WEBVTT - PG&E’s 2017 Verdict Doesn’t Ensure The Same For 2018 (Podcast) 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.640 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:18.000 podcast or wherever you listen to podcasts. As well as that, 0:00:18.079 --> 0:00:23.639 Bloomberg dot Com Pacific guests and Electric got a little 0:00:23.680 --> 0:00:26.560 bit of some good news yesterday's California cleared it of 0:00:26.600 --> 0:00:30.760 responsibility for one of the deadliest fires in two thousand seventeen. 0:00:30.800 --> 0:00:32.440 To give us a sense of how important that is 0:00:32.520 --> 0:00:35.600 to the company, let's bring in Kite. Kid is a 0:00:35.720 --> 0:00:39.880 senior industrials and utilities analysts for Bloomberg Intelligence. He joins 0:00:39.960 --> 0:00:43.279 us in the Bloomberg Interactive Broker studio here in New York. So, Kit, 0:00:43.920 --> 0:00:47.000 does this reprieve at least or at least an exhoneration 0:00:47.159 --> 0:00:50.440 of that seventeen fire that the liability associated with that? 0:00:50.800 --> 0:00:53.440 Does that protect the company or save the company from bankruptcy? 0:00:54.240 --> 0:00:57.680 I don't think it does, Paul. I think, uh, we're 0:00:57.680 --> 0:01:00.880 gonna see it be worth about ten bill in in 0:01:00.880 --> 0:01:07.119 in less exposure. They still have twenty billion left of exposure. Uh. 0:01:07.120 --> 0:01:10.800 And maybe most important, UH, they have the concern that 0:01:10.880 --> 0:01:16.200 any future wildfire could lead rapidly to very large liabilities 0:01:16.240 --> 0:01:19.000 similar to what they have on the books. Now. One 0:01:19.040 --> 0:01:20.919 thing that I'm struck by, kid, is that this comes 0:01:20.959 --> 0:01:25.240 with a backdrop of several reading agencies saying that they 0:01:25.240 --> 0:01:29.600 could downgrade Californian utilities, possibly even to junk as a 0:01:29.600 --> 0:01:32.520 result of the liability kind of policies that they have. 0:01:32.880 --> 0:01:35.920 In other words, that utilities can be found liable for 0:01:36.240 --> 0:01:38.880 damages from some of these wildfires. How much does that 0:01:38.959 --> 0:01:43.360 ratchet up the pressure? I think it It puts pressure 0:01:43.400 --> 0:01:46.840 on California officials, but you wouldn't know it so far. 0:01:46.920 --> 0:01:52.320 Let's put it that way. The governor yesterday expressed um 0:01:52.360 --> 0:01:55.400 some sensitivity to these issues, and he said he was 0:01:55.760 --> 0:01:59.000 indicated he was trying to move things along faster. But 0:01:59.160 --> 0:02:02.400 faster in the California means maybe in six months will 0:02:02.640 --> 0:02:08.919 start to see some results. So it's moving slow. And 0:02:08.919 --> 0:02:11.560 and the problem is pg n E says we're running 0:02:11.560 --> 0:02:15.680 out of cash. So uh, they feel like on a 0:02:15.840 --> 0:02:19.480 liquidity basis, they need to get something done right away, 0:02:19.560 --> 0:02:23.600 and also in order to basically hold the feet to 0:02:23.680 --> 0:02:28.200 the fire of all the parties in California and get 0:02:28.320 --> 0:02:31.800 something done about As Paul mentioned, this long term issue 0:02:32.040 --> 0:02:34.600 of what happens the next time there's a fire and 0:02:34.639 --> 0:02:38.520 everybody sues them again, Well, what happens being a homeowner 0:02:38.520 --> 0:02:42.080 in California myself and a customer of Pennie, what happens 0:02:42.120 --> 0:02:44.800 when this company does go into bankruptcy? Do the lights 0:02:44.800 --> 0:02:47.840 go out in California? Oh? No, everything, everything runs along 0:02:47.919 --> 0:02:51.320 just fine. They just got five and a half billion 0:02:51.360 --> 0:02:55.600 in UH debt or in possession financing, so if anything, 0:02:55.639 --> 0:02:58.080 their liquidity has improved in the near term. Ike, I 0:02:58.120 --> 0:03:00.639 think it's fair to say neither the company in nor 0:03:00.800 --> 0:03:07.000 California governor, or the regulators and other officials. Nobody is 0:03:07.080 --> 0:03:11.040 going to be interested in