WEBVTT - Amazon Still Digesting $13.7 Billion Whole Foods Takeover 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the worlds of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all parnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week at iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:31.800 YouTube search Bloomberg Cloble News. Well in the current issue 0:00:31.800 --> 0:00:33.960 of Bloomberg Business Week magazine catch it now. It's on 0:00:34.000 --> 0:00:36.440 news stands online on the terminal of course as well, 0:00:36.479 --> 0:00:38.720 and then at Bloomberg dot com slash a Business Week. 0:00:38.960 --> 0:00:42.720 There's an article about five years on Amazon is still 0:00:42.720 --> 0:00:46.159 digesting that thirteen point seven billion dollar Whole Foods takeover. 0:00:46.440 --> 0:00:49.840 The article written by Matt Day. It's edited by Joshua Brustein. 0:00:50.200 --> 0:00:52.800 He is with us on the phone right now. Also 0:00:52.880 --> 0:00:55.720 with us is Joel Webber. He is the editor of 0:00:55.880 --> 0:00:58.320 Bloomberg Business Week. He's with us in the Bloomberg Interactive 0:00:58.360 --> 0:01:01.160 Broker studio Katie that we're talking about this a few 0:01:01.160 --> 0:01:02.920 minutes ago, Joel. It was sort of like the where 0:01:02.920 --> 0:01:05.559 were you when you heard moment? There were so many 0:01:05.640 --> 0:01:09.600 jokes about getting avocado toasts by drone. Yeah, so waiting 0:01:09.640 --> 0:01:11.760 for that still. By the way, that's another good Bloomberg 0:01:11.760 --> 0:01:15.080 Business Week story is about that the drones com materializing. 0:01:16.080 --> 0:01:18.400 But but what's going on with John Mackie, the guy 0:01:18.440 --> 0:01:21.280 who he's gone all he's gone exactly? So what is that? 0:01:21.440 --> 0:01:25.040 Mere Whole Foods co founder of Whole Foods um five 0:01:25.120 --> 0:01:28.760 years ago Amazon uh went shopping for some produce and 0:01:28.880 --> 0:01:32.120 ended up with Whole Foods UM. And you know, I 0:01:32.400 --> 0:01:34.760 think the point of the story is five years on, 0:01:34.959 --> 0:01:36.600 what was it all about? And that was sort of 0:01:36.720 --> 0:01:41.520 I think, what what interested Matt and uh, you know what, 0:01:41.720 --> 0:01:44.319 Josh to just put it to you, what was it 0:01:44.360 --> 0:01:46.920 all about? What does Amazon really had to show for it? Now? 0:01:46.959 --> 0:01:49.640 Thirteen point seven billion for groceries is more than I 0:01:49.720 --> 0:01:55.120 usually spent exactly. Um. Yeah, I think both five years ago, 0:01:55.160 --> 0:01:58.760 both Whole Foods and Amazon needed something. Whole Foods had 0:01:59.200 --> 0:02:02.440 built itself off been to this really big player in 0:02:02.440 --> 0:02:04.640 the organic grocery market, and then everyone else kind of 0:02:04.640 --> 0:02:06.840 figured out that they could do the same thing, and 0:02:06.960 --> 0:02:10.120 so Whole Foods was UM really struggling to figure out 0:02:10.120 --> 0:02:13.280 what its second act would be. UM investors were calling 0:02:13.320 --> 0:02:15.280 for a shake up, and it was just having a 0:02:15.280 --> 0:02:18.079 lot of trouble in the public markets. Meanwhile, Amazon had 0:02:18.080 --> 0:02:20.520 really been trying to get into groceries and grocery delivery, 0:02:21.040 --> 0:02:24.000 and it thought, you know, by this five hundred store 0:02:24.120 --> 0:02:28.359 chain of grocery stores and really just really power up 0:02:28.360 --> 0:02:32.239 our own entry into the grocery market. UM. And five 0:02:32.320 --> 0:02:35.280 years later, it doesn't seem like Whole foods problems have 0:02:35.360 --> 0:02:38.360 been solved. Its problems are still mostly the same. Amazon 0:02:38.639 --> 0:02:42.000 also has not taken over groceries UM, despite the fears 0:02:42.000 --> 0:02:44.480 that it would at that time. And it seems like 0:02:44.520 --> 0:02:47.200 we're largely kind of where we were and not as 0:02:47.320 --> 0:02:49.720 much