WEBVTT - Markets, Fixed Income, And Crypto Investments

0:00:00.800 --> 0:00:04.040
<v Speaker 1>Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

0:00:04.040 --> 0:00:06.920
<v Speaker 1>my co host Matt Miller. Every business day we bring

0:00:06.960 --> 0:00:11.480
<v Speaker 1>you interviews from CEOs, market pros, and Bloomberg experts, along

0:00:11.560 --> 0:00:15.600
<v Speaker 1>with essential market moving news. Find the Bloomberg Markets Podcast

0:00:15.600 --> 0:00:18.479
<v Speaker 1>on Apple Podcasts or wherever you listen to podcasts, and

0:00:18.480 --> 0:00:23.040
<v Speaker 1>at Bloomberg dot com slash podcast. All right, Danielle di

0:00:23.120 --> 0:00:26.080
<v Speaker 1>Martino Booth, one of our absolute faves here on Bloomberg Markets,

0:00:26.120 --> 0:00:29.640
<v Speaker 1>joins us. She's the CEO and Chief Strategies at Quill Intelligence.

0:00:29.640 --> 0:00:33.360
<v Speaker 1>She drives on social gotta follow on, Danielle, you drive it.

0:00:33.479 --> 0:00:36.760
<v Speaker 1>You have a giant pickup, don't you. UM. I have

0:00:36.840 --> 0:00:39.559
<v Speaker 1>a large SUV, but I also have four large children.

0:00:40.880 --> 0:00:45.720
<v Speaker 1>There you go. You need that space, Danielle. She's a

0:00:45.960 --> 0:00:49.320
<v Speaker 1>chief strategis Quill Intelligence and former advisor at the Federal

0:00:49.320 --> 0:00:52.520
<v Speaker 1>Reserve Bank at Dallas. UM. Danielle, A lot of our

0:00:52.560 --> 0:00:57.959
<v Speaker 1>listeners probably haven't put money to work, invested in, been

0:00:58.040 --> 0:01:01.040
<v Speaker 1>in the market, taken market risk in a rising interest

0:01:01.120 --> 0:01:05.800
<v Speaker 1>rate environment. How are you thinking about this environment? Right here?

0:01:05.800 --> 0:01:07.800
<v Speaker 1>We're talking about the Fed raising rates, and I keep

0:01:07.840 --> 0:01:11.440
<v Speaker 1>hearing people raise their expectations for the number of rate

0:01:11.480 --> 0:01:13.240
<v Speaker 1>hikes we're going to see this year. How do you

0:01:13.319 --> 0:01:18.080
<v Speaker 1>kind of frame out two and twenty three. Well, I mean,

0:01:18.280 --> 0:01:21.440
<v Speaker 1>you know, look, I applaud the idea that that the

0:01:21.440 --> 0:01:24.560
<v Speaker 1>FED is going to have that kind of flexibility because

0:01:24.600 --> 0:01:29.000
<v Speaker 1>it implies that there's there's significant runways for this economic

0:01:29.000 --> 0:01:32.839
<v Speaker 1>recovery to continue. And I just you know, I'm seeing

0:01:32.920 --> 0:01:36.680
<v Speaker 1>so many red flags raised, whether it was retail control,

0:01:37.160 --> 0:01:42.240
<v Speaker 1>whether it was Empire literally collapsing yesterday, and Empire headline

0:01:42.360 --> 0:01:45.600
<v Speaker 1>tends to follow what follows, which is the Business Leader survey.

0:01:45.640 --> 0:01:48.360
<v Speaker 1>In New York is a very service intensive state. Um,

0:01:48.440 --> 0:01:52.360
<v Speaker 1>so we're seeing some some markers out there. Uh in Michigan,

0:01:52.360 --> 0:01:54.120
<v Speaker 1>for example, I'm gonna throw a one quick example out

0:01:54.120 --> 0:01:57.240
<v Speaker 1>in Michigan, you've seen General Motors and Ford fire back

0:01:57.320 --> 0:02:00.960
<v Speaker 1>up their production line so they're they're unemploy Claims are

0:02:01.120 --> 0:02:04.240
<v Speaker 1>the healthiest in the nation if you take Michigan out

0:02:04.280 --> 0:02:08.880
<v Speaker 1>of the top ten most manufacturing intensive state. We've seen

0:02:09.400 --> 0:02:13.000
<v Speaker 1>initial jobless claims weekend for five weeks running now, and

0:02:13.040 --> 0:02:15.720
<v Speaker 1>that flashed me, you know, as along with the Empire,

0:02:15.760 --> 0:02:18.720
<v Speaker 1>that we're heading into an industrial recession and pretty quickly.

0:02:19.280 --> 0:02:22.120
<v Speaker 1>So my concern is that the global economy and the

0:02:22.200 --> 0:02:25.640
<v Speaker 1>US economy are slowing fairly quickly because we've been in

0:02:25.680 --> 0:02:29.120
<v Speaker 1>this compressed economic cycle. That's interesting. We don't see it

0:02:29.200 --> 0:02:33.000
<v Speaker 1>coming through in financial conditions yet, at least as measured

0:02:33.000 --> 0:02:34.959
<v Speaker 1>by a con On the Bloomberg Termer you can type

0:02:35.000 --> 0:02:37.280
<v Speaker 1>f c O and go for the financial conditions, but

0:02:37.320 --> 0:02:39.840
<v Speaker 1>gold other function of the day. I mean, all the

0:02:39.840 --> 0:02:44.200
<v Speaker 1>big banks also have their own con um UH indexes. Danielle,

0:02:44.760 --> 0:02:46.880
<v Speaker 1>why do you think that is? Why do you think

