1 00:00:02,520 --> 00:00:10,520 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 2 00:00:10,520 --> 00:00:14,680 Speaker 1: Weekdaily reporting from the magazine that helps global leaders stay 3 00:00:14,720 --> 00:00:18,799 Speaker 1: ahead with insight on the people, companies, and trends shaping 4 00:00:18,800 --> 00:00:23,760 Speaker 1: today's complex economy. Plus global business finance and tech news 5 00:00:23,800 --> 00:00:27,800 Speaker 1: as it happens. The Bloomberg Business Week Daily Podcast with 6 00:00:27,920 --> 00:00:31,760 Speaker 1: Carol Masser and Tim Stenebeck on Bloomberg Radio. 7 00:00:32,280 --> 00:00:34,120 Speaker 2: We're going to stay tim on the US economy. 8 00:00:34,120 --> 00:00:36,479 Speaker 3: We're going to broaden out as well, especially when it 9 00:00:36,520 --> 00:00:39,840 Speaker 3: comes to geopolitics and the global economy, something we talked 10 00:00:39,840 --> 00:00:41,479 Speaker 3: about with our Stu Paul yesterday. 11 00:00:41,600 --> 00:00:43,280 Speaker 4: We got a great voice to do this, Doctor Adam 12 00:00:43,320 --> 00:00:47,000 Speaker 4: Posen joins US, President of the Peterson Institute for International Economics, 13 00:00:47,280 --> 00:00:51,280 Speaker 4: joining us this afternoon from Washington, DC. Before we broaden out, 14 00:00:51,320 --> 00:00:54,280 Speaker 4: doctor Posen, want to talk about the US economy coming 15 00:00:54,320 --> 00:00:56,560 Speaker 4: off of that inflation print that we just talked about 16 00:00:56,720 --> 00:00:59,800 Speaker 4: with Mike McKee. Where do you see the US economy? 17 00:01:01,320 --> 00:01:03,520 Speaker 5: Well, thank you for having me back, Tim, and I 18 00:01:03,560 --> 00:01:05,520 Speaker 5: agree with a lot of what Mike said about what 19 00:01:05,680 --> 00:01:07,640 Speaker 5: was under the hood. But the main thing I think 20 00:01:07,680 --> 00:01:11,240 Speaker 5: your investor listeners should be thinking about is that if 21 00:01:11,280 --> 00:01:14,440 Speaker 5: your plus or minus zero point one zero point two 22 00:01:14,480 --> 00:01:19,720 Speaker 5: from expectation on any given months print. It's not worth 23 00:01:19,800 --> 00:01:24,039 Speaker 5: real information. I mean, nobody has their expectations that precise. 24 00:01:24,600 --> 00:01:26,800 Speaker 5: So you have to look at the bigger stories. And 25 00:01:26,920 --> 00:01:29,280 Speaker 5: to me, the bigger stories in the US are that 26 00:01:29,360 --> 00:01:33,119 Speaker 5: we have a labor market that isn't cratering as people 27 00:01:33,280 --> 00:01:37,759 Speaker 5: used to worry about, that has solid retention of employment, 28 00:01:37,880 --> 00:01:42,400 Speaker 5: not huge employment growth, but solid retention. We have potentially 29 00:01:42,440 --> 00:01:46,280 Speaker 5: some very stimulative fiscal policies coming down the pike in 30 00:01:46,400 --> 00:01:50,600 Speaker 5: that the Republican majorities in the Congress may give President 31 00:01:50,640 --> 00:01:53,680 Speaker 5: Trump checks to hand out ahead of the midterm elections 32 00:01:53,680 --> 00:01:58,280 Speaker 5: in November. They may, I hope they will restore some 33 00:01:58,360 --> 00:02:02,080 Speaker 5: of the funding for Obamacare insurance subsidies that we're taken 34 00:02:02,120 --> 00:02:05,480 Speaker 5: out in last year's bill. And we've got in the 35 00:02:05,720 --> 00:02:10,080 Speaker 5: end a bunch of things on the tara front and 36 00:02:10,200 --> 00:02:13,200 Speaker 5: even more so on the anti migration front that are 37 00:02:13,240 --> 00:02:18,280 Speaker 5: percolating through the economy. And people were premature to say, oh, 38 00:02:18,320 --> 00:02:20,760 Speaker 5: it all must have happened by now, or it won't happen. 39 00:02:20,880 --> 00:02:24,680 Speaker 5: That's not right. It takes time for businesses and households 40 00:02:24,720 --> 00:02:29,600 Speaker 5: and migrants to make decisions. So I'm with Mike, I'm 41 00:02:29,600 --> 00:02:32,880 Speaker 5: with a lot of people. I think the pricing of 42 00:02:33,040 --> 00:02:36,120 Speaker 5: three FED cuts this year is much too many. 43 00:02:36,480 --> 00:02:39,359 Speaker 3: So this explains, or I'm assuming this kind of explains, 44 00:02:39,639 --> 00:02:44,080 Speaker 3: doctor Posen, that you and Lazard CEO Peter Orzag of course, 45 00:02:44,120 --> 00:02:46,720 Speaker 3: formerly director of the Office of Management and Budget and 46 00:02:46,760 --> 00:02:50,239 Speaker 3: director of the CBO. You guys put out a column 47 00:02:50,280 --> 00:02:52,799 Speaker 3: in January that the Fed's two percent inflation target could 48 00:02:52,800 --> 00:02:55,600 Speaker 3: be totally left in the dust. You think inflation could 49 00:02:55,639 --> 00:03:00,360 Speaker 3: quote surprise to the upside, potentially exceeding four percent sent 50 00:03:00,480 --> 00:03:04,480 Speaker 3: by the end of twenty twenty six. Is it because 51 00:03:04,520 --> 00:03:08,400 Speaker 3: of what you just laid out in terms of you know, 52 00:03:08,520 --> 00:03:10,560 Speaker 3: tax cuts, federal government spending. 53 00:03:10,600 --> 00:03:12,919 Speaker 2: These are things that are going to be stimulative. 54 00:03:13,480 --> 00:03:16,840 Speaker 5: Stimulation carols exactly and Peter and I And I was 55 00:03:16,919 --> 00:03:19,400 Speaker 5: glad to co author with Peter because he knows the 56 00:03:19,400 --> 00:03:22,840 Speaker 5: fiscal stuff. So if he and I agree that these 57 00:03:22,880 --> 00:03:26,840 Speaker 5: are real likely risks to more stimulus out of fiscal 58 00:03:27,040 --> 00:03:30,680 Speaker 5: I'm willing to buy it or willing to sell it. 59 00:03:30,760 --> 00:03:31,239 Speaker 2: Actually. 60 00:03:31,840 --> 00:03:34,720 Speaker 5: But I think the other things that we're talking about 61 00:03:34,880 --> 00:03:38,480 Speaker 5: is the lagged effect of tariffs and anti migration. I 62 00:03:38,520 --> 00:03:41,200 Speaker 5: wrote about this in a column for Business Week magazine 63 00:03:41,200 --> 00:03:44,520 Speaker 5: earlier this month. I think we're talking about in Peter 64 00:03:44,680 --> 00:03:49,120 Speaker 5: points too from his Purchaselizard, various corporate CEOs I at Amazon, 65 00:03:49,640 --> 00:03:52,280 Speaker 5: and or the beige books from the FED that say 66 00:03:52,720 --> 00:03:56,440 Speaker 5: companies are only just now passing through some of these adjustments. 67 00:03:57,000 --> 00:03:59,360 Speaker 5: I think there's also just the bottom line that the 68 00:03:59,440 --> 00:04:02,080 Speaker 5: labor market, it is more solid, and so if we 69 00:04:02,120 --> 00:04:06,120 Speaker 5: get any inflation, it's in a more tidy economy. And 70 00:04:06,160 --> 00:04:09,760 Speaker 5: then finally, whether or not we get into the new 71 00:04:09,840 --> 00:04:13,120 Speaker 5: leadership at the FED. After all the attacks on the 72 00:04:13,120 --> 00:04:16,040 Speaker 5: FED over the last year since President Trump came back 73 00:04:16,080 --> 00:04:19,360 Speaker 5: into office, you have to be a little more worried 74 00:04:19,560 --> 00:04:23,080 Speaker 5: that the FED will not react quickly if there is inflation, 75 00:04:23,240 --> 00:04:26,320 Speaker 5: and that to some degree becomes self fulfilling. So I 76 00:04:26,360 --> 00:04:28,479 Speaker 5: think there's a lot of things going on now. It 77 00:04:28,520 --> 00:04:31,360 Speaker 5: could be a recession. It could be that the migrants 78 00:04:31,400 --> 00:04:34,960 Speaker 5: really haven't left yet. They could be that the government 79 00:04:35,000 --> 00:04:38,040 Speaker 5: breaks down and doesn't pass these stimulus, in which case 80 00:04:38,320 --> 00:04:41,240 Speaker 5: inflation won't be that high. But I think each of 81 00:04:41,279 --> 00:04:44,520 Speaker 5: these is pretty darn likely, and cumulatively they get you 82 00:04:44,640 --> 00:04:46,600 Speaker 5: up to high inflation by end of the year. 83 00:04:46,760 --> 00:04:48,120 Speaker 4: Well, you mentioned the FED, so I want to go 84 00:04:48,160 --> 00:04:50,760 Speaker 4: there then, and then I want to do some demographic 85 00:04:50,800 --> 00:04:53,359 Speaker 4: stuff because there's a lot of questions about what the 86 00:04:53,400 --> 00:04:55,240 Speaker 4: economy looks like in the next few years with the 87 00:04:55,279 --> 00:04:59,080 Speaker 4: decline and immigration. On the FED, you said if the 88 00:04:59,160 --> 00:05:02,719 Speaker 4: FED is less react moving forward. Is that a result 89 00:05:02,800 --> 00:05:06,440 Speaker 4: you think of Kevin Walsh being nominated as Chair of 90 00:05:06,440 --> 00:05:06,800 Speaker 4: the FED? 91 00:05:08,000 --> 00:05:12,240 Speaker 5: I think it's a result of the desires expressed so 92 00:05:12,560 --> 00:05:16,400 Speaker 5: strongly by President Trump and by Secretary Dissent, and by 93 00:05:16,480 --> 00:05:19,120 Speaker 5: not just Kevin worsh to the nominee, but all the 94 00:05:19,400 --> 00:05:23,039 Speaker 5: shortlisted people who would be FED Chair in favor of 95 00:05:23,600 --> 00:05:27,919 Speaker 5: loosening policy quite a bit, and doing so in the 96 00:05:27,960 --> 00:05:31,360 Speaker 5: face of data which the vast majority of the Federal 97 00:05:31,400 --> 00:05:34,240 Speaker 5: Open Market Committee has publicly said leads them to want 98 00:05:34,279 --> 00:05:38,640 Speaker 5: to pause. I think should give people pause. So I 99 00:05:38,680 --> 00:05:41,119 Speaker 5: think there is a real issue there. I think there's 100 00:05:41,160 --> 00:05:47,599 Speaker 5: also genuine debate to be had. Nominee Warsh, Governor Waller 101 00:05:47,640 --> 00:05:51,400 Speaker 5: and others have said that some of these tariff and 102 00:05:51,440 --> 00:05:53,880 Speaker 5: other effects are one time shocks are not going to 103 00:05:53,920 --> 00:05:57,080 Speaker 5: be passed on We'll see that would be very unusual. 