operations not going well. And 0:03:11.080 --> 0:03:13.720 in fact, the company has indicated one of the things 0:03:13.800 --> 0:03:18.360 they'll do in bankruptcy is increased spending for safety UH 0:03:18.400 --> 0:03:23.480 and for capital investment in the UH type of capital 0:03:23.520 --> 0:03:27.799 spending for green projects that California always wants. So they're 0:03:27.840 --> 0:03:31.200 trying to say and do the right things that at 0:03:31.240 --> 0:03:34.440 least in California people should be saying, Oh good, they're 0:03:34.480 --> 0:03:37.640 spending money where I want it, uh, and they want 0:03:37.640 --> 0:03:39.680 to come out of it, of course with people saying, 0:03:40.000 --> 0:03:42.040 by the way, here's the revenues for what you spent. 0:03:42.360 --> 0:03:46.200 So going back to the decision yesterday that PGNI is 0:03:46.200 --> 0:03:50.480 not responsible for the deadly two seventeen fires, does that 0:03:50.640 --> 0:03:54.640 set any precedent for what their potential liability could be 0:03:55.080 --> 0:04:00.360 in wildfires? I don't think it does, Lisa, because in 0:04:00.400 --> 0:04:04.520 that case, UH, in the Tubs fire, what we had 0:04:04.600 --> 0:04:08.560 was the company did say a while ago, months ago, 0:04:08.640 --> 0:04:11.360 that they didn't think they were responsible, and that turned 0:04:11.360 --> 0:04:15.480 out to be accurate. In the case of the eighteen fire, 0:04:16.360 --> 0:04:19.560 the company has indicated, well, we did have some wires 0:04:19.600 --> 0:04:23.320 that were down and some UH equipment that looked in 0:04:23.480 --> 0:04:28.000 bad shape. So if anything, that's indicating, I think that 0:04:28.160 --> 0:04:32.760 the potential for some real major liability is still there. 0:04:32.960 --> 0:04:35.680 Do we have this issue where there's you know, real 0:04:36.640 --> 0:04:38.919 in the West. There seems to be fires all throughout 0:04:38.920 --> 0:04:40.760 the West every year. Do we have other utilities that 0:04:40.800 --> 0:04:45.160 are at risk like PGANI, I haven't seen it. I 0:04:45.200 --> 0:04:51.960 think it it really looked. Utilities are UH creatures of regulators, right, 0:04:52.040 --> 0:04:56.320 I mean the regulator monopolies. If their revenues are higher 0:04:56.360 --> 0:05:00.440 than their costs, then they're fine. If the regulator don't 0:05:00.520 --> 0:05:03.000 raise their revenues to cover their costs, then you get 0:05:03.000 --> 0:05:05.600 this kind of situation. And the other states, so far 0:05:06.360 --> 0:05:09.840 we seem to have had the regulators on board with 0:05:09.960 --> 0:05:14.040 the idea that if you have costs, even extreme costs 0:05:14.040 --> 0:05:18.560 for fires and so on, obviously we have to reimburse 0:05:18.600 --> 0:05:21.360 the utility for for what happened. It gets tricky when 0:05:21.720 --> 0:05:25.200 there are real issues of liability, as there might be 0:05:25.320 --> 0:05:28.280 in the case of PG and E. Kick contledge, has 0:05:28.279 --> 0:05:31.800 ever been so exciting to cover utilities? Well, it's it's 0:05:31.800 --> 0:05:34.279 a low bar, but I would I would say no. 0:05:34.600 --> 0:05:40.279 And how many years have been? Twenty five, twenty seven 0:05:40.320 --> 0:05:42.640 years and now around the block it's been. It's been 0:05:42.680 --> 0:05:45.680 a while, and this is the apex of this is 0:05:45.720 --> 0:05:50.239 the big time Kick Cottledge senior Industrials and Utilities analysts 0:05:50.240 --> 0:05:53.960 for Bloomberg Intelligence joining us here in our Bloomberg Interactive 0:05:54.000 --> 0:05:58.880 Brokers studios. Certainly, utilities have become an incredibly hot spot. 0:05:59.200 --> 0:06:02.960 This is the industry that's thought of as boring, the staple, 0:06:03.080 --> 0:06:06.280 the safe haven, and now we have this being the 0:06:06.480 --> 0:06:09.599 fodder for distressed investors such as Kenyon Capital, which is 0:06:09.640 --> 0:06:13.720 now diving in a lot of question marks around California's 0:06:13.800 --> 0:06:32.600 utility complex. If Venezuela could get even messier, it has. 