WEBVTT - Interactive Brokers Chair Thomas Peterffy Talks Trump, M&A & Crypto

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, plan, sitting by with

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<v Speaker 1>Thomas Petrophy of Interactive Brokers, and a lot of things

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<v Speaker 1>dominating the conversation, but none more than the next presidential administration.

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<v Speaker 1>When you think about what President elect Trump, who you

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<v Speaker 1>have given to for his prior campaign and the most

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<v Speaker 1>recent one, what do you think the most impactful change

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<v Speaker 1>will be to investors over the next four years.

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<v Speaker 2>Well, the most impactful aspect of the new administration will

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<v Speaker 2>be less regulation and less interference with private enterprise. Having

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<v Speaker 2>grown up in a socialist country, I've come to a

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<v Speaker 2>conviction earlier in my life that a free market economy

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<v Speaker 2>is the only way to efficiently run a society, and

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<v Speaker 2>so I'm very happy that this is the outcome that

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<v Speaker 2>we had this election time. I did not contribute as

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<v Speaker 2>much to President Trump as I did to other candidates,

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<v Speaker 2>other Republican candidates. I've always been a Republican all my life, because,

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<v Speaker 2>as I said, a good economy can only be based

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<v Speaker 2>on private entrepreneurship.

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<v Speaker 1>Speaking of the Republican Party beyond Trump, I am very

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<v Speaker 1>curious to hear what your thoughts are for Ron DeSantis

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<v Speaker 1>political future at the end of his term. As Florida governor.

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<v Speaker 1>Where do you think his career goes from here?

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<v Speaker 2>Well, unfortunately, I think round the centers shut himself in the.

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<v Speaker 3>Foot with this six week abortion.

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<v Speaker 2>Issue, and that I mean he could I don't know

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<v Speaker 2>if he will change his politics on that or not.

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<v Speaker 2>That is going to be a very difficult.

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<v Speaker 3>Situation.

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<v Speaker 2>I was a great supporter of run for many years

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<v Speaker 2>up until he came up with this six week abortion

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<v Speaker 2>thing because I don't believe in it.

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<v Speaker 3>I don't think it's a good thing.

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<v Speaker 1>Beyond round the scantis, who do you think he has

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<v Speaker 1>put up for the Senate see for Marco Rubio? Who

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<v Speaker 1>do you think takes that spot in Florida? Who would

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<v Speaker 1>you like to see take that spot? Who would you

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<v Speaker 1>be backing?

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<v Speaker 2>Well, I think rundiscientists would probably be the best candidate

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<v Speaker 2>for that Senate seat, and I hope that he will

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<v Speaker 2>do that rather than being Secretary of Defense, because I mean,

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<v Speaker 2>from a point of view of his political future, I

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<v Speaker 2>think a senatorial seat would be a better place to

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<v Speaker 2>jump off up than secretary of Defense.

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<v Speaker 1>What then, do you make of the reports that Lara

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<v Speaker 1>Trump is being put up for that Senate spot? Do

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<v Speaker 1>you think that she has a significant place there.

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<v Speaker 2>Well, she certainly has done a good job this time, Iran,

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<v Speaker 2>But I think she's I don't even know how she's

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<v Speaker 2>Is she old enough to become a senator? She must

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<v Speaker 2>be if they are talking about her, right, But I

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<v Speaker 2>think she's still a very young woman.

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<v Speaker 1>So you know, of course, are a very prominent Florida

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<v Speaker 1>resident yourself. Activity in Florida has been very heated, a

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<v Speaker 1>lot of people from Wall Street moving down there, and

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<v Speaker 1>of course with the president eleft at the Winter White House,

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<v Speaker 1>what has it been like there? Have you seen much

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<v Speaker 1>more increased activity, especially from the business community in what

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<v Speaker 1>is now known as Wall Street South.

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<v Speaker 2>Well, you see, it's actually from my point of view

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<v Speaker 2>because I live only three houses away from from mar Lago.