0:02:47.080 --> 0:02:50.800
<v Speaker 1>this UH hawkish pivot, the tightening that we're seeing not

0:02:50.880 --> 0:02:53.360
<v Speaker 1>just from the Fed but globally from central banks hasn't

0:02:54.240 --> 0:02:58.519
<v Speaker 1>um fed through into financial conditions. Well, I mean, look,

0:02:58.560 --> 0:03:01.880
<v Speaker 1>we didn't increase the paper and my good friend Dr

0:03:01.960 --> 0:03:04.639
<v Speaker 1>Lacy Hunt says that there is a three times multiplier

0:03:04.680 --> 0:03:08.320
<v Speaker 1>that you can apply to liquidity being reduced the same

0:03:08.360 --> 0:03:11.280
<v Speaker 1>way you would apply to liquidity being increased. But we

0:03:11.320 --> 0:03:14.400
<v Speaker 1>haven't seen this. But for two weeks into January with

0:03:14.480 --> 0:03:17.840
<v Speaker 1>the with the taper increased to billion from the prior

0:03:17.919 --> 0:03:20.600
<v Speaker 1>fifteen billions. We've got another thirty billion coming on February

0:03:20.639 --> 0:03:24.080
<v Speaker 1>of the first, so you know they're the liquidity is

0:03:24.120 --> 0:03:26.560
<v Speaker 1>being pulled from the system. But we're not seeing the

0:03:26.600 --> 0:03:30.000
<v Speaker 1>effects of this except for in a very lagged fashion.

0:03:30.360 --> 0:03:33.160
<v Speaker 1>Well I say very like very lagged in central banker

0:03:33.200 --> 0:03:35.040
<v Speaker 1>speak as a former central banker, means like eighteen to

0:03:35.080 --> 0:03:38.160
<v Speaker 1>twenty four months. But again we're seeing a very compressed cycle.

0:03:38.200 --> 0:03:40.160
<v Speaker 1>I'll be paying attention to the Philadelphia FIT and the

0:03:40.200 --> 0:03:42.360
<v Speaker 1>other surveys that come out in the days to come,

0:03:42.400 --> 0:03:45.320
<v Speaker 1>because everything that we that we're seeing right now suggests

0:03:45.360 --> 0:03:47.080
<v Speaker 1>that we're going to get in a disappointment when we

0:03:47.120 --> 0:03:49.480
<v Speaker 1>see the I s M. That's when I think you'll

0:03:49.480 --> 0:03:52.400
<v Speaker 1>see Wall Street pay pay better attention. Well, when you

0:03:52.440 --> 0:03:55.080
<v Speaker 1>say that we're headed for an industrial recession, when are

0:03:55.120 --> 0:03:57.680
<v Speaker 1>we gonna see? Is that what we see coming through

0:03:57.680 --> 0:03:59.200
<v Speaker 1>in the I s M. Where are you going to

0:03:59.280 --> 0:04:02.320
<v Speaker 1>see that? For? First, I think you will see it

0:04:02.320 --> 0:04:03.920
<v Speaker 1>in the I M first, and again I think that

0:04:03.960 --> 0:04:07.920
<v Speaker 1>if you're if you're talking about the nine most manufacturing

0:04:07.960 --> 0:04:10.680
<v Speaker 1>intensive states in the nation, with Indiana being the most

0:04:11.120 --> 0:04:13.920
<v Speaker 1>intensive of them all as as a as a percentage

0:04:13.960 --> 0:04:16.880
<v Speaker 1>of their growth state products, that five at the last,

0:04:17.000 --> 0:04:21.440
<v Speaker 1>that that five straight weeks of weakening initial jobless claims

0:04:21.560 --> 0:04:25.239
<v Speaker 1>is saying something to you. They're up in that short

0:04:25.279 --> 0:04:28.960
<v Speaker 1>time frame, Danielle. I often I just can't understand that.

0:04:29.000 --> 0:04:32.240
<v Speaker 1>Why you know Indiana when you say Indiana, I think

0:04:32.279 --> 0:04:36.560
<v Speaker 1>of um electric cars because Rivian produces there. I think

0:04:36.560 --> 0:04:40.040
<v Speaker 1>the town is called normal Indiana, Normal Indiana, and they

0:04:40.080 --> 0:04:44.760
<v Speaker 1>must be working triple shifts. I mean, isn't everyone buying

0:04:44.760 --> 0:04:47.040
<v Speaker 1>as much stuff as they can get? Aren't you ordering

0:04:47.040 --> 0:04:50.280
<v Speaker 1>all of it? I don't think we're ordering as much

0:04:50.320 --> 0:04:51.880
<v Speaker 1>as we think we're ordering. If you if you think

0:04:51.880 --> 0:04:55.560
<v Speaker 1>about car sales in America in the aggregate, again, electric

0:04:55.640 --> 0:04:58.000
<v Speaker 1>vehicles are a really hot spot right now, and there's

0:04:58.040 --> 0:05:00.919
<v Speaker 1>absolutely no denying that. But but when you think that

0:05:01.000 --> 0:05:06.760
<v Speaker 1>car sales holistically peaked in April, that's not like the

0:05:06.800 --> 0:05:09.760
<v Speaker 1>beginning of a small trend, you And there's more of

0:05:09.800 --> 0:05:13.640
<v Speaker 1>a supply chain disruption in that length of a narrative.