0:06:32.640 --> 0:06:36.320 We now have two presidents in the nation, with Juan 0:06:36.520 --> 0:06:40.160 Guido uh the thirty five year old opposition who has 0:06:40.240 --> 0:06:44.640 risen up getting a sign off from legislation to be 0:06:44.760 --> 0:06:47.520 the president, Nicholas Maduto, who is the current or was 0:06:47.560 --> 0:06:51.240 the president, saying he is still the president. All of 0:06:51.279 --> 0:06:54.279 this is raising the specter of regime change, which is 0:06:54.320 --> 0:06:58.080 something that the U. S. President Trump has supported. The 0:06:58.200 --> 0:07:00.760 question is how much does this really mean that the 0:07:00.839 --> 0:07:03.840 situation in Venezuela is about to shift? Joining us now, 0:07:03.839 --> 0:07:05.800 I'm very pleased to say in our Bloomberg Interactive Broger 0:07:05.839 --> 0:07:10.160 Studios is Yakov Arnapolon, portfolio manager focused on emerging markets 0:07:10.200 --> 0:07:13.840 at PIMCO, normally in London, but he is here with 0:07:13.920 --> 0:07:17.920 us in New York. Hopefully good luck getting out uh Jacova. 0:07:18.200 --> 0:07:20.600 So let's start with Venezuela. Do you think that this 0:07:20.760 --> 0:07:22.680 is the moment that we are finally going to see 0:07:22.800 --> 0:07:27.680 regime change that will allow the Venezuelan economy to regrow 0:07:27.760 --> 0:07:31.120 a bit well, i'd say, taking taking a step back. 0:07:31.320 --> 0:07:33.600 Let's just remember what is going on in the country. 0:07:33.600 --> 0:07:36.600 It's a humanitarian crisis, if you're called. There was a 0:07:36.720 --> 0:07:39.680 story a little while ago saying that over the past year, 0:07:40.240 --> 0:07:43.400 an average Venezuela lost twenty four pounds in weight because 0:07:43.640 --> 0:07:46.280 one of the three Venezuelans is facing starvations a nation 0:07:46.320 --> 0:07:49.040 of thirty plus million people, that's Tamuline people in starvation. 0:07:49.120 --> 0:07:51.960 So let's say we're all hoping for a gene change, 0:07:52.320 --> 0:07:54.600 and it's all very heavy stuff, and we certainly would, 0:07:54.640 --> 0:07:56.200 you know, would love to see the back of Maduro. 0:07:56.920 --> 0:08:02.000 But despite the recent developments, UM, the base cases resolution 0:08:02.120 --> 0:08:06.240 is not necessarily in hand. The army still supports him, 0:08:06.320 --> 0:08:11.280 and their international communities is fairly split. So although that 0:08:11.440 --> 0:08:14.520 we've had this big spike in Venezuela's like you said, 0:08:14.520 --> 0:08:17.560 the international community is fairly space right. So you've got 0:08:17.600 --> 0:08:19.440 the U S, You've got Columbia, You've got some of 0:08:19.480 --> 0:08:23.080 the other nations nearby Venezuela, but then you have Russia 0:08:23.120 --> 0:08:25.960 and China, right, And I think Mexico has come out 0:08:26.480 --> 0:08:29.200 in favor of Madura as well. MLOs. I think we 0:08:29.200 --> 0:08:33.199 went on record supporting the current administration. So I think 0:08:33.200 --> 0:08:35.160 the point is it's it's it will take a while 0:08:35.200 --> 0:08:37.559 to resolve this, and even assuming we do, if and 0:08:37.640 --> 0:08:41.000 when we see regime change, there's probably still going to 0:08:41.080 --> 0:08:45.880 be conflicting claimants, you know, the bond holders, some of 0:08:45.880 --> 0:08:49.360 the sovereign creditors like Russian China, So you know that. 0:08:49.480 --> 0:08:51.640 I think that's one of the reasons we've seen volatility 0:08:52.480 --> 0:08:54.640 um but you know it's in margine markets. We see 0:08:54.679 --> 0:08:58.240 volatility in other places and and even to the extent Venezuela. 0:08:58.280 --> 0:09:00.520 I mean maybe there's been some u f and AS prices. 0:09:01.120 --> 0:09:03.640 There have been other spots in em where we do 0:09:03.679 --> 0:09:07.319 you think some of this optimism year to date is justified. 