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. Amazon shares are plummeting, posting
Speaker 1: their biggest drop since as the company acknowledged that a
Speaker 1: hiring and warehouse building binge during the pandemic now really
Speaker 1: catching up with the company as e commerce sales growth
Speaker 1: inevitably slows from the toward pace that we've seen from
Speaker 1: the outbreak. We're all done kind of Mike going crazy
Speaker 1: on Amazon and look at the if you look at
Speaker 1: the size and scope, as we like to say over
Speaker 1: in the newsroom, uh, in the just today for Amazon,
Speaker 1: that's their worst drop since two thousand and six. About
Speaker 1: the historic, so even more than I think i'd put
Speaker 1: it out. So it's it's it's a greater drop. Yeah, yeah,
Speaker 1: it's huge, all right, and that's why we're seeing the
Speaker 1: drag on those major equity averages. Hey, let's get to
Speaker 1: the story, the fundamentals. Bloomberg News technology reporter Matt Day
Speaker 1: on the phone in Seattle, joining up Mike and myself. So, Matt,
Speaker 1: we got the results. Initially, we saw the stock drop.
Speaker 1: What other insight do we get? Our intel? Um on
Speaker 1: the analysts call last night, it was it was a
Speaker 1: lot of playing defense from Amazon, which you might expect
Speaker 1: given the ugly numbers they reported. You know, they're they're
Speaker 1: really trying to push people to think of the big picture.
Speaker 1: And remember all of that growth Amazon turned through during
Speaker 1: the pandemic. Um, you know, listen at a different universe
Speaker 1: they pulled through. You know a lot of a lot
Speaker 1: of increases in an e commerce behavior just in in
Speaker 1: a period of twelve months. And to take the long view,
Speaker 1: investors clearly haven't haven't bought that. They they see some
Speaker 1: weakness and Amazon's business that that weren't weren't apparent before.
Speaker 1: Are they right to focus? Is Amazon right? We had
Speaker 1: an investor on too Amazon is is his number one pick.
Speaker 1: He says it's the most undervalued play out there. Um.
Speaker 1: Probably speaking his book, but he covers the tech sector
Speaker 1: and has for a while. Um, we talked with him
Speaker 1: last night. But I'm just wondering, is Amazon right to
Speaker 1: focus or refocus the analysis community about the growth? You know,
Speaker 1: they certainly have a point. Um, they've grown a ton,
Speaker 1: They've they've grabbed a ton of market share since the
Speaker 1: beginning of the pandemic. I think the question that that
Speaker 1: that analysis leaves out is what happens now. You know,
Speaker 1: is Amazon structurally more profitable business now that they have
Speaker 1: built all of these warehouses around the U S to
Speaker 1: meet all of our demand? Or you know, because labor
Speaker 1: costs are what they are and and supply to him,
Speaker 1: looks like it's never gonna get uncanked. Um, is it
Speaker 1: just a structurally more expensive business to run an e
Speaker 1: commerce operation? I think that's a that's an open question
Speaker 1: now in a way it wasn't just just twenty four
Speaker 1: hours ago. Yeah, Matt, you know, I'm an older guy,
Speaker 1: as they say, as the reason I have that title
Speaker 1: senior senior editor, Carol. But I remember back in the day.
Speaker 1: It almost didn't matter what Amazon's earnings said. You know,
Speaker 1: they had that top line growth, They had these investments
Speaker 1: in R and D, branching out into new business lines,
Speaker 1: cloud computing, you know. I mean, they went from basically
Speaker 1: a bookseller to what they are now. Is anyone in
Speaker 1: the analyst community making that case sort of defending them, saying, look,
Speaker 1: this is kind of old school Amazon, just laying the
Speaker 1: groundwork for for the future. We're are we really looking
Speaker 1: at a scenario where we could see maybe even the
Speaker 1: closing some of all these warehouses they build, or laying
Speaker 1: off this massive number of people that they hired. Uh
Speaker 1: any idea which way people are expecting them to go?
Speaker 1: I think it's it's a great question. I mean, it's
Speaker 1: definitely too soon to suggest they're gonna they're gonna start
Speaker 1: laying people off in droves or closing some of these facilities.
Speaker 1: But I think some of the problem that that analysts
Speaker 1: are chewing on is just how big Amazon has gotten.
Speaker 1: Like in those in those earlier days you talked about
Speaker 1: like they could they could move the needle a lot easily.
Speaker 1: They are, They're a cute e commerce company, and getting
Speaker 1: into new lines of business was with maybe maybe less
Speaker 1: of a risk and easier to make a big difference.
