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tv   Bloomberg Business Week  Bloomberg  December 22, 2018 3:00am-4:00am EST

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carol: welcome to "bloomberg businessweek." this week we focus on businesses and companies working on approving what they do. and it is the end of an era at goldman sachs. we start in the economic section week.
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many experts are predicting a global growth slowed down in the coming year. simon kennedyeter from making a pulled case in 2019.he joined london. in it is a pretty depressing environment. imon: this is not the core of the market. defense,ase for the the global economy. be testingseems to that case as we enter the new year. is than itafting of more is slumping.
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it is looking fairly robust into the new year. imfl: you talked about the forecasting decent global growth. we haven't seen a lot of reduction in terms of growth estimates. simon: the markets lately have been worried about what the federal reserve is going to do. they might even positive rate hikes in 2019. there is a level of support from the central banks. there were donald trump's cuts in the u.s., but other governments are releasing fiscal stimuli. there are lots of areas of
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support for the world economy going forward. the world can get a health year expansion next year. emerging markets at had a bit of a rough year this year. we seem like we are hearing more people talk about the potential for a recession. we are not hearing people talk about a global recession for 2019. mon: there is this sluggish expansion. there is some fatigue out there. the most optimistic is 30% chance of a recession for the united states.
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i think there is a pace to be made. day, thed of the unemployment rate is really low globally. people are employed and people feel there is wages. the unemployment stays solid. pretty robust indicator for the overall strength of the economy. carol: simon, thank you. in 2019,ome insight hindsight in 2018. we talk about what the investing landscape was like this year
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with a visit to the imaginary hedge fund, hindsight capital. i've beendge fund visiting every year for the last 10 years. this is something you would put on if you had perfect knowledge of how the year was going to work out. infinite everye year. les are that it can only in relatively broad asset classes, no individual stocks or bonds. and it has to show that you did not need that hindsight to make the trade at the beginning. do get disappointed.
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this hedge fund is imaginary. carol: we are having fun. googling if you are listening or watching. john: this fund has beaten all others every year. carol: talk about trades you should have known about. peoplehe big theme should have latched onto was america first. this is also the fed becoming tighten. to
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it would hurt everyone else. this would bethat the year trump would go hard on trade and that he would move on from his failure to repeal obamacare. buy managed-care funds, something like 7% or 8%. then, if you want to big something that will get it in the next from the trade war, japanese marine trade has been down. regione something in the of 60%.
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>> i love this. you mentioned health care. you mentioned the world mining sector. there were two bubbles last year. one was in lack of volatility. never been a better year than last year. one bubbles one of the most blatant in the history of mankind. bitcoin. andborrowed some bitcoin sold it and put proceeds into the vix. carol: the trade --
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jason: the trade of the year. this was below an 800% level for the year. as a record this, it's gone up to about 830%. , dependingt to 1000% on how silly the week between christmas and new year's is. long vix was going to work this year. did it ever. carol: we have a special issue focused on good business. joel is your to talk more about
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it. -- here to talk more about it. wanted to use this opportunity to talk about places that are doing good. we have this great story in west virginia about the lavender. it is being planted on mountains that are basically dotted in terms of coal. -- gutted in terms of coal. storyis another great about the diamond industry. and also, the dallas mavericks in sports. a woman has led the charge in transforming that.
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we know there is an opportunity withild new empires veganism. last -- carol: women led businesses. joel: there is not enough. there is a co-working space to help more female vendors. carol: thanks. rtf's aims to better the world holding up their bargain? and amazon. this is "bloomberg businessweek." ♪
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carol: welcome back to
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"bloomberg businessweek." join jason and me for bloomberg businessweek every day on the radio. you can also catch up on our on itunes and on special focuses on good business. that -- about a business that claims to be doing good to promote a better world. but sometimes as such businesses are cracked up to be. crackedot what they are up to be. fund had put exxon mobil as its largest holding.
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it has a few issues on the environment and governance. phillip morris is often in their. for investors, is this what they expect to be buying? wouldn't -- carol: you wouldn't normally think about these companies when it comes to esd investing. -- esg investing. rachel: this is good for people to be thinking about it and about what actually constitutes esg.
