WEBVTT - Markets, Elon Musk, And Bank Earnings (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.400 at Bloomberg dot com slash podcast. Let's check in with 0:00:22.440 --> 0:00:25.840 Adam Gold, founder and Chief investment Officer Acadam l L 0:00:25.960 --> 0:00:29.240 c Adam Again, kind of a boring day today, but 0:00:29.640 --> 0:00:32.440 when you talk to your clients, what's your number one 0:00:32.520 --> 0:00:36.320 message these days? Good morning, guys, Thanks for having me 0:00:36.360 --> 0:00:39.199 back on. We think boring days are fun. They may 0:00:39.240 --> 0:00:43.280 not be fun for for the news cycles, but generally speaking, 0:00:43.720 --> 0:00:46.880 things don't change that much day today in the long term, 0:00:46.880 --> 0:00:49.320 in the big scheme of things, any given days something 0:00:49.400 --> 0:00:52.440 might change that. But generally, since we last spoke a 0:00:52.479 --> 0:00:55.640 few months ago, things have gotten, you know, extremely worse 0:00:55.680 --> 0:01:00.280 across so many investor sentiments, inflation numbers, interest rates, rysing 0:01:00.800 --> 0:01:03.319 and all of that is already priced in. We think 0:01:03.360 --> 0:01:05.440 a lot of that is what's caused the markets to 0:01:05.440 --> 0:01:07.880 sell off here the last few months. So people who 0:01:07.959 --> 0:01:10.400 talk and we speak with clients every day and they're 0:01:10.480 --> 0:01:13.120 very concerned about where they are, and we say that 0:01:13.200 --> 0:01:17.040 that's the opportunity to be deploying capital. To be concerned now. 0:01:17.160 --> 0:01:19.880 To sell now feels like you're a few months behind 0:01:19.880 --> 0:01:22.760 the curve um And somebody argue that's where the fete is. 0:01:22.760 --> 0:01:24.760 But the fet is you know, trying to react to 0:01:24.760 --> 0:01:26.959 to what they see every day. And so we think 0:01:27.000 --> 0:01:29.680 the opportunity is for people who have a long term horizon, 0:01:29.720 --> 0:01:32.080 which is multi years, which is the only kind of 0:01:32.120 --> 0:01:35.320 investors investors and investments we try to focus on. Then 0:01:35.360 --> 0:01:37.520 we think this is a time when other people are selling, 0:01:37.560 --> 0:01:39.760 you should be buying. And it's not easy, it's not 0:01:39.840 --> 0:01:42.440 fun day to day, and things may continue to you know, 0:01:42.480 --> 0:01:44.720 to get worse on a daily sort of return basis, 0:01:45.000 --> 0:01:47.720 But that's where the opportunity is because long term, there's 0:01:47.760 --> 0:01:54.160 still extremely large, glowing, growing trends around technology, around population growth. 0:01:54.160 --> 0:01:56.320 There there's just a lot of underlying tailings here in 0:01:56.360 --> 0:01:59.000 the long term. So I mean, we're we I know 0:01:59.080 --> 0:02:01.880 that we're not trading for undred, but we are at 0:02:01.920 --> 0:02:04.920 forty four D on the S and P. It's it's 0:02:04.960 --> 0:02:08.520 not so far off from the high are you saying, 0:02:08.560 --> 0:02:11.440 are you saying it's just um, you know, gonna look 0:02:11.480 --> 0:02:13.799 like we'll look like in the rear view mirror five 0:02:13.840 --> 0:02:16.000 ten years from now, such an opportunity that you should 0:02:16.000 --> 0:02:17.960 buy now, regardless of what we do in the next 0:02:18.000 --> 0:02:20.840 few weeks or months. That's our viewpoint. When I was 0:02:20.880 --> 0:02:24.200 born in three the Dow was eleven hundred. When I 0:02:24.200 --> 0:02:26.400 started my career in two thousand one, the Dow is 0:02:26.480 --> 0:02:30.560 ten thousand. We're at thirty four thousand now. And if 0:02:30.560 --> 0:02:32.800 you look forward a couple of years by a couple 0:02:32.840 --> 0:02:35.400 I mean, you know, a couple of decades, rather you know, 0:02:35.400 --> 0:02:37.160 we're going to have a Dow at a hundred thousand, 0:02:37.639 --> 0:02:40.000 and that keger. That annual growth rate is sort of 0:02:40.080 --> 0:02:42.600 in the low mid single digits. It's not in the 0:02:42.639 --> 0:02:45.799 teams anymore, because you know, when you have a large numbers, 0:02:45.840 --> 0:02:47.840 there's it's hard to continue to grow at that pace. 0:02:48.280 --> 0:02:50.960 But if inflation is in the mid single digits and 0:02:51.280 --> 0:02:54.239 fixed interest rates are in the low single digits before tax, 0:02:54.840 --> 0:02:57.040 we still believe equities are the only place to be 0:02:57.080 --> 0:02:59.840 invested over long term to have any chance of beating inflation. 