Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news on the Bloomberg Markets Podcast,
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. So Matt again, you
Speaker 1: were still on Sombaticway yesterday. Um, it was a I
Speaker 1: think a seminal day in the world of crypto. It
Speaker 1: was insane. Don't you bring us in and let me
Speaker 1: just tell you down here? Okay, September two eight, I'm
Speaker 1: on a flight from Cologne to New York via Shannon.
Speaker 1: We had to sort landing. It's no, it's not part
Speaker 1: of the story, but it just so. We land at
Speaker 1: JFK and I turned on my BlackBerry right and I
Speaker 1: see the Leading Brothers news. Everybody on the plane they're like,
Speaker 1: oh my God, like everyone no one knew. You know,
Speaker 1: the same thing happened to me yesterday. I'm coming back
Speaker 1: from Indonesia via Tokyo, and I turned on my phone
Speaker 1: and I see the ft X news and I'm just
Speaker 1: like chills, going down my spine because this is such
Speaker 1: a big deal. Sam Bankman Freed, I think of him
Speaker 1: as like the richest, smartest guy in crypto and trustworthy.
Speaker 1: He's pushing for regulation, he you know, champions transparency and
Speaker 1: all of a sudden anyway, let's bring in uh. Well,
Speaker 1: we have Katie Greifeld here in the studio, thrilled to
Speaker 1: see her. We have Joanna awesonger Um out in. She's
Speaker 1: probably closer to where I was yesterday out in Singapore,
Speaker 1: and I read her work all the time to get
Speaker 1: to get the latest on crypto, so I'm glad to
Speaker 1: have her. And then Nick Carter from cass Island Ventures
Speaker 1: voice that you know, we all listen to this guy's
Speaker 1: podcast every week on the Brink Baby Brink Nation UM
Speaker 1: to learn what we can as well about the industry.
Speaker 1: So I think a pretty excellent panel. Nick. Let me
Speaker 1: start with you, UM, were you as shocked I know
Speaker 1: that this played out over you know, Friday, uh with
Speaker 1: concerns about liquidity and then on the weekend with c
Speaker 1: Z just dumping f t T, which is the ft
Speaker 1: X native token. Um. But man, if anyone had prepared
Speaker 1: for the crypto winter, I thought it was Sam Bankman freed. Yeah,
Speaker 1: I was Flabbergas said, I think even the most seasoned
Speaker 1: industry participants were completely taken aback by the f t
Speaker 1: X was considered extremely credible. A lot of my friends
Speaker 1: had capital on that exchange, including people that had dodged
Speaker 1: all the previous exchange hacks and solvencies, wrong bulls, etcetera,
Speaker 1: were stung by this. One. Is really one of the
Speaker 1: most shocking exchange collapses in the history of the industry,
Speaker 1: one of the worst days in the history of the industry.
Speaker 1: Joanna want to bring you in here. I mean, for
Speaker 1: the skeptics of all things crypto, I just think of
Speaker 1: a Jamie Diamond type. Does this give them more ammunition
Speaker 1: to say this isn't really an asset class, This is
Speaker 1: just a speculative kind of side to the market. At
Speaker 1: the very least, it gives people like regulators who say
Speaker 1: we need more guardrails in the crypto industry a lot
Speaker 1: of ammunition because it does show that somebody can be
Speaker 1: flying high one day. I mean, I think Bloomberg wealth
Speaker 1: did this. He lost of his fortune in one day.
Speaker 1: I mean, how much money is that in terms billions?
Speaker 1: I think sixteen billion dollars he lost in one day.
Speaker 1: I mean, that's just nuts. And I say I had
Speaker 1: a pretty good tweet. If you won the powerball, on paper,
Speaker 1: you're worth more than Sam BigMan freed, which was two billions,
Speaker 1: but you know, after taxes maybe and also if well,
Speaker 1: at one point I think he was worth like forty
Speaker 1: billion all in. And I hope you know, if you're
Speaker 1: worth forty billion, hopefully you take a billion and bury
Speaker 1: it somewhere, right, Yeah, you get some liquidity somewhere. Hey, Nick,
Speaker 1: so where do you think? I mean, you've been in
Speaker 1: this space since the beginning. You're one of the trusted
Speaker 1: voices there. What are you and your colleagues in the
Speaker 1: space saying today? We're um bracing ourselves for the for
Speaker 1: the real fallout today. So yesterday sort of events came
Speaker 1: to a head, but today now we expect to see
Speaker 1: the knock on effects. We look to see the lenders
Speaker 1: which are exposed to Alimato, which is a lot of them.
Speaker 1: We look for that next light down. Uh, yesterday was
Speaker 1: kind of the red wedding, but today is we're taking
Speaker 1: out the bodies. We also, I mean there's a letter
Speaker 1: of intent for finance to buy f t X, but
Speaker 1: it's non binding, right, and you said your friends had
Speaker 1: capital on the ft X platform. I'm assuming they've taken
Speaker 1: it off. No, I mean, you know, withdrawals were suspended.
Speaker 1: We don't currently, we don't believe that f t X
Speaker 1: can make depositors whole. It appears now that there was
Speaker 1: some funny business going on with Alameda potentially gambling with
Speaker 1: deposits on the platform. That's kind of my best explanation
Speaker 1: for what went on. I believe there's a whole and um,
Speaker 1: you know, depositors, whether retail or institutional, will not be
Speaker 1: made whole at this point. Nick, First of all, let
Speaker 1: me say there's no one I'd rather be talking with
Speaker 1: right now. You mentioned this was like the red wedding.
Speaker 1: Now we're going to see the bodies get taken out.
Speaker 1: Let's talk about what that fallout looks like. Obviously, some
Speaker 1: big headlines today from novograts is Galaxy saying that you
Speaker 1: know they had exposure to ft X. They have somewhere
Speaker 1: close to fifty million dollars of withdrawals being processed. Salana
Speaker 1: obviously has really taken a brunt of selling here. When
Speaker 1: you think about how SPF backed Salana But where else
Speaker 1: should we look for the contagion for the fallout from here?
