Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: YouTube search Bloomberg Global News. So Credit Suite, you know
Speaker 1: they have been announcing an array of management changes. We
Speaker 1: got that back in April, the departure as CFO, their
Speaker 1: Asia had their general council. Well, we just got a
Speaker 1: headline crossing the Bloomberg terminal and Credit Suits wearing the
Speaker 1: exit of the company CEO Thomas Gottstein. Uh. And we
Speaker 1: have certainly done some reporting over the last month or so. Uh.
Speaker 1: Justin late April, the company's chairman Axe Lehman express support
Speaker 1: for that CEO. But this was a again a bank
Speaker 1: that has been overseeing a streak of profit warnings more
Speaker 1: scandals which have saddled the bank with losses worth billions
Speaker 1: of dollars, damaged its reputation for risk management, and triggered
Speaker 1: a shake up of its leadership. So again, just crossing
Speaker 1: moments ago, a Bloomberg headline credit Sweet weighing the exit
Speaker 1: of Thomas Gottstein as soon as this year well, speaking
Speaker 1: of a leadership shake up. Twitter shares are down nine
Speaker 1: point five percent after Elon musk tweeted earlier this morning
Speaker 1: that the deal was on hold, this billion dollar takeover
Speaker 1: of Twitter. He did follow up a little bit later,
Speaker 1: saying that, you know, trying to clarify. I think when
Speaker 1: he saw that the stock was down and pre market
Speaker 1: trading um that it's still proceeding. But let's get the
Speaker 1: details now with Ed Love. Though he's West Coast correspondent
Speaker 1: for Bloomberg News, he's with us from our Bloomberg nine
Speaker 1: sixties studios in San Francisco. At never a dull moment
Speaker 1: when you're covering Elon Musk, Um, I do wonder what
Speaker 1: the strategy is here, because if you think about this
Speaker 1: from the perspective of somebody who you know, you'd think
Speaker 1: would do some serious due diligence. Um, the problem that
Speaker 1: he has is with the spot fake accounts. He's concerned
Speaker 1: that there are more than five that they make up
Speaker 1: more than five of Twitter's users. Um, wouldn't this be
Speaker 1: something that you kind of figure out before you make
Speaker 1: at four billion dollar takeover? Yeah? Well, first things first,
Speaker 1: Remember he waived due diligence, and we've known that for
Speaker 1: some time. And and you're completely right, because there's only
Speaker 1: one point he's been consistent on throughout this whole process,
Speaker 1: which is he wants to remove bots from the platform.
Speaker 1: He's very aware of bots on the platform. But then
Speaker 1: to suddenly turn around and be like, WHOA put the
Speaker 1: brakes on, guys, it's weird. And I'll tell you why, guys.
Speaker 1: The the language Twitter used in its regulatory Friday Friday
Speaker 1: Morning is standard boiler plate. They use it all the time,
Speaker 1: every quarter, So why now? So sometimes I think ed
Speaker 1: Elon Musk is just as he thinks. He just puts
Speaker 1: it out to everybody, you know, versus editing himself and
Speaker 1: saying what I you know, like most normal people like
Speaker 1: to do. But I'm just saying I do feel like synomons.
Speaker 1: It's the thought process and it just comes out. I mean,
Speaker 1: I don't know how so is he still committed to
Speaker 1: this deal? What do we know on that front? And
Speaker 1: I'm thinking about all the investors who are lining up
Speaker 1: behind him, or the money that's lining up behind increasingly
Speaker 1: other people's right money, not his. Maybe Yeah, So I
Speaker 1: mean he tim tweet said, he tweeted by the way
Speaker 1: to clarify, I'm committed to the deal. So you follow
Speaker 1: it on a blow by blow basis to our listeners
Speaker 1: and tell him to get everything on social media. We
Speaker 1: should trust well, we have no other mechanism to talk
Speaker 1: to him. Remember, there is no spokesperson, there's no sort
Speaker 1: of active press team. Um, go on the Bloomberg terminal
Speaker 1: if you're a subscribable and Bloomberg dot com if not,
Speaker 1: and read Matt Levin's column. According to Matt Levine Bloomberg
Speaker 1: opinion columnists, you can't just say I'm putting a deal
Speaker 1: on hold. Why you have a binding contract? That's it. Yeah,
Speaker 1: And I'm wondering what this has to do with price,
Speaker 1: because you know, the SMP five dred is down just
Speaker 1: in the last month since April four. April four was
Speaker 1: the day that Twitter shares closed hired by after Musk
Speaker 1: took that nine percent stake, so it was before he
Speaker 1: made the offer for Twitter. This was a passive one.
Speaker 1: But I wonder how much this has to do with
Speaker 1: the broader route that we've seen in tech stocks, and
Speaker 1: if Elon Musk is using this as an opportunity to
Speaker 1: try to get Twitter for a lower price. Yeah, there
Speaker 1: is a school of thought. Hindenberg short seller research company
Speaker 1: put it out there at the beginning of this week
Speaker 1: that this could be a sign of Elon Musk potentially
Speaker 1: coming back with a lower offer. You know, Twitter has
Speaker 1: not been caught up in the sell off in technology
Speaker 1: stocks because it's pending a deal, right, and you look
Speaker 1: at the spread between the offer price fifty four dollars
Speaker 1: twenty cents and the current share price, it's getting wider wider, wider,
Speaker 1: especially with today's sell off in Twitter stock. And that's
Speaker 1: an indication, a soft indication that Wall Street is betting
Speaker 1: this deal is not going to happen, at least not
Speaker 1: in its current form. Yeah, I mean, I just feel like,
Speaker 1: you know, it's interesting. Um David western Um talking to
Speaker 1: a guest earlier, Eric Gordon, who follows M and A
Speaker 1: and teaches it to students and was like, how do
Speaker 1: you teach Elon Musk to business school students? And you know,
Speaker 1: he's just got his own rules right ed. And I
Speaker 1: think about you folks who have to report on him,
Speaker 1: Like how you have to interpret these things he does well.