0:03:00.840 --> 0:03:02.520 All right, So what are some of the sectors that 0:03:02.880 --> 0:03:04.840 you think we should be looking at here as we 0:03:04.919 --> 0:03:07.040 go into or as we you know, we certainly are 0:03:07.080 --> 0:03:11.079 in the beginning of a rising interest rate environment. Yep. 0:03:11.200 --> 0:03:14.040 So I think historically financials, you know, there's sectors. Now 0:03:14.120 --> 0:03:16.560 what's now we're refocused. This is what I think generally. 0:03:16.560 --> 0:03:19.920 The opportunity that people may think is well with rising rates, 0:03:19.960 --> 0:03:22.360 banks can get paid more. But then of course we 0:03:22.400 --> 0:03:25.720 have inflation concerns, and so there's obviously recession risk, and 0:03:25.760 --> 0:03:28.400 so banks do not do very well during recessions because 0:03:28.680 --> 0:03:30.920 there's a lot of loans and there's bad debt, revisions 0:03:30.919 --> 0:03:33.079 and things that cost their earnings to go away to 0:03:33.160 --> 0:03:36.880 take away some of that. You know, interest rates increased opportunities. 0:03:36.880 --> 0:03:40.160 So we've only focused on technology for over twenty years. 0:03:40.160 --> 0:03:44.080 The reason is that innovation and new product cycles, these 0:03:44.080 --> 0:03:46.880 are not priced into stocks today. The only thing that 0:03:46.880 --> 0:03:49.800 analysts can do is project forward for what they see 0:03:49.840 --> 0:03:52.000 in front of them. I don't give the example of Apple. 0:03:52.600 --> 0:03:55.560 When I started investing the company with the iPod, people 0:03:55.560 --> 0:03:57.120 thought the iPod was going to go the way of 0:03:57.160 --> 0:03:59.640 the Mac, Windows and Microsoft, We're going to take them out. 0:04:00.120 --> 0:04:02.200 And then a few years later that hadn't happened. So 0:04:02.240 --> 0:04:04.920 the company grew very nicely, but then they introduced the 0:04:04.960 --> 0:04:07.880 iPhone and that none that there was no revenue or 0:04:07.880 --> 0:04:10.960 profits based into those estimates. And we think about are 0:04:11.000 --> 0:04:14.400 their innovative companies today that are doing exciting things And 0:04:14.440 --> 0:04:16.560 that's where the technology world is so great, because there 0:04:16.560 --> 0:04:19.800 are companies working on internal innovation and new products where 0:04:19.800 --> 0:04:22.200 analysts cannot price them in, and so we're starting to 0:04:22.279 --> 0:04:24.240 see downgrades. You know, it's funny, is you know, back 0:04:24.240 --> 0:04:27.000 in November always saw our upgrades of companies, example like 0:04:27.080 --> 0:04:31.680 Navidia three forty share, we were seeing upgrades, analysts were 0:04:31.720 --> 0:04:34.440 chasing each other with targets that were higher, and now 0:04:34.440 --> 0:04:38.160 at to twenty the stocks down thirty cent, same company, 0:04:38.400 --> 0:04:42.000 same business, same innovation, we're seeing downgrades. There were no 0:04:42.080 --> 0:04:44.320 downngrades at three forty and so it just seems like 0:04:44.360 --> 0:04:46.240 the Wall Street and some of the analysts that are 0:04:46.240 --> 0:04:49.440 focused on generating commissions around trading, they do the exact 0:04:49.480 --> 0:04:51.640 opposite of what you should do for a long term investing. 