And vladimir putin, a topic that never seems to get old. Megan it is counter intuitive. It looks at who is winning this game and who is likely to win this match. We see donald trump making this outreach to him that we have never seen from a republican president elect, trying to cozy up to him in some sense, recasting that relationship with russia. What peter delves into is what is Vladimir Putins longterm game. His history is a zerosum game, so if trump thinks by sort of cozying up, what is he likely to gain . In diplomacy, it is the Strategic Mission and outlook for the country that is important. You can try to sort of have a personal relationship, but when you are dealing with putin, he will be thinking three steps ahead on the chessboard. Oliver we know trump talks about his business and deal making history, but there is a salient point, there is no higher power to enforce political dealings rather than you know, business dealings, so what can happen is anything. Megan putin does not have that much to deal with. His economy is struggling. Oil exports are challenged. His population is shrinking. It is hard to see where they are going, so he is playing with half a deck. The one way hes doing that is by destabilizing western governments, whether the hacking allegations, running his own pseudonews organization. What will be really interesting when trump and putin do match up as elected officials and when they get into negotiation, who has really got anything to deal with and how trump will respond to someone who may not be playing the same game and have the same agenda he does at all. Oliver moving to the Global Economics section, turkeys president erdogan hunting down the people behind the coup and how its bleeding into turkey. Megan this story delves into something you dont see written about a lot, the purge of the People Associated with this coup. We have found one of the largest peanut manufacturers who has been decimated, a business once singled out as a model of state entrepreneurship, and that has a knock on effect down the chain. So what we see is this purge, this hunting down of suspected sympathizers, is having a hampering affect on turkeys growth. Their gdp has gone down, and president erdogan had to encourage people to go out there and support the turkish lira. The economy was one of the ones with the most room to grow as recently as 12 years ago. Oliver finally, the cover story, a fascinating feature, talking about a big airline. Megan my favorite piece, the headwinds facing the ultra luxury carrier. It went from having two planes in the desert in 1985 to one of the more globally dominant carriers out there, how it will continue, and do they have more room to expand or are they reaching the end of their road in the sky . Oliver we got those details from matt campbell. In europe and the u. S. , emirates is ubiquitous, unavoidable, the worlds biggest Longhaul Airline by a huge margin. It has been flying outstanding capacity, number of aircraft and seats that most Industry Analysts never thought was possible. In the process of this growth, it has attracted a lot of enemies, notably in the u. S. Where the big three u. S. Airlines are stepping up a campaign to essentially oppose the amount of service that emirates and its two smaller persian gulf rivals fly into the u. S. , arguing these airlines are massively subsidized by their governments, and of course this was looking like a long shot, but then came donald trump. It will be a very challenging few years for emirates as it attempts to break into the United States. Lets go through some of what you said. There is a lot in terms of how emirates got to where it is today. Take us back 30 years ago, how did it come to be this massive airline . Well, emirates is inextricable from the story of dubai as a whole. 30 years ago, it was a backwater, very few people had heard of the place. Then you had the rulers of dubai, which is an absolute monarchy, part of the federation of the uae, who decided they wanted to create a middle eastern singapore, a center for business, tourism that was clean, safe, and orderly, and would be a Meeting Place for the arab world and the broader middle east and african region, so they set about doing this, building development, building the port so dubai became a big maritime center, but the most important way they did this was through an airline. They figured if we have a worldclass airline that can bring the globe to our door, that would contribute immeasurably to the growth of dubai, so it grew and grew to the point where it dwarfs a lot of what we think of as larger airlines. Much of this story here is also as you point out, it is akin to the story of dubai in general, government backed entities and business. You start off with the control exerted by the company over its employees, down to the makeup the Airline Stewardesses wear. Tell us how that degree of control and oversight is so important to the growth story . While emirates are adamant that they are not subsidized by the government of dubai, that they dont receive cash, advantages over their competitors, there is no question they operate in an environment that is pretty unique. Their chairman is the uncle of dubais ruling monarch. He also runs the airport regulator, airport authority. He runs as the chairman