104 00:05:57,200 --> 00:06:00,800 Speaker 5: But maybe they've also said or started to say that 105 00:06:01,080 --> 00:06:04,599 Speaker 5: productivity growth will bail us out, we'll be able to 106 00:06:04,640 --> 00:06:08,640 Speaker 5: have more growth with less inflation. That's more plausible to me. 107 00:06:08,920 --> 00:06:11,360 Speaker 5: But even there that's by no means for sure. There 108 00:06:11,400 --> 00:06:13,520 Speaker 5: was a nice piece by Jason Furman and the Wall 109 00:06:13,520 --> 00:06:16,839 Speaker 5: Street Journal discussing this. The angle I would take is, 110 00:06:17,080 --> 00:06:20,280 Speaker 5: just as Governor Waller or Kevin worsh says, with the tariffs, 111 00:06:20,800 --> 00:06:23,640 Speaker 5: you get a real income shock, in this case positive 112 00:06:23,680 --> 00:06:27,359 Speaker 5: from AI. It's indeterminate ahead of time, to use a 113 00:06:27,400 --> 00:06:30,880 Speaker 5: fancy word, how much of that shows up as income 114 00:06:31,000 --> 00:06:33,600 Speaker 5: and how much of that shows up as price disinflation. 115 00:06:34,320 --> 00:06:37,200 Speaker 5: And my reading of the historical evidence is when you 116 00:06:37,240 --> 00:06:40,760 Speaker 5: get a new technology, most of the disinflation stuff comes 117 00:06:40,800 --> 00:06:45,000 Speaker 5: with a lag, because that only comes when companies start restructuring, 118 00:06:45,200 --> 00:06:48,400 Speaker 5: changing their workforces, figure out how to use this stuff. 119 00:06:48,680 --> 00:06:51,359 Speaker 5: Whereas some of the income growth, the productivity growth you 120 00:06:51,400 --> 00:06:53,559 Speaker 5: get upfront just because we've all got a new toy. 121 00:06:54,440 --> 00:06:58,440 Speaker 5: So I think there's room for me to be plenty wrong. 122 00:06:58,680 --> 00:07:02,279 Speaker 5: But I think we're going to end up pretty high 123 00:07:02,279 --> 00:07:04,520 Speaker 5: inflation fed that's behind the curve. 124 00:07:04,800 --> 00:07:08,440 Speaker 3: So is that the biggest realistic risk to the US economy. 125 00:07:08,480 --> 00:07:10,760 Speaker 3: I wanted to insert that word realistic because I think 126 00:07:10,800 --> 00:07:12,840 Speaker 3: we talk about risks all the time, and there's a list, 127 00:07:13,120 --> 00:07:14,760 Speaker 3: you know, as long as my arm and then some. 128 00:07:15,120 --> 00:07:18,640 Speaker 3: But I'm just curious. Is it higher inflation? Is a 129 00:07:18,760 --> 00:07:22,200 Speaker 3: higher interest rates? Is it demographics and older population folks 130 00:07:22,200 --> 00:07:25,679 Speaker 3: not having babies. Is it less immigration? Is it rising debt? 131 00:07:26,000 --> 00:07:29,800 Speaker 3: Is it China? US tech? What do you think is 132 00:07:29,840 --> 00:07:34,080 Speaker 3: the biggest realistic risk to the US economy, maybe to 133 00:07:34,080 --> 00:07:34,960 Speaker 3: the global economy. 134 00:07:35,640 --> 00:07:37,880 Speaker 5: Yeah, well, thank you for putting it that with, Carol. 135 00:07:37,960 --> 00:07:42,120 Speaker 5: I would sort the risks by two categories, the realistic 136 00:07:42,120 --> 00:07:45,280 Speaker 5: and unrealistic, as you said, but then at what time 137 00:07:45,360 --> 00:07:49,040 Speaker 5: frame they hit. I think the realistic risk for the 138 00:07:49,200 --> 00:07:52,960 Speaker 5: US in the next three to twelve months is probably 139 00:07:53,040 --> 00:07:56,559 Speaker 5: inflation is the biggest risk. And I'm not that worried 140 00:07:56,600 --> 00:08:01,280 Speaker 5: about a downside unemployment. I'm not that worried about trade 141 00:08:01,320 --> 00:08:05,120 Speaker 5: wars turning into hot wars with China. I mean, I'm 142 00:08:05,160 --> 00:08:07,160 Speaker 5: worried about it. It'd be terrible, but I'm not that 143 00:08:07,240 --> 00:08:11,160 Speaker 5: worried it's likely. But if we start looking out one 144 00:08:11,320 --> 00:08:14,960 Speaker 5: two years, then to me, the realistic risk starts to 145 00:08:14,960 --> 00:08:17,760 Speaker 5: get into some of those demographic issues you and Tim 146 00:08:17,960 --> 00:08:21,600 Speaker 5: just mentioned, because we are cutting off a lot of 147 00:08:21,640 --> 00:08:26,840 Speaker 5: people from the workforce by excluding or deporting migrants. And 148 00:08:26,880 --> 00:08:29,120 Speaker 5: there's a lot of things that happen, for example, the 149 00:08:29,160 --> 00:08:33,520 Speaker 5: female labor force participation in prime AH women if you 150 00:08:33,600 --> 00:08:39,000 Speaker 5: don't have cheap available healthcare and cheap available childcare and 151 00:08:39,280 --> 00:08:42,400 Speaker 5: the budget doesn't support that out of the federal government, 152 00:08:42,920 --> 00:08:45,480 Speaker 5: and healthcare is cut back if they don't pass the 153 00:08:45,520 --> 00:08:48,280 Speaker 5: subsidies for Obamacare, and even if they do, it's still 154 00:08:48,280 --> 00:08:51,040 Speaker 5: cut back. So those are the things in the next 155 00:08:51,080 --> 00:08:53,760 Speaker 5: couple of years. But then when we think beyond that, 156 00:08:54,040 --> 00:08:58,760 Speaker 5: then you've got a tug of war between the positive 157 00:08:58,800 --> 00:09:03,800 Speaker 5: impact of AI and the potential for large scale unemployment 158 00:09:03,920 --> 00:09:07,120 Speaker 5: as people adjust to AI. And there I got to say, 159 00:09:07,200 --> 00:09:11,440 Speaker 5: not only I, but the economics profession has no clear idea. 160 00:09:11,480 --> 00:09:13,760 Speaker 5: There are a few people out there a very strong opinions, 161 00:09:13,800 --> 00:09:16,600 Speaker 5: but there's no consensus and we're still working on that. 162 00:09:16,920 --> 00:09:21,040 Speaker 4: What's your best bet there? What's there's no consensus. We 163 00:09:21,040 --> 00:09:22,800 Speaker 4: don't know what's going to happen. We can't see the future. 164 00:09:22,880 --> 00:09:24,000 Speaker 4: But what's realistic. 165 00:09:24,920 --> 00:09:28,480 Speaker 5: What's realistic is productivity growth stays up as high as 166 00:09:28,520 --> 00:09:31,079 Speaker 5: it's now starting the trend, maybe even goes a little 167 00:09:31,120 --> 00:09:35,840 Speaker 5: higher and unemployment shoots up in a couple of years, 168 00:09:35,960 --> 00:09:40,160 Speaker 5: but doesn't shoot up enormously, and it is disproportionately on 169 00:09:40,400 --> 00:09:46,760 Speaker 5: younger people, and that you get some decline in labor 170 00:09:46,800 --> 00:09:51,400 Speaker 5: force participation because people figure out different ways of living 171 00:09:51,440 --> 00:09:55,480 Speaker 5: their lives, and so the unemployment number understates how many 172 00:09:55,520 --> 00:09:56,880 Speaker 5: people feel displaced? 173 00:09:58,720 --> 00:10:03,440 Speaker 3: Yeah, gosh, a million questions. I want to ask you, 174 00:10:03,720 --> 00:10:06,800 Speaker 3: when do we are we seeing kind of the fruits 175 00:10:07,320 --> 00:10:12,080 Speaker 3: of the gaps in wealth playing out globally? 176 00:10:12,480 --> 00:10:14,120 Speaker 2: And is it kind of where we are? 177 00:10:14,200 --> 00:10:19,199 Speaker 3: It's amazing to me where people point to stock market highs. 178 00:10:19,559 --> 00:10:22,440 Speaker 3: We've talked about the K shaped economy a lot, but 179 00:10:22,640 --> 00:10:25,360 Speaker 3: how many conversations I have on a regular basis with 180 00:10:25,800 --> 00:10:28,920 Speaker 3: so many Americans that just find it difficult and ones 181 00:10:28,920 --> 00:10:31,000 Speaker 3: that I wouldn't even think so, that are probably in 182 00:10:31,040 --> 00:10:35,760 Speaker 3: a decent income bracket, but it's just doesn't feel so good. 183 00:10:36,720 --> 00:10:36,840 Speaker 6: Now. 184 00:10:38,040 --> 00:10:42,840 Speaker 5: I think as economists, you all are anchors. You cover everything, 185 00:10:42,880 --> 00:10:44,679 Speaker 5: but as economists have got to be a little bit 186 00:10:44,760 --> 00:10:47,800 Speaker 5: modest that sometimes when people don't feel so good, it's 187 00:10:47,800 --> 00:10:50,520 Speaker 5: not about the economic numbers. They may say it's about that, 188 00:10:50,800 --> 00:10:55,400 Speaker 5: but it's about their relative position in life. It's about uncertainty. 189 00:10:55,600 --> 00:10:59,960 Speaker 5: It's about through an ideological lens. Is their party in power? 190 00:11:00,120 --> 00:11:04,440 Speaker 5: Not in power? Are their kids? So it's not that 191 00:11:04,640 --> 00:11:08,720 Speaker 5: people's feelings are unimportant, but obviously not. They can vote, 192 00:11:08,760 --> 00:11:13,320 Speaker 5: they can choose. But the connection, and there's very clear 193 00:11:13,400 --> 00:11:16,360 Speaker 5: data on this, the connection between surveys of how good 194 00:11:16,400 --> 00:11:21,080 Speaker 5: people feel, how confident people feel, has become much more 195 00:11:21,120 --> 00:11:25,520 Speaker 5: tenuous in terms of linking it to actual economic outcomes 196 00:11:25,600 --> 00:11:29,720 Speaker 5: than it used to be. That's interesting what I would say, Carol. 197 00:11:29,880 --> 00:11:31,160 Speaker 2: We have to run though yet quickly. 198 00:11:31,240 --> 00:11:34,560 Speaker 5: Yeah, no, no, no, sorry, just to just to say 199 00:11:34,600 --> 00:11:39,440 Speaker 5: that the global situation is similar to the US. There's 200 00:11:39,480 --> 00:11:42,160 Speaker 5: a lot of youth unemployment in China and in Europe, 201 00:11:42,200 --> 00:11:43,800 Speaker 5: and that we got to think about. 202 00:11:44,040 --> 00:11:45,640 Speaker 3: Just means you want to have you come back real soon, 203 00:11:45,679 --> 00:11:47,640 Speaker 3: doctor Posen be well, have a great weekend. 