0:04:52.360 --> 0:04:56.000 You guys get commissions, Paul, You we should definitely get 0:04:56.040 --> 0:04:58.760 I mean, you get ranked by your salesforce and stuff, 0:04:58.760 --> 0:05:00.760 and you know, making some big calls and things like that. 0:05:00.839 --> 0:05:04.960 So kindly. Yeah, but I think the exact opposite of 0:05:05.000 --> 0:05:07.760 how to compound wealth. You want to buy low and 0:05:07.839 --> 0:05:10.760 sell high. To be downgrading stocks that are down thirty 0:05:11.760 --> 0:05:14.240 out of cash flows, that of, you know, exciting opportunities 0:05:14.240 --> 0:05:17.320 in the future. That doesn't seem like the great long 0:05:17.400 --> 0:05:20.280 term decisions. I hear you, all right, good stuff. I mean, 0:05:20.560 --> 0:05:21.960 I don't know. I mean, I guess I kind of 0:05:22.080 --> 0:05:23.680 did that back in the day on the cell side, 0:05:23.839 --> 0:05:28.640 Adam Gold, founder and chief investment officer Cantampent. That's the 0:05:28.800 --> 0:05:31.320 sin he's telling us. That's the wrong thing, that's not 0:05:32.000 --> 0:05:35.160 serving your customers. I was a big investment banker as 0:05:35.200 --> 0:05:37.640 an analyst. We did tons of deals in my space. 0:05:37.960 --> 0:05:40.040 I'll mention if I'm still on, I'll mention one more 0:05:40.040 --> 0:05:43.520 example of a great investor. The Oracle from Omaha has 0:05:43.560 --> 0:05:46.880 deployed over thirty in the last month. Yea, I know 0:05:46.960 --> 0:05:49.160 he's been putting money to work. We appreciate that. Adam Gold, 0:05:49.200 --> 0:05:55.840 thank you so much. Founder in chief investment Officer Cadam LLC. Matt, 0:05:55.920 --> 0:06:02.080 you have any idea what Elon Musk is doing with Twitter? I? Uh, well, 0:06:02.120 --> 0:06:04.479 you know, what we watched. We all watched that Ted 0:06:04.520 --> 0:06:08.080 talk thing last week, and I thought it was really fascinating. Um, 0:06:08.200 --> 0:06:11.560 he says this is something that he wants to do 0:06:11.640 --> 0:06:15.240 for democracy, for society. It's a free speech issue and 0:06:15.320 --> 0:06:19.280 not an economic move. Okay, A lot of people aren't 0:06:19.279 --> 0:06:23.000 going to take that at face value, and especially you know, 0:06:23.279 --> 0:06:25.000 on the left, there's a lot of concern that he 0:06:25.080 --> 0:06:27.400 wants to I don't know why there is this concern, 0:06:27.480 --> 0:06:30.920 but everyone's saying that he's kind of coming to the 0:06:30.960 --> 0:06:35.640 rescue of pro Trump people or I have no idea 0:06:35.680 --> 0:06:40.400 about that. He seemed genuine and uh, I think it's 0:06:40.400 --> 0:06:43.599 fascinating to watch. It's fascinating to watch, and fortunately for us. 0:06:43.720 --> 0:06:47.080 Matt Winkler, the founder of Bloomberg News, editor in chief 0:06:47.120 --> 0:06:50.720 emeritus of Bloomberg News, he's paying attention to this, uh 0:06:50.800 --> 0:06:54.640 so he can share his thoughts. Matt. You know, we 0:06:54.640 --> 0:06:58.280 we look at Elon Muskin. I as a traditional investor 0:06:59.320 --> 0:07:02.039 am uncom table with this guy, particularly if I were 0:07:02.080 --> 0:07:04.200 a shareholder of one of his companies, even though the 0:07:04.279 --> 0:07:06.720 stock has done so great and he's made so many 0:07:06.720 --> 0:07:08.880 investors so much money. How do you think about Elon 0:07:08.960 --> 0:07:11.680 musk These days. You have to think about him in 0:07:11.680 --> 0:07:16.360 the context of maximizing shareholder value. And if you go 0:07:16.440 --> 0:07:19.760 back to the initial public offering of Tesla in two 0:07:19.760 --> 0:07:24.600 thousand ten, Uh, to understand what has happened to Tesla, 0:07:25.200 --> 0:07:28.720 you have to put an exponent next to Tesla, so 0:07:28.760 --> 0:07:32.120 it's Tesla to the twelfth power. So this is a 0:07:32.120 --> 0:07:36.680 company that's gone from a billion dollars to UH a 0:07:36.720 --> 0:07:42.240 trillion today. And um, it wasn't luck. It was if 0:07:42.280 --> 0:07:45.440 you think about it, two thousand and ten, virtually nobody 0:07:45.480 --> 0:07:51.440 took electric vehicles seriously, today everybody does. And disclosure mat 0:07:51.760 --> 0:07:54.880 you are a Tesla driver owner, right I am, and 0:07:54.920 --> 0:07:59.240 a happy one. Yeah, And I can attribute that that 0:07:59.320 --> 0:08:04.680 to uh combination of meeting Musk for an interview at 0:08:04.720 --> 0:08:09.200 