WEBVTT - Amazon Growth, Crypto ETF Latest 0:00:01.440 --> 0:00:05.320 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:00:05.400 --> 0:00:08.479 weekdays at ten am Eastern on Apple Car playing Android 0:00:08.520 --> 0:00:11.600 Otto with the Bloomberg Business app. Listen on demand wherever 0:00:11.680 --> 0:00:16.000 you get your podcasts, or watch us live on YouTube. 0:00:16.600 --> 0:00:20.280 Big Big Earnings week This week, we've got Amazon Molly 0:00:20.360 --> 0:00:23.400 after the closed Thursday, So I think it's time to 0:00:23.440 --> 0:00:26.240 get a preview of what we might see from Amazon. 0:00:26.280 --> 0:00:28.960 And when we talk about Amazon these days, it's both 0:00:29.040 --> 0:00:34.280 a retail story etail and a text retailer with its cloud. Yeah, 0:00:34.320 --> 0:00:36.320 with its cloud. So what do you do? 0:00:36.360 --> 0:00:37.519 How do you get an expert on both? 0:00:37.560 --> 0:00:40.520 Well, you go to Bloomberg Intelligence because we have Punham Guoyle. 0:00:40.600 --> 0:00:43.320 She's a Bloomberg Intelligence senior analyst for e commerce and 0:00:43.400 --> 0:00:45.720 all that retail stuff. She joins us here, as does 0:00:45.760 --> 0:00:50.400 an Aragrana, senior analyst on a tech side for Bloomberg Intelligence. 0:00:51.159 --> 0:00:52.480 Pooham, let's start with you here. 0:00:52.840 --> 0:00:55.800 I'm gonna go back to the roots of Amazon as 0:00:55.960 --> 0:00:57.280 a retail story. 0:00:57.320 --> 0:00:57.520 Here. 0:00:57.600 --> 0:01:01.160 What do you expect to see and hear from Amazon 0:01:01.440 --> 0:01:04.000 this quarter about that core retail business. 0:01:04.600 --> 0:01:06.959 I think the retail business will be very strong for 0:01:07.000 --> 0:01:09.240 the fourth quarter. We already saw it in some of 0:01:09.280 --> 0:01:12.399 the industry numbers that were reported back in November and December, 0:01:12.760 --> 0:01:16.800 with really strong online sales, especially in November, and that 0:01:16.840 --> 0:01:20.560 momentum kind of continuing into December. So from the retail side, 0:01:20.600 --> 0:01:24.039 we expect Amazon to report a much stronger four Q 0:01:24.680 --> 0:01:28.839 and they'll still be driven Paul by the third party marketplace. 0:01:28.880 --> 0:01:31.720 So you know, Amazon's business is one P and third 0:01:31.840 --> 0:01:34.240 party where they sell stuff on their own and then 0:01:34.240 --> 0:01:37.480 they have sellers sell on the platform. We think the 0:01:37.520 --> 0:01:40.840 third party business will continue to outpace first party, but 0:01:40.920 --> 0:01:42.760 both will have strong growth rates. 0:01:43.400 --> 0:01:45.520 And that's just you know, that's just one piece of 0:01:45.560 --> 0:01:48.160 Amazon's business. I mean, granted a big piece, but just 0:01:48.200 --> 0:01:50.360 one of them. So An Rag, why don't you tell 0:01:50.440 --> 0:01:53.520 us a bit about the Amazon Web Service component and 0:01:53.800 --> 0:01:56.240 what that is going, what you were expecting out of that. 0:01:57.440 --> 0:02:00.480 Yeah, thank you. So, you know, AW is the biggest 0:02:00.680 --> 0:02:03.480 cloud infrastructure vendor out there, and what we have seen 0:02:03.520 --> 0:02:05.680 over the last two years, it has been a bit 0:02:05.720 --> 0:02:08.960 of slow down in the growth rates of AWS and 0:02:09.000 --> 0:02:11.840 the reason for that is it's a variable pricing model. 