You mimic other publications. Last year, we did a special design for the year ahead. We are doing it again this year. We are parodying other magazines. Its really fun. Theres a lot of material in this issue. This makes it more digestible so the economics section looks like the economist, the tech section looks like wired. Our Art Department did a really nice job of both helping the reader to get through it and also helping the reader read the text. It is all very readable. David this is the fourth year you guys have done a year ahead issue. You have an editors note at the beginning in which you are urging caution. Thats the message of a lot of the stories. The economy is still in a muddle, but the people we spoke to sort of saw clear paths to growth. It was not a time to take huge risks. As i Read Everything we did, caution was the work that jumped out at me and i think will jump out at readers, too. Carol in the finance section, you talk about the doubt and uncertainty still hanging over hedge funds. Theyve not had a good year or two. The hedge fund situation remains very murky. Weve talked to people who are managing funds. Theres too many funds at this point. They have not been performing well enough. What needs to happen is the number of hedge funds needs to be cut substantially. To make the market work for them. David and the energy section, my favorite artwork, you look at solar power here. The industry is facing a deadline. Congress extended benefits for people who are installing panels. Which was not immediately the outcome people were expecting. The question is how the Solar Industry is going to change. They need to focus instead of on installations that they were convincing people to install solar panels because the law was going to expire, now, they have to think about their own productivity. It is a complete pivot for them. Carol the whole introduction, you guys talk to economists and ceos in terms of their expectations for growth and its not very upbeat. It is not upbeat. The sense is there will be growth, but it will continue to be modest. That is the way it was last year. People are a bit more optimistic. The growth will be tepid. David i spoke to the editor about that piece. The world leaders, finance chiefs and bankers were gathered for the Imf World Bank meeting a few weeks ago. The chief economist gave a forecast for Global Growth that was fairly dire. Sideways. Not dire in the sense we are headed for a crash, but not exactly robust growth. Looking for a year where we keep edging along, growing, but not at the pace we need in order to help rais Living Standards raise Living Standards. David a cocktail of interacting legacies, Nonperforming Bank loans, low investment and eroded human capital. This is a global phenomenon. When he said that, he was referring to the rich countries. Its interesting because that is where you see kind of the most moping around. Certainly there are parts of the developing world, brazil, for example, having real difficulties today. There are some countries doing nicely in the developing world. India is number one. India for a long time was such a disappointment. China took off and india did not. Now, we have the reverse. India is growing faster than china. 2017 will be the third year in a row that indias growth rate surpasses china. David i talked to strategists all the time and they bring up india as well. What has positioned it so well . Theyre finally shaking up this legacy of socialism in this ceiling that they need to make everything themselves. They are inviting foreign capital in. They are deregulating. These are all nobrainer things from the point of view of developing economists, but there was such political resistance for so long. Now we have the Prime Minister going ahead with these reforms and succeeding. This year, he managed to push through a new National Sales tax called the gst. That is a big positive just in terms of aiding interstate commerce within india. We also had the new bankruptcy laws. These are getting india out of its sclerotic old self. David india has been pretty well integrated into the Global Economy as a whole. Right. India being so big is still not as exposed as singapore to global trends. Just based on fixing its own problems, india can have a lot of growth, even if the rest of the world is not growing quickly. Carol turning fear of next year into a cover image. How to package a magazine that i thought it was great. From there, we are thinking, how do we feature all these covers . Newsstand. We did some research. Newsstands all kind of look the same. We hired a set designer who built this to scale. We actually printed mockups of all the magazines ourselves. Ship them to the set and then shot it. Carol i wonder if you played around with different angles and played with the model doing different things. Had a specific crop for everything. The actor was pretending to be asleep in one. We ended up using that for the subscriber cover. David doing this with all the other sections within my lot of work for you guys. Must have been a busy week. It was fun. Carol up next, the 50 companies to watch next year and the industries we will hear the most about. David what exactly is that dreaded tech bubble and when will it burst . David welcome back to Bloomberg Businessweek. Carol this weeks special issue has a list of 50 companies to watch. David on it, you will find household names and lesser known and comers across the categories. These are the founders of People Software sold software to on premise clients. You would buy the software from them and deploy the software and run your hr systems on it. After a messy takeover with oracle, the founders left and started this Company Called workday. Selling the similar product but on the cloud. Slowly and slowly, companies moved their applications to the cloud. This became a popular product. Carol why should it be on the list of 50 companies to watch . Cloud