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<v Speaker 2>So many times I cannot get out of my house

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<v Speaker 2>because there are so many cars waiting in line that

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<v Speaker 2>it's very hard for me to go anywhere. So there

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<v Speaker 2>is a hell le a lot of traffic there. The

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<v Speaker 2>road is always closed up, and unfortunately, you know, these

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<v Speaker 2>assassination attempts are are very difficult to cope. So, yes,

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<v Speaker 2>it's not easy to live in Palm Beach nowadays.

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<v Speaker 1>You were talking earlier about the pro growth agenda, but

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<v Speaker 1>nothing to say yet of the tariff agenda. That is

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<v Speaker 1>something that has spooked a significant portion of the business community.

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<v Speaker 1>Do you think that if they are put on as

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<v Speaker 1>aggressively as had been postured during the campaign, that there

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<v Speaker 1>could be ramifications inflation that pervades the US economy.

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<v Speaker 2>Yes, it's certainly it's it's certainly possible. But I agree

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<v Speaker 2>with Trump that that is probably the best tool to

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<v Speaker 2>get to the point where eonan I get to. And

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<v Speaker 2>I think the opposite side will see that and we

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<v Speaker 2>will agree with it and they will.

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<v Speaker 1>Give in What does this all mean at the end

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<v Speaker 1>of the day for you at Interactive Brokers? If you

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<v Speaker 1>are looking at a pro growth agenda and stock markets

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<v Speaker 1>now record highs, another day of gains in the Nasdaq

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<v Speaker 1>one hundred, just soaring equities, what does it mean for

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<v Speaker 1>business for you, your clients and your ability to grow.

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<v Speaker 3>Well, it's extremely good for our business.

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<v Speaker 2>But I'm afraid that the markets are becoming over extended

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<v Speaker 2>and that you know, sometime in the future we will

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<v Speaker 2>have a downturn in the markets. But I don't think

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<v Speaker 2>it's going to be very violent and very far. It

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<v Speaker 2>will not go very far. So I'm extremely optimistic about

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<v Speaker 2>the next four years and maybe when thereafter.

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<v Speaker 1>What do you think this means for the potential to

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<v Speaker 1>grow inorganically? Have you considered mergers and acquisitions for interactive brokers?

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<v Speaker 3>Oh? For yeah, yes, yes we have.

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<v Speaker 2>It is it is difficult for us to engage in

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<v Speaker 2>any of that because most firms we look up that

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<v Speaker 2>we would we would buy are charging more for their

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<v Speaker 2>services than what we do, and they and they would

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<v Speaker 2>uh price themselves based on those revenues and incomes. And

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<v Speaker 2>of course if we were to take them over and

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<v Speaker 2>we reduce the charges to our level, then they those

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<v Speaker 2>profits would go down, so we we would we would

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<v Speaker 2>buy a firm that where they where. I don't think

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<v Speaker 2>that the that their cost reductions would be equally at

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<v Speaker 2>least as high as as what the revenue reductions would be.

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<v Speaker 3>So it is difficult. A lot of people be better off.

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<v Speaker 2>I think building our own reinvesting in our own business

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<v Speaker 2>rather than going out and buying others.

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<v Speaker 1>A lot of people believe that in the next administration

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<v Speaker 1>you would have much looser antitrust regulations as well lighter

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<v Speaker 1>antitrust enforcement. Does that mean you said you would build yourself,

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<v Speaker 1>but would you ever consider a transformative deal, something that

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<v Speaker 1>would be a merger of equals or even larger.

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<v Speaker 2>This is not a question I was prepared to deal

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<v Speaker 2>with today. But well, of course, I mean, we look

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<v Speaker 2>at everything, but it doesn't mean that this is not

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<v Speaker 2>something I ever thought about, to tell you frankly.

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<v Speaker 1>So the other thing where a lot of investors are

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<v Speaker 1>expecting much lighter regulation is in the world of cryptocurrencies.