0:02:11.919 --> 0:02:14.519 You know, you pay what you use and in this 0:02:14.880 --> 0:02:17.120 economic downturn in the last I would say one and 0:02:17.120 --> 0:02:20.000 a half to two years. Companies are dialing back on 0:02:20.040 --> 0:02:22.480 their cloud usage. It's one way for them to control 0:02:22.520 --> 0:02:24.880 their cost. So that doesn't mean that they are not 0:02:25.080 --> 0:02:27.560 embracing cloud at the same pace. They're not just using 0:02:27.600 --> 0:02:30.040 as much. But we think that takes a u turn 0:02:30.080 --> 0:02:32.840 either in this quarter or the next quarter. We are 0:02:32.880 --> 0:02:35.720 fairly optimistic based on a survey we did. We think, 0:02:35.919 --> 0:02:38.320 you know, we are coming to a point with easy comparisons, 0:02:38.639 --> 0:02:41.280 so we are fairly optimistic that over the next twelve 0:02:41.360 --> 0:02:44.880 months we'll see rebound in growth rates for AWS and 0:02:45.160 --> 0:02:47.360 by default for for Microsoft also. 0:02:47.720 --> 0:02:50.959 So on our what's the I mean if I'm Amazon, 0:02:51.080 --> 0:02:54.240 Amazon Web Web Services, how do I position myself in 0:02:54.280 --> 0:02:56.840 this AI discussion here? 0:02:56.919 --> 0:02:59.320 I mean, if I'm the IR person, what am I telling. 0:02:59.000 --> 0:03:02.679 My executives to say when I get on this conference call? 0:03:02.720 --> 0:03:04.320 You know, one of the most important things. I think 0:03:04.320 --> 0:03:06.400 the message they have been telling people is, you know, 0:03:06.440 --> 0:03:08.880 you don't really need just open AI to go out 0:03:08.919 --> 0:03:13.040 and build your AI. You could say strategy. They work 0:03:13.120 --> 0:03:17.600 with a lot of open source companies or AI vendors 0:03:17.639 --> 0:03:20.280 that have the large language models. They work with Meta 0:03:20.320 --> 0:03:23.280 for example. They really promote a lot of Meta's large 0:03:23.360 --> 0:03:25.880 language model. So if I'm a company, you can go 0:03:25.919 --> 0:03:29.680 out and choose whichever raw material you want, whichever you know, 0:03:29.760 --> 0:03:31.959 large language model that you want, but you can host 0:03:32.040 --> 0:03:34.240 that on AWS. And that's how they're going to make 0:03:34.280 --> 0:03:37.920 money is by giving the building blocks of AI to companies. 0:03:38.600 --> 0:03:40.640 So, pun On, let's come back to the retail side 0:03:40.640 --> 0:03:40.840 of it. 0:03:40.880 --> 0:03:43.640 Obviously, the big news with Amazon today the termination of 0:03:43.680 --> 0:03:48.080 the one point for billion dollar deal with Irobod. I'm 0:03:48.080 --> 0:03:51.160 going to say, again, pretty sure Amazon's going to be okay, 0:03:52.040 --> 0:03:53.720 but maybe you could tell us a little bit more 0:03:53.720 --> 0:03:57.040 about like the you know, is this really material for 0:03:57.080 --> 0:03:59.520 them that this deal didn't go through? And of course, 0:03:59.560 --> 0:04:02.360 you know, we just keep hammering it time and time again, 0:04:02.440 --> 0:04:03.360 this m and A outlook. 0:04:03.360 --> 0:04:04.160 It's really tough. 0:04:04.960 --> 0:04:06.920 Yeah, you know, we talked about this a little earlier 0:04:07.000 --> 0:04:09.280 and it's non material to Amazon just looking at the 0:04:09.320 --> 0:04:11.800 size of it, right, a billion dollars a little more 0:04:11.800 --> 0:04:14.640 than a billion dollars on Amazon scale of over six 0:04:14.720 --> 0:04:18.040 hundred billion dollars in GMB. It doesn't move the needle 0:04:18.080 --> 0:04:21.040 at all. But that said, it just reinforces our view 0:04:21.080 --> 0:04:24.120 that we've had for a long time that acquisitions for 0:04:24.200 --> 0:04:27.880 these companies will be more difficult given the scrutiny that 0:04:27.920 --> 0:04:31.120 they're under. So we do think that organic growth is 0:04:31.160 --> 0:04:33.280 what Amazon is going to have to focus on, and 0:04:33.360 --> 0:04:35.760 we think there's plenty of it on the retail side, 0:04:35.760 --> 0:04:38.080 on the advertising side, and on the cloud side. 0:04:38.480 --> 0:04:40.920 Just a little redhead crossing the Bloomberg truminal bring to 0:04:41.000 --> 0:04:43.960 your attention Renault to cancel and peer. 0:04:44.440 --> 0:04:46.760 Ipo, So not good news for the IPO market. 