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when you talk to the index providers, some are more dialed up then dialed down. >> that is how so many people are investing in the market right now. investors trust their providers to pick the right stocks. they think this is an esd friendly investment. where thehis happen, blackrock's end up with these baskets of stocks that don't ?ass the smell test fees have gotten so low. out with an index tracker that is incredible.
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there may be some slicing and dicing of the market in a slightly different way. -ne really see the growth and - you can really see the growth esg funds with that context. maybe some of these will bring in fees. assets are kind of small, looked higher fees make but higher fees make them lucrative. rachel: you could ge generating generating 3000 for all
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that you have invested in that fund. jason: one of the trickiest things is, how do you measure and track it? easier to get around and measure. --hel: how do you tall up tally up social benefits? many easier to see how women are on the board when it comes to governance. it is actually the first thing you should start with esg. it's one of the more measurable things and the larger things that investors actually care about.
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side, theyitutional are still thinking about their bottom line at the end of the day. man toldek, ken milla jason his company is committed to investing in good. on thingse focused like how we help the world mitigate and adapt to climate change? the industrialss revolution, which can make us smarter and more mobile and make us safer. it is going to require hundreds of millions of people to re-train throughout their lives. create a way to reduce the amount of waste we generate and the food we eat? there is a huge amount of capital new did to address these
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challenges. -- needed to address these challenges. we want to find companies addressing one of the united nations sustainable development goals. developed in a way designed to mobilize government, the social sector, the private sector, and investors. to learn that people have been investing around impacts for years. up, amazon success brings unintended consequences. this is "bloomberg businessweek." ♪
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carol: welcome back to "bloomberg businessweek." you can also listen to our daily program on sirius xm and in new dc, inoston, washington the bay area and in london. amazon's rapid growth has changed the face of retail and created a trillion dollar empire. building a one-of-a-kind company comes with one-of-a-kind challenges. look atiggs takes a amazon distribution. taylor: let's hop in the bloomberg terminal. it is so easy to pull up the share price of amazon. this is a story about the distribution centers. we have the function here just like we have the function of everything at bloomberg. as we know at amazon, a massive
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expansion. shipping is rising. it is one of the fastest growing costs of amazon. they are trying to hire some couriers. there is a driver shortage. carol: thank you. where the company's warehouse centers are located. storyrings us to another in our technology section on amazon this week. it focuses on getting packages from point a to b. os was on 60 minutes and envisioned his future and gave a prediction of maybe five drones would be delivering packages from the sky.
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amazon issued this call to arms to entrepreneurs, encouraging create small businesses and deliver amazon packages. fedex is copping the model of creating this nationwide network of counting oncouriers amazon packages to make money for their businesses. five years after this big of making delivery drivers obsolete, we have this company needing thousands and thousands of more drivers, like pizza hut and the post office. story really reminds us about the business model that exists. fedex and ups are taking different approaches. how do those companies work and
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what may amazon do going forward? : amazon and fedex have a more asset-lite model. amazon does not want to buy the vans. it is relying on this network of entrepreneurs so what has negotiating power over them. then it lets them do the dirty work. the vehicles. the alternative would be a ups, which employs all of its drivers. takes those costs on itself. the big differentiation we are seeing is how much drivers earn. ups has drivers that earn $40 an hour. the median postal carrier makes about 50 housing dollars per year.
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$58,000 dollars per year. drivers for amazon make about $15-$20 an hour. carol: in order for amazon to do do, they have to to have people deliver packages/ pencer: their business has grown faster than technology has advanced. they need to rely on the old guard model because it is the only thing they have right now. demand, theywith need a lot of delivery people. enticing people to invest money makes this like it is not a short-term situation. up, lloyding blankfein, taking heat due to
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scandal. the dallas mavericks, cleaning up the front office culture. this is "bloomberg businessweek." ♪
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carol: welcome back. master. still -- i'm carol massar. still ahead, a pair of ceo's. one that cleaning up the dallas mavericks. we kick it off in the finance section. 2018 is wrapping up on a negative note from goldman sachs. the bank is facing investigation over its role in the scandal
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involving charges of embezzlement and money laundering in a state investment fund. down atankfein stepping the end of september. he will retire at the end of the year and the controversy is casting a cloud over his legacy. >> i would not have thought we would be sitting at this table talking about this huge scandal that's dented his reputation on wall street. this is heavy stuff. it's a story about malaysia and investment banking and a legend bribery but also a story about the things we care about the most, which is money and power. it comes down to how wall street makes money and how to get into it. governments often raise investment funds. this is not unusual. tell us about this fund. >> we can go a step further back
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and talk about how goldman sachs, lloyd blankfein says we need to be goldman sachs -- beat goldman sachs in more places. and the former prime minister of malaysia was rising to power, tim weiser was this young, handsome german banker married to a former model, apparently quite likable. he apparently had a phd from a fly-by-night school, we think. he was rising in asia, specifically in malaysia. najib wase time rising as prime minister. he gave them the thumbs up to become a more powerful wall street entity. happened, he threw these connections.