0:09:07.840 --> 0:09:10.720 If regime change does not take place in the streets, 0:09:11.160 --> 0:09:13.480 how does the country resolve the fact that it has 0:09:13.600 --> 0:09:17.319 two presidents? Is this a legal proceeding that needs to 0:09:17.360 --> 0:09:20.720 take place? What are next steps? I'm not sure there 0:09:20.720 --> 0:09:24.560 are many precedents for that. I think it'll take That's 0:09:24.559 --> 0:09:26.719 another you know, I'd say it was fairly complex, and 0:09:26.760 --> 0:09:28.640 now it's even more complex. It probably will take a 0:09:28.640 --> 0:09:30.880 while to sort out, and you know, I guess the 0:09:30.960 --> 0:09:33.760 two sides just won't recognize each other. So you just 0:09:33.800 --> 0:09:36.520 said that perhaps there are other areas and emerging markets 0:09:36.520 --> 0:09:39.680 where the optimism is more warranted. First is so that 0:09:39.720 --> 0:09:42.080 means the optimism that we've seen of late in Venezuela 0:09:42.080 --> 0:09:44.640 and assets you think is unwarranted. Yeah, I think that 0:09:45.080 --> 0:09:47.960 some of this you four year round regime change, you know, 0:09:48.000 --> 0:09:50.559 to extend this drags on, and the stand of drags on. 0:09:50.720 --> 0:09:53.040 You know, maybe we do see bond prices come off 0:09:53.080 --> 0:09:55.240 once again, so the rally perhaps has gone too far there. 0:09:55.360 --> 0:09:58.400 So where are the other places in emerging markets where 0:09:58.480 --> 0:10:00.800 you think the optimism is warranted? You know? Well, well, 0:10:01.240 --> 0:10:04.959 I'd say Egypt is one good example, very compliant with 0:10:05.040 --> 0:10:08.040 the IMF program, will continue to like the currency, continue 0:10:08.080 --> 0:10:11.800 to like the bonds, um significant economy, hugely important on 0:10:11.880 --> 0:10:16.040 Arab street. And that's one example. And we're watching very 0:10:16.080 --> 0:10:19.920 closely countries that to have elections this Yere, Argentina and Ukraine, 0:10:20.640 --> 0:10:25.280 single bee credits. It's kind of hairy. Let's obviously because 0:10:25.320 --> 0:10:28.120 of these political developments and and markets are fairly worried 0:10:28.120 --> 0:10:30.560 about what's going to happen. But to the extent they're 0:10:30.600 --> 0:10:32.839 able as their sense thread the needle and to extend, 0:10:32.880 --> 0:10:37.199 we see positive outcome, So to extend the incumbents succeed 0:10:37.400 --> 0:10:39.920 to stay in place in both countries, that could be 0:10:39.960 --> 0:10:43.160 a significant boost to asset prices. Taking look at China, 0:10:43.280 --> 0:10:46.560 do the trade talks which seem to be coming back 0:10:46.600 --> 0:10:49.480 to the fore a little bit? See the activity level 0:10:49.480 --> 0:10:51.040 seems to be a little bit better than maybe it 0:10:51.120 --> 0:10:53.920 was for the last several months. Does that how do 0:10:53.960 --> 0:10:56.400 you view that? You are you? How constructive are you 0:10:56.440 --> 0:10:59.120 that any type of meaningful trade agreements can be made 0:10:59.120 --> 0:11:02.280 between China and you US? I'd say we're a skeptical 0:11:02.320 --> 0:11:05.280 there as well. The anticipation is there will be a 0:11:05.280 --> 0:11:07.000 true there will be the ton that's going to happen 0:11:07.080 --> 0:11:08.679 next couple of weeks, So what sorry, a couple of 0:11:08.720 --> 0:11:10.679 I guess a couple of months. Maybe it won't be 0:11:11.200 --> 0:11:14.360 by March first, Let's say it's another there will be 0:11:14.400 --> 0:11:18.240 an extension, but but we'll probably see something. How meaningful 0:11:18.360 --> 0:11:20.559 is that? Beyond the headlines? I think that's where we'll 0:11:20.600 --> 0:11:22.679 have a lot of questions and and you know, we 0:11:22.760 --> 0:11:26.160 do anticipate a resumption of conflict later in the year now, 0:11:26.200 --> 0:11:28.480 simply because a lot of the issues around I P 0:11:28.679 --> 0:11:31.760 haven't been dealt with. And and also you know what 0:11:32.200 --> 0:11:35.119 the data point that is important that we saw overnight 0:11:35.880 --> 0:11:41.200 is the PBOC balance it expansion. Right, so they basically announced, uh, 0:11:41.280 --> 0:11:44.120 the ability for local banks to