as happened as we would thought. Well, that's what 0:02:49.760 --> 0:02:51.760 I want to talk about. Five years later, what does 0:02:51.760 --> 0:02:55.600 it Amazon have to show with this purchase. What is 0:02:55.639 --> 0:02:59.760 Whole Foods actually added or subtracted from its bottom line? 0:03:01.400 --> 0:03:04.160 So in terms of its bottom line, the answer is 0:03:04.200 --> 0:03:07.160 that this is not This is one of the slower 0:03:07.800 --> 0:03:10.679 growing parts of Amazon's business. If you look at other 0:03:10.880 --> 0:03:15.200 other aspects of Amazon's business like cloud, cloud computing and 0:03:15.760 --> 0:03:18.600 sort of other real revenue drivers, those have been growing 0:03:18.639 --> 0:03:23.720 faster than the grocery business. Um, and that business is 0:03:23.760 --> 0:03:26.919 also being uh it's not just that groceries are going slower, 0:03:26.919 --> 0:03:29.880 it's like they're not even growing as fast as competitors. 0:03:29.919 --> 0:03:33.040 So that just really hasn't taken off. They haven't figured 0:03:33.080 --> 0:03:35.440 out how to combine these two companies in a way 0:03:35.480 --> 0:03:38.360 that helps them compete in the specific market. Okay, So 0:03:39.120 --> 0:03:40.960 one thing though that it has done is, you know, 0:03:41.000 --> 0:03:44.600 if you need to return Amazon products or you know, 0:03:44.760 --> 0:03:49.720 get grocery pickups, there have been some some noteworthy enhancements 0:03:49.760 --> 0:03:53.800 that either you know, either the mergers helped facilitate or 0:03:53.840 --> 0:03:57.080 that maybe Amazon shoppers have gotten out of it. So, 0:03:57.080 --> 0:04:00.600 so what has been on the on the good side here? Yeah, 0:04:00.640 --> 0:04:02.720 So I think the good side is that you know, 0:04:02.800 --> 0:04:08.080 Amazon uh does have a large uh, this large network 0:04:08.080 --> 0:04:10.440 of physical stores um as I said, there's about five 0:04:11.440 --> 0:04:16.160 um and it has started to lean on Whole Foods 0:04:16.560 --> 0:04:19.839 the expertise in there to help with Amazon Fresh, which 0:04:19.880 --> 0:04:24.400 is its other chain of grocery outlets UM, and we 0:04:24.440 --> 0:04:28.040 haven't really seen the fruits of that yet so speak, 0:04:29.120 --> 0:04:31.920 but that could come in the future that you could 0:04:31.920 --> 0:04:35.240 see if if Amazon Fresh really does mature um and 0:04:35.279 --> 0:04:38.960 turn into something really substantial for the company, that a 0:04:39.000 --> 0:04:41.560 lot of Whole Foods wisdom will have gone into the 0:04:41.600 --> 0:04:45.479 building of that product. It's just not quite um there yet. 0:04:45.720 --> 0:04:47.560 So we mentioned John Mackie. He was the co founder 0:04:47.600 --> 0:04:50.720 of Whole Foods. UM he's moved on retired as of 0:04:50.720 --> 0:04:57.640 September one. Who's in charge of Whole Foods within Amazon now? Yeah, 0:04:57.800 --> 0:05:03.000 so uh he is being taken over by his former CEO, 0:05:04.160 --> 0:05:09.680 former management consultant UM very kind of uh. Mackew was 0:05:09.720 --> 0:05:13.080 known as an as an over as as sort of 0:05:13.080 --> 0:05:18.040 a really big personality um, whereas his successor is less. 0:05:18.080 --> 0:05:21.240 So Jason is his name? Yea, yeah, I mean, I'm 0:05:21.240 --> 0:05:24.960 I'm sorry Jason. Jason Buchelle mentioned that m and his 0:05:25.080 --> 0:05:28.440 plan is kind of to take Whole Foods back to 0:05:29.120 --> 0:05:32.160 its roots, as he says, to try to get back 0:05:32.200 --> 0:05:35.040 to some of like the local produce offerings and doing 0:05:35.080 --> 0:05:37.919 things that makes Whole Foods kind of not feel like 0:05:37.920 --> 0:05:40.880 an Amazon honestly, to feel like not you get the 0:05:40.880 --> 0:05:42.839 same experience everywhere, but you go and you know that 0:05:42.880 --> 0:05:47.120 your local Whole Foods has whatever the produces um you 0:05:47.160 --> 0:05:49.520 know in your region. Well, Joshua, that's been a big 0:05:49.520 --> 0:05:51.960 complaint for people who were sort of the die hard 0:05:52.000 --> 0:05:55.400 Whole Foods people before Amazon purchased the company. If you 0:05:55.480 --> 0:05:58.120 go back to you know, the roots of this company. 