of the citys largest a, so there is a level of influence enjoyed at the top of an emirates group. That say, a delta or a united just does not have. Out in the desert, there is a fiverunway new mega of being built i the government to emirates specifications. It will be called, believe it or not, dubai world central, which i would say tells you something about the ambitions embodied in that project. Similarly, unions are banned. There is no question that emirates is the Favorite Corporation of the government of dubai, and in that way enjoys advantages that are just unimaginable for other airlines. Oliver turning the emirates a story into a cover image was the job of rob vargas. It was basically very easy because sometimes we go to places and they provide is things that feel flat, but the images they gave us encompassed how they see themselves. Oliver they gave you a list of photos and you guys picked one . They had images of men and large comfortable beds, women getting out of the spot, a beautiful bar scene, all available on their planes. Oliver it is all luxurious. This bar is on a plane, four beautiful people, reinforcing the point of the story that it is very luxurious. That is how they made their name. We thought this one was our favorite almost right away. Then we were trying to think of a way to make it a cover. We had this imagined conversation between these two people at the bar. Oliver there is also a great caption that says, are they running out of air space, which points to a more serious part of the story, theyve been growing a lot, and can they sustain that . When you are growing as much as they have, you are bound to hit a ceiling at some point. Oliver up next, what may happen to the 20 million americans who have Health Insurance under the aca if republicans do as they promised and repeal it. Plus, a controversy and tied to the kremlin for Donald TrumpsNational Security advisor. This is bloomberg. Oliver welcome back to Bloomberg Businessweek. I am oliver renick. In the politics and policy section, despite rhetoric from republicans, obamacare is not in a death spiral, making it tricky for the gop to follow through on its promises to repeal the law. My story in Bloomberg Businessweek is arguing that republicans are in a pickle here. They have said repeatedly they want to repeal obamacare. They tried repeatedly while obama was in office and failed, and now they can succeed. It is like the dog chasing the truck. It catches the truck and it does not know what to do with it. That is a Chuck Schumer line. They dont have a plan. So what they are trying to argue is that they need to come up with a way to explain why so Many Americans would lose Health Insurance, which is what would happen if they repealed obamacare care and did not replace it. So what they are doing is making the case, we did not kill obamacare. Obamacare died of natural causes, failed from the start, couldnt possibly succeed. All we are doing with this repeal is putting it out of its misery. That is the argument. Oliver so it wasnt covered under obamacare . What is the case they are making . Carol are they right . The economists who support the republican line talk about something called a death spiral. In the concept of a death spiral, it is actually pretty elegant and does hold in some cases. The argument is that when you have a pool of people of mixed health, some healthy, some not, if the premium is set too high, the healthiest people will say it is not justified for them to pay that much, so they will drop out and not carry insurance. Then that leaves a sicker population, and so the insurers in order to make money have to raise the premium more, so the next healthiest tranche of people will drop out and you will be left with super sick people and super high premiums. That is pretty much what a lot of republicans, including tom cotton, have been arguing is happening with obamacare. Except it is not true. And let me explain why. This happens, the spiral is basically being shortcircuited by a couple of key provisions of obamacare, because they knew that would be an issue and took steps to prevent it. One is the mandate, you have to have coverage or you get a tax penalty. And that has some effect, but the stronger one, the stick, the carrot, which is premium support. If you are below a certain threshold of income, you get help paying your obamacare premium, and if the pool gets sicker and so the insurers have to raise the premium will it is the government, not the individual, who takes up the slack, so you have no extra incentive to drop out just because say some others have dropped out, so theres going to be a problem, but it wont cause a spiral. Oliver it is the spiral will have to be stopped by some sort of assistance from the government . And that is what is happening. Oliver staying in politics, more questionable ties between Donald TrumpsNational Security advisor and the kremlin. We ask about Michael Flynns work. Carol your story involves two companies, then the relationships between those companies, which also brings in michael flynn, named as National Security advisor for president elect donald trump. Flynn until group, general flynn was the head of the Defense Intelligence agency, so he worked as a Consulting Agency with Cyber Security groups, drone companies, and