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fund to giveate them a ton of money to raise bonds. carol: to give goldman. >> exactly. goldman got $600 million, which is a lot more than when you make from a deal. to help the fund raise that money. that's where the trouble starts. carol: why does a get more fees? >> goldman would say it's more than just fees. it's also commissions. that's the rub. guy.eistner isn't a random he told the federal government he fled guilty to bribery and has basically said that this was a bribery scheme. , becauseecomes clear
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it went away for a while. we weren't paying that much attention. you wrote about tim leistner a long time ago. it's only been the past few months and during this management transition at goldman sachs, where lloyd blankfein is standing aside, this scandal comes back in force and we see it reaching the highest levels. talk about blankfein's role. >> that's an important point. it does feel like something different. timing is one of the reasons why. lloyd blankfein said to his colleagues when things are good, you don't want to leave. when things are bad you can't leave. but it feels like the right time. that's what his memo said. now it's fair to say things are going wrong. if your lloyd blankfein, this is
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what you do not want. the partners are questioning. they seem to talk about it not as this sunny soap opera. they talk about it like in new york. how high up did the involvement go? why were reservations ignored? is this symptomatic of the way goldman made record profits? those questions are coming from inside the house and that's got to be nerve-racking. carol: and outside, you have regulators and prosecutors. what happened? >> is goldman sachs can end up paying $550 million, which was a record find, and that's all that happens, lloyd blankfein will be so happy. the successor is a man named david solomon. he comes from investment
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banking. there's nervousness that this not only will color lloyd blankfein's entire legacy. and when you look at the goldman stock price, it doesn't look fantastic. carol: what does goldman say about this? goldman says it's a rogue employee. they are going to contest the charges. when we asked for a comment, he said blankfein just got a standing of asian from other corporate executives from a cloud that includes mike bloomberg that owns bloomberg lp, and says that's more meaningful than backbiting and second-guessing from former employees. lloyd blankfein heads out as his company faces controversy, this week's cover story highlights the ceo taking charge of an mba organization -- nba organization dealing with fallout of its own.
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they have a me too mess to mop up. she comes from at&t with a mandate to change a toxic culture. we talked to jim ailey, who put together this special section. jim: we do this every year for five or six years. monthsa is, after 11.5 of finding badness -- [laughter] carol: it's kind of everywhere. jim: the world is full of it. people try to do well by doing good. the idea is to try to have as much sweet as we can of these basic as the centers. carol: the first one is a great one. this is their cover story. tell us about the dallas mavericks and this story. jim: as you probably know, the mavericks had a very big scandal that broke last february when it broke sports illustrated. it showed how toxic the culture
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was. of thelater, the owner , the owner and participant in creating the culture of the place that was when we hiredized , shemer at&t executive just retired, highly respected and in a situation, you wonder if they are serious about performing. pay $10 decided to million in restitution on their own to domestic violence programs, prevention programs. jason: as you point out, usually the cap is $2.5 million. jim: that's a fine. they voluntarily decide to do this. a reallythat they got
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accomplish executive to take over was something. the ceo's name is cynthia marshall. she took over after that story came out and when the place was in full crisis mode, and has had a huge impact. carol: what was the impact? jim: the main thing is people feel comfortable, according to our interviews. people aren't embarrassed to say they work better. briefly, they were. there was a woman we quoted who said, after the stories came out, she said she worked for the dallas mavericks. year old woman and you work -- you're a woman and you work for the mavs? ugh. there are 10,000 people who would take this job, so don't complain. her response to that was, there are 10,000 people that want to take this job. if anything, it's like a thousand. and by the way, who cares?