0:05:58.120 --> 0:05:59.960 It started in Austin, and it was kind of the 0:06:00.000 --> 0:06:02.960 it's like weird alternative grocery store, right, And even when 0:06:02.960 --> 0:06:05.200 it was a publicly traded company, it and it made 0:06:05.240 --> 0:06:07.440 a ton of acquisitions around the country, it still was 0:06:07.560 --> 0:06:10.000 unique because it had that local produce and it had 0:06:10.040 --> 0:06:12.960 that kind of heart to get stuff. And and I'm wondering, 0:06:13.080 --> 0:06:15.360 It's funny, you know, when this article came out, I 0:06:15.600 --> 0:06:18.000 saw people tweeting about it who didn't work at Bloomberg, 0:06:18.040 --> 0:06:20.200 and they were saying, the Whole Foods the experience of 0:06:20.240 --> 0:06:23.000 going to Whole Foods has changed too much since Amazon 0:06:23.040 --> 0:06:25.599 took it on, So you know, I don't go there anymore. 0:06:25.680 --> 0:06:27.599 Is one of the tweets that that I saw that 0:06:27.600 --> 0:06:30.719 tweeted out this story. How is Whole Foods physically different 0:06:30.920 --> 0:06:35.440 because of Amazon? Like, what's the experience like now, Yeah, 0:06:35.480 --> 0:06:37.559 I think there's two things in there that The first 0:06:37.600 --> 0:06:41.000 that you mentioned about, you know, the whole foods really 0:06:41.000 --> 0:06:43.760 feeling different and sort of losing that local feel is 0:06:43.760 --> 0:06:47.400 is that was a complaint before the acquisition and one 0:06:47.440 --> 0:06:49.479 that I think one of the problems that Hold Food 0:06:49.480 --> 0:06:52.480 had and it certainly hasn't been solved. UM hasn't been 0:06:52.480 --> 0:06:55.280 solved by Amazon, nor would it really like that's not 0:06:55.480 --> 0:07:00.000 Amazon's strength. UM. But to your question about what's physically different, 0:07:00.400 --> 0:07:06.080 you know, Amazon has has helped re re engineer Whole 0:07:06.080 --> 0:07:09.800 Foods UH stores a little bit to be um, you know, 0:07:09.840 --> 0:07:12.400 more focused on delivery. There's a lot of delivery pickers 0:07:12.440 --> 0:07:14.960 in the store people mentioned, which I think some people 0:07:15.000 --> 0:07:17.679 really don't like. You know, you're you're trying to shop 0:07:17.720 --> 0:07:20.679 and there's someone you know, they're like clearly like filling 0:07:20.760 --> 0:07:23.680 up carts to move along. And they've had to dedicate 0:07:23.840 --> 0:07:27.200 some some space that used to be cafes and somewhat 0:07:27.240 --> 0:07:30.960 for the physical infrastructure around the delivery business. So that 0:07:31.000 --> 0:07:32.720 I think is really changed in some of the stores 0:07:32.760 --> 0:07:36.160 and ways that um, you know, long standing customers don't 0:07:36.200 --> 0:07:40.560 necessarily like. UM. One other thing that's interesting is in 0:07:40.680 --> 0:07:43.160 terms of the actual technology. That's the biggest and most 0:07:43.200 --> 0:07:48.480 visible technology change since the Amazon acquisition. You think it 0:07:48.480 --> 0:07:51.480 would be drones or something like super high tech, it's 0:07:51.480 --> 0:07:55.720 actually just the self checkout. Um. Whole Foods had resisted 0:07:55.760 --> 0:07:58.080 doing that for a long time, despite the fact that 0:07:58.880 --> 0:08:02.480 their grocery change had gone along with it. They thought 0:08:02.480 --> 0:08:05.840 it would feel impersonal right. Eventually it just kind of 0:08:05.880 --> 0:08:09.320 became the standard than though self checkout always always takes 0:08:09.320 --> 0:08:12.000 longer than waiting in mind for me at least. Joshua 0:08:12.040 --> 0:08:15.040 Breustin is editor at Bloomberg Business. Joe Weber is the 0:08:15.160 --> 0:08:17.280 editor of Bloomberg Business Week. With us in the Bloomberg 0:08:17.320 --> 0:08:19.240 Interactive Broker Studio. Check out this story. It's in the 0:08:19.240 --> 0:08:22.760 current issue of Bloomberg Business Week magazine. You're listening to 0:08:22.840 --> 0:08:26.840 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:08:26.920 --> 0:08:31.000 Tim Stinovic on Bloomberg Radio. Joining us now to talk 0:08:31.040 --> 0:08:33.120 about s back e t f S is Emily Graffeo. 