runofthemill defense stuff, but also got involved in 2016 with a Company Called brainwave science, which is trying to Sell Technology that says it can tell if you are lying or not by doing a brain scan and reading your brain waves. Carol does it work . There is debate within the scientific community. A lot of people question the validity of this and think it is junk science, so that is debatable, but general flynn went into it. He was brought in to endorse it. According to the people who run the company, he wore the helmet and did a demonstration, and you put this on and it read your waves, like something from young frankenstein, and it made him go and he met 10 times, he set up Flynn Intelligence Group to do the training. They sold these two Government Agencies and they were going to do the training, and according to the Company President , he made different introductions to Law Enforcement agencies. Oliver so he didnt just dip his toes, he jumped right in, and in the process of which, overlooked or ignored the role of a board member at this company. Tell us about his history and why he has been the target of investigations for his relationships with kgb and russian spies. He is one of two principles of the company, and it turns out he has a history of selling Sensitive Information to the russian spy agency. The kgb. In the 1990s, he was involved in russia. In the early 2000s, he pleaded guilty to selling biotechnology to a russian operative. In the course of that, the fbi came out with evidence that he had been part of a spy ring that sold Missile Defense shield technology to the russians. The guy he met with, who was a notorious kgb agent, met him in cyprus several times overseas and got hundreds of thousands of dollars to Sell Technology about transistors, Missile Shield technology, and u. S. Helicopters, so general flynn, this was a person he was doing business with, but trying to help him get inroads into the u. S. Law enforcement and defense establishments. Carol government rules clearly state this is not the kind of company that a government contractor, military contractor, should be dealing with. Not just government rules, but there is a publication they put out Available Online that says contractors, convicted people, and it warns people in the Defense Industry and Defense Department that spy activity does not happen like james bond movies. It is very mundane things and says here is a list of 100 people who have been convicted and you should stay away because they have ties to intelligence agencies or shown to have criminal backgrounds. Mr. Koda was written up extensivel in this so the question about general flynn is why he did not do Due Diligence . Oliver it is basically an encyclopedia of spies. Not even that, but you get that by googling him. You google the stories about the spy trial. Oliver up next, rogue trades and a ponzi scheme that investigators say could be the biggest investment fraud since Bernie Madoff. We will introduce you to baby monitor aristotle. Oliver welcome back to Bloomberg Businessweek. I am oliver renick. You can also catch us on the radio on sirius xm 119. 99. 1 fm in washington, d. C. Also in london, and in asia on the Bloomberg Radio plus app. In the markets and finance section, why it took great you later so long to catch on the rogue trades and schemes that Platinum Partners. This hedge fund at its peak manage 2 billion and flew under the radar, founded by two Orthodox Jews from new york, and much of its fundraising was from the Orthodox Jewish community. Such as those that own the century 21 department store. They were big philanthropists, so they met people through that. Now last month the u. S. Prosecutors in brooklyn arrested seven People Associated with platinum. The authorities are now saying that this was a 1 billion fraud and the hedge fund had been inflating its returns for years. Carol talk about their track record, right. Because it was kind of revered that it was so consistently a performer. Yeah, this was a chart that went at a 45 degree angle up. Carol all good. In the main fund, they returned to 17 a year from 20032015, some of the best returns you are ever see from a hedge fund. Oliver even during the financial crisis . Carol yes, no losses, no down years. They had a second fund that was the returns were a little lower, but only one down month in that fund, even more consistent. If you look at the sharpe ratio, a measure of like risk adjusted returns, the main fund was reporting returns that were nearly as smooth as the fake numbers that Bernie Madoff posted. Oliver so is that what sort of drew scrutiny . This is too good to be true . Did the sec get a whiff of what was going on . I started looking at platinum two years ago because a lot of these return numbers were amazing in that few people had heard of them. It was almost a little weird that the fund had only 2 billion under management if and its great returns. You would expect it would be much bigger. When i started poking around, there were so many weird things that the fund had been involved with over the years. Carol such as . In 2007, there was a rogue trading scandal at the bank of montreal, and Platinum Partners was on the other side of trades. Bank of montreal sued platinums founder and accused him of helping the rogue trader, may