Carol we are here with megan murphy and lets a start with politics. I cant wait to see how the magazine handles the world of politics in this year. You start here in our home front. Mike pompeo has had a good year. Megan mike pompeo is the director of the cia and those names have been mentioned as a potential successor to rex tillerson. Our secretary of state has not had a good year and we will talk about his departure has cooled, there is a widespread feeling that his relationship with the president is not longterm. So mike pompeo has emerged as a personal favorite from the president. This means a lot to the president , who you get access to. His circle is very small and mike pompeo has become one of them. Julia how has he managed to cultivate that relationship with the president . One story that comes out is the daily briefings. How normal is it for the cia director to meet the president on a daily basis . Megan its more than that. How do they break down the information . A lot of pictures, a lot of graphics. There are two things about pompeo. One is that hes ideological. Hes been forthright in defending the resident about collusion with russia. This is a guy who is a west point graduate, harvard law graduate, someone who wears that coat of arms, that the president likes those people, able with a people with a military background. Julia the domestic cover story, it is a shocking subject of which we dont know about or talk about enough, and thats whats going on in the latenight shifts in meet Meat Processing factories. Megan we have fought hard to expose the horrors that our underexposed labor force, sometimes illegal immigrants, sometimes white workingclass marginalized people working to support their lives on eight dollars an hour and this cover story goes into this third shift and it shows the life and death on the lines of this third shift when people are risking everything for an average of 12 an hour and standing in thats in vats of chicken fat and what their going through as sanitation workers. Carol we have more from Peter Waldman and what he says points to a dark place in human history. The third shift is so named because its the graveyard shift. It begins around midnight and its the folks that come in and clean these plants and these people use highpowered hoses and all kinds of chemical cleansers, usually chlorinated. They generally clean meat packing machines while they are operating, so there are lots of blades and blunders spinning. Steam is lofting everywhere. These are the folks that come in and clean. Very often, they are immigrants. This is not a desirable job. Its sort of the bottom of the in the United States and even more often, they are undocumented immigrants. Julia talk to us about martha and her experience because you begin her story in graphic detail. Sure, i call her martha because torres was only one of the surnames given to her by several people in the documents we reviewed. The reason is that she was or is an undocumented person. We dont know if she is in the United States or not because we couldnt track her down, which is part of the story. Its why we begin with the stories running her surname. She was working at a tyson plant in kansas and she was cleaning a Conveyor Belt at one point and her glove got caught and the Conveyor Belt essentially reeled her in like a fish and it cracked her forearm in two places, the bones literally sticking out of her skin. She was taken to the hospital and given emergency surgery and so forth and where the story gets interesting, there are lots of factory accidents, but her employer was a Sanitation Company called packard sanitation out of wisconsin and they were in charge of helping her. They did cover her medical expenses, but when it came time for her to apply for workers comp. To account for the months and months of lost wages and some perhaps cushion for future disability, because she was permanently impaired in the nerves in her hand, they refused. Not only did they refuse, they fired her. It turns out thats not an untypical response to workers in this industry and perhaps others when the employer in this case could prove to a workers comp. Judge that the accident was marthas fault. In kansas, there is a faultbased workers comp. System and packard and their insurer convinced the judge she shouldnt have put her arm where it was and that cracking it in two places was her fault, cleaning the machine, and they gave her nothing and fired her. Carol in this third shift, there is often a lot of undocumented workers so that if they are injured, it is like they have no recourse, no voice to speak for them and say here is the compensation for damages or so forth and these individuals are afraid to come forward. Julia they are afraid to whistle blow. We have very little picture of what they do. There is anecdotal evidence here and there, such as martha. There is another case where an employee, and undocumented employee of packard sanitation made a claim for injuries in arkansas. Made a workers comp. Claim. Packard fought them under the sole reasoning that they were not legitimate, authorized worker. And in that case, the state Appeals Court of arkansas overturned packards decision and told packard you have to pay for that persons workers comp. Whether or not they are a document worker. But this is just a tiny anecdotal things here and there. In general, these people kind of melt away into our society. If they are able to work, they go to another place and work. If not, they perhaps had backs head back south over the border. Julia up next, why the latest uprising in iran is different from the last. Carol what is most at stake for the middle east and the United States . Julia this is bloomberg businessweek. Carol welcome back to bloomberg businessweek, im carol massar. Julia and im julia chatterley. Carol in the politics section, the wave of antigovernment protests in iran. Julia and the men and women are largely from rural areas. Carol and their grievances stem from the cost of common items. Movement cameeen from the disputed reelection of the then president. Millions take to the streets and it was concentrated in the capital