issue more perps, more 0:11:44.200 --> 0:11:47.959 eight year eighty one bonds and that in turn should 0:11:47.960 --> 0:11:49.920 be actually quite a boost for the economy. Right, so 0:11:49.960 --> 0:11:52.360 we should see a pickup and credit, we should see 0:11:52.400 --> 0:11:55.319 a slow down in the deleveraging process. So that's actually 0:11:55.320 --> 0:11:59.360 a pretty pretty decent near term boost. Would you be 0:11:59.400 --> 0:12:02.760 a buyer of perpetual bonds sold? It's for a local 0:12:02.920 --> 0:12:05.360 it's for local markets, it's by you know, by Chinese 0:12:05.360 --> 0:12:08.440 banks for local investors you know, will pick our spots 0:12:09.679 --> 0:12:11.520 with the will will pick our spots. That's not going 0:12:11.559 --> 0:12:13.800 to be you know, but but look, if you if 0:12:13.840 --> 0:12:17.240 you look across, there are some other large scale and 0:12:17.320 --> 0:12:20.080 international banks with a significant presence in China and Asia 0:12:20.480 --> 0:12:23.560 whose um asset prises, who's whose bonds and stocks are 0:12:23.600 --> 0:12:26.080 trading at up on the back of this. Okay, so 0:12:26.160 --> 0:12:28.360 a question for you, how much of your time do 0:12:28.400 --> 0:12:32.160 you spend traveling if they're if they're a bit and 0:12:32.400 --> 0:12:34.800 look at it. It helps to have a twenty five 0:12:34.840 --> 0:12:37.360 strong team. It helps that. So we'd cover fifty to 0:12:37.400 --> 0:12:40.600 sixty countries a year, among among the among us um 0:12:40.679 --> 0:12:43.040 and some of it is obviously China. We've been to 0:12:43.120 --> 0:12:45.840 China twice so far this year. Someone has come down 0:12:45.880 --> 0:12:48.040 to going to d C as much as possible, given 0:12:48.200 --> 0:12:50.240 that we have the FED, I, m F and the 0:12:50.280 --> 0:12:53.520 White House which increasingly is dictating the path of asset 0:12:53.559 --> 0:12:56.360 prices and Venezuela as we just discussed in China and 0:12:56.400 --> 0:12:59.920 Russia with sanctions in Mexico with a lovely U S 0:13:00.080 --> 0:13:02.480 m c A. So just real quickly, how did your 0:13:02.480 --> 0:13:05.959 portfolio perform in December and January? Just broadly, I mean 0:13:06.120 --> 0:13:08.439 I can look like a relatively calm person. I can 0:13:08.480 --> 0:13:12.760 imagine last two months as an emerging market strategist. Well, 0:13:12.760 --> 0:13:14.760 that's that's that's emerging markets here. There's a scene that 0:13:14.960 --> 0:13:18.720 emerging markets give you the opportunity of a lifetime every quarter. Right, 0:13:19.000 --> 0:13:21.840 So you know, there's we're used to that. There's comportunities 0:13:21.840 --> 0:13:25.640 of many, many many, But you know we've been we've 0:13:25.640 --> 0:13:27.040 been picking our spots and I think that's going to 0:13:27.160 --> 0:13:29.679 continue to be the theme. Broadly speaking. Still like EM 0:13:29.760 --> 0:13:32.000 think this is a good environment for EM in twenty 0:13:32.120 --> 0:13:36.520 nineteen after the swoon of twenty eighteen. But we have 0:13:36.600 --> 0:13:38.439 to pick our spots and again as always, going to 0:13:38.480 --> 0:13:40.920 walk between the rain drops. Ten seconds local currency or 0:13:40.960 --> 0:13:44.480 hard currency, em bonds, three months outlook local currency, twelve 0:13:44.480 --> 0:13:47.080 month heard currency Yahko of Arnipole, and thank you so 0:13:47.120 --> 0:13:49.079 much for being with us. Thanks. That was very interesting. 0:13:49.080 --> 0:13:51.760 It's interesting. It's so many places around the world that 0:13:52.080 --> 0:13:56.400 emerging market um UH strategist and investors can place their money, 0:13:56.720 --> 0:13:58.760 but the management net risk on a global scale is 0:13:58.960 --> 0:14:01.040 is just mind boggling. Yak of on a pull in 0:14:01.120 --> 0:14:03.719 portfolio manage emerging markets from Pimco joining us in a 0:14:03.720 --> 0:14:06.600 Bloomberg eleven thirty UH studio in New York. Thank you 0:14:06.679 --> 0:14:24.880 so much. Remember, Paul, we used to talk about bitcoin. 