204 00:11:48,520 --> 00:11:49,280 Speaker 7: Stay with us. 205 00:11:49,320 --> 00:11:52,319 Speaker 4: More from Bloomberg Business Week Daily coming up after this. 206 00:11:56,520 --> 00:12:00,360 Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch 207 00:12:00,440 --> 00:12:03,160 Speaker 1: us live weekday afternoons from two to fiveys during the 208 00:12:03,320 --> 00:12:07,200 Speaker 1: Listen on Applecarplay and Android Otto with the Bloomberg Business app, 209 00:12:07,400 --> 00:12:09,160 Speaker 1: or watch us live on YouTube. 210 00:12:09,960 --> 00:12:12,560 Speaker 3: Hey, consumer spending on Valentine's Day expected to reach a 211 00:12:12,600 --> 00:12:15,120 Speaker 3: record twenty nine point one billion dollars according to an 212 00:12:15,120 --> 00:12:18,120 Speaker 3: annual survey that was released by the National Retail Federation 213 00:12:18,640 --> 00:12:22,599 Speaker 3: and Prosper Insights and Analytics. Now that amount surpasses the 214 00:12:22,640 --> 00:12:26,080 Speaker 3: previous record of twenty seven point five billion that was 215 00:12:26,200 --> 00:12:29,959 Speaker 3: last year. Shoppers budgeting a record almost two hundred dollars 216 00:12:30,200 --> 00:12:32,679 Speaker 3: on average for gifts, and increase from one hundred and 217 00:12:32,720 --> 00:12:35,880 Speaker 3: eighty nine dollars last year and surpassing the previous record 218 00:12:36,080 --> 00:12:38,800 Speaker 3: of one hundred and ninety six dollars spent in twenty twenty. 219 00:12:39,160 --> 00:12:41,040 Speaker 4: So basically, people are going to send two hundred bucks. 220 00:12:41,600 --> 00:12:45,640 Speaker 7: Is that how you're talking? Yeah, Okay, that seems like 221 00:12:45,679 --> 00:12:45,960 Speaker 7: a lot. 222 00:12:46,200 --> 00:12:49,439 Speaker 2: It seems like a lot. Like I love, I love, Yeah, 223 00:12:49,559 --> 00:12:53,280 Speaker 2: but but it's like I don't know. Yeah, it's sweet, Okay, 224 00:12:53,320 --> 00:12:53,840 Speaker 2: I do love. 225 00:12:53,960 --> 00:12:55,079 Speaker 7: Let's ask Christina Stembull. 226 00:12:55,160 --> 00:12:57,800 Speaker 4: She's got her CEO of farm Girl Flowers Hates, a 227 00:12:57,800 --> 00:12:59,960 Speaker 4: firm she built from the ground up. She strapped it 228 00:13:00,160 --> 00:13:02,679 Speaker 4: starting back in twenty ten, making booquets from her San 229 00:13:02,679 --> 00:13:06,720 Speaker 4: Francisco apartment. She's in Gig Harbor, Washingtonday at what the 230 00:13:06,720 --> 00:13:10,200 Speaker 4: company calls the farm Quarters, which I'm guessing is like 231 00:13:10,240 --> 00:13:11,440 Speaker 4: you know, there's a headquarters. 232 00:13:12,040 --> 00:13:14,560 Speaker 7: There's a farm headquarters. This is the farm quarters. Where 233 00:13:14,559 --> 00:13:15,320 Speaker 7: are you exactly? 234 00:13:16,120 --> 00:13:18,520 Speaker 8: Yeah, we're about an hour south of Seattle. 235 00:13:19,400 --> 00:13:21,000 Speaker 7: And what's going on there? 236 00:13:22,559 --> 00:13:25,720 Speaker 9: Lots of lots of busyness here going on, just like 237 00:13:26,480 --> 00:13:28,439 Speaker 9: Valentine's DA and Mother's Day. As you know, I've been 238 00:13:28,440 --> 00:13:30,160 Speaker 9: on here many times with you. Thank you for having 239 00:13:30,200 --> 00:13:33,080 Speaker 9: me back by the way, but just a lot of busyness, 240 00:13:33,120 --> 00:13:35,880 Speaker 9: a lot of forecasting, making sure that orders are coming in, 241 00:13:35,920 --> 00:13:39,200 Speaker 9: we're taking care of our customers. Well, the normal Valentine's 242 00:13:39,240 --> 00:13:39,800 Speaker 9: Day hubbub. 243 00:13:40,240 --> 00:13:40,880 Speaker 7: Well yeah. 244 00:13:40,880 --> 00:13:43,640 Speaker 4: What we do know though, is that people think Valentine's 245 00:13:43,679 --> 00:13:45,440 Speaker 4: Day is the busiest day for you, but it's not. 246 00:13:45,559 --> 00:13:48,360 Speaker 4: Mother's Day is a busier holiday, right, Yeah. 247 00:13:48,360 --> 00:13:52,280 Speaker 9: This is our like warm up to motas. So it's 248 00:13:52,320 --> 00:13:54,040 Speaker 9: good to have this one. First Mother's Day is about 249 00:13:54,040 --> 00:13:55,400 Speaker 9: double the size Valentine's Day. 250 00:13:55,400 --> 00:13:56,840 Speaker 3: Fir tell us about like kind of what's going on 251 00:13:56,880 --> 00:13:58,360 Speaker 3: behind the scenes, And I am curious. 252 00:13:58,400 --> 00:13:59,360 Speaker 2: We are curious. 253 00:13:59,600 --> 00:14:02,800 Speaker 3: Is a ber than last year or you know? No, 254 00:14:03,000 --> 00:14:05,120 Speaker 3: you are always such a great read on the consumer 255 00:14:05,120 --> 00:14:07,760 Speaker 3: because I think about things like holidays, is when okay, 256 00:14:07,800 --> 00:14:09,560 Speaker 3: we can find the money to spend so give us 257 00:14:09,600 --> 00:14:11,280 Speaker 3: an idea of what the consumer's doing this year, what 258 00:14:11,320 --> 00:14:12,840 Speaker 3: they're buying, how much they're spending. 259 00:14:14,280 --> 00:14:16,280 Speaker 9: Yeah, yeah, it kind of falls in line with what 260 00:14:16,320 --> 00:14:18,640 Speaker 9: you just said. We are seeing that people are spending 261 00:14:18,640 --> 00:14:21,200 Speaker 9: a little bit more this year. Orders are up a 262 00:14:21,200 --> 00:14:23,040 Speaker 9: little bit as well year every year, which we're really 263 00:14:23,280 --> 00:14:23,920 Speaker 9: happy about. 264 00:14:24,800 --> 00:14:26,760 Speaker 8: And they're spending more this year, which is also a 265 00:14:26,760 --> 00:14:27,080 Speaker 8: great thing. 266 00:14:27,160 --> 00:14:29,560 Speaker 9: Valentine' Day has always been kind of a high average 267 00:14:29,640 --> 00:14:31,520 Speaker 9: order value, high high ticket. 268 00:14:31,280 --> 00:14:33,520 Speaker 8: Item holiday for us. Mother's Day tends to be a 269 00:14:33,560 --> 00:14:34,120 Speaker 8: little bit less. 270 00:14:34,120 --> 00:14:36,120 Speaker 9: We get a lot more orders, you know, but people 271 00:14:36,160 --> 00:14:38,880 Speaker 9: spend a little bit less on their moms unfortunately. 272 00:14:38,280 --> 00:14:39,000 Speaker 8: Than their lovers. 273 00:14:39,840 --> 00:14:41,320 Speaker 7: What are they buying this year. 274 00:14:42,200 --> 00:14:46,320 Speaker 8: Yeah, they're buying. You know, we did survey again. 275 00:14:46,360 --> 00:14:49,240 Speaker 9: We hadn't done any surveying of our customers since before COVID, 276 00:14:49,400 --> 00:14:51,680 Speaker 9: so we did a great survey this year that totally 277 00:14:51,680 --> 00:14:53,080 Speaker 9: you know, kind of give us more insights. 278 00:14:53,400 --> 00:14:53,520 Speaker 10: You know. 279 00:14:53,600 --> 00:14:56,000 Speaker 9: Everything's kind of you know, changed a lot since COVID, 280 00:14:56,040 --> 00:14:57,640 Speaker 9: so we wanted to see if if we were still 281 00:14:57,640 --> 00:15:01,160 Speaker 9: providing what customers wanted, and we found a lot of 282 00:15:01,640 --> 00:15:03,120 Speaker 9: the same from before COVID and a. 283 00:15:03,040 --> 00:15:05,880 Speaker 8: Little bit different. So it's a thought that counts. 284 00:15:06,560 --> 00:15:09,280 Speaker 9: You know, our customers want their loved ones to really 285 00:15:09,280 --> 00:15:11,680 Speaker 9: think about what they what they like, to know what 286 00:15:11,840 --> 00:15:14,440 Speaker 9: flower like, their favorite flower like instead of a red rose. 287 00:15:14,720 --> 00:15:17,840 Speaker 9: We did find, just like before COVID, not many women 288 00:15:17,920 --> 00:15:20,040 Speaker 9: want true just standard red roses. 289 00:15:20,200 --> 00:15:23,280 Speaker 3: Yeah, we don't want it, guys, get the message. 290 00:15:23,680 --> 00:15:29,320 Speaker 9: Sorry, most totally. You're so right, Carol. Women want a bright, mixed, 291 00:15:29,360 --> 00:15:32,600 Speaker 9: beautiful bouquet. So that's what we're giving our customers a 292 00:15:32,640 --> 00:15:36,240 Speaker 9: lot of options on bright, beautiful bouquets. But since men 293 00:15:36,360 --> 00:15:38,800 Speaker 9: are the consumer for this holiday, we also have to 294 00:15:38,840 --> 00:15:40,960 Speaker 9: keep them happy. We found this many many years ago, 295 00:15:41,000 --> 00:15:42,880 Speaker 9: over a decade ago, you know, when I was just 296 00:15:42,960 --> 00:15:46,680 Speaker 9: kind of stumped with like why the senders were not happy, 297 00:15:46,720 --> 00:15:49,040 Speaker 9: but the recipients were. And so that was the first 298 00:15:49,080 --> 00:15:51,560 Speaker 9: survey ever did over a decade ago and found that 299 00:15:51,640 --> 00:15:53,640 Speaker 9: just what women and what men want are very different. 300 00:15:53,720 --> 00:15:56,360 Speaker 9: So men want a red rose. So we're mixing red 301 00:15:56,440 --> 00:15:59,560 Speaker 9: roses in with a lot of other flowers to give 302 00:15:59,600 --> 00:16:02,520 Speaker 9: women they want and men what they want when they order. 303 00:16:03,040 --> 00:16:05,400 Speaker 9: But the main thing from our survey showed us that 304 00:16:05,520 --> 00:16:08,560 Speaker 9: women really and you know everyone really, not just women, 305 00:16:08,960 --> 00:16:12,520 Speaker 9: want their partner to really think about the gifts they're giving. 306 00:16:12,840 --> 00:16:15,520 Speaker 9: So if their favorite flower is a renucular, don't send 307 00:16:15,560 --> 00:16:18,600 Speaker 9: a mixed Okay, send you know the forty stems of 308 00:16:18,640 --> 00:16:21,480 Speaker 9: beautiful Hanoi rinuculars that we have on our site. So 309 00:16:21,520 --> 00:16:23,680 Speaker 9: they just don't really want to feel like the person 310 00:16:23,680 --> 00:16:25,240 Speaker 9: that they're with knows them really well. 311 00:16:25,560 --> 00:16:27,880 Speaker 3: What does it mean when there's a Saturday delivery? Like 312 00:16:27,920 --> 00:16:29,720 Speaker 3: I think about that a lot. Is it better? 313 00:16:29,800 --> 00:16:31,240 Speaker 2: Is it easier? Is it harder? 