0:08:33.240 --> 0:08:36.320 She is a cross asset reporter for Bloomberg News. She's 0:08:36.360 --> 0:08:38.920 with us in studio sitting to my left, which is 0:08:38.960 --> 0:08:41.440 thrilling because this is how we sit when we're actually 0:08:41.440 --> 0:08:44.160 at our desks um. Let's talk about these back e 0:08:44.240 --> 0:08:46.800 t F So we're talking about the Defiance next Gen 0:08:46.920 --> 0:08:50.400 SPAC derived e t F and the Morgen Creek Exos 0:08:50.559 --> 0:08:54.560 Spack originated e t F both shut last month. Why 0:08:54.559 --> 0:08:56.200 did it take so long? I feel like we've been 0:08:56.200 --> 0:08:59.080 talking about this back downturn for a while now. Yeah, 0:08:59.120 --> 0:09:01.560 well we have. And there's actually still a lot of 0:09:01.600 --> 0:09:04.520 spack e t F s that are still trading, like 0:09:04.679 --> 0:09:06.640 a lot of E t F s um in the 0:09:06.679 --> 0:09:09.640 market right now that are following these speculative areas of 0:09:09.679 --> 0:09:14.680 the market crypto psychedelics, cannabis, and they're still on the market. 0:09:14.720 --> 0:09:17.040 But all the fun stuff, yeah, all the fun stuff, 0:09:17.080 --> 0:09:20.080 and it's been doing pretty poorly. But these two Spack 0:09:20.160 --> 0:09:22.960 e t F s. I think it's an interesting story 0:09:23.280 --> 0:09:27.640 of the FED tightening of monetary policy kind of giving 0:09:27.640 --> 0:09:30.720 a double whammy two spack e t f s, because 0:09:30.800 --> 0:09:33.280 on the one hand, you have this tightening that's not 0:09:33.440 --> 0:09:37.080 very good for speculative risk assets like an e t 0:09:37.240 --> 0:09:39.480 F that tracks a new industry, and then on the 0:09:39.520 --> 0:09:42.920 other hand, the tightening is drying up the liquidity that 0:09:43.200 --> 0:09:46.280 made the back market thrive in the first place. And 0:09:46.360 --> 0:09:48.960 so before they shut It felt like they never really 0:09:49.080 --> 0:09:51.320 gained a lot of traction if you look at the assets, 0:09:51.320 --> 0:09:54.320 if you look at the performance for example, exactly you're 0:09:54.520 --> 0:09:57.000 an E t F reporter, You're an expert E t 0:09:57.160 --> 0:09:59.480 F reporter, so you know, I mean, even at the 0:09:59.520 --> 0:10:02.720 peak a defiance, et F was only about a hundred 0:10:02.760 --> 0:10:06.440 twelve million in assets, which isn't that large, and then 0:10:06.480 --> 0:10:09.720 it moved down to about twelve million when actually liquidated 0:10:09.800 --> 0:10:11.880 in August. Even though I'm not an E t F reporter, 0:10:11.880 --> 0:10:14.120 Can I still be part of this conversation? You can try, Okay, 0:10:14.120 --> 0:10:16.920 I'll try. What does it say about SPACs though? I mean, 0:10:17.200 --> 0:10:19.440 we had Michael Burry talked about this a little earlier 0:10:19.480 --> 0:10:21.880 on Twitter. Katie and I talked about it in referencing 0:10:21.920 --> 0:10:25.120 Emily's story. That was pretty that's pretty cool. Hey, that's 0:10:25.120 --> 0:10:29.079 really cool. Congratulations. I mean, and Katie mentioned that it 0:10:29.120 --> 0:10:33.360 kind of you know, symbolizes excess and frothiness in the market, 0:10:33.360 --> 0:10:36.400 whether we're talking about crypto, but specs are a little 0:10:36.400 --> 0:10:40.720 different because they're kind of cyclical. Right, we've seen SPACs before. 