Betting. Carol and we have amtraks turnaround plan. You may not like it. Jason here is joel weber on the issue. Lets start by talking about trains. A big travel week. Maybe some people taking a train, flying, but amtrak is in a bit of a pickle. Joel amtrak has been a money loser for years. It has a new ceo who came from the airline industry, and they talked about his plan. A lot of people who are amtrak fans dont really like this plan of his. But it could lead amtrak to be profitable. Carol delays, delays. Never on time, right . Jason it is Richard Anderson, the former ceo of delta, not making a lot of friends out there. Maybe some people making friends, or at least feeling better about the economy, is almost everyone. Peter coy talks about this 180 folks have done looking at the economy. Joel just a couple months ago, it was like rain clouds out. Now it is winter, and suddenly the sky seems to be opening up and everybody is like, it does not seem to be so bad. A crazy time for the economy. At the background of this is the trade war. If there is any sort of resolution, even a phase i deal, you might think markets would pop on that. Carol your cover story, talking about what google is up to. I love the line about how Silicon Valley wore as a badge of honor that washington didnt like them, now they want all in. Joel this shows the conflicted nature of being a tech company, that google has reached mid age. Billions of dollars, trillions of dollars out there, and yet there is this other pool of money that they have been unsuccessful in reaching so far, which are government contracts to do department of defense work. This is true throughout tech. The jedi contract we sought into a betting contract and a dispute with amazon and the government is one version of it. This is why we made it the cover story, because of a number of activists at the company who said, we dont want google to do this kind of work. Carol the internal strikes. Joel the internal tension at a tech company. It has broken out into the open at google, and that is what makes that story so sensational. Jason incredibly timely. There were people fired just this week over their activism. You do wonder, google is such a harbinger for the rest of Silicon Valley if this portends more stress across the economy. Joel the bigger story here is, how is tech and department of defense going to Work Together . For the industry, for Silicon Valley, they look at this. We have old companies, defense companies, that dont do tech as well as our tech companies. Can the department of defense benefit from tech, but at what cost . That is the ethical and moral dilemma right now, and there are big contracts. Carol the world gets more and more complicated in their relationships. Jason that is why we have joel weber to break it down. Thank you so much. And it is not just an internal dilemma at google. Carol for more on that cover story and big tech computing, here is reporter joshua brustein. Josh there are two differences between google and microsoft. The first is an internal difference, which is that google has always had a culture where they debate everything. There is a long history of these Message Boards where everything came up from rigorous debate. Microsoft is a very buttoned up company, top down. The second thing, to allude to your point about how the public looks at them, microsoft has receded as a real consumerfacing company. Google is one of the things we think of as the internet. People use Google Search every day and they think, they are building weapons . Or they are Building Military something. And that makes people uneasy. It doesnt maybe with companies that are not in their daytoday consciousness. Jason amazon and its lobbying and trying to find its way in a much more complicated Nations Capital, and a Nations Capital filled with lawmakers and politicians who are more skeptical about tech than they were 10 years ago. How does that play into the decisionmaking at google and you have antitrust investigations and this sort of skepticism, and dare i say, techlash . Josh you mentioned that amazon is in a very difficult, although different, situation. For google, what happened was it publicly rejected the military. I dont think that was its intention. But it did it. And google has a lot of enemies on the right who saw this as an opportunity to attack the company as being unpatriotic, especially because it does some work in china. I think there was some genuine confusion and outrage within the pentagon. You saw the senior military officials criticizing a commercial company, which is not usual. And google has basically spent the last year backpedaling, trying to reassure the government and the military specifically that we are good actors here, we are willing to work with you. I get the feeling that within the pentagon, that has been working. Jason interesting. Josh but within the political class, not so much. Carol they are also courting big time. Google wants in. Josh the format of backpedaling is to say, we are backpedaling. We will take your contract, which is what they want anyway. Jason what do you make of the current state of the internal debate at google . You talked to a lot of people there, as you say, the Message Boards still pretty lively. There has been some action taken against employees around media leaks and other elements here. It still feels unsettled when it comes to the internal politics of the company. Josh it is definitely unsettled. Google has been in a very contentious relationship with some faction of its workforce. You have seen action taken against internal activists, mostly from doing things like accessing information that companys leadership said was confidential, and you see the Company Really not wanting to back down like it did with maven. And at the same time, you see people within the company who want to shape its future trying to extend beyond military contracting