Speaker 1: Look at the lenders that I mean, alimated was the
Speaker 1: biggest bar or there's lenders left still after three hours,
Speaker 1: not for long, not for long. Unfortunately, this is pains
Speaker 1: me to say this is the death noel for Block five. Believe, Um,
Speaker 1: I don't. I don't know if Genesis so apparently they
Speaker 1: didn't have residual exposure here, but there's actual defied lenders
Speaker 1: to the head exposure. Yeah, this will be the sort
Speaker 1: of like final blow that basically kills off the crypto
Speaker 1: lending space for now. Joanna, is this going to be
Speaker 1: a period where now regulators will take maybe a more
Speaker 1: intense review of the kind of they were supposed to
Speaker 1: be doing that already? Sam bankman Free was a champion
Speaker 1: of that, right. I mean, the question is are we
Speaker 1: going to get this is like climate right, there's so
Speaker 1: much talk and no follow through. Is anybody gonna demand
Speaker 1: transparency from these big multibillion dollar businesses? Well, the interesting
Speaker 1: thing is they are kind of trying to do it
Speaker 1: themselves to an extent. Finance has talked about actually putting
Speaker 1: out some numbers publicly, and some other exchanges are now
Speaker 1: saying that they'll follow that standard, So the industry may
Speaker 1: start to do some of that itself, but it is
Speaker 1: hard to do the regulation. This is such a fast
Speaker 1: moving industry that to try to get ahead of it,
Speaker 1: to try to work things out about how something should
Speaker 1: be regulated is pretty tricky. But it is also true
Speaker 1: that there aren't a whole lot of jurisdictions at this
Speaker 1: point that you can point to and say, you know,
Speaker 1: they really have a solid balance where they're you know,
Speaker 1: they're kind of helping the industry thrive, but also really
Speaker 1: you know, regulating solidly. So you know a lot of
Speaker 1: people in regulations still trying to work this out. Nick,
Speaker 1: let's put this more firmly into your world and talk
Speaker 1: about the crypto venture space. Uh, it feels like just
Speaker 1: if you look at crypto Twitter, everyone is so shell
Speaker 1: shocked about this moment that that hasn't really been discussed.
Speaker 1: But what's your best guess on what happens to crypto venture?
Speaker 1: I mean, how how do you even go about finding
Speaker 1: deals in this sort of environment. It'll be an enormous
Speaker 1: recording for all of the funds that were effectively copy
Speaker 1: trading Sam bankmun Freed which was a lot of the
Speaker 1: successful funds in the last two years. Those those were
Speaker 1: the best trades f t T, f t X, Slona, Sarah,
Speaker 1: everything under Sam's nuclear umbrella. That was the trade of
Speaker 1: the last two years. Those funds will struggle now. Undoubtedly
Speaker 1: also the growth funds that did that thirty two billion
Speaker 1: dollar round for f t X last year. Those are
Speaker 1: some of the best and most respected funds in the world.
Speaker 1: There's gonna be a huge amount of scrutiny there. The
Speaker 1: question will be did they fail to do diligence or
Speaker 1: did Sam lie to them? Uh? And if actively commit
Speaker 1: fraud during that round. I don't know what the answer is,
Speaker 1: but you have to imagine if they knew the truth
Speaker 1: of FX's business at that point, there's no way they
Speaker 1: would have done that deal. Again, these are some of
Speaker 1: the most credible and respected, not just crypto but generalist
Speaker 1: funds in the world. That round and then the lack
Speaker 1: of governance over there will also be severely scrutinized. Now,
Speaker 1: what about retail traders, I mean, aren't they gonna want
Speaker 1: to see um some sort of guarantee that these exchanges
Speaker 1: are going to be able to make them whole or
Speaker 1: else not leave any money on the platform. Yeah, I mean,
Speaker 1: retail has been kind of very skeptical the centralized exchanges
Speaker 1: ever since the events of the summer. This is going
Speaker 1: to make it worse again. F t X was considered
Speaker 1: one of the most credible exchanges top three, really most
Speaker 1: credible in the world. Now, um, we are seeing some
Speaker 1: efforts that reform, like joint and mentioned exchanges doing proof
Speaker 1: of reserve. I'm really hardened to see a lot of
Speaker 1: exchanges announcing they're going to do that. That's probably not
Speaker 1: going to be enough to rebuild confidence at this point.
Speaker 1: F t X, really one of the biggest and most
Speaker 1: visible public facing exchanges in the world, going down is
Speaker 1: just gonna shatter industry confidence. Well that's kind of what
Speaker 1: I wanted to pick up on what I was thinking
Speaker 1: about coin Base yesterday. If you're an f t X
Speaker 1: user and suddenly perhaps if this deal closes, you're going
Speaker 1: to be a binance user, would maybe you rather be
Speaker 1: with a coin base. Wouldn't you rather be with the
Speaker 1: US publicly listed company that's under the purview of the
Speaker 1: US government. Is that too naive for me to think?
Speaker 1: And I see coin Base today, it's just down another
Speaker 1: six percent. The stock has been doing terribly, so maybe
Speaker 1: no one agrees with me. I have no reason a
Speaker 1: question coin basis solvency. I think they've been really well
Speaker 1: behaved throughout their entire history. But also a lot of
Speaker 1: these users are offshore. Maybe they you know, don't have
Speaker 1: access to a lot of ft X users were users
Speaker 1: because they didn't have access to other exchanges, whether Body
Speaker 1: and stor point base. Actually, so, yeah, the US exchange
Speaker 1: is not part of this deal. Also. I mean the
Speaker 1: other thing I'll say is, since it is non binding,
Speaker 1: you talked about this deal closing. I mean, I think
Speaker 1: that's really up in the air at this point. I mean,
Speaker 1: I would say that the general feeling is that it
Speaker 1: probably isn't going to happen. Um. You know, it sounds
Speaker 1: like CZ has put out some stuff talking about doing
Speaker 1: the deal and this sort of thing, and they've they're
Speaker 1: obviously um looking at it. But I think there's a
Speaker 1: big sentiment that this this may not actually happen just ahead.
Speaker 1: I just think actually the liability that Finance would be
Speaker 1: inheriting here is astronomical. I think I would say, very
Speaker 1: low probability that the deal actually closes. Wow, alright, real quick,
Speaker 1: Nick thirty seconds, what happens to Sam Bank ben Free?
Speaker 1: Do you think in the next day's weeks? I wouldn't
Speaker 1: want to be in issues, man, Um. I think the
Speaker 1: question is is whether there's criminal liability. I would say
Speaker 1: likelihood of yes. Oh boy, alright, and Nicko down in
Speaker 1: Miami stay safe down there. I know we get a
Speaker 1: little bit of a weather event come in your way.
Speaker 1: But you guys are used to with Nick Carter founding
Speaker 1: partner Castle Castle Island Adventures, Joanna Osinger, and Katie Greifeld,
Speaker 1: a cross asset reporter. So we had it just circled here,
Speaker 1: a big, big day in crypto yesterday. We're gonna be
Speaker 1: dealing with this for the days and weeks to come. Alright.
Speaker 1: So the red wave that was kind of expected with
Speaker 1: his mid term elections coming in more like a red ripple,
Speaker 1: I think, is what I've read the term I've been
Speaker 1: hearing this. I go with that. Um. Nathan Dean, he's
Speaker 1: a senior policy analyst for the US and Latin America
Speaker 1: Bloomberg Intelligence for better worse. He's located in d C.
Speaker 1: He's one of those d C policy wants that you
Speaker 1: don't necessarily want to go hang out with at a
Speaker 1: cocked up party. But the man we might like to
Speaker 1: hang out with Nathan, but boy does he know what's
Speaker 1: going on down there. So Nathan, We're so lucky to
Speaker 1: get a couple of minutes of your time. What do
Speaker 1: you take away from what we know so far about
Speaker 1: these mid term elections? So last night was a shock.
