much issuance of new stock makes people nervous for a variety of reasons, one of them being -- everyone knows something we don't know. >> why is everybody running to go public? >> right, right. and there's often a lot of conspiracy theory, for lack of a better word, that sleeps through the market. the bankers must be whispering in the ears, this is it, this is the time to sell, because the market is looking like it is getting top-heavy. as the bond yields in version shows, there could be a recession sometime in the not-too-distant future, the stock market rally has gone on for a decade, it is the longest we have seen, depending on how you measure it.

the economic expansion is almost unprecedented at this point. everyone will tell you, well, bull market, economic expansion, they don't die of old age -- >> if i had a nickel for every time. >> right. but it still makes you wonder. so all of these companies picking this moment in time to tap into the public stock market is making people nervous. >> and speaking of unicorns going public, later in the program, we will hear from an investor in uber and airbnb, the ceo of general atlantic. >> looking forward to that. up next, the american who may have a big influence, and how much we make it to see of robert mueller's report. it's the same american the report is about. >> plus, the apps that helped elect aoc. >> this is "bloomberg businessweek."

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>> welcome back to "bloomberg businessweek." >> join carol and i for for "bloomberg businessweek" every day, and check up on our daily show by subscribing to our podcast. >> and of course you can find us online at businessweek.com and on our mobile. in the politics session, william barr meets to decide how much of robert mueller's report to release. >> president trump may have a big say. here is julian goodman.

>> trumpism a really interesting position, on the one hand he was the subject of a 22 month investigation but now he's the only one who gets to decide what parts of that are in are not covered by executive privilege. he got up in front of reporters on monday and said he doesn't care as long as the attorney general is ok, but there are plenty of reasons why even beyond anything in particular he is worried about having been set or discovered, they wouldn't want some of those things to come out. jay sekulow was also talking to reporters about how, if they released his interview questions, that would set a difficult president for future presidents. >> as you say, trump ultimately decides -- do you have a sense of where justice is leaning? you have an interesting cast of characters, the attorney general who was appointed after he

dismissed jeff sessions, who the president made his displeasure well-known, rod rosenstein who is hanging around for a certain amount of time, ultimately the president is the decider but what sort of advice do you think he is going to be getting? >> from his own lawyer, they probably would not want that much of what they provided to come out as far as from a justice standpoint. part of the job is to make sure that executive privilege is protected. on the other hand, barr has said repeatedly that he wants to make as much of the report public as possible, of course that "as possible" is a big, effective if, because there are plenty of things he won't be able to disclose because of regulations covering secrecy around grand jury proceedings. he has been vocal about --

people are calling on him to release the full report, or at least a redacted version, he says he does not intend to do that. it has been hard to pin down barr on what we can expect. >> one of the interesting elements around attorney general barr is this notion that he wrote this long memo about what he's not of this investigation, specifically around the question of obstruction of justice, so we know a little bit about what his thinking was before. is there any sense that says changed, or could that be called into account by folks on the other end up on capitol hill as to what he should and shouldn't do? >> that memo was going to make it a lot harder for him to appease democrats on this question. he hasn't said anything other than what was in his sunday memo, but he will be coming before some house members and appropriations subcommittee on

april 9 for a previously scheduled hearing about his departmental budget. that hearing is likely not just about his budget, he's likely to get questions about what if anything congress will be able to see. we should know more at that point. >> and do you have any sense of what the timing is when some larger group of people will see some larger version of this report? at this point, we should remind people, very few people have seen the whole enchilada. >> exactly. barr has said he intends to take weeks, not months, to complete his review of the report, to see what he could potentially release. whether he decides to release that to congress or congress decides to release it to the public -- all of those questions are still out there. >> and online at

businessweek.com, the organizing app that helped elect alexandra ocasio cortez. >> the app is called reach, and it offers a new way for canvassing supporters, about to go mainstream. >> josh green has the story. >> reach is a new piece of political tech, and organizing app that evolved organically from alexandra ocasio cortez's campaign. in the political world, the most interesting thing about aoc, as she is known, was that her campaign was a marvel of grassroots organizing. nobody had ever heard of our, no one imagined a socialist could knock off a longtime incumbent democrat who was probably going to be the next speaker of the house, and out of nowhere, she organized the fourth district in queens in the bronx, essentially taking that seat away from joe crowley. one of the ways she did that was a couple volunteers on her campaign built a mobile organizing at to go out and get a registered, young socialist