be coming up with the ideas for these trades. Oliver are we talking equities . What kinds of assets . These were gas options. Platinum call themselves a multistrategy hedge fund, but that meant they would do almost anything. From people i talked to, they would take meetings with someone, someone who needed money for crazy ventures, and they would loan people say 10 million, 20 million at a pretty high Interest Rate to pursue kind of crazysounding things. Carol that was like warning number one. Yeah, that was one warning. In 2011, a big ponzi scheme grew up in florida, run by this lawyer, Scott Rothstein. He had been telling investors they could participate in his legal settlements, like basically you would give Scott Rothstein 50,000, and when he got paid for a case that had already settled, he would give you 100,000. The returns were great, and he had raised about a billion dollars with this, but if you are a sophisticated guy like Platinum Partners, maybe you shouldve thought this seemed too good to be true. Oliver up next, how many of our pets become overmedicated and over vaccinated. After that, george lucas in his quest to build an art museum. Oliver welcome back to Bloomberg Businessweek. What happened if it really starts valid. You take a look at mattels new toy. As well as by george lucas is having so much trouble getting with a 1. 5 billion is inherited all of that ahead on Bloomberg Businessweek. We are back with Bloomberg Businessweek editor megan murphy. Lets talk about the beaches. Lets talk about pets. There is over medication going on. Megan this explores how the corporatization of pet care and how pets are being treated like humans are. In terms of investors going in and corporate ties in the space. Big oxthis into a retailer. Big box retail. They are trying to get people on revolving payments for this. This story explores the debate. Of thather as a result shift, some as a big overmedicated, some are being tested more than 92. Some people have had more money than they should. People are always going to be getting with tons of adults. This focus on a veterinarian who goes back and supports this. Fairlythey had a long, tortured legal history. The Bigger Picture of the story is are we really serving our pet population as well as we can and should be . Are the standards like vaccines where they need to be . The shots are still regulated by the department of agriculture. This harkens back to a day when thats what treated as livestock. They are not treated as part of the family and much closer to some people than their own children. Oliver lets talk about another interesting topic. Troubleucas is having giving away an art museum. Megan he tried to put the museum this is an interesting battle. George lucas feels like he doesnt get the respect he deserves. As the maker of films like star wars. But also, his own art collection. Betty liu drawings, a lot of Norman Rockwell concept that is not considered high art. It has gone down now to los angeles and san francisco. The take a look at some of the imagery of the museum and draws that he had. Space age, they are really monitoring this. You can see why some local residents objected to some of the plans. There is a great story here. You are doing with the dollar. And whether we are thinking about the dollar properly. Megan the rising strength of the dollar is 6 since the election. Is that really hampering growth for american corporate . Is it going to be something that is going to affect them . But the interesting thing is that they are there is more room to run for the dollar. To economicslked editor peter. Peter the point im trying to make in the story is that the dollar is not quite as strong as some people think it is. If you look at the federal hasrves broad index, it gone up considerably over the past couple of years. It is still well below the levels that it reached in 2002. It is even farther below the alltime peak it reached in 1985. We had the socalled plaza of concerted effort to bring the dollar down. To display what i am talking broad as if it covers the vast majority of the trade the u. S. Does. Indicator it a better than the dxy which bloomberg users are familiar with. U. S. Dollar index. That covers only six currencies. It is not adjusted for inflation. It doesnt show a bigger rise. 25 of its most recent love. Low. Why does it matter that the dollar has gone up less . Because if we are having trouble with the dollar at these levels of fairly modest rising, imagine how much worse it would get if it really does. Main negativewo consequences of a strong dollar. The one we hear most about in the u. S. Is the damage to u. S. Manufacturers. A strong dollar price their products more expensive abroad. It makes imports cheaper. There is another consequence which is the one abroad. Mostly developing countries, relatively fragile, emerging markets. Especially ones that have issued a lot of debt and dollars. They do that because they can pay a lower rate when it is denominators and dollars. Now they have to take their local currency and converted into dollars and a disadvantageous exchange rate. It raises the cost of funding for that. They are raising Interest Rate and putting up upward pressure. They are getting a double whammy. They are getting hurt. Manufacturers are getting