Speaker 1: I mean, I don't think any many people were anticipating
Speaker 1: that the Democrats were going to perform as most they
Speaker 1: did in the House. It's almost like the New York
Speaker 1: Jets beating but the Buffalo bills last week. It was feasible,
Speaker 1: but you know, it was still a shock. And so,
Speaker 1: you know, going into the election, there was this anticipation
Speaker 1: that the Republicans are going to have thirty seats, forty seats.
Speaker 1: The latest projection I'm seeing from Bloomberg right now is
Speaker 1: maybe about two to three seats, and so that's a
Speaker 1: very tight margin in the House. In the Senate, you know,
Speaker 1: I think there was more anticipation that the Democrats would
Speaker 1: perform well there. Uh, if you see what's happening in Georgia, Nevada,
Speaker 1: and Arizona, it looks like the Georgia runoff is going
Speaker 1: to be the most important thing to determine in the
Speaker 1: Senate control. But you know, I will say the thing
Speaker 1: that we're telling our clients right now is that if
Speaker 1: the Democrats win the House and they keep the Senate,
Speaker 1: it brings back reconciliation, and that brings back the ability
Speaker 1: to do broad corporate tax increases if they wanted to
Speaker 1: fiscal stimulus. That's the one scenario that I don't think
Speaker 1: the markets have really looked at. So that's the one
Speaker 1: thing that we're telling people to watch for right now.
Speaker 1: All I care about is the salt deduction? Is it
Speaker 1: ever coming back? Nathan? Well, you know there, you know,
Speaker 1: Carl Smith at Bloomberg Opinion wrote a great calm this
Speaker 1: week about how tax bipartisanship could play out in three
Speaker 1: and salt deduction is one of those things. And unfortunately
Speaker 1: for the people that are living in New York and
Speaker 1: New Jersey at the moment, you know, the thought is
Speaker 1: that salt deduction may go away in its entirety. Now, Uh,
Speaker 1: you know, it's way too soon to tell. I mean,
Speaker 1: taxes probably uh one of the two or three top
Speaker 1: issues they're gonna play out in three no matter the election,
Speaker 1: because the Trump bear at tax cuts are eventually going
Speaker 1: to expire for the consumers, and so uh, you know,
Speaker 1: I'm not feeling very good about it at the moment.
Speaker 1: But Andrew Silverman, our tax analysts, is certainly looking at it,
Speaker 1: and it's going to come back up next year. All right, Nathan,
Speaker 1: your policy geek. We love talking to you to get
Speaker 1: to the real details here. Over the next two years,
Speaker 1: what happens in Washington? Can anything really get done? Or
Speaker 1: is it the veto pen from the president gonna sty
Speaker 1: me what could be a Republican controlled Congress. So you
Speaker 1: know you hear grid luck. Grid luck is going to increase. Well,
Speaker 1: grid luck is the new normal. I mean, things happen
Speaker 1: in gridlock. It's just instead of going through this process
Speaker 1: where you have big bills and debates and so forth,
Speaker 1: it all gets bunched up into government shutdown fights or
Speaker 1: dead sealing fights. It's a perfect opportunity for Republicans to
Speaker 1: try and use leverage. This happens if the Republicans control
Speaker 1: the House, now the Senate side, if the Republican if
Speaker 1: the Democrats control the Senate, you're going to see certain
Speaker 1: bills move faster through uh and so forth. But Ultimately,
Speaker 1: there are a couple of things. One, the president is
Speaker 1: still the president, which means anything that he signs has
Speaker 1: to be bipartisan. There's no way the filibuster is going
Speaker 1: away in the next two years, so again it has
Speaker 1: to be by partisan. So rather than these broad economic
Speaker 1: fiscal stimulus bills, the debates and the fights get down
Speaker 1: to the sector level. So if you're in things like
Speaker 1: marijuana or cryptocurrencies or drug pricing, you know, this is
Speaker 1: where you actually have to start looking at the legislations
Speaker 1: that maybe don't you know, materially change your portfolio, but
Speaker 1: certainly would increase sales, increase revenue, increased costs, etcetera. And
Speaker 1: it happens. So that reminds me of the Safe Banking Act,
Speaker 1: which is something that um, I don't think anyone has
Speaker 1: been particularly optimistic about allowing cannabis, allowing keys companies to bank,
Speaker 1: and to allowing them to be advised by Wall Street
Speaker 1: on m and a, etcetera. Is that still not gonna
Speaker 1: happen anytime soon? Actually we're fairly bullsh on it. I
Speaker 1: actually think that there is a decent chance that could
Speaker 1: pass in the lame Duck. For those of you listening,
Speaker 1: you know, at State Banking Act allows banks to service
Speaker 1: marijuana businesses. Now, the potstocks react almost time any time
Speaker 1: a policymaker mentions this. But the Safe Banking Act is
Speaker 1: currently attached to the House for the National Defense Authorization Act.
Speaker 1: And because we think that, you know, the Senate Democrats
Speaker 1: want this issue done, they want to pass on it
Speaker 1: and so forth like that, Ultimately I think it will pass.
Speaker 1: The most important thing to keep keep in mind is
Speaker 1: that these potstocks react almost when this news like happens,
Speaker 1: but then once they realize that decriminalization illegalizations not going occur,
Speaker 1: they decline the next day. So certainly be careful of
Speaker 1: watching this in the lame duck period. Nathan, what question
Speaker 1: are Matt and I not smart enough to ask you
Speaker 1: that we should be asking you this morning? You know everything, man,
Speaker 1: what's the most important issue that we're that us layman,
Speaker 1: are are missing out on here? So you know, I
Speaker 1: would just say, just the death ceiling is coming back,
Speaker 1: and the dead ceiling fight is coming back, and you
Speaker 1: know what what does that mean? Remind us of what
Speaker 1: that means, because it's been a while. Okay, so you know,
Speaker 1: the dead ceiling is essentially the limit that the U. S.
Speaker 1: Treasury is allowed to borrow up to to pay our
Speaker 1: debts and so forth like that, and every few years
Speaker 1: or every six months as it was early or Congress
Speaker 1: needs to approve the limit. Now, in the last death
Speaker 1: ceiling debate, uh, the Democrats were able to unilarially raise
Speaker 1: the debt ceiling by a dollar amount as opposed to
Speaker 1: a data amount. And essentially the United States will run
Speaker 1: out of money to pay its debts sometime in the
Speaker 1: first half of next year. Now they can use what
Speaker 1: is known as extraordinary measures to use other funds and
Speaker 1: the ultimate go no go deadline is probably sometime in
Speaker 1: the third quarter. That's what Ira Jersey, are chief right strategist,
Speaker 1: is is predicting. So the death ceiling is this really
Speaker 1: bad time for markets in terms of do you see
Speaker 1: lots of headlines political brickman ship, you know, the end
Speaker 1: of the world is coming. Fixed income certainly reacts to it,
Speaker 1: Equity strategy certainly, fixed too reacts to it. But ultimately
Speaker 1: Congress kick the can down the road at the last minute. Now,
Speaker 1: if Kevin McCarthy does become the Speaker of the House,
Speaker 1: he said he wants to use this as leverage to
Speaker 1: potentially get in some deficit reductions or something like that,
Speaker 1: but ultimately we think it's going to just play out
Speaker 1: the same way, really painful headlines. Folks in the sixth
Speaker 1: think of market night liking what they're seeing. But ultimately
Speaker 1: there's a deal and then it gets done. It's just
Speaker 1: pain for all of us in the markets. Dead ceiling
Speaker 1: is a bit like my spending budget at home. I
Speaker 1: just raise it whenever I need to eat. Why not?