0:04:46.800 --> 0:04:49.760 We'll get some reporting on that coming up and pun 0:04:49.839 --> 0:04:54.400 them with the e commerce side of Amazon. What's your sense, 0:04:54.600 --> 0:04:56.320 you know, talking to the Amazons of the world, the 0:04:56.320 --> 0:04:59.560 Walmarts of the world. How's the consumer these days and 0:04:59.560 --> 0:05:00.840 how's this spending out there? 0:05:01.600 --> 0:05:04.200 The spending is pretty good. Surprisingly, you know, we've been 0:05:04.240 --> 0:05:08.279 talking about the consumer possibly falling off and really slowing 0:05:08.279 --> 0:05:10.320 down their spend, but we haven't seen it. The holiday 0:05:10.400 --> 0:05:13.160 numbers suggests that spending is strong. I'd still say, though, 0:05:13.160 --> 0:05:15.480 I think people are picking and choosing where they spend. 0:05:15.720 --> 0:05:17.760 They're deciding where they want to spend their dollars, and 0:05:17.800 --> 0:05:20.719 Amazon has been a place where they're more likely to 0:05:20.720 --> 0:05:23.320 spend it, given the fact that they get speed, convenience, 0:05:23.360 --> 0:05:26.520 and really everything that they want from there. But that said, 0:05:26.760 --> 0:05:29.479 I do think that on the low end you could 0:05:29.520 --> 0:05:33.680 see some issues arise as inflation and other concerns really 0:05:33.720 --> 0:05:35.680 do hamper their spending power. 0:05:36.279 --> 0:05:40.159 So Ana Punam was just saying how the growth story 0:05:40.200 --> 0:05:42.880 for Amazon is really going to come more from organic 0:05:42.920 --> 0:05:45.640 growth rather than acquiring it. So tell us about on 0:05:45.680 --> 0:05:48.520 the cloud side, if you see a lot of organic 0:05:48.520 --> 0:05:50.440 growth opportunities coming from that business. 0:05:51.440 --> 0:05:54.159 Yeah, no, we expect actually growth to pick up. We 0:05:54.240 --> 0:05:56.560 think the growth is going to be closer to twenty 0:05:56.560 --> 0:05:58.960 percent by the end of this year. You know, this 0:05:59.040 --> 0:06:02.200 is a market that has a long, long I would 0:06:02.200 --> 0:06:05.800 say runway overall cloud spending, it's still less than twenty 0:06:05.839 --> 0:06:08.520 percent of total tach spending, somewhere in that twenty to 0:06:08.560 --> 0:06:11.560 twenty five percent range. I think we have a long 0:06:11.600 --> 0:06:13.719 way to go, and Amazon is right in the middle 0:06:13.720 --> 0:06:16.600 of it. They are the biggest cloud infrastructure vendor, as 0:06:16.640 --> 0:06:19.240 I said, with over forty percent of the market share. 0:06:19.279 --> 0:06:22.160 So I feel fairly optimistic that this year we're going 0:06:22.160 --> 0:06:23.120 to see a rebound. 0:06:23.279 --> 0:06:25.760 So in the cloud infrastructure side of it, who do 0:06:25.800 --> 0:06:28.880 they compete against and is that forty percent market share 0:06:29.000 --> 0:06:31.880 something that they have to defend. Is that something they 0:06:31.960 --> 0:06:35.680 can grow. How's the competitive landscape look in the infrastructure space? 0:06:36.400 --> 0:06:39.120 Yeah, in five years if they get able to maintain it, 0:06:39.160 --> 0:06:41.440 I'll be very happy with that. Because what has happened is, 0:06:41.760 --> 0:06:44.400 you know, Microsoft has really gone out big over the 0:06:44.480 --> 0:06:47.160 last you know, seven, eight, ten years, and it is 0:06:47.200 --> 0:06:50.480 now the second biggest vendor. Now, surprisingly enough, this is 0:06:50.600 --> 0:06:53.560 a space where the smaller vendors cannot really make a 0:06:53.640 --> 0:06:57.000 dent because you need a lot of capital expenditures to 0:06:57.040 --> 0:06:59.560 come up with a cloud model. You or infrastructure business 0:07:00.080 --> 0:07:01.880 US can't do it in your garage. You really need 0:07:01.920 --> 0:07:05.600 billions of dollars off data centers in order to you know, 0:07:05.720 --> 0:07:07.920 really be good at this business. So right now there 0:07:07.920 --> 0:07:11.480 are two big vendors. AT's aws and it's Microsoft Azure, 0:07:11.760 --> 0:07:13.760 and then after that we have Google and you know 0:07:13.760 --> 0:07:15.520 the likes of Oracle and IBM after that. 0:07:16.160 --> 0:07:17.520 So last one here for you, poone. 