applications is becoming a very interesting place right now. We have a lot of competition from legacy companies. Workday and salesforce doing really adjusting work right now. Interesting work right now. We are on the cusp of creative competition in the industry, a lot of fighting going on and consolidation. They have had very little impact because of the competition so far. Can they remain independent in 2017 or 2018 . David compare with this company does to work old or s. A. P. Or salesforce. Where does it operate in that ecosystem . Their applications are still on premise. Salesforce is the largest crm company. Workday is the largest pure play Hr Solutions Company and there are a lot of them out there. Companies that specialize in certain verticals. Carol the already being Venture Capital funds keep getting bigger. David i asked about what we can expect in Silicon Valley next year. Venture capitalists are raising record amounts of funds from their limited partners Like University endowments, mutual funds, overseas investors. On the other hand, startups are struggling to raise money. We are seeing this rush of capital into the startups that are perceived as the most successful like uber and snapchat and everyone else is feeling just meh about the coming year. David they are big and perceived to be safe or because these are companies that could go public anytime . Both of those things. Uber is an example. If you are looking for a pet and not feeling super good about the economy and your choice is between a start up trying to compete in that space or even an adjacent space where you have to compete for drivers, that choice which is high risk my reward and hoover would be perceived as a lower risk, lower return bet, given the fact that we are not in a highgrowth environment, uber looks like a safe bet. David they are still raising money. Uber lost an amazing amount of money. They have been in this price war with a couple of their rivals. This is being caused by the huge amount of money flowing into Silicon Valley. You have lyft this causes some investors to be concerned that it looks like a bubble. When you have a bunch of companies raising tons of money, bidding up prices and where economic prospects of all of them doesnt look totally certain. The economic prospects of all of them does not look totally certain. David 2012, it was easier for somebody with a start up to go to an investor and ask for a couple million dollars. What changed there . A few years ago, smartphone growth was off the map. If you had something that was pretty good and work on smartphones, you could ride that wave of growth to the bank. If somebody buys a smartphone, they needed to download some apps. They would download your app. Now, most people have smartphones. That sort of avenue is closed. There are a few candidates for the next big thing. Things like Virtual Reality, driverless cars, Wearable Technology there is no new iphone yet. David there no underlying wave of growth. One of the big stars of the past boom, he invested in instagram and tumblr and square, smartphone driven companies, he said the times are not as good. A lot of the innovation is happening inside of Large Companies which are consolidating. There is in this market that is not this market that is super friendly to startups. David up next, we turn our attention to retail. Carol how to capture the spending power of millennials next year. Carol welcome back to Bloomberg Businessweek. David you can also listen to whats on the radio on sirius xm channel 119. Lets get back to that list in the issue of the 50 companies to watch next year. Carol retailers face multiple challenges. We talked about walmart, jcpenney and American Eagle outfitters. Walmart is definitely the largest retailer. Think about where you shop right now. You are doing most of your shopping online and that is where walmart is placing its bet for 2017. You saw the jet. Com merge. It is an acquisition by the companies are coming together. Their placement even bigger bet on taking the customer away from amazon. Theyre going after that prime customer and trying to get some of their wallet spend back to them. Their online sales are only up 7 . If you look online, its about 2 of their total business. David we watched the change in leadership at jcpenney. What will 2017 look like . Think of a department store, its going to come under pressure. They sell apparel. Jcpenney is now selling appliances. How many other stores sell appliances . Sears. They have an opportunity to get a new customer and increase that ticket. They are a 12 billion company in sales. They still have 5 billion lost in sales. Theyve been showing signs of improvement to increase samestore sales while others have been contracting. David American Eagle, why is that when you are looking at . That is a turnaround story. You think about teen apparel, that is one of the hardest factors American Eagle has done a phenomenal job to turn the business around. The are really focusing on product. When you think about apparel, a teacher is a teacher. What makes it different is the fabric a tshirt is a tshirt. What makes it different is the fabric, the fit. Having stretchy jeans, having denim that fits well and has that elasticity. Theyve done a great job on their product. Carol a helpful guide to getting one presenters and millennials to spend their money. We cannot stop talking about millennials because theres so many of them. They relate command so much power. They are very health conscious, they make choices about eating healthier, being more active. All these trends we see, millennials out there doing things. They live in cool, athletic sneakers. There is a social awareness that goes to their spending as well. They want to buy things that they can feel good about. Organic products, natural products, responsible products. Not to say these dont cover other groups, but this is a big factor. When of the biggest