Speaker 1: Even even after that crazy decline in their their share price,
Speaker 1: there's still more than a one trillion dollar company, right, Um,
Speaker 1: So it's just just getting incrementally harder to keep up
Speaker 1: with all of this, you know, twenty year growth that
Speaker 1: they they fed to Wall Street for so many years
Speaker 1: in a row. You know, uh that I was reading
Speaker 1: a story of years a while back on CEO Andy
Speaker 1: Jesse's compensation package, and I almost I had to take
Speaker 1: my glasses off and clean them. I I thought I
Speaker 1: thought I was reading it wrong. It was like moment
Speaker 1: it was like, yeah, it was like two d and
Speaker 1: twenty million. Granted a lot of that in stock. Um,
Speaker 1: but I'm wondering that. You know, so he has a
Speaker 1: background in the web services side of the business, which
Speaker 1: was such a strong driver of growth now, but with
Speaker 1: this problem on the the e commerce side, is is
Speaker 1: there any grumblings you're picking up, any grumblings that you know,
Speaker 1: maybe Jeff Bezos should come back from space and and
Speaker 1: that maybe you know that they should that they need
Speaker 1: a stronger leader in that retail side of the business.
Speaker 1: Nobody's nobody's crying loud enough, but it's it's reaching my
Speaker 1: ears so far. I mean, I think this is this
Speaker 1: is definitely and Jesse's biggest challenge since sitting in this chair.
Speaker 1: And and and the word we get from Amazon is that
Speaker 1: he's still asking just really hard questions of a lot
Speaker 1: of business. You know, certainly today he's asking a bunch
Speaker 1: of of their core retail unit. Um What what we're
Speaker 1: hearing at Amazon is this is giving giving Jesse uh
Speaker 1: kind of an excuse to um to to interrogate some
Speaker 1: of Amazon's assumptions, right, like what are they what are
Speaker 1: they planning on for e commerce growth? And can they
Speaker 1: sustain that? So I don't think we've seen enough results
Speaker 1: of that, And certainly, you know, nobody seems to be
Speaker 1: calling for his head this morning as far as I
Speaker 1: can tell. Hey, man, I'm looking at the Bloomberg and
Speaker 1: looking at three year growth average numbers on the big
Speaker 1: product revenue segmentation when it comes to Amazon, I mean,
Speaker 1: online store is obviously the big bulk in terms of
Speaker 1: the overall revenues, but in terms of growth it is
Speaker 1: a WS or those third party sellers at least over
Speaker 1: the last three years. Subscription services is too when you
Speaker 1: look especially at a WS, is that still the thing
Speaker 1: that kind of shining holy grail when it comes to Amazon,
Speaker 1: and that's where a lot of growth can still come
Speaker 1: And it really is. And that's that's so much of
Speaker 1: the bool case for the company and buy some estimates
Speaker 1: at half of their valuation or more today is just
Speaker 1: at AWS. You know, structurally, more business and retail is
Speaker 1: going to keep growing and they're going to keep expanding
Speaker 1: as as you know, more companies put put their servers
Speaker 1: out of business and and trust to the cloud. Right.
Speaker 1: I think you've also you also got to note the
Speaker 1: advertising business Amazon. Last four I started to break out
Speaker 1: ads and they're doing real well there too. Yeah, it's
Speaker 1: interesting to our Bloomberg Intelligence team putting that out to
Speaker 1: when it comes to when we're seeing some of the
Speaker 1: ad disappointments amongst some of the other companies, whether it
Speaker 1: was Google right specifically UM saying that increasingly we're seeing
Speaker 1: Amazon take a bigger share of that. Hey, Matt Day,
Speaker 1: thank you so much. Technology Putter at Bloomberg News. We
Speaker 1: know Amazon among the top decliners in both the SMP
Speaker 1: and the NASDAC on this Friday. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. So outside advisors to the U
Speaker 1: s f d A tentatively planned to meet UH in
Speaker 1: June to talk about covenanteen vaccines for younger kids were
Speaker 1: talking about five years or under five years of age.
Speaker 1: The news coming one day after Maderna's that it had
Speaker 1: applied for emergency authorization for itch shot in young kids.
Speaker 1: So let's get a pandemic update on this Friday. Back
Speaker 1: with us, as he often is on a Friday, Dr
Speaker 1: Ian LUs Bader, clinical Professor of Medicine at n y
Speaker 1: U Land, going on the phone in New York City,
Speaker 1: joining Mike Reagan and myself. Ian, how are you doing
Speaker 1: very well? Carol and Mike. Happy Friday. I hope you
Speaker 1: guys are doing well. Yeah, it feels good. Feels good
Speaker 1: to be Friday. Uh. Yeah, we're we're loving it ahead
Speaker 1: of the weekend. Um. It also does feel good to
Speaker 1: see that when it comes to the vaccine, we're finally
Speaker 1: getting to those little critters. How do you see it?
Speaker 1: And I'm always curious about what's involved and getting um,
Speaker 1: you know, youth authorization safe use authorization for younger kids.