314 00:16:31,320 --> 00:16:31,480 Speaker 11: Like? 315 00:16:31,560 --> 00:16:33,640 Speaker 2: How do and how do consumers think about it? 316 00:16:34,280 --> 00:16:37,080 Speaker 9: Yeah, it's horrible, so you know, I'll just give it 317 00:16:37,120 --> 00:16:39,960 Speaker 9: two straight. It's really bad. The only day worse is Sunday. 318 00:16:40,000 --> 00:16:43,400 Speaker 9: So next year is going to be great. So you know, 319 00:16:43,440 --> 00:16:45,560 Speaker 9: when you're a company our size, which is small, we're 320 00:16:45,640 --> 00:16:49,000 Speaker 9: small business. You know, we don't have the buying power 321 00:16:49,040 --> 00:16:51,240 Speaker 9: that some of the giant companies have that if made 322 00:16:51,280 --> 00:16:54,760 Speaker 9: consumers think that deliveries happen at you know, eleven pm 323 00:16:54,800 --> 00:16:57,280 Speaker 9: on a Sunday, even like that doesn't happen for companies 324 00:16:57,320 --> 00:17:01,040 Speaker 9: outside of those you know, goliaths, companies that you think 325 00:17:01,080 --> 00:17:03,960 Speaker 9: of with that, So you know, we can't get Sunday 326 00:17:04,000 --> 00:17:07,000 Speaker 9: deliveries and Saturday deliveries are tough, so not everybody lives 327 00:17:07,280 --> 00:17:11,040 Speaker 9: in an urban enough place to receive deliveries on Saturdays, 328 00:17:11,200 --> 00:17:14,879 Speaker 9: but the senders don't know that necessarily, so you know, 329 00:17:14,960 --> 00:17:17,959 Speaker 9: we offer Saturday delivery. It's we have it at right now. 330 00:17:18,000 --> 00:17:20,840 Speaker 9: It's the same price as is during the week, but 331 00:17:20,880 --> 00:17:22,960 Speaker 9: there's a lot more risk on Saturday. It's that they're 332 00:17:23,000 --> 00:17:24,919 Speaker 9: not going to make it there in time. So another 333 00:17:24,920 --> 00:17:28,080 Speaker 9: thing we found in our survey is that this surprised us. Actually, 334 00:17:28,400 --> 00:17:31,280 Speaker 9: women don't want to get the flowers on Saturday. They 335 00:17:31,280 --> 00:17:32,679 Speaker 9: want to get them earlier in the week so they 336 00:17:32,680 --> 00:17:34,800 Speaker 9: can enjoy them. And on the weekends they have very 337 00:17:34,840 --> 00:17:36,720 Speaker 9: full schedules, so they don't want to have to like 338 00:17:37,000 --> 00:17:39,800 Speaker 9: worry that they're sitting on their front porch freezing somewhere. 339 00:17:39,880 --> 00:17:41,639 Speaker 9: If you're in parts of the United States where it's 340 00:17:41,640 --> 00:17:44,439 Speaker 9: freezing right now, and the flowers aren't going to look 341 00:17:44,440 --> 00:17:46,280 Speaker 9: good when they get home. So we found that most 342 00:17:46,320 --> 00:17:49,159 Speaker 9: people wanted to get them early. We saw that in 343 00:17:49,200 --> 00:17:52,800 Speaker 9: the orders too, most people selected Friday for delivery, So 344 00:17:52,840 --> 00:17:55,359 Speaker 9: now that timings up, so now we're getting the people 345 00:17:55,359 --> 00:17:57,600 Speaker 9: that might have might have slipped their minds and are 346 00:17:57,680 --> 00:18:00,000 Speaker 9: ordering for Saturday delivery, but there were always on pins 347 00:17:59,880 --> 00:18:02,000 Speaker 9: and needles like, oh, you know, it's going to be 348 00:18:02,359 --> 00:18:04,240 Speaker 9: a higher percent that don't make it in time on 349 00:18:04,240 --> 00:18:04,760 Speaker 9: a Saturday. 350 00:18:04,840 --> 00:18:07,760 Speaker 4: Yeah, the last minute folks out there making the calls 351 00:18:07,880 --> 00:18:09,920 Speaker 4: right now, Christina. In the past year when we have 352 00:18:10,000 --> 00:18:11,960 Speaker 4: you on, you've spoken about tariffs because a lot of 353 00:18:11,960 --> 00:18:14,399 Speaker 4: the what ends up in these bouquets comes from outside 354 00:18:14,400 --> 00:18:16,200 Speaker 4: of the United States. Just give us an update there 355 00:18:16,240 --> 00:18:19,280 Speaker 4: and the way that you've shifted your supply chain or not, 356 00:18:19,400 --> 00:18:21,000 Speaker 4: and how the bottom line has been affected. 357 00:18:22,160 --> 00:18:26,280 Speaker 9: Yeah, tariffs are definitely impacting a lot this year in 358 00:18:26,320 --> 00:18:27,560 Speaker 9: ways that people don't think about. 359 00:18:27,600 --> 00:18:28,159 Speaker 8: And I wouldn't have. 360 00:18:28,160 --> 00:18:31,120 Speaker 9: Thought about either, So I'm this is no shade on anybody. 361 00:18:31,119 --> 00:18:32,520 Speaker 9: I wouldn't have thought about this if I didn't have 362 00:18:32,600 --> 00:18:36,840 Speaker 9: a flower company. But you know, flowers, they cost a 363 00:18:36,880 --> 00:18:38,520 Speaker 9: lot more in the United States. So you know, all 364 00:18:38,560 --> 00:18:42,160 Speaker 9: the tariffs on encouraging to bring back manufacturing and agriculture 365 00:18:42,160 --> 00:18:44,800 Speaker 9: to the United States, it just doesn't have that impact. 366 00:18:45,280 --> 00:18:47,600 Speaker 9: I understand the intention is there, but the impact isn't 367 00:18:47,600 --> 00:18:51,159 Speaker 9: that way because what happens are it's not just you know, 368 00:18:51,359 --> 00:18:53,880 Speaker 9: the flowers themselves. So like when you're bringing in flowers 369 00:18:53,920 --> 00:18:55,320 Speaker 9: from Europe or South America. 370 00:18:55,040 --> 00:18:56,240 Speaker 8: Which is a tremendous amount. 371 00:18:56,240 --> 00:18:58,919 Speaker 9: I think the stat this year is eighty percent of 372 00:18:58,960 --> 00:19:01,000 Speaker 9: the exports from Columbia came to the United States. 373 00:19:01,000 --> 00:19:01,800 Speaker 8: I just saw this morning. 374 00:19:01,880 --> 00:19:04,760 Speaker 9: So you know, that's a lot are imported and you 375 00:19:04,800 --> 00:19:08,560 Speaker 9: pay more for those imported flowers. But for US grown flowers, 376 00:19:08,720 --> 00:19:11,000 Speaker 9: you have all of the materials to grow those flowers. 377 00:19:11,040 --> 00:19:15,000 Speaker 9: So the bulb prices have gone up so much, the fertilizers, 378 00:19:15,000 --> 00:19:17,160 Speaker 9: everything that you're bringing in still to grow them here. 379 00:19:17,400 --> 00:19:19,719 Speaker 9: And then on top of that, the land, the labor, 380 00:19:20,240 --> 00:19:23,360 Speaker 9: everything here costs so much more. The insurance, the legals, 381 00:19:23,520 --> 00:19:25,359 Speaker 9: you know, everything here in the US costs more. So 382 00:19:25,760 --> 00:19:28,040 Speaker 9: you know, for instance, a good example, just to kind 383 00:19:28,040 --> 00:19:29,320 Speaker 9: of break it down and. 384 00:19:29,359 --> 00:19:31,320 Speaker 2: Just quickly, yeah, a tulip. 385 00:19:31,600 --> 00:19:34,040 Speaker 9: A tulip is you know, three times three to four 386 00:19:34,080 --> 00:19:36,360 Speaker 9: times more expensive to buy it here in the US. 387 00:19:36,440 --> 00:19:39,720 Speaker 9: We're still making that choice to buy tulips here here 388 00:19:39,720 --> 00:19:41,359 Speaker 9: in the US to support the farms that we have 389 00:19:41,440 --> 00:19:43,119 Speaker 9: that we've worked us for a long time, but we 390 00:19:43,160 --> 00:19:45,920 Speaker 9: could get them significantly cheaper if we imported them, even 391 00:19:45,920 --> 00:19:49,040 Speaker 9: with the tariffs. Because of what the farmers here are experiencing. 392 00:19:49,560 --> 00:19:52,000 Speaker 3: Yeah, no, you like you really kind of like open 393 00:19:52,000 --> 00:19:54,480 Speaker 3: a window for us in terms of what it means 394 00:19:55,119 --> 00:19:58,800 Speaker 3: in terms of farming here in the United States. Happy 395 00:19:58,880 --> 00:20:01,560 Speaker 3: Valentine's Day, Good luck. I know it's a crazy time 396 00:20:01,600 --> 00:20:04,080 Speaker 3: for you, but always fun to check in with you. That, 397 00:20:04,160 --> 00:20:07,160 Speaker 3: of course, is Christina Stembel, founder and CEO of farm 398 00:20:07,200 --> 00:20:08,280 Speaker 3: Girl Flowers. 399 00:20:08,800 --> 00:20:09,560 Speaker 7: Stay with us. 400 00:20:09,600 --> 00:20:12,520 Speaker 4: More from Bloomberg Business Week Daily coming up after this. 401 00:20:17,720 --> 00:20:21,560 Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch 402 00:20:21,640 --> 00:20:24,320 Speaker 1: us live weekday afternoons from two to five eas during 403 00:20:24,520 --> 00:20:27,760 Speaker 1: Listen on Apple Karplay and Android Auto with the Bloomberg 404 00:20:27,800 --> 00:20:30,760 Speaker 1: Business app, or watch us live on YouTube. 405 00:20:31,520 --> 00:20:33,000 Speaker 4: You know what is one of the most read stories 406 00:20:33,000 --> 00:20:35,160 Speaker 4: on the Bloomberg Anything related to Jeffrey Epstein. 407 00:20:35,320 --> 00:20:36,560 Speaker 7: Yeah, yeah, it's. 408 00:20:36,400 --> 00:20:39,240 Speaker 2: An interesting story about gloomc Sachs that regards. 409 00:20:39,359 --> 00:20:41,399 Speaker 4: Yeah, from a resignation of the top lawyer there to 410 00:20:41,440 --> 00:20:43,359 Speaker 4: the resignation of one of the most powerful figures in 411 00:20:43,400 --> 00:20:45,640 Speaker 4: the Middle East. We are all over the fallout from 412 00:20:45,680 --> 00:20:48,199 Speaker 4: the latest batch of the Epstein files. Todd Gillespie's here. 413 00:20:48,240 --> 00:20:51,680 Speaker 4: We have Jason Leopold next hour to really tell us 414 00:20:52,560 --> 00:20:56,280 Speaker 4: what the steady outflow of information has been from these 415 00:20:56,280 --> 00:20:58,359 Speaker 4: files and potential repercussions moving forward. 416 00:20:58,480 --> 00:20:58,800 Speaker 7: All right. 417 00:20:58,840 --> 00:21:01,840 Speaker 3: Also, I'm holding this up because this is Bloomberg Markets Magazine. 