1 00:00:12,760 --> 00:00:16,480 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:16,600 --> 00:00:19,200 Speaker 1: My name is Mike Reagan, and I'm a senior editor 3 00:00:19,239 --> 00:00:23,599 Speaker 1: at Bloomberg and I'm Aldona Higher, across asset reporter at Bloomberg. 4 00:00:24,200 --> 00:00:26,160 Speaker 1: This week on the show, it was a pretty interesting 5 00:00:26,200 --> 00:00:29,760 Speaker 1: week in macro news. While Al Salvador is not exactly 6 00:00:29,800 --> 00:00:33,480 Speaker 1: someplace that comes up in market conversations often, this week 7 00:00:33,520 --> 00:00:36,880 Speaker 1: it became the first nation to adopt bitcoin as legal 8 00:00:36,920 --> 00:00:41,479 Speaker 1: tender and didn't exactly go very smoothly. Also, another major 9 00:00:41,560 --> 00:00:44,360 Speaker 1: central bank made it clear it's ready to start tapering 10 00:00:44,440 --> 00:00:47,879 Speaker 1: bond purchases that it's been making to counteract the effects 11 00:00:47,880 --> 00:00:51,760 Speaker 1: of the pandemic now that the recovery is picking up steam. 12 00:00:51,800 --> 00:00:53,840 Speaker 1: What does it all mean. We'll get into it with 13 00:00:53,880 --> 00:00:57,800 Speaker 1: a macro strategist at an investment advisory firm. But first, 14 00:00:58,000 --> 00:01:01,600 Speaker 1: Bill Donna, I have to it's back to school week, 15 00:01:01,680 --> 00:01:03,800 Speaker 1: which is means there's a lot of drama in the 16 00:01:03,800 --> 00:01:07,640 Speaker 1: Regan household with you know, getting your books in the 17 00:01:07,680 --> 00:01:11,160 Speaker 1: backpack and having the right outfit and everything. I was 18 00:01:11,200 --> 00:01:14,360 Speaker 1: trying to figure out what Vill Donna, a young Vill Donna, 19 00:01:14,480 --> 00:01:16,600 Speaker 1: was like back to school time. I'm guessing you were 20 00:01:16,640 --> 00:01:19,040 Speaker 1: like gung ho to get back to school every septeme. Yeah, 21 00:01:19,120 --> 00:01:21,720 Speaker 1: I loved back to school. It was so fun. All 22 00:01:21,720 --> 00:01:24,240 Speaker 1: the new stuff, you know, all of your new notebooks 23 00:01:24,240 --> 00:01:28,800 Speaker 1: and things, all the new grammar. Yes, oh gosh, don't 24 00:01:28,840 --> 00:01:32,240 Speaker 1: get me excited. I figured I should have haven't had 25 00:01:32,240 --> 00:01:34,120 Speaker 1: you give a pep talk to my daughters. I had 26 00:01:34,160 --> 00:01:36,840 Speaker 1: a feeling you were enthusiastic back to How was back 27 00:01:36,880 --> 00:01:38,440 Speaker 1: to school for you when when you were going to 28 00:01:38,480 --> 00:01:42,440 Speaker 1: school in the eighteen eighties? Oh in the eighties, Oh 29 00:01:42,480 --> 00:01:46,360 Speaker 1: my good? Did he It was well, you know, it 30 00:01:46,440 --> 00:01:48,320 Speaker 1: was a one room school house and we had to 31 00:01:48,360 --> 00:01:51,160 Speaker 1: walk both ways uphill in the snow and and that 32 00:01:51,240 --> 00:01:54,680 Speaker 1: sort of thing. But you know, eighties bore. That hurts. 33 00:01:54,680 --> 00:01:59,360 Speaker 1: I'm sorry, that hurts. I'm dealing with this. And I 34 00:01:59,400 --> 00:02:03,720 Speaker 1: had a teenage Sun News so easy and so tenth 35 00:02:03,720 --> 00:02:07,920 Speaker 1: grade now, so with all that stuff. Same thing. That voice, 36 00:02:07,920 --> 00:02:10,840 Speaker 1: there's bed Emens. That's our guest. He's a macro strategist 37 00:02:10,880 --> 00:02:13,440 Speaker 1: at Bedley Global Advisors. Bed House. Back to school going 38 00:02:13,600 --> 00:02:17,720 Speaker 1: in your household? Well, it's actually schools just more. My 39 00:02:17,760 --> 00:02:19,480 Speaker 1: wife's giving me a hard time, but I don't know. 40 00:02:20,400 --> 00:02:25,200 Speaker 1: My son is actually following the instruction, so it's more 41 00:02:25,240 --> 00:02:27,400 Speaker 1: than knuckle sandwich. It gets served every day, you know. 42 00:02:29,840 --> 00:02:31,520 Speaker 1: But that I wanted to talk to you about what 43 00:02:31,560 --> 00:02:33,840 Speaker 1: I mentioned at the opening, there's El Salvador. I know 44 00:02:33,919 --> 00:02:38,640 Speaker 1: you've been watching the El Salvador situation. UM. Fascinating to 45 00:02:38,680 --> 00:02:42,359 Speaker 1: me that we finally have a bitcoin as legal tender, 46 00:02:42,400 --> 00:02:46,720 Speaker 1: albeit not in a major market economy. But I think 47 00:02:46,760 --> 00:02:49,359 Speaker 1: you know it's it's breaking that seal of a government 48 00:02:49,360 --> 00:02:53,160 Speaker 1: actually accepting bitcoin as legal tender. Walk us through sort 49 00:02:53,200 --> 00:02:55,720 Speaker 1: of the implications of it in your view? I mean, 50 00:02:55,800 --> 00:02:58,240 Speaker 1: is this a big deal in sort of the evolution 51 00:02:58,280 --> 00:03:00,840 Speaker 1: of crypto? Um? And though there was kind of a 52 00:03:00,880 --> 00:03:05,640 Speaker 1: glitchy uh introduction uh in El Salvador. How are you 53 00:03:05,639 --> 00:03:07,639 Speaker 1: thinking about it all? You know? What what does this mean? 54 00:03:08,040 --> 00:03:12,639 Speaker 1: We mean sort of from the evolution of bitcoin. It's 55 00:03:12,680 --> 00:03:15,880 Speaker 1: definitely important, staff, Mike, because look, if if you have 56 00:03:15,919 --> 00:03:18,000 Speaker 1: a country as small as l Salve that are is 57 00:03:18,560 --> 00:03:21,239 Speaker 1: and although it doesn't have a major currency and occurrencies 58 00:03:21,280 --> 00:03:25,520 Speaker 1: back to the dollar, it's in economy adopting adopting bitcoin 59 00:03:25,800 --> 00:03:28,800 Speaker 1: in a wider way, like as in everything that you 60 00:03:28,880 --> 00:03:32,359 Speaker 1: want to buy and transacting can be done there in bitcoin. 61 00:03:32,440 --> 00:03:36,400 Speaker 1: To that Shivo wallets that they created where they purchase 62 00:03:36,640 --> 00:03:40,480 Speaker 1: I believe something like forty million dollars of bitcoin in there, 63 00:03:40,600 --> 00:03:43,960 Speaker 1: and so obviously there's a limited demand, but okay, it's 64 00:03:44,040 --> 00:03:47,240 Speaker 1: it's it's enough for people to get really comfortable with 65 00:03:47,360 --> 00:03:51,000 Speaker 1: transacting in something that allows them to be part of 66 00:03:51,000 --> 00:03:54,760 Speaker 1: this digital revolution and not dealing with a black markets. 67 00:03:54,880 --> 00:03:56,600 Speaker 1: Right like some of these countries, I go solve it 68 00:03:56,640 --> 00:03:59,160 Speaker 1: over to or Argentina and Venezuela will probably go this 69 00:03:59,200 --> 00:04:02,120 Speaker 1: way to Yeah, people transact more in the black markets, 70 00:04:02,160 --> 00:04:05,760 Speaker 1: and and and and while they're having an official currency rate, 71 00:04:05,920 --> 00:04:09,480 Speaker 1: that doesn't mean much. So I think the implication of 72 00:04:09,520 --> 00:04:11,840 Speaker 1: it is is that other central banks are taking this 73 00:04:12,400 --> 00:04:15,200 Speaker 1: also serious. And what I noted was just not that 74 00:04:15,280 --> 00:04:17,400 Speaker 1: long ago. I think just a week or two weeks 75 00:04:17,440 --> 00:04:21,279 Speaker 1: before El salvad or you know, launched this bitcoin law, 76 00:04:21,960 --> 00:04:25,839 Speaker 1: the Central Bank of Australia launched a project with the 77 00:04:25,880 --> 00:04:29,560 Speaker 1: Central Bank of South Africa Singapore, and I believe it 78 00:04:29,680 --> 00:04:34,160 Speaker 1: was Korea to look at the way of using a 79 00:04:34,240 --> 00:04:40,159 Speaker 1: digital currency central bank digital currency CBDC and allowed for 80 00:04:40,480 --> 00:04:46,240 Speaker 1: international payments across boarder payments. Really more the institutional version 81 00:04:46,320 --> 00:04:50,000 Speaker 1: of bitcoin and so as that happened as that project 82 00:04:50,000 --> 00:04:52,960 Speaker 1: is under ways called Project Dunbar, and you have this 83 00:04:53,480 --> 00:04:56,840 Speaker 1: l salved Or example. I think we're making a big 84 00:04:56,920 --> 00:05:00,120 Speaker 1: leaps forward here or where ultimately going to be in 85 00:05:00,400 --> 00:05:03,520 Speaker 1: is that although our currency system will not change because 86 00:05:03,560 --> 00:05:06,520 Speaker 1: that would put an end to our conventional amount apolicies. 