Speaker 1: So there are really a number of questions about COVID
Speaker 1: of as there have been over the past two years
Speaker 1: that we've been following this and vaccines. In a very
Speaker 1: interesting article in the New York Times entitled Truth and Trust,
Speaker 1: the author David Leonard really talks about public health officials
Speaker 1: sending confusing messages about masks vaccines, and I think that's
Speaker 1: what we're seeing with the really pediatric and UM, you know,
Speaker 1: essentially neo natal vaccines. And they do have to go
Speaker 1: through a vaccine committee that reviews the data, and they're
Speaker 1: taking a little bit of a pause to to really
Speaker 1: review this. And I think we have to keep in
Speaker 1: mind a few things. One, UM, these vaccines still are
Speaker 1: for the alpha That the alpha virus, which is two
Speaker 1: years old O macron, both in kids and adults, is
Speaker 1: a relatively milder vaccine over thirty mutations just in the
Speaker 1: spike protein alone. So I think their question is going
Speaker 1: to be, UM, do we really need this uh? And
Speaker 1: what are the risks and what are the benefits? So
Speaker 1: a O macron is milder than alphas, So do we
Speaker 1: really need to give alpha shots? It's two shots to
Speaker 1: UM two children really as young as six months old.
Speaker 1: The studies look from six months to six years to
Speaker 1: most young people do better than old people anyway. With
Speaker 1: with the virus and what really are both the short
Speaker 1: term and long term side effects. We know that the
Speaker 1: vaccines in a small percent of patients, they can have myocarditis,
Speaker 1: neurologic problems, other problems. And do we really need to
Speaker 1: expose millions of kids to really save the lives potentially
Speaker 1: of maybe hundreds or perhaps a thousand kids who have
Speaker 1: died sadly, but that's really mainly from the from the
Speaker 1: alpha of virus, not from the omicron. So anyway, they
Speaker 1: have to look at all of that data, right, the
Speaker 1: data is sort of questionable. It's the efficacy was fairly
Speaker 1: low at you know, talk to those calculations that the
Speaker 1: FDA are doing that you're talking about, I feel like
Speaker 1: parents in this country are doing the same type of calculations.
Speaker 1: And I've noticed just anecdotally, you know, friends that I
Speaker 1: talked to who even have gotten the vaccine themselves, and
Speaker 1: at the booster, there's a bit more reluctance to have
Speaker 1: their kids get the booster or to get the shot
Speaker 1: when it's available. Do you think the uptake on this
Speaker 1: Madurna vaccine, if it is approved for these young kids
Speaker 1: will be will be pretty low as a result, And
Speaker 1: you know what does that mean for the virus going forward? Mike,
Speaker 1: You're exactly right. That's sort of hesitancy I think will
Speaker 1: be shared by a lot of people because they're seeing
Speaker 1: an adults that many people have either had COVID or
Speaker 1: have had three shots and they still get O macron
Speaker 1: and they're going to wonder like if I even vaccinate
Speaker 1: my child, my me andate or young child isn't really
Speaker 1: going to do anything. And that's what we're seeing with
Speaker 1: questions about the fourth shot, the same question how long
Speaker 1: does the protection last? Do we really needed for our kids?
Speaker 1: And what other potential side effects? So I do think,
Speaker 1: as you say, the uptake on this may not be
Speaker 1: as great as we think. I think it's good to
Speaker 1: offer to people they can make their own decision. Um.
Speaker 1: I think it's nice for for some kids who may
Speaker 1: have immune compromise. Is it good for everyone? I think
Speaker 1: we have to wait and really review more data. Yeah.
Speaker 1: I feel like anything that has to do with COVID,
Speaker 1: I feel like there's always a ton of question. No,
Speaker 1: um Ian, thank you so much. Listen, have a great weekend.
Speaker 1: Dr Ian los Spader, clinical Professor of Medicine at n
Speaker 1: y U Lango Medical Center with us on the phone
Speaker 1: from New York City. The FDA, though, has said it
Speaker 1: is holding the dates of June eight je June for
Speaker 1: potential meetings of its Vaccines and Related Biological Products Advisory
Speaker 1: Committee to talk about pediatric use of vaccines made my
Speaker 1: Manderna and also the partnership of Fiser and bion Tech,
Speaker 1: so they're going to be Mike certainly looking into it.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. So in the
Speaker 1: new issue of Bloomberg business Week magazine, it's already out
Speaker 1: on newsstands, it's online at Bloomberg dot com, also business
Speaker 1: Week dot com and off of course, on the Bloomberg terminal.
Speaker 1: It's a story by Josh Green that looks at Florida's
Speaker 1: Governor Rondo Santis raising his profile while managing to not
Speaker 1: alienate former President Donald Trump, which is tricky as we
Speaker 1: all know. That story from Bloomberg Business Week National correspondent
Speaker 1: Josh Green, who joins us on the phone in Washington,
Speaker 1: d C. Josh, good to have you here with Mike
Speaker 1: Reagan and myself. So tell us about what the Florida
Speaker 1: governor is up to, because he's been quite public uh
Speaker 1: as of late, especially when it comes to his spat
Speaker 1: with the Walt Disney Company. Yeah. I'm really looking at it,
Speaker 1: at the Santis and the Disney fight in our new issue,
Speaker 1: because it's it's just odd to see the popular governor
Speaker 1: of a big state attack his state's most prominent employer.
Speaker 1: And yet that is what is happening in Florida, with
Speaker 1: the Santis attacking the Walt Disney Company for uh statements
Speaker 1: and support it's put out for for gay people and
Speaker 1: for criticizing what Democrats called the Don't Say Gay law
Speaker 1: in Florida that the sand is pushed and signed that
Speaker 1: forbids teachers from teaching about gender to uh younger school kids. UH.