418 00:21:01,920 --> 00:21:05,320 Speaker 3: It's a February March issue and it is out. It 419 00:21:05,359 --> 00:21:07,080 Speaker 3: asked should we be afraid of the big boom in 420 00:21:07,080 --> 00:21:10,480 Speaker 3: private credit? The asset class is the subject of the 421 00:21:10,520 --> 00:21:12,879 Speaker 3: latest issue of Bloomberg Markets Magazine. The editor is going 422 00:21:12,880 --> 00:21:14,359 Speaker 3: to join us in just a few minutes. I do 423 00:21:14,440 --> 00:21:17,560 Speaker 3: feel like credit, in all its twists and turns, is 424 00:21:17,600 --> 00:21:19,000 Speaker 3: certainly top of mine for everybody. 425 00:21:19,080 --> 00:21:21,800 Speaker 4: Okay, champagne haad of Valentine's Day? That sounds nice, Yeah, 426 00:21:21,840 --> 00:21:23,880 Speaker 4: all right, could cost you more due to those tariffs. 427 00:21:24,119 --> 00:21:27,960 Speaker 4: The founder and CEO of one champagne company. Yeah, chocolate 428 00:21:27,960 --> 00:21:28,600 Speaker 4: covered anything. 429 00:21:28,680 --> 00:21:30,679 Speaker 2: No, but they go, you know with oh, I don't know, 430 00:21:30,840 --> 00:21:32,000 Speaker 2: have you not some pretty one? 431 00:21:32,119 --> 00:21:36,280 Speaker 4: Okay, I'm trying to stay on track here, right. This 432 00:21:36,400 --> 00:21:39,399 Speaker 4: company is suing the Trump administration for what the founder 433 00:21:39,400 --> 00:21:42,119 Speaker 4: and ceo says is seventy eight thousand dollars she is 434 00:21:42,160 --> 00:21:43,840 Speaker 4: owed that she spent on tariffs last year. 435 00:21:43,880 --> 00:21:45,760 Speaker 2: Well, Supreme Court might remember who's staying. 436 00:21:45,600 --> 00:21:46,160 Speaker 7: For that tariffs. 437 00:21:46,160 --> 00:21:48,640 Speaker 2: Supreme Court though, Yeah, totally, that's where it's going. All right, 438 00:21:49,119 --> 00:21:50,679 Speaker 2: lots to come over the next two hours. Do not 439 00:21:50,720 --> 00:21:51,119 Speaker 2: go anywhere. 440 00:21:51,160 --> 00:21:53,320 Speaker 3: First up, though, check on that trading day. Here's Amy 441 00:21:53,320 --> 00:21:54,560 Speaker 3: Morrison for Charlie Pellett. 442 00:21:55,160 --> 00:21:58,080 Speaker 10: All right, thank you, Carol sources telling Bloomberg that SpaceX 443 00:21:58,160 --> 00:22:00,600 Speaker 10: is pursuing a dual class share structure in its planned 444 00:22:00,640 --> 00:22:03,639 Speaker 10: IPO this year. A two tier structure would give select 445 00:22:03,640 --> 00:22:07,200 Speaker 10: shareholders stock with extra voting power, allowing them to dominate 446 00:22:07,240 --> 00:22:10,600 Speaker 10: decision making, but it would also allow insiders like Elon 447 00:22:10,760 --> 00:22:13,320 Speaker 10: Musk to maintain control of the company even with a 448 00:22:13,359 --> 00:22:14,119 Speaker 10: minority stake. 449 00:22:14,520 --> 00:22:15,080 Speaker 2: And you're right. 450 00:22:15,119 --> 00:22:18,400 Speaker 10: Tamer than expected inflation numbers spurred bigger bets on fed 451 00:22:18,480 --> 00:22:20,600 Speaker 10: rate cuts, moving markets into the green. But just a 452 00:22:20,640 --> 00:22:22,639 Speaker 10: little bit, just a little bit, peering back some of 453 00:22:22,640 --> 00:22:24,680 Speaker 10: those gains from earlier Today. Right now, s and P 454 00:22:24,720 --> 00:22:27,320 Speaker 10: five hundred up a quarter percent, NASDAK little changed on 455 00:22:27,359 --> 00:22:29,720 Speaker 10: the upside, the Dow up about two tens seven percent, 456 00:22:29,960 --> 00:22:32,440 Speaker 10: tenure treasury yield at four percent, the two year yield 457 00:22:32,440 --> 00:22:34,960 Speaker 10: at three point four percent. Let's check bitcoin now, Oh, 458 00:22:35,000 --> 00:22:38,720 Speaker 10: it's fine, up almost five percent around sixty nine thousand dollars. 459 00:22:38,920 --> 00:22:41,440 Speaker 10: Traders now pricing a fifty percent chance of a third 460 00:22:41,520 --> 00:22:44,040 Speaker 10: rate cut this year. CPI fell to a nearly five 461 00:22:44,119 --> 00:22:47,119 Speaker 10: year low last month as apartment rental price growth slowed 462 00:22:47,119 --> 00:22:50,160 Speaker 10: and gas prices fell. That offered some relief to Americans 463 00:22:50,200 --> 00:22:53,159 Speaker 10: who are still dealing with sharp increases and costs of 464 00:22:53,200 --> 00:22:56,280 Speaker 10: the past five years. Consumer prices are about twenty five 465 00:22:56,280 --> 00:22:59,280 Speaker 10: percent higher than they were five years ago. Efan Devit 466 00:22:59,320 --> 00:23:03,080 Speaker 10: is global more market strategist at Monetta Group Investment Advisors. 467 00:23:02,680 --> 00:23:03,879 Speaker 8: Cuarently not just noise. 468 00:23:03,960 --> 00:23:06,280 Speaker 9: We have to look at how this is cascading through 469 00:23:06,320 --> 00:23:07,120 Speaker 9: different sectors. 470 00:23:07,160 --> 00:23:09,439 Speaker 8: It hit our sector just this week, Private wealth. 471 00:23:09,800 --> 00:23:12,600 Speaker 9: There is definitely a sell first, to ask questions later 472 00:23:12,800 --> 00:23:13,760 Speaker 9: type of mentality. 473 00:23:14,800 --> 00:23:18,679 Speaker 10: Money Ifinns Devitz was on Bloomberg Open interest for on 474 00:23:18,720 --> 00:23:21,440 Speaker 10: demand news twenty four hours a day. Subscribe to Bloomberg 475 00:23:21,480 --> 00:23:23,640 Speaker 10: News Now wherever you get your podcasts. 476 00:23:23,800 --> 00:23:26,200 Speaker 2: I'm Amy Morris. That's a Bloomberg Business Flash. 477 00:23:26,240 --> 00:23:28,720 Speaker 10: We go back to Bloomberg Business Week Daily with Carol 478 00:23:28,760 --> 00:23:29,800 Speaker 10: Masser and Tim Stineviek. 479 00:23:29,960 --> 00:23:32,239 Speaker 7: He thanks for that update. Do appreciate it well. 480 00:23:32,240 --> 00:23:34,399 Speaker 4: One of the most read stories on the Bloomberg Kathy 481 00:23:34,440 --> 00:23:38,400 Speaker 4: Rumler leaving our position as Goldman Sachs top lawyer, drawing 482 00:23:38,400 --> 00:23:41,120 Speaker 4: to a closing month on Saga that saw the investment 483 00:23:41,119 --> 00:23:45,520 Speaker 4: bank staunchly defend her over previous associations with Jeffrey Epstein. 484 00:23:45,560 --> 00:23:47,960 Speaker 7: We've got Todd Gillespie with us. He's Bloomberg News banking reporter. 485 00:23:48,040 --> 00:23:51,160 Speaker 4: He joins us here in the Bloomberg Interactive Brokers studio. 486 00:23:51,880 --> 00:23:54,119 Speaker 4: So her name has been associated with Jeffrey Epstein for 487 00:23:54,400 --> 00:23:58,480 Speaker 4: months at this point, but the bank changed its tune 488 00:23:58,520 --> 00:24:00,119 Speaker 4: after the latest batch. 489 00:24:00,080 --> 00:24:03,080 Speaker 11: Well apparently noted him. And in fact, that's actually one 490 00:24:03,119 --> 00:24:06,080 Speaker 11: of the most interesting things about this. David Solomon was 491 00:24:06,119 --> 00:24:09,440 Speaker 11: on CNBC this morning. She said fully supported her right right, 492 00:24:09,480 --> 00:24:12,600 Speaker 11: and she offered her resignation. And this is actually one 493 00:24:12,640 --> 00:24:14,920 Speaker 11: of the things that is quite incredible to a lot 494 00:24:14,920 --> 00:24:17,240 Speaker 11: of the partners and senior executives at Goldman is how 495 00:24:17,359 --> 00:24:20,560 Speaker 11: staunchly the leadership continues to defend her. And there was 496 00:24:20,600 --> 00:24:25,040 Speaker 11: in fact no contrition, no you know, no acknowledgment of 497 00:24:25,520 --> 00:24:30,919 Speaker 11: any wrongdoing at all about Rumor's behavior from David Solomon 498 00:24:30,960 --> 00:24:32,919 Speaker 11: this morning when he spoke on TV. Just before, by 499 00:24:32,920 --> 00:24:35,560 Speaker 11: the way, he went to play golf alongside Ronda Santis 500 00:24:35,560 --> 00:24:39,000 Speaker 11: at Pebble Beach. So some people are suggesting that perhaps 501 00:24:39,040 --> 00:24:41,840 Speaker 11: Goldman's response to this whole crisis, And you know, the 502 00:24:41,880 --> 00:24:44,680 Speaker 11: two weeks or so that David Solomon has been battling 503 00:24:44,680 --> 00:24:48,040 Speaker 11: this out essentially against the media and internally and perhaps 504 00:24:48,040 --> 00:24:50,639 Speaker 11: even against his own psyche. Who knows, really when it 505 00:24:50,680 --> 00:24:53,720 Speaker 11: comes to David Hollomon, sometimes you know, some are really 506 00:24:53,760 --> 00:24:56,480 Speaker 11: asking questions about his judgment now, and really that's where 507 00:24:56,600 --> 00:24:58,320 Speaker 11: people in the next few days are going to start 508 00:24:58,359 --> 00:24:59,080 Speaker 11: to turn their attention. 509 00:24:59,359 --> 00:25:00,920 Speaker 7: Who asking those questions? 510 00:25:00,960 --> 00:25:03,840 Speaker 4: I mean, are there are employees internally Did it become 511 00:25:03,880 --> 00:25:05,679 Speaker 4: difficult for her internally because of this? 512 00:25:06,440 --> 00:25:06,720 Speaker 7: Yeah? 513 00:25:06,840 --> 00:25:09,359 Speaker 11: I mean, I mean suddenly employees internally felt a lot 514 00:25:09,400 --> 00:25:13,200 Speaker 11: of them couldn't necessarily raise their concerns to David Solomon. 515 00:25:13,200 --> 00:25:15,600 Speaker 11: Bearing in mind, you know, he's someone who has consolidated 516 00:25:15,600 --> 00:25:18,159 Speaker 11: power at this firm over the past few years, away 517 00:25:18,160 --> 00:25:21,160 Speaker 11: from its partnership structure and much more towards a sort 518 00:25:21,160 --> 00:25:24,480 Speaker 11: of traditional top down CEO environment. You also have a 519 00:25:24,520 --> 00:25:28,480 Speaker 11: management committee that he's expanded dramatically, which now has forty 520 00:25:28,480 --> 00:25:30,480 Speaker 11: six people on it, way more than any other Wall 521 00:25:30,520 --> 00:25:33,480 Speaker 11: Street bank, which essentially, you know, when you talk about 522 00:25:33,480 --> 00:25:36,800 Speaker 11: collaboration and everything, actually, in the end one might argue 523 00:25:36,800 --> 00:25:39,520 Speaker 11: it ends up consolidating power in the hands of you know, 524 00:25:39,600 --> 00:25:42,760 Speaker 11: the one CEO who's essentially the top of that all. 525 00:25:42,800 --> 00:25:45,120 Speaker 3: Right, devil's advocate for a moment, like some would say, 526 00:25:45,119 --> 00:25:48,119 Speaker 3: what what did she legally do wrong? Like did she 527 00:25:48,200 --> 00:25:51,640 Speaker 3: provide him any legal advice? 