0:10:42.840 --> 0:10:45.200 That wasn't the first rodeo for SPACs, right, but it 0:10:45.280 --> 0:10:49.240 was probably the biggest rodeo force backs that we had seen, 0:10:49.280 --> 0:10:52.079 and it was all again about that fed liquidity. So 0:10:52.400 --> 0:10:55.720 not only are we seeing these funds close up given 0:10:55.760 --> 0:10:57.760 the fact that the liquidity is drawing, but we also 0:10:57.800 --> 0:11:02.360 have regulators um warning about scrutiny over SPACs. And so 0:11:02.440 --> 0:11:05.160 I was talking to a strategist who was saying, maybe 0:11:05.160 --> 0:11:07.520 these et f issuers are just thinking this is not 0:11:07.600 --> 0:11:09.760 worth it anymore. We don't want to be involved in 0:11:09.760 --> 0:11:14.720 this space with the perhaps oncoming regulation for this back space. 0:11:15.000 --> 0:11:17.200 But then again, there's so many crypto et f s 0:11:17.240 --> 0:11:18.880 like we were saying, that are still on the market, 0:11:19.040 --> 0:11:21.800 and of course that they're all doing terribly. Yeah, and 0:11:21.800 --> 0:11:24.400 there's regulation you know, in that space as well. I 0:11:24.440 --> 0:11:26.080 actually have a fun fact, you guys want to hear it. 0:11:26.920 --> 0:11:29.880 So I was looking at the worst performing non leveraged 0:11:30.040 --> 0:11:32.920 e t s so far this year. The first one, 0:11:33.000 --> 0:11:36.120 the top worst performer, is a dry bull shipping e TF. 0:11:36.240 --> 0:11:38.880 The next nine are all crypto related. I thought they 0:11:38.880 --> 0:11:42.200 were like psilocybin. One of them was still Yeah, No, 0:11:42.360 --> 0:11:45.200 that's also doing really poorly, not as poorly, it's still 0:11:45.240 --> 0:11:47.439 super bad. Wow. Yeah, I didn't know the crypto ones. 0:11:47.440 --> 0:11:48.800 I mean it makes sense, and we're gonna talk about 0:11:48.800 --> 0:11:50.960 the crypto winter a little later. Yeah, so you didn't 0:11:50.960 --> 0:11:54.080 read the story that I put out last week. I 0:11:54.120 --> 0:11:55.719 have no excuse. I was going to say I had 0:11:55.760 --> 0:12:00.000 COVID but was recovering. Yeah, excuse long, Let's go back 0:12:00.000 --> 0:12:02.560 to the U t F world, the six trillion, six 0:12:02.559 --> 0:12:06.040 point eight trillion U S E t F arena. You 0:12:06.160 --> 0:12:08.280 write that this what we're seeing with these spack e 0:12:08.360 --> 0:12:12.360 t F closures. It's actually, uh, mirroring a broader pattern 0:12:12.440 --> 0:12:14.640 that we're seeing in the industry overall, in terms of 0:12:14.640 --> 0:12:17.480 how young these firms were. Yeah. So both of these 0:12:17.520 --> 0:12:20.240 e t f s that closed were less than two 0:12:20.320 --> 0:12:23.680 years old. And we've been tracking on the Bloomberg Cross 0:12:23.720 --> 0:12:26.920 Asset Team the fact, Yes, in the e t F 0:12:27.160 --> 0:12:30.400 industry this year, almost half of the e t F 0:12:30.440 --> 0:12:35.400 s that have closed in two were launched in So 0:12:35.400 --> 0:12:39.680 we're seeing the trend of these newer funds um launching 0:12:39.760 --> 0:12:43.200 and trading and then closing pretty soon after. Did you guys, 0:12:43.240 --> 0:12:44.920 I'm sorry, I was like fixing my computer here in 0:12:44.960 --> 0:12:48.160 my microphone. Did you guys talk about the anti spack 0:12:48.240 --> 0:12:51.320 e t F s. Yeah, so, actually we're talking about 0:12:51.320 --> 0:12:54.760 the ranking of different funds, and I was looking at 0:12:54.760 --> 0:12:58.480 the best performing active equity e t F s in 0:12:58.520 --> 0:13:01.400 the US. I love the nuances, you know, you have 0:13:01.480 --> 0:13:03.760 to really streamline it down. But one of them is 0:13:03.880 --> 0:13:07.360 a e t F that shorts um SPACs. This is 0:13:07.360 --> 0:13:10.680 the a excess short despect daily e t that one's 0:13:10.720 --> 0:13:14.440 doing really well. How well, want to give it a number? 