Joel webber. We have been talking about a must in every issues and the fury broke forth this summer. The thing that happened was the airport in the class that happened at the airport. We felt that had become a Tipping Point and all eyes on hong kong. Thought about, what is a perspective we can bring to the story that has not been brought . One thing that came out of the conversation was, where is the thanks coming from now . 2047. About when hong kong was handed back to china, one country to systems being this guided idea for how the city would be managed, 2047 was used as the Expiration Date of that. When you think about the stakes of this situation, five years out is not enough time to solve that. 10 years out is not enough time. The we are watching, the fury is only about 24 7. Hong kongs countdown to 2047. Jason when you think about the nexus of Business Economic politics, there are other places in the world where it happens in sharp relief. This is speaks to the dilemma that xi jinping has. If you use force now, the situation could escalate. Side, if you use patience, all the students who are a large poster of protesters might go to school in september. The work that is now being dropped is terrorism. Terrorism would be justification to escalate and have things turned to force sooner rather than later. That, obviously all eyes on hong kong. That would become a much bigger challenge for the world. With thets check in bloomberg managing editor overseeing coverage in asia. He joins me from hong kong. Dan, thank you so much for joining me. Give us a sense of what we have seen this week. This week we saw unprecedented scenes of protesters going into airports and grounding flights. In hong kong, this is unusual here it i was in thailand in 2008 when they shut down the airport. That is not known to be the case here. Firmly in control. Taking over and airport is a drastic move. The government was tolerant for the first couple days. If you are flying into hong kong, you would see massive amount of people coming in. This affected the economy and raised the stakes in this conflict. Great you provide Historical Perspective on the ground. The story this weeks magazine. Akes us to 24 7 24 7 isunderstands the date of the basic law expires. The british handed over hong kong to the chinese in 1997. It was negotiated in the 1980s margaretitor thatcher. The idea was these systems would submerge in the democratic system would prevail. We are nearly halfway through that period. Years, youst couple have seen just in the roads. How can i see a subject to the communist party . Dan, we see these pictures and for people in the business work, this is not the hong kong they know. This is a place that has been astral to the Global Economy well as many paths from around the world. What is at stake for the Global Financial system . A lot is at stake. Hong kong is one of the khmer financial hubs in asia. It facilitates a lot of the investment that goes into china and out of china. Money. Nese raise [indiscernible] kong, to be wary of investing in hong kong because of political stability is a significant worry. Business. Lot of people have been here a long time. They are worried about how this is going to end. There is a lot of money already moving out of this place. Whiplash, sounding the alarm after sounding the yield curve. s here is peter quite to make sense of it all, plus to talk about his story. He is apologizing for something he wrote before most of us were born. What is an inverted yield curve . It is the reverse of a normal condition. It can be a harbinger of recession. We already have one for three months and the 10 year. Of the twoyear and 10 Year Anniversary which was considered longer. Not necessarily tomorrow but 18 months or so. That was the big news of the week. It was one of the big factors in why the stock market did badly. Jason this is an economic story. As a business story. But it is also a political story. Donald trump is getting because if they recession hits in 2020, it will be bad for his reelection campaign. He has taken off after jay powell originally needs to lower interest rates. Thehe fed did that, university would go away. Talk to me about the story you had this week. You go back to a cover story 40 years ago . Agoes 40 years businessweek ran on cover story for the death of equities. People were giving me a hard time about it because equities are likely. Was we were observing busted nothing to be as it had to guess place in it wasnt it has was gold. What was a good hedge was gold. And spam. I cannot believe that was a thing. The article was really ripe for three years because stock continued to go down. After paul volker, the chairman of the Federal Reserve had to squeeze out of the system , the conditions were set for the rebounds. If you had invested in dividends over that period of time, we have 7000 percent. That article came out. A story right in the short term but very wrong in the longterm. Glad our readers are keeping it up. Peter court, thank you. Coming up, as the 20 20th extra approaches, are the polls prepared for hackers . We are biting the American Cities neglected in industrial hub. This is Bloomberg Businessweek. Jason welcome back. I jason kelly. Join us every day on the radio from 2 00 to 5 00 p. M. Catch up on our daily show. Get that up bloomberg. Com. Find us online at businessweek. Com and on our mobile app. As the election approaches, it is democracy versus hackers. This weeks solution session exposes how efforts in illinois protects its system show how the the outside attacks. Here is editor dmitry cassini be. We got a preview when Robert Mueller went to testify and putting aside everything about that event, he kept hitting on this message, that this is a serious threat we are confronting. That is the take away from that report. When we get into details like we do in the story, focusing on emblematic what is across the country, it is a problem becoming bigger and that is hard to contend with. Jason illinois got hacked. One of two states that were singled out in muellers report and that is owning up