0:07:17.520 --> 0:07:19.840 I'm just quick on the thirty seconds looking at pharmacy 0:07:19.880 --> 0:07:21.040 and grocery for Amazon. 0:07:21.080 --> 0:07:22.440 What are the next developments there? 0:07:23.400 --> 0:07:25.200 There's a long way to go there. We think they're 0:07:25.240 --> 0:07:27.600 still in very early innings and it's a harder market 0:07:27.600 --> 0:07:29.960 for them to crack with grocery, they're trying to build 0:07:30.000 --> 0:07:32.840 out their fresh business, but we really haven't seen that 0:07:32.960 --> 0:07:35.760 much progress there. And on pharmacy they're still very very 0:07:35.760 --> 0:07:38.360 early on. So those are businesses that we haven't even 0:07:38.520 --> 0:07:41.040 factored into our growth scenario for Amazon. 0:07:41.520 --> 0:07:41.720 Wow. 0:07:41.800 --> 0:07:43.480 Yeah, that's it seems like a tough nut for them 0:07:43.520 --> 0:07:45.640 to crack and for a lot of people. All right, 0:07:45.640 --> 0:07:48.040 put them Goyle on a rag rana. Two of our 0:07:48.120 --> 0:07:50.840 best analysts at Bloomberg Intelligence also. 0:07:50.960 --> 0:07:53.080 Absolutely are some of our very first. 0:07:52.840 --> 0:07:55.800 Folks we brought on board to Bloomberg Intelligence many moons ago, 0:07:56.360 --> 0:07:57.960 but they cover it give us a little preview there 0:07:57.960 --> 0:08:01.480 of Amazon because it is the giant retailer and it 0:08:01.600 --> 0:08:04.880 is a significant player in the cloud business. So you 0:08:04.960 --> 0:08:08.040 got to bring the two expert areas together, which we. 0:08:08.000 --> 0:08:09.280 Can do with Bloomberg Intelligence. 0:08:09.320 --> 0:08:11.640 And you can find Punam's and on a Rog's research 0:08:11.680 --> 0:08:14.000 as well as the other four hundred analyst of Bloomberg Intelligence. 0:08:14.320 --> 0:08:18.240 B I go on the Bloomberg terminal, Best Research on 0:08:18.240 --> 0:08:18.640 the Street. 0:08:20.240 --> 0:08:24.120 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:08:24.200 --> 0:08:27.720 weekdays at ten am Eastern on applecar Play and Android 0:08:27.760 --> 0:08:30.559 Auto with the Bloomberg Business app. You can also listen 0:08:30.680 --> 0:08:33.760 live on Amazon Alexa from our flagship New York station, 0:08:34.120 --> 0:08:36.880 just say Alexa playing Bloomberg eleven thirty. 0:08:38.559 --> 0:08:41.880 Big big news is several weeks ago in the crypto 0:08:41.960 --> 0:08:44.560 space because we finally they finally got approval from the 0:08:44.640 --> 0:08:50.040 SEC for a spot Bitcoin ETF and that was huge 0:08:50.040 --> 0:08:52.400 for the crypto space and big, big news for the 0:08:52.440 --> 0:08:54.400 ETF space as well. So let's dig in see how 0:08:54.400 --> 0:08:56.880 things are progressing there. Austin re joins us. He's global 0:08:56.880 --> 0:08:59.600 head of revenue and business at falcon X. What is 0:08:59.640 --> 0:09:05.000 falcons the largest institutional crypto prime brokeridge in the world. Austin, 0:09:05.040 --> 0:09:07.760 thanks so much for joining us here. Where are you based? 0:09:07.760 --> 0:09:09.520 Where is the falcon X? 0:09:09.600 --> 0:09:09.760 Yeah? 0:09:09.800 --> 0:09:11.400 First of all, thank you guys for having me so 0:09:11.440 --> 0:09:14.680 excited for the conversation. I'm actually based in San Francisco. 0:09:15.000 --> 0:09:17.320 The team has spread globally. We have an office in 0:09:17.360 --> 0:09:21.320 Silicon Valley, New York, Chicago, Singapore, Hong Kong, and London, 0:09:21.400 --> 0:09:22.760 so a little bit of everywhere. 0:09:22.880 --> 0:09:25.040 Who trades on your platform and what did they trade? 