Speaker 1: I mean, it's the lack of sleep that's the hardship,
Speaker 1: it's not the interpreting. Um, let's remember, let's recap the reporting,
Speaker 1: multiple media reports, the FTC. The SEC are looking at
Speaker 1: the deal and how Elon Musk steaks was acquired and communicated.
Speaker 1: So you know, he's not free or above the law,
Speaker 1: but he does have his own way of doing things
Speaker 1: that is atypical for an executive of a large publicly
Speaker 1: traded or private company. And we have thirty seconds left.
Speaker 1: What's happening inside Twitter right now? Yesterday the CEO let
Speaker 1: go of two executives there. What are you thinking if
Speaker 1: you're working at Twitter right now, They're hiring Freeze, they're
Speaker 1: re sending offers take us into it. Yeah, I mean
Speaker 1: I'm hearing that in some respects this business is normal. Um.
Speaker 1: They're surprised that Elon Musk didn't know about the bots.
Speaker 1: It's a kind of well known thing. Internally. Um, but
Speaker 1: they're bracing what Twitter looks like. You know, there was
Speaker 1: expectations that some management would go and we're starting to
Speaker 1: see that play out now. Yeah. Anyway, all right, it
Speaker 1: continues the story that continues to give and give and give.
Speaker 1: Sleep from Ed luve Blow. Yeah, yeah, it doesn't seem
Speaker 1: like Elon must look sleeps at all all. The West
Speaker 1: Coast correspondent Bloomberg News Twitter share of selling off Tesla shares.
Speaker 1: They're rallying. This is Bloomberg. You're listening to Bloomberg Business Week.
Speaker 1: We've Carol Masser and Bloomberg Quick Takes. Tim Stinovic on
Speaker 1: Bloomberg Radio. We're still in a pandemic everyone, and COVID
Speaker 1: is searching again in the US. Reinfections a chief culprit.
Speaker 1: Let's get to it. Dr I los Bader is clinical
Speaker 1: Professor of Medicine at n y U Landgoing Medical Center.
Speaker 1: On the phone from New York City. My guess is
Speaker 1: thou e and first of all, great to have you
Speaker 1: here with him and myself. You would say it's okay
Speaker 1: to be out and about. Well, uh are now it's
Speaker 1: always fair to be prudent, Happy Friday. But Carol and
Speaker 1: tim and two years ago we did talk about that
Speaker 1: everyone would be getting COVID eventually. I certainly did not
Speaker 1: anticipate all of the mutations and the O macron sub
Speaker 1: variants that are coming out. And I think we are
Speaker 1: we are certainly seeing and I'm seeing in the office
Speaker 1: more COVID infections a lot of people. I think we're
Speaker 1: under counting because people are testing at home. The home
Speaker 1: tests are fairly accurate, and so we really are seeing
Speaker 1: a surge. Some of those people. We are getting taxl
Speaker 1: of it for you're older born, firm underlying disease, but
Speaker 1: a lot of people are getting it, and I think, um,
Speaker 1: you know, going out to big venues, you know, does
Speaker 1: pose some risk. Fortunately, most of these omicron infections are
Speaker 1: like that cold sinus cloth, sore throat. We're not really
Speaker 1: seeing a bump in the deaths. We've had enough deaths,
Speaker 1: you know, a million in the United States, fifteen million
Speaker 1: excess deaths around the world. So uh, this has been
Speaker 1: quite ago. But it's frustrating that despite people who have
Speaker 1: had vaccines two or three, and people even four vaccines,
Speaker 1: or if they've even had COVID, they are still getting
Speaker 1: O Macron And that's been very frustrating, So going out
Speaker 1: to concerts. Probably it's not a zero risk, let's put
Speaker 1: it that way. And we've seen it front and center
Speaker 1: with our colleagues. Ten Yeah, we have, um I mean,
Speaker 1: and it's not just in the data. Anecdotally, we've had
Speaker 1: more and more colleagues who are getting sick dr les better.
Speaker 1: Why is it so difficult to get packs of it? Still?
Speaker 1: Uh Well, typically we try and reserve that for people
Speaker 1: who are older sixty five or of underlying medical problems.