87 00:05:06,600 --> 00:05:08,560 Speaker 1: It is right, you know that that will not happen. 88 00:05:09,120 --> 00:05:11,520 Speaker 1: But the fact that you're going to transition to a 89 00:05:11,560 --> 00:05:15,280 Speaker 1: digital world where you can settle everything digitally, you can 90 00:05:15,320 --> 00:05:18,920 Speaker 1: transact everything digitally. Can you then imagine that we can 91 00:05:18,960 --> 00:05:22,320 Speaker 1: actually open the stock market during the weekend. That could 92 00:05:22,360 --> 00:05:25,640 Speaker 1: be an implication that sounds big, but it's actually the 93 00:05:25,640 --> 00:05:30,400 Speaker 1: way because if you can instantly settle money and security 94 00:05:30,480 --> 00:05:33,560 Speaker 1: is that fast because of the technology. Yeah, that's a 95 00:05:33,640 --> 00:05:37,640 Speaker 1: huge lead forward right for man kinds. As famous estronaut 96 00:05:37,680 --> 00:05:41,599 Speaker 1: set Vildana just got very excited when you mentioned the 97 00:05:41,600 --> 00:05:43,600 Speaker 1: stock market open on the weekends. That means she'll get 98 00:05:43,640 --> 00:05:47,000 Speaker 1: to work on the weekends, which I think you sometimes 99 00:05:47,040 --> 00:05:50,800 Speaker 1: cover bitcoin whenever it's really volatile. We do tend to 100 00:05:50,839 --> 00:05:53,360 Speaker 1: cover it over the weekends as well. But yeah, my 101 00:05:53,400 --> 00:05:57,200 Speaker 1: eyes did just for all the listeners sort of get 102 00:05:57,240 --> 00:05:59,760 Speaker 1: really wide. But Ben, I do want to ask you. 103 00:05:59,839 --> 00:06:02,760 Speaker 1: It used to be an argument that a lot of 104 00:06:02,760 --> 00:06:06,080 Speaker 1: crypto people made about bitcoin that eventually you're going to 105 00:06:06,160 --> 00:06:10,120 Speaker 1: start seeing it being used to purchase your morning coffee 106 00:06:10,200 --> 00:06:13,120 Speaker 1: or your morning breakfast sandwich or whatever, which never really 107 00:06:13,360 --> 00:06:16,520 Speaker 1: hand out, at least not in the US. It's really 108 00:06:16,680 --> 00:06:20,120 Speaker 1: difficult to to to do something like that. Depending on 109 00:06:20,240 --> 00:06:24,279 Speaker 1: how things play out in El Solvador. Does that mean 110 00:06:24,320 --> 00:06:26,760 Speaker 1: potentially that that could be an argument again for why 111 00:06:26,880 --> 00:06:31,320 Speaker 1: somebody might want to own bitcoin where you might be 112 00:06:31,360 --> 00:06:34,159 Speaker 1: able to use it to transact with your you know, 113 00:06:34,240 --> 00:06:39,279 Speaker 1: your everyday needs. Yeah, I think so, because if people 114 00:06:39,520 --> 00:06:45,640 Speaker 1: get comfortable with this with a cryptocurrency which is volatile, 115 00:06:46,360 --> 00:06:49,360 Speaker 1: and you know, the argument was made when Fel Salvador 116 00:06:49,800 --> 00:06:52,880 Speaker 1: launched this that as as bitcoin sold off because of 117 00:06:52,920 --> 00:06:56,159 Speaker 1: the glitch. Okay, so I'm buying. I just bought a 118 00:06:56,200 --> 00:07:00,919 Speaker 1: pizza that was worth you know, fifty bitcoin dollars of 119 00:07:00,920 --> 00:07:04,240 Speaker 1: bit coin nosworth tony tous. Let's say that's a that's 120 00:07:04,279 --> 00:07:07,720 Speaker 1: pretty strange, right, It would not be uh, you know, 121 00:07:07,920 --> 00:07:11,000 Speaker 1: very pleasant. But I think it's just like when you 122 00:07:11,320 --> 00:07:14,720 Speaker 1: had in the past, how the banking systems so traditional 123 00:07:14,960 --> 00:07:19,000 Speaker 1: of just cash going around that has become very digital. 124 00:07:19,040 --> 00:07:20,960 Speaker 1: I mean, I do most of my payments through my 125 00:07:21,200 --> 00:07:23,960 Speaker 1: through my iPhone or an app most of it. So 126 00:07:24,000 --> 00:07:26,120 Speaker 1: I think that is the direction we're heading with this. 127 00:07:26,840 --> 00:07:30,360 Speaker 1: As you mentioned, there's a fair bit of regulatory um 128 00:07:30,680 --> 00:07:34,240 Speaker 1: oversight that's you needed, and it's not clear who's going 129 00:07:34,280 --> 00:07:39,040 Speaker 1: to be the responsible agency to look after crypto. That's 130 00:07:39,080 --> 00:07:42,160 Speaker 1: I think the big issue in the United States. Um, 131 00:07:42,200 --> 00:07:44,400 Speaker 1: the SEC was regulated, but then you have the I R. 132 00:07:44,480 --> 00:07:46,320 Speaker 1: S and then you have the Treasury Department, then you 133 00:07:46,320 --> 00:07:50,160 Speaker 1: have maybe Department of Justice, and there's another agency. I 134 00:07:50,200 --> 00:07:52,640 Speaker 1: do think that we're not that far away from that 135 00:07:53,040 --> 00:07:57,080 Speaker 1: reality to have crypto being used for payment because last 136 00:07:57,160 --> 00:08:01,120 Speaker 1: year and summer bit quietly, but the Office of Currency Controller, 137 00:08:01,240 --> 00:08:07,160 Speaker 1: which is the regulator for commercial banks, did allow banks 138 00:08:07,200 --> 00:08:11,600 Speaker 1: to accept crypto as a cortical deposit and so that 139 00:08:11,680 --> 00:08:16,480 Speaker 1: people have purchase crypto they could actually deposited at their 140 00:08:16,560 --> 00:08:19,440 Speaker 1: at their bank. And I don't know the exact technical 141 00:08:19,480 --> 00:08:23,120 Speaker 1: specifics of it, but that new SIDEM always was in 142 00:08:23,160 --> 00:08:25,920 Speaker 1: my mind like, okay, so if we're starting with making 143 00:08:26,000 --> 00:08:29,120 Speaker 1: it possible to be a deposit, then it becomes an 144 00:08:29,160 --> 00:08:32,560 Speaker 1: anchor right for for using it as a means of 145 00:08:32,559 --> 00:08:36,600 Speaker 1: payment over time, even though it's still very subject to 146 00:08:37,080 --> 00:08:43,080 Speaker 1: volatility markets, subject to technological challenges, and the concerns over 147 00:08:43,120 --> 00:08:47,560 Speaker 1: the technological chances in frauds and criminal activity that that 148 00:08:47,720 --> 00:08:50,880 Speaker 1: obviously here big concerns about Politically, they want to make 149 00:08:50,880 --> 00:08:54,000 Speaker 1: sure that that obviously doesn't happen. So but I think 150 00:08:54,000 --> 00:08:55,840 Speaker 1: I'll solve it, or a small country it is, it 151 00:08:55,960 --> 00:08:58,760 Speaker 1: is one you know, wants to step forward of this. Uh. 152 00:09:00,600 --> 00:09:03,680 Speaker 1: I find it fascinating that no regulators can sort of 153 00:09:03,720 --> 00:09:05,439 Speaker 1: decide who's in charge of this thing. But I think 154 00:09:05,440 --> 00:09:07,360 Speaker 1: they should put the Space Force in charge of it. 155 00:09:07,440 --> 00:09:09,640 Speaker 1: You know, the goal, the goal is always to send 156 00:09:09,679 --> 00:09:11,520 Speaker 1: these things to the moon. So put the put the 157 00:09:11,520 --> 00:09:14,520 Speaker 1: space to force in charge of regulating it. But but 158 00:09:14,679 --> 00:09:18,280 Speaker 1: I know you've been doing a lot of analysis sort 159 00:09:18,320 --> 00:09:23,559 Speaker 1: of looking at relationships between bitcoin and ethereum and crypto 160 00:09:23,600 --> 00:09:27,720 Speaker 1: in general with the more traditional asset classes in the market, 161 00:09:28,080 --> 00:09:31,760 Speaker 1: oil and stocks at meme stocks. I think you know 162 00:09:32,280 --> 00:09:36,160 Speaker 1: you've noticed some kind of correlations and relationship. Walk us 163 00:09:36,200 --> 00:09:39,480 Speaker 1: through what your analysis of that looks like. You know, 164 00:09:39,760 --> 00:09:43,600 Speaker 1: how does bitcoin sort of fit into the traditional asset classes. 