Bloomberg and SpaceX headquarters back in two thousand fourteen, and 0:08:09.240 --> 0:08:13.520 after we got done, h he invited us to try 0:08:13.520 --> 0:08:17.400 a Tesla or two, and uh, you know that's where 0:08:17.400 --> 0:08:20.960 it started. But you know, really all kidding aside. What 0:08:21.240 --> 0:08:25.040 is relevant about Tesla is that it has been very 0:08:25.120 --> 0:08:29.560 methodical and very disciplined about growth and that's the something 0:08:29.680 --> 0:08:33.079 that's the one thing that gets investors excited. And Tesla's 0:08:33.120 --> 0:08:36.000 had growth that has been unequaled by any of the 0:08:36.040 --> 0:08:40.640 top largest companies today. And Tesla got to its one 0:08:40.679 --> 0:08:45.200 trillion market capitalization in eleven years sooner, if you like, 0:08:45.679 --> 0:08:48.439 than any of the companies were familiar with, whether it's 0:08:48.440 --> 0:08:51.920 Microsoft or Amazon. Facebook got there briefly, but it didn't 0:08:52.000 --> 0:08:56.240 last very long. This the Tesla evaluation is sticky. And 0:08:56.559 --> 0:09:00.440 you may have noticed that last Thursday, Uh, one of 0:09:00.480 --> 0:09:06.000 Tesla's champions, arc Cathy would Um, increased her target more 0:09:06.040 --> 0:09:11.560 than to forty dollars a share. So that's an indication 0:09:11.640 --> 0:09:14.560 of just where testing she's Tesla. I mean, you point 0:09:14.600 --> 0:09:16.839 out in your column that she um forecast I think 0:09:16.840 --> 0:09:19.640 it's trillion dollar valuation before anyone else did and stuck 0:09:19.679 --> 0:09:23.280 to her guns. Yeah and uh. And there's a reason 0:09:23.320 --> 0:09:26.520 for that, is that why is Tesla done as well 0:09:26.520 --> 0:09:31.400 as it done, because it actually anticipates the things that 0:09:31.440 --> 0:09:34.160 it needs before everybody else does. And what I mean 0:09:34.200 --> 0:09:38.839 by that is Musk was very concerned about vertical integration 0:09:39.559 --> 0:09:46.080 long before COVID nineteen became a problem for every company worldwide. Uh. 0:09:46.080 --> 0:09:51.520 He did things to achieve supply security, if you like 0:09:52.559 --> 0:09:57.200 Nicol for example, very important essential component in electric vehicles, 0:09:57.240 --> 0:10:01.719 and he made several agreements to get nick Um so 0:10:01.800 --> 0:10:07.360 that the supply would not be disruptive for UH Tesla. 0:10:07.400 --> 0:10:11.240 And the latest quarter, for example, show the deliveries were 0:10:11.679 --> 0:10:14.560 much better than what people anticipated, even though he said 0:10:14.880 --> 0:10:17.080 it was a very difficult quarter. So this is a 0:10:17.080 --> 0:10:20.719 company that actually has been very strategic in the way 0:10:20.760 --> 0:10:26.000 it goes about UH manufacturing vehicles. Their factories are built 0:10:26.080 --> 0:10:32.960 from the ground up, whether it's Berlin, Austin, Texas, UH Fremont, California. UM. 0:10:33.200 --> 0:10:37.400 And he's done incredible. Look he I still use PayPal. 0:10:37.640 --> 0:10:39.840 I noticed this weekend. I was like, wow, I'm still 0:10:39.920 --> 0:10:43.719 using PayPal and we saw him last week. I think 0:10:43.760 --> 0:10:48.520 send for civilian citizens to the I S S which 0:10:48.600 --> 0:10:51.679 is like mind blowing Lee, just unbelievable how well he's 0:10:51.679 --> 0:10:55.440 done in SpaceX. Why do you think he um makes 0:10:55.480 --> 0:11:00.320 all this noise on Twitter and challenges the SEC? I mean, 0:11:00.360 --> 0:11:03.280 is it just because he can? You know, I don't 0:11:04.040 --> 0:11:08.160 actually spend a lot of time thinking about what you 0:11:08.240 --> 0:11:12.559 and others would consider his eccentricities. Otherwise smoking a joint 0:11:12.600 --> 0:11:15.280 on Joe Rogan's podcast, Are there other than to say 0:11:15.320 --> 0:11:21.080 this that he isn't the first brilliant chief executive officer, 0:11:21.240 --> 0:11:25.560 founder of a company if you like, to have attributes 0:11:25.640 --> 0:11:32.360 that people have considered socially questionable. And