divining characteristics is the approval they will not make a decision about something to buy, whether it is an item of clothing or a place to go and needed they have not checked with friends, check the reviews online and then they will make a decision. Theres not a lot of individualism. David we always talk about millennials and housing. We dont see millennials interested in buying homes. Goldman sachs came out with a study on millennials recently. They are pointing to the huge potential that is there. They are starting to age. They are into their early 30s. Thats something they are starting to think about. At the moment, it is some renting, some living at home, or living away in this sharing economy ethos. I think there is a lot of stock marketers are putting into what is going to open up when. David gen xers care about housing. They straddle these moments in time that are kind of interesting. Technology is something they are comfortable with. They are also the mall rats. Its very much about who they are caring for right now. A lot of them are caring for aging parents while raising their teens or even younger children. The choices are not so much about themselves and more about these others. When it is about a choice they are making for themselves, its typically going into the home. They are still very individualistic. David another group they cross all these lines. There are likely some dual income no kids millennials. They were an offshoot of the yuppies in the 1980s. People who have more disposable income for themselves. Theyre spending it in ways that are not so surprising. Their trips are more lavish or involved because it doesnt have to factor in children and keeping them busy. Hobbies that require gear, another big thing. They might be giving more to philanthropy than these other groups. Personal grooming is very big with the dinks. Sometimes the dinks are then no longer dinks because even though they are older, they start having kids. The middleaged couple that is out there skiing at that great resort in aspen or flyfishing out in wyoming somewhere. Enjoying their lives. A lot of them come into by choice and they are carol the developing program that could offer visas to startup founders and their employees. David coming up, much more from this weeks special issue, the year ahead to 2017. Carol what will matter next year, like the jobs that could see a boom thanks to brexit. David and the products divining defining the future of Virtual Reality. All that ahead on Bloomberg Businessweek. We are here with the Magazine Editor in chief. Lets start with the technology section. How some entrepreneurs are pinning hopes on a change tovis. Lots of entrepreneurs that have done incredibly well in Silicon Valley are from all over the world. There are a lot of people who want to work in this country and start companies, but they cant because they have to skedaddle after their visas run out. There is a plan that would allow them more time in the u. S. To get their startups going and that will make it easier for them to find funding. Thats been difficult for them. You have venture funds saying yeah, but you may not be here. Carol a special visa tailormade for entrepreneurs. To let them get their companies off the ground. Carol big electionyear around the globe. You talk about the Upcoming Elections in china. This is a big deal. It doesnt happen often. The question is whether xi will want to put another term on the back of the term he will be starting next year. Its unclear who else is going to be in favor. That is not decided until next fall at the big party congress. David theres a chance xi could stay on for another term. That would be pretty radical. There was a sense that they needed to put limits on how long somebody served. It would be quite radical. The question would be whether he would still be controlling the military. David we are continuing to follow what happened in brexit, the aftermath of the Eu Referendum in the u. K. You look at a number of other elections happening in the european continent going forward. A super cycle of elections, you have france, germany and a lot of these countries in europe, there is a very conservative hand today. The question is very antiimmigration candidates, whether they will gain in parliaments. Carol there is a worry about how these elections play out. But it could be for a developed world that is trying to create economic growth. Whether these parties will put pressure on the eu and whether others will think, ok, we want to withdraw from the eu. Its the issue bubbling up. Carol thank you for the setup. The run up to article 50, we are waiting to see how this plays out. Theres one job that will be in demand temporarily. A good year for consultants and law firms. Whenever there is trouble and uncertainty, they bubble up. And when a lot of dollars. A lot of companies, a lot of agencies are trying to plan for the plan. Its a little early because it has not been negotiated yet. We dont exactly know how that period after theresa may pulls the trigger will come out. Its sort of planning for the planning. You have law firms setting up specialized brexit departments, Accounting Firms doing the same. You may have your lawyer lined up and they may be doing research and coming up with plans, but its a little early. It could all crater for them because once its decided, those practices, those lawyers will have to go back to what theyre doing before. Matt one of the few groups of people in the u. K. Who may benefit economically from the 23rd brexit boat is lawyers and consultants. June 23 brexit vote is lawyers and consultants. Someone i spoke to compare it to reuniting the two germanys after the cold war. We are talking about that level of legal complexity. If you are in the business of helping deep pocketed professional clients sort through complicated problems, this could be an extremely lucrative time for you. Even as the broader