Speaker 1: You can handle it, Nathan Dean, You are too good
Speaker 1: at this stuff. I mean, it's serious policy. Geek. We
Speaker 1: love getting your guy. Oh yeah, cool guy, but again
Speaker 1: cock part better word, better than geek. He's the senior
Speaker 1: policy analysts for bloom. I know boiler makers as whear
Speaker 1: as fast food burgers go, Matt, Wendy's are one of
Speaker 1: my all time face. Oh dude, Wendy's is the best
Speaker 1: in terms of the major change there. I think there's
Speaker 1: no comparison that if you just put up you know
Speaker 1: the main burgers of Wendy's, McDonald's and Burger King. Clearly
Speaker 1: Wendy's is geting away. Yeah, I'm with you there, fresh ingredients, delicious,
Speaker 1: the numbers just this morning. Soon to check in with that.
Speaker 1: I want to check in with just what's going on
Speaker 1: with the fast food bisines in general the restaurant business.
Speaker 1: We do that with Mike Halen. He's a senior restaurant
Speaker 1: analyst at Bloomberg Intelligence. So Mike, uh, Wendy's. I'm all
Speaker 1: into Wendy's. How did they do with their results here?
Speaker 1: And I'm with you guys, Wendy's. Wendy's has a great product.
Speaker 1: Wendy's similar to a lot of the quick service chains
Speaker 1: and restaurant chains that we covered. They did better than
Speaker 1: expected on the sales side. Um, you know, three year
Speaker 1: trends accelerated, so so the trends in the third quarter
Speaker 1: were better than they were in the second quarter, but
Speaker 1: margins took a hit, right, Restaurant level margins contracted again
Speaker 1: pretty significantly. You know, things we've passed peak inflation, so uh,
Speaker 1: they should improve next year. But they're also expecting some
Speaker 1: some significant Morgin margin pressure in the fourth quarter as well,
Speaker 1: which I mean from a consumer perspective, that's a good
Speaker 1: thing because you know that they're not going to skimp
Speaker 1: on the ingredients, um that make their products so good.
Speaker 1: I guess they have to raise prices, right yeah, right
Speaker 1: now they're running at about ten percent, which is uh,
Speaker 1: you know, it's typically the high end of what consumers
Speaker 1: will expect will accept in the quick service realm Um.
Speaker 1: You know. Uh, they said for next year, looking at
Speaker 1: more like mid single digit price increases. Um. You know,
Speaker 1: inflation should ease to about that level as well. Um.
Speaker 1: So yeah, I mean what they said on the call,
Speaker 1: and what a few other companies have mentioned is that
Speaker 1: the consumers earning seventy thousand a year and less are
Speaker 1: cutting back on their spending. So they're they're visiting less,
Speaker 1: they're ordering more off the value menu, uh, and less
Speaker 1: off the regular menu. Um, you know. And does the
Speaker 1: lowering I mean, let's say we go into a recession, right,
Speaker 1: I mean like a real recession, not just the two
Speaker 1: quarters of contraction that we've already seen. Um, does the
Speaker 1: lowering cancome consumer eat less at fast food or does
Speaker 1: a lower consumer go more to the you know, the
Speaker 1: value menu because it seems like it is cheaper to
Speaker 1: get a value menu at a fast food place and
Speaker 1: it is to make a good healthy meal at home. Yeah.
Speaker 1: So I mean there's a lot of people doing that
Speaker 1: now where they're they're doing these fast food diets where
Speaker 1: they're eating at fast food restaurants, you know, two or
Speaker 1: three times a day to try to save money. So, um,
Speaker 1: you know, customers will do that, but you'll also have
Speaker 1: few that's not healthy. I'm sure my doctor wouldn't advise
Speaker 1: that for sure, but you know, so so what we'd
Speaker 1: expect and what we saw in the last recession, you know,
Speaker 1: I think is a good good indicator. So what you'll
Speaker 1: see is you'll see some people falling out of the
Speaker 1: QSR bucket and into maybe more grocery purchases because it
Speaker 1: is cheaper to feedure family that way. Um. But then
Speaker 1: you'll have some middle and upper uh, some middle and
Speaker 1: higher income consumers kind of fall into that QSR bucket
Speaker 1: to kind of save some money. Um. But you know
Speaker 1: what happened last time was McDonald's got really aggressive with
Speaker 1: price uh and and push their value menu very very aggressively,
Speaker 1: and and it definitely hurt hurt some of the smaller
Speaker 1: QSR chains like you know, Wendy's, Jack in the Box
Speaker 1: and something. Yeah, so they're not the same, they don't
Speaker 1: they don't have the same reach. I mean, I just
Speaker 1: went to Indonesia via Tokyo, stopped in you know, Tokyo.
Speaker 1: I was in Jakarta. McDonald's is everywhere their Jersey. They
Speaker 1: have McDonald's New Jersey as well. But the point being,
Speaker 1: you know, you don't see Wendy's over there. You don't
Speaker 1: see Wendy's really in Europe very much. I mean there's
Speaker 1: I think there's one of heath Throw but otherwise, um,
Speaker 1: they're not there. Is that better for them? Right now?
Speaker 1: They're not affected by they don't close stores in Russia
Speaker 1: for example, Um, they don't have to get out of
Speaker 1: places that are getting hit already economically. I wouldn't. I
Speaker 1: would say that it's not better for them. So and
Speaker 1: the reason why is that that franchise. Everyone franchises their
Speaker 1: business internationally, right, so they're not getting hit with the
Speaker 1: inflation pressures. This is just those those businesses are just
Speaker 1: um basically paying the franchise or a royalty stream. Right.