that's just has 0:11:32.400 --> 0:11:37.000 been something that we've seen in history. And so what 0:11:37.280 --> 0:11:40.280 is far more important, the context that I think everybody 0:11:40.360 --> 0:11:46.120 misses is this company, Tesla, has transformed the world's view 0:11:46.920 --> 0:11:50.840 of vehicles to the extent that Tesla itself is a 0:11:50.960 --> 0:11:53.840 robotic company if you like, you know it's not a 0:11:53.880 --> 0:11:57.120 car company. How do you view by the way. I also, 0:11:57.120 --> 0:11:58.720 I don't want to sound too naive, but you have 0:11:58.800 --> 0:12:01.000 to give it to him that he's on so much 0:12:01.640 --> 0:12:04.560 to fight climate change. He at least says he wants 0:12:04.600 --> 0:12:08.240 to buy Twitter right now to support free speech and democracy. 0:12:08.280 --> 0:12:10.800 I mean, this is a guy who has big ideas 0:12:10.880 --> 0:12:14.400 about helping the world right. So people can be cynical 0:12:14.440 --> 0:12:18.400 about that because he's made so much money doing it, um, 0:12:18.600 --> 0:12:22.320 but you can't deny the fact that he's changed the 0:12:22.400 --> 0:12:26.040 way we think about the future of transportation. Yeah, and 0:12:26.040 --> 0:12:28.439 if you consider all the obstacles a raid against him, 0:12:28.480 --> 0:12:34.040 remember a lot of states wouldn't let Tesla's sell its 0:12:34.160 --> 0:12:38.600 vehicles the way it wanted to because the car dealer lobby, 0:12:38.640 --> 0:12:42.080 if you like, was so powerful. Um, and he somehow 0:12:42.120 --> 0:12:44.920 got through that. The fact that now everybody's in this 0:12:44.960 --> 0:12:47.400 market and Tesla has been able to hold its market 0:12:47.480 --> 0:12:52.640 share consistently even though the market has expanded dramatically tells 0:12:52.640 --> 0:12:56.280 you something about the quality of the vehicles that he has. 0:12:56.360 --> 0:12:59.720 And and Cathy would for example, says that in battery 0:12:59.760 --> 0:13:02.360 tech knowledge, he alone Tesla is at least three years 0:13:02.360 --> 0:13:07.040 ahead of its competitors. Matt Um, your column today has 0:13:07.760 --> 0:13:12.640 got the headline in defense of Elon Musk managerial excellence. Uh. 0:13:12.960 --> 0:13:15.800 Tesla CEO's track record proves he's a pretty eminent builder 0:13:15.840 --> 0:13:20.120 of businesses and maximizer shareholder value. He retweeted that out today. 0:13:20.400 --> 0:13:25.240 Did you see that? Somebody told me that your column formed. 0:13:25.559 --> 0:13:27.680 He's got a couple of followers, so I'm thinking, I 0:13:27.679 --> 0:13:31.520 think this might get Mr Winklers some notoriety because nobody 0:13:31.600 --> 0:13:35.080 let's let's just founded Bloomberg News, you know, I mean, 0:13:35.200 --> 0:13:40.319 but Musk does have eighty two point four million followers. 0:13:40.480 --> 0:13:43.920 That's big. I'm just a reporter trying. You're just a reporter. 0:13:44.160 --> 0:13:47.439 You and Chinpeg and your team doing great stuff as always, 0:13:47.760 --> 0:13:50.680 lots of data in your column here. So again, check 0:13:50.720 --> 0:13:53.480 it out on Bloomberg dot com. Uh, and on the 0:13:53.480 --> 0:14:00.280 Bloomberg terminal and on Twitter apparently and on Twitter want 0:14:00.280 --> 0:14:04.320 a switch to crypto? Taxes? You have to pay taxes 0:14:04.320 --> 0:14:07.040 apparently meant on your crypto gains. Tom, we'll write founder 0:14:07.040 --> 0:14:10.600 of Wealth Ability Joints us here. Tom, give us your overview. 