into things like order contract. Even into things like dealing with the oil and gas industry. There is a real tension going on where both sides are trying to claim as much ground as they can in their own internal debate. Carol coming up, we look at a plan to counter social media disinformation and move democrats into the 21st century. Jason end of the Economic Outlook seemed dark, but now the bulls are back. What happened . This is Bloomberg Businessweek. Carol welcome to Bloomberg Businessweek. Im carol massar. Jason im jason kelly. Join us for Bloomberg Businessweek every day on the radio starting at 2 00 p. M. Wall street time. You can also catch up on our daily show by checking out our podcast. Get that at bloomberg. Com, or wherever you get podcasts. Carol the next story is about the media spin on local news. Jason this is josh green from washington. This is a spin on something we have seen really come to the fore and elections the last few years. Tell us what is going on on the left . Josh this is a very in the moment peace, in the sense that democrats are looking forward to 2020. One of the things that digitally inclined democrats are looking at and worrying about is the fact that republicans and trump are absolutely dominating social media. Facebook, google, all these sorts of things, while democrats are busy running for president. I do a profile online for businessweek for the person i think is the most interesting democratic strategist right now on their side, a young woman named tara mcgowan, who is the founder of a nonprofit called acronym, that in order to combat this trumprepublican advantage online has started a company that is launching a series of digital newspapers in swing states that are aimed at reaching and persuading the kinds of voters that democrats think they are going to need to win over in order to prevail in 2020, not just in the president ial election, but in congress and statehouses as well. Carol it is a fascinating story, and we are definitely living in a different world when it comes to news, digital news, and the impact it is having on elections. How does she recreate that local newspaper that has gone away in droves over the last decade . Josh mcgowan did a deep dive look into why democrats lost, and her conclusion was that they had essentially ceded the political battlefield on facebook. There were so many people getting their news and information. The twist that she had was that one reason why this was happening was because of the disappearance of local newspapers. In the past, people had a source of objective mainstream news. But as these papers disappeared, they were turning to facebook, where they were being inundated with conservative propaganda, and that was affecting the votes. She thought the way to balance this out was to basically begin to publish, to fill the news void, the news desert, and build products to reach the voters, give them a source of what mcgowan says is factbased information. She is adamant this is not bogus rumors and lies, but the same sort of things you would ordinarily find in a typical local newspapers. It arms readers with the hope of steering the back to democratic issues, the Democratic Candidates in enough numbers to have a meaningful effect on the outcome of the race. And the fact that she is doing it in the digital realm rather than the oldfashioned way of democrats bombarding you with tv ads in the weeks before an election is an interesting look at the cutting edge of what is happening in politics as we head into 2020. Jason you mentioned objective journalism. This is not objective at the end of the day. This is meant to steer people in a certain direction, to frame issues in a very specific way. Josh this actually touches on two hot button issues. The piece generated a lot of feedback on both sides. On the one hand is about journalism, on the other hand is about partisan politics. Mcgowan is not out here running this news operation, which is called courier newsroom, strictly because she is worried about the death of local news. She has started these newspapers in states like arizona, virginia, soon wisconsin, pennsylvania, north carolina. These are all swing states that will be important, so clearly there is a political intent. The differentiation that mcgowan makes between what she is trying to do and the more extreme conservative sites you see online is essentially she is hiring actual newspaper reporters, actual editors with journalistic experience to publish a simulacrum of what local news used to look like when it was still around. Jason josh green, thank you for that timely story. Carol it is a must read. Markets hitting record highs this week. A story in the economics section looks at what a difference three months makes. Jason heres economics editor peter coy. Peter there are some changes since august. I picked out one day in august where the Dow Jones Industrials and the s p fell in one session, and the 30 year treasury bond hit a record low. It was like recession talk was in the air on our tv, everywhere. What has happened since then, the fed has already changed its stance. Even at that time in august, they had already put through one rate cut. They have had two since then. That is huge. The most powerful central bank in the world, the European Central bank, resumed buying securities to drive down the long end of their yield curve. We see the bank of japan maybe not as aggressive, but keeping their policy rate in negative territory. I would say that Monetary Policy is the single biggest change since then, and you can fill in a lot of things around that. But if it had not been for that, the economy would still be in a world of hurt. Carol go back to last december, we were talking about the fed raising rates several times. Peter powell was still talking about how we have more to come in 2019. December 24, christmas eve, was a massacre. The stock market was