working class minorities who are so plentiful in her district in were the key to her victory. now they are taking that tack and have started a company called reach, that will make this available more broadly. >> take a step back. i'm curious what these guys were thinking. what was it that wasn't working about grassroots campaigning today that they knew they needed something different to make it more effective? >> right. anybody who comes from the tech world from the world of politics -- the first thing they think is this is completely antiquated and makes no sense. the two people that started the company realized that this isn't a very smart way of doing things, especially not as a way of reaching the kind of people aoc wanted to reach, people who were outside the political system, who may not have voted in the last election but could

be turned on to this exciting, charismatic new candidate. they took the voter list and uploaded to an app, in that allowed them to go to the places where her potential voters actually congregated, places like bars and coffee shops and farmers markets in subway platforms, and lo and behold when primary day came around she had the votes to knock off the incumbent in what was undoubtedly the biggest upset of the 2018 cycle. >> was it just a case of finding more people, loading up more people into the voter base? what was it that really made the difference? >> what made the difference is the mobility, that essentially politics as it was being conducted until 2018 was based on the lifestyle that people don't live anymore. knocking on your door and trying to catch you at home and call you on your landline phone and hoping you will talk to a stranger.

who picks up their phone anymore? a lot of people don't even have a landline. what this did was take the process of canvassing and modernize it for the new era, especially to match the lifestyles of the people in that district. democrats traditionally relied on young people in minorities, two very important components of their electorate. barack obama was able to mobilize these people but hillary clinton wasn't, because these groups of people are difficult to reach. one of the things -- not just democratic socialists but mainstream democrats excited and interested in the technology is that they managed to reach and activate the voters, voters that every candidate would like to be able to reach. >> coming up next, the loophole etf depend on. >> and a couple investing titans

. >> this is bloomberg. ♪

>> welcome back to "bloomberg businessweek." >> you can also listen to us on the radio on sirius xm channel 119 and on a 11.30, 99.1 fm in washington -- >> a.m. 960 in the bay area, on dab digital and through the bloomberg business and. how banks are helping etf's. >> it's a fascinating story on the short-term trades, called heartbeats. you can see how these traits have spikes recently. >> it is a massive jump up. >> i will let rachel evans explain. >> in september we saw this enormous inflow of cash into a technology fund, followed by an outflow. this is something we had been

watching for for a while. we heard about this big index rebalancing that was going to take place in september, as it got reject. we were looking to for this and when we saw the inflow it was really large, more than 3 billion, and it got us thinking about what these traits are all about. we have seen these traits in the in thees o past that typically happen with an index rebalancing, the etf getting rid of the stocks it no longer needs. >> a normal part of market activity. >> of very large trade. this is the thing that zach picked up on. >> there's a totally innocent explanation, which is this is how the fund needs to get rid of

isew stocks, but that actually not what's really going on. if they wanted to do that they would just wait until markets closed and they could sell the stocks that needed to leave and by the new ones. they could swap with an investment banker. but instead, two days ahead of time, they are having a bank put new stock into the fund, become a big investor in the fund, 14% of the fund increases in size, and the stock that the bank is putting in includes the stock they need to get rid of, so why would they be doing that? it just seems kind of illogical on its face. >> why would they be doing that? >> because if they sell the stock, or swap it with an investment bank -- this is like facebook stock they need to get rid of that has appreciated, a big, built-in gain -- if they sell it, they have to report that gain to the irs, and their investors have to pay tax on it.

but if an investor in the fund wants to withdraw from the fund, and they give that stock away to the investor as compensation for them leaving, there is no tax due. they have a bank come in and be an investor for 48 hours, and that's enough to make the tax bill disappear. >> and it is legal. >> it is a quirk of how etf's are structured, they have in creation and redemption which means the way they work when the fund expands that someone delivers a portfolio, they get shares back in return, and the money swells. if they want to take their money out of the fund they get the etf shares and get a bunch of stocks back. what i thought was interesting, what this means from a tax perspective. it is very much a de facto way the fund works, but the tech

side was interesting. >> let's go back to the tax side. it goes back to a tax law change in 1969. take us back. what happened? before the world of etf's. >> 24 years before the first etf even existed. back then the only thing congress was talking about was mutual funds because they were the only kinds of funds that were regulated by this part of the tax law. congress was cracking down on tax dodging among insurance companies and in order to do that they said -- insurance companies in the 60's, a big bull market, they had all these investments that had gone way up and so they said rather than pay tax on those stocks we will just do share buybacks and instead of cash we will give you appreciated stocks. you don't have to pay tax and neither do we. congress got wind of that and said that's a legal now. but we will exempt mutual fund companies for reasons they never