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carol: coming up, an inspiring start up story, door --. now it's -- door dash. now it's thriving. this is bloomberg businessweek. ♪
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carol: welcome back. i'm carol massar. join jason kelly and meet for bloomberg businessweek every day on the radio. you can also catch us on our show by listening to our podcast on itunes, soundcloud, and you can also find us on this and our mobile app. a couple stories featuring names looking to do things differently. dreamworks founder jeffrey katzenberg and tesla's elon musk. we caught up with our tech editor. >> over a handful of years that
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elon has been talking about this , growth in urban areas in the u.s. has fallen in half while growth to suburban areas quadrupled. carol: is that while? we keep -- wild? we keep hearing people want to move in cities and is not the case. >> even millennials that are having kids are looking to move out into more of a yard and fence situation, not just because they are priced out, but they want to live further away from everybody. jason: and so what did we take away from the little tour that elon gave? we felt like there were mixed reviews, what people saw in los angeles. jeff: there were really setbacks. this was a week ago. they had to hold it off because the stuff was already. what was supposed to be a much more ambitious looking, how the hyperloop could work, now became more of a tour of the equipment
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they've got available so far as they build the tunnel. it's something that's in the ground, something they didn't have a year ago. jason: the tunnel is there and the technology exists. we don't know what it's going to do. jeffrey katzenberg, well-known figure in entertainment. a new company, wonder there are no valleys -- vowels. it's a hybrid type shop. jeff: with the assistance from meg whitman and other folks from the tech industry, this is caps on birds big shot -- katzenberg's big shot to make it in the valley, his sphere of influence. his startup accelerator of sorts has raised about $100 million now to sort of plunge into various, mostly entertainment related tech-ish initiatives -- tech initiatives. one of the biggest is his own
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startup, focused on short form video that's bonanza on the internet now. all of that is expensive to produce, the content the levels he wants. he tells people it has a shot at competing with longer form like netflix. carol: another company is door dash, a startup that turned its fortunes around. the ceo was a guest on bloomberg and he told emily chang about his company's soaring revenue. >> business is on fire. we have tripled sales in a year. $1,500,000,000 in revenue. in the restaurant delivery business, we are getting shares faster than everyone, growing faster than everyone, and on track to be the largest in the
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space. emily: how do you translate that into profit, including overhead? tony: we are profitable. we had a playbook of turning businesses from investment mode into growth mode into cash flow positive. and it's only after that playbook was developed that we decided to raise financing in march and later in august. emily: we had the head of uber eats on earlier, who also said business is growing faster than they expected. they are doubling down, exploring groceries delivery. they have deep pockets now, too. how do you stand up to the competition? tony: we are a have. -- already have. emily: what are you doing to differentiate yourself? tony: we are on track to be the largest delivery space, and that happened before 2018.