528 00:25:52,119 --> 00:25:53,280 Speaker 7: She certainly did. Cal Yeah. 529 00:25:53,280 --> 00:25:55,359 Speaker 11: And in fact, one of the most incredible things this 530 00:25:55,400 --> 00:25:58,640 Speaker 11: week that came out was revelations about emails in this 531 00:25:58,720 --> 00:26:02,880 Speaker 11: drop that showed how she essentially helped him suppress the 532 00:26:03,040 --> 00:26:07,000 Speaker 11: media strategy and legal fight by Virginia Dufrey, who we 533 00:26:07,040 --> 00:26:10,119 Speaker 11: all know, one of the most vocal defenders, sorry, vocal 534 00:26:10,359 --> 00:26:14,600 Speaker 11: accusers of Jeffrey Epstein who committed suicide last year. Bear 535 00:26:14,640 --> 00:26:17,760 Speaker 11: in mind the story that we love. Sorry she didn't 536 00:26:17,920 --> 00:26:20,560 Speaker 11: write a book, Yeah, there was posthumously published then, right, 537 00:26:20,800 --> 00:26:24,080 Speaker 11: and she you know, and throughout all of this you 538 00:26:24,119 --> 00:26:26,880 Speaker 11: can see these emails that show actually that how Rumler 539 00:26:27,200 --> 00:26:30,160 Speaker 11: talks about relishing the potential opportunity if only she could 540 00:26:30,160 --> 00:26:32,600 Speaker 11: have been the lawyer to depose her at the stand. 541 00:26:33,359 --> 00:26:37,080 Speaker 11: She helps advise lawyers of Epstein on how to wage 542 00:26:37,080 --> 00:26:39,760 Speaker 11: that campaign to stop her interview with Good Morning America 543 00:26:39,760 --> 00:26:43,120 Speaker 11: from airing, which famously never aired and has still never aired. 544 00:26:43,119 --> 00:26:45,800 Speaker 11: You know, before she died. And so there are these 545 00:26:45,920 --> 00:26:48,160 Speaker 11: moments here where people are starting to see these emails 546 00:26:48,160 --> 00:26:50,480 Speaker 11: and then question more deeply at the firm, in particular 547 00:26:51,040 --> 00:26:54,520 Speaker 11: why Goldman was continuing to stand by her and also 548 00:26:54,600 --> 00:26:56,600 Speaker 11: what came up in this due diligence process that they 549 00:26:56,640 --> 00:26:59,160 Speaker 11: said they conducted and that led them to such confidence 550 00:26:59,200 --> 00:26:59,439 Speaker 11: in her. 551 00:26:59,520 --> 00:27:02,120 Speaker 4: What do we know about her relationship with Jeffrey Epstein? 552 00:27:02,160 --> 00:27:04,400 Speaker 4: Why was she so close to him? 553 00:27:05,119 --> 00:27:07,239 Speaker 11: Well, one thing that's cleared throughout the emails is that 554 00:27:07,280 --> 00:27:10,640 Speaker 11: he consistently started leaning on her for years for informal 555 00:27:10,760 --> 00:27:15,560 Speaker 11: legal advice for media strategy. She was also receiving things 556 00:27:15,560 --> 00:27:18,040 Speaker 11: in return, right, He was introducing her to people, he 557 00:27:18,160 --> 00:27:21,680 Speaker 11: was advising her on, you know, getting a new job 558 00:27:21,720 --> 00:27:24,080 Speaker 11: for instance. She was he was giving referrals to people 559 00:27:24,119 --> 00:27:27,320 Speaker 11: like Larry Summers, you know, who was close to Cheryl 560 00:27:27,359 --> 00:27:29,720 Speaker 11: Sandberg at Facebook when she was looking for a potential 561 00:27:29,800 --> 00:27:32,720 Speaker 11: job there. And all through this you see this like 562 00:27:33,000 --> 00:27:37,280 Speaker 11: very transactional reciprocal relationship between these two people who you know, 563 00:27:37,440 --> 00:27:39,800 Speaker 11: as lots of people who have been troubled throughout these files. 564 00:27:39,800 --> 00:27:42,320 Speaker 11: This is you know, and you know many people have 565 00:27:42,400 --> 00:27:44,800 Speaker 11: mentioned in this case in particular, you know, the plutocratic 566 00:27:44,880 --> 00:27:47,880 Speaker 11: class that sort of comes and you know that they're intimate. 567 00:27:47,960 --> 00:27:50,919 Speaker 11: Levels of behavior that come out within these files are 568 00:27:51,040 --> 00:27:53,280 Speaker 11: quite something, and I mean it's important to say, you 569 00:27:53,280 --> 00:27:55,120 Speaker 11: know that she you know, she says she's never done 570 00:27:55,160 --> 00:27:58,200 Speaker 11: anything wrong, she's never done anything illegal. She says she's 571 00:27:58,240 --> 00:28:01,840 Speaker 11: never represented Epstein in court or advocated on his behalf 572 00:28:01,880 --> 00:28:04,960 Speaker 11: to the press or to any government officials. 573 00:28:05,000 --> 00:28:07,600 Speaker 3: And yet, as we all remind that, in two thousand 574 00:28:07,640 --> 00:28:09,439 Speaker 3: and eight is when he did the plea agreement, and 575 00:28:09,480 --> 00:28:11,840 Speaker 3: he was a registered sex offender. So at that point, 576 00:28:12,160 --> 00:28:14,679 Speaker 3: anything that anybody does in terms of a relationship is 577 00:28:14,680 --> 00:28:15,440 Speaker 3: with that knowledge. 578 00:28:15,520 --> 00:28:15,720 Speaker 7: Yeah. 579 00:28:15,760 --> 00:28:18,480 Speaker 11: Absolutely, And I mean one of the things that you know, 580 00:28:18,640 --> 00:28:21,080 Speaker 11: there's an op ed, for instance, that he was trying 581 00:28:21,080 --> 00:28:23,840 Speaker 11: to get published in the Washington Post that she helped 582 00:28:23,960 --> 00:28:27,159 Speaker 11: edit that basically defended, you know, the strength of the 583 00:28:27,160 --> 00:28:29,880 Speaker 11: plea agreement and the federal investigation that he was under 584 00:28:29,920 --> 00:28:32,320 Speaker 11: back in two thousand and eight. She entered this relationship 585 00:28:32,359 --> 00:28:34,639 Speaker 11: with him. In around twenty fifteen US, she entered this 586 00:28:34,680 --> 00:28:37,080 Speaker 11: friendship with him. She calls it a friendship, you know, 587 00:28:37,600 --> 00:28:39,360 Speaker 11: and says that she wants to get help him get 588 00:28:39,440 --> 00:28:43,040 Speaker 11: rid of his legal troubles, and this continues and persists 589 00:28:43,160 --> 00:28:46,760 Speaker 11: even after the twenty eighteen Miami Herald investigation which released, 590 00:28:46,800 --> 00:28:49,880 Speaker 11: you know, accusations of abuse by sixty women. She ended 591 00:28:49,960 --> 00:28:52,680 Speaker 11: up at his in court standing behind his lawyers during 592 00:28:52,680 --> 00:28:53,280 Speaker 11: his arraignment. 593 00:28:54,040 --> 00:28:58,600 Speaker 2: Yeah, so some would say judgment comes into Carl certainly. 594 00:28:59,160 --> 00:29:00,840 Speaker 3: Todd, thank you so much for keeping us up to 595 00:29:00,840 --> 00:29:02,800 Speaker 3: speed on this banking reporter at Bloomberg News. This is 596 00:29:02,800 --> 00:29:04,280 Speaker 3: one of the most right, if not the most red 597 00:29:04,280 --> 00:29:05,760 Speaker 3: story on the Bloomberg Ternal today. 598 00:29:05,920 --> 00:29:07,640 Speaker 4: Also one of the most red stories has to do 599 00:29:07,760 --> 00:29:10,880 Speaker 4: with SpaceX considering a dual class share structure in its 600 00:29:10,920 --> 00:29:13,280 Speaker 4: planned IPO this year with us with what you need 601 00:29:13,320 --> 00:29:15,560 Speaker 4: to know is Bloomberg Tech co host ed Ludlow. He 602 00:29:15,640 --> 00:29:19,920 Speaker 4: joins us from San Francisco and the dual class share 603 00:29:19,920 --> 00:29:24,200 Speaker 4: structure nothing uncommon about that in Silicon Valley and you 604 00:29:24,240 --> 00:29:27,360 Speaker 4: know in media companies too. To be fair, is this 605 00:29:27,400 --> 00:29:28,840 Speaker 4: all about Elon maintaining control? 606 00:29:30,080 --> 00:29:33,960 Speaker 12: It's all about Elon maintaining control, right, I mean, it's 607 00:29:34,000 --> 00:29:38,600 Speaker 12: not surprising that this would be something SpaceX is considering. 608 00:29:39,080 --> 00:29:41,800 Speaker 12: You know what I understand from sources, and we did 609 00:29:41,800 --> 00:29:46,600 Speaker 12: this story of Ryan Gould, right, is that it's being considered. Like, 610 00:29:46,680 --> 00:29:49,320 Speaker 12: I don't think they're as far as having decided the 611 00:29:49,320 --> 00:29:52,960 Speaker 12: structure of an IPO. But the state of play with 612 00:29:52,960 --> 00:29:58,120 Speaker 12: SpaceX anyway is that, you know, it's kind of already 613 00:29:58,120 --> 00:30:02,320 Speaker 12: structured that way. Musk has a lot of like the 614 00:30:02,400 --> 00:30:06,360 Speaker 12: majority of influence and control, but he doesn't have a 615 00:30:06,400 --> 00:30:10,520 Speaker 12: financial majority. So the cat table's quite diversified among all 616 00:30:10,560 --> 00:30:14,080 Speaker 12: the names you know, like Google and Fidelity and Founder's Fund, 617 00:30:14,680 --> 00:30:17,520 Speaker 12: But within that in terms of power, in terms of 618 00:30:17,600 --> 00:30:20,640 Speaker 12: votes as a private company, must's already there. And I 619 00:30:20,800 --> 00:30:24,360 Speaker 12: just point out finally that you know, he tried to 620 00:30:24,400 --> 00:30:28,320 Speaker 12: do that previously with Tesla and it didn't work, And 621 00:30:28,360 --> 00:30:30,440 Speaker 12: so I think there had been an underlying assumption that 622 00:30:30,480 --> 00:30:32,840 Speaker 12: they would at least try with SpaceX. 