to the hacking and trying to say, this is what happened to us and we do not want to repeat. There is a concern that the hacking of 2016 was a practice 2020. R what they do in the number of parties is going to be more. The number of countries doing , it iseopolitical moves not just russia. It is north korea, china. The resources you need to contend with this are tremendous. While resources have been devoted, it is a traction of what is necessary. Jason we are talking low double what apercentagewise of state like illinois would need. Lets talk about the electoral system. One thing i was reminded of in this story is it is complicated and it is decentralized. Statebystate, localities. You have election boards and secretaries of state that deal with it. You have different positions and have to figure out how you are going to persuade since it is not centralized all of those people about the necessity to invest. The first thing this comes to is money. A lot do not have money and they are not giving as much as they need. When you say, try to find the money, 30 Million Dollars more than what you are devoting to contend with this, they look at it and say, who are we . Jason that is right. That was an important part of this. You have officials saying, i know a they might go after. Oting in chicago or florida that is ground zero for a lot of this and you talked to the governor, ron desantis. But a small county in kansas or town in kansas, they are like who cares . Damage can be done. It is not just messing with the voting machine. It is getting databases, messing with the roles, the names of voters. Create chaose will , no confidence in the system. What you are doing is a psychological war. Which will lead people to say, why should i vote when this is happening . Jason from illinois, lets go east to baltimore. A renaissance story may set a template for other cities hollowed out by forces of globalization. Here is tom maloney on the 3100 acre fixerupper. A story about trade atlantic which the development on the edge of baltimore city. It used to be one of the biggest mills in the world. And it started falling on hard times at the beginning of the sites inury like other the u. S. And went through a series of owners. It went bankrupt in 2012 and was bought out by this company that is more of an assets. After spending time at the site over a couple years, i realized it could be valuable at the logistics center, which is what it is becoming today. Names you have wellknown in the business world, which have been betting big on this. Not the least of which is kevin plank from under armour. It has been one of the biggest champions of the hometown of his company. How does he play into this narrative . Under open day facility there, it is 1. 5 million square feet and that is the size of 23 football fields. Geek annymous enormous ecommerce facility. What was interesting speaking to the guy at atlantic, even though kevin plank is a baltimore booster, he was looking across the east coast for this facility and they thought the trade point atlantic is unique. What made it attractive as a steelmaking facility being right on the water and close to rail and the interstate highways makes it ideal as an ecommerce for logistics facility. They can have ships unloading goods and then get them onto the highway. Still to come, my interview with private equity lender don goodell. This is Bloomberg Businessweek. Jason welcome back. Listen to us on the radio on sirius xm channel 119, also a. M. 11 three in new york. 99. 1 in washington, d. C. And london on dav digital and through the Bloomberg Business app. Not to a business week exclusive. Became the company ceo in 1998. We are seeing 18 billion in assets. Kong,ays chaos, hong brexit, volatility in the u. S. I asked him what role pe plays now . Don private equity can be a buffer during these periods. Firms, virtually all of them are not full hearty and they do not say we are just going to buy on a downturn. One of the challenges the private equity has now to play that buffer role is it is harder now to deploy capital and has been any while. Notwithstanding the chaos, have remained stubbornly high and they have been growing over the last five years. You cannot reverse the laws of supply and demand. Will the with all the money raised, with all the praises this sort of dry power available valuations have moved up and it is harder to put money to work. The only way you justify it is if you see this, not unbroken but longterm trend up. Given the chaos in a number of youstries called by factors do not need to enumerate now. Watch bloomberg and find out factors. It is harder to put money to work. Some of the technical factors although favorable High Yield Fund flows have been diminished. There has been 38 straight weeks out of funds. Y there were still money available. It is a product line. There. Ital will still be there is plenty of equity there. It is a matter of selectivity of time,ese periods there is a rush of businesses that seem to have a lower risk profile. For us and others, navigating your way to find the right transaction and the right risk reward, the right management team, the right prospects, the right path through regulatory if it is a business like health care, where we invest often it is complicated. I view it as a flexible buffer that can normalize economies and companies when needed. Andn you have the ability probably the need to be talking to ceos all the time. But ceos of companies that you notrol, and once you might want to control. If you can generalize how the leaders of the companys and maybe Small Companies are feeling right now, what would you say . Don there is high anxiety and appropriately so. Anxiety about economic and microeconomic political dejection ship you described. Public ceos feel more pressure than ever to show some level of performance improvement. Both stockction market which gives you a report every day. Activists which let you know what we should be doing right. Boards that feel like they have to respond to those pressures. If you look at statistics, i will pray that in a way