Speaker 1: I have not had that much trouble getting it. We
Speaker 1: use a specific pharmacy, which I'm not going to mention
Speaker 1: on air, but who do seem to be able to
Speaker 1: get it for most patients? As patients over sixty five
Speaker 1: you're saying, or with underlying conditions, not necessarily like you know,
Speaker 1: if I'm under forty and I got it, I wouldn't
Speaker 1: be able to get packs of it. It's it's much
Speaker 1: more difficult um A. You have to upload and document
Speaker 1: one that you have a positive test. Um. I have
Speaker 1: a few patients who are under forty or or under
Speaker 1: sixty five, we're getting it. In general, most doctors are
Speaker 1: trying to reserve it for older people, because most young
Speaker 1: people do seem to get through it, you know, seven
Speaker 1: to ten days, that's the quarantine. They may have some
Speaker 1: residual you know, cough. I've had patients coughing for several
Speaker 1: months after. Unfortunately, we don't have great treatment for post
Speaker 1: COVID or long long haul at this point, although we're
Speaker 1: looking at a number of things. But yes, young people,
Speaker 1: it is harder to get pack lav it true. You know,
Speaker 1: we have a Bloomberg story out there and it says
Speaker 1: experts say that it's difficult to know what the next
Speaker 1: few months will bring, uh and just says how the
Speaker 1: virus is not behaving the same way it has in
Speaker 1: the past, and the majority of the country is living
Speaker 1: like the pandemic is over. How do you think about
Speaker 1: I don't know the next the rest of the year
Speaker 1: in terms of what we might see when it comes
Speaker 1: to the pandemic, you know, I think we should be
Speaker 1: focusing or if I were in leadership, I would try
Speaker 1: and encourage an omicron vaccine or a universal COVID coronavirus
Speaker 1: vaccine because clearly this virus is mutating faster than we thought.
Speaker 1: People are getting reinfected multiple times. As for the Bloomberg article.
Speaker 1: Even natural antibodies are not providing protection, so and paxl
Speaker 1: of it is in limited amounts. So I think we
Speaker 1: I think vaccines can be helpful, but they have to
Speaker 1: be more of a universal like universal flu vaccine or
Speaker 1: universal coronaviru respect scene. And I would say if you
Speaker 1: are elderly or from be careful going to concerts. You know,
Speaker 1: so outdoors said certainly safer than indoors, and be prudent.
Speaker 1: I just say, I'm getting ready to do some traveling
Speaker 1: outside the country, and it's it's pretty there's strict rules
Speaker 1: out there. You got those masks ready. I have the
Speaker 1: masks ready. But going into a country and then coming
Speaker 1: back to the US, I mean they want to make
Speaker 1: sure you're not carrying stuff around. I hope you don't
Speaker 1: get stuck in some beautiful location for ten days because
Speaker 1: you just continue to test positive comment Sorry guys, still positive,
Speaker 1: Maybe with like a nice beach or tropical climate comments comment.
Speaker 1: Dr Iain LUs Bader, thank you so much, clinical professor
Speaker 1: of medicine and go to for us throughout the pandemic.
Speaker 1: Key's over at n y U lend Going Medical Center.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. The remarks in
Speaker 1: the new isshue of Bloomberg business Week really taps into
Speaker 1: what has been going on in the trade and kind
Speaker 1: of where we are right and and our markets actually
Speaker 1: starting to make some sense at this point. Well, that's
Speaker 1: the question. I mean, the valuations have certainly come down
Speaker 1: a lot. Michael mackenzie is rates reporter who covers the
Speaker 1: bond market here at Bloomberg News. He joins us on
Speaker 1: the phone from New York City. He's the author of
Speaker 1: the remarks in the current issue of Bloomberg Business Week magazine.
Speaker 1: It's available on newstands, on the Bloomberg and at Bloomberg
Speaker 1: dot com Slash business Week. Also with us right now
Speaker 1: is Joel Weber, editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studio. Joel Ober, the
Speaker 1: editor of the magazine. Joel Um. The party well today
Speaker 1: notwithstanding um, but you know these are sort of characteristics
Speaker 1: of bear markets. The party it's over? Do we know
Speaker 1: if it's over? I mean, we may have time. This
Speaker 1: article so perfect, guys are perfect with time man. So
Speaker 1: should We talked to Michael this week, and obviously this
Speaker 1: has been a really interesting week to watch things continue
Speaker 1: to fall. We've seen weeks of declines. Now everyone's kind
Speaker 1: of looking for that bottom. And you know, in our
Speaker 1: business week way we were we were like, we're in
Speaker 1: the hangover right, Like this is It's been a decade
Speaker 1: long party, easy money, free money, memestocks, crypto, everything was
Speaker 1: just you know, so easy. And when we started talking
Speaker 1: to Michael about this, it's like, yeah, this is gonna
Speaker 1: it's there's a turn that's happening, and inflation, interest rates,
Speaker 1: all of these things is going to make it much
Speaker 1: a much different, more difficult environment. And and when we
Speaker 1: talked to Michael about that, we were like, oh, yeah,
Speaker 1: that the hangover is here. Uh and maybe we're already
Speaker 1: on the other side of that hangover and more powering
Speaker 1: through on this Friday, Michael. But what were the elements
Speaker 1: that really stood out to you as you dug into
Speaker 1: writing this story. Well, I think what I've always enjoyed
Speaker 1: being a financial genus out for twenty years. It's like
Speaker 1: you do get to make people during that journey. A
Speaker 1: lot of them has been around mother than I have
Speaker 1: and so people like David Drew a tro price and
Speaker 1: wha why not at research serious? You know, they've been
Speaker 1: sounding the quarter intel for some time. And so when
Speaker 1: I was thinking to them a year ago on other stories,
Speaker 1: they were currently, well, it's just things are too easy,
Speaker 1: the mean stock to start phrase, cryptocurrencies. Everything suggested to
Speaker 1: them that things are getting very, very hot, and it
Speaker 1: was time to sort of raise cash and focus on values,
Speaker 1: focus on doing your homework and prepare for for rougher waters.