0:05:13.720 --> 0:05:15.919
<v Speaker 1>And we know that many companies have gone from just

0:05:16.080 --> 0:05:20.280
<v Speaker 1>in time inventory replenishment to just in case so and

0:05:20.279 --> 0:05:22.960
<v Speaker 1>we're starting to see evidence in the inventory data as

0:05:22.960 --> 0:05:27.240
<v Speaker 1>well that firms inventories they need for them to be

0:05:27.880 --> 0:05:33.000
<v Speaker 1>so in some cases you might be talking about opponent,

0:05:33.080 --> 0:05:36.839
<v Speaker 1>that being the semiconductor All right, Danielle, I love having

0:05:36.880 --> 0:05:39.960
<v Speaker 1>you on our show because oftentimes I hear from you

0:05:40.560 --> 0:05:44.400
<v Speaker 1>first on new topics like an industrial recession. Had not

0:05:44.640 --> 0:05:47.080
<v Speaker 1>heard that at all. We need to do a whole

0:05:47.279 --> 0:05:49.320
<v Speaker 1>whole show with her. Daniel, next time you're in New York,

0:05:49.320 --> 0:05:51.680
<v Speaker 1>please come in the studio. Yeah, let's do that absolutely.

0:05:51.760 --> 0:05:54.839
<v Speaker 1>Daniel de Martino, Booth CEO and Chief strategistic Quill Intelligence.

0:05:54.839 --> 0:05:58.400
<v Speaker 1>I'm telling you, folks, it's some of the smartest economic

0:05:58.839 --> 0:06:01.800
<v Speaker 1>uh and now's is out there. From my perspective, she

0:06:01.920 --> 0:06:06.320
<v Speaker 1>is so data intensive. Uh. Great follow on social media

0:06:06.440 --> 0:06:10.200
<v Speaker 1>as well because she shares her thoughts on social as well.

0:06:14.920 --> 0:06:17.400
<v Speaker 1>All right, let's bring in David Deats. Let's get h

0:06:17.600 --> 0:06:21.640
<v Speaker 1>professional again. David Deet's managing Principal Senior portfolio strategists at

0:06:21.720 --> 0:06:25.120
<v Speaker 1>Gladstone Bank. David, what do we do here? I mean,

0:06:25.520 --> 0:06:28.560
<v Speaker 1>I've got a rising interest rate environment for the remainder

0:06:28.560 --> 0:06:31.880
<v Speaker 1>of the year going into next year. It's been a

0:06:31.920 --> 0:06:35.480
<v Speaker 1>while since I've had to deal with that. What are

0:06:35.520 --> 0:06:39.400
<v Speaker 1>you telling your clients in terms of asset allocation for

0:06:39.440 --> 0:06:44.039
<v Speaker 1>the next year or two? Well, certainly you you want

0:06:44.040 --> 0:06:47.080
<v Speaker 1>to make sure that your long term asset allocations it

0:06:47.160 --> 0:06:51.120
<v Speaker 1>is here too, because the problem here, Matt is that. Um.

0:06:51.520 --> 0:06:56.239
<v Speaker 1>You know, stocks uh do not necessarily benet from rising

0:06:56.240 --> 0:06:58.600
<v Speaker 1>interest rates. Obviously it reduces the present value of all

0:06:58.600 --> 0:07:03.080
<v Speaker 1>those future earnings, but don't look so good either, um Uh.

0:07:03.400 --> 0:07:06.799
<v Speaker 1>You know, as yields go up than bond prices go down.

0:07:07.080 --> 0:07:11.000
<v Speaker 1>We saw a negative return on the major bonding necks

0:07:11.040 --> 0:07:13.080
<v Speaker 1>last year, and it started out that way this year.

0:07:13.120 --> 0:07:18.280
<v Speaker 1>So I think this year you continue to be fully

0:07:18.280 --> 0:07:21.520
<v Speaker 1>committed to stocks um, but you do want to pick

0:07:21.560 --> 0:07:23.840
<v Speaker 1>your spots because I think you're gonna see different winners

0:07:24.360 --> 0:07:26.840
<v Speaker 1>uh this year than perhaps you've seen during the pandemic.

0:07:27.320 --> 0:07:29.440
<v Speaker 1>What about the you know, we're talking with cretty good

0:07:29.560 --> 0:07:32.120
<v Speaker 1>earlier across assets reporter, and she said, one way a

0:07:32.120 --> 0:07:34.520
<v Speaker 1>lot of people are hedging inflation is just by buying

0:07:34.560 --> 0:07:39.280
<v Speaker 1>the things that inflate, i e. The commodities themselves. Well,

0:07:39.600 --> 0:07:43.240
<v Speaker 1>certainly stay diversified, but but we have seen, of course

0:07:43.320 --> 0:07:48.600
<v Speaker 1>commodities and energy prices, particularly UH skyrocket since the depths

0:07:48.600 --> 0:07:52.640
<v Speaker 1>of the pandemic. UM. Energy prices have gone up every

0:07:52.720 --> 0:07:56.920
<v Speaker 1>day this year. Certainly, there's geopolitical developments on the horizon.

0:07:57.040 --> 0:08:00.320
<v Speaker 1>You've got a pipeline explosion between Turkey and Iraq. They've

0:08:00.360 --> 0:08:04.320
<v Speaker 1>got United State says that Russia may immediently invade Ukraine.