Speaker 1: And it's turned into this big fight in politics, and
Speaker 1: people are kind of wondering what is going on. And basically,
Speaker 1: as I lay out in the new issue of Business Week,
Speaker 1: de Santis is purposely picking this fight because it is
Speaker 1: something that chimes with what conservatives care about it's about
Speaker 1: the culture wars. But he's also trying to do something
Speaker 1: very tricky for Republican presidential hopeful, and that is to
Speaker 1: raise his own profiles presidential prospect without pissing off the
Speaker 1: biggest guy in Republican politics, and that is Donald Trump.
Speaker 1: You know. And first, Carol, full disclosure, as a father
Speaker 1: of three daughters, I don't know how much I've spent
Speaker 1: at Disney and on their products. Just get that out
Speaker 1: of the way. But josh I, I think you you
Speaker 1: make a good point in this column about how this
Speaker 1: is really something that kind of riles up the base,
Speaker 1: uh and and the real sort of vocal thought leaders,
Speaker 1: if you will, of the Republican Party. It's the type
Speaker 1: of thing that maybe makes sense in a primary season,
Speaker 1: but if de Santis is to get the nomination, um,
Speaker 1: I'm curious what you think, you know, does being anti
Speaker 1: Disney play nationally or is it the type of thing
Speaker 1: where he you know, suddenly we'll see him make amends
Speaker 1: with with Disney and be riding the teacups in a
Speaker 1: in a photo op and and making friends with the
Speaker 1: LGBTQ community a little bit. When he tries to move
Speaker 1: to the middle of a little bit in a general election. Yeah. Well,
Speaker 1: what he's really doing, and he's been doing this since
Speaker 1: last fall I wrote about him back then, before Disney
Speaker 1: was in his crosshairs, is it's not so much that
Speaker 1: he's fighting against Disney. He's fighting against this broader notion
Speaker 1: of what he calls woke capitalism, the idea that businesses
Speaker 1: generally are spurning their shareholders and kind of subordinating themselves
Speaker 1: to UM activist liberals who want them to adopt a
Speaker 1: social agenda. And in fairness to the Santus, that is
Speaker 1: not entirely untrue. Liberals have made a point of targeting
Speaker 1: Fortune five companies in states like Georgia where they really
Speaker 1: don't have political power. He saw that last year with
Speaker 1: all the fights over Delta and Coca Cola. UM activists
Speaker 1: had pressured them to speak out against these voting restriction laws.
Speaker 1: Republicans had responded with the boycott. What the Santus is
Speaker 1: doing and essentially is turning the table and starting a
Speaker 1: political fight with Disney because he wants to draw his
Speaker 1: attention to himself as someone combating UH this issue of
Speaker 1: woke capitalism, which is very popular with conservatives UM, and
Speaker 1: it serves his immediate political interests because it helps to
Speaker 1: raise his profile in the lead up to the Republican
Speaker 1: presidential primary. And you know, Josh, you follow this stuff
Speaker 1: a lot more closely than I do. But it seems
Speaker 1: to me that Donald Trump hasn't really staked out a
Speaker 1: position on Disney per se, and he never really seemed
Speaker 1: to show too much animosity, at least in his in
Speaker 1: his statements towards the LGBTQ community. Do you think he'll
Speaker 1: he'll try to chase the Santis on this issue or
Speaker 1: how do you see him reacting to this? You know,
Speaker 1: it's interesting. I'm not sure if you will are not.
Speaker 1: The reason to Santis started this issue is because he
Speaker 1: needed something to raise his profile, and the problem he
Speaker 1: had is that most of the fights in Republican politics
Speaker 1: are cultural fights that revolve around Donald Trump. There fights
Speaker 1: Donald Trump has started, Their fights that revolve around him.
Speaker 1: The big one that's royaling a lot of primary races,
Speaker 1: including the one I've written about um in the Pennsylvania
Speaker 1: Senate race, is the question of whether or not Trump
Speaker 1: was the rightful winner of the election and had it
Speaker 1: stolen from him. The status correctly recognizes that anytime you
Speaker 1: know he's gotta he's got to sort of talk about
Speaker 1: Trump's issues, subordinate himself to Trump. It makes him look feckless,
Speaker 1: it doesn't make him look like a strong, standalone candidate
Speaker 1: who can develop his own following. And so one reason
Speaker 1: he started this fight with with Disney is that it's
Speaker 1: the kind of uh cultural grievance that Republicans have really
Speaker 1: learned to care a lot about um in the era
Speaker 1: of Donald Trump. And yet it isn't a fight that
Speaker 1: revolves around Trump or one that Trump has even particularly involved. Then,
Speaker 1: so I think we'll have to wait and see whether
Speaker 1: Trump or not decides to get involved in the Disney fight.