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<v Speaker 1>How do you feel about cryptocurrencies from where you stand?

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<v Speaker 1>And do you think that when your clients are going

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<v Speaker 1>to interactive workers, it's going to be something they're asking

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<v Speaker 1>about more and more and more.

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<v Speaker 2>Two Currencies are a very interesting area. We have been

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<v Speaker 2>into cryptocurrencies for about three years. We charge less commission

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<v Speaker 2>and a crypto currency trade than any other firm other

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<v Speaker 2>than robin Hood, but robbin Hood has a lot a

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<v Speaker 2>wider spread because they get their commissions paid by the

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<v Speaker 2>market maker who they send their orders to. So I

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<v Speaker 2>think unbalanced, our platform is probably the most efficient one

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<v Speaker 2>for a crypto trader. And otherwise I am to tell you, frankly,

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<v Speaker 2>I'm sort of scared of cryptos because you know, they

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<v Speaker 2>can go to any price, because it's basically just a

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<v Speaker 2>figment of imagination, so it doesn't have any any underlying value.

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<v Speaker 2>The only value it has is the same as the

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<v Speaker 2>paper dollar, which is nothing.

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<v Speaker 1>But you've seen people pull in nonetheless through ETFs. You

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<v Speaker 1>saw the price of bitcoin get to one hundred thousand dollars.

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<v Speaker 1>Will the investor of tomorrow be more likely to buy

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<v Speaker 1>bitcoin or a US stock?

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<v Speaker 2>Well, it depends.

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<v Speaker 3>Well. For a bitcoin, you can buy US stocks right.

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<v Speaker 2>For a US stock, it's more difficult to buy bitcoin, right.

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<v Speaker 2>So I think that anybody who does not have bitcoin

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<v Speaker 2>should have some bitcoin, but not too much. I would

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<v Speaker 2>recommend that people put maybe their two to three percent

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<v Speaker 2>of their network into bitcoin. And we, for example, will

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<v Speaker 2>not allow anyone to invest more than ten percent of

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<v Speaker 2>their as into bitcoin because I think that would be

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<v Speaker 2>very dangerous.

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<v Speaker 1>And if you have one area that investors should look

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<v Speaker 1>at for next year, the biggest risk on the horizon.

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<v Speaker 1>Everyone is talking about so much growth and soar and

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<v Speaker 1>stock markets. You mentioned you're worried that you could actually

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<v Speaker 1>see a downturn, which is contrary to what everybody else

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<v Speaker 1>is out there saying. Right Many people are out there

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<v Speaker 1>saying right now, what's the biggest risk on the horizon so.

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<v Speaker 2>A downturn is a very big risk because margin balances

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<v Speaker 2>have been growing very very quickly, and especially if you

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<v Speaker 2>take a thing like bitcoin. I mean, you know, margins

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<v Speaker 2>on bitcoin futures for example, charged by the CME are

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<v Speaker 2>extremely low. So I am very worried that people over

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<v Speaker 2>extend themselves. A sudden hit comes into the market and bitcoin.

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<v Speaker 3>For save thirty forty fifty.

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<v Speaker 2>Percent from one day to the next, there'll be many bankruptcies.

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<v Speaker 2>The clearing house will be unable to pick up the

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<v Speaker 2>pieces and it basically will or that the bad that

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<v Speaker 2>will be transferred to the clearing members. So this is

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<v Speaker 2>a difficult situation. If it happens now, the probability is

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<v Speaker 2>not very high that it will happen, but it certainly

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<v Speaker 2>it could happen. So I wish that everybody please pay

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<v Speaker 2>attention to these situations and try to take preventive measures

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<v Speaker 2>and do not extend margin so easily.

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<v Speaker 1>It's a good reminder to in the middle of all

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<v Speaker 1>the exuberants keep an eye out.

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<v Speaker 3>For those risks.

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<v Speaker 1>That is Thomas Pedrophy. Of course, tremen of interactive brokers