that sounds shocking but it is just math. Five s pcognize one in 500 ceos change every year, that means there is a ceo change in the s p 500 every for five days. Math. S just if you are the ceo, you are looking at numbers and you are looking to the left and right and you would like to have ice behind to and it is not that you do not trust your board or people are not going to give you time, but it is a measure of the environment that it is tough. Ceo tenure is being reduced and that is tough in Public Companies. Scrutiny social media makes itshareholders very hard to be a Public Company ceo. Jason for my entire conversation with don gogel , check out our business week podcast wherever you get your podcasts. We return from anxiety in the boardroom to anxious students and graduates and the lasting burdens of student debt. Explaineris weeks from the finance section. Americas one on point trillion dollar student loan balance and the bottomline is grim. Aresinessweek analysis paying down 1 of their federal debt every year. Bar is investigating 300 on a typical 30,000 loan. No wonder it has become a political issue. Progressives bailout because tuition far outpaced tuition and rages wages. Borrowers are in incomebased plans to let them reduce Monthly Payment and can lead to Debt Forgiveness and sus 10 years. Quincy. Ves fewer during they have lead to slower payments and rising balances. Expansion wasic the time to get tougher and student loan crises, it is time to get worse. Back to making life difficult with intel. The ftc and facebook, why the tech last is making the social network stronger. This is Bloomberg Businessweek. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you preorder a new samsung note. Click, call or visit a store today. Jason welcome back. 5ll ahead, last months billion privacy settlement with the fcc may make facebook even stronger. Personalized weed is the next stage of business of Legal Cannabis. First, technology. American chipmakers themselves in the crosshairs of a trade war between the u. S. And china. One is thriving. Here is taylor reeks riggs. There is a big rivalry between amd. Going back five years, amd is in white, up 600 in the last five years. The stocks intel only up 50 or so. You know the rivalry between these two, even with everything going on with the trade tariffs and china, pretty impressive from the markets perspective. Jason that outperformance is something. Thank you. Lisas thriving thanks to sue and her efforts to exploit intels woes. Staying a little bit volatile as you would expect. To oneral, i spoke people thoughtd they were rock stars and it never turned out well. We are much more comfortable with someone comfortable in their own skin who is focused on the job. She checks on people and how things are going. That appears to have resonated with investors. Jason look at the other side of the coin. The intel side. That is the company and you and i have talked about this several times over the last couple years. It has had management challenges. It has had technical challenges as it tried to continue on down that road of shrinking things on semi conductors shrinking its down to 10 animators. Do you have that do i have that right . You do. Like any company, intel has ups and downs. This appears to be fundamental. This is the thing they have been used to beat up everybody. And the andy is remarkable. Of used to compete with intel. They ran the best factories on the planet. It was hard to argue with it. Normally, i year, 18 months and we are on to the best narrative of processing. That gives not just the cheaper but it makes the chips perform better. Nobody was coming close to what intel was capable of. Promised was when they. Not going to happen. Things youof the point out in your story which is fascinating is lisa sue and her team made a key decision around their own manufacturing, which has allowed them to step in at a time as you point out when intel has stumbled. Example ofan magnetism. She makes decisions not based becoming a mini intel are trying to compete with intel on its own terms but doing the best for her company and positioning themselves and what she has done his shift the company. And that company has pulled the heads in the last couple of years if you believe the analysts and results. That company, which only does output manufacturing is benefiting from a fundamental shift. The vast majority of volume comes from smartphones, from smartphone memory. And a lot of what goes on in chip factories is pierce science. It is material science. It is applied physics. It is applied chemistry. It is experienced based. Putting the machine in the right order. Just the simple blocking and tackling of making sure these things are working flat out. Tmc is the best at doing that right now. The thing with technology, the tech glass has only made facebook stronger. Antitrust over the social network but we are looking at the fine print of last months 5 billion privacy settlement. Here is sarah friar in san francisco. Sarah think about facebook and what makes facebook work. This 70 billion revenue advertising business this year it is all about data. The data that facebook has compiled, notches from users but third parties, from checking people around the internet, understanding what they click on and watch and care about, that is the value with the center of their advertising business. When the ftc comes and tells them you cannot share that data with anybody else, well great. Facebook loves that. They are big enough now that they do not really need to rely on other companies building other kinds of products sharing their data with those in order to grow their network. Fore used to be a reason facebook to share data with all of the developers of games for facebook and quizzes and all the things you remember from the facebook of five or six years ago. Now the company is big enough that it does not need to rely on the ftc isk and punishing a version of facebook that no longer exists. A provocative idea and i loved reading this story because it turned it on its head and made me think about it in a