Speaker 1: But the Santus has already won to an extent, at
Speaker 1: least in the political realm um by by creating this
Speaker 1: spectacle that revolves around him, that's raised his profile, that's
Speaker 1: gotten conservatives excited, and that has nothing to do for
Speaker 1: the time being with Donald Trump. Hey Josh, what is
Speaker 1: the relationship between De Santis and Donald Trump? It sounds
Speaker 1: like it's a little complicated, very frosty, very frosty. Yes,
Speaker 1: I mean, Trump expects people in the Republican Party, all politicians,
Speaker 1: to essentially bow down to him, in genuflect um de
Speaker 1: Santis in particular because when the Santis was first running
Speaker 1: for governor in the Republican primary, Trump endorsed him and frankly,
Speaker 1: probably got him elected. I don't think the Santis would
Speaker 1: be governor were it not for Donald Trump. UM. But
Speaker 1: at the same time, the Santus has ambitions of his
Speaker 1: own and recognizes that deferring to Trump is going to
Speaker 1: make it impossible for De Santis to be the Republican
Speaker 1: nominee in two and so he's refused to try. Has
Speaker 1: noticed this, Uh, it's angered him quite a bit. He's
Speaker 1: complained privately to advisers that the Sanders is a loser,
Speaker 1: that he has a dull personality, and he's taken shots
Speaker 1: at the Santis publicly for refusing to reveal, for instance,
Speaker 1: whether or not he's had a COVID booster shot. He
Speaker 1: doesn't like the fact that the Santus has become popular
Speaker 1: on terms that don't put him um as a secondary
Speaker 1: figure to Trump, you know. Trust. Another story that caught
Speaker 1: my eye this week was that the whole Q and
Speaker 1: On community has piled in on this Disney issue. Is
Speaker 1: are we seeing the signs of that sort of fringe
Speaker 1: element of the right wing getting on board with the
Speaker 1: Santis or is or is that just absolutely well, certainly
Speaker 1: they're being attracted to the fight that the Santus has started,
Speaker 1: and to the extent that this fight raises, the santass profile,
Speaker 1: you know, sucks in all the kind of activist fringy
Speaker 1: wackos who drive so much Republican politics these days, you'd
Speaker 1: have to think, you know, not great for Disney, not
Speaker 1: great for teachers and kids and l g B, t
Speaker 1: q Q folks who are in the cross singers here.
Speaker 1: But as far as the Santus's own short term political interests,
Speaker 1: it's really hard to see that hurting him. It's fascinating
Speaker 1: to see how this is playing out here, and of
Speaker 1: course the midterms just really months away. A Josh Father,
Speaker 1: excuse me, thank you so much. Josh Green. He's national
Speaker 1: correspondent at Bloomberg Business Week. His story is featured in
Speaker 1: the new issue of Business Week magazine, available on newsstands,
Speaker 1: on the Bloomberg and at Bloomberg dot com slash business Week,
Speaker 1: so be sure to check it out. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick takes
Speaker 1: Tim Stinovic on Bloomberg Radio. So Goldman Sacks offering its
Speaker 1: first ever lending facility back by bitcoin. It's a significant
Speaker 1: step for a major US bank that accelerates Wall streets
Speaker 1: embrace of crypto. Meantime, Mike and I just talking about
Speaker 1: the journal, talking about the labor department and officials they're
Speaker 1: believing Fidelities planned to allow investors to put bitcoin in
Speaker 1: there four oh one k accounts, risks, the retirement security
Speaker 1: of Americans, so so much as always on a daily
Speaker 1: basis to talk about when it comes to crypto. In
Speaker 1: our weekly crypto segment, we welcome Rick Edelman. He's founder
Speaker 1: of dac FP. That's Digital Assets Council of Financial Professionals,
Speaker 1: which worked with financial professionals when it comes to learning
Speaker 1: about blockchain and digital assets. Rick is with us on
Speaker 1: the phone in Virginia. Rick, nice to have you here.
Speaker 1: I do feel like every day we are flooded by
Speaker 1: people embracing the crypto world and people taking a step
Speaker 1: back and being more cautious about crypto. Tell us, first
Speaker 1: of all your organization, what you are doing to educate
Speaker 1: the financial world when it comes to the crypto world.
Speaker 1: Thanks for having me on Carol. The challenge, of course,
Speaker 1: is that crypto is so new financial advisors don't know
Speaker 1: much more about it than everybody else, and that's not
Speaker 1: really good when clients come asking what is bitcoin? Should
Speaker 1: I invest? How do I invest? So we created dak
Speaker 1: FPA four years ago to serve as the premier education resource.
Speaker 1: We're the only game in town, really the only objective independent,
Speaker 1: we're not proud sponsored, we're not pushing products, etcetera. UH,
Speaker 1: that gives a product agnostic level of education for financial advisors.
Speaker 1: We offer the Certificate in blockchain and Digital Assets so
Speaker 1: that advisors get a deep dive not only in understanding
Speaker 1: the tech, but in understanding how to build a portfolio,
Speaker 1: how to serve clients, how to explain all this to clients.