Speaker 1: So the fact that Wendy's doesn't have that international business,
Speaker 1: you know, is part of the reason why. That is
Speaker 1: just it's got that smaller market cap, right, it's just
Speaker 1: a smaller chain in general. But it also provides them
Speaker 1: with a pretty good opportunity, right They have a strong
Speaker 1: business in Canada. Uh, they're expanding into Europe and they're
Speaker 1: starting with the u K. And they're really playing the
Speaker 1: long game, right And you know, it's it's clear that
Speaker 1: the UK is kind of struggling right now and and
Speaker 1: European recession is likely going to be worse than what
Speaker 1: we we experience here in the US. But but Wendy's
Speaker 1: is definitely playing the long game there in terms of
Speaker 1: their international expansion. I think it's it's a it's a
Speaker 1: very good opportunity for them. All right, Folks that are
Speaker 1: listening that are Bloomberg terminal users. If you want the
Speaker 1: best research on a law street, on the restaurant, it's
Speaker 1: going to be I Eats, a T S Go And
Speaker 1: that's where you can find all the Mike's work might
Speaker 1: be I Space, I Space eats, Yes, exactly. So, Mike,
Speaker 1: I was at Chipotle yesterday on Third Avenue here in Manhattan,
Speaker 1: and instead of having three people behind the counter making
Speaker 1: you know, the burritos and the tacos and things like that,
Speaker 1: there was one. And so the line was crazy long,
Speaker 1: and I went up. When I finally got up there,
Speaker 1: I asked the woman behind and she's like, Yeah, we
Speaker 1: usually have three people here, but we don't today because
Speaker 1: they just can't hire enough. So how much is that
Speaker 1: labor still an issue for the restaurant business? It is,
Speaker 1: It is an issue. Um, It's not as bad as
Speaker 1: it was a couple of quarters ago. And you know,
Speaker 1: if the economy continues as slow, which we expect, we
Speaker 1: think it should eat some more. But right now Chipotle
Speaker 1: is a little bit of a different animal. Um. You know,
Speaker 1: their sales are up thirty four percent since right so
Speaker 1: you have they've absolutely crushed it. They're one of the
Speaker 1: your chains that have you know, traffic games since that time. UM,
Speaker 1: so they are in more and more in need of
Speaker 1: labor than a lot of their competitors. Right now, we're
Speaker 1: probably getting pretty close to that twenty nineteen employment levels
Speaker 1: in the restaurant industry. We're at that so you know,
Speaker 1: the industry was understaffed prior to the pandemic. They're still understaffed.
Speaker 1: Uh and probably take you know, more technology implicating implementation
Speaker 1: over the next decade to kind of eventually get to
Speaker 1: that fully staffed. Do you like them the best, Mike,
Speaker 1: if you had to pick, if we uh look at
Speaker 1: all of your research, you know, what's what's the stock
Speaker 1: that you're most excited about. Oh wow, Um, you know
Speaker 1: that I cover a lot of them, so uh, you know,
Speaker 1: in terms of performance wise, Chapole is really not going
Speaker 1: to cover off the ball. They have some risk because
Speaker 1: they're exposed to California, which uh, you know could raise
Speaker 1: quick service employee minimum wage to twenty two dollars uh
Speaker 1: at the beginning in next year. Yeah, so that's kind
Speaker 1: of um, that's kind of a risk to that name. Uh.
Speaker 1: And they own their stores. So the stocks come down
Speaker 1: from thirteen seventy three over the last year. So yeah,
Speaker 1: it's it's been a pretty pretty good damn move. But
Speaker 1: you know, that's probably as well run as any restaurant
Speaker 1: chain I cover. You know. McDonald's is another great name,
Speaker 1: you know, and they really have the scale to to
Speaker 1: offer price points that their competitors just can't during a recession.
Speaker 1: And I will die on this hill the best fries
Speaker 1: in the business, McDonald's. Mike Klin, Senior restaurant analyst, Bloomberg Intelligence.
Speaker 1: If you want all that restaurant research BI Space Eats,
Speaker 1: go on the Bloomberg terminal. Alright, a recession is either
Speaker 1: here or it's coming but I can tell you from
Speaker 1: decades of experience in the media business, advertisers don't like recessions.
Speaker 1: That's one of the things they pull back on first.
Speaker 1: And so we're seeing it across the board with these
Speaker 1: quarterly numbers coming in either wrong enough. And she's a
Speaker 1: US media analyst, senior analysts Bloomberg Intelligence, one of the
Speaker 1: best on the street. Man deeps seeing a fairly decent
Speaker 1: tech analyst here in our Bloomberg Interactive Broker studio. He
Speaker 1: covers meta and all those social media things. Keith, let
Speaker 1: me start with you. Mickey Mouse is down twelve percent today.
Speaker 1: What did the company say on a conference call last
Speaker 1: night that spooked people so much? Oh? Well, subscriber numbers
Speaker 1: were actually very very good, But that's not enough these days, Paul.
Speaker 1: I mean, we were really looking at some really bad
Speaker 1: numbers on the possibility front. So parks came in much
Speaker 1: much lighter than expected. And really it's the DTC business,
Speaker 1: the director consumer business that I think is kind of
Speaker 1: really spooking investors because they already have booked about eight
Speaker 1: billion dollars in losses at this segment and it's just
Speaker 1: not going to get much better up until at least
Speaker 1: maybe another one and a half years, So, um, you
Speaker 1: know they The main problem really is the guidance that
Speaker 1: they gave for a fiscal three So uh, consensus was
Speaker 1: looking at about operating income guidance for the entire company.
Speaker 1: They set high single digits and so it's just basically
Speaker 1: weakness across the board. Um and investors kind of really
Speaker 1: looking at fiscal three as an extremely cost year. It's
Speaker 1: about costs, like what what what's costing them so much?
Speaker 1: What are the blockbuster hits on Disney Plus that are
Speaker 1: so expensive to produce? It's it's content, Yes, content is
Speaker 1: very very expensive. It's sports rights. They pay about billion
Speaker 1: dollars in sports rights for ESPN. But yes, it's it's
Speaker 1: thirty two billion dollars that they're going to be spending
Speaker 1: in content costs, um and um you know that that
Speaker 1: really kind of crimps of the bottom line. I mean,
Speaker 1: why do I need Disney Plus? Is it Mandalorian? Am
Speaker 1: I getting it for encantent? Need? For what you needed
Speaker 1: for the Little One? For? Yeah? I love one, and
Speaker 1: you have no choice. You have to get Disney Plus
Speaker 1: for the Little One? Man deep Unlike eth who covers
Speaker 1: real companies, your companies. I mean, profits are you know,
Speaker 1: maybe you got profits, maybe you will have profits. Maybe
Speaker 1: there's a dude he covers a company that just is
Speaker 1: firing eleven thousand employees and that's only pcent of the
Speaker 1: workforce exactly. So talk to us about Meta. I mean
Speaker 1: it stocks up seven percent on the news. But this
Speaker 1: is what happens when a traditional industrial company they announced
Speaker 1: their cutting their workforce and the stock goes up, not
Speaker 1: a high flying growth stock like Meta. What's going on
Speaker 1: with this company? We're talking about making money. You know,
Speaker 1: Meta had forty percent free cash flow margin before they
Speaker 1: jumped into this Meta wors and they're bleeding, you know,
Speaker 1: over ten billion dollars a year on Meta words and
Speaker 1: they're spending approximately ten billion dollars on topex to build
Speaker 1: a metawors stacks. So I think what really has concerned
Speaker 1: investors about Meta specifically is, look, you know there is
Speaker 1: competition from TikTok, but beyond that, you know, if you're
Speaker 1: spending hundred billion dollars in five years on this new thing,
Speaker 1: it has to have some commercial viability and it's not
Speaker 1: proven right now. So that is you know, you could
Speaker 1: argue roadblocks is the best bed when it comes to
Speaker 1: metal Works. But it's a two billion dollar revenue run
Speaker 1: right company with a very niche audience, and they're building
Speaker 1: the metaverse. So and then they're letting consumers build it,
Speaker 1: users build it for free, right, whereas Zuckerberg is spending
Speaker 1: ten billion dollars a year to build it for us exactly.