city of tehran and it was by and large being led by the upper class, who were reform minded. They wanted political reforms. What we are seeing right now, while you are seeing fewer people in the streets, it is more dispersed and it is concentrated in the outskirts of iran, not necessarily in tehran. You are seeing it in the smaller, midsized towns and it is really about the economy and how after the nuclear deal was tied, a lot was promised in terms of economic success and it has not necessarily been delivered and people are feeling it in their pockets and they are taking it to the streets. Julia we have all seen the headlines of spiking agricultural prices. You point out a 50 rise in price of eggs. That is crippling for ordinary iranians. What is going on against you and what isoing on driving this . What would you expect to see some kind of reaction at some point and now we see it. The economy is not doing very well. Unemployment is double digits, 12 . Inflation is down 10 . You are seeing a big spike in basic food prices for things like eggs and agricultural goods. Those concerns have broadened to a much wider demonstration about the very essence of irans political establishment, which is the theocracy and the iranian republic led by the ayatollah that have ultimate control over the country. Carol this is the second term for president or tommy for the president. He has brought inflation down to 10 . One thing slow to come back to the country is foreign investment. Some of many see necessary to helping the economy. That is part of the deal he sold to the iranian people through the 2015 nuclear deal that it was going to remove sanctions from world powers and lead to a Huge Investment from Foreign Companies and multinationals and governments. It hasnt played out like that. And the degree that it has hasnt really impacted your average iranian. On top of that, there is a banking crisis and oil prices stillill ready cheap, pretty cheap, below 60. He has faced concern and strife from his supporters and hardline conservatives, many among them, the clerics. Julia it bought him time to enact the reforms he was talking about as a moderate and he was consistently fighting the hardline in the country. Step forward to today and we have donald trump pushing back on the nuclear deal and creating uncertainty surrounding the situation. To what extent has that also pontificated some of the fears we have seen with ordinary people . Donald trump does pose a threat to rouhani because he is able to do certain things with his rhetoric to kind of make Foreign Investors even more nervous to put their money into iran. He has increased sanctions, he has talked about tearing up the Nuclear Accord and he has raised the idea of putting it to the u. S. Congress about whether this thing should be completely rewritten and if sanctions should be reimposed. That has a direct impact on the confidence that Foreign Investors have of investing in iran and that in turn slows Economic Growth and that is a problem for rouhani. He also does have, i should say, an opportunity to play this to his advantage, rouhani does. It is clear that there is structural change that needs to happen and time is not on the side of the clerics. If he can navigate this delicate political balance and convince the hardline clerics that we need to do this, you need to let me push more reforms through, whether thats cultural, letting women, for example, go to soccer stadiums, or economic reforms, that could help in a big way navigate and survive this, which is the biggest challenge hes had since being in office. Startede have already to see him react like this. Who are the people blaming . On the blaming rouhani . Because they are also calling for the death of the supreme leader, so where is the blame being placed here . Its very hard to find the political lines as they cut across iranian society. Its easy, maybe too easy to put them into two caps. Two camps on the one hand, you have moderates who support rouhani and his election, and on the other hand you have hartline dline conservatives who aligned with the clerics and the line. Whats interesting is that was much more of a rural populist and he was much more liked in those parts of the country than rouhani is. Rouhani has had to do a lot of things that had a bad impact for your average workingclass person in the rural parts of iran. Hes cut subsidies way back that was simply not sustainable, the system he took over. He had to make a lot of reforms that cause a lot of pain in the lives of people. Julia up next, what unicorn frappuccinos and trending hashtags might tell us about Economic Growth in 2018. Carol plus, to raise rates or not to raise rates are good that raise rates. That is the question. The tale of two curves. Julia this is bloomberg businessweek. Julia welcome back to bloomberg businessweek, im julia chatterley. Carol im carol massar. You can listen to us on radio on channel 119 and a. M. In new york and one of 6. 1 in boston and a m naik 60 in the bay area. Julia and in london and asia on the Bloomberg Radio plus app. In the economic section, several social trends in 2017 that may help us predict what will happen in the economy in 2018. It told us something about the American Consumer and that struck me as i was talking to some friends at the party the , things that talk to us our economic at heart so i called the economists and chatted about what happened in 2017 and it struck them similarly. Julia ive never heard of a unicorn frappuccino. Carol thats what they came up with . These economists . I came up with the unicorn frappuccino. Julia its interesting. I had to look it up. Its a lot of pink and purple and blue. People bought it at five dollars or something . Its five dollars a pop, really expensive drink and people were buying them like crazy. It was a treat yourself phenomenon. It was the strong extravagances small extravagances weve seen among young consumers, whether avocado toast or unicorn frappuccinos or five dollar bottles of kombuchas. We have an able to see people splurge on these kind of luxuries. It could be worrying if people dont move on to bigger purchases. Julia