really explained. that didn't matter much because mutual fund companies don't really do that, they never have. they hadn't before and they haven't since. >> mutual fund companies are different from etf's, in terms of how they work, which is why they wouldn't take advantage. >> they traded generally directly with retail investors, and investor opens an account and when they close that they want cash, they don't want a basket, and so mutual funds don't really use this loophole very often of withdrawing investors, this pile of securities. >> when i read this, i was thinking about the coordination that is necessary to get the bank that buys into the fund a few days ahead of when the selling his plan. so tell me about that coordination. >> the understanding that we have is that a few days before the balance, before the stocks

leave the fund, the etf manager picks up the phone and calls a few different banks. >> who do they call? >> goldman sachs, bank of america merrill lynch, credit suisse. these things are what we call authorized participants. this gives them a special, privileged role within the ecosystem. it means they are the only people that will create and redeem etf shares. given that the etf manager needs to have this coming in, wash out all of their taxes, they call of these authorized banks in say, a, we have this big index, would you guys mind doing us a favor? the bank will look into the economics and ultimately make a decision based on the relationship they have. >> they get a lot of fees, it's really about the relationship. >> the trophies. by law they can't get paid a commission by the etf manager for the service they are providing, which costs them the cost of their capital to be tied up, $3 billion for two days, the

cost that it takes to hedge, in the bank is not going to take any risk. they do want to be exposed to the market. they will hedge their exposure 100%. so they are incurring these -- small but nonzero costs of doing these transactions. >> because? >> it's the relationship. if you are a bank and you are doing business with blackrock or vanguard, you want to continue to do business, and you don't want them going to another bank. >> taylor has another look at these heartbeat trades, and it is obvious when you see them. >> it is. let me show you one, this is the technology select fund. one of the etf's we are hearing about in this story last september, somehow they got a bank or an investor to come in,

3.6 billion dollars to avoid taxes on capital gains, just to see them withdraw two days later. the index fund is about to change, getting to do that, you can avoid the capital gains tax after their shares more than doubled. >> you can see why it has been standing out. >> fascinating. thank you so much. >> up next, how lloyd's of london plans to curb its culture and an sexual harassment at the firm. >> the ceo responds to our report. ♪ . .

♪ hijason: welcome back to "bloomberg businessweek." i'm jason kelly. i'm carol massar. still ahead, the difficult task of beating microsoft when it comes to video games. jason: plus, efforts to improve diversity. begin with lloyd's of london. last week, bloomberg reported on

testimony from women in the insurance industry about a deep-seated industry of sexual misconduct at lloyds. jason: they have rolled out a package to stamp out sexual misconduct. carol: we have the exclusive interview. the lloyd's that i want to be part of. the lloyd's my colleagues want to be part of either. it is simply not acceptable in this day and age that any woman should not feel safe. you run through the actions we have announced. one of them is to understand through an independent culture survey what we are doing well, but importantly, what we -- what more we can do. we have to ensure everybody, whether it is a woman or a man, should feel safe any time of day

feeling secure doing anything to market.a lloyd's i'm determined that will be the case. >> it is one thing to police workior what people are at , but a lot of incidents bloomberg reported did not happen within the building itself. >> you are right. operates globally. we will impose our own sanctions . if anyone is found to have acted inappropriately, we will be incredibly decisive, and as i said yesterday, that could include lifetime brands. we are being as clear as we can accept this behavior. critics might say that this is crisis management or closing the door after the horses have bolted. can you bring a culture that your predecessor, with all her

work on diversity, did not manage to do in five years? a fantastiche did job bringing the market forward. i think the inclusion pledge, the changes of the market has been incredibly significant. everyone i have spoken to has been shattered by the article. i have no doubt that everyone wants to redouble their efforts to ensure that these events cannot occur. >> it's one thing to regulate behavior. it's quite another to regulate thoughts. what will you do to change the attitudes that lead to sexual misconduct? would say.gs, i first, we are doing mandatory training for all of higher staff so they can understand and look out for actions that are inappropriate. how do they intervene in a situation where someone is feeling uncomfortable? if you like, the experienced bystander who is able to step

into the situation and help. the other is to understand what is working, what is working well and make sure those lessons are learned by everyone across our business. >> what sort of response have you gotten when talking to industry executives? what has encouraged me is none of the participants in our marketplace, and let's remember there's almost 100 insurance ofpanies -- every single one those entities is lined up behind what i said yesterday without hesitation. i think everyone felt very, very disappointed to read the news. to 18 women spoke with something like 300 years of combined experience between them. when bloomberg spoke to these women, some of them said they had gone to their hr department and actually been persuaded to stay silent. do the hr systems need to change