165 00:09:44,200 --> 00:09:47,040 Speaker 1: Is it influencing the prices of I mean Obviously you've 166 00:09:47,040 --> 00:09:50,480 Speaker 1: got your stocks that are exposed to crypto in some way, 167 00:09:50,480 --> 00:09:53,280 Speaker 1: but is it influencing things on a macro level in 168 00:09:53,320 --> 00:09:56,520 Speaker 1: your opinion, Well, you have to start with at last 169 00:09:56,520 --> 00:09:59,520 Speaker 1: point as you're making so you know, the list of 170 00:09:59,600 --> 00:10:04,480 Speaker 1: company needs that have using bitcoin or crypto or having 171 00:10:05,200 --> 00:10:09,360 Speaker 1: a more digitalized business has just compounded as it's increased 172 00:10:09,440 --> 00:10:13,199 Speaker 1: very rapidly, and you know that that does influence the 173 00:10:13,200 --> 00:10:15,480 Speaker 1: stock market because if you take all those companies together 174 00:10:15,520 --> 00:10:18,760 Speaker 1: as a market way, and it's direct or indirect exposure 175 00:10:18,800 --> 00:10:22,480 Speaker 1: to crypto bitcoin, then the fluctuation of bitcoin has become 176 00:10:22,520 --> 00:10:25,079 Speaker 1: more correlated with the changes in the S and P 177 00:10:25,200 --> 00:10:29,000 Speaker 1: five that's particularly this year has been that's been the case. 178 00:10:29,280 --> 00:10:32,160 Speaker 1: That's a big difference from the number of years before. 179 00:10:32,679 --> 00:10:37,439 Speaker 1: Then obviously as we had the more wider adoption, if 180 00:10:37,440 --> 00:10:41,559 Speaker 1: not recognition on institutional side to hit the people who 181 00:10:41,600 --> 00:10:46,000 Speaker 1: manage money institutionally looking at crypto as this must be 182 00:10:46,040 --> 00:10:49,280 Speaker 1: another alternative that plays a big role too, And that's 183 00:10:49,320 --> 00:10:52,400 Speaker 1: where the regulatory parts of it comes come into play 184 00:10:52,480 --> 00:10:56,280 Speaker 1: when it comes to the SEC and and the Treasury Department, 185 00:10:57,240 --> 00:10:59,880 Speaker 1: and then you as you have this sort of correlate 186 00:11:00,000 --> 00:11:05,199 Speaker 1: issue between bitcoin and broader markets. Positive, it's been a 187 00:11:05,240 --> 00:11:09,120 Speaker 1: positive correlation this year. You may think about and that 188 00:11:09,240 --> 00:11:11,440 Speaker 1: you can take the steps further of Okay, this could 189 00:11:11,520 --> 00:11:16,320 Speaker 1: effect different assets, not just equities, but it could spill 190 00:11:16,400 --> 00:11:20,160 Speaker 1: over to other assets. Now, what's interesting with with with 191 00:11:20,320 --> 00:11:24,760 Speaker 1: crypto and an etherium for example? Two, it's obviously high 192 00:11:24,920 --> 00:11:27,720 Speaker 1: energy uses right and one thing that has happened with 193 00:11:27,760 --> 00:11:30,760 Speaker 1: the etherium as it got back in significant demand because 194 00:11:30,760 --> 00:11:33,240 Speaker 1: of the upgrade London upgrades that happened a few weeks 195 00:11:33,240 --> 00:11:37,400 Speaker 1: ago and the fact that that the non fungible tokens 196 00:11:37,920 --> 00:11:40,480 Speaker 1: have exploded in trading, so people very excited about that. 197 00:11:40,600 --> 00:11:42,760 Speaker 1: But you need etherium for that. Eterium is of course 198 00:11:42,760 --> 00:11:46,359 Speaker 1: related to the big to the blockchain technology. The ethereum 199 00:11:46,480 --> 00:11:49,280 Speaker 1: does require a fair bit of energy and so etherium 200 00:11:49,320 --> 00:11:51,720 Speaker 1: gas prices as they say, which are you can find 201 00:11:51,720 --> 00:11:54,400 Speaker 1: online I have jumped. So there's a bit of a 202 00:11:54,400 --> 00:11:59,040 Speaker 1: relationship too of the physical markets with the space of crypto. 203 00:11:59,559 --> 00:12:02,120 Speaker 1: So at think it all points to the same direction 204 00:12:02,160 --> 00:12:05,120 Speaker 1: of as we were talking in the previous discussion, was 205 00:12:06,200 --> 00:12:10,120 Speaker 1: you have crypto assets at becoming part of the investment universe. 206 00:12:11,120 --> 00:12:15,520 Speaker 1: The transition from what it was like a very esoteric 207 00:12:15,200 --> 00:12:21,360 Speaker 1: technology that was off exchange and very privately managed and 208 00:12:21,400 --> 00:12:24,920 Speaker 1: traded becomes more wider adopters. And then what you're going 209 00:12:24,960 --> 00:12:28,560 Speaker 1: to get now is crypto stock, scripto bounds, crypto features, 210 00:12:28,600 --> 00:12:32,160 Speaker 1: which which exists Bitcoin features, and as we moved to 211 00:12:32,240 --> 00:12:34,760 Speaker 1: that e t F, which is I think likely to 212 00:12:34,800 --> 00:12:38,280 Speaker 1: happen at some point, you get the retail public even 213 00:12:38,280 --> 00:12:41,720 Speaker 1: more involved, at different retail public than those meme traders 214 00:12:41,760 --> 00:12:44,280 Speaker 1: that you talk about, which is the link. They've moved 215 00:12:44,280 --> 00:12:47,920 Speaker 1: from memes stocks to non fungible tokens recently for some reason. 216 00:12:48,520 --> 00:12:50,320 Speaker 1: But you know the fact that you get then Meme 217 00:12:50,360 --> 00:12:53,520 Speaker 1: stucks with saying micro Strategy is a company that's considered 218 00:12:53,520 --> 00:12:55,800 Speaker 1: to me, memes stuck. Yeah, that's all about bitcoin, right, 219 00:12:55,840 --> 00:13:00,000 Speaker 1: micro Strategy. So there goes those linkages between meme stucks, 220 00:13:00,160 --> 00:13:03,520 Speaker 1: non fungible tokens, and bitcoin right. So I think it's 221 00:13:03,320 --> 00:13:07,480 Speaker 1: it's just morphing into this larger and larger universe of 222 00:13:08,000 --> 00:13:22,680 Speaker 1: the relationships between bitcoin, crypto aspects, and financialists. And not 223 00:13:22,800 --> 00:13:25,840 Speaker 1: to spend too much time on cryptocurrencies, although it is 224 00:13:25,920 --> 00:13:27,920 Speaker 1: so fun to talk about, and I do have questions 225 00:13:27,960 --> 00:13:30,520 Speaker 1: about um the broader market as well, but I want 226 00:13:30,520 --> 00:13:32,240 Speaker 1: to ask you one more thing. I was looking at 227 00:13:32,280 --> 00:13:35,640 Speaker 1: one of your notes and you wrote that bitcoin slide 228 00:13:35,760 --> 00:13:39,760 Speaker 1: is that necessary means to achieve digitization of financial markets? 229 00:13:40,040 --> 00:13:41,719 Speaker 1: And I wanted to ask you what you meant by that, 230 00:13:41,840 --> 00:13:44,680 Speaker 1: and maybe in particular if you can focus on that 231 00:13:44,720 --> 00:13:49,160 Speaker 1: bitcoin slide part of the question. So we had now 232 00:13:49,240 --> 00:13:52,560 Speaker 1: three sell offs and called the slide, but the sell 233 00:13:52,600 --> 00:13:55,880 Speaker 1: off in bitcoin, and there's all these particular reasons for 234 00:13:55,960 --> 00:13:59,000 Speaker 1: why that happened. The last one this was more specifically 235 00:13:59,000 --> 00:14:02,320 Speaker 1: ready to fitness realy. Uh just I guess a market 236 00:14:02,360 --> 00:14:07,680 Speaker 1: reaction of people being overly excited along bitcoin and there's 237 00:14:07,679 --> 00:14:11,160 Speaker 1: a glitch and people get a little scared and itself off. 238 00:14:11,600 --> 00:14:13,760 Speaker 1: But the real the way I look at that is 239 00:14:13,800 --> 00:14:19,479 Speaker 1: to say that volatility that we're experiencing is indeed maturing 240 00:14:19,520 --> 00:14:23,680 Speaker 1: asset right of it should actually be very volatile as 241 00:14:23,680 --> 00:14:27,040 Speaker 1: it becomes more matured, because there's more more people involved 242 00:14:27,320 --> 00:14:30,280 Speaker 1: in that space, right, And there's no surprise that then 243 00:14:30,760 --> 00:14:32,680 Speaker 1: if something like with this event's reel event would you 244 00:14:32,720 --> 00:14:36,440 Speaker 1: would have not really mattered much at all, suddenly becomes 245 00:14:36,640 --> 00:14:39,640 Speaker 1: very sought out on the web, and it leads to 246 00:14:39,680 --> 00:14:42,680 Speaker 1: volatility of bitcoin even though it didn't need to be 247 00:14:42,840 --> 00:14:45,400 Speaker 1: that way. It was just you know, a short glitch 248 00:14:45,880 --> 00:14:49,560 Speaker 1: in the app chief of wallet as opposed to anything 249 00:14:50,080 --> 00:14:53,160 Speaker 1: with where bitcoin was mind or traded on exchange or 250 00:14:53,160 --> 00:14:55,520 Speaker 1: anything like that. Right, So, so I think it's a 251 00:14:55,520 --> 00:14:58,800 Speaker 1: function of that that it becomes a it's maturing, and 252 00:14:58,840 --> 00:15:03,160 Speaker 1: therefore the volatility isn't necessary means for us to make 253 00:15:03,200 --> 00:15:09,360 Speaker 1: that further step to this completely digitalized financial markets. I 254 00:15:09,440 --> 00:15:12,920 Speaker 1: find amazing that we already making steps that way. The 255 00:15:12,960 --> 00:15:17,040 Speaker 1: central maker Thailand has issued the bonds over blockchain settled it, 256 00:15:17,280 --> 00:15:21,720 Speaker 1: and the European Investment Bank, which is the agency Europe 257 00:15:21,760 --> 00:15:27,080 Speaker 1: that looks after infrastructure investments, is issuing bonds over blockchain. 