economy begins to sputter. David what are firms looking at, what are they worried about right now . The big one is finance. No secret, london is one of the two or three true financial capitals of the world. Its something called the financial passport, a piece of legal jargon that refers to the ability of banks domiciled in the u. K. To do business across any eu state, and that goes away, banks will have to go through their operations in London Business line by business line, deal by deal to see what can be legally conducted here and what will have to be moved elsewhere in europe. Whether that is paris or amsterdam or somewhere else. Thats one area where lawyers and consultants will have a huge amount of work to do. Every industry is regulated by the eu. They all have to run through everything in the event of brexit to figure out how to be on the right side of whatever new rules will be. David we dont even know when article 50 will be triggered. What are the consultants doing at this point . Matt as one Senior Consultant put it, they are planning for a plan, developing scenarios for various clients as two different outcomes that could occur. There is not an infinite range of outcomes. Theres infinite new want an infinite variation, but broadly, there are several models. Its a question of which one. The noise coming from theresa may has been in the direction of a socalled hard brexit. The u. K. Would have no special relationship with the eu. It would deal with the eu much as the u. S. Or australia does. Theres Something Like norway and switzerland who are quite integrated in the eu while not being members themselves. Those have quite different implications for the volume of regulatory and legal change we are talking about. David we asked the creative director about how he put it all together. Far ranging global economic, energy, retail weve heard up this section with the magazines we thought was naturally fit. Global economics, we took inspiration from the economist and for retail, we took inspiration from in style magazine. There wasnt a wellknown energy magazine, so we paired energy to a fitness magazine aesthetic. David is the objective here to mimic it as completely as possible or get a sense of what the economist looks like . First, we tried to replicate it as close as possible. And then we added our own brand. A little more playful and loser. Looser. We look at the magazine a couple of times to make sure everything is progressing well. There was more laughter than there usually is. David will wall street make it through 2017 without another financial crisis. Carol could the good times just be Getting Started for u. S. Energy producers . Carol welcome back to Bloomberg Businessweek. Peter coy looks at the unhappy history of years that end in sevens. David help us understand why the debate is so important in economic circles right now. Peter the positive shortterm trends would include somewhat stronger Commodity Prices which helps him developing economies helps some developing economies. And some sign of easy money in the developed markets. If you are a developing economy and suddenly, rates are going up in the rich world, they worried that money would get sucked out of their economies. The u. S. Has held back on some of the Interest Rate increases. The fed will probably still raise, but not as quickly. There wont be a sucking sound of money coming out of the developing economies. That is a shortterm relatively good, not such a crisis feel as there might have been six months ago. The mediumterm is still problematic. These are things we talk about all the time like the decreased public support for free trade. These developing economies really need free trade, they need to be part of the world economy, they need to have markets are there goods. And just eroding fiscal balances, the cost of supporting the social infrastructure and so on. Heavy corporate debts that china would be a great example of that. Debt is something that may not cause a conflagration in the mediumterm david how worried are people about debt . Is high on the list for an obvious reason. Debt makes the economy or company or household brittle. Debt juices your growth because you dont have to put up all the money for your investment. In a house, classic example, you are a money, the house price goes up, you are happy because you only put down 10 . What happens when the house price goes down . Its the same thing for an economy. You still own the money even if your wherewithal is decreased and you become brittle that way. As debt mounts, household and corporate debt as well as corporate debt worldwide becomes more and more vulnerable. David why the shale boom may hit hyperdrive next year sometime next year, we are going to basically sell more natural gas then we buy. It wont be an annual average, we wont get there until 2018, but sometime in november, we will have more natural gas to sell to the world than we buy. This is a huge shift. This is the first time the shale revolution has kicked into gear and given us enough gas to push out there into the world more than we buy. David a big reversal from where we were a decade ago. What happened in the interim . Matt 10 years ago, the government was saying we are going to be forever short. We would increase our imports and continually go up. Billions of dollars building these really expensive import terminals to take lng. That flipped around 2008. We are not sure, we are long. We have a century of gas. The industry to seven or eight years to recalibrate around that. You have import terminals in the gulf that were never used. One in particular opened in 2008, immediately turned around and said lets build and export terminal. This year, we will see more come online. This is the geopolitical weapon we can use. Pushing our influence into places like europe and latin america and trying to get our trade balance a bit more in line. Carol up next, the companies