in the u.k. insurance industry? complaint any form of seriously. i heard that. one of the things i said we would do was set up an independently-managed and confidential multiaccess point that anyone could go to if they have a complaint. at the very least, it can give them advice or more strongly than that, it can run a process with these people feel will they be heard. it cannot be right that they will only be heard by bloomberg. up, his own firm of the an investigation college admissions scandal. carol: plus, what is life like for transgender americans? jason: this is "bloomberg businessweek." ♪

jason: welcome back to

"bloomberg businessweek." i'm jason kelly. and i'm carol massar. join us every day on the radio from 2:00 to 5:00 wall street time. and we can check out our podcast on itunes, soundcloud, and bloomberg.com. onon: and check us out bloomberg.com and our mobile app. carol: the bloomberg equality summit. i sat down is where with our guest. we started talking about the recent college admissions scandal, which saw charges brought against a former partner. >> a couple weeks ago when the news first broke, it was pretty shocking. this is something that we had no knowledge off or had no idea it .as happening so, any time something like this happens, it takes your breath away for a minute. we reacted, as you describe.

we try to react in a pretty focused way. we thought wasgs really important to do was make sure that we were communicating. and this is externally and also internally, because this is important with our people. they obviously understood the context. so, our investors, number one were very supportive. our investors understand what we are trying to be part of. franchiseur impact which obviously has a lot to do with why we are here today. but naturally, they have a lot of questions.

committed toave our investors, we have undertaken an investigation internally to make sure that none of those things were in any way, shape, or form leading into the business. help us understand this in the broader context of the work that you are doing in tpg. this is something personally you have personally taken on since you arrived a few years ago. what work are you involved in internally? just the broader context of why i think it is so -- it's not just a question of diversity is one aspect office. i like to view it in a much broader context. live inin the world we

today, being the few do sherry investing -- the do sherry -- ciary investing in the world we want to be a part of, it is important have an expression of values. what do you stand for as a company? diversity is one part of it. what are your values as an organization? what do you think of what we are doing, how we are doing it? inclusivity and that bleeds into the idea of .iversity are we an organization where people feel like a really want to be part of this living, breathing organism that is the

firm? to thelike when i got firm, we were in the beginning stages of getting our heads around that. in the past couple years in particular, this concept of value orientation, what do you stand for, what are you trying to accomplish, i think that has accelerated in a big way. not just at tpg, in the market. carol: in our quality issue, "bloomberg businessweek" talk to transgender americans about discrimination they face in the workplace. jason: the supreme court may soon decide whether they are entitled to protections. guest's asked about our journey. hard going up being gender queer, especially growing up in nebraska, an environment where i was not exposed to diversity.

i was scolded and disciplined for displaying feminine tendencies and wanting to exist in an identity that was not normative. know you were you not gay? , -- how did you know you were gay? how do you know, this is what i am? >> in right wing a book. my book is titled "i've always been me." in fourth grade and people were asking, are you gay, i didn't know. me, and i think that is a fact for thousands of queer kids in the world. they are just being who they are . i liked playing with girl toys.

i liked playing dress-up. i did not want to be a little boy, but there was no education at that time surrounding gender asntity or identifying gendernder or being nonconforming. i just showed up in the world without definition. that must have been hard for you. >> it was definitely a struggle. i was definitely bullied. i was definitely harassed. in my hard to be strong personality without having any figure to identify it with. i was just being me. it was not until recent years we started to have this massive conversation around gender and transgender identity. it was a struggle until i

when i took atood note to bt literature course we have a great history, a great history of trans and non-gender conflict coming -- non-gender conforming people. i understood there was a history i have been a part of. carol: we talked to nine individuals, trans workers about personal experiences, including you and they talked about support and not getting support in what could be better, whether it is health care, government involvement, education, what could be better, from your own experience? we need a firming health care. i think that means people need to service provider who understands their unique needs without triggering them, without disrespecting them. we need basic rights. and people deserve to serve in

the military. trans people deserve to exist in our society and pursue what ever desire or dream may have. you know, there is this onslaught from the trump administration against transgender people and i think it is about recognizing our humanity and not bill in the ,ising us and dehumanizing us and i think it is about showing , that we areanity mothers, brothers, sisters, cali and a multitude of things. it's more than just recognizing our humanity. when privatet, why at -- why one private equity type is not giving up on hq two. carol: and while microsoft may remain king of video games the matter what google and apple try