Speaker 1: And I think what you know, if you look back
Speaker 1: to what happened in two thousand, what happened before two
Speaker 1: thousand made a lot of the market turmoil you do
Speaker 1: get comes when the Fed Reserve decided you to start
Speaker 1: raising rates. It has to tighten up the cost of money.
Speaker 1: And I think we've been through an extraordinary period since
Speaker 1: the pandemic. We didn't just get zero interest rate an
Speaker 1: enormous amount of bombying from the FED. We got it
Speaker 1: from other global central banks, some of whom did quantitative
Speaker 1: easy for the those first time, such as earlier. And
Speaker 1: we also had a huge amount of fiscal stimulus that
Speaker 1: came the cities in the US, and that combination has
Speaker 1: given us a legacy of near double digit inflation, and
Speaker 1: you've suddenly got a federal reserve that has a dual mandate.
Speaker 1: It's looking there to make sure the employment market is
Speaker 1: strong but also price stability in the form of an
Speaker 1: inflation rate around a target of two. At the moment,
Speaker 1: they're doing very well on the employment side of that
Speaker 1: dual mandate, they're not doing very well on the inflation side.
Speaker 1: So it's very reasonable as an investor be thinking, this
Speaker 1: is a FED that's really focused on one thing, and
Speaker 1: that is getting inflation down. And this is why we
Speaker 1: keep hearing more and more references back to what poor
Speaker 1: volcadicament view was share of the said reserves in the
Speaker 1: late seventies and eighties, when he really did crack the
Speaker 1: wid and in the end got inflation down, but at
Speaker 1: the cost of a very hard landing for the economy.
Speaker 1: And I guess right now the market is called in
Speaker 1: this environment, is the said going to be able to
Speaker 1: secure a softer landing, and therefore evaluations will continue to
Speaker 1: under pressure. But there's probably a time now to start
Speaker 1: scaling into some of the things you'd like and which
Speaker 1: do look cheap um. But the risk here is that
Speaker 1: we get a harder landing, so it could be for
Speaker 1: the Hall to come likely and credit. Michael, That's what's
Speaker 1: been kind of interesting to watch this. We have just
Speaker 1: talked NonStop about inflation, inflation, inflation, and so of course
Speaker 1: the FED has to be aggressive when it comes to
Speaker 1: interest rates. I feel like that the conversation, especially in
Speaker 1: the last week or two, has aggressively and increasingly moved
Speaker 1: to a wait a minute, FED raising rates, what happens
Speaker 1: to growth? And that's what we're all focusing on that
Speaker 1: the now we're looking at probably some kind of slowdown,
Speaker 1: and who knows what kind of a slowdown and how
Speaker 1: long it lasts, how deep and how long exactly. So
Speaker 1: I mean a lot of people are sort of looking
Speaker 1: at the template of team where the Fed raising said
Speaker 1: times rates around two and a half per cent, and
Speaker 1: we had an I guess, the tantrum in both equities
Speaker 1: and credit, and the FED stopped, but they also could
Speaker 1: see that the economy was really staring down. I think
Speaker 1: what's problematic this time is that rent and shelter about
Speaker 1: a third nearly a third or how the US calculates
Speaker 1: consumer price index, and we've had an explosive housing market
Speaker 1: and that re announcing rent increases through big sings big
Speaker 1: cities such as New York and San Francisco really taking off.
Speaker 1: It's also happening in the areas of the country where
Speaker 1: people have moved to because they have a more flexible
Speaker 1: work environment. They can work from home, so Florida, Austin, Texas.
Speaker 1: So you've not got to rent and housing price problem
Speaker 1: that's feeding through into CPI and could very well continue
Speaker 1: for much of this year. So you don't have a
Speaker 1: situation where growth is slowing that inflation remains high. We
Speaker 1: also still have a war in Ukraine, which is putting
Speaker 1: pressure on commodity prices, particularly food. Now the flip side,
Speaker 1: of course, is that high super crisis tend to eat
Speaker 1: into people's into people's persons and walls to excuse the time,
Speaker 1: and therefore that will slow the economy. But I think
Speaker 1: it's a very clicky time and I think it's This
Speaker 1: is why when I was talking to investors, their sort
Speaker 1: of view was, I'm taking long term view and I'm
Speaker 1: going to scalely in the areas that I like. I'm
Speaker 1: not going full in, but I'm starting to scale in
Speaker 1: because we've seen enough of a fall now. But they're
Speaker 1: also adopting a sort of our strategy here that there
Speaker 1: could very well be further drops, but from a sort
Speaker 1: of if you sort of take a three to five
Speaker 1: year time horizon there, it's usually these are these are
Speaker 1: the times to buy. You can hold in the next
Speaker 1: three to five years, you'll be You'll come out of
Speaker 1: that um looking far better. So the album, the famous
Speaker 1: album was start making sense? Do markets finally start making sense?
Speaker 1: Michael really quickly? Like seconds? Um, I think a year
Speaker 1: ago we had what sixteen crew the negative eut in bonds.