0:13:14.440 --> 0:13:17.760 I think it's more than It feels like anecdotally a 0:13:17.760 --> 0:13:19.360 lot and we could put numbers to this, but it 0:13:19.400 --> 0:13:21.240 feels like a lot of the short e t f 0:13:21.320 --> 0:13:23.079 s are doing well because you think of the short 0:13:23.160 --> 0:13:25.560 Cathy would et F, the short innovation e t F 0:13:25.640 --> 0:13:29.080 that's also one of the blockbuster hits of this year. Yeah, 0:13:29.080 --> 0:13:32.200 and they're both from Access, which is pretty impressive for 0:13:32.720 --> 0:13:36.120 a newer, more indie e t F issuer. And we're 0:13:36.120 --> 0:13:39.160 talking about fund closures here, but we know that fund 0:13:39.400 --> 0:13:43.080 e t F launches have actually been really, really robust 0:13:43.200 --> 0:13:47.640 this year. Yeah, So that's another the fund closures and 0:13:47.679 --> 0:13:50.080 these new funds. It might not be all that bad 0:13:50.120 --> 0:13:53.320 that we're seeing so many new funds close because in 0:13:53.360 --> 0:13:56.400 the last two years we've seen so many new e 0:13:56.559 --> 0:13:59.200 t F s launched. So just this year, like volume 0:13:59.240 --> 0:14:02.080 of products out on the market means that there's more 0:14:02.120 --> 0:14:04.760 funds that are bound to close up as well. Yeah, 0:14:04.840 --> 0:14:08.600 it almost feels as if maybe we are actually nearing 0:14:08.600 --> 0:14:11.600 the point where there is an e t F for everything. Yeah, 0:14:11.880 --> 0:14:14.200 I think there is. I'm still tracking that breakfast one 0:14:14.240 --> 0:14:16.240 that I wrote about in Tanuary. What was that one? 0:14:16.679 --> 0:14:20.360 It was breakfast commodities. It was like so much battle. 0:14:20.400 --> 0:14:24.000 It was poor cogs hogs. I mean, with inflation, it's 0:14:24.000 --> 0:14:25.680 probably gone up quite a bit, although you have seemed 0:14:25.680 --> 0:14:28.880 some disinflation in that space as well. Yeah, but it's 0:14:28.920 --> 0:14:34.040 certainly is not to it's sound like seventy something per cent. 0:14:34.160 --> 0:14:36.320 I wonder if people jumped in there after it was 0:14:36.360 --> 0:14:39.840 one of the best performing et okay, exactly when shipping 0:14:39.880 --> 0:14:42.080 rates were just off the chart. Sign of the times, 0:14:42.200 --> 0:14:45.600 all right. Emily Graffeo cross asset reporter for Bloomberg News 0:14:45.640 --> 0:14:48.200 with us in the Bloomberg Interactive Broker Studio. Check out 0:14:48.200 --> 0:14:50.160 her late Well it's actually not even her latest story. 0:14:50.200 --> 0:14:52.040 She's got another one in there. She's very busy. Two 0:14:52.080 --> 0:14:54.800 spack ETFs wiped out in one month. Signal to Boom 0:14:54.880 --> 0:14:56.720 is truly over. Check it out on the Bloomberg Terminal, 0:14:56.840 --> 0:14:59.400 and of course more of her work at Bloomberg dot com. 0:15:00.160 --> 0:15:04.160 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:15:04.240 --> 0:15:08.040 Quick Takes Tim Stinovic on Bloomberg Radio. We're here with 0:15:08.080 --> 0:15:10.720 Stacy Marie Ishmael. She's managing editor for Crypto here at 0:15:10.720 --> 0:15:13.480 Bloomberg News. She's with us in the Bloomberg Interactive Broker studios. 0:15:13.480 --> 0:15:16.040 And I gotta say we're doing a little reminiscing. Katie 0:15:16.040 --> 0:15:18.960 brought it to our attention Stacy that today is your 0:15:18.960 --> 0:15:22.320 one year anniversary of being here at Bloomberg. And typically, 0:15:22.840 --> 0:15:24.640 you know, you walk by people's desks here and they 0:15:24.640 --> 0:15:27.280 have these kind of cool little blocks that they put 0:15:27.360 --> 0:15:31.640 up if they've been here for like ten thirty years. Um, 0:15:31.760 --> 0:15:36.520 one year not huge, however, in the context of Crypto 0:15:37.560 --> 0:15:39.240 A huge anniversary. And I should say not huge in 0:15:39.240 --> 0:15:41.960 the context of like, um, you know, Katie thinks every 0:15:41.960 --> 0:15:44.680 anniversary is a big deal. It's worth celebrating. It is. 0:15:44.720 --> 0:15:49.160 We're celebrating, happy anniversary, Thank you, thank you. What is 0:15:49.200 --> 0:15:53.120 the last year though? How is I mean, like, how 0:15:53.120 --> 0:15:56.200 do we describe the last year in crypto? I'm great, 