0:14:25.160 --> 0:14:27.560 Those days kind of ended. Huh. Yeah. I'm looking at 0:14:27.600 --> 0:14:30.720 the five year chart of the Bitcoin index and it's 0:14:30.800 --> 0:14:33.120 just extraordinary, going from you know, a couple of hundred 0:14:33.120 --> 0:14:37.760 bucks early two and then here we are back down 0:14:37.840 --> 0:14:40.880 at Yeah, and now JP Morgan is saying that it 0:14:40.920 --> 0:14:44.440 costs more to mine bitcoin than the actual value itself. 0:14:44.560 --> 0:14:48.640 Joining us Mike mclogan, commodity strategist for Bloomberg Intelligence here 0:14:48.680 --> 0:14:52.520 in our Bloomberg directive Broker Studios Mike, what's your take 0:14:52.760 --> 0:14:55.960 on this JP morgan assessment that it now costs more 0:14:56.040 --> 0:14:59.480 to mine bitcoin? Does this mean essentially, is this a 0:14:59.480 --> 0:15:02.760 good thing or bad thing for their cryptocurency. I think 0:15:02.840 --> 0:15:05.560 JP Morgan has been very good about pointing out one 0:15:05.600 --> 0:15:08.280 of the key things about bitcoin mining is the number 0:15:08.280 --> 0:15:10.720 one factor to really effect mining it's price. When the 0:15:10.760 --> 0:15:14.120 price goes down, if it's not really the mining that matters. 0:15:14.480 --> 0:15:16.520 And they put out a report this time last year 0:15:16.520 --> 0:15:18.560 that I read three times, and they pointed that out. 0:15:18.680 --> 0:15:20.560 And a lot most of the mining occurs in China, 0:15:20.920 --> 0:15:23.160 and good luck really trying to measure what that costs 0:15:23.160 --> 0:15:26.320 because there's connections with you know, political connections or whatever, 0:15:26.360 --> 0:15:28.720 and there a lot of it's happening in Russia, so 0:15:28.840 --> 0:15:32.680 it's hard to measure. But overall in those parts of 0:15:32.680 --> 0:15:34.440 the world, I suspect they're probably making a profit and 0:15:34.440 --> 0:15:35.920 they're getting what they want out of it, but that's 0:15:35.920 --> 0:15:38.120 really insignificant for the price of being coined. The price. 0:15:38.200 --> 0:15:40.800 To me that what really matters is currently it's taking 0:15:40.800 --> 0:15:44.120 back the speculative frenzy that should continue. It's not I 0:15:44.120 --> 0:15:46.280 think it's getting towards the end of the ball game. 0:15:46.520 --> 0:15:48.440 But I always looking at it versus gold, and I 0:15:48.440 --> 0:15:51.080 think it's going close back to the price of the 0:15:51.160 --> 0:15:53.440 parounced price of gold, which is actually up today. So 0:15:53.600 --> 0:15:56.560 I think that convergent is happening, will continue and probably 0:15:56.600 --> 0:15:59.600 meet this year. So you had a great call on gold, 0:15:59.600 --> 0:16:01.400 by the way, you which I remember from a couple 0:16:01.400 --> 0:16:04.240 of months ago. So well, well done there. So bitcoin, 0:16:04.400 --> 0:16:07.360 I mean give it. It's the volatility, said some of them. 0:16:07.440 --> 0:16:09.760 You think a lot of speculaive volatility has come out 0:16:09.800 --> 0:16:12.360 of the currency. What do you think the future is 0:16:12.560 --> 0:16:15.320 of bitcoin? Well, that's the key thing. I think it's important. 0:16:15.360 --> 0:16:18.560 Is I really believe that bitcoin is becoming digital gold. 0:16:18.640 --> 0:16:20.720 We published on that today, and by digital gold, is 0:16:20.760 --> 0:16:22.800 I look at it ten years from now. If it's not, 0:16:22.960 --> 0:16:25.760 if we don't have some form of technology like cryptocurrency, 0:16:25.760 --> 0:16:28.120 which is probably bitcoin, that is not a better form 0:16:28.160 --> 0:16:31.400 of global currency, I'd be surprised. But it's happening fast. 0:16:31.440 --> 0:16:33.920 And one thing we noted is it's been acting like 0:16:34.040 --> 0:16:37.200 gold as an inverse factor to the dollar, which is 0:16:37.240 --> 0:16:39.880 what you want to see. Bitcoin peaked in you know, 0:16:40.000 --> 0:16:42.440 twenty thousand and right, about the time the dollar bottom 0:16:42.440 --> 0:16:44.560 depending on how you measure, and the recent