Speaker 1: And UH there's a huge amount of increased demand from
Speaker 1: advisors for this knowledge because their clients are asking like
Speaker 1: never before. Watch this evolution of UH, the attitudes towards
Speaker 1: crypto on Wall Street. You know, back from the days
Speaker 1: when Jamie Diamond was saying he would, you know, basically
Speaker 1: fire anyone who traded crypto at JP Morgan's, you know,
Speaker 1: dipping his toe at JP Morgan, dipping their tone into
Speaker 1: the space. I'm wondering what the sort of mood is
Speaker 1: among those registered advisors that you're talking about. UM. Are
Speaker 1: they skeptics? Are they warming up to the asset class? Uh?
Speaker 1: You know, it's a lot for UH, AN R, I
Speaker 1: A to wrap their head around when you've got complicated
Speaker 1: traditional markets all of a sudden layer on top the
Speaker 1: digital markets and and defying everything else. Are you know,
Speaker 1: is there an embrace of the risk uh sort of
Speaker 1: tolerance among these advisors that you need to to get
Speaker 1: into crypto? There really is. According to the most recent surveys,
Speaker 1: nearly half of all financial advisors personally on bitcoin, but
Speaker 1: only fiftent are recommending it to clients predominantly because their
Speaker 1: firms won't let them. And advisors are realizing that they're
Speaker 1: got their hands tied behind their back because clients want
Speaker 1: to engage, they want to invest, and if the firms
Speaker 1: won't let them, then the clients are going to go
Speaker 1: somewhere else, and that's costing the firm's assets and and
Speaker 1: a U M. It's reducing their fee revenue and helping
Speaker 1: them frankly lose credibility. UM as clients are saying, are
Speaker 1: you that inequated, you're not able to help me with
Speaker 1: the newest asset class on the marketplace. So advisors are
Speaker 1: are recognizing the value and importance of this. They cite
Speaker 1: as the number one reason for investing in bitcoin, the
Speaker 1: non correlation, the fact that this is additive to a
Speaker 1: diversified portfolio. It helps to improve returns while reducing risks.
Speaker 1: And advisors are big fans of portfolio diversification and bitcoin
Speaker 1: is just the latest way to help make that even better.
Speaker 1: Right right, Although, does that non correlation really hold up
Speaker 1: all the time? It seems like, you know, we see
Speaker 1: bitcoin and ethereum really trading as as risky assets like
Speaker 1: stocks these days. But I guess, I guess one day
Speaker 1: the potential and the hope is that they will be
Speaker 1: completely uncorrelated. You're absolutely right. We're beginning to see over
Speaker 1: the past six months exactly what you said, and everybody
Speaker 1: is wondering is this a temporary aberration or is this
Speaker 1: representative of a new long term trend? Jury is out,
Speaker 1: We'll have to wait and see. Well, how much of
Speaker 1: the education that you guys are doing is also though
Speaker 1: about the volatility of it and how investors need to
Speaker 1: be incredibly cautious. I mean we talked about the Labor department.
Speaker 1: They're not so comfortable with what Fidelity might be doing
Speaker 1: here and allowing investors to put bitcoining their own K costs.
Speaker 1: I mean, to be fair, Rick, there is still so
Speaker 1: much for trying to figure out about the crypto world.
Speaker 1: You're absolutely right about that, Carol, But you know what,
Speaker 1: in this particular case with fidelities four O one K,
Speaker 1: the Department of Labor is dead wrong. Think about it.
Speaker 1: We know that the best way to invest is dollar
Speaker 1: cost averaging. Everybody is an agreement on that. You invest
Speaker 1: a little bit of money at a regular interval over many,
Speaker 1: many years. It smooths out the volatility. We also know
Speaker 1: that when you do it this way, you're not investing
Speaker 1: in a lump sum. And we want the most volatile
Speaker 1: investment we can find me to take advantage of the
Speaker 1: price wings. That's what makes dollar cost averaging work. It
Speaker 1: wouldn't make any sense to dollar cost average into a
Speaker 1: bank account. So if bitcoin is an incredibly volatile asset,
Speaker 1: it's ideal for dollar cost averaging, which is what you
Speaker 1: do automatically in a four O one K with the
Speaker 1: tax deductability, the tax referral and free employer match. What
Speaker 1: you're going to discover happening? Hang out, hang out Mike life.
Speaker 1: I know Mike has done to jump in. I get you, Rick,
Speaker 1: but I'm wondering what is the responsible way to approach
Speaker 1: putting bitcoin into a four one K? I mean, would
Speaker 1: you limit allocations? Would you have a big red flashing
Speaker 1: box come up and say this is a risky asset?
Speaker 1: Read all this first, know how? Because this is on
Speaker 1: advised money, right, not the financial advisors you're talking about.