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by building more services like door dash drive, which allows merchants to deliver their own orders, we signed more merchants than anyone else. we have 90%, more than all of our peers combined. we are also delivering other types of meals. we started with food, which is the hardest in terms of parish ability. but our partnership with walmart started in april and reached over 500 stores, and we deliver the vast majority of walmart's groceries. carol: straightahead, breitling is under new ownership and the ceo is making changes. and luxury consciousness. pursuing good is the theme of the pursuit section. this is bloomberg businessweek. ♪
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carol: welcome back. i'm carol massar. you can also listen to our program on the radio and on a.m. 11th rio in new york, washington, d.c., a.m. 960 in the bay area, in london on dab digital, and of course on the bloomberg business app. in the business section, one privately -- private equity cbc bought bright link, it raise eyebrows. the company is profitable, but sales were stagnant. is reshaping its brand and retail strategy. managing editor and a camel tells us what makes breitling tick. >> george, he has french answer
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street -- ancestry, he was at richemont and was there for 17 years and rose to the ranks. everyone thought the top job of richemont is within his grasp. then a year after cbc bought the brand, they started talking and started asking him, what do you make of this brand? where would you take it? what does it need? what does it lack? and then one thing led to another. he said, why don't i do it myself? one big reason for him to make that transition was that he owns equity, about 5% of the company. for him, that was a great incentive because he can the entrepreneurial about it. you can watch the company grow, ideally, under his stewardship. and that to him, after 17 years
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at richemont, seemed like a new step to take. is in his 50's now. carol: when i started reading this story, all i do think of was the old breitling adds. it was like women in tight clothes, scantily clad, guys really macho, driving planes. you're laughing but that's what it was. they've got to change their image. >> that's one of the first things that can notice. it's a well-known brand, but it's well known at this point for the wrong reasons. it's known for chunky, fairly busy watches, the kind of watches favored by the top gun guy, someone who socialized in the 1980's and 1990's, someone not a loop -- and immune to the lures of objectified women. and that is not the time we live
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in anymore. people look at these adverts and the kind of image and think that's not really the kind of product i want to get behind. he noticed that and realized this is something we need to do. you can see it in the kind of people he recruited for his advertising campaigns, the sexist ads are out. they are gone. he's brought on a fresh crop of people. brad pitt is one of them. he's a brand ambassador. charlize theron is another one. adam driver for the younger generation of people. that's what they call the sinema squad of their brand ambassadors. they try to be sort of younger, outdoorsy, digital, not sort of your dad's watch kind of company anymore. carol: earlier we looked at this week's special issue on good business. in the pursuits section, we returned to social responsibility and ethical business.
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jason kelly and i spoke with chris rouser about luxury brands and experiences that make a positive impact. >> increasing priority for travelers, especially millennial travelers, is to do good while you are doing it or not have a huge footprint. what we did is look through a range of products and experiences that are run by companies were consciousness is a key part of the business. we started with travel. we found six resorts. we've known about them for a while. it's not just a resort where they make charitable donations. its people making an investment in the communities around them, and making serious efforts to be carbon neutral or have a low footprint, environmentally. carol: take us to, i don't know, indonesia. chris: the resort is one of the reasons why we needed to do this piece goods is been around for a decade now. it's just really a standardbearer in this sort of
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field of really environmentally thoughtful resorts. it's brought the area of indonesia to the luxury map. it's one of those places where i try to find it on google maps, i had to zoom in and zoom out. carol: a four hour flight from jakarta, and then a four hour long boat ride, as well. it's a long trip. jason: your committed. chris: your committed and you're in the middle of nowhere, which you are. carol: which i love. chris: surrounded by a marine reserve. you can see gigantic seahorses. wrapcan see manta rays r their fins around a volkswagen beetle. part of the reason they do that is because they protected the ecosystem. it's a cool place to go. carol: i've gone on trips to costa rica, and you plant a tree when you're done, but this is
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taking it to a higher level, the kind of trips in terms of their impact on the environment. chris: around the school, biomass increased 60%. they are making a big difference. it's mostly ecological stuff, but some places its workplace training. these resorts are turning people in the hospitality industry. it helps the resort because it's staff for them, but it gives people lasting jobs they can teach and take elsewhere. jason: a little closer to home in new york, churchill wild in canada was one that jumps out at me, in part because of the 100% success rate at seeing a polar bear. that's amazing. chris: do we need to fact check this? carol: bob jones going to call? can you promise me you'll see one tomorrow? onis: churchill wild is
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hudson bay and it's a small resort. it's got amazing trips where you can trek out, you seek polar and they do donations to local charities. they pick three initiatives every year, anything from local elfl scouts to making its fossil fuels free, so they -- what they do every year is a big part of how they operate. carol: bloomberg businessweek is available on newsstands,, and our mobile app. and you can find more stories over the weekend. check that out and check out the daily business week podcast where jason kelly and myself is available on itunes, soundcloud, and we spoke with crystal rose. she's using blockchain for messaging. next week on bloomberg businessweek tv and radio, we revisit the bloomberg annual summit, conversations about what
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to expect in 2019 business, finance, politics, and luxury. more bloomberg television starts right now. ♪
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emily: i'm emily chang and this is "the best of bloomberg technology." we bring you our top interviews. facebook hit with a bombshell, the new york times reports the network cut deals with 150 companies to share more data. is filed big suit against facebook over cambridge analytica. apple versus qualcomm, both sides of the showdown way in after


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