Speaker 1: And they still don't have the same amount of content
Speaker 1: that Roadblocks has. So talking about content costs as Geta
Speaker 1: was alluding to, in this case, he is trying to
Speaker 1: source more content on the metal Works, but clearly the
Speaker 1: engagement metrics aren't there, and he keeps doubling down. So
Speaker 1: you know, that is the reason why the stock fell
Speaker 1: off so much. The core business is still pretty good,
Speaker 1: although I would argue, you know, why can't they catch
Speaker 1: up to TikTok. At the end of the day, TikTok
Speaker 1: is using an AI based feed, It has a lot
Speaker 1: of original content, so one Meta needs to content. Yeah,
Speaker 1: and and so right now, what Meta is doing is
Speaker 1: they pivoted to videos and reels, but it doesn't have
Speaker 1: the original creators creating that on Meta first, and that
Speaker 1: is what they need to do in terms of pulling
Speaker 1: those creators. Maybe there has to be a revenue sharing
Speaker 1: aspect to it. Like YouTube, Meta doesn't pay anything to
Speaker 1: its creators. So once you bake in the revenue sharing aspect,
Speaker 1: that will print the gross margins. But they haven't announced
Speaker 1: that yet. Man deep, So your universe, unlike eas, is
Speaker 1: facing real challenges in terms of well just heads are
Speaker 1: rolling basically right, Facebook and Twitter and um, you know
Speaker 1: coin based. Everybody in in tech in Silicon Valley is
Speaker 1: getting fired. Is this the worst you know, pink slip
Speaker 1: party that we've seen since two thousand? Well, so, I
Speaker 1: think there was clearly a pull forward and based on
Speaker 1: what everyone has told us so far, they feel like
Speaker 1: they overhired. They thought revenue growth of will continue forever
Speaker 1: and uh look has it happened before. Yes, in this case,
Speaker 1: I think there will be a correction. Some of these
Speaker 1: businesses you know that are based on user metrics and
Speaker 1: you know AI driven, there are real businesses. It's not
Speaker 1: as if they're going to disappear or somebody knew will
Speaker 1: come on the block. It's just a matter of course
Speaker 1: correcting and revenue for employee was just going down. Businesses.
Speaker 1: Business I mean, you got about thirty seconds here, where
Speaker 1: is a media invest investor to go to hide out here.
Speaker 1: Tough question. You know, um really really because the goal
Speaker 1: boasts have kept shifting. You know, we were in for
Speaker 1: streaming pain with the profit losses, we're in for a
Speaker 1: lot of linear TV pain. So yeah, that that I
Speaker 1: really don't know. There's really nowhere to hide. That's why
Speaker 1: I'm gonna I mean, that's why nobody picks up Keith's
Speaker 1: phone when she calls to talk about stock ideas in
Speaker 1: the media space, like I mean, I think you go
Speaker 1: to like I mean a New York Times, I mean,
Speaker 1: go back to some of the sleeping through his paper
Speaker 1: names or some of the advertising, or you go to
Speaker 1: a different industry right now. Yeah, but if you're geither
Speaker 1: on Anath and your media anals, you kind of gotta
Speaker 1: stick with media. So Keithan thanks so much. It'll come back.
Speaker 1: Keithan Wronganath and she's a US media Annalso Bloomberg Intelligence
Speaker 1: based in Princeton, which I think might be the new
Speaker 1: headquarters of Bloomberg Intelligence if I'm not I'm not incorrect,
Speaker 1: Man Deep saying he's still here in New York and
Speaker 1: our Bloomberg Interactive Broker studio trying to make sense of
Speaker 1: what's going on with our good friends at Meta Crypto. Boy,
Speaker 1: it is ugly out there in the crypto space. Cryptocurrencies
Speaker 1: extended declines to the lowest level in two years as
Speaker 1: Binas is seen increasingly unlikely to follow through on us
Speaker 1: take over of ft X dot Com. Let's just get
Speaker 1: a reset what's going on in the crypto space. Let's
Speaker 1: do a little round table action, if we will. Mike McLane,
Speaker 1: he's a senior commodity strategist for Bloomberg Intelligence Um Commodities,
Speaker 1: but he's been our kind of our bitcoin and our
Speaker 1: crypto kind of market specialist really over the last several years.
Speaker 1: And Shinnellie Basket Wall Street reporter with Bloomberg News joints
Speaker 1: us in our Bloomberg Interactive Broker studio. Mike, you down
Speaker 1: in Miami at the Bloomberg Miami office manning that office.
Speaker 1: I know hurricanes coming your way, you guys getting safe
Speaker 1: down there, Paul, Well, right now, it's just tropical storm rain.
Speaker 1: I hear it's mostly hitting the Bahamas. Might head north
Speaker 1: actually your way, and I'll be your next week. So
Speaker 1: I'm bringing the storm with me. He's gonna hit Sam
Speaker 1: Bankman Freed first, then, right, isn't the in Sahammas? But
Speaker 1: that what's the key thing. It's true, it's Bahamas. It's
Speaker 1: kind of you know, ironic, but that whole thing with
Speaker 1: him is such a shock we you know, the crypto
Speaker 1: space view to him is basically the savior. It turns
Speaker 1: out he might have been just a fraud. Well I guess,
Speaker 1: but I mean here's we got the you know, the
Speaker 1: headline crossing the Bloomberg terminal in the United States probes
Speaker 1: FTX empire overhandling of client funds and if you would
Speaker 1: certainly hope so right, I mean, otherwise, what the heck
Speaker 1: are they doing? Let's get too Shonali really give us.
Speaker 1: Let's back up a little bit. Tell us what happened
Speaker 1: over the last week? What uh caused Sam Bankman Free
Speaker 1: to go from like the well respected in Washington super
Speaker 1: billionaire that everybody wanted to get a meeting with, and
Speaker 1: it was called the John Pierpont Morgan of crypto to
Speaker 1: a guy who might be investigated for the F word
Speaker 1: a few thing. I mean, that's not what he's being
Speaker 1: an investigator force. I do want to make that very clear.
Speaker 1: That has not been determined yet. But or at all
Speaker 1: for that matter. But you know, when you look at
Speaker 1: what happened here, the coin deaths came out with the
Speaker 1: story really outlining the relationship between the f t T
Speaker 1: token issued by f t X and Alameda, which is
Speaker 1: another entity owned largely by Sam Bankman Freed. These are
Speaker 1: two different companies, and it drew some concerns about the
Speaker 1: intersectionality between the two companies and the balance sheets. F
Speaker 1: t X is the exchange, Alameda is his VC company.