Speaker 1: Most people set their four ones on their own? How
Speaker 1: do you do that responsibly? And just got about thirty
Speaker 1: seconds advise four one K plans are increasingly engaging in
Speaker 1: financial education. To your exact point, I believe you're going
Speaker 1: to find employers using this as a recruitment tool, saying
Speaker 1: to workers are trying to hire, come work for our
Speaker 1: company and we'll provide you bitcoin in your four O
Speaker 1: one K to our match. This is here to stay
Speaker 1: and it's a sea change, big advance for crypto. I'm
Speaker 1: just gonna say, younger generation is asking for flexibility. Right now,
Speaker 1: I'm being able to work. I don't know if it's bitcoin,
Speaker 1: and I wonder if they'll be matching in bitcoin. I'd
Speaker 1: be interesting. Alright, great conversation. Rick Edelman, founder of doc FP,
Speaker 1: joining us on the phone in Virginia. That's a Digital
Speaker 1: Assets Council of Financial Professionals. Bro Mac turn on yaw.
Speaker 1: But you let me drive? No, no, no, all right please,
Speaker 1: i'vels I want to drive. It's a good question. Drive.
Speaker 1: This is the Drive to the clothes well on Bloomberg Radio.
Speaker 1: All right, TikTok, everybody, About ten minutes left to wrap
Speaker 1: up the Friday trading session. Wrap up a wild week.
Speaker 1: We're seeing stocks selling into the clothes here. We're down
Speaker 1: down about four on the NASTAC more than four percent.
Speaker 1: You heard Charlie talk about at three point six percent.
Speaker 1: Lower on the sp Dow off two point seven percent.
Speaker 1: Katy Nixon is with us for the drive to the
Speaker 1: close back with us. In fact, she's chief investment officer
Speaker 1: at Northern Trust Wealth Management. On the phone from Ryan,
Speaker 1: New York. So how many phone calls, Katie, Mike and
Speaker 1: I Mike Reagan and I want to know how many
Speaker 1: calls are you getting from some of your clients? You know, Carol,
Speaker 1: first of all, thank you for having me, But I
Speaker 1: would say was prepared our clients for this kind of volatility.
Speaker 1: We've been anticipating that we would be in this period
Speaker 1: of uncertainty and that would be reflected in lots of
Speaker 1: gyrations both up and down um in markets and bond
Speaker 1: markets and and stock markets, and certainly that has come
Speaker 1: come to bear. I'm just in the last week alone,
Speaker 1: we've had great upside and and um some painful downside
Speaker 1: as we see today. So we've kind of prepared folks
Speaker 1: for this, so we're not getting as many pone calls
Speaker 1: as you would think, Katie. It's funny, you know, uh
Speaker 1: months ago. I don't know, at the end of last year,
Speaker 1: earlier this year, people started sort of whispering that word stagflation, um,
Speaker 1: and immediately they'd be sort of hushed and and and
Speaker 1: someone else would say, no, there's no no chance. The
Speaker 1: consumers too strong, the economy is too strong. Uh, you know.
Speaker 1: But then we see this negative GDP print for the
Speaker 1: first quarter, uh this week, are we is this what
Speaker 1: stagflation looks like? Or is that is that repurchased a
Speaker 1: false signal? Do you think? Well, I think the data
Speaker 1: was pretty annoyed. The honestly, for the first quarter, we
Speaker 1: had that big trade drag um, and then we had
Speaker 1: consumption that did come in pretty pretty good, A little
Speaker 1: bit light, but about pretty good. So the data was
Speaker 1: I wouldn't say conclusive in terms of one way or another,
Speaker 1: but I would say the risks of staglation have risen
Speaker 1: for sure. Um, we have seen some rolling over of data. Um,
Speaker 1: We're gonna get a lot more data next week. Obviously,
Speaker 1: we're gonna get the non farm payroll numbers, We'll get
Speaker 1: some I S M data. Um, we'll hear from the
Speaker 1: Fed clearly. Um, So we're gonna get a lot of
Speaker 1: a lot of stuff coming at us next week. But
Speaker 1: I don't think, um, that's our base case just yet.
Speaker 1: I think we're gonna have to watch really carefully what happens,
Speaker 1: and certainly listening to some of the earnings announcements over
Speaker 1: the last couple of days also present, I would say
Speaker 1: a little bit of a mixed story in terms of
Speaker 1: what the macro environment is. How do you feel about
Speaker 1: big tech right now, after this weekend, after last week?
Speaker 1: You know, Carol, it's such a great question, and you
Speaker 1: know you you were just reporting on what a tough
Speaker 1: day the Nasdaq is having, and clearly it's embar their
Speaker 1: market territory right now, and investors have just really run
Speaker 1: away from these high valuation stocks. I mean, I think
Speaker 1: valuation is very fragile in this rising rate environment here.