really bad. If you look at the history of the stock market, it is like a deep v. Then everybody took off for christmas, came back with bright smiles, and after stocks shot up because it was around then the fed changed its mind a little bit, and that was the beginning of the rally we are in now. Carol you talk about recession. We focused a lot on that two year and 10 year spread in the treasury market, where we did see an inversion of the yield curve. We have seen that in the past. Peter inversion means the 10 year yield falls below the two year yield, which historically is an indicator that a recession is coming, because usually longterm rates are higher. It did not last very long, though. It was gone within two weeks. And we have had a resteepening of the yield curve, which is a positive sign in ordinary circumstances for the economy. It means conditions are normal, basically. Jason stocks, bonds, and a bit of basketball trading. Firms are looking to play ball. In a sport gambling carol plus, visa ceo on why the u. S. Is lagging on things like tap to pay. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. Im jason kelly. Carol and im carol massar. You can also listen to us on the radio on siriux xm, channel 119. And on a. M. 1130 in new york, 106. 1 in boston, 99. 1 f. M. In washington, d. C. Jason a. M. 960 in the bay area. In london on dab digital, and through the Bloomberg Business app. It is not your grandfathers or your fathers wall street. Charles schwab agreed to by td ameritrade. It is a deal that will reshape the brokerage business. Carol it is a big one. And that is not the only move. Td ameritrade and some wall street firms, they are looking into sports gambling as legalization spreads. Lets get more from annie massa. Annie wall street firms are dipping their toes in the water of Sports Betting. It is an interesting time because a federal ban on Sports Betting was lifted last year, and you are starting to see about 13 states legalizing the practice, with more potentially to come. You have a couple different firms looking for ways in. Carol i think about many conversations we had with our sports team about this. They were all looking forward to the ruling and what it meant for online betting firms, but i did not think about the potential for wall street firms, and that is what this is about. Annie exactly. There is some overlap for firms. Nasdaq has licensed some of its Exchange Technology to horserace market in hong kong and australia and sweden. Carol it is a trading platform. Annie exactly. As they were saying, there is no need to reinvent the wheel when it comes to handling large transactions on these markets. They recently also licensed matching technology to a u. K. Based Sports Betting platform, where you can own stakes in players. That is one way that a wall street firm is getting into this business. Jason talk to us about who is the most interested, and from your perspective, the most interesting name. Annie one really compelling case that we go into in the story is susquehanna, which has created a Sports BettingDivision Operating out of dublin. They are betting on the outcome of u. S. Sports. The idea is to make twosided markets on online exchanges that exist in the u. K. , for example. It is interesting because there are some parallels, just as they operate as a market maker in markets, they can do a similar thing in a Sports Betting markets. Carol i think about the potential. The Sports Betting market is a huge one. This is potentially a big revenue stream potentially. Annie it is not as big as other financial markets, which i think will limit its growth. Projections are all over the place for how big this could be in the u. S. But we found projections it could be about 17 billion. If you think for huge marketmaking or hedge fund firms, that is not gigantic. Carol who is likely to get involved . You mentioned susquehanna. Who else might get involved . Annie it seems like a niche opportunity for expert Market Makers where you can leverage some of your technology in these kinds of places. Jason when you think about this more broadly, this is what you look after every day. Your primary burden is looking after blackrock and money managers. Folks are looking for different ways to make money right now. We had a conversation on our radio show with a long time wall street guy, former broker, who was saying, these guys are going to make money somewhere, especially in the age of zero fees. Annie i think that is why you are seeing different firms looking for ways in. While i could not see blackrock getting into Sports Betting, on the brokerage side, there are interesting opportunities. Both td american trade and Interactive Brokers have projects in the works. Carol visa ceo al kelly is weighing in on why the u. S. Lagging on tap to pay is a threat to the industry. Al the u. S. Is lagging because you have to go back about six or seven years where the u. S. Was much slower to adapt the chip in the card. It took so long to adapt chip at that point in time, that people around the rest of the world were moving past dipping the card to actually tapping. The reality is that the other countries have moved hugely ahead of us. You have countries like poland and hungary that are 90 tap to pay. In the u. S. , we have a very interesting situation. The vast majority of the businesses are pumped to be able to facilitate tap to pay. It is replacing hundreds of millions of cards. The banks want to do it on their normal cycle. By the end of this year, we will have over 100 million cards in the United States that will be tap to pay enabled, and by the end of next year, it will be over 300 million. Right now, tap to pay is about 2 penetration. Based on our experience around the world, it will really take off. Carol will we eventually become china . Basically, you have your phone in china, and that is all they need. They dont want cash or any other mod