to do. jason: this is bloomberg. ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: and i'm jason kelly. you can listen to us on the radio. carol: i am 960 in the bay area. in london, on dab digital and of course on the bloomberg business app. belfort is one of the biggest names in private equity. he is the ceo of general atlantic. jason: he joined me for the exclusive interview bloomberg television. we talked about the troubled ipo market and amazon and hq two. toi think 2019 is setting up be the most exciting ipo year since 2012 for a couple reasons. they will introduce investors

and you have on the crowd source, i highly anticipated next generation software companies. may in -- they introduced investors to the social media space. when you have a very market,tive equity combined with modern volatility, the market is not too hot, not too cold, really creates the best conditions for a good ipo market. we have seen levi strauss to work and we have a nice condition for the year. jason: have you worry about valuations it was goldilocks market? more makes our job

challenging. the key for us is actually discerning can companies emerge as market leaders? when you get that right, history tells us you can get your investment returns even if you are paying a full valuation. where you get travel, companies have relatively small markets. jason: you are also involved in the partnership for new york city. i believe that you guys have been very involved, especially on the back end of that decision not to come to does on the back end of the decision of a messiah not to come to new york city. >> we have really tried to turn around amazon's decision. we are looking to see if we can

turn this around. momentum in great the tax base. you think about it -- facebook as a campus here. has a has a facebook -- campus here. the space had momentum and i think getting amazon would only have distinguished new york as a leader in technology. also media. it would be another catalyst for development. we want to send a really strong signal to the new york business community that they want to operate here, build a business here. jason: got to talk some hoops. noware in fifth place right , in good company.

back in the day, i believe you wrote you and see all the way. this year you have duke. a lot of people have duke. how are you feeling? >> us a great. it's one of my favorite times of the year. cause -- there's deep or contested this year and is a great feeling. congratulations, like anderson, forgetting 16 of the sweet sixteen p report team got 15 out of 16 we are hanging on in fifth place. this is a super competitive field this year. we just feel coach k, probably the best college basketball player in zion williamnson, hard to go against. that got a good chance to win. amazon bothe and want to be netflix for games. hown: this just sums up they can market is. look at smartphones and tablets. their dominating. carol: not small numbers at all.

,> people to use xbox playstation, pc's to play these large expensive games that take years hundreds of millions of dollars to make, the technological change allows those expensive games to be streamed, just like shows and tv on netflix. you will not need a console or pc. that a let's the tech giants, microsoft, google, maybe amazon to jump into the industry and really disrupt it. think aboutpeople the games, they think about what you're are talking about. what you planning on? when is the next big game coming on? they are like movie releases. but this whole notion of the hardware piece, that is radical, right? we have had hardware

consuls for decades. they became popular in america playstations and 2000's.g in the you have had a new console come out every 4, 5, 6, 7 years and costing between $400 and $500, and most people upgrade. some people of xbox. other people of playstation. those companies have gotten exclusive deals with games makers to bring you to the console because you want to play halo or you want to play red dead redemption 2. bethis point, if we will streaming games, that really shakes it all out. shake up thees it videogame makers, because they are stocks -- we talk about them every day, whether it is activision blizzard or e.a. or take two. how does it change the equation? like you said, in some cases

movie releases. in some cases, digger than movie releases. moreead redemption 2 made than the latest avengers movie made in its opening weekend. this is a big money production. it takes years, hundreds of -- a dollars.rs hundreds of workers. the with economics of the industry has worked is hoping people will shell out some new dollars or $80 win the game comes forward. at this point, those games makers, ubisoft, electronic wo, they have the power because they have content. away in thegone netflix world. if they have that premium content, they hold a lot of power. services wereming announced, they were announced without any deals with major

game makers. there is no sense whether those games will be available and if those big tech giants want them to be available, they will have to pay up to get them. jason: -- carol: "bloomberg businessweek" is available on newsstands now. jason: what is your must-read? all of those products coming to the market -- we do not know whether to believe what the fed is saying, the bond market, turn to figure it out. in my that came up conversation with bill ford. all the is why he is so focused and what it means for the overall market, on the private and public side. we love. say to think. what is going on with eea and take two. but this way that people are considering the games, how they play them, it will change them. carol: more stories over the

weekend. out our podcast on itunes, simplot, and bloomberg.com. carol: more bloomberg television starts right now. ♪

david: the legend is you began trading convertible bonds out of your dorm room. ken: when you make a few thousand dollars as a freshman, you are rich. david: but the time you graduated, did you say, i am now going to do this full-time? ken: i became boy genius but i knew i was lucky. david: how does somebody invest at citadel? ken: we have been closed for a long time. david: even from interviewers, you wouldn't take anything. your parents must be proud of you. ken: i'm certain mom is proud of me. david: does she ever say, where do you think the markets are