hurt. Could gohe dollar considerably higher in 2017. Megan what kind of low starts to cause problems . Peter i think we are starting to see problems already. It is more of a concept. Ironic that you think a strong dollar would help ones out of the equation and her the other. But now we can now it can hurt both. Emerging markets do suffer. Of course they do gain a benefit from exporting to the United States at a more advantageous price. But for some, that is a wave of negative affect. That is the higher interest and the problems with the dollar denominated debt. When you are talking about the stronger dollar, you can look at it like a basket. You look at the trailer dolly. Expect to be wife betrayed away dollar is more than just an academic way to look at it. If you are looking at economics rather than currently training, what you care about is the buying power of the dollar with regard to other currencies. Not just one or two. Group of currencies that we do business and. You want to include the chinese yuan. You want to include in the mexican peso. Then you want to include some of the smaller currencies. Oliver up next, how home and Garden Television beat cnn last year. A declininge is attendance in College Football games. Oliver welcome back to Bloomberg Businessweek. Down a Cable Television and doing it without news, it was celebrities or sports. A list of celebrities or sports. Sincey have a formula they have been created in 1994. There is an old house and they fix it up. A happy couple walks in and that is the new home. Up a beatendown house and then sell it. It is really about repetition. It is really interesting in this era of the golden age of tv. This is reality programming. It is not that expensive to make. They make the centro shout over and over. It has worked out for them. The most shocking line for all of us who have read it is that this is the third most popular cable channel. It is third behind rocks news and espn. In total viewers, it was ahead of cnn. They had a user with the election. Huge year with the election. This is programming you can watch ondemand whenever you want. But for some reason they have a high liveive tune in. I know when these shows are on. One of the interesting things i found in my reporting, they a acknowledge this as sort of a refuge. The president ial election was stressful for a lot of people. Hdtv, i talked to one of your who said a lot of the news on tv is stressful and hdtv is not something that will hurt me. There are things that people tune in to because they wanted to out what is going on on the cable news with the political season. I want to connect to a previous story. The hallmark channel. This is the same idea. They do the same movies and shows over again. It is feelgood stuff. Is that what it takes to stay afloat if you are not a Sports Network . It seems to be working for them. There are a lot of strategies going on. Most Cable Networks have either live sports or news. Those are the two ways that people tune in live. Here is a channel like it which has none of those things. The ratings have been increasing while most Cable Networks have been decreasing. Andl talk about canada low ken lowe. He started this. Jerry he had a lot of skeptics. He wanted who would watch a show about paint drying and grass growing. He even had trouble getting hdtv carrying it. People in manhattan will not watch it is what he was told. He went to customers in the aisles of home depot and lowes and just talked to them and asked what their issues where. Are you remodeling your house . What sort of things are going on with your house . He found there was a big command for a channel like this. Especially outside of the big metropolitan areas. Oliver how empty bleachers at College Football stadiums may impact liberated to be deals. Deals. Ative tv three things are happening. If you look at your Traditional College sports, these departments make money in three ways. , that is the biggest one. Then there are a lot of donations and the third is tickle sales. Ticket sales. What schools are spending now versus what they are spending 10 years ago is orders of magnitude bigger. Now we are seeing all three of those streams start to call into stion a little bit the tv cable tv model is fracturing. We are looking at new players in the digital space. Especially in the live sports well. No one really knows if there will be more money at the end of that rainbow as there has been in the past for sports properties. College football attendance is dropping. When you look at ticket sales, if youre going down, dont go to games as a student, you will not donate to the athletics department. In the face of that, in the face of the three main revenue streams, all fracturing a bit at the lower levels, there are some very concerned people in the College Football world. Tell us how much the numbers are going down. When you are reading this, it is visual. The entire stadium is in their student crowd. What does it translate to in numbers . All attendance is down for the seventh straight year. It is down a percent per year. That is masked by the fact that your ohio states and michigans are selling out all the time. Tier,ou get below the top that is where it is happening. 