bottom in 0:16:44.600 --> 0:16:47.160 bitcoin was when the dollar peaked, So it still has 0:16:47.200 --> 0:16:49.920 more excesses that come out, but it's also just a 0:16:49.960 --> 0:16:52.800 more modern version. I think it's getting there, and I 0:16:52.840 --> 0:16:54.720 don't know what's going to replace it. People say there's 0:16:54.760 --> 0:16:57.280 other coins, maybe it's going to go the way a whale. Well, 0:16:57.400 --> 0:16:59.560 but it has the hash power. It has to come 0:16:59.640 --> 0:17:03.360 compy patient power. You can't do a fift attack in bitcoin, 0:17:03.520 --> 0:17:06.199 so to me, that's happened. It's just still too expensive. 0:17:06.520 --> 0:17:10.159 The problem with the idea of bitcoin as digital gold, 0:17:10.400 --> 0:17:13.880 in my mind, is that gold's price is determined not 0:17:14.040 --> 0:17:17.520 just from its haven quality, but also from the fact 0:17:17.560 --> 0:17:21.880 that people actually wear gold and use gold in uh 0:17:22.400 --> 0:17:26.400 in a variety of ways. So how does crypto How 0:17:26.440 --> 0:17:29.240 does bitcoin sort of get past that hurdle and having 0:17:29.280 --> 0:17:34.080 the same kind of store of value reputation among investors, well, 0:17:34.160 --> 0:17:37.000 also not having the other purpose transportation. It's the key thing. 0:17:37.000 --> 0:17:38.919 It's hard to We all have gold in our bodies, 0:17:38.960 --> 0:17:40.960 most of its jewelry, and you get that's in them. 0:17:41.000 --> 0:17:42.879 One form for gold and gold historically has been a 0:17:42.920 --> 0:17:45.679 store value, which you know, I view is still positive 0:17:45.720 --> 0:17:49.359 in dollars speaking, but with bitcoin you can transport it 0:17:49.800 --> 0:17:51.280 with a click of the button. You can you're in 0:17:51.359 --> 0:17:54.800 Venezuela and Argentina or Turkey. You can diversify your doll 0:17:54.960 --> 0:17:58.080 or your currency assets, which is this deflating paper into 0:17:58.160 --> 0:18:00.400 something that is a little more stable. And then from there, 0:18:00.440 --> 0:18:02.919 with gold you have to physically move and there's restrictions. 0:18:02.960 --> 0:18:07.440 Historically you can put basically, you can move move millions 0:18:07.480 --> 0:18:10.040 of dollars or value on a thumb drive, and you 0:18:10.040 --> 0:18:11.680 can't do with gold. And to me, that's where it's 0:18:11.680 --> 0:18:14.480 going in the future. Right, I'm sorry, go ahead now, 0:18:14.520 --> 0:18:16.840 it's just gonna ask. I love putting Mike on the spot. 0:18:16.880 --> 0:18:18.480 I think we all do because he can handle it. 0:18:18.880 --> 0:18:23.280 How do you think, how does one really value bitcoin? 0:18:23.720 --> 0:18:26.439 It's not supplying demand, there's not the present value of 0:18:26.440 --> 0:18:29.480 future cash flows. How do you value this thing? That's 0:18:29.520 --> 0:18:32.480 the key thing? And I look at it more right now, 0:18:32.720 --> 0:18:35.080 it's gonna be at some point transactions and I look 0:18:35.119 --> 0:18:37.560 at it very similar to gold. So that's why I'm thinking, 0:18:37.560 --> 0:18:39.439 what's going to happen this year? I'll be able to 0:18:39.480 --> 0:18:41.120 get a better value on it when I see how 0:18:41.119 --> 0:18:42.920 it reacts to what I expect is going to happen 0:18:42.960 --> 0:18:46.120 than dollar peaking, and gold is obviously going to really 0:18:46.240 --> 0:18:49.280 but actually valuing it. It's based on the demand. Now 0:18:49.320 --> 0:18:52.680 historically do you think transactions, But it's really not a currency. 0:18:52.760 --> 0:18:55.800 It's like gold is not based on transaccidents, based on 0:18:55.920 --> 0:18:58.120 the desire to hold that and put in the vault 0:18:58.119 --> 0:19:00.439 and put it away and diversify your portfolios. And to me, 0:19:00.920 --> 0:19:03.200 that's what's going to be happening. But actually value it. 0:19:03.280 --> 0:19:05.760 So I look at one way of value is looking 0:19:05.800 --> 0:19:08.600 at volume trading, which is speculation and volumes way down. 0:19:08.640 --> 0:19:11.080 So that means Bitcoin to me right now should go 0:19:11.119 --> 0:19:14.879 down just based on the latest volume figures. But I 0:19:14.920 --> 0:19:18.680 see it's it's it's just it's it's should find a 0:19:18.680 --> 0:19:21.280 foundation at some point this year. Very interesting. Thanks Mike 0:19:21.720 --> 0:19:23.280 again putting them on a spot. He can handle it. 0:19:23.320 --> 0:19:26.440 That's Mike mcgloan. Mike's a commodity strategist for Bloomberg Intelligence. 