0:14:10.600 --> 0:14:12.200 What do you what do you tell your clients about 0:14:12.400 --> 0:14:20.720 crypto and the tax implications of crypto and all things crypto? Thanks, Matt. Well, 0:14:20.800 --> 0:14:22.880 what you have to realize is that every time you 0:14:22.960 --> 0:14:26.480 use crypto, you've sold it and it's treated as a 0:14:26.520 --> 0:14:29.600 taxabull transaction. So you have to keep track not just 0:14:29.720 --> 0:14:32.280 when you actually sell it. Let's say you're you know, 0:14:32.320 --> 0:14:34.680 selling to Bitcoin went up and so you're selling something, 0:14:34.880 --> 0:14:37.560 but you're actually using it. When you use it, you 0:14:37.720 --> 0:14:41.200 also have to pay tax on that. And losses are 0:14:41.280 --> 0:14:45.320 capital losses, so they're limited. Gains are capital gains, and 0:14:45.360 --> 0:14:46.880 so if you hold it for more than a year 0:14:47.000 --> 0:14:51.520 you actually get a tax benefits. Wait, uh, capital losses 0:14:51.520 --> 0:14:58.360 are limited. They can only upset capital gains. Ah, that 0:14:58.520 --> 0:15:01.200 is such a huge bummer. Um, I'm sure that no 0:15:01.240 --> 0:15:08.200 one's keeping track of bitcoin. They're using when they buy something. Um. 0:15:08.760 --> 0:15:12.560 In fact, this whole area is so new. Do you 0:15:12.600 --> 0:15:15.080 get a lot of people coming to you saying like, 0:15:15.240 --> 0:15:20.200 I just need uh you know crypto tax rules one 0:15:20.200 --> 0:15:23.120 oh one? Because how how would you have any idea 0:15:23.760 --> 0:15:26.800 what kind of tax burden coin or or an n 0:15:26.840 --> 0:15:30.440 f T is going to generate for you? Well? Yeah, totally. 0:15:30.520 --> 0:15:33.600 Because you know, if you if you spend money, you 0:15:33.640 --> 0:15:37.239 don't typically think, oh I've got a tax taxical transaction 0:15:37.280 --> 0:15:39.440 there I have to track when I spend money. You 0:15:39.480 --> 0:15:41.800 don't think that. But with crypto you do. It's like 0:15:42.080 --> 0:15:46.720 it's like if you actually, um use the stock. Let's 0:15:46.720 --> 0:15:49.080 say you use some of your apple stock to buy something, 0:15:49.120 --> 0:15:51.240 it would be the same thing. Uh. That's the way 0:15:51.280 --> 0:15:54.200 the I R S treats it. So tracking it is 0:15:54.240 --> 0:15:56.520 the actually the number one issue right now is how 0:15:56.560 --> 0:15:59.880 do you track all of your crypto transactions. I'm just 0:16:00.000 --> 0:16:02.000 guessing the I R S has no idea what to 0:16:02.040 --> 0:16:05.000 do with crypto? Are they tracking this stuff closely? Did 0:16:05.040 --> 0:16:08.760 they know what they're doing? No? I don't think so. 0:16:08.880 --> 0:16:11.200 I actually don't think anybody really knows what they're doing 0:16:11.200 --> 0:16:14.760 from a tax standpoint. Let's never stopped the I R 0:16:14.920 --> 0:16:19.040 s yep. That's the point that has never stopped the irs. 0:16:19.040 --> 0:16:22.920 What However, in the in the Infrastructure bill last year, 0:16:23.320 --> 0:16:28.080 they did they are going to require crypto exchanges to track. 0:16:28.240 --> 0:16:30.600 So at least the crypto exchanges will have to track. 0:16:31.080 --> 0:16:34.960 This is kind of like back in the early um nineties. UM, 0:16:35.000 --> 0:16:38.480 I recall when people were day trading and they had 0:16:38.520 --> 0:16:41.400 to track every single day trade. But now the brokers 0:16:41.440 --> 0:16:44.400 do it, right, that's what's going on in crypto. All right, Tom, 0:16:44.400 --> 0:16:48.440 thanks very much, appreciative. Tax Day wasn't confusing enough. Now 0:16:48.480 --> 0:16:51.280 we've got crypto, you have to you know, track the 0:16:51.320 --> 0:16:55.840 taxable uh transactions that you have with crypto. Tom will right, 0:16:55.880 --> 0:16:57.960 he's a founder of wealth Ability giving us some thoughts 0:16:58.000 --> 0:17:01.720 here on crypto when I don't know, I don't I 0:17:01.720 --> 0:17:04.120 don't think I've ever claimed anything on my tax returns 0:17:04.119 --> 0:17:06.160 for crypto at this point, and I you know what, 0:17:06.440 --> 0:17:09.160 I don't plan on doing it ever. About that you're 0:17:09.160 --> 0:17:12.120 gonna have to do really yeah, I mean, at some 0:17:12.160 --> 0:17:14.960 point it's going to become, um, just like any other asset, 0:17:15.119 --> 0:17:17.159 or you're gonna have to have regulators to declare it 0:17:17.240 --> 0:17:20.400 like a currency. Wad of cash in my pocket I'm 0:17:20.400 --> 0:17:26.359 showing Matt, that's how we roll here. Matt. Back in 0:17:26.400 --> 0:17:30.159 the summer of before between my first and second year 0:17:30.200 --> 