0:15:56.360 --> 0:15:59.080 I worry about other people who have had their you know, 0:15:59.200 --> 0:16:01.840 companies off of bankruptcy or lose access to all of 0:16:01.840 --> 0:16:05.600 their savings. Um. The way that I have remembered the 0:16:05.640 --> 0:16:08.760 fact that September seven is a big date is because 0:16:08.800 --> 0:16:11.840 it's also the one year anniversary of El Salvador starting 0:16:11.840 --> 0:16:15.880 to accept bitcoin is legal tender. And I feel like 0:16:16.040 --> 0:16:19.640 I measured out most of my weeks, months, weekends in 0:16:19.760 --> 0:16:22.600 terms of what chaotic thing happened in the crypto market. 0:16:22.720 --> 0:16:25.640 So there was the weekend in which China was like, 0:16:26.040 --> 0:16:29.680 we think crypto transactions are illegal. There was the weekend 0:16:29.720 --> 0:16:32.880 in which you know, Celsia said that it was halting withdrawals, 0:16:32.920 --> 0:16:34.320 and just kind of on and on and on. And 0:16:34.360 --> 0:16:36.840 I think the the highs and the lows of this 0:16:36.960 --> 0:16:41.280 market have been very interesting and perhaps more pronounced and 0:16:41.320 --> 0:16:44.800 more profound than people were expected going into September last year. 0:16:45.000 --> 0:16:48.440 And if we think about September last year, we were 0:16:48.720 --> 0:16:50.800 on our way to what would be an all time 0:16:50.880 --> 0:16:53.920 high for bitcoin in November that was around the launch 0:16:53.960 --> 0:16:56.080 of the first bitcoin futures e t F. For you 0:16:56.120 --> 0:16:58.320 and I really got to know each other so much time. 0:16:58.360 --> 0:17:01.560 It was fun bringing it or to today, though the 0:17:01.600 --> 0:17:04.560 big headline out is that the crypto market cap has 0:17:04.640 --> 0:17:08.480 dropped a one trillion dollars sort of tell us how 0:17:08.520 --> 0:17:10.919 we got here and where we're going. Sure, so if 0:17:10.920 --> 0:17:13.160 we were having this conversation last November would have been like, wow, 0:17:13.200 --> 0:17:16.720 crypto market values above three trillion dollars, we're flirting with 0:17:17.240 --> 0:17:21.119 sixty five. People were making prognostications about like nine hundred 0:17:21.160 --> 0:17:24.080 ks in sight. And now you know, there's a meme 0:17:24.160 --> 0:17:26.359 that I saw on Twitter today that like, you know, 0:17:26.440 --> 0:17:29.960 the nineteen thousand um range and Twitter is looking like 0:17:30.000 --> 0:17:33.520 somebody's holding it together with duc dapen string. And that 0:17:33.640 --> 0:17:37.040 shift in sentiment seems to me to really do a 0:17:37.040 --> 0:17:40.440 good job of telling the story, which is that folks 0:17:40.480 --> 0:17:43.760 were very much betting on all things going up, which 0:17:43.800 --> 0:17:45.960 was also the problem with Three Arrows Capital. They blew 0:17:46.000 --> 0:17:48.280 themselves up because they were like prices could never go down. 0:17:48.880 --> 0:17:50.920 And now we're at a point where prices have been 0:17:51.000 --> 0:17:55.080 hovering in this fairly tight range between you know, sort 0:17:55.119 --> 0:17:58.399 of seventeen five and twenty one, which is a frankly 0:17:58.480 --> 0:18:02.720 unusual lack of all utility for something like bitcoin. And 0:18:02.720 --> 0:18:05.119 so I think the fact that we are we seem 0:18:05.200 --> 0:18:08.840 to be stuck. Here is again testimony to the fact 0:18:08.840 --> 0:18:11.439 that there isn't really anything pushing it significantly up, but 0:18:11.480 --> 0:18:14.000 also not anything pushing it significantly down. So if the 0:18:14.040 --> 0:18:16.600 last year was characterized by a huge hedge fund that 0:18:16.640 --> 0:18:20.400 managed ten billion dollars blowing up big layoffs at companies 0:18:20.520 --> 0:18:22.720 f t X coming in and being the hero, the 0:18:22.800 --> 0:18:25.640 same hero, yeah, the savior, the White Knight, if you will, 0:18:25.800 --> 0:18:30.200 what does what does the next year look like? One 