Speaker 1: Turned turned out that Alameda had a lot of his
Speaker 1: f t X token and was you know, doing a
Speaker 1: bunch of stuff with it in terms of how they
Speaker 1: were trading and getting into different assets. However, what happened
Speaker 1: that really started to get a lot of attention here
Speaker 1: was the Binance the CEO of Binance on Twitter started
Speaker 1: announcing that they would be selling their f t T tokens.
Speaker 1: They had a lot of it, and so saying a
Speaker 1: billion dollars worth, correct, half a billion dollars worth and
Speaker 1: saying that they would be selling so many tokens would
Speaker 1: start to put pressure on the price by other people
Speaker 1: selling on the back of Binance selling. Then what had
Speaker 1: happened was you start to see, uh, Sam bank Man
Speaker 1: freed really saying that there weren't clear liquidity issues in
Speaker 1: the company. They were fine, that's a different company, right,
Speaker 1: So so CZ is like, we're going to dump this
Speaker 1: f t T token and that dropped sevent in value.
Speaker 1: So al Meda has a ton of what's now worth
Speaker 1: less token, worth less than it was a week before.
Speaker 1: Then people think, okay, well, we are not sure about
Speaker 1: the connections between al Meda and f t X other
Speaker 1: than the fact that Sam Bankman fried, We're not even
Speaker 1: clear that that's why Finance was selling. But but but
Speaker 1: it looks like people on the FTX platform or like, listen,
Speaker 1: we gotta get our money off that platform, right. So
Speaker 1: that's that is when they finally announced the deal or
Speaker 1: a potential transaction. It was really just a letter of intent,
Speaker 1: a non binding one for that matter, and the reason
Speaker 1: was to seal some of these liquidity issues that Matt
Speaker 1: was talking about. The problem now becomes, you know, twenty
Speaker 1: four hours barely after that, we are now reporting coin
Speaker 1: Desk has reported as well. They re first with the
Speaker 1: news here that Finance is strongly leaning towards scrapping that
Speaker 1: proposed takeover. Okay, so they're actually doing due diligence, unlike
Speaker 1: some other folks when they buy companies. Mike mcglowan here,
Speaker 1: what does this mean for the crypto space. You're used
Speaker 1: to traditional commodities supply and demand, that kind of thing.
Speaker 1: How do you think this plays in the crypto space
Speaker 1: going forward? It's stopped. That's the key thing I learned
Speaker 1: in training. This is a stop pitting trigger for all cryptos.
Speaker 1: I mean, I don't see now Bitcoin the next key
Speaker 1: supports not till about twelve thousand. The theory might hold
Speaker 1: a thousand, but this is a clear shocker. It means
Speaker 1: hitting yourself, stops, get out. I mean just that juxtabitious
Speaker 1: and has seen sand Bank and Streeing sitting on the
Speaker 1: stage with Bill Clinton and Tony Blair back at the
Speaker 1: Salt conference that was at earlier near It's just a
Speaker 1: shocker how that shifted. So the key thing I want
Speaker 1: to end is that to me, this is potentially the
Speaker 1: concasion for all risks because Bitcoin has been one of
Speaker 1: the best leading gators on the way up and clearly
Speaker 1: in the way down, and now we're seeing it. It
Speaker 1: was a trigger yesterday for people hitting stops and crudeoil
Speaker 1: and they're hitting stops in stocks now. So to me,
Speaker 1: this is part of that great reversion of trickling. And
Speaker 1: what's the best indicator for it that a good old
Speaker 1: bitcoin and check it out. You look at some of
Speaker 1: the stocks that are trading either in the US or elsewhere.
Speaker 1: Coin Base was down ten percent yesterday, another nine percent today,
Speaker 1: and even though they said that they didn't have liquidity issues.
Speaker 1: I want to put on another firm the head not
Speaker 1: that much exposure to f TX itself, but it did
Speaker 1: have some exposure. Galaxy Digital. This is billionaire Mike Novergrat's
Speaker 1: company is down twenty percent today. It trades in Canada.
Speaker 1: It's trying to listen to the United States, and so
Speaker 1: to the point that you can see contagion. You are
Speaker 1: seeing billionaires lose a lot of money today. All Right,
Speaker 1: you know, really interesting stuff. I'm glad we've allocated a
Speaker 1: lot of time during the show to crypto. We will
Speaker 1: continue to do it going forward. Mike mcglogan's senior Commodity
Speaker 1: Strategies for Bloomberg. Intelligency is based out of Miami Beach,
Speaker 1: which is trying to make itself the crypto capital. We're
Speaker 1: gonna check in with Mike going forward to see how
Speaker 1: that is going in Miami. Again, one of the hubs
Speaker 1: for all things crypto and snelly bastis she covers Wall
Speaker 1: Street UH and the reaction and fancier markets to what
Speaker 1: is a meltdown in the crypto UH space. So we
Speaker 1: will continue to follow up on this story. Alright. So
Speaker 1: over in Egypt, Matt they're having some of the United
Speaker 1: Nations is having something called COP twenty seven where they're
Speaker 1: talking about climate change and what governments need to do
Speaker 1: to arrest climate change and it's a big deal. And
Speaker 1: Bloomberg sending a lot of our smart people over to
Speaker 1: Egypt H to participate Charmel Shake. Charmel Shake, which is
Speaker 1: like the that's a diving capital of Egypt. Oh and
Speaker 1: Shaheen contractor are e s G analyst for Bloomberg Intelligence.
Speaker 1: She is a diver and she's going over so hopell
Speaker 1: she sh'll get to dive there. But she you're going
Speaker 1: over to Egypt Cop twenty seven. Realistically, you're a Wall
Speaker 1: Street person. You look at s G as an investment theme.
Speaker 1: What is Wall Street? What does the e s G
Speaker 1: community really think may come from COP twenty seven this year?
Speaker 1: Copy last year and presuming COP twenty eight next year.
Speaker 1: Thanks Boyd. So I'll tell you what I'm most excited
Speaker 1: about and at least what I'm looking forward to. I
Speaker 1: think what happened with Copy Last till and even this
Speaker 1: hell is that companies are setting these cob and goals
Speaker 1: at a base we've never seen before. I've never seen it.
Speaker 1: It's a big, big karma option, okay. And the question
Speaker 1: is we have no idea what that actually transitions to,
Speaker 1: whether actually means in practice, if they execute exactly preparedness
Speaker 1: to meet goes, what they're doing to meet these goals,
Speaker 1: rather than just putting out numbers. So I think what
Speaker 1: I would expect and I'd like to see is actual
Speaker 1: plans around preparedness, and we are saying that come to light.