0:17:34.120 business school, Duke did an internship at Merrill Lynch Investment Bank. 0:17:34.760 --> 0:17:38.159 My key transaulor Meryl. My key transaction from that summer 0:17:38.240 --> 0:17:41.760 was a million dollar I think that was amount liquid 0:17:41.920 --> 0:17:46.080 yield option note a lion for ker McGee, the energy 0:17:46.119 --> 0:17:49.920 company down in Texas. Uh wow, yep. We can't believe 0:17:49.960 --> 0:17:52.960 that you have trouble understanding crypto when you're dealing with 0:17:53.000 --> 0:17:57.320 such incredibly complex transactions. I have no idea what you 0:17:57.400 --> 0:18:01.440 just said. Yep, it was cool. Discounted the note for 0:18:02.000 --> 0:18:04.040 Kirman Ghee. That was pretty cool. I can't remember the 0:18:04.040 --> 0:18:05.879 banker who I pitched it with, but anyway, that was 0:18:05.920 --> 0:18:09.479 good stuff. Anyway, they reported some numbers today. Uh Shali 0:18:09.520 --> 0:18:11.520 Bassing Joints is here in our Bloomberg in Erector Broker 0:18:11.600 --> 0:18:14.600 studio Shnale. How did my friends at Bank of America 0:18:15.000 --> 0:18:18.600 Merrill Lynch do. It's pretty fascinating. You would not have 0:18:18.680 --> 0:18:21.320 expected this to be a quarter where anything hit a record, 0:18:21.440 --> 0:18:24.119 but advisory fees for the first quarter hit a record, 0:18:24.400 --> 0:18:27.320 equity trading hit a record, and part of that was 0:18:27.400 --> 0:18:30.040 because you have buy side clients of the likes of 0:18:30.080 --> 0:18:33.320 hedge funds and other clients, big investors still taking on 0:18:33.440 --> 0:18:38.160 financing in order to engage with these markets, more derivatives 0:18:38.200 --> 0:18:41.560 trading and so really robust trading desks there in the 0:18:41.680 --> 0:18:47.560 face of expected high declines. Talk to me about compensation. 0:18:48.040 --> 0:18:50.440 That's my favorite topic. We talked about these investment banks. 0:18:51.119 --> 0:18:53.040 What are what are the big banks saying now because 0:18:53.040 --> 0:18:55.399 they're paying their junior bankers a lot more, I assume 0:18:55.440 --> 0:18:58.160 that means they're paying their senior bankers more. How big 0:18:58.200 --> 0:19:00.199 of an issue is this for the margins, Yeah, it 0:19:00.240 --> 0:19:03.000 depends on who you are. For Bank of America in particular, 0:19:03.119 --> 0:19:06.160 remember their headcount has declined steadily over the last couple 0:19:06.200 --> 0:19:09.040 of quarters, so you know, you can raise prices for 0:19:09.119 --> 0:19:12.640 some bankers, but you can also not have as many 0:19:12.720 --> 0:19:15.560 of them. Bank of America is keeping control of costs. 0:19:15.560 --> 0:19:18.120 And remember it's not just the bankers, it's the investment 0:19:18.119 --> 0:19:21.080 in technology. This quarter, Bank of America generated more than 0:19:21.119 --> 0:19:26.520 half of its total sales through digital means. Yes, fascinating, 0:19:26.600 --> 0:19:29.720 and so you are seeing they have hundreds of patents 0:19:29.720 --> 0:19:33.879 out for more you know, advanced technology and you do 0:19:34.000 --> 0:19:38.800 see them really keeping control over their costs at a 0:19:38.800 --> 0:19:41.320 time where they're willing to invest to gain more share 0:19:41.320 --> 0:19:45.000 in a tough market. So we've this is the last 0:19:45.000 --> 0:19:47.040 of the major Wall Street banks to report, right, if 0:19:47.040 --> 0:19:49.520 you step back and look at them, can you say 0:19:49.560 --> 0:19:53.680 something universal about the banks this season? I go back 0:19:53.680 --> 0:19:56.520 to what Jamie Diamond and his executive said a couple 0:19:56.520 --> 0:19:58.960 of days ago, which is that the probability of a 0:19:59.000 --> 0:20:02.359 recession went from being low to less low. So you 0:20:02.400 --> 0:20:05.680 have all these banks that are, you know, not answering 0:20:05.760 --> 0:20:08.800 questions necessarily on what the probability of a recession is, 0:20:09.200 --> 0:20:11.159 but the fact that it may happen, and this is 0:20:11.200 --> 0:20:14.360 