0:08:04.360 --> 0:08:07.160
<v Speaker 1>All those things could drive energy prices higher. Posts of course,

0:08:07.200 --> 0:08:10.840
<v Speaker 1>the more overriding factor is we are ultimately think going

0:08:10.880 --> 0:08:12.920
<v Speaker 1>to get out of this pandemic and that's going to

0:08:13.040 --> 0:08:16.920
<v Speaker 1>drive demand for energy. So that's interesting, gave. You know,

0:08:17.160 --> 0:08:18.960
<v Speaker 1>on the energy front, I'm looking at w T I

0:08:19.040 --> 0:08:21.880
<v Speaker 1>crewed here up another one point four percent, just under

0:08:21.960 --> 0:08:25.760
<v Speaker 1>eight seven dollars per barrel. You know, the energy stocks,

0:08:25.800 --> 0:08:27.320
<v Speaker 1>you know they've been they were so out of favor

0:08:27.360 --> 0:08:30.800
<v Speaker 1>for both cyclical and secular reasons, but they've had a

0:08:30.880 --> 0:08:32.880
<v Speaker 1>nice run. And do I take my profits here? Do

0:08:32.880 --> 0:08:36.040
<v Speaker 1>I have more room to go? So I definitely agree

0:08:36.040 --> 0:08:40.319
<v Speaker 1>with you that they seem over bought here. Um And

0:08:40.320 --> 0:08:43.120
<v Speaker 1>and certainly, you know, some analysts are coming out now

0:08:43.160 --> 0:08:45.840
<v Speaker 1>and saying, hey, you know, um, this business that they're

0:08:45.840 --> 0:08:49.120
<v Speaker 1>gonna hold back on further development because of pressure from

0:08:49.160 --> 0:08:53.200
<v Speaker 1>green forces and because they just want to return capital shareholders.

0:08:53.320 --> 0:08:56.319
<v Speaker 1>Not necessarily we're not. We're seeing you know, junk graded

0:08:56.480 --> 0:09:00.000
<v Speaker 1>energy companies being able to uh tap the borrowing windows

0:09:00.120 --> 0:09:03.280
<v Speaker 1>very easily. We're seeing rick count surge at the same

0:09:03.320 --> 0:09:05.280
<v Speaker 1>pace that it did back in the last time that's

0:09:05.280 --> 0:09:09.600
<v Speaker 1>happened two thousand sixteen, two thousand seventeen. Nevertheless, I do

0:09:09.760 --> 0:09:14.240
<v Speaker 1>think that um uh, that there is more discipline on

0:09:14.400 --> 0:09:17.080
<v Speaker 1>the part of these energy companies. They want to return

0:09:17.120 --> 0:09:20.160
<v Speaker 1>money to shareholders. Basically shareholders need to return. Has been

0:09:20.200 --> 0:09:22.400
<v Speaker 1>so long that they've been down in the cellar that

0:09:22.440 --> 0:09:24.520
<v Speaker 1>they think we've got more room to go. And I

0:09:24.520 --> 0:09:26.320
<v Speaker 1>think that should be part of a world there's reverse

0:09:26.320 --> 0:09:31.000
<v Speaker 1>surviveed portfolio. When do you think the tightening environment? And

0:09:31.040 --> 0:09:34.640
<v Speaker 1>to be fair, we've had basically job owning us far right.

0:09:34.720 --> 0:09:38.480
<v Speaker 1>But um if the FED is going to tighten uh

0:09:38.520 --> 0:09:41.720
<v Speaker 1>and by raising raids four something some people are saying

0:09:41.760 --> 0:09:44.040
<v Speaker 1>and and Wong from Bloomberg in tellis now five times

0:09:44.040 --> 0:09:46.720
<v Speaker 1>this year. As as they run off the balance sheet,

0:09:46.920 --> 0:09:53.439
<v Speaker 1>when does that hit the real economy? David Well, Historically

0:09:54.040 --> 0:09:58.600
<v Speaker 1>it takes twelve to twenty four months, and historically stocks

0:09:58.600 --> 0:10:02.080
<v Speaker 1>have continued to do well until about the third rate hike.

0:10:02.200 --> 0:10:04.080
<v Speaker 1>If in fact we get there, you know there's three

0:10:04.120 --> 0:10:06.800
<v Speaker 1>steps and the stumbles of famous Well Streets solved from

0:10:06.840 --> 0:10:09.679
<v Speaker 1>back in the seventies and eighties. Um So, I think

0:10:09.720 --> 0:10:12.280
<v Speaker 1>it's going to take a while. One reason we are

0:10:12.280 --> 0:10:16.160
<v Speaker 1>optimistic here, of course is there's tremendous political pressure to

0:10:16.280 --> 0:10:19.200
<v Speaker 1>keep this economy going for those in power to stay

0:10:19.200 --> 0:10:22.680
<v Speaker 1>in power. Um. And of course there's there's tremendous political

0:10:22.720 --> 0:10:26.360
<v Speaker 1>pressure to make sure that everyone states fully employed here.

0:10:26.440 --> 0:10:28.439
<v Speaker 1>So I think that although there's a lot of jaw

0:10:28.520 --> 0:10:31.920
<v Speaker 1>boning bowing, as you pointed out, UM, if they see

0:10:31.960 --> 0:10:34.720
<v Speaker 1>any real effect on the economy. And it's difficult because

0:10:34.760 --> 0:10:36.880
<v Speaker 1>all this stuff works with the lag, it takes a while.

0:10:37.080 --> 0:10:39.880
<v Speaker 1>I think you're gonna be quick to recalibrate exactly what

0:10:39.920 --> 0:10:43.520
<v Speaker 1>they need to do. That's interesting. That's in Muhammad arians

0:10:43.559 --> 0:10:47.280
<v Speaker 1>op ed that came out overnight. He essentially said that's

0:10:47.400 --> 0:10:51.439
<v Speaker 1>one of the main reasons that the market and financial

0:10:51.440 --> 0:10:54.280
<v Speaker 1>conditions haven't tightened along with the Fed tawk Is pivot,

0:10:54.280 --> 0:10:56.120
<v Speaker 1>is that a lot of people don't believe the central

0:10:56.120 --> 0:10:59.480
<v Speaker 1>banks will even do it, or that if they do that,

0:10:59.520 --> 0:11:02.040
<v Speaker 1>they'll fall allow through and go the whole way. Really,

0:11:02.200 --> 0:11:04.800
<v Speaker 1>I mean, I mean, the communication has been so clear.