0:19:39.920 --> 0:19:42.760 When you think about asset classes that are experiencing extraordinary growth, 0:19:42.800 --> 0:19:45.560 ETFs are absolutely at the top of that list. Uh. 0:19:45.680 --> 0:19:47.520 To give us some color on what is going on 0:19:47.560 --> 0:19:50.240 in the E t F marketplace today is Martin Kremenstein. 0:19:50.560 --> 0:19:53.840 Martin's ahead of exchange traded funds at Nuvine Investments, which 0:19:53.840 --> 0:19:56.439 I just learned is today is a subsidiary of t 0:19:56.600 --> 0:20:00.880 I double a CREFT about nine seventy billion total assets 0:20:00.960 --> 0:20:03.040 under management, of which about I think twenty billion of 0:20:03.080 --> 0:20:05.960 those are e t s roughly, UM so it's about 0:20:06.760 --> 0:20:10.359 in responsible investing assets of that about five million dollars 0:20:10.359 --> 0:20:12.879 as ETFs. So what are they? What are you seeing 0:20:12.880 --> 0:20:15.800 in fun flows right now on E t F s? 0:20:15.840 --> 0:20:19.000 What what's hot? What's not? Um? So, we're seeing starting 0:20:19.000 --> 0:20:21.840 to see quite a lot of investors interest and flow 0:20:21.880 --> 0:20:24.960 into our responsible investing E t F A E S 0:20:25.000 --> 0:20:27.880 G ones UM. We launched them a couple of years ago, 0:20:28.400 --> 0:20:30.200 and we started see towards the back end of the 0:20:30.240 --> 0:20:32.359 ear as they were getting towards the two year track record, 0:20:32.800 --> 0:20:35.320 flows start to pick up and investors start to come in. 0:20:35.600 --> 0:20:37.480 So E s G, which, for those who don't know, 0:20:37.560 --> 0:20:42.440 was environment, Social and governance, right, and so that has 0:20:42.520 --> 0:20:46.480 and I know it's always been fairly important metric or 0:20:46.680 --> 0:20:50.040 or investment concern for European investors, not so much in US. 0:20:50.080 --> 0:20:52.920 Are you sensing that E s G focused investing is 0:20:53.119 --> 0:20:55.800 really gaining a popularity or or interest. I think so. 0:20:55.840 --> 0:20:58.159 I mean, there's there's been a ton of kind of 0:20:58.240 --> 0:21:00.760 news and kind of hot air about it it um, 0:21:00.800 --> 0:21:03.000 but now we're actually starting to see investors come to 0:21:03.359 --> 0:21:05.680 the market, and really it's because these products are now 0:21:05.720 --> 0:21:07.000 the ones that are out there. The new ones are 0:21:07.040 --> 0:21:08.919 starting to show that you don't have to give up 0:21:08.920 --> 0:21:12.960 performance in order to have a responsible investing mandate. The 0:21:13.000 --> 0:21:15.359 problem for me with wrapping my head around s G 0:21:15.560 --> 0:21:19.360 funds is I don't totally understand what the standards are 0:21:19.440 --> 0:21:25.000 to be an environmental, social, and governmental governmentally responsible company. 0:21:25.119 --> 0:21:27.040 So how do you even measure these things? They seems 0:21:27.080 --> 0:21:29.680 brother fuzzy. Yes, so I think you're right. It is 0:21:29.720 --> 0:21:31.480 a little fuzzy, and it's certainly on the industry to 0:21:31.480 --> 0:21:34.160 do a better job of explaining that. I think though. 0:21:34.200 --> 0:21:36.240 What you can do is you can take an industry, 0:21:36.920 --> 0:21:40.439 say like technology, and you can mark each company according 0:21:40.480 --> 0:21:43.800 to the material s G factors for that industry. So 0:21:43.960 --> 0:21:47.000 for technology, it's can be things like data privacy, data 0:21:47.080 --> 0:21:50.720 security under the social environmental is less important to them. 0:21:50.800 --> 0:21:52.720