what their businesses could look like in that scenario. Interestingly, 0:20:14.680 --> 0:20:17.640 in the event of an interest rate rise that's more 0:20:17.680 --> 0:20:21.480 severe than initially expected, Bank of America says that rates 0:20:21.480 --> 0:20:24.600 would have to rise a lot more in order to 0:20:24.720 --> 0:20:27.920 impact the way that people are borrowing, because right now, 0:20:27.960 --> 0:20:31.040 consumers are still pretty healthy at least how they look 0:20:31.080 --> 0:20:32.760 at it. Yeah, when I when I think about Bank 0:20:32.760 --> 0:20:35.879 of America, I think about Wells Fargo. I think about 0:20:35.920 --> 0:20:39.680 you know, real lending to real businesses on main street, 0:20:39.680 --> 0:20:42.679 whether that's Main Street small town, you know, say main street, 0:20:42.880 --> 0:20:46.720 big city, USA, but really lending to fund growth. What 0:20:46.720 --> 0:20:48.399 are they saying about loan demanding? I mean, do you 0:20:48.440 --> 0:20:52.359 want to mortgage a five percent? That is mortgage? I 0:20:52.359 --> 0:20:55.320 mean historically, I mean it's not three percent that Matt, 0:20:55.600 --> 0:20:58.040 you know the mortgage arbitress. You're got just a couple 0:20:58.080 --> 0:21:01.160 of months. I'll spend my easter somebody talking to mortgages somehow. 0:21:01.240 --> 0:21:04.879 But we are yes. I mean, listen, it does have 0:21:05.119 --> 0:21:09.480 an impact here on residential home loan originations, and you 0:21:09.560 --> 0:21:11.959 see it a lot of the major banks. But the 0:21:11.960 --> 0:21:15.919 thing is credit card spend and credit card borrowing is 0:21:15.960 --> 0:21:19.439 still pretty high, So there is still borrowing. It's just 0:21:19.480 --> 0:21:26.439 not everywhere necessarily. So in terms of assumptions, right, um, 0:21:26.480 --> 0:21:29.520 do we have to assume that the FED is going 0:21:29.560 --> 0:21:32.600 to drive us into a recession? And I mean because 0:21:32.600 --> 0:21:36.800 that will change loan demand? Right, The assumption is that 0:21:36.840 --> 0:21:40.800 you can't look out past three months. The assumption is 0:21:40.840 --> 0:21:43.840 the next three months things could be okay, but after 0:21:43.920 --> 0:21:47.040 that things are very cloudy, and it's really anyone's guest 0:21:47.080 --> 0:21:49.120 where things go. Remember, Bank of America has sold off 0:21:49.119 --> 0:21:52.040 pretty heavily this year, about four cent or so so 0:21:52.080 --> 0:21:55.959 they are rising today, but it seems like these banks 0:21:56.000 --> 0:21:58.880 are trading within a range here with not too much 0:21:59.040 --> 0:22:02.400 upside on how some of those clouds leave the horizon. 0:22:02.800 --> 0:22:05.040 When I think about the retail side of the business, Shannale, 0:22:05.119 --> 0:22:09.240 it's just I always read stories about Bank A poaching 0:22:09.280 --> 0:22:12.240 broker from Bank B. Is that still a thing? Oh? Yeah. 0:22:12.400 --> 0:22:15.240 People love the wealth business and if you look at 0:22:14.320 --> 0:22:17.480 the price to book ratios, that means a place that 0:22:17.520 --> 0:22:20.359 they're trading at. It's really JP Morgan and Morgan Stanley 0:22:20.359 --> 0:22:23.560 trading more richly than anybody else, which shows you there's 0:22:23.560 --> 0:22:29.600 a premium on wealth here. Good stuff, good stuff Wall Street. 0:22:29.640 --> 0:22:31.560 I mean some good numbers. I think coming out of 0:22:31.600 --> 0:22:34.200 this first course, maybe the expectations were a little bit low, 0:22:34.280 --> 0:22:36.840 but we got through most of the big financials. Shale 0:22:36.960 --> 0:22:39.240 keeping us in the loop as she always does. Shanale, 0:22:39.240 --> 0:22:44.240 Basketball Street reporter for Bloomberg News. Thanks for listening to 0:22:44.280 --> 0:22:47.800 the Bloomberg Markets podcast. You can subscribe and listen to 0:22:47.840 --> 0:22:52.000 interviews with Apple Podcasts or whatever podcast platform you prefer. 0:22:52.400 --> 0:22:56.360 I'm Matt Miller. I'm on Twitter at Matt Miller three. 0:22:56.760 --> 0:22:59.199