0:11:04.840 --> 0:11:06.880
<v Speaker 1>It seems like the messaging has been so clear. The

0:11:07.000 --> 0:11:10.280
<v Speaker 1>transitory messaging was super clear last year. Good point, good point,

0:11:10.280 --> 0:11:13.160
<v Speaker 1>all right. David Date's managing principal and senior portfolio strategists

0:11:13.400 --> 0:11:16.640
<v Speaker 1>for Gladstone Bank joining us there giving us his thoughts

0:11:16.720 --> 0:11:25.160
<v Speaker 1>on these markets and inflation outlook and risk assets. Let's

0:11:25.160 --> 0:11:27.960
<v Speaker 1>get right to R. J. Gallo, senior portfolio manager at

0:11:28.000 --> 0:11:30.880
<v Speaker 1>Federator Hermes. He's a former financial alice with the Federal

0:11:30.880 --> 0:11:33.040
<v Speaker 1>Reserve Bank of New York and ARCH. I guess I

0:11:33.120 --> 0:11:36.240
<v Speaker 1>want to start with the Federal Reserve. Is my Federal

0:11:36.280 --> 0:11:43.400
<v Speaker 1>Reserve behind the curve here? Um? Yes? I think the

0:11:43.480 --> 0:11:48.080
<v Speaker 1>tone of the FOMC speakers recently clearly portrays that the

0:11:48.120 --> 0:11:52.680
<v Speaker 1>policy making officials, the FOC members voting or not, all

0:11:53.320 --> 0:11:56.040
<v Speaker 1>have woken up to the idea that inflation is just

0:11:56.120 --> 0:11:59.560
<v Speaker 1>too high and they need to act boldly to address it.

0:12:00.320 --> 0:12:02.520
<v Speaker 1>So how boldly will they act? We're starting to hear

0:12:03.160 --> 0:12:05.559
<v Speaker 1>and see the my market basically price in if you

0:12:05.559 --> 0:12:09.520
<v Speaker 1>look at Euro dollar futures um a fifty point at

0:12:09.559 --> 0:12:14.319
<v Speaker 1>the possibility of a fifty basis point hike in March, Yeah,

0:12:14.360 --> 0:12:16.600
<v Speaker 1>it's striking. I mean, it's been a long time since

0:12:16.600 --> 0:12:19.520
<v Speaker 1>we've seen that type of incremental tightening that scale, usually

0:12:19.520 --> 0:12:23.640
<v Speaker 1>twenty five basis points is dogma these days. But obviously

0:12:23.679 --> 0:12:27.280
<v Speaker 1>we're in challenging times. The FED throughout the playbook to

0:12:27.480 --> 0:12:31.920
<v Speaker 1>ease in the face of the pandemic crisis. I wouldn't

0:12:31.960 --> 0:12:34.599
<v Speaker 1>be surprised if they have to rewrite some things or

0:12:34.640 --> 0:12:36.840
<v Speaker 1>revisit the past and being more bold on the way

0:12:36.840 --> 0:12:40.200
<v Speaker 1>back up In terms of tightening. That's said, I don't

0:12:40.240 --> 0:12:43.240
<v Speaker 1>anticipate in the fifty basis point move um. I think

0:12:43.320 --> 0:12:45.280
<v Speaker 1>one of the key challenges to the FED right now

0:12:45.840 --> 0:12:51.280
<v Speaker 1>is can they address the inflation problem without causing financial

0:12:51.320 --> 0:12:55.400
<v Speaker 1>conditions to tighten accessively. It's sort of like walking a

0:12:55.480 --> 0:12:58.679
<v Speaker 1>tight rope. I think part of the language we're getting

0:12:58.720 --> 0:13:02.240
<v Speaker 1>from them it sounds very bold by design now that

0:13:02.280 --> 0:13:04.120
<v Speaker 1>I don't think you're trying to deceive us. But they

0:13:04.160 --> 0:13:06.960
<v Speaker 1>have to talk tough. One of the key facets of

0:13:07.000 --> 0:13:10.320
<v Speaker 1>the market's interpretation of inflation lately has been it's really

0:13:10.400 --> 0:13:13.160
<v Speaker 1>high now, but it won't stay there. How do you

0:13:13.600 --> 0:13:17.400
<v Speaker 1>keep that market in that mindset? You talk tough as

0:13:17.400 --> 0:13:19.120
<v Speaker 1>a FEDE official, and you're gonna have to deliver, You're

0:13:19.120 --> 0:13:21.080
<v Speaker 1>gonna have to tighten, you're gonna have to taper. All

0:13:21.080 --> 0:13:23.400
<v Speaker 1>the things they're talking about. I don't think it serves

0:13:23.440 --> 0:13:26.200
<v Speaker 1>their purpose to do so in a way that causes

0:13:26.240 --> 0:13:30.040
<v Speaker 1>financial conditions to crumble. Well, we still see financial conditions,

0:13:30.280 --> 0:13:32.439
<v Speaker 1>We still see them quite loose. And this is a

0:13:32.520 --> 0:13:35.200
<v Speaker 1>question that John Faroh has been asking a lot over

0:13:35.240 --> 0:13:38.959
<v Speaker 1>the past couple of weeks. When our financial condition is

0:13:38.960 --> 0:13:42.920
<v Speaker 1>going to be affected by UM, you know, rate increases

0:13:42.960 --> 0:13:45.400
<v Speaker 1>Muhammad Area and posing the same question and an op

0:13:45.480 --> 0:13:47.160
<v Speaker 1>ed overnight. But I guess what you're saying is the

0:13:47.240 --> 0:13:49.800
<v Speaker 1>question should be if it's possible for the FED to

0:13:49.840 --> 0:13:57.880
<v Speaker 1>tighten without financial conditionings, financial conditions UM getting uh too problematic,

0:13:58.040 --> 0:14:00.560
<v Speaker 1>too difficult. I think they need financial conditions to tighten.