0:09:25.160 --> 0:09:27.880 Yeah, so we trade with a wide variety of institutional 0:09:27.880 --> 0:09:31.400 market participants, so that's everyone from today and topically ETF 0:09:31.480 --> 0:09:35.400 issuers who are active within the cryptocurrency space, to hedge funds, 0:09:35.440 --> 0:09:39.080 asset managers, venture capital firms, really anyone that's looking to 0:09:39.120 --> 0:09:42.400 access liquidity on the spot markets or in the derivative 0:09:42.480 --> 0:09:45.439 side of the cryptocurrency space. Our options business, it's the 0:09:45.679 --> 0:09:48.880 substantial growth over the past couple of quarters as well. 0:09:49.000 --> 0:09:51.120 So basically, if you're looking to get access to the 0:09:51.160 --> 0:09:54.640 asset class headge or exposure either in spot or derivatives markets, 0:09:54.720 --> 0:09:56.520 we work with a lot of those market participants. 0:09:56.720 --> 0:09:59.520 Yeah, tell us Austin, like, why that recent news from 0:09:59.559 --> 0:10:02.520 the SEC regarding the coinets was so important and what's 0:10:02.559 --> 0:10:04.160 that what that's meant for your business? 0:10:04.480 --> 0:10:07.080 Yeah, for sure. Look, I think if you look at 0:10:07.120 --> 0:10:10.200 what the ETF means in the mid to long term, 0:10:10.400 --> 0:10:13.320 really the unlock with the ETF is net new pools 0:10:13.320 --> 0:10:16.280 of capital that historically haven't had access to the cryptocurrency 0:10:16.320 --> 0:10:20.680 or digital asset market, specifically rias and financial advisors within 0:10:20.720 --> 0:10:24.160 the US so thirty trillion dollar markets roughly forty percent 0:10:24.320 --> 0:10:28.080 of US capital markets, and within that they haven't had 0:10:28.080 --> 0:10:31.000 an instrument to access this asset class yet. And so 0:10:31.040 --> 0:10:34.480 the thought is the ETF provides a regulated instrument through 0:10:34.520 --> 0:10:37.920 which these different market participants can get access and that 0:10:37.960 --> 0:10:41.200 will increase overall adoption over time. So in relation to 0:10:41.240 --> 0:10:44.720 our business there where we service where Spot liquidity provider 0:10:44.800 --> 0:10:48.520 to number the etf issuers within that we've partnered. We've 0:10:48.520 --> 0:10:51.000 partnered to provide liquidity and we did about thirty percent 0:10:51.000 --> 0:10:54.439 of the day one issuances. From a trading perspective itself. 0:10:54.760 --> 0:10:55.920 Interesting, Oh okay, very good. 0:10:55.920 --> 0:10:56.079 Ask. 0:10:56.160 --> 0:10:58.439 I wanted to know, like, how has that impacted your business? 0:10:58.480 --> 0:11:00.920 So you saw day one, we saw day one. 0:11:00.960 --> 0:11:03.200 Look, this is something we've been preparing for for years 0:11:03.200 --> 0:11:05.640 at this point, right in terms of building out the 0:11:05.760 --> 0:11:10.360 liquidity at scale ability to transact significant size within this market. 0:11:10.600 --> 0:11:13.080 And so we've been working with different issuers, larger asset 0:11:13.120 --> 0:11:16.160 managers that they've been preparing their crypto strategies and I 0:11:16.200 --> 0:11:18.880 think Day one saw significant amount of flows and we 0:11:18.960 --> 0:11:22.319 continue to basically see consistent trading activity from those issues. 0:11:22.480 --> 0:11:24.920 Right, So, just for our listeners and for me, you're 0:11:24.960 --> 0:11:29.600 a prime brokerage. You're not in exchange like FTX, correct? 0:11:29.640 --> 0:11:30.040 Correct? 0:11:31.160 --> 0:11:33.760 Now you traded on FTX at some. 0:11:33.800 --> 0:11:36.839 Point, yeah, correct, So we're a prime brokerage. What that 0:11:36.920 --> 0:11:39.600 means is we aggregate liquidity from a number of different 0:11:39.640 --> 0:11:44.200 liquidity pools globally, exchanges, proprietary trading firms, market makers, and 0:11:44.240 --> 0:11:46.559 so we trade with all major venues around the world, 0:11:46.640 --> 0:11:48.760 depending on the structure where the client is in some 0:11:49.160 --> 0:11:51.960 uh in the regulatory jurisdiction, and our goal is to 0:11:52.280 --> 0:11:56.040 basically provide our clients the most seamless trading experience possible 0:11:56.040 --> 0:11:58.480 and an aggregation of that global liquidity within. 