do they end up spending more on bigger luxuries . Exactly. Are you spending consistently enough . And not saving up to buy that house. Carol the other story is vacation. Julia they are all splurging. Absolutely. One thing i really like about travel spending is that it moves up recovery and falls when you hit a recession and sometimes its even a leading indicator. What are seeing is travel spending is going gangbusters. They are really leaving. We saw a Record Number of outbound trips in 2016 and a really high travel imports, which means americans spending on travel abroad. Really surged in the first months of 2017, so it looks like the trend has continued and that struck me as something important about consumers. Julia interesting, we are not seeing the wage gains we were expecting. Is that pointing to a growing confidence rather than a financial reward response . Absolutely. We have seen wages trending along 2. 5 , which is keeping up slightly over inflation, and we havent seen the pickup we would expect to be driving consumer confidence. Some people hope it will happen in 2018, poll we saw in 2017 was a lot of nonwage benefits. We saw a collection of anecdotal reports around the country speaking to employers offering perks at work. You know, think about snacks in your pantry here at bloomberg, fitness programs, benefits, that kind of thing. These nonwage compensation to get around wage gains. It will be interesting to see whether that holds in 2018 or whether employers have to spend more. Carol both of the u. S. Treasury yield curve and phillips curve are flattening. Julia that makes it a top job for economists to decide when and how to raise rates. Carol we let economics editor peter coy explain. Peter the yield curve and the phillips curve are different and the only thing that unifies them in my story is that some people looking at these two are saying the fed reserve and other central banks, as well, can afford to not worry so much about inflation and still keep the focus on getting growth going. In my article, i am saying not really sure, maybe we still need to think about the fact that inflation could start accelerating in 2018. Julia okay, so take a step back and explain what we are talking about here because it comes down to interpretation. What is the phillips curve and what is it saying to us at this moment, the relationship to the factors . Relationship between the factors . Peter its named after a new zealand economist and he simply, it is a simple idea, which is that there is a tradeoff between inflation and unemployment. When you have high inflation, its associated with low unemployment and vice versa. Now, Milton Friedman and some others in the 1960s poked holes in the phillips curve by saying that in the long run, there is no free lunch. Central banks cant buy stronger growth on lower unemployment on a permanent basis by tolerating high inflation, but on a shortterm, there remains in theory, what you think of as a slope. If you imagine inflation on one axis, high unemployment. The problem is, it hasnt proven out in the real world. The curve is flat. Julia because u. S. Economies have been creating jobs hand over fist and we havent seen inflation pick up. Now we are confused. Where is inflation and why arent we getting wage growth . Below inflation remains the feds target of 2 . Even as the Unemployment Rate was down to 4. 1 , and so there are people saying the phillips curve is broken and we can ignore it. And all im saying in this article is no, the underlying logic remains sensible. Right . You would think the economy heats up, workers are in great demand, can demand higher wages , wages go up and that transit into higher pay overall. Carol whether globalization or workers not having enough power, technology having a factor, maybe workers are satisfied. Peter there are always reasons, but i just think there comes a point where for all the excuses and explanations, at some point you would think it would bite. Carol are we just inpatient . And maybe it will start . Year maybe in the coming it hasnt happened yet, but that , doesnt mean it never will. I dont want to leave the yield curve out of that. Julia if you look at the shape of the yield curve its the , flattest it has been in a decade and a people are expending stronger inflation, the back end should be higher. Peter thats the other conundrum. The yield curve, just to back it up a little bit here, is the idea that if you look at the maturities of say, treasury bonds, the short ones, have the lowest Interest Rates and the curve goes up like this so that the longterm 10year note, 30 year bond have higher yields because people want to be rewarded for tying up their money longer. Thats the normal shape of the yield curve and every time the yield curve tips so that the 10year note is less than, pick your points, its a strong precursor of a recession. So there are people who are warning now that because the yield curve is flattening, we need to worry about a recession. All im saying is if we were indeed inverted, if the yield curve had tipped, i would be worried. We are not inverted. We have a positively sloping yield curve and there is no guarantee we will ever invert. We might stay like this for a long time. Carol what will it take to undo the damage in zimbabwe . Julia where would you go if you want to know what its like to camp on the moon . Its all in the pursuit 2018 travel guide. Carol this is bloomberg businessweek. Julia im julia chatterley. Carol im carol massar. Julia plus, the running shoe backed by Warren Buffett. All that still ahead on bloomberg businessweek. Julia we are back with megan murphy and megan, in the must read section, the political turmoil in zimbabwe. Does this mean a future of change . You focused on the companys that struggled in the economic challenges. Megan this is a great hes by great piece by Matt Campbell and with all the other turmoil engulfing the world, zimbabwe and robert downfall has drifted off into the sideshows again. Why this stands out is that it traces the economic devastation, not only through the companies that have really struggled as the company tries to ge