0:14:00.800 --> 0:14:03.760
<v Speaker 1>You know, obviously the stock markets had an incredible run.

0:14:03.960 --> 0:14:07.800
<v Speaker 1>Credit spreads are tight, cost the capital is low, capital provision.

0:14:07.920 --> 0:14:11.400
<v Speaker 1>You can get capital in most places of reasonable prices

0:14:11.440 --> 0:14:13.480
<v Speaker 1>these days, and I think the FED wants that to

0:14:13.559 --> 0:14:17.520
<v Speaker 1>reverse somewhat, But they don't want to cause a disorderly

0:14:17.600 --> 0:14:19.720
<v Speaker 1>crash of some sort. They don't want the stock market

0:14:19.760 --> 0:14:22.800
<v Speaker 1>to go down. We know how the FED responds when

0:14:22.840 --> 0:14:24.960
<v Speaker 1>that happens. How many people have been talking about the

0:14:25.360 --> 0:14:28.200
<v Speaker 1>FED put probably is UH further out of the money

0:14:28.240 --> 0:14:30.680
<v Speaker 1>these days, and that might be true, but the FED

0:14:30.760 --> 0:14:33.160
<v Speaker 1>isn't going to try to engineer a situation where we

0:14:33.200 --> 0:14:37.440
<v Speaker 1>see a bear market in stocks just to tighten financial conditions.

0:14:37.440 --> 0:14:41.040
<v Speaker 1>I think they would instead talk tough, deliver in a

0:14:41.120 --> 0:14:44.680
<v Speaker 1>methodical and still somewhat gradual way. Don't go fifty five,

0:14:44.920 --> 0:14:47.640
<v Speaker 1>but stop adding to the balance sheet. He talked about

0:14:47.680 --> 0:14:50.160
<v Speaker 1>reducing the balance sheet and do it in ways that

0:14:50.240 --> 0:14:53.360
<v Speaker 1>the markets are not surprised at the fact that the Fed,

0:14:53.400 --> 0:14:58.640
<v Speaker 1>facing nearly seven percent inflation, is acting aggressively. People rationally

0:14:58.680 --> 0:15:02.000
<v Speaker 1>expect they should be acting aggressively. If they weren't, I

0:15:02.040 --> 0:15:04.240
<v Speaker 1>think the markets would be worse off. We'd be very

0:15:04.240 --> 0:15:07.640
<v Speaker 1>concerned that our central bankers have just lost all religion

0:15:07.640 --> 0:15:09.880
<v Speaker 1>with respect to inflation. That would be a worse outcome

0:15:10.480 --> 0:15:14.120
<v Speaker 1>than actually trying to tighten those conditions without causing a crash.

0:15:14.440 --> 0:15:16.280
<v Speaker 1>All right, r J, thank you so much for joining us.

0:15:16.320 --> 0:15:19.920
<v Speaker 1>Always appreciate getting your perspective here. R J. Gallo, Senior

0:15:19.960 --> 0:15:25.160
<v Speaker 1>portfolio manager for Federated Herme's talking about these fixed income markets.

0:15:25.200 --> 0:15:32.960
<v Speaker 1>What is being discounted in the credit markets today. Let's

0:15:32.960 --> 0:15:36.120
<v Speaker 1>talk a little crypto here. You know are when we

0:15:36.160 --> 0:15:38.600
<v Speaker 1>talk crypto a lot of times we'll go to Mike McGlone.

0:15:38.680 --> 0:15:41.280
<v Speaker 1>He's there, kind of our crypto guy at Bloomberg Intelligence

0:15:41.520 --> 0:15:44.560
<v Speaker 1>to get the investment research angling, he moved to Miami, Florida,

0:15:45.080 --> 0:15:47.600
<v Speaker 1>And I thought it was just a scam, everybody else

0:15:47.640 --> 0:15:49.680
<v Speaker 1>moving to Miami, getting out of New York, selling their

0:15:50.000 --> 0:15:51.800
<v Speaker 1>New York property and going down there. But he tells

0:15:51.840 --> 0:15:55.120
<v Speaker 1>me Miami is becoming a crypto hub. And I'm like,

0:15:55.160 --> 0:15:57.480
<v Speaker 1>wait a minute, New York is the financial hub, but

0:15:57.520 --> 0:15:59.680
<v Speaker 1>what's going on here? So let's bring in somebody who

0:15:59.720 --> 0:16:02.080
<v Speaker 1>kind of as the stuff for living Alex Lamberg, CEO

0:16:02.160 --> 0:16:06.480
<v Speaker 1>of Nimbus. Alex doesn't matter. Does crypto have a hub

0:16:06.520 --> 0:16:10.560
<v Speaker 1>like Wall Street for the financial services industry, like the

0:16:10.600 --> 0:16:14.760
<v Speaker 1>City of London for financial services in Europe? Does crypto

0:16:15.240 --> 0:16:19.840
<v Speaker 1>have a kind of a hub? Uh? Good, good afternoon,

0:16:20.040 --> 0:16:22.480
<v Speaker 1>A good morning still, and thank you for having me this.