Speaker 1: And then at the same time, um, you've got some
Speaker 1: fundamentals that you know, at best are sort of flattening
Speaker 1: out and at worst are showing some declining trends. I mean,
Speaker 1: Netflix is sort of the poster child, joined now by
Speaker 1: Amazon that's really showing a weakening of demand as those
Speaker 1: sort of stay at home stocks get kicked to the
Speaker 1: curb in uh, in favor of the stocks more more
Speaker 1: into the reopening trade, the rere reopening trade, I guess
Speaker 1: I would say, so, well, let me just follow real quickly,
Speaker 1: would you though? See this? I mean, you're right where
Speaker 1: the nastack one hundred um from its top right now
Speaker 1: is down about Is that a buying opportunity? Well, here's
Speaker 1: something which I think is really interesting is our outlook
Speaker 1: is that the economy is actually going to start slowing
Speaker 1: in the back half of two three. And in a
Speaker 1: slowing economy, these are the kinds of stocks that actually
Speaker 1: tend to do well. The have sustainable growth models, they
Speaker 1: have great cash flow. They have fortu spanace sheets, so
Speaker 1: we would we would really advise investors not to sort
Speaker 1: of have to pick sides here between the cyclicals and
Speaker 1: the growth stocks, but really have both in their portfolio,
Speaker 1: because there will come a day when investors prioritize growth
Speaker 1: and will pay more for growth in a slow and
Speaker 1: growth environment. Okay, I know you've been looking keeping an
Speaker 1: eye on mortgage traits. I guess everyone has these days. Uh,
Speaker 1: you know, in tandem with just higher shelter costs. Uh,
Speaker 1: this rip roaring housing market at least up till now.
Speaker 1: Are are we setting ourselves up for a hard landing
Speaker 1: and housing? Do you think? And if if so, how
Speaker 1: does that play out? Is that part of your sort
Speaker 1: of thinking on why we'll see a slow down in growth? Well,
Speaker 1: I would say that that's that's part of our thinking
Speaker 1: why we think inflation is probably going to continue to
Speaker 1: surprise on the upside because housing costs, whether it's rents
Speaker 1: or or or home prices, we think are going to
Speaker 1: remain elevated. And the interesting thing is despite the fact
Speaker 1: that certainly financing costs of gone up. I mean that
Speaker 1: the thirty year mortgage fixed rate mortgages up significantly in
Speaker 1: just a couple of months. There's still such strong fundamental
Speaker 1: demand for housing, and we have a sixply problem, so
Speaker 1: that's going to continue to put upward pressure on housing prices,
Speaker 1: probably not at the pace that we have seen in one,
Speaker 1: but we certainly think housing price inflation is going to
Speaker 1: going to persist for a while until supply catches up
Speaker 1: with this really robust demand. So what do you do
Speaker 1: if you've got some new money to put to work?
Speaker 1: Do you do? You stick it in cash or cash
Speaker 1: like investments at this point and just kind of ride
Speaker 1: this out. You know, Carol, this is going to be
Speaker 1: hard advice for a lot of folks to hear, but
Speaker 1: I would say get invested. I mean, we see the
Speaker 1: bigs so ellly to hear it. Over thirty we see
Speaker 1: prices down significantly. When you have those two things in tandem,
Speaker 1: these very sharp price declines coupled with heightened volatility, for
Speaker 1: long term investors, it's typically a very good time to
Speaker 1: get invested. Now. Clearly though, it's always the hardest time
Speaker 1: to get invested, because there there's certainly fear overwhelming greed
Speaker 1: at this point. Um. But if you have a long
Speaker 1: enough time horizon, history would suggest this is a good
Speaker 1: time to get to your strategic allocations. Talk about fear
Speaker 1: overwhelming greed. I'm looking at the markets now that thatw
Speaker 1: average down almost a thousand points out makes me wonder
Speaker 1: what warm Buffet's going to say, right, because this is
Speaker 1: when he would say, this is when you want to
Speaker 1: be time. But Keatie also, I wonder you know you
Speaker 1: pointed out that investor sentiment is at sort of historic woes.
Speaker 1: I think what you're looking at one measure lowis sance.
Speaker 1: Now that to Carol's point about Buffet, that gets every
Speaker 1: contrarians sort of sputty, senses tingling, and you know they
Speaker 1: want to jump in and and be the hero. Is it?
Speaker 1: Is it that easy when when sentiments that bad? Or
Speaker 1: is there you know or a sentiment right? Yeah? Right,
Speaker 1: well how are you thinking about that? It can always
Speaker 1: get worse. So we're never going to time the market
Speaker 1: perfectly at the bottom, but we can look back at
Speaker 1: history that shows us, generally speaking, these are good times
Speaker 1: for long term investors in very much. I'm glad you
Speaker 1: mentioned more in Buffet because you know the compliment launch
Speaker 1: term investor or UM would probably have that same advice
Speaker 1: you know you want to be buying when everyone else
Speaker 1: is selling, running in when everyone else is running out,
Speaker 1: and certainly not just a sentiment, so not just words,
Speaker 1: but indeeds. Investors are just selling. Retail investors are selling
Speaker 1: stocks and bombs now here at really enormous levels. All right,
Speaker 1: we're gonna leave it there us so great as always
Speaker 1: to check in with you. Kitty Nixon, she's chief investment
Speaker 1: officer for the wealth management business over at Northern Trust,
Speaker 1: on the phone from Rotten, New York. It's sticking with
Speaker 1: me that she's saying. As we're seeing selling into the clothes,
Speaker 1: it can always get worse. But history like right, over time,
Speaker 1: how many market cycles have you seen? We are way
Speaker 1: higher than where we were how many years ago, you
Speaker 1: know what I mean? Five years ago, ten years ago,
Speaker 1: twenty years ago. So just a little bit of a reminder.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
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