different way. You go back to the cambridge analytical story, which a story, which is part of what we are talking about this. Sarah there was an outside developer who used it will together information on millions of people, not just people who used the quiz but their friends and sold that data to cambridge analytica. That was an uproar but that 2015. Ed back before the fact that facebook knew about it and did not do anything is a problem. We are going to continue to see leaks like that from the past. These breaches of user data that will come back to hot facebook. Today, theebook of facebook of the future is not the same company. When regulators think about how to fix the current problem of this company with tremendous amount of power over society and how we think and what kind of information we get and who we connect with, that facebook uptodate is not the one sharing of today is not the one sharing parties. It is not the one relying on people to make personality quiz apps. It is trying to become a selfsufficient network of its own making. And combine its messaging out so they have this meghan network to work with. It is a very different company. It will be interesting to see if regulators start to think about the future of what they are looking at and not the current situation. Jason next, the next stage and Legal Cannabis debating returns. This is bloomberg is this week. Jason welcome back. Join us every day on the radio from 2 00 to 5 00 p. M. Catch up on our daily show. Listen to our podcast. Find us online at businessweek. Com. Turning to a story you can find a reporter ons how we does normalizing by going upscale. We are talking about an industry where sales were over 10 billion. They were 11 states where adults can buy marijuana. There would be 24 with medical access. The latest progression is you are starting to see a lot of luxury products. We talked to a company from colorado that would make a cigar filled with marijuana. They sell for 1200 pop and people are buying these per their weddings. We are seeing more people do this for bachelorette parties and rap groups that are getting custom joints. The latest progression in the normalization of this industry is the emergence of luxury products. Jason it is interesting the celebrity angle. I feel like one of the subheads to be wed is not just fors is not just weed for snoop dog anymore. There are a lot of celebrities that have been going out there with it. This was demonized and now you are seeing the normalization and more and more states. In new york, it is illegal. There are those stigmas. You go to california or oregon, a very different attitude about this. Crazy peopleit is would go out after work and get drunk because they have to get up early and go mountain climbing. Cannabis has been positioned as an act of lifestyle. You are seeing more celebrities Marcus Stewart had a friendship with snoop so he turned her onto it. This is pushing into the mainstream and being embraced by people across the cultural spectrum. Walk me through where we have come the last two years. We have it big investors coming into this. That is evidence of the maturing of the industry. A year ago this time, Constellation Brands 4 billion into canopy, which is the worlds most valuable Marijuana Program in canada. It was a big Public Company in the u. S. Saying, we think this is real and we are betting on that. We had a slew of ipos. Banksg guys, the big still largely on the sidelines. Federal prohibition was keeping etc. Oldmans, the swedes, those guys are staying away from it. It is small enough to ignore and they are concerned about the federal risk. The federal government considers marijuana the worst narcotics. Does this crazy dichotomy. The federal government is saying this is illegal but it is a thriving business in california. It is the largest marijuana market in the world and business is booming. Family offices are showing up. More hedge funds are showing up interested. It isners capital the first time they have invested in marijuana. More people see the growth, see the potential across a variety of industries, whether it is medical, consumer and they are starting to put money in it. They see a lot of growth and do not want to miss out on this. What is interesting about it isrs investment is nonplant touch. They invest in leaf length, which is a tech company. Leaf link does not touch the plant which does not deal directly with marijuana. If i did not invest in a retail chain, they invested in a Technology Company that is working in canada. There are subtle distinctions in the Way Investors are getting themselves comfortable. For more on the business of cannabis, we spoke with ceo and cofounder ryan smith, the online marketplace where buyers and sellers of cannabis raised 35 million round led by capital management. This is the firms first cannabis related investment. I asked ryan what they plan to do with this money. Proud our team connects quality. Way for them to look into the space and participate. We want to work with and we think of ourselves as a professional tech to provide clients with the best solution. Jason give me the basic pitch. B2b marketplace. We connect 1200 brands in 22 territories. Each case would be, if you purchase at a dispensary, you need to buy to stock yourselves. , one of the big deals it feels about this new round, you are going to scale leaf link financial it feels like that piece of it, the financial peace , compliance of all those issues has got to be one of the most complicated things to tackle in the ecosystem. Ryan we have always done our best to follow the rules that exist and we work closely with regulators and counsel to make we are putting in the market or following regulations that are there. If we were a marketplace selling shoes, we could plug in paypal use usps or dhl. None of those things are available to clients and a lot of clients are run banked so we had to come up with a solution that was removed but compliant. That gave rise to financial that allows them to pay for goods to the marketplace. Jason walk me through how you go about building this. Shoesnot like someones or books that we are used to buying online and through those sorts of payment systems. Ryan the first 3. 