0:16:22.640 --> 0:16:27.680
<v Speaker 1>This crypto have a hub? Well, it should, but it

0:16:27.840 --> 0:16:31.920
<v Speaker 1>certainly shouldn't be one city. And I'll give you my

0:16:31.920 --> 0:16:35.720
<v Speaker 1>my my logic here. Right. Um, So you started off

0:16:35.760 --> 0:16:37.320
<v Speaker 1>by saying, you know, New York as a hub for

0:16:37.400 --> 0:16:41.440
<v Speaker 1>financial products and and it should retain that. It should

0:16:41.480 --> 0:16:45.080
<v Speaker 1>retain that, Monica, right, you know, no matter what we

0:16:45.160 --> 0:16:46.920
<v Speaker 1>do as far as witch industries, we're going to we

0:16:46.920 --> 0:16:49.360
<v Speaker 1>always want to find a standard, right, and a gold

0:16:49.400 --> 0:16:52.200
<v Speaker 1>standard or some form of guidance or some form of

0:16:52.480 --> 0:16:55.120
<v Speaker 1>some kind of a standard. And and you you you

0:16:55.160 --> 0:16:58.400
<v Speaker 1>have to understand that blockchain will cater to a whole

0:16:58.440 --> 0:17:01.720
<v Speaker 1>school of products, a whole smooth innovation from from finance

0:17:01.760 --> 0:17:06.680
<v Speaker 1>to social, to medical, to you know, to everything else. Right.

0:17:06.760 --> 0:17:09.400
<v Speaker 1>So so when we do speak about you know, when

0:17:09.400 --> 0:17:11.639
<v Speaker 1>we do speak about New York, you know, it's important

0:17:11.680 --> 0:17:14.400
<v Speaker 1>that New York screams from the top of the from

0:17:14.440 --> 0:17:18.000
<v Speaker 1>the mountains that they want to retain that financial you know,

0:17:18.080 --> 0:17:21.359
<v Speaker 1>to become to retain that financial hub as a as

0:17:21.400 --> 0:17:24.320
<v Speaker 1>a gold standard. Not not only that that they should

0:17:24.440 --> 0:17:28.720
<v Speaker 1>also retain that gold standard from a regulatory perspective, right,

0:17:28.800 --> 0:17:30.600
<v Speaker 1>And and that's what they are to the world. And

0:17:31.160 --> 0:17:34.160
<v Speaker 1>I know, I know, regulatory is the most horrific word

0:17:34.200 --> 0:17:37.320
<v Speaker 1>when it comes to blockchain and define everything else. But

0:17:37.400 --> 0:17:41.600
<v Speaker 1>it really isn't right, Uh, you know, regulation, regulation is

0:17:41.600 --> 0:17:43.720
<v Speaker 1>going to be tried for you know, when you know

0:17:43.880 --> 0:17:48.360
<v Speaker 1>investors or that participants, let's in this particular space, UH

0:17:48.600 --> 0:17:51.719
<v Speaker 1>need someone that that policing and that guidance. Right. Everyone

0:17:51.760 --> 0:17:54.600
<v Speaker 1>hates the police until your house gets robbed, right, and

0:17:54.600 --> 0:17:58.199
<v Speaker 1>then they started screaming and even even CEOs like myself, right,

0:17:58.280 --> 0:18:02.080
<v Speaker 1>you know, you know we we we cry against regulation

0:18:02.119 --> 0:18:04.119
<v Speaker 1>because we want to get into this space. What happens

0:18:04.320 --> 0:18:06.720
<v Speaker 1>when we actually create a company and we have a

0:18:06.720 --> 0:18:10.200
<v Speaker 1>product in service and other participants in the view want it,

0:18:11.080 --> 0:18:12.800
<v Speaker 1>you know, are not doing it the right way, right,

0:18:12.840 --> 0:18:15.480
<v Speaker 1>and then we want regulation as well. Right, So New

0:18:15.520 --> 0:18:18.399
<v Speaker 1>York women should be that stand up or wherever c

0:18:18.600 --> 0:18:22.119
<v Speaker 1>Z is at the time. I guess Alex, let me

0:18:22.160 --> 0:18:27.359
<v Speaker 1>ask you about Nimbus because, um, you know, Bitcoin was

0:18:28.840 --> 0:18:31.480
<v Speaker 1>the white paper came out what two thousand nine by

0:18:31.520 --> 0:18:35.600
<v Speaker 1>Satoshi and Nimbus is, as far as I understood it,

0:18:35.680 --> 0:18:39.199
<v Speaker 1>a cipher that was from ten years before that. So

0:18:39.240 --> 0:18:42.960
<v Speaker 1>what do you do? So so Nimbus Nimbus is a

0:18:43.080 --> 0:18:47.239
<v Speaker 1>traditional defying company. Well, we'll defined the way defines being

0:18:47.320 --> 0:18:49.399
<v Speaker 1>used today. Right, it's you know, we have a school

0:18:49.400 --> 0:18:52.440
<v Speaker 1>of products, of school of apps, but primarily we're focused

0:18:52.520 --> 0:18:56.320
<v Speaker 1>on lending, uh, you know, peer to liquidity, providing peer

0:18:56.320 --> 0:18:59.800
<v Speaker 1>to peer uh and and lending. Where I'm taking nimbusis

0:19:00.080 --> 0:19:04.200
<v Speaker 1>taking Nimblais to start leveraging all of the alternative assets

0:19:04.240 --> 0:19:07.439
<v Speaker 1>that we've wanted to run in efficient markets and have

0:19:07.600 --> 0:19:11.760
<v Speaker 1>price discovery. Uh. And pure liquidity and all that other

0:19:11.800 --> 0:19:14.679
<v Speaker 1>good stuff. So we're taking what is a four hundred