258 00:15:27,720 --> 00:15:32,920 Speaker 1: When you gets institutions involved testing that that ours, this 259 00:15:33,040 --> 00:15:36,520 Speaker 1: is going to become very quickly mainstream within I predict 260 00:15:36,840 --> 00:15:39,640 Speaker 1: alms will predict within the next year. So we're going 261 00:15:39,680 --> 00:15:42,760 Speaker 1: to have a lot of corporations doing this um same way, 262 00:15:42,800 --> 00:15:45,720 Speaker 1: all adopting that technology. But it cannot come along with 263 00:15:45,920 --> 00:15:49,520 Speaker 1: more volatility as more more people are getting involved in this, right, 264 00:15:49,560 --> 00:15:51,720 Speaker 1: And that's I think where I'm coming from. But I 265 00:15:51,760 --> 00:15:54,480 Speaker 1: wanted to switch gears a little bit, uh to another topic. 266 00:15:54,480 --> 00:15:57,360 Speaker 1: I know you've been watching closely. That was Christine Laguard 267 00:15:57,440 --> 00:16:00,120 Speaker 1: at the European Central Bank this week. I feel she 268 00:16:00,200 --> 00:16:03,280 Speaker 1: pulled a bit of a Jedi mind trick by basically 269 00:16:03,320 --> 00:16:06,480 Speaker 1: announcing tapering and then saying, no, I'm not tapering. You know, 270 00:16:07,440 --> 00:16:11,480 Speaker 1: but you know, given the negative yields in Europe, and 271 00:16:11,520 --> 00:16:14,280 Speaker 1: the case has always made whenever the question is well, 272 00:16:14,320 --> 00:16:18,200 Speaker 1: who's buying US treasuries at these yields that the argument is, well, 273 00:16:18,240 --> 00:16:21,040 Speaker 1: have you seen the yields in Europe? Um, you know, 274 00:16:21,560 --> 00:16:24,800 Speaker 1: how big of a deal is DCB sort of taking 275 00:16:24,840 --> 00:16:27,200 Speaker 1: the foot off the gas a little bit with their 276 00:16:27,240 --> 00:16:30,520 Speaker 1: emergency pandemic program. I mean, is this It doesn't seem 277 00:16:30,560 --> 00:16:33,080 Speaker 1: like it's caught anyone by surprise in the markets. You 278 00:16:33,120 --> 00:16:36,000 Speaker 1: know that the euro was kind of mixed against most currencies. 279 00:16:36,040 --> 00:16:38,680 Speaker 1: I didn't see any sort of dramatic moves. But how 280 00:16:38,720 --> 00:16:42,000 Speaker 1: are you thinking about this announcement from Regard this week? 281 00:16:42,120 --> 00:16:45,680 Speaker 1: Is it, you know, changed the calculus at all? Thinking 282 00:16:45,720 --> 00:16:48,240 Speaker 1: about um, you know, bond markets going forward for the 283 00:16:48,320 --> 00:16:50,720 Speaker 1: rest of the year. It could be mine because I 284 00:16:51,000 --> 00:16:53,240 Speaker 1: think like so she says that you know, the lady 285 00:16:53,280 --> 00:16:57,160 Speaker 1: can't can't taper, and it isn't tapering that that reference 286 00:16:57,240 --> 00:17:00,640 Speaker 1: to market tenters speech. But in the in the yes, 287 00:17:00,720 --> 00:17:03,800 Speaker 1: it's they are right whatever you call slowing down those 288 00:17:03,800 --> 00:17:07,960 Speaker 1: purchases and any survey it ultimately is taper. But the market, 289 00:17:08,040 --> 00:17:10,440 Speaker 1: you know, the bond marketing Europe rallies on this because 290 00:17:11,240 --> 00:17:13,480 Speaker 1: you know, whatever they are slowing down the pace with, 291 00:17:13,880 --> 00:17:16,320 Speaker 1: it still covers a fair bit of issuance well into 292 00:17:16,680 --> 00:17:18,880 Speaker 1: next year. And that's just I think the reason why 293 00:17:18,920 --> 00:17:22,080 Speaker 1: there was a bit of a relief, but almost all 294 00:17:22,119 --> 00:17:25,119 Speaker 1: of it issuance, right, And yeah, fair fair bit of 295 00:17:25,359 --> 00:17:28,040 Speaker 1: But here's the interesting change it's going to happen um 296 00:17:28,720 --> 00:17:31,280 Speaker 1: is the e c p IS is very smart running 297 00:17:31,280 --> 00:17:33,560 Speaker 1: two programs at the same time. Right, they have this 298 00:17:33,640 --> 00:17:37,760 Speaker 1: emergency program called PEP, and they have this Q program. 299 00:17:38,400 --> 00:17:42,120 Speaker 1: It's called a p P and a Q program will 300 00:17:42,160 --> 00:17:46,000 Speaker 1: come back in a more meaningful way as the PET 301 00:17:46,040 --> 00:17:49,960 Speaker 1: program buying sound and they she talked about that extensively. 302 00:17:50,600 --> 00:17:53,359 Speaker 1: But the importance for the bond market is that under 303 00:17:53,359 --> 00:17:56,560 Speaker 1: that PET program, we really are addressing the pandemic and 304 00:17:56,600 --> 00:17:58,840 Speaker 1: we're going to buy large volumes as much we can 305 00:17:59,160 --> 00:18:03,760 Speaker 1: to keep market really really loose influential conditions and everything 306 00:18:03,800 --> 00:18:07,600 Speaker 1: functioning well till the pandemic video is weighing off is 307 00:18:07,640 --> 00:18:09,679 Speaker 1: the first step for the easy B to acknowledge that 308 00:18:09,720 --> 00:18:13,640 Speaker 1: the pandemic is in their minds slowly changing, but it 309 00:18:13,680 --> 00:18:16,199 Speaker 1: is waning. And they made the point about that they 310 00:18:16,280 --> 00:18:20,240 Speaker 1: hit the vaccination, which is a key metric to the ECB. 311 00:18:20,880 --> 00:18:24,440 Speaker 1: So this that change happening. Plus they're going to make 312 00:18:25,080 --> 00:18:28,000 Speaker 1: the app the normal keyv program a more important part 313 00:18:28,040 --> 00:18:31,560 Speaker 1: of their their two kit. And the reason why that 314 00:18:31,600 --> 00:18:35,040 Speaker 1: matters is because that program is designed to bring inflation 315 00:18:35,080 --> 00:18:37,600 Speaker 1: back to the target and keep it to the target. 316 00:18:38,440 --> 00:18:41,880 Speaker 1: And that program is really the guidance on that is 317 00:18:41,920 --> 00:18:45,160 Speaker 1: about interest rate hikes in the future once you succeed 318 00:18:45,160 --> 00:18:48,040 Speaker 1: by bringing inflation back to the target. So my view, Illness, 319 00:18:48,080 --> 00:18:50,600 Speaker 1: is that yes, we've got this nice rally on this bat, 320 00:18:51,240 --> 00:18:55,119 Speaker 1: you know, okay, slowly adjusting issues still covered, But on 321 00:18:55,160 --> 00:18:57,679 Speaker 1: the app, the issues and issues or bond is not 322 00:18:57,800 --> 00:19:01,320 Speaker 1: much covered. It doesn't need to be an eight billion program, 323 00:19:01,359 --> 00:19:04,840 Speaker 1: probably much smaller, maybe forty maybe thirty billion. Do you 324 00:19:04,840 --> 00:19:08,000 Speaker 1: ever put pressure on yields in the future. Plus it's 325 00:19:08,000 --> 00:19:10,800 Speaker 1: really designed to bring inflation back, which the marketable does know, 326 00:19:10,920 --> 00:19:14,440 Speaker 1: like once you get there the rate hig so to speak, 327 00:19:14,480 --> 00:19:18,960 Speaker 1: will be coming into the horizon, and and that's that's 328 00:19:19,080 --> 00:19:20,760 Speaker 1: I think what's going to play from here now. Now, 329 00:19:20,800 --> 00:19:24,680 Speaker 1: why does this matter even further is that year Zone 330 00:19:24,800 --> 00:19:27,919 Speaker 1: government bonds, as you say, are negative yielding majority of it. 331 00:19:28,440 --> 00:19:30,840 