5 years of the company all very close with our clients. People were paying a flat fee to be on the Software Platform so we were not part of the transactions at all. What we found was it is not that institutions can serve in this companies, it is that there is a higher level of diligence. Know your customer. We know thet was businesses they do. We know the individuals behind the companys and so we take advantage of all the things that only we have in the leading marketplace to provide them to banks and institutions that lessens the amount of manual workings. Jason how did you get this idea . Zach my cofounder and i, dass was at ebay for a bit. I have been selling things on my since i was in sixth grade. I always loved marketplaces. Zach and i started independent companies that we sold in the same year in 2014. We began thinking about what is a way we can virtualize the supply chain . Why are bw marketplace is not a thing . We shop for anything and everything. We are emailing, texting. We thought, what is a great place and if we were to launch , our spacer industry itself is a startup with progressive thinkers so we built the marketplace here. Jason lets talk about the ecosystem because we have had very highly valued Public Companies that have come onto the scene, some of which are associated with canopy. Talk about that relationship. Ryan we have been growing in the states. Wasnew since cannabis legal, we would reach out. Upbegin to open International Markets and they are operational in over 12 international territories. With them to launch our software. So we opened up an office in toronto around that. Up, we will get why you cannot fight yet what some consider dirty money out of museums around the world. This is Bloomberg Businessweek. Jason welcome back. Listen to us on the radio on sirius xm channel 119 and am 11 30 in new york. 99. 1 in washington, d. C. And in london on dav digital and of course to the Bloomberg Business app. We cannot let you go without a little pursuit. This weeks opener, the art world is in crisis. A wave of process protests against museum donors. Our reporter. Protests occurring in museums across europe have to do you with wealthy have to do with wealthy families that have been doing controversial things. There is the fackler family, p harmauce farmout werearma, which responsible for producing the opioid academic. Who owns safari land. Protesters allege was used during confrontations at the u. S. Mexico border. It just so happens that the Sackler Family and Warren Kanders are major patrons. Art patrons. There is a tremendous movement to remove the Sackler Family and kanders from various cultural institutions. Protestersf this is are alleging that cultural institutions are in whatever way forwardlooking and liberal and worldviews that are completely in opposition to people like the sacklers in the cannabis family. The culture that institutions in whatever way, the kanders and sacklers benefit in a way they should not. Jason lets take a step back because what you just laid out goes to the very core of how institutions culture institutions have been funded for centuries. Maybe millennia in some ways. The entire thing is in europe, institutions are funded by the government. In the united states, cultural institutions have our ways been paid for by wealthy people. Peopleu. S. , most wealthy have made their money in ways that are not necessarily blameless. There is a finite number of people whose fortunes are derived from green energy. Everyone else is in whatever way potentially subject to unwelcome scrutiny. The issue then is museums rely on this vast wealth to stay in business and they do not have any other way of getting money. There are not public funds available. As museums attempt to respond to these protesters, they are put in this interesting position and some might say impossible position wherein they want to be responsive to their constituents but they also need to keep the lights on. This is the real crux of the issue and no one has a great answer for how to keep this moving forward. Jason lets take a virtual stroll through the various wings of the various mediums in new york city. Look at the outside of the buildings. Look up the boards of trustees and you do not have to did very deep to find oil money, private equity money, hedge fund money. What is a museum to do . Idearrently they have no if the short answer. For the time being, a lot of museums are in whatever way putting out fires. Necessitypartly by and partly by principal, if people believe in our mission, we are not in a position to whatever way makes valued judgments about the way they made their money in a capitalist society. Jason Bloomberg Businessweek is Available Online at businessweek. Com and through our mobile app. Dave can find more stories on this weeks issue, including a political upset and panicky investors in argentina. Plus, french tv reform as netflix and you to capture a growing chunk of advertising dollars france may digits money. And china in its bid for technological supremacy, runs into problems. Israel,is worked by japan and the united states. Check in our podcast at bloomberg. Com. More over television starts now. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. David so you have been in north korea, and you have met with the leader of north korea on a few occasions, and you have been there when the president has met with him. So what type of person is he . Does he have interesting thoughts . Does he speak english . Do you communicate in english with him . Can you just kind of summarize what your impression is of the leader of north korea . Sec. Pompeo i have spent more time with him than any american. I passed Dennis Rodman on the last trip. David President Trump has tweeted unfavorable things about some people working for him. He has never tweeted anything unfavorable about you. Sec. Pompeo it is early. David my experience is sometimes when people get close to the president an