Speaker 1: He is now down to about only about sup treally now, um,
Speaker 1: that's the word. Best thing that tells you that they're
Speaker 1: starting to make sense when we no longer have negative
Speaker 1: viewer in bonds. By you're paying someone so your money
Speaker 1: is ridiculous. I think that's the key. That's killer and
Speaker 1: so perfect. After what a week, Bloomberg Business Week editor
Speaker 1: Joel Webber in studio, thank you, And of course that
Speaker 1: voice you just heard Bloomberg News Rates reporter Michael Mackenzie
Speaker 1: on the phone in New York City. That is the remarks.
Speaker 1: The new issue of Bloomberg Business Week out now. This
Speaker 1: is Bloomberg Radio you're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Crypto though for equities, it's been a vault to work
Speaker 1: for a lot of asset classes, including the cryptocurrency markets,
Speaker 1: we have seen kind of a crazy week, to say
Speaker 1: the least. We've got a great voice to join us
Speaker 1: to talk all things crypto right now. Giante Sue is
Speaker 1: the co founder and CEO of alex It's a decentralized
Speaker 1: finance de FI platform for bitcoin. Santa, Good to have
Speaker 1: you with us. How are you, Hi, Carol, Hi Tiam.
Speaker 1: Thank you for having me join you today. Yeah, thanks
Speaker 1: so much for joining us. I want to go back
Speaker 1: to something that Carol shared from our colleague Mike Reagan,
Speaker 1: senior Markets editor here at Bloomberg, about a story that
Speaker 1: he wrote earlier this week. One point eight trillion dollars
Speaker 1: is the value of cryptocurrencies that has evaporate evaporated since
Speaker 1: the market top to three trillion dollars in early November.
Speaker 1: That's more than fifty drop, according to coin get Go.
Speaker 1: When I see numbers like that, I think to myself,
Speaker 1: this as Mike Reagan rights could be a turning point
Speaker 1: in the crypto industry. What do you think? Well, I
Speaker 1: think the overall my care team is that it is
Speaker 1: definitely undergoing a massive correction and largely due to you know,
Speaker 1: delayed fat high tried to curb inflation. And crypto is
Speaker 1: highly correlated with tech, which is an injurery sensitive sector.
Speaker 1: So we're interesting, right, you know the value of those
Speaker 1: future and the is greatly discounted. Let's just face it.
Speaker 1: The macro environment is challenging on several fronts. The conflict UQUES,
Speaker 1: slowing growth in China, US and other central banks are
Speaker 1: tight or they are tightening. So all these are contribute
Speaker 1: to the pencil of were seeing not just incredible, but
Speaker 1: you know, the global market as a whole, So I
Speaker 1: would say the downside race to growth definitely dominates, with
Speaker 1: very very limited upside for crypto and for the whole
Speaker 1: market as well. You say we shouldn't think about what's
Speaker 1: going on um with crypto right now as a Leman moment.
Speaker 1: Is that fair? Um? That's my personal opinion, Carol, because
Speaker 1: you know, interestingly, people does people do associate this, particularly
Speaker 1: the collapse of the terror stable point u S t
Speaker 1: with LIMA moment. Right, my prisents of personal opinion is
Speaker 1: the folling care is that first of all, you know,
Speaker 1: when we define LIMA moment, we think about the market suddenly.
Speaker 1: I understood at that point that the government will not
Speaker 1: fail our Lima as it has already done so for Bear,
Speaker 1: Fannie and Freddie. In crypto, there has never been any
Speaker 1: talks that the other one would you know, save us
Speaker 1: or stabbing with spellouts. Um. So that's what I think.
Speaker 1: That is really not a Dima moment. But the only
Speaker 1: thing I would say is, you know, do you think
Speaker 1: investors understood the risk here? Uh in what is turning
Speaker 1: out to be and has been a very volatile market
Speaker 1: with the you know, true possibility of losing everything. Yeah,
Speaker 1: I um, I appreciate this terror. I would say two things.
Speaker 1: Number one, this terror ust collapse. It is a it's
Speaker 1: supposed to be a stable coin, but it is turned
Speaker 1: out to be not to be a stable coin. Right,
Speaker 1: so when we talk about the terrors collapse, first of all,
Speaker 1: it is our recently stable coin and it turned out
Speaker 1: that it's not well designed, so it did not survive this.
Speaker 1: A market fell up. But if you look at other
Speaker 1: stable coins such as U S d C. It's back
Speaker 1: one to one with US dollar reserve. It continues to
Speaker 1: maintain the very stable value. But also number two about
Speaker 1: crypto itself as a whole industrial sector. The value of
Speaker 1: cryptocurrencies depends crucially on our perceived likelihood of they becoming
Speaker 1: more widely used in the payment system, so that perception
Speaker 1: can fluctuate dramatically. Right, events like Terra's collapsed push the
Speaker 1: likelihood further into the future. Yeah, well, I wonder if
Speaker 1: it's there's two sort of issues here. One is the
Speaker 1: lack of confidence that people might have because of what
Speaker 1: happened with Tera. I was talking about the reddit posts
Speaker 1: on uh the subreddit for terror Luna, and there are
Speaker 1: people who are in despair because of the money that
Speaker 1: they've lost, people who've lost their life savings according to
Speaker 1: these posts. I wonder if it makes it less likely
Speaker 1: for cryptocurrency to be adopted widespread by financial systems around
Speaker 1: the world because of the volatility that we've seen because
Speaker 1: of the more than fifty draw down. And this is
Speaker 1: we've got what non inten cential banks exploring the possibility
Speaker 1: of creating your own digital currencies. I mean, it's moving ahead.