0:19:14.680 --> 0:19:19.399
<v Speaker 1>billion dollar alternative asset space that exists purely on the

0:19:19.440 --> 0:19:22.879
<v Speaker 1>auction model and actually starting to bring it in uh

0:19:22.920 --> 0:19:26.960
<v Speaker 1>to a more liquid market and more efficient marketplace. That's

0:19:26.960 --> 0:19:28.800
<v Speaker 1>what embasis, you know, for the most part. I mean,

0:19:29.080 --> 0:19:33.320
<v Speaker 1>we're a hundred men organization, hundred person organization, I should say, uh,

0:19:33.320 --> 0:19:35.560
<v Speaker 1>in seven different countries, and we're starting to get a

0:19:35.600 --> 0:19:40.280
<v Speaker 1>decent foothold in the US. Alex yeh. I'm looking at,

0:19:40.560 --> 0:19:43.000
<v Speaker 1>you know, the volatility that we've I guess become accustomed

0:19:43.040 --> 0:19:46.639
<v Speaker 1>to in the crypto space. And again Bitcoin just for example,

0:19:46.720 --> 0:19:50.880
<v Speaker 1>down one point three today, just unders per token. What's

0:19:50.920 --> 0:19:55.199
<v Speaker 1>your outlook for crypto this year and beyond, because you know,

0:19:55.240 --> 0:19:57.080
<v Speaker 1>we're going to be in an inflation we are an

0:19:57.119 --> 0:19:59.320
<v Speaker 1>inflationary period. We're in a period were interest rates or

0:19:59.400 --> 0:20:01.760
<v Speaker 1>will be right using. How do you think the crypto

0:20:01.920 --> 0:20:07.199
<v Speaker 1>asset class performs in that environment? I think, uh, I

0:20:07.240 --> 0:20:10.200
<v Speaker 1>think that I fullheartedly believe that the crypto ax the

0:20:10.240 --> 0:20:13.520
<v Speaker 1>class is going to do extraordinarily well for for for

0:20:13.720 --> 0:20:16.359
<v Speaker 1>basically what you just said, right, you know, you know,

0:20:16.760 --> 0:20:20.439
<v Speaker 1>inflationary periods. What's going to happen with the interest rates

0:20:20.600 --> 0:20:22.919
<v Speaker 1>uh uh and the whole slow of other factors that

0:20:22.960 --> 0:20:25.840
<v Speaker 1>crypto really should live outside of now right now, because

0:20:26.440 --> 0:20:29.679
<v Speaker 1>so much of that is either pegged or or or

0:20:29.760 --> 0:20:33.240
<v Speaker 1>have a tie into the traditional markets. I believe that

0:20:33.280 --> 0:20:35.520
<v Speaker 1>those things are going to start, you know, instead of

0:20:35.560 --> 0:20:39.240
<v Speaker 1>converging there, they're gonna start to try to dislocate from

0:20:39.240 --> 0:20:42.399
<v Speaker 1>each other. When that happens, uh, they'll start trading on

0:20:42.440 --> 0:20:46.720
<v Speaker 1>their own basis what is the utility of that coin um, etcetera, etcetera.

0:20:46.760 --> 0:20:48.760
<v Speaker 1>And and and the fact that you can't just keep printing

0:20:48.760 --> 0:20:51.520
<v Speaker 1>those things and like you can with the US dollar

0:20:51.600 --> 0:20:54.600
<v Speaker 1>or other fiat currencies, the world will start getting down understanding.

0:20:54.880 --> 0:20:57.080
<v Speaker 1>The other thing is going to start driving the volatility

0:20:57.119 --> 0:20:59.480
<v Speaker 1>down is keep in mind that the crypto space is

0:20:59.560 --> 0:21:03.439
<v Speaker 1>into a test similarly tiny I mean, uh, you know,

0:21:03.480 --> 0:21:06.600
<v Speaker 1>Amazon has a bigger market value market cap, and then

0:21:06.680 --> 0:21:10.480
<v Speaker 1>then the whole crypto space combined, and as as regulators

0:21:10.560 --> 0:21:12.520
<v Speaker 1>start to you know, get on the ball and start

0:21:12.520 --> 0:21:15.119
<v Speaker 1>working with companies like you know, like Nimbus and others,

0:21:15.560 --> 0:21:17.840
<v Speaker 1>uh and and you know, and and actually start to

0:21:17.880 --> 0:21:21.000
<v Speaker 1>tease and and help this space more than um, you

0:21:21.040 --> 0:21:23.399
<v Speaker 1>know more than heard it. For now you're gonna you're

0:21:23.400 --> 0:21:25.920
<v Speaker 1>gonna see that value and the volatilities start to drive

0:21:25.960 --> 0:21:29.040
<v Speaker 1>itself down. Alex, thanks so much for joining us. Alex Lamberg,

0:21:29.119 --> 0:21:33.200
<v Speaker 1>there is the CEO of Nimbus talking to us about crypto.

0:21:34.520 --> 0:21:37.639
<v Speaker 1>Thanks for listening to the Bloomberg Markets podcast. You can

0:21:37.680 --> 0:21:41.439
<v Speaker 1>subscribe and listen to interviews with Apple Podcasts or whatever

0:21:41.560 --> 0:21:45.199
<v Speaker 1>podcast platform you prefer. I'm Matt Miller. I'm on Twitter

0:21:45.480 --> 0:21:48.960
<v Speaker 1>at Matt Miller three and on ball Sweeney I'm on

0:21:48.960 --> 0:21:51.919
<v Speaker 1>Twitter at pt Sweeney. Before the podcast, you can always

0:21:51.920 --> 0:21:53.760
<v Speaker 1>catch us worldwide at Bloomberg Radio