Speaker 1: So you have this negative yielding bond indecks that you 332 00:19:30,880 --> 00:19:34,119 Speaker 1: can look up on Bloomberg. That was something like I 333 00:19:34,160 --> 00:19:36,800 Speaker 1: think sixteen seventeen trilling recently, and it has fallen by 334 00:19:37,080 --> 00:19:40,000 Speaker 1: a few trilling because yes, boond deals and French governmentent 335 00:19:40,080 --> 00:19:41,680 Speaker 1: deals and all those have all moved up a little 336 00:19:41,680 --> 00:19:45,160 Speaker 1: bit higher. I think it's going to continue that way, 337 00:19:45,280 --> 00:19:49,120 Speaker 1: which means that the deflationary expectations in those bond prices 338 00:19:49,160 --> 00:19:54,159 Speaker 1: in Europe are really moving away. As the ECB is 339 00:19:54,200 --> 00:19:57,680 Speaker 1: succeeding with the strategy of managing the pandemic then bringing 340 00:19:57,720 --> 00:20:01,160 Speaker 1: that new that old TV program back to life again 341 00:20:01,200 --> 00:20:04,840 Speaker 1: inflation to the target. Some people may be sounding like, wow, 342 00:20:04,920 --> 00:20:07,760 Speaker 1: this that's a pretty ambitious man, because that's never gonna 343 00:20:07,760 --> 00:20:10,040 Speaker 1: happen Europe. But I think that they have some window 344 00:20:10,080 --> 00:20:13,359 Speaker 1: here to succeed with that. So I think negative feels 345 00:20:13,440 --> 00:20:18,400 Speaker 1: your will somewhat disappear entirely, but will someone even though 346 00:20:18,440 --> 00:20:37,160 Speaker 1: the e C you will keep buying bosh. I appreciate that. Then, 347 00:20:37,200 --> 00:20:40,679 Speaker 1: you know, Bildna gets bored with the ECB talk. She 348 00:20:40,800 --> 00:20:44,720 Speaker 1: wants to talk about stunks with with an end stuns 349 00:20:44,880 --> 00:20:47,280 Speaker 1: right right, I'm not going to use that word. But 350 00:20:47,320 --> 00:20:50,320 Speaker 1: I did want to bring us back to the domestic, 351 00:20:50,880 --> 00:20:53,919 Speaker 1: the U S stock market, because something that we were 352 00:20:54,000 --> 00:20:57,840 Speaker 1: looking at this week is strength in tech, in particular 353 00:20:58,080 --> 00:21:01,520 Speaker 1: the big cap text talks, and we found that about 354 00:21:01,640 --> 00:21:05,359 Speaker 1: fifty of SMP five hundred stocks are down ten percent 355 00:21:05,440 --> 00:21:10,040 Speaker 1: since May, and that's true of of Russell two thousand stocks. 356 00:21:10,200 --> 00:21:13,680 Speaker 1: So what does that tell us about tech strength and 357 00:21:13,840 --> 00:21:17,520 Speaker 1: why investors might be treating big tech as safe havens 358 00:21:17,600 --> 00:21:20,760 Speaker 1: right now? And is it at all tied to some 359 00:21:20,800 --> 00:21:23,639 Speaker 1: of the worries that people have about COVID and the 360 00:21:23,760 --> 00:21:28,600 Speaker 1: delta variant. It's certainly with that IKS so there's uncertainty 361 00:21:28,600 --> 00:21:32,600 Speaker 1: about delta variant. And really because of the delay of 362 00:21:32,680 --> 00:21:35,000 Speaker 1: going back to office, is made to stay at home 363 00:21:35,119 --> 00:21:39,040 Speaker 1: trade so to speak. You know again you know flaring 364 00:21:39,119 --> 00:21:41,520 Speaker 1: up in in in in value right, the meaning it's 365 00:21:41,560 --> 00:21:44,480 Speaker 1: it's becoming populican at tech plays a big role in it. 366 00:21:44,600 --> 00:21:47,680 Speaker 1: But I think it's also to do with that this 367 00:21:47,840 --> 00:21:52,720 Speaker 1: defensive nature of the market goes further than tech. And 368 00:21:52,760 --> 00:21:55,520 Speaker 1: that's that's fifty fifty portfolio. I'm jumping maybe to the 369 00:21:55,560 --> 00:21:57,640 Speaker 1: topics if you wanted to discuss, but it's fifty fifty. 370 00:21:57,720 --> 00:22:02,520 Speaker 1: Idea that I was looking at was you have industrial staples, 371 00:22:02,920 --> 00:22:06,440 Speaker 1: and you know this type of even utilities, and that 372 00:22:06,560 --> 00:22:11,320 Speaker 1: includes TACK considerably defensive. Some of those have actually lacked 373 00:22:11,400 --> 00:22:15,040 Speaker 1: TACH even though the defensive sectors. And at the same 374 00:22:15,040 --> 00:22:17,960 Speaker 1: time you have the offensive side of the market, retail, 375 00:22:19,000 --> 00:22:21,800 Speaker 1: some of the reopening sectors that are still much value 376 00:22:21,840 --> 00:22:25,040 Speaker 1: in there, let's say airlines as an example. And so 377 00:22:25,080 --> 00:22:29,119 Speaker 1: I thought about this fifty fifty portfolio of those combined 378 00:22:29,720 --> 00:22:32,520 Speaker 1: and tracking that against the tech sector. And it actually, 379 00:22:32,760 --> 00:22:36,240 Speaker 1: interestingly how the fifty fifty portfolio is performing better now 380 00:22:36,440 --> 00:22:39,639 Speaker 1: than tech. And you can also see this from the 381 00:22:39,760 --> 00:22:44,720 Speaker 1: relative value between tech and say industrials. So industrials have 382 00:22:44,840 --> 00:22:47,480 Speaker 1: been really strong because of the pandemic and all the 383 00:22:47,480 --> 00:22:51,080 Speaker 1: production is needed, all the pipeline pressures a sorry supply 384 00:22:51,160 --> 00:22:54,439 Speaker 1: chain supply chain pressures that we have. But if you 385 00:22:54,480 --> 00:22:58,719 Speaker 1: take the relative ratio between tech and industrials, that's now 386 00:22:58,760 --> 00:23:01,359 Speaker 1: a lot lower than it was during the major disruption 387 00:23:01,400 --> 00:23:05,320 Speaker 1: phases in January or last year when really attack was 388 00:23:05,440 --> 00:23:10,160 Speaker 1: huge the outperforming. So there is strengthen tech, but it's 389 00:23:10,200 --> 00:23:12,359 Speaker 1: not as strong anymore, I think if you compared to 390 00:23:12,400 --> 00:23:15,159 Speaker 1: industrials that has been before. At the same time, the 391 00:23:15,200 --> 00:23:19,280 Speaker 1: market to your point is defensive or getting more defensive, 392 00:23:19,960 --> 00:23:21,840 Speaker 1: which is I think also now the debate in the 393 00:23:21,920 --> 00:23:25,440 Speaker 1: market you had Interestingly b of Ay were really barished 394 00:23:25,440 --> 00:23:28,399 Speaker 1: on the market, upgraded there and here in target, but 395 00:23:28,440 --> 00:23:31,600 Speaker 1: I still buries. You have another more Stanley who are 396 00:23:31,640 --> 00:23:34,160 Speaker 1: much more bullish and they have kind of become more cautious. 397 00:23:34,600 --> 00:23:36,879 Speaker 1: I think that speaks to this market ready to have 398 00:23:37,000 --> 00:23:40,159 Speaker 1: some sort of correction again and tack therefore place this 399 00:23:40,280 --> 00:23:43,720 Speaker 1: defensive role. You know, it is an easy position to 400 00:23:43,800 --> 00:23:46,800 Speaker 1: be in if you do get this draw down so 401 00:23:46,920 --> 00:23:49,520 Speaker 1: to speak. But I would say though this that as 402 00:23:49,560 --> 00:23:53,160 Speaker 1: the last point the draw down ultimately will really happen. 403 00:23:53,240 --> 00:23:57,000 Speaker 1: I think because of the economy shifting again from what 404 00:23:57,119 --> 00:24:00,520 Speaker 1: we had a bit of a delta impact of number 405 00:24:00,520 --> 00:24:04,280 Speaker 1: of months of weeks becoming again more visible, that that's 406 00:24:04,320 --> 00:24:07,960 Speaker 1: going to weigh because that way full taper will taper 407 00:24:07,960 --> 00:24:11,040 Speaker 1: off and then the tapering from the fat comes into play. 408 00:24:11,320 --> 00:24:16,040 Speaker 1: Plus the bunch of resolution that's being negotiated is a 409 00:24:16,080 --> 00:24:19,040 Speaker 1: big pressure to get that really through. There's plenty of 410 00:24:19,119 --> 00:24:22,160 Speaker 1: that fundamental vision to see a draw down in the market, 411 00:24:22,800 --> 00:24:25,800 Speaker 1: which then would make tech I think, a bit vulnerable 412 00:24:25,880 --> 00:24:29,240 Speaker 1: ultimately at a large s capturle on the perform. So 413 00:24:30,280 --> 00:24:33,560 Speaker 1: tech is in demands because of defense. But I think 414 00:24:33,600 --> 00:24:35,480 Speaker 1: there's come a moment that this draw down in the 415 00:24:35,520 --> 00:24:39,600 Speaker 1: markets is upon us again, as all these opinions are gatting, 416 00:24:39,600 --> 00:24:44,120 Speaker 1: converging to one another, and everybody's getting cautious. Yeah, I'm 417 00:24:44,119 --> 00:24:46,120 Speaker 1: curious about that, but I think in one note, correct 418 00:24:46,160 --> 00:24:48,480 Speaker 1: me if I'm wrong. But you mentioned that one possible 419 00:24:48,640 --> 00:24:51,480 Speaker 1: catalyst for a drawdown could be sort of a renewed 420 00:24:51,640 --> 00:24:54,399 Speaker 1: rotation into Europe or other parts of the world. And 421 00:24:55,000 --> 00:24:59,000 Speaker 1: you know, how are you thinking about that relative value globally? 