Speaker 1: Mmmm yes, by heart broken. You know when you reason
Speaker 1: treature and ready people lost your shags. They will even
Speaker 1: talk about suicide. So you know, as a builder bitcoin
Speaker 1: in a defact protocol, I really really I am heartbroken,
Speaker 1: but I want to save this number one. UM you
Speaker 1: know yell and came out to come and some you
Speaker 1: know possible regulation, particularly on stable coins. I welcome professor
Speaker 1: yelling comment. Why because stable coins are supposed to be
Speaker 1: packed to the SIA dollar. And I believe cryptox industry
Speaker 1: as a whole welcome regulation that are clear but not
Speaker 1: limiting the innovation of crypto. Right the cryptal practisers want
Speaker 1: to become from like myself, like our protocol alex build
Speaker 1: on people. We welcome regulations because greater clarity will accelerate
Speaker 1: the adoption of printle by retail and institutional investors. But
Speaker 1: it's just as important that this regulation they are not regressive.
Speaker 1: So trackonian that you know, us end up lacking itself
Speaker 1: out of this open crypto networks. Okay, UM obviously will
Speaker 1: have to do more in the future. She anti su
Speaker 1: shes conancy of the fintech firm there are focused on
Speaker 1: crypto investing. It's called Alex. She was the global head
Speaker 1: of Quantitative Investment Strategy research over at Morgan Stanley h
Speaker 1: And what was a wild week, certainly when you think
Speaker 1: about stable coins. This is Bloomberg Moro Journal now. But
Speaker 1: let me drive. Oh no, no, no no, no, all right, please,
Speaker 1: I'll dovel. I want to drive. Its good question. This
Speaker 1: is the Drive to the Globe on blue Bird Radio.
Speaker 1: Right just about thirteen minutes left in today's trading session,
Speaker 1: we're getting ready to trump wrap up the Friday trade.
Speaker 1: The week overall a volatile week and even a volatile day.
Speaker 1: We are bouncing around, uh, flipping back and forth here
Speaker 1: with just a few minutes to go here, but we're
Speaker 1: definitely off our worst levels of the session, near our highs.
Speaker 1: In fact, Yeah, the nasdak up more than three point
Speaker 1: six highed by two point three percent, in the Dow
Speaker 1: hired by one point four percent. So we're seeing that
Speaker 1: rally maintain at least late in the day. Let's get
Speaker 1: into it with the Victoria Green, the chief investment officer
Speaker 1: at G squared Private Wealth. They've got five fifty million
Speaker 1: dollars in assets under management. Victoria joins us once again
Speaker 1: on the front from College Station Texas, Victoria today is
Speaker 1: it Is it better than yesterday because we're seeing more
Speaker 1: green on the screen. Well, yeah, I'm just hoping we
Speaker 1: don't jing fit. Man, this last thirty minutes of the
Speaker 1: market has not been kind, so I'm kind of holding
Speaker 1: my breath here. I know we only have thirteen minutes
Speaker 1: to go, but I'm like, come on, baby, just hold
Speaker 1: onto this rally. Why is it important to you? Why
Speaker 1: is it important to you that this rally is held
Speaker 1: onto at the end of the week here. Yeah, well,
Speaker 1: so there's some important supports on the SMP five hundred
Speaker 1: around thirty eight hundred that held this week. Um, and
Speaker 1: we kind of want to relief rally. You know, it
Speaker 1: hasn't if you look at the pattern every single day
Speaker 1: this week, it pifically didn't necessarily start off bad and
Speaker 1: you even have decent games sometimes through lunch and then
Speaker 1: we chiled off in the afternoon. So this will be
Speaker 1: kind of breaking this powder and of just four down
Speaker 1: days and pretty miserable week. You know, even with this
Speaker 1: relief rally to day, they're still looking at index is
Speaker 1: down two to three percent on the week. You know,
Speaker 1: in the Nassas looking to line up their six straight
Speaker 1: weekly loss of most What are the important um, you
Speaker 1: said some important sup ports? It think holding? Did you
Speaker 1: say this week or just today? Uh? No, this week?
Speaker 1: So we were really a little nervous yesterday level on
Speaker 1: the SMP five that's a pretty big retracement level we
Speaker 1: were hoping would hold. Uh and it did today. It's
Speaker 1: just kind of putting a little bit more room between
Speaker 1: us and and today is really one of the first
Speaker 1: times in a long time we've had a rally that's held,
Speaker 1: and that's just kind of as a nice little relief
Speaker 1: and kind of helps April go from down eight to
Speaker 1: six percent, you know that to now the week is
Speaker 1: is looking two to three percent, and that that just
Speaker 1: makes it a little less worse and a little easier
Speaker 1: to take some time off this weekend. Well, I do
Speaker 1: I agree, like I would like to see some boy,
Speaker 1: I mean, listen, I'm not seeing what I would like.