623 00:30:33,840 --> 00:30:35,920 Speaker 3: If you were sitting down, I don't know, with the Elon, 624 00:30:36,000 --> 00:30:37,120 Speaker 3: what would you ask him about this? 625 00:30:38,760 --> 00:30:41,560 Speaker 12: Oh goodness, if I was sitting down with Elon, I mean, 626 00:30:42,600 --> 00:30:44,360 Speaker 12: it's something I think about day and night. 627 00:30:45,400 --> 00:30:48,680 Speaker 8: Well, you know, as it. 628 00:30:48,600 --> 00:30:53,280 Speaker 12: Relates to voting control. The one reason it's not surprising 629 00:30:53,640 --> 00:30:59,720 Speaker 12: is if you think about Elon musk stated motivations with 630 00:31:00,080 --> 00:31:03,200 Speaker 12: Tesla and the compensation package. Right, so we when the 631 00:31:03,240 --> 00:31:06,040 Speaker 12: compensation package for Tesla. And again people are going to 632 00:31:06,040 --> 00:31:09,280 Speaker 12: get confused because we're jumping from SpaceX Tesla. Are they 633 00:31:09,280 --> 00:31:12,640 Speaker 12: one and the same? Who knows? He always framed this 634 00:31:12,720 --> 00:31:15,240 Speaker 12: as being not about money. He didn't care how much 635 00:31:15,240 --> 00:31:17,600 Speaker 12: he was paid. In the end, he wanted to have 636 00:31:17,720 --> 00:31:21,080 Speaker 12: enough voting power so that he could execute on what 637 00:31:21,160 --> 00:31:23,440 Speaker 12: he thought his vision for the company was in the 638 00:31:23,480 --> 00:31:27,800 Speaker 12: AI context, and with SpaceX, like the logic's very much 639 00:31:27,920 --> 00:31:31,240 Speaker 12: the same. You have a company that's doing really well 640 00:31:31,240 --> 00:31:34,959 Speaker 12: at launching rockets and payload for customers and has got 641 00:31:35,000 --> 00:31:39,920 Speaker 12: a very successful so far constellation based internet service in Starlink. 642 00:31:40,240 --> 00:31:42,840 Speaker 12: But he's like ripping up the script right. The future 643 00:31:42,880 --> 00:31:46,520 Speaker 12: is space based data centers, and so the control part 644 00:31:46,760 --> 00:31:48,120 Speaker 12: is for him to be able to do it. 645 00:31:48,840 --> 00:31:52,920 Speaker 4: A catapult to the moon, that's what he wants. I'd 646 00:31:52,920 --> 00:31:57,800 Speaker 4: love low from Bloomberg Tech. That was Mars Moon and 647 00:31:57,800 --> 00:31:58,280 Speaker 4: then Mars. 648 00:31:58,360 --> 00:31:59,360 Speaker 7: Okay, yeah, that's what we do. 649 00:31:59,520 --> 00:32:02,040 Speaker 4: Just check out story, Ryan gold story and more on 650 00:32:02,160 --> 00:32:05,480 Speaker 4: the Bloomberg terminal. You're listening to and watching Bloomberg BusinessWeek Daily. 651 00:32:06,600 --> 00:32:07,360 Speaker 7: Stay with us. 652 00:32:07,440 --> 00:32:10,440 Speaker 4: More from Bloomberg Business Week Daily coming up after this. 653 00:32:14,960 --> 00:32:18,800 Speaker 1: You're listening to the Bloomberg Business Week Daily Podcast. Catch 654 00:32:18,880 --> 00:32:21,600 Speaker 1: us live weekday afternoons from two to five eas during 655 00:32:21,760 --> 00:32:25,680 Speaker 1: Listen on Applecarplay and Android Auto with the Bloomberg Business app, 656 00:32:25,880 --> 00:32:28,440 Speaker 1: or watch us live on YouTube. 657 00:32:28,920 --> 00:32:30,720 Speaker 4: The best performer in the S and P five hundred 658 00:32:30,760 --> 00:32:35,240 Speaker 4: coin base up sixteen point eight percent as we speak. 659 00:32:35,920 --> 00:32:39,600 Speaker 4: Volume is actually triple the average company posted week results. 660 00:32:39,680 --> 00:32:43,400 Speaker 4: Yet people are buying. I want to bring in Stacy 661 00:32:43,480 --> 00:32:46,719 Speaker 4: Marie ishmel Hi, Bloomberg News executive for Crypto, Payments and 662 00:32:46,760 --> 00:32:51,400 Speaker 4: Digital Finance. Is this a signal, Yeah, I'm. 663 00:32:51,280 --> 00:32:52,640 Speaker 7: Gonna do this. I'm gonna put you on the spot. 664 00:32:53,160 --> 00:32:56,280 Speaker 4: Is this a signal that people think this is the bottom. 665 00:32:56,400 --> 00:32:58,120 Speaker 6: I think it's a signal that people will hope it's 666 00:32:58,120 --> 00:33:00,720 Speaker 6: the bottom. So one of the interesting things that we've 667 00:33:00,720 --> 00:33:03,800 Speaker 6: been keeping an eye on is, you know, we talked 668 00:33:03,840 --> 00:33:05,240 Speaker 6: the last time that I was here, thanks for having 669 00:33:05,240 --> 00:33:06,000 Speaker 6: me back up there. 670 00:33:06,040 --> 00:33:08,080 Speaker 7: It was just a week ago, and things have changed 671 00:33:08,080 --> 00:33:08,720 Speaker 7: a lot since then. 672 00:33:08,840 --> 00:33:10,120 Speaker 2: A lot of crypto stuff. 673 00:33:10,120 --> 00:33:14,840 Speaker 6: Folks really are looking for signs that even if it's 674 00:33:14,840 --> 00:33:16,840 Speaker 6: not going to get better, it's not going to get worse. 675 00:33:17,680 --> 00:33:20,320 Speaker 6: And one of the interesting things about the coin based 676 00:33:20,360 --> 00:33:23,000 Speaker 6: results yesterday was that there was this feeling of like, okay, 677 00:33:23,600 --> 00:33:25,480 Speaker 6: like that was they had a rough quarta. 678 00:33:25,680 --> 00:33:27,200 Speaker 2: Everybody else had a rough quarta. 679 00:33:27,360 --> 00:33:29,760 Speaker 6: A lot of the you know, loss that they reported 680 00:33:29,840 --> 00:33:32,720 Speaker 6: was based on like the mark to market value of bitcoin, 681 00:33:33,320 --> 00:33:36,360 Speaker 6: and so maybe you know, coming into Q one and 682 00:33:36,440 --> 00:33:38,600 Speaker 6: Q two, that's as low as we're going to see 683 00:33:38,600 --> 00:33:40,760 Speaker 6: it for the foreseeable future. And so even though you 684 00:33:40,920 --> 00:33:44,520 Speaker 6: had various analysts and you know, different folks on the 685 00:33:44,560 --> 00:33:47,160 Speaker 6: cell side adjusting their price targets, it was still very 686 00:33:47,200 --> 00:33:49,520 Speaker 6: much kind of like, okay, we think now we're at 687 00:33:49,560 --> 00:33:52,080 Speaker 6: a level that stuff may be over sold, and so 688 00:33:52,200 --> 00:33:54,240 Speaker 6: let's like let's not get out of control here. 689 00:33:54,400 --> 00:33:56,240 Speaker 3: I'm glad you went there, because I mean you go 690 00:33:56,400 --> 00:34:00,400 Speaker 3: back to the October high and we saw, i mean 691 00:34:00,480 --> 00:34:02,720 Speaker 3: coinbase has fallen as crypto has fallen, right, and I 692 00:34:02,800 --> 00:34:05,600 Speaker 3: mean it's down about sixty percent since then. So there's 693 00:34:05,640 --> 00:34:08,120 Speaker 3: a lot of bad news factored in at this point. 694 00:34:08,160 --> 00:34:11,959 Speaker 3: And it's not like this these results were terrible, right, 695 00:34:12,280 --> 00:34:13,879 Speaker 3: So that's just okay. 696 00:34:13,640 --> 00:34:15,640 Speaker 6: Like you said, maybe the worst is the results were 697 00:34:15,719 --> 00:34:19,440 Speaker 6: kind of you know, they missed some estimates, but like 698 00:34:19,600 --> 00:34:21,799 Speaker 6: not buy a huge amount, and there was some like 699 00:34:21,840 --> 00:34:24,840 Speaker 6: optimism about what might be coming in the next closas 700 00:34:24,840 --> 00:34:27,279 Speaker 6: And I think one of the things, interestingly, you know, 701 00:34:27,400 --> 00:34:30,880 Speaker 6: FinTechs and digital asset companies aren't being punished by the 702 00:34:30,920 --> 00:34:33,520 Speaker 6: market because they are a little bit outside of the 703 00:34:33,520 --> 00:34:36,279 Speaker 6: AI narrative. They're a little bit outside of the why 704 00:34:36,320 --> 00:34:39,400 Speaker 6: do you need billions of dollars in capital expenditure? And 705 00:34:39,480 --> 00:34:41,799 Speaker 6: so you know, they're really kind of benefiting from this 706 00:34:41,920 --> 00:34:44,960 Speaker 6: idea of if you think that bitcoin has had a 707 00:34:45,040 --> 00:34:48,040 Speaker 6: rough time, but the road ahead looks more positive, it's 708 00:34:48,080 --> 00:34:49,360 Speaker 6: time to buy up some of these stocks. 709 00:34:49,440 --> 00:34:51,000 Speaker 3: Well, can I just say in the press release there 710 00:34:51,080 --> 00:34:55,760 Speaker 3: was optimism from the coin based team about regulation and things, 711 00:34:55,880 --> 00:34:57,759 Speaker 3: and are they kind of right that that's going to 712 00:34:57,880 --> 00:35:00,879 Speaker 3: make it better for anybody or can we not make 713 00:35:00,880 --> 00:35:01,480 Speaker 3: that assumption. 714 00:35:02,000 --> 00:35:04,680 Speaker 6: I think there is very much the a sense within 715 00:35:04,719 --> 00:35:07,800 Speaker 6: the digital asset industry that there is a one remaining 716 00:35:07,880 --> 00:35:11,399 Speaker 6: key piece of legislation that they are really desperately looking 717 00:35:11,440 --> 00:35:13,680 Speaker 6: forward to, and that is what's been called the Clarity Act, 718 00:35:14,160 --> 00:35:16,960 Speaker 6: which would you know, codify some elements of market structure 719 00:35:17,000 --> 00:35:20,360 Speaker 6: and also make some final adjustments to how stable coins 720 00:35:20,480 --> 00:35:24,480 Speaker 6: are regulated and legislated. The problem for the digital asset 721 00:35:24,480 --> 00:35:27,239 Speaker 6: industry is the banks and the crypto companies do not 722 00:35:27,400 --> 00:35:30,719 Speaker 6: agree on how to move forward with some of those provisions, 723 00:35:30,719 --> 00:35:34,000 Speaker 6: and that's been a real drag on both sentiment and 724 00:35:34,080 --> 00:35:35,440 Speaker 6: prices across the market. 725 00:35:35,800 --> 00:35:39,200 Speaker 4: When there is agreement, If there is agreement, does that 726 00:35:39,280 --> 00:35:40,840 Speaker 4: change things markedly absolutely? 