422 00:24:59,160 --> 00:25:01,919 Speaker 1: I mean, if we especially here in the US, you know, 423 00:25:01,920 --> 00:25:05,840 Speaker 1: obviously we're we're kind of plateauing out on vaccines. You know, 424 00:25:05,880 --> 00:25:09,840 Speaker 1: we we seem to have this hesitancy to vaccination that 425 00:25:10,640 --> 00:25:12,520 Speaker 1: parts of Europe and the rest of the world don't 426 00:25:12,600 --> 00:25:16,919 Speaker 1: quite have. Um at the same time, you know, uh, 427 00:25:17,400 --> 00:25:19,800 Speaker 1: it doesn't look like this three and a half trillion 428 00:25:19,840 --> 00:25:22,800 Speaker 1: dollar budget plan from Biden is is going to pass 429 00:25:22,920 --> 00:25:26,159 Speaker 1: without some some cuts to it. We've got the that 430 00:25:26,280 --> 00:25:32,040 Speaker 1: treaded UH debt sailing approaching again and the famous extraordinary 431 00:25:32,080 --> 00:25:34,400 Speaker 1: measures and all that. Is it a time to start 432 00:25:34,440 --> 00:25:37,119 Speaker 1: looking outside of the US and start looking overseas. Do 433 00:25:37,119 --> 00:25:40,280 Speaker 1: you think you could use it as an argument micas 434 00:25:40,400 --> 00:25:44,359 Speaker 1: Um if we had some relative under performance of Asian 435 00:25:44,400 --> 00:25:48,679 Speaker 1: markets to the US, because Asia was the first resion 436 00:25:48,720 --> 00:25:52,199 Speaker 1: to come out of pandemic without much pain, but there 437 00:25:52,240 --> 00:25:55,600 Speaker 1: was also the region where the vaccinations were really slow 438 00:25:56,000 --> 00:25:58,960 Speaker 1: in the first phase. Now they're picking up really rapidly, 439 00:25:59,119 --> 00:26:01,639 Speaker 1: right and and it's not just in Singapore. Is happening 440 00:26:01,640 --> 00:26:04,399 Speaker 1: also in even markets at Hong Kong, but it was 441 00:26:04,520 --> 00:26:08,200 Speaker 1: huge hesitancy about vaccinations. And Japan now too has picked 442 00:26:08,280 --> 00:26:12,480 Speaker 1: up really quickly. So Asia is getting in that respect 443 00:26:12,520 --> 00:26:14,879 Speaker 1: a bit in a better position. If you think about 444 00:26:15,000 --> 00:26:19,240 Speaker 1: this rotation trade, which really a momentum trade, right that 445 00:26:19,240 --> 00:26:23,280 Speaker 1: that has been playing the entire pandemic. Each time one 446 00:26:23,520 --> 00:26:26,520 Speaker 1: area under performs another area, and a progress made in 447 00:26:26,560 --> 00:26:28,520 Speaker 1: the pandemic, and one way or the other, right, whether 448 00:26:28,560 --> 00:26:33,119 Speaker 1: the lockdowns end or vaccinations increase the money flows to 449 00:26:33,400 --> 00:26:37,080 Speaker 1: that under that relative underperforming area. In this case, now 450 00:26:37,119 --> 00:26:40,399 Speaker 1: it's it's Asia specific area. Think of Singapore, think of 451 00:26:40,440 --> 00:26:44,120 Speaker 1: Hong Kong, think of New Zealand, think of Japan. And yeah, 452 00:26:44,160 --> 00:26:46,040 Speaker 1: if you look at an at a graph where you 453 00:26:46,119 --> 00:26:49,960 Speaker 1: normalize those ets versus dispiety, that is a gap, right, 454 00:26:50,040 --> 00:26:53,080 Speaker 1: and I think it will not pret entirely close that gap, 455 00:26:53,440 --> 00:26:56,000 Speaker 1: but it will definitely be a catch up here really 456 00:26:56,040 --> 00:26:59,520 Speaker 1: playing on on again, this reopening cyclical momentum idea that 457 00:26:59,560 --> 00:27:03,560 Speaker 1: we've been into and since say April of last year, 458 00:27:03,640 --> 00:27:06,399 Speaker 1: when we come out of the depth of the of 459 00:27:06,440 --> 00:27:09,800 Speaker 1: the of the worst of the pandemic. Europe on the 460 00:27:09,800 --> 00:27:12,280 Speaker 1: other hand, is now a little bit in a phase 461 00:27:12,359 --> 00:27:15,960 Speaker 1: of that. Yes, E c B is my view, tapering 462 00:27:16,080 --> 00:27:20,480 Speaker 1: the lady can taper, right, So it is happening, and 463 00:27:20,480 --> 00:27:22,320 Speaker 1: and you can kind of tell right it's it starts 464 00:27:22,480 --> 00:27:25,000 Speaker 1: like way way on the markets there that they're down 465 00:27:25,000 --> 00:27:27,639 Speaker 1: more month to day so far since all that hawkey 466 00:27:27,880 --> 00:27:30,040 Speaker 1: language came out and now today we get the news 467 00:27:30,680 --> 00:27:34,199 Speaker 1: then then US markets or Asian markets. So so I 468 00:27:34,240 --> 00:27:37,080 Speaker 1: do think that the Europe probably despite the success with 469 00:27:37,119 --> 00:27:42,080 Speaker 1: vaccination rates, will deal now with more the policy changing 470 00:27:42,320 --> 00:27:46,159 Speaker 1: to degree. So that's an interesting aspect of the global 471 00:27:46,200 --> 00:27:50,000 Speaker 1: macro landscape too, right because if you look at Asia Pacific, 472 00:27:50,760 --> 00:27:54,360 Speaker 1: New Zealand and Korea for example, they booked success against 473 00:27:54,359 --> 00:27:58,520 Speaker 1: the virus and they now seeing their bunches normalized was 474 00:27:58,560 --> 00:28:01,920 Speaker 1: two on the tenure. So it does show that when 475 00:28:01,960 --> 00:28:05,280 Speaker 1: you get that advice better on the control, that interests 476 00:28:05,359 --> 00:28:08,840 Speaker 1: can depart from the virus influence on the pandemic at 477 00:28:08,920 --> 00:28:12,919 Speaker 1: that's important observation. And the second ones is Europe that 478 00:28:13,600 --> 00:28:16,840 Speaker 1: you made a huge progress with all the vaccination, you're 479 00:28:16,880 --> 00:28:19,760 Speaker 1: getting the situation. They're also better under control. Now you 480 00:28:19,760 --> 00:28:24,520 Speaker 1: can focus on adjusting policy and that will affect markets 481 00:28:25,480 --> 00:28:28,600 Speaker 1: negatively inequities there right, So I think if you look 482 00:28:28,640 --> 00:28:32,760 Speaker 1: at both examples, I think the opportunities in Asia specific 483 00:28:32,760 --> 00:28:35,760 Speaker 1: equalities they have lacked the US and you know the 484 00:28:35,760 --> 00:28:38,400 Speaker 1: this progress in the pandemic there, but that also means 485 00:28:38,560 --> 00:28:41,960 Speaker 1: yields normalizing, So there is that risk on trade where 486 00:28:42,040 --> 00:28:43,800 Speaker 1: the Europe is a bit of the opposite way. You 487 00:28:43,840 --> 00:28:46,880 Speaker 1: get a bit of traction attraction on equalities we are 488 00:28:47,000 --> 00:28:49,760 Speaker 1: in the US. Not that that in that situation just yet, 489 00:28:49,800 --> 00:28:52,120 Speaker 1: but the yields of trasies are kind of arranged around 490 00:28:52,120 --> 00:28:55,080 Speaker 1: the boxing, and so is the SNP. So I do 491 00:28:55,160 --> 00:28:57,760 Speaker 1: think we're gonna go to that scenario. I mean, I 492 00:28:57,760 --> 00:28:59,960 Speaker 1: would expect us that we will get to a point 493 00:29:00,040 --> 00:29:03,600 Speaker 1: where fields are going to be reflecting more of a 494 00:29:03,680 --> 00:29:07,000 Speaker 1: normal economy that is not so much anymore the influence 495 00:29:07,040 --> 00:29:11,480 Speaker 1: of the pandemic as tapering then gets on the way. 496 00:29:11,800 --> 00:29:15,560 Speaker 1: Tiden up your straight jackets. It's time for the craziest 497 00:29:15,560 --> 00:29:19,920 Speaker 1: things we saw in markets this week? Now the thought, 498 00:29:19,960 --> 00:29:22,920 Speaker 1: as you know, Ben is no stranger to this podcast, 499 00:29:23,000 --> 00:29:25,840 Speaker 1: it's not his first time at the rodeo, so I 500 00:29:25,920 --> 00:29:29,000 Speaker 1: know he came prepared with the crazy thing for us. Bend, 501 00:29:29,480 --> 00:29:31,160 Speaker 1: Let's have it. What's the craziest thing you saw in 502 00:29:31,240 --> 00:29:34,720 Speaker 1: markets this week? So you know, you know it's a 503 00:29:34,720 --> 00:29:37,240 Speaker 1: bit from history too that you know. I had once 504 00:29:37,320 --> 00:29:39,360 Speaker 1: Twitter account of while back, and it got hacked and 505 00:29:39,400 --> 00:29:42,480 Speaker 1: all kinds of funky stuff happened. So but these days 506 00:29:42,520 --> 00:29:44,760 Speaker 1: I'm a little bit on there again. I watched all 507 00:29:44,760 --> 00:29:47,920 Speaker 1: the celebrities on there, and it's your Fildana tweeting and 508 00:29:47,920 --> 00:29:50,720 Speaker 1: Bloomberg tweeting, and then all of a sudden, one evening, 509 00:29:50,760 --> 00:29:53,640 Speaker 1: I see this this is tweet coming out of a 510 00:29:53,680 --> 00:29:57,280 Speaker 1: guy laying with two hairy legs on the beach, you know. 511 00:29:57,440 --> 00:29:59,400 Speaker 1: And but the interesting thing is that those lacks for 512 00:29:59,480 --> 00:30:02,360 Speaker 1: it's just the lower legs will actually looked like she's 513 00:30:02,440 --> 00:30:05,040 Speaker 1: but the restaurants pretty hairy, it turned out to you, 514 00:30:05,120 --> 00:30:09,040 Speaker 1: And I thought, like, this is crazy thing. You were 515 00:30:09,040 --> 00:30:11,880 Speaker 1: you at the Jersey Shore. That was me at the 516 00:30:11,920 --> 00:30:15,800 Speaker 1: Jersey Shore. Yes, yes, I do not shave the upper 517 00:30:15,800 --> 00:30:18,720 Speaker 1: parts of the legs. That's just uh, that's just my natural, 518 00:30:19,000 --> 00:30:24,640 Speaker 1: uh receding hairline. I guess that's why you should stay 519 00:30:24,640 --> 00:30:32,400 Speaker 1: off Twitter. Ben enough, I was hacked to Ben. Yeah 520 00:30:32,440 --> 00:30:35,680 Speaker 1: you did. Okay, those are my legs. I'm proud of 521 00:30:35,680 --> 00:30:38,800 Speaker 1: those legs. Alright. Thought that's a that's a good one. 522 00:30:38,920 --> 00:30:41,840 Speaker 1: I don't know, can you beat my hairy legs? Well, 523 00:30:41,880 --> 00:30:44,360 Speaker 1: I was just gonna go with something that happened to me, 524 00:30:44,440 --> 00:30:48,560 Speaker 1: which is I was reporting on bitcoin earlier this week, 525 00:30:49,000 --> 00:30:51,479 Speaker 1: and I was in the midst of talking to somebody 526 00:30:51,520 --> 00:30:56,719 Speaker 1: about why bitcoin could potentially hit and then go above 527 00:30:56,760 --> 00:30:59,600 Speaker 1: that this week, we were just looking at some technical 528 00:30:59,640 --> 00:31:03,520 Speaker 1: signal and while we were talking, it started dropping. And 529 00:31:03,880 --> 00:31:06,400 Speaker 1: that's my weirdest thing for for this week. It's just 530 00:31:06,480 --> 00:31:09,560 Speaker 1: the speed with which bitcoin fell, Like I think it 531 00:31:09,680 --> 00:31:13,120 Speaker 1: was on Tuesday, Tuesday morning, New York time, it went 532 00:31:13,120 --> 00:31:17,040 Speaker 1: from down ten percent down twelve, down fifty. I looked up. 533 00:31:17,080 --> 00:31:19,560 Speaker 1: I have this little screen on my bloom Book terminal. 534 00:31:19,600 --> 00:31:24,440 Speaker 1: I was down and I literally couldn't believe it. We 535 00:31:24,440 --> 00:31:27,920 Speaker 1: were just talking about it potentially going higher, and just 536 00:31:27,960 --> 00:31:31,680 Speaker 1: the speed with which it fell it was. It was 537 00:31:31,720 --> 00:31:34,560 Speaker 1: something that's when you quickly say, well, where's the support 538 00:31:34,600 --> 00:31:37,680 Speaker 1: that if? Right? Yeah? And then I was I was 539 00:31:37,760 --> 00:31:40,880 Speaker 1: chatting the topic, I was chatting with people. I was like, 540 00:31:40,920 --> 00:31:43,080 Speaker 1: what just happened? And I was like, I have no idea, 541 00:31:43,160 --> 00:31:45,520 Speaker 1: but this is normal for the clear point. Yeah, it 542 00:31:45,520 --> 00:31:48,479 Speaker 1: looked more like a Saturday Night special for bitcoin then, right. 543 00:31:48,600 --> 00:31:51,240 Speaker 1: You know? Then, uh, what you see at the opening 544 00:31:51,240 --> 00:31:53,360 Speaker 1: of a week. That's a good one, Bill Donna, I'm 545 00:31:53,360 --> 00:31:57,720 Speaker 1: gonna give you mine. Mine's courtesy of U story in 546 00:31:57,840 --> 00:32:02,400 Speaker 1: Coin Desk the Matt Live Mean Excellent Money Stuff newsletter. 547 00:32:02,920 --> 00:32:05,520 Speaker 1: Now it kind of feels like cheating to talk about 548 00:32:05,680 --> 00:32:08,640 Speaker 1: n f t s and the crazy things, because the 549 00:32:08,680 --> 00:32:12,000 Speaker 1: whole concept is crazy in my opinion, but this one 550 00:32:12,080 --> 00:32:17,040 Speaker 1: is especially crazy. Um because okay, there was and it 551 00:32:17,360 --> 00:32:20,160 Speaker 1: combines the other craziest thing of our lifetime, which is 552 00:32:20,200 --> 00:32:25,760 Speaker 1: doge coin. So the image of the original Sheba a 553 00:32:25,800 --> 00:32:30,480 Speaker 1: new dog that dose coin is based on. It's a meme. 554 00:32:30,560 --> 00:32:32,640 Speaker 1: I'm hopefully people know what I'm talking about, but it 555 00:32:32,680 --> 00:32:34,680 Speaker 1: was a meme with a dog, and that that's what 556 00:32:35,520 --> 00:32:38,320 Speaker 1: dose coin was created around. That was turned into an 557 00:32:38,400 --> 00:32:41,680 Speaker 1: n f T. That image, it's sold for about four 558 00:32:41,720 --> 00:32:45,320 Speaker 1: million dollars uh a few months ago. Three months ago. 559 00:32:46,080 --> 00:32:48,800 Speaker 1: Now here's where it gets crazy. So someone whoever bought 560 00:32:48,800 --> 00:32:52,120 Speaker 1: it decided, Okay, I'm gonna carve this up and offer 561 00:32:52,480 --> 00:32:57,120 Speaker 1: fractional shares of this n f T um seventeen billion 562 00:32:57,240 --> 00:33:02,320 Speaker 1: tokens were created by cutting up this n f T. 563 00:33:03,280 --> 00:33:06,760 Speaker 1: Of of them sold to one buyer, and it's time 564 00:33:06,800 --> 00:33:09,760 Speaker 1: to play prices, right, all right? All right? Ben, if 565 00:33:09,760 --> 00:33:11,280 Speaker 1: I were to if I were to buy a four 566 00:33:11,320 --> 00:33:14,400 Speaker 1: million dollar n f T, what would you expect someone 567 00:33:14,400 --> 00:33:17,680 Speaker 1: to pay for twenty of that four million dollar n 568 00:33:17,720 --> 00:33:21,480 Speaker 1: f T. Yeah, well that would be eight on the town? 569 00:33:21,960 --> 00:33:26,280 Speaker 1: Is that right? It would be eight on? That's a 570 00:33:26,280 --> 00:33:27,960 Speaker 1: good quick math there. I put you on the spot there, 571 00:33:27,960 --> 00:33:32,920 Speaker 1: but yeah, but yeah, but you know of four million 572 00:33:33,040 --> 00:33:35,480 Speaker 1: is not eight on the thousands, right, It maybe be 573 00:33:35,680 --> 00:33:40,000 Speaker 1: more two millions, right, because in can be doubles easily, 574 00:33:40,480 --> 00:33:43,880 Speaker 1: simply because it's such a unique artifact that that you 575 00:33:43,920 --> 00:33:47,560 Speaker 1: own on that blockchain. No one else can until those 576 00:33:47,920 --> 00:33:51,480 Speaker 1: that changes. So now it's just not transaction zoo zooper 577 00:33:51,480 --> 00:33:54,360 Speaker 1: monetized market here, that's for sure. Yep, yep, you're in 578 00:33:54,400 --> 00:33:59,320 Speaker 1: the right direction. Forty five million for of an n 579 00:33:59,400 --> 00:34:01,400 Speaker 1: f T that originally sold a few months ago for 580 00:34:01,440 --> 00:34:06,720 Speaker 1: four million. So I guess the idea is that you 581 00:34:06,800 --> 00:34:08,960 Speaker 1: break this thing up. I don't know. I'm trying to 582 00:34:09,000 --> 00:34:11,720 Speaker 1: guess what the idea is for Bretti. This is crazy, 583 00:34:11,719 --> 00:34:14,840 Speaker 1: but I guess that notion of fractionalizing it and breaking 584 00:34:14,840 --> 00:34:18,600 Speaker 1: it up, you know, I don't know. I don't know. 585 00:34:18,640 --> 00:34:21,040 Speaker 1: I can't wrap my head around this. As Levine said, 586 00:34:21,080 --> 00:34:23,319 Speaker 1: it's all a big joke. And uh, you know, the 587 00:34:23,320 --> 00:34:25,680 Speaker 1: original joke was at selling for four million, and then 588 00:34:25,800 --> 00:34:30,200 Speaker 1: it's an even better joke that it sells for million. 