0:11:58.400 --> 0:12:02.240 You want to get and your clients mostly institutional. 0:12:01.559 --> 0:12:03.520 Money, correct, all institutions. 0:12:03.520 --> 0:12:06.680 Okay, So tell me then about like where the retail 0:12:07.559 --> 0:12:11.120 bitcoin trader stands right now and like their access to ETFs. 0:12:11.520 --> 0:12:14.720 Yeah, so it's an interesting question, right, and I think 0:12:14.840 --> 0:12:17.960 with the initial ETF rollout, the perspective would be that 0:12:18.000 --> 0:12:20.719 this would give broader access to the retail side of 0:12:20.760 --> 0:12:23.520 the market as well as segments of the institutional side 0:12:23.520 --> 0:12:25.480 of the market. What I would say is we're still 0:12:25.480 --> 0:12:28.240 early in this ETF cycle though right it was approved 0:12:28.280 --> 0:12:31.120 earlier this month, and within that you're still seeing some 0:12:31.200 --> 0:12:35.000 platforms not actually allow their end clients to trade this asset. 0:12:35.120 --> 0:12:35.280 Right. 0:12:35.600 --> 0:12:39.480 Vanguard is an example, seven trillion dollars of assets that 0:12:40.400 --> 0:12:44.200 are invested there. You're not seeing them basically allow access 0:12:44.240 --> 0:12:46.640 to Bitcoin ETF vehicles. You've seen some of the other 0:12:46.679 --> 0:12:49.600 brokerages still working through that cycle, and so from a 0:12:49.640 --> 0:12:52.960 retail investor perspective, it should open up access. But I 0:12:52.960 --> 0:12:57.640 think it's also a longer term cycle as to know 0:12:57.679 --> 0:12:59.280 how these really open up over time. 0:13:00.040 --> 0:13:04.480 We had Bitcoin ETF, do you expect other crypto spot 0:13:04.600 --> 0:13:06.200 ETFs to get approved? 0:13:06.720 --> 0:13:10.120 Yeah? So I think the next ETF that the market 0:13:10.160 --> 0:13:13.920 is looking at right now is the Ethereum ETF, and 0:13:14.000 --> 0:13:17.439 specifically within that, there's a perspective from some market participants 0:13:17.480 --> 0:13:20.120 that you could see in eth ETF approved later this year. 0:13:20.480 --> 0:13:23.199 What I would say is, in contrast to the Bitcoin 0:13:23.280 --> 0:13:26.280 ETF that realistically through Q three and Q four the 0:13:26.280 --> 0:13:30.160 market consensus was this was likely to happen the eth ETF, 0:13:30.160 --> 0:13:32.560 there's not the same level of consensus right now. So 0:13:32.600 --> 0:13:34.480 I think what we'll see right now we have different 0:13:34.480 --> 0:13:37.959 Some clients that anticipate this happening later this year, others 0:13:38.120 --> 0:13:40.040 think it's a longer road ahead. I think that the 0:13:40.040 --> 0:13:43.120 market is still waiting to determine what ultimately happens here. 0:13:43.240 --> 0:13:46.360 It looks like another catalyst potentially that the SEC is 0:13:46.360 --> 0:13:49.280 seeking comments on a proposal to allow options trading on 0:13:49.360 --> 0:13:50.760 blackrocks ETF. 0:13:50.880 --> 0:13:52.360 So how do you see that one unfolding? 0:13:52.679 --> 0:13:57.080 Yeah, So, I think one of the interesting elements in 0:13:57.120 --> 0:14:00.240 relation to the ETF approval itself is the potential to 0:14:00.280 --> 0:14:04.920 catalyze greater options market activity domestically in the United States. 