0:18:30.240 --> 0:18:33.080 of the things that we've really been trying to look 0:18:33.119 --> 0:18:36.399 at is, you know, I grew up in a in 0:18:36.440 --> 0:18:38.840 an euro financial reporting in which people cared about counter 0:18:38.880 --> 0:18:41.280 party risk, and I feel like counterparty risk super back. 0:18:41.920 --> 0:18:45.480 And the big question or the series of questions that 0:18:45.520 --> 0:18:47.399 we're asking in crypto right now is like, Okay, we 0:18:47.480 --> 0:18:51.359 know about the celsius is, the voyages, the volts who 0:18:51.440 --> 0:18:54.000 are all of their counter parties. We know about these 0:18:54.040 --> 0:18:57.840 minas that are saying, you know, they're dealing with liquidity 0:18:57.920 --> 0:19:01.280 challenges or other forms of financial distress, and they have 0:19:01.440 --> 0:19:03.919 different pools of energy that they might be writing who 0:19:03.960 --> 0:19:06.160 are their customers and trying to sort of work down 0:19:06.200 --> 0:19:09.320 the chain of where do we expect different kinds of 0:19:09.359 --> 0:19:13.920 full out simultaneous. So that is we fully expect executive shakeups, 0:19:13.960 --> 0:19:17.320 and we've already started to see that happening, like CEO departures, 0:19:17.359 --> 0:19:21.040 web voluntary or otherwise CFOs deciding you know what, I'm 0:19:21.040 --> 0:19:23.000 going to piece back out to JP Morgan, where my 0:19:23.080 --> 0:19:26.520 life was a lot more chill um that kind of 0:19:26.560 --> 0:19:28.680 This is a time of distress, and in a time 0:19:28.720 --> 0:19:32.320 of distress, senior executive and senior management teams are going 0:19:32.359 --> 0:19:35.680 to reorg in ways big and small. Yeah, it feels 0:19:35.680 --> 0:19:38.200 like the crypto sphere is learning a lot of trad 0:19:38.200 --> 0:19:41.919 five less super trad five when it comes to founter, 0:19:41.960 --> 0:19:45.000 party risk, collaterized lending. Well, that's a good idea. But 0:19:45.040 --> 0:19:47.240 I want to go back to the market cap uh 0:19:47.560 --> 0:19:51.240 question here, because obviously Bitcoin has gone down a lot, 0:19:51.280 --> 0:19:54.320 but Ether there's actually a lot of optimism there. The 0:19:54.359 --> 0:19:56.840 Ether market cap has kind of been growing over the 0:19:56.880 --> 0:19:59.040 past few months. Of course, as we lead up to 0:19:59.240 --> 0:20:02.040 the merge. Do you have any sense of whether this 0:20:02.080 --> 0:20:04.200 is going to turn into a sell the news sort 0:20:04.200 --> 0:20:08.320 of event. Well, our colleague Vildana has Her of course, 0:20:08.440 --> 0:20:10.359 has written a series of very smart stories about the 0:20:10.359 --> 0:20:12.639 fact that options activity does suggest that there is a 0:20:12.840 --> 0:20:14.960 dent going to be a sell the news event where 0:20:15.000 --> 0:20:17.480 we have folks positioning themselves for a great, great run. 0:20:17.560 --> 0:20:20.040 Congratulates everybody on the on the merge, We're out there, 0:20:20.240 --> 0:20:22.760 quarter guys. Well done. At the same time, though, you 0:20:22.840 --> 0:20:25.439 do have this, if there's any optimism in crypto right now, 0:20:25.480 --> 0:20:28.159 it is it seems to be concentrating around ether and 0:20:28.240 --> 0:20:31.560 ethereum and the merge and the idea of to use 0:20:31.760 --> 0:20:34.760 the jargon the flippening, right like this, this idea that 0:20:34.800 --> 0:20:37.080 there could be a moment in which the market value 0:20:37.080 --> 0:20:40.760 of ether overtakes that of bitcoin. We are so far 0:20:41.480 --> 0:20:44.000 away from that being a practical reality, but that is 0:20:44.040 --> 0:20:46.560 at least something that folks have some degree of conviction. 0:20:46.600 --> 0:20:49.200 And perfect segue for me to tease your podcast, because 0:20:49.280 --> 0:20:51.680 in recent weeks the flippening has been at the subject 0:20:51.760 --> 0:20:53.879 of one of the episodes. Correct, make sure to check 0:20:53.880 --> 0:20:56.840