Speaker 1: So first, today is Financi Day at CUFF, so very
Speaker 1: very realistic. Um, the UK, I think yesterday came out
Speaker 1: with this proposal to get every company to disclose on
Speaker 1: its transition plan. And there was a similar U N
Speaker 1: report today that sets out standards to judge companies. So
Speaker 1: I got most excited by that. I can you got
Speaker 1: a master's in sustainability management at Columbia well, so she
Speaker 1: can help those companies actually do that, right, the key
Speaker 1: is here, We're going to hold their feet to the fire.
Speaker 1: You can say, we're going to be uh you know,
Speaker 1: car have been neutral by twenty fifty, which first of
Speaker 1: all is like a hundred years from now. And second
Speaker 1: of all, it's just mumbo jumbo if you don't have
Speaker 1: a real plan to actually achieve it exactly. And I
Speaker 1: think that's what we're going to hope to get out
Speaker 1: of it, I mean to be fair. Also, these carbon
Speaker 1: goals have been set very recently, so I think the
Speaker 1: transition plans and all that will come, but there's now
Speaker 1: this urgent need for it to be more realistic. Well,
Speaker 1: the last cop you know, in what was it in Glasgow? Right,
Speaker 1: the US delegation went there and made a whole bunch
Speaker 1: of promises. Biden held a speech and then on his
Speaker 1: way out he was on the phone with Saudi Arabia
Speaker 1: saying please pump more oil. Right, I mean, so it's
Speaker 1: hard to buy um all of these big promises. I'm
Speaker 1: sure that Charmel Shake will be a nice place to go,
Speaker 1: and I'm sure they love rubbing elbows with each other's,
Speaker 1: these these big wigs, But are they actually gonna do
Speaker 1: something about it. As you know, in many countries it
Speaker 1: costs more to charge your car, your electric car, than
Speaker 1: it does to fill up the gas tank. Yeah, no,
Speaker 1: you're right. I mean this year is a particularly challenging one. Right,
Speaker 1: we have an energy crisis, We have all these things
Speaker 1: coming in. And you make a good point because China
Speaker 1: basically has sort of a very high sort of cold
Speaker 1: pipeline for its for its power generation, for it's mining.
Speaker 1: So how is that going to be sort of realistic?
Speaker 1: How is that going to be fed in all these questions?
Speaker 1: I think trying to participate in these they do. They
Speaker 1: do send delegations every country sense delegations. I don't think
Speaker 1: they're leader is going okay, So I don't. One of
Speaker 1: the challenges is we think about, you know, implementing these
Speaker 1: and and really getting stuff done on the ground as
Speaker 1: opposed to these grand pronouncements, is who regulates this stuff?
Speaker 1: Who says whether my country, my company is actually meeting
Speaker 1: these goals this The SEC doesn't look at this, for example,
Speaker 1: in the United States doesn't. So first, I think when
Speaker 1: these things happened at these conferences, a lot of it
Speaker 1: is self regulated. Actually all of it is self regulated,
Speaker 1: which is a challenge. You have these un agencies that
Speaker 1: basically regulate membership through these things, so that's one. I
Speaker 1: think there's a lot of just regulation also coming in
Speaker 1: from the authorities, like the SEC has rules around fun disclosures,
Speaker 1: around emissions. Europe has a huge pipeline of regulations. So
Speaker 1: I think that's all to come, but it may be
Speaker 1: a bit of a meandering on the way there. So
Speaker 1: last week President Biden said we're gonna be shutting down
Speaker 1: all the coal plants across America. Yeah, I mean that's
Speaker 1: a direct quote I have. We still have plans in response. Obviously,
Speaker 1: Joe Mansion wasn't pleased. He called those remarks offensive and disgusting.
Speaker 1: And he's from West Virginia, yes, of course. But the
Speaker 1: point is, and I think the White House is kind
Speaker 1: of walked back those comments. It was maybe it was
Speaker 1: a gaff by the President, which is not unusual, But um,
Speaker 1: don't we have to figure these things out internally before
Speaker 1: we can go and make credible promises with other global leaders.
Speaker 1: I mean, especially as we see you know how much
Speaker 1: elections can change the makeup of the House, and maybe
Speaker 1: in two years Leo of an election that changes the
Speaker 1: makeup of the or or the sort of the occupant
Speaker 1: of the White House. How helpful is it to to
Speaker 1: make these these promises. Yeah, that's something that's interesting. I
Speaker 1: I don't know. I think a lot of this, A
Speaker 1: lot of what happens at these conferences is basically debating,
Speaker 1: basically raising issues on what their country needs, especially for
Speaker 1: the emerging markets. I think a lot of what they
Speaker 1: are bringing to plate is basically complaints that you know,
Speaker 1: they need the funding for this transitions. I think a
Speaker 1: lot of it is also just voicing the concerns. All right,
Speaker 1: So for just E s G in general, if pharm
Speaker 1: a CEO, I'll comply with E s G whatever, if
Speaker 1: I'm incentive to do so, yes, if I'll get paid
Speaker 1: for it, does that happen? Yes, so, CEO, So executive
Speaker 1: compensation linked to E s G. That is something that's
Speaker 1: been growing tremendously. Actually, So if we we actually did
Speaker 1: this analysis on the Rustle one thousand and we found that,
Speaker 1: you know, as a CEO is payback JAZELLNK to multiple things, right,
Speaker 1: financial returns, all that stuff. E s G is one
Speaker 1: of the factors that's being worked in. And we found
Speaker 1: that actually I don't know the exact number, but I
Speaker 1: think it was of the wrestle one thousand have some
Speaker 1: kind of E s SHE linkages, which I think is interesting.
Speaker 1: Diversity and inclusion has seen this huge spike up, which
Speaker 1: is the most notable out of all the linkage is Yeah,
Speaker 1: we saw that with the Goldman Sachs. They announced their
Speaker 1: partner class and it's the most diverse in their history.
Speaker 1: And that's why there's the biggest Bass Solomon right, big, big, big,
Speaker 1: biggest class and in an effort to improve the diversity
Speaker 1: of their partnership ranks. So we'll see how that goes.
Speaker 1: And we have lots of e s G data, I
Speaker 1: would argue some of the best e s G data
Speaker 1: out on the street. When you go to any company,
Speaker 1: you're looking down on the Bloomberg triminal, you hit f
Speaker 1: A for the financial analysis and that will give you
Speaker 1: the income statement to balance it. All that good stuff.
Speaker 1: But we also have a big tab of e s
Speaker 1: G data um ranking all the company, so it's good
Speaker 1: stuff there. She came contractor, she's an e s G
Speaker 1: research channel, so Bloomberg Intelligence. She's about to hop on
Speaker 1: a jet tomorrow head over to Egypt. For COP twenty seven.
Speaker 1: That'll be good stuff here. We'll chat with you when
Speaker 1: you get back. Thanks for listening to the Bloomberg Markets podcast.
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
Speaker 1: on Twitter at Matt Miller. Put on fal Sweeney I'm
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
Speaker 1: always catch us worldwide at Bloomberg Radio