Speaker 1: But you know, I've got a four o one K
Speaker 1: and unfortunately, well I understand that there are two sides
Speaker 1: to the market. I'm not trying to be just buried
Speaker 1: stuff in the backyard. I thought you exactly. You just
Speaker 1: you found the crypto and you buried it's all under
Speaker 1: my mattress. No, but you know in terms of I
Speaker 1: mean the thing is right now, we're trying to find
Speaker 1: the bottom. We're talking about market capitulation. I mean Apple
Speaker 1: getting just decimated. You know, that was something we've talked
Speaker 1: about a lot this week, right, you know, officially in
Speaker 1: terms of how much it has fallen? Um, how much
Speaker 1: are you guys talking about market capitulation? What to you? Says?
Speaker 1: Market capitulation? Victoria. So unfortunately, I'm not to put a
Speaker 1: damper on this lovely day to day. But typically you
Speaker 1: need to have a ninety percent down day, which we
Speaker 1: haven't had, as well as more breadth of selling if
Speaker 1: you look at the number of stocks trading below their
Speaker 1: ten other day moving averages, as well as value holding
Speaker 1: up very well. It's it's not necessarily the indiscriminate sailing
Speaker 1: you typically see when you get a capitulation, because the
Speaker 1: capitulation is just people throw off their hands and say,
Speaker 1: Cathro if I'm done, like I gotta get out of here,
Speaker 1: and I just have to sail because I can't take
Speaker 1: it anymore. We are starting to see some of that, right,
Speaker 1: some We did see equity outflows this week and last week.
Speaker 1: Then you are seeing you know, clients start to want
Speaker 1: to give up on some position and moving into bonds
Speaker 1: right into moving into bond funds, and talked about that
Speaker 1: or there. I mean you're still seeing, you're still seeing
Speaker 1: how you'll come out, I'd say selective bonds, treasuries. You
Speaker 1: know you're seeing that flight to quality to all about
Speaker 1: a twenty basis point drop in the ten year this week, uh,
Speaker 1: and which is is good signs. But if you look
Speaker 1: for the historical when is the bottom? You know, yes,
Speaker 1: to support hell, but is it conpitulation? Not to sound bad,
Speaker 1: but typically it gets a little bit more ugly and
Speaker 1: then everybody just wants to throw up and give up,
Speaker 1: and then that's that's the bottom. Okay. Um. Victoria helps
Speaker 1: settle something for for Carol and me because during one
Speaker 1: of the breaks we were talking about valuations off air,
Speaker 1: about price earnings ratio for the SMP five D. We're
Speaker 1: using the Bloomberg to pull up the PE ratio for
Speaker 1: the SP five in at twenty right now, um, which
Speaker 1: is the lowest it's been roughly since you know, the
Speaker 1: coronavirus pandemic recovery back in back exactly rely exactly two
Speaker 1: years ago today, but it's still historically high, right, So
Speaker 1: is it fair to say that stocks are so expensive
Speaker 1: by at least this measure. Some stocks are still expensive, absolutely,
Speaker 1: but you also have to just count in the low
Speaker 1: rates we still have. And yes, rates are coming up,
Speaker 1: but come on, guys, we're not even able to keep
Speaker 1: a book free on the tenure if you look back
Speaker 1: at worically, this is not a high rate environment. And
Speaker 1: I think that's the debate is where's the peg and settle?
Speaker 1: Some of that ends up with how where a rate's
Speaker 1: gonna settle? And with that discount looked like, and how
Speaker 1: much do we want to pay for that dollar earning?
Speaker 1: I mean, I think because this SMP five is so
Speaker 1: heavily capuated to tech stocks and growth stocks right now, um,
Speaker 1: it's probably a very reasonable valuation of considering where those
Speaker 1: have fallen and when with their growth trajectory looks like
Speaker 1: it for the future. Uh. And because they're so heavily
Speaker 1: weighted to Teck versus I mean energies like what three
Speaker 1: percent of the SMP five hundred financial some of your
Speaker 1: more historical value stops, you know, I know, this is
Speaker 1: our broad base, this is the market. The SMP five hundred,
Speaker 1: but it's really not. It's very close to the nast
Speaker 1: back and the rustle or one thousand growth. And so
Speaker 1: I think someone is taking back and not to be existential.
Speaker 1: But what is the market, so you want to say,
Speaker 1: is it fairly valued? Tech? Maybe not? Other barstood market
Speaker 1: absolutely and almost pricing in a recession at this point?
Speaker 1: What do you make of something like bank stocks which
Speaker 1: are down about twenty or so this year and more so,
Speaker 1: I'm just looking at the high here, oh one thirteen,
Speaker 1: doing some quick math here on the Bloomberg uh, and
Speaker 1: we're seeing them down even more so if I if
Speaker 1: we look at the high back in January. I mean
Speaker 1: my assumption was rates going up good for banks? Um?
Speaker 1: But is that telling you the nervousness about the growth
Speaker 1: picture recession? Maybe lower loan demands slowdown? Is that what
Speaker 1: that tells you? So? I mean mortgage rights have certainly spiked.