80 of the stadium is empty at some schools. Florida atlantic, they built a new football stadium five years ago in their final home game of the year, they had 5000 people there. Carol why are people so interested and it . In it . People will say that millennial generations dont value going to games as much. I explained the millennials for everything. Blame the millennials for everything. People are watching social media on your phone and playing a game on the side. Those are all options now. There is concern for going to a football game. It isnt what it was a number of years ago. Up next, and an apple and spotify world, soundcloud is struggling to find its place. And mattel, the toymaker, they want to start into Artificial Intelligence. Oliver [Bloomberg Businessweek. To bloombergck businessweek. London, and in asia, you can listen to us. In the technology section, providedusic soundcloud is beloved by artists and its users but it is struggling to grow in a spotify dominated world. The Music Industry in the grown for the second time in a row in 2016. That is the First Time Since the late 90s. That is when they were buying lots of cds. That was the peak of the modern music business. Most of that is attributed to spotify or apple music. While the Music Industry is really happy about what has happened over the past. , the services that are leading services that the are leading this growth are unhappy. Soundcloud, talk to us about soundcloud. Is distinct from all these other ones. Spotify ork about apple music, music about a paid or a subscriptions granting Service Streaming service. Same catalog everywhere. What made soundcloud distinct in 2007 and for the years after that was that it was a playground for artists and for true music fans where you can see musicians upload raw cuts or demos or something they were working on that they wanted to show fans before it was really ready to be released to the mass public. That proved to be incredibly popular. Soundcloud has over 100 million users. What they really have struggled to do is turn that into a business and make money from it. Advertising off of audio is really different difficult. To improve the advertising business. They need to have a paid service. They try to create one at a much lower price point and spotify at about four dollars a few years ago and could not get the industry to sign on. They finally introduced this page service and 2016 in 2016. By that time, other services had taken off. They had nothing to offer that was very different from the Free Services that are out there. Out with thecoming first smart baby monitor. They are talking about the companys Artificial Intelligence. The worldsically first smart baby monitor. It is supposed to grow with your child. The moment you bring a baby back from the hospital, you are supposed to set up mattels new product. It is called aristotle. It is a High Definition camera bluetooth,er part is wifi, speakers, it has voice recognition. It does all these different things. Involve and itto is something that is supposed to stay by your tiles bedside for the next 10 years. I am already great doubt. It sounds like alexa for babies. All of these products have aen coming out since amazons alexa. These Artificial Intelligence home automation hubs. What is different about aristotle is it is the first one that differentiated in terms of going after a specific niche in the house which is specifically for parents with young children. It is for your nursery room. I dont know if you have had a baby monitor. We know how it works, it is useful. You hear the baby. This takes into another level. Takes it to another level. Changingten you are their diapers, it comes in with a couple of ecommerce partnerships from the getgo. One thing is that it is supposed to do is that if it sees you are changing diapers, you tell it that i need to order some new diapers. It also, in addition to that, it is supposed to learn from the data it is collecting. Ideally, at some point, it will recognize before you run out of diapers that you are running low. At the same time, in terms of sleep patterns, one of the things they are talking about is that your child is sleeping and the baby starts getting restless and crying a little bit, you can program it to play white noise or a lullaby or maybe turn on a little nightlight. Hopefully it will try to soothe your baby back to sleep. Is there anything it does that replaces the time for the effort required by the parents . The the question of its usefulness. How easy is it to program and keep it learning with your child as opposed to doing this stuff yourself. The idea is that it save you time and energy. Saves you time and energy with your baby. It is going on sale this summer. Earys where w after a couple of months. Part of it is that it comes with a bunch of learning games that are supposed to help your child as they grow older. It will teach our kids how to do certain things, abcs, want to one 23s ape oliver we will be right back. Bloomberg televisions right now. Coming up on bloomberg best, the stories that shaped the business world. From confronting carmakers to dismantling obamacare, the Trump Administration gains speed. Clearly we see a more positive environment under is an alexa trump. President elect trump. Currency surges against the dollar. And all signs point to further tightening at the fed. There is a lot of uncertai