that may finally figure out what Virtual Reality is for. David what the editors got right last year. Carol and wrong. David welcome back to Bloomberg Businessweek. Carol lets get back to the issues 50 companies to watch. We spoke to paul sweeney about netflix, comcast and cbs. David what is comcast looking forward to in 2017 . Paul they will focus on growth we spoke to paul sweeney about netflix, comcast and cbs. David what is comcast looking forward to in 2017 . Paul they will focus on growth areas. One will be there consumer broadband business. Its become a basic utility for consumers as they consume more and more content over the internet. It has been a strong growth story for them. Also the commercial business. They are providing highspeed Internet Access to enterprise businesses. Its becoming a very big profit contributor to them. A business that is growing 20 per year. A business that comcast will allocate more capital to. David comcast has content under control. Lets go to netflix. Very Big Aspirations of growing around the world. Paul netflix just put up a Strong Quarter in terms of subscriber growth. That is still the primary metric for this company. That will ultimately drive revenue and drive profits that will fund their everincreasing programming budget. Right now, they spend 7 million year in programming. 7 billion a year in programming. They have a very big programming ambitions. That requires a lot of capital. They continue to need to grow. David cbs has been involved in this big drama surrounding the redstone family. Paul cbs has done very well. The ceo has been a constant programmer. The cbs network has had the top ratings of any of the broadcast networks. Showtime has shown consistent growth. The stock is performing very well. Is there another life for cbs in the context of viacom . The controlling shareholders have pressed for a merger of the two companies. What will the role for les moonves be . Les will be the ceo and it will be his task to revive the fortunes of the Cable Network and the paramount studio of viacom. David a look at the different variations of Virtual Reality hitting the market. Josh 2016 was supposed to be the year of vr. We saw oculus released a highend Virtual Reality headset, as did htc. Those things need powerful computers, they are the deluxe experience. Google gained a lot of steam as well for releasing a cardboard thing you put a phone and. Its a cardboard holder for a phone that fits on your face. That gives a very basic Virtual Reality experience. There is stuff in between. Oculus worked with samsung to make a plastic headset that you also put a phone and but has a bit more of the bells and whistles. Carol oculus rift and htc are at the high end. Is a very expensive devices. You have to spend 1000 for a pc to run with them. The google thing is essentially free. The same something is in between. Google released a competitor to the samsung gear vr called the daydream view. You can use your phone with it. That gives you something in between. Not quite oculus rift, but good enough at this point. Its clear what you are paying for when you get the highend experience like especially the htc vibe. It tracks you around the room. Its a bit of a struggle theres two cameras you have to set up that track your movement. You have to plug this into a computer and you have a cord hanging off of your head plugged into this computer. David each year, Bloomberg Businessweek offered its predictions for the year ahead. It gets some things right and somethings wrong. This is the third year in a row weve done this what we got right, what we got wrong. Some are qualitative, some are quantitative. Some are writer insights, some come from analysts we talk to. Its like a reverse backcheck. Fact check. We find anything that is a prediction and some of them leap right out the death of scalia. Others, you have to check. Did this come true . David talk about the means by which you did it this year. The whole issue this week nodding to other magazines here. Using the matrix that is a weekly facet of new york magazines. We like to be a little weird. This is a nod to the approval matrix. There is another awareness level on top of that. Also a nod to the movie the matrix. You can see that in our whoa category. David you mentioned antonin scalia. Im glad you brought that up. That was my prediction personally. This was about the counterintuitive likelihood that of the Nine Supreme Court justices, if there was one who would be the swing vote who both sides would have the most recent to focus on in this extremely potentially impactful case about mandatory union fees, scalia was the one who could make it go one way or another. Talked to various experts, when into what scalia had written in the past why he would not necessarily take the same position. Instead, he died. David still wrestling with what will become of the court in washington. That particular case deadlocked 44, as did others. Its an issue that has deadlocked the court. People are trying to get back there. Carol Bloomberg Businessweek is on newsstands now. David and online. I love that matrix. Fun to go back and look at the predictions. How about you . Carol i like how its divided into five sections and how they did a nod to other publications. To divide the magazine and cover different areas. Really well done. More Bloomberg Television starts now. The following is a paid program. The opinions and views expressed do not reflect the opinions of bloomberg lp, its affiliates or employees. The following is an Important Program about humana Medicare AdvantagePrescription Drug plan. Welcome to your medicare, your decision, the program that guides you through the Medicare Options available from humana. There are many different medicare choices available today. Are you sure you have the right medicare plan . Are you with the right company . Do you wonder if you could save money with a different plan