Speaker 1: What is it five point through now that we've been
Speaker 1: so spoiled this last decade that five point three is
Speaker 1: like an astonishing number two was now you backed that
Speaker 1: out thirty years any one of us would have been
Speaker 1: happy in get up five set mortgage right. Some of
Speaker 1: this stuff is all relative, but I think financials should
Speaker 1: do a little bit better. I mean, the kW Bank
Speaker 1: index is down from January this year. That's huge. Yeah,
Speaker 1: and some of that is you had the issue with
Speaker 1: Russia and sanctions. You had some write off and that
Speaker 1: hurts some of the financials. Then you had the curve
Speaker 1: not really doing what the curve does to help financials,
Speaker 1: and that ended up, you know, with the concerns on
Speaker 1: inflation and what rates were going to do. The trajectory
Speaker 1: became so uncertain. They didn't really get this boost they
Speaker 1: usually get during a rising interest rate environment because trust me,
Speaker 1: you're only gonna still make your point. You're a one
Speaker 1: percent interest on your checking account, but they're definitely going
Speaker 1: to charge you a lot more on your loans. So
Speaker 1: they should be making more. Their margins should be doing better.
Speaker 1: But you also didn't see consistent results during earnings, right.
Speaker 1: You saw them starting to shore up reserves. I mean,
Speaker 1: thanks did not sound super happy about the world. They
Speaker 1: were more you know, putting more in their reserved budgets
Speaker 1: and generally reducing risk, which is not necessarily a good
Speaker 1: songt But is that a canary in the coal mine.
Speaker 1: I think it's because they're so regulated now that they
Speaker 1: kind of have to react. First, I think we have
Speaker 1: a much more cautious banking industry over here in the
Speaker 1: US than we used to ever have, right oh eight,
Speaker 1: I think forever is earned into everybody's mind in the
Speaker 1: financial industry. Um so slight canary in the coal mine.
Speaker 1: But I think it's also a little bit the way
Speaker 1: that their industry reacts now to potential bad news. I mean,
Speaker 1: remember what they set aside for the coronavirus sauces. They're
Speaker 1: very quick now they start raising reserves and moving a
Speaker 1: little more conservatively. You don't really have over here aggressive
Speaker 1: banks anymore. You and then you look at what's happening,
Speaker 1: was like, say your credit poeee you Deutsche Bank that
Speaker 1: tend to be a little bit more aggressive what they
Speaker 1: they're doing, and they're struggling, But you know, I'll take
Speaker 1: a U S Bank over European Bank any day, Victoria.
Speaker 1: So it does look like and here we are, you know,
Speaker 1: less less than about four minutes ago until the market closes,
Speaker 1: It does look like the rallies holding the nattack hired
Speaker 1: by three point six, the SMB five under hired by
Speaker 1: two point to the how high at one point three.
Speaker 1: So what's the message that today's rally is sending about
Speaker 1: how you're feeling about where we are in terms of capitulation.
Speaker 1: I still don't think we're there yet. Uh, you know,
Speaker 1: I'm not sure if we're not going to give this
Speaker 1: back up next week. I really hate to be a
Speaker 1: Debbie Downer on a Friday afternoon. I kind of just
Speaker 1: feel like I should lie to you right now and
Speaker 1: be like, no, don't here at the bottom. So the
Speaker 1: vic the Vix, hey, you know, Victoria the vix being
Speaker 1: down three points on us today We're at twenty nights
Speaker 1: and just dipping below thirty on a day that was volatile. Again, Like,
Speaker 1: I don't get that. There's a lot of disconnect. Cryptocurrency
Speaker 1: was supposed to offer that inflation. You know, they're all
Speaker 1: of these should haves in the market, and sometimes the
Speaker 1: market just is its own, its own beast, and it
Speaker 1: really has a mind of its own. And so that's
Speaker 1: why sometimes it's better to grin, embarrass and stay invested,
Speaker 1: because what is logical is not always what happens. I mean,
Speaker 1: some if you backed out and said, Okay, this is
Speaker 1: what's happening in the world, where do you think the
Speaker 1: markets would be I still think people would think we
Speaker 1: were at a massive question at this point. So sometimes
Speaker 1: you have to remember the markets don't always react to
Speaker 1: news the way we think or rational um. And we
Speaker 1: definitely do not have a rational stock market right now,
Speaker 1: because you do have some indiscriminate selling of stocks that
Speaker 1: make billions of dollars and strong earnings and great balance sheets.
Speaker 1: It doesn't matter that most of them are going down hostefully.
Speaker 1: If you're saying an apple, just quickly, just got about
Speaker 1: twenty seconds here, So next week for more FED speakers,
Speaker 1: a retail sales report, what's going to be on your
Speaker 1: radar just quickly? Yeah, I mean they gotta put seventy
Speaker 1: five bases points on the tables they got, they got
Speaker 1: a man up. They gotta get a kind of inflation.
Speaker 1: I don't think they're gonna do it, but in place
Speaker 1: you know, the FED, don't fight the Fed. The Fed's
Speaker 1: tightening here, So you've got to realize, you know, up
Speaker 1: hill and a bowl market is running into a major
Speaker 1: FED headwind. All right, we're gonna leave it on that now.
Speaker 1: Always fine. Victoria gree And Chi's chief investment officer over
Speaker 1: chief Squared Private Well fifty million dollars in assets under management,
Speaker 1: joining us on the phone from college station Texas. Got
Speaker 1: a man app although even yesterday Marketplace, even with that
Speaker 1: interview in Marketplace yesterday he reiterating it's not going to
Speaker 1: be so many five, but he could change his mind.
Speaker 1: He could change his mind. Still got a few weeks
Speaker 1: right before the next meeting. All right. Thanks for listening
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