0:14:05.120 --> 0:14:07.920 We've actually seen substantial options growth in our own business 0:14:08.000 --> 0:14:10.680 just for context, Q three to Q four falcon X's 0:14:10.679 --> 0:14:13.640 options business group ten x quarter over quarter, and so 0:14:14.000 --> 0:14:16.760 currently one of the largest options market participants on the 0:14:16.800 --> 0:14:19.560 institutional side of the market. And if I look at 0:14:19.600 --> 0:14:23.280 why that matters, right, people are looking for different ways 0:14:23.280 --> 0:14:26.760 to express their views within this market as well as 0:14:26.800 --> 0:14:29.720 to hedge their exposure. And over time, what you see 0:14:29.800 --> 0:14:33.760 as these options markets evolve around ETFs is actually greater 0:14:33.840 --> 0:14:37.240 liquidity going into those ETF instruments itself and in the 0:14:37.280 --> 0:14:40.480 future potentially a lowering of volatility. 0:14:40.600 --> 0:14:40.720 Right. 0:14:40.760 --> 0:14:43.040 So, if you look at gold as an analogy, gold 0:14:43.120 --> 0:14:46.040 ETF options markets around those ETFs, what you saw is 0:14:46.080 --> 0:14:49.480 over time that's a more liquid market, lower volatility within 0:14:49.520 --> 0:14:52.720 that market itself, and that actually attracts more capital over 0:14:52.800 --> 0:14:56.360 time because it's a more investable asset that is less volatile. 0:14:56.480 --> 0:14:59.360 Largest institutional crypto prime brokers in the world. 0:14:59.360 --> 0:14:59.960 How do you define that? 0:15:00.560 --> 0:15:02.160 How do I define largest? 0:15:02.320 --> 0:15:02.400 Like? 0:15:02.880 --> 0:15:05.080 Is it five volume transaction volume? 0:15:06.160 --> 0:15:06.360 Yeah? 0:15:06.400 --> 0:15:09.040 So defined from a volume perspective there, Right, So, like 0:15:09.480 --> 0:15:13.800 I mentioned, we're active both on spot markets, derivatives markets, 0:15:13.840 --> 0:15:16.280 and partnering with clients both in the US and globally. 0:15:16.360 --> 0:15:18.280 So what are other Like who do you compete with 0:15:18.320 --> 0:15:19.200 for that market share? 0:15:19.440 --> 0:15:22.520 Yeah? So Look, if I look at the crypto market 0:15:22.680 --> 0:15:27.320 and where prime brokers sits within this ecosystem, you have 0:15:27.360 --> 0:15:30.520 different players that are providing different products and services across 0:15:30.520 --> 0:15:30.880 the board. 0:15:30.960 --> 0:15:31.080 Right. 0:15:31.120 --> 0:15:33.280 It's not like traditional financial services where you can go 0:15:33.280 --> 0:15:35.920 to Gold Midzas or JP Morgan and get basically most 0:15:35.920 --> 0:15:39.600 things that you need from an institutional market participation perspective, 0:15:39.920 --> 0:15:43.120 So where we're focused is trading spot and derivatives markets, 0:15:43.200 --> 0:15:46.320 the extension of credit and solving capital efficiency for our customers, 0:15:46.480 --> 0:15:50.240 and providing technology to facilitate risk management. As it relates 0:15:50.240 --> 0:15:52.760 to competition, what you see is we compete with different 0:15:52.800 --> 0:15:55.920 players in each of those different segments. Those could be 0:15:55.960 --> 0:15:58.480 some of the proprietary trading firms in one, it could 0:15:58.480 --> 0:16:01.960 be other trading market part participants in the other. But 0:16:02.040 --> 0:16:05.040 from my perspective, look, there's a huge market opportunity here. 0:16:05.160 --> 0:16:07.520 The question is how we grow this over time. I think, Uh, 0:16:07.760 --> 0:16:10.400 the ETF is a great catalyst, and we're excited to 0:16:10.440 --> 0:16:12.680 continue with partner with you know, wide write and market 0:16:12.680 --> 0:16:14.000 participants to grow the pie. 0:16:14.080 --> 0:16:16.480 So I know that you're working with institutional clients, but 0:16:16.520 --> 0:16:19.080 I got to ask on behalf of myself and maybe 0:16:19.120 --> 0:16:21.480 other you know, retail participants who are maybe a little 0:16:21.480 --> 0:16:24.600 bit hesitant to get into crypto. There's obviously, I think 0:16:24.720 --> 0:16:27.320 since it began, just been a lot of skepticism around 0:16:27.360 --> 0:16:31.400 the asset and obviously with FTX imploding, like a lot 0:16:31.400 --> 0:16:32.720 of concerns about. 0:16:32.480 --> 0:16:33.360 The viability of it. 0:16:33.480 --> 0:16:35.760 So what's your pitch to somebody who's like, you know, 0:16:35.840 --> 0:16:37.560 not involved in crypto why they should? 