589 00:34:30,280 --> 00:34:33,600 Speaker 1: But well, you know, the topic that we didn't talk about. 590 00:34:33,600 --> 00:34:36,240 Speaker 1: It you wanted to talk about was by Bill Gross. 591 00:34:36,239 --> 00:34:40,080 Speaker 1: It's only an interest in these n f T st 592 00:34:40,480 --> 00:34:43,600 Speaker 1: about that now, now listeners don't know Ben used to 593 00:34:43,640 --> 00:34:45,920 Speaker 1: work at PIMCO back in the Bill Gross era. He 594 00:34:45,960 --> 00:34:49,239 Speaker 1: was it was a credit fund you you uh manage right? 595 00:34:50,040 --> 00:34:53,600 Speaker 1: Global funds have also as also involved in his total 596 00:34:54,040 --> 00:34:56,480 Speaker 1: Yeah yeah, so you know. But you know Bill's history 597 00:34:56,640 --> 00:35:01,279 Speaker 1: is also artifacts. Is this postamp collection, right, a huge collection, 598 00:35:01,880 --> 00:35:05,719 Speaker 1: a very unique posted so again, same idea. He was 599 00:35:05,760 --> 00:35:08,719 Speaker 1: the only one owning that and unless he sold them, 600 00:35:08,760 --> 00:35:10,640 Speaker 1: which he did, but he has sold a part of 601 00:35:10,640 --> 00:35:13,520 Speaker 1: it for for charity. I think that's why he was 602 00:35:13,680 --> 00:35:16,880 Speaker 1: interested in the n f T concept. But the interesting 603 00:35:16,920 --> 00:35:19,480 Speaker 1: thing I found from his opted was that he you know, 604 00:35:19,520 --> 00:35:22,440 Speaker 1: he was complaining a lot about Okay, we're not really 605 00:35:22,480 --> 00:35:25,000 Speaker 1: too lower interest rates already told you ten years ago 606 00:35:25,520 --> 00:35:28,759 Speaker 1: that rates were too low, even lower, and gosh, we're 607 00:35:28,760 --> 00:35:31,480 Speaker 1: going to do here. Those are the bomb funds, you know, 608 00:35:31,640 --> 00:35:33,520 Speaker 1: think about the n f T s. And I always 609 00:35:33,560 --> 00:35:36,080 Speaker 1: wanted to say, like, well, that's your diversification, right If 610 00:35:36,120 --> 00:35:38,279 Speaker 1: if you think about if you're worried about inflation, if 611 00:35:38,280 --> 00:35:40,520 Speaker 1: you worry about lower interest is a real interest rates 612 00:35:40,560 --> 00:35:44,120 Speaker 1: being so negative, then an n f T probably is 613 00:35:44,120 --> 00:35:46,959 Speaker 1: is another sort of form of a hedge against you're 614 00:35:47,040 --> 00:35:51,680 Speaker 1: dissiccated bond market, so to speak. Because it bonds have 615 00:35:51,680 --> 00:35:54,920 Speaker 1: a risk reward that's so asymmetric. You have more downside 616 00:35:54,960 --> 00:35:58,399 Speaker 1: and upside in the current situation, even much worse than 617 00:35:58,640 --> 00:36:01,040 Speaker 1: when he rented about it ten years ago, when he 618 00:36:01,080 --> 00:36:04,719 Speaker 1: also said that it was a really poor time for treasuries. 619 00:36:05,400 --> 00:36:08,200 Speaker 1: Then an nf he could make a difference, and the 620 00:36:08,239 --> 00:36:12,080 Speaker 1: returns and NFTs are so gigantic that that would compensate 621 00:36:12,120 --> 00:36:15,920 Speaker 1: you so much for any kind of inflation shark. That 622 00:36:16,040 --> 00:36:18,800 Speaker 1: was sort of I think where he was coming from. 623 00:36:18,840 --> 00:36:20,600 Speaker 1: But you know, at the end of the day, a 624 00:36:20,760 --> 00:36:23,359 Speaker 1: mutual funds and you know, for the act mutual funds 625 00:36:23,360 --> 00:36:26,200 Speaker 1: so to speak, you know, it's unlikely to purchase n 626 00:36:26,280 --> 00:36:28,680 Speaker 1: f T s and they're not going to be calling 627 00:36:28,680 --> 00:36:31,200 Speaker 1: on the n f T king anytime soon, as I suppose, 628 00:36:31,760 --> 00:36:34,200 Speaker 1: not like you know, but but but both even though 629 00:36:34,280 --> 00:36:37,319 Speaker 1: he you know, during the time that he managed his funds, yeah, 630 00:36:37,360 --> 00:36:40,600 Speaker 1: he was an advent post stamp collector, right, and and 631 00:36:40,719 --> 00:36:43,320 Speaker 1: he was very known in that world, which is, you know, 632 00:36:43,440 --> 00:36:46,360 Speaker 1: completely outside of the defencial markets world. So like like 633 00:36:46,560 --> 00:36:49,080 Speaker 1: n f T, that's a good comparison because you know, 634 00:36:49,120 --> 00:36:51,239 Speaker 1: what is the intrinsic value of that little piece of 635 00:36:51,239 --> 00:36:55,200 Speaker 1: paper that stamps purnt it on you know nothing, No, 636 00:36:55,280 --> 00:36:58,960 Speaker 1: but it's the value is what someone's willing to pay 637 00:36:59,000 --> 00:37:01,719 Speaker 1: for it, So I it kind of makes sense to 638 00:37:01,760 --> 00:37:03,680 Speaker 1: think of n f T s in that perspective. I guess. Yeah, 639 00:37:03,760 --> 00:37:06,799 Speaker 1: collectors item, you know, and people want to hold it 640 00:37:06,880 --> 00:37:09,279 Speaker 1: and it's there for an emotional value. I guess, but 641 00:37:09,440 --> 00:37:12,960 Speaker 1: collectors item, so no one else has it but you. 642 00:37:12,960 --> 00:37:16,560 Speaker 1: You just really have this really unique artifact and therefore 643 00:37:16,719 --> 00:37:21,200 Speaker 1: it's worth a lot more intrinsically than than than with 644 00:37:21,320 --> 00:37:25,560 Speaker 1: the physical value for this. Yeah, vildonna, should I make 645 00:37:25,600 --> 00:37:27,000 Speaker 1: an n f T and my dog? Do you think 646 00:37:27,000 --> 00:37:31,600 Speaker 1: anyone would should try it? Definitely? Well why not? This 647 00:37:31,680 --> 00:37:34,279 Speaker 1: is the time? Yeah, And speaking of the time, I 648 00:37:34,320 --> 00:37:37,280 Speaker 1: think that is all the time we have for today. 649 00:37:37,600 --> 00:37:39,480 Speaker 1: Bett Emon is always a pleasure to catch up with 650 00:37:39,520 --> 00:37:42,640 Speaker 1: you Bet on the podcast many times. Listeners. If you 651 00:37:42,640 --> 00:37:45,120 Speaker 1: want to hear Ben's takes on other things, you gotta 652 00:37:45,120 --> 00:37:48,239 Speaker 1: scroll through a few months worth episodes. But he's been 653 00:37:48,280 --> 00:37:50,680 Speaker 1: on a few times and we are he's appreciate his time. 654 00:37:50,719 --> 00:37:52,360 Speaker 1: Thank you, Ben, Thank you make thank you for that. 655 00:37:52,560 --> 00:37:59,160 Speaker 1: It's great to be a good discussion. Thanks Ben. What 656 00:37:59,280 --> 00:38:01,640 Speaker 1: goes up will be next week. Until then, you can 657 00:38:01,680 --> 00:38:04,560 Speaker 1: find us on the Bloomberg Terminal, website and app, or 658 00:38:04,560 --> 00:38:07,239 Speaker 1: wherever you get your podcasts. We'd love it if you 659 00:38:07,280 --> 00:38:09,440 Speaker 1: took the time to rate and review the show on 660 00:38:09,520 --> 00:38:13,120 Speaker 1: Apple Podcasts so more listeners can find us. And you 661 00:38:13,120 --> 00:38:17,360 Speaker 1: can find us on Twitter follow me at Reaganonymous. Bildonna 662 00:38:17,400 --> 00:38:20,000 Speaker 1: high Rich is at Bildonna hi Rich. You can also 663 00:38:20,040 --> 00:38:24,040 Speaker 1: follow Bloomberg Podcasts at podcasts and Thank you to Charlie 664 00:38:24,040 --> 00:38:26,040 Speaker 1: pelto Bloomberg Radio and the voice of the New York 665 00:38:26,040 --> 00:38:30,320 Speaker 1: City Subway System. What Goes Up is produced by Laura Carlson. 666 00:38:30,560 --> 00:38:34,440 Speaker 1: The head of Bloomberg podcast is Francesco Leave. Thanks for listening, 667 00:38:34,520 --> 00:38:35,279 Speaker 1: See you next time.