727 00:35:40,920 --> 00:35:43,879 Speaker 6: I mean, our own analysts on BI have said that, 728 00:35:43,920 --> 00:35:46,840 Speaker 6: you know, companies like Coinbase and Robinhood will really benefit 729 00:35:47,360 --> 00:35:50,040 Speaker 6: from like this this agreement to go forward because one 730 00:35:50,080 --> 00:35:52,400 Speaker 6: of the things that it removes is the uncertainty that 731 00:35:52,400 --> 00:35:54,920 Speaker 6: if there's a change of administration, if Democrats retact the 732 00:35:54,960 --> 00:35:58,200 Speaker 6: White House, then you know, they'll just undo the executive 733 00:35:58,280 --> 00:36:00,840 Speaker 6: orders and everything else. So having things like actually codified 734 00:36:00,840 --> 00:36:04,239 Speaker 6: into legislation really provides a much clearer path for the 735 00:36:04,239 --> 00:36:05,320 Speaker 6: digital asset companies. 736 00:36:05,480 --> 00:36:07,800 Speaker 4: So on back to Coinbase, and then we can branch 737 00:36:07,840 --> 00:36:10,319 Speaker 4: out a little bigger. If we think about Coinbase, can 738 00:36:10,360 --> 00:36:13,920 Speaker 4: we think about Coinbase like we think about Intercontinental Exchange 739 00:36:13,960 --> 00:36:14,600 Speaker 4: or the Nasdaq? 740 00:36:16,120 --> 00:36:16,239 Speaker 3: Uh? 741 00:36:16,520 --> 00:36:20,400 Speaker 6: I mean, I would say that Coinbase, much like robin Hood, 742 00:36:20,480 --> 00:36:24,480 Speaker 6: has demonstrated a real commitment to like diversifying in some 743 00:36:24,600 --> 00:36:26,880 Speaker 6: of the ways that these other like you know, traditional 744 00:36:26,920 --> 00:36:29,960 Speaker 6: exchanges have. I think they are doing some really interesting 745 00:36:30,040 --> 00:36:34,080 Speaker 6: things around the fact that they are like, oh okay, 746 00:36:34,120 --> 00:36:36,319 Speaker 6: Like how are we thinking about tokenization, how are we 747 00:36:36,320 --> 00:36:39,480 Speaker 6: thinking about custody of different kinds of digital assets? Like 748 00:36:39,520 --> 00:36:42,319 Speaker 6: what are our relationships with the ETF providers in that 749 00:36:42,320 --> 00:36:45,239 Speaker 6: particular vein so from you know, the analysts who are 750 00:36:45,239 --> 00:36:47,160 Speaker 6: more bullish on the stock are really looking in like 751 00:36:47,200 --> 00:36:50,680 Speaker 6: that forward looking direction of digital asset companies. Don't only 752 00:36:50,680 --> 00:36:53,560 Speaker 6: think of them as a proxy for bitcoin, think of 753 00:36:53,600 --> 00:36:56,040 Speaker 6: them as like FinTechs in that broader sense. 754 00:36:55,880 --> 00:36:58,120 Speaker 4: Because if you know, this is a company where transaction 755 00:36:58,200 --> 00:37:01,880 Speaker 4: revenue accounts for the majority of revenue, and then subscription 756 00:37:02,160 --> 00:37:04,719 Speaker 4: and services is the minority of revenue, and there are 757 00:37:04,760 --> 00:37:08,719 Speaker 4: different segments and lines within each of those segments. But 758 00:37:09,640 --> 00:37:12,880 Speaker 4: if we think about it, if they're making money from transactions, 759 00:37:12,920 --> 00:37:15,160 Speaker 4: people are buying and selling crypto no matter what the 760 00:37:15,160 --> 00:37:18,640 Speaker 4: price of bitcoin is, So they're still making money even 761 00:37:18,640 --> 00:37:20,520 Speaker 4: if the price of bitcoin is going down because those 762 00:37:20,560 --> 00:37:24,360 Speaker 4: transactions are happening. Do more transactions happen when prices rise. 763 00:37:24,440 --> 00:37:27,759 Speaker 6: Really depends, So you know, one of the things you 764 00:37:27,800 --> 00:37:30,399 Speaker 6: sometimes see is that when prices are falling, you might 765 00:37:30,440 --> 00:37:32,839 Speaker 6: have like more selling or people kind of sitting out 766 00:37:32,880 --> 00:37:36,239 Speaker 6: on the sidelines or exiting completely. The bigger risk from 767 00:37:36,280 --> 00:37:37,840 Speaker 6: some of the analysts that we've been talking to to 768 00:37:37,960 --> 00:37:42,239 Speaker 6: crypto companies is people spending less money on transacting on 769 00:37:42,280 --> 00:37:46,160 Speaker 6: crypto exchanges and more money on the prediction rights. Right. 770 00:37:46,239 --> 00:37:48,960 Speaker 6: So again it's this idea of if you're a person 771 00:37:48,960 --> 00:37:52,560 Speaker 6: who used to trade like meme stocks, or you're into 772 00:37:52,600 --> 00:37:55,560 Speaker 6: sports gambling, and you're like, oh, like bitcoin and dogecoin 773 00:37:55,640 --> 00:37:57,799 Speaker 6: and meme coins, this seems fun, and now you're like, 774 00:37:58,000 --> 00:38:00,080 Speaker 6: or I could be putting some money on polymer that 775 00:38:00,160 --> 00:38:02,960 Speaker 6: I putting some money on calshi. So it's you know, 776 00:38:03,040 --> 00:38:06,000 Speaker 6: like the competition is not so much. Is this person 777 00:38:06,000 --> 00:38:08,560 Speaker 6: interested in like crypto for the sake of crypto. It's 778 00:38:08,560 --> 00:38:11,399 Speaker 6: more like they have some discretionary income, right, and there 779 00:38:11,400 --> 00:38:13,720 Speaker 6: are more ways that you could be, you know, spending 780 00:38:13,760 --> 00:38:15,000 Speaker 6: that than their world previous lies. 781 00:38:15,040 --> 00:38:16,520 Speaker 3: So then how do you think about this? Because I 782 00:38:16,560 --> 00:38:18,320 Speaker 3: feel like you and I have these conversations tim a 783 00:38:18,320 --> 00:38:22,000 Speaker 3: lot do. But I mean, are we still like, what 784 00:38:22,080 --> 00:38:25,640 Speaker 3: will cryptocurrencies really be in terms? Are they going to 785 00:38:25,680 --> 00:38:30,560 Speaker 3: be this thing that totally changes how everybody and everything transacts? 786 00:38:30,560 --> 00:38:32,640 Speaker 2: Are not necessarily. 787 00:38:32,000 --> 00:38:33,560 Speaker 6: Deep existential questions in a front. 788 00:38:33,880 --> 00:38:37,400 Speaker 2: Sorry, it's we do have champagne later to make up 789 00:38:37,440 --> 00:38:37,719 Speaker 2: for it. 790 00:38:37,760 --> 00:38:39,520 Speaker 3: But like, do you know what I'm saying, Like I 791 00:38:39,760 --> 00:38:42,680 Speaker 3: just I still don't know, you know, do we have 792 00:38:42,719 --> 00:38:44,200 Speaker 3: to have the like what does it mean for them, 793 00:38:44,239 --> 00:38:47,040 Speaker 3: the big banks or the big financial firms or I 794 00:38:47,080 --> 00:38:49,920 Speaker 3: don't know, just all the financial infrastructure that we have today, 795 00:38:49,920 --> 00:38:52,799 Speaker 3: Does that mean they will likely be all a part 796 00:38:52,880 --> 00:38:53,399 Speaker 3: of this too? 797 00:38:53,680 --> 00:38:56,560 Speaker 6: So there's absolutely a version of what you are describing, 798 00:38:56,640 --> 00:38:59,280 Speaker 6: which is in fact the version that banks are preparing 799 00:38:59,320 --> 00:39:01,120 Speaker 6: for in a lot of ways, which is that crypto 800 00:39:01,200 --> 00:39:08,160 Speaker 6: becomes a traditional financial payments rail alongside like the swifts 801 00:39:08,200 --> 00:39:10,880 Speaker 6: and the hs and everything else where. It's just like 802 00:39:11,200 --> 00:39:15,319 Speaker 6: so normalized that it's a way of either transacting or 803 00:39:15,400 --> 00:39:18,600 Speaker 6: moving money across borders or trading certain types of assets 804 00:39:18,600 --> 00:39:20,799 Speaker 6: and you don't even think about it, and it's just 805 00:39:20,840 --> 00:39:24,280 Speaker 6: like built into the system. And one of the great 806 00:39:24,320 --> 00:39:27,520 Speaker 6: ironies of that is it's like absolutely the opposite of 807 00:39:27,520 --> 00:39:29,200 Speaker 6: what the people who came up with crypto. 808 00:39:28,960 --> 00:39:32,560 Speaker 3: Wants to exactly, because to me, that sounds like a 809 00:39:32,560 --> 00:39:34,600 Speaker 3: lot of oversight and a lot of regulation and. 810 00:39:35,000 --> 00:39:38,399 Speaker 6: So then what but also potentially like way more volume right, 811 00:39:38,480 --> 00:39:42,520 Speaker 6: like way like different kinds of use cases, And yeah, 812 00:39:43,080 --> 00:39:44,719 Speaker 6: I think that that is to me what makes this 813 00:39:44,760 --> 00:39:48,200 Speaker 6: beat so interesting. It's you can either have this perception 814 00:39:48,600 --> 00:39:50,719 Speaker 6: that you are betting on bitcoin because you think all 815 00:39:50,719 --> 00:39:53,040 Speaker 6: of the world's governments are going to fail, or you 816 00:39:53,040 --> 00:39:55,080 Speaker 6: could have this perception that you think things like stable 817 00:39:55,120 --> 00:39:57,640 Speaker 6: coins are interesting because governments are going to need more 818 00:39:57,680 --> 00:40:01,799 Speaker 6: ways to like monitor financial transactions across borders. 819 00:40:02,520 --> 00:40:03,840 Speaker 7: This is why she is the best I know. 820 00:40:04,600 --> 00:40:05,440 Speaker 2: Oh my gosh. 821 00:40:05,680 --> 00:40:08,160 Speaker 4: Faith and Maria Mel, executive editor for Crypto, Payments and 822 00:40:08,200 --> 00:40:11,360 Speaker 4: Digital Finance for Bloomberg News. In here in our Bloomberg 823 00:40:11,400 --> 00:40:13,879 Speaker 4: Interactive Brokers studio. Check out what she and the team 824 00:40:13,920 --> 00:40:14,880 Speaker 4: do on the terminal. 825 00:40:16,080 --> 00:40:21,560 Speaker 1: This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify, 826 00:40:21,719 --> 00:40:25,760 Speaker 1: and anywhere else you get your podcasts. Listen live weekday 827 00:40:25,800 --> 00:40:29,960 Speaker 1: afternoons from two to five pm Eastern on Bloomberg dot Com, 828 00:40:30,080 --> 00:40:33,920 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business App. 829 00:40:34,080 --> 00:40:36,960 Speaker 1: You can also watch us live every weekday on YouTube 830 00:40:37,200 --> 00:40:39,400 Speaker 1: and always on the Bloomberg Terminal.