0:16:38.040 --> 0:16:38.320 Yeah. 0:16:38.560 --> 0:16:41.440 So I don't spend much time actually convincing people to 0:16:41.480 --> 0:16:43.240 be active within the crypto's base. 0:16:43.120 --> 0:16:45.280 Probably because they already are with the people. 0:16:45.120 --> 0:16:48.640 You people come to me, right, they're actually active already, Yes, 0:16:49.080 --> 0:16:51.720 But like look within that, if I think, what's the 0:16:51.880 --> 0:16:54.840 value within crypto? Right, and where's the value within bitcoin? 0:16:54.880 --> 0:16:57.160 And why are people excited about the ETF as an 0:16:57.200 --> 0:16:59.880 example here, what you're looking at as a non soft 0:17:00.080 --> 0:17:04.120 and stored a value that's digitally scarce and solving what 0:17:04.200 --> 0:17:07.040 many refer to as a digital goal. Right, why does 0:17:07.080 --> 0:17:08.000 that matter today? 0:17:08.320 --> 0:17:08.480 Right? 0:17:08.760 --> 0:17:13.480 We're looking at a macroeconomic landscape of seventy plus elections globally, 0:17:13.640 --> 0:17:16.360 not just in the US. Within that, we didn't anticipate 0:17:16.400 --> 0:17:20.040 loose in monetary policy that could lead to inflation. Do 0:17:20.080 --> 0:17:22.639 you want to protect your assets against that? And then 0:17:22.680 --> 0:17:26.119 the other area that we see, you know, our clients 0:17:26.160 --> 0:17:28.919 investing within crypto is some believe it could be a 0:17:28.920 --> 0:17:33.360 good geopolitical hedge over time and increasingly uncertain geopolitical landscape. 0:17:33.400 --> 0:17:35.760 As you guys know, question is is a portion of 0:17:35.840 --> 0:17:38.840 your portfolio makes sense to act to allocate to this 0:17:38.960 --> 0:17:43.600 asset class. But obviously, you know, always recommend people look 0:17:43.600 --> 0:17:45.840 at all the risks and of course body volatility is. 0:17:45.840 --> 0:17:47.720 So read the fine print. I'm sure. 0:17:47.960 --> 0:17:49.439 Austin Reid, thanks so much for joining us. 0:17:49.480 --> 0:17:52.440 Really appreciate Austin Reid, Global Head of Revenues and Business 0:17:52.440 --> 0:17:56.400 at falcon X. Falcon X is the largest institutional crypto 0:17:56.920 --> 0:17:59.600 prime brokerage in the world, and we again all getting 0:17:59.600 --> 0:18:02.840 a lot small arder on crypto. 0:18:02.760 --> 0:18:06.639 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:06.720 --> 0:18:09.440 weekdays at ten am Eastern on Apple car Playing and 0:18:09.560 --> 0:18:12.439 broud Otto with the Bloomberg Business App. Listen on demand 0:18:12.480 --> 0:18:16.800 wherever you get your podcasts, or watch us live on YouTube. 0:18:18.080 --> 0:18:21.840 Adam Coons joins us from Winthrop Capital here. We talked 0:18:21.880 --> 0:18:25.560 at him about the markets and so forth going forward. Adam, 0:18:25.920 --> 0:18:29.639 you know, we had that big, big September, I mean 0:18:29.720 --> 0:18:33.760 really kind of November December last year that just ripped equities, 0:18:34.760 --> 0:18:38.879 just went through the roof bods actually turned in positive performance. 0:18:38.400 --> 0:18:38.920 For the year. 0:18:39.080 --> 0:18:41.520 You know, what do you tell your clients here as 0:18:41.600 --> 0:18:44.119 we kind of start off another year, do we just 0:18:44.200 --> 0:18:46.760 kind of start from zero and try to find some 0:18:46.800 --> 0:18:47.440 winners out there? 0:18:47.560 --> 0:18:48.760 What's the theme for you this year? 0:18:49.000 --> 0:18:49.200 Yeah? 0:18:49.200 --> 0:18:50.680 I mean I think this year is going to definitely 0:18:50.720 --> 0:18:53.640 be a stock pickers year. I think fixed income will 0:18:53.640 --> 0:18:58.040 continue to be a primary story for returns and that's 0:18:58.080 --> 0:19:00.560 going to come despite what the FED does, Even if 0:19:00.600 --> 0:19:03.679