WEBVTT - Tesla’s Removal From S&P Index Sparks Debate 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.599 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week at iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:32.599 YouTube search Bloomberg Clobal News. Well, fifty seven percent that's 0:00:32.600 --> 0:00:34.720 the increase in new COVID cases here in the United 0:00:34.760 --> 0:00:37.080 States in the last two weeks. That's according to data 0:00:37.120 --> 0:00:39.400 from the New York Times. More than one hundred thousand 0:00:39.479 --> 0:00:43.040 new cases per day. Hospitalizations are also up during the 0:00:43.080 --> 0:00:46.280 same period of time twenty nine percent, again according to 0:00:46.360 --> 0:00:48.360 the Times. Let's get into it with Dr Andy Pekosh, 0:00:48.400 --> 0:00:52.200 Professor of molecular microbiology and Immunology at the Johns Hopkins 0:00:52.320 --> 0:00:55.160 University Bloomberg School of Public Health. The Bloomberg School of 0:00:55.160 --> 0:00:57.520 Public Health that is supported by Michael R. Bloomberg, founder 0:00:57.560 --> 0:01:01.800 of Bloomberg LP and Bloomberg Philanthropy. Dr Pekosh. It's been 0:01:01.800 --> 0:01:03.920 a while since we've spoken, but I think it's a 0:01:03.960 --> 0:01:05.920 good time. Not just anecdotally, A lot of people in 0:01:05.920 --> 0:01:08.440 my circle are are getting COVID. Katie's just recovered. I 0:01:08.440 --> 0:01:11.000 hope you don't mind me saying that. You've talked about it, 0:01:11.000 --> 0:01:13.679 You've tweeted about it. A lot of our colleagues are out, 0:01:14.440 --> 0:01:16.960 why are we seeing this latest spike even among the 0:01:17.040 --> 0:01:20.200 vaccinated the boosted. Yeah, well, I think we're saying the 0:01:20.240 --> 0:01:24.400 main thing here because you know, it's been sometimes since 0:01:24.440 --> 0:01:27.080 we've sort of let up all of our public health interventions, 0:01:27.080 --> 0:01:30.039 so we've now been an extended period of time where 0:01:30.040 --> 0:01:34.040 people have been going about there, they're somewhat normal business 0:01:34.280 --> 0:01:37.160 and you know, putting getting put into situations where they 0:01:37.160 --> 0:01:40.360 could potentially be exposed to the virus. So I think 0:01:40.360 --> 0:01:43.760 that's one aspect of it that's contributing. And then the 0:01:43.800 --> 0:01:46.840 other aspect is UM. You know, you're getting further and 0:01:46.920 --> 0:01:51.440 further from your last boost if you've taken one UM, 0:01:51.560 --> 0:01:55.080 and immunity is going to wane over time. And the 0:01:55.160 --> 0:01:58.000 first thing that you'll see when your immunity wanes, is 0:01:58.040 --> 0:02:01.880 an increase in the number of cases. Um, what we're 0:02:01.920 --> 0:02:05.000 hoping is that that increased number in cases is going 0:02:05.040 --> 0:02:08.520 to lead to a lower amount of hospitalizations and severe cases. 0:02:08.520 --> 0:02:11.080 But that's really wherever the monitoring is happening right now. 0:02:11.639 --> 0:02:13.959 And is that what we're seeing so far that even 0:02:14.040 --> 0:02:17.200 with this surge in cases, it seems like hospitalizations, we 0:02:17.240 --> 0:02:20.079 haven't heard as much about them. Yeah, you know, I 0:02:20.120 --> 0:02:23.280 don't want to say that a surgeon cases is good 0:02:23.320 --> 0:02:27.040 to see, but when you see it with a correspondingly 0:02:27.160 --> 0:02:31.720 smaller surgeon hospitalizations, and when you look at who's getting hospitalized, 0:02:31.760 --> 0:02:35.120 it still tends to be people who are who have 0:02:35.200 --> 0:02:38.640 not been boosted or have not had a COVID infection 0:02:39.040 --> 0:02:42.040 in recent times. So the signs are there that says 0:02:42.600 --> 0:02:46.400 vaccination with a boosting or if you were vaccinated and infected, 0:02:46.960 --> 0:02:49.720 you have at least protection from severe disease and are 0:02:49.760 --> 0:02:53.560 probably seeing some protection from infection as well. And Dr Pekosh, 0:02:53.600 --> 0:02:55.960 I also want to ask about the pill because I've 0:02:56.000 --> 0:02:57.640 been making the joke. You know, I got COVID at 0:02:57.639 --> 0:02:59.919 the beginning of April. I got boosted the hard way, 0:03:00.040 --> 0:03:03.560 but I could not get my hands on any sort 0:03:03.560 --> 0:03:08.560 of treatment, on any sort of pilla exactly tried to, 0:03:08.680 --> 0:03:11.240 could not get there, didn't have an underlying condition, and 0:03:11.240 --> 0:03:14.639 I found that somewhat frustrating. Um, I do want to 0:03:14.720 --> 0:03:17.240 jump in because I wonder if it's a state by 0:03:17.280 --> 0:03:22.720 stately and that's what I wanted to to highlight here. Yeah, 0:03:22.760 --> 0:03:25.000 you know, one of the things that I think people 0:03:25.040 --> 0:03:28.720 should really do right now is be a little proactive, 0:03:29.240 --> 0:03:32.520 particularly if you're in one of the groups that's highly 0:03:32.600 --> 0:03:35.880 vulnerable to severe COVID. You know, go out and find 0:03:35.920 --> 0:03:40.120 the pharmacies that do this test as treat program, because 0:03:40.360 --> 0:03:44.800 not all pharmacies do the program, UM, and not all 0:03:44.840 --> 0:03:48.600 pharmacies have a lot of doses of these drugs in stock. 0:03:49.040 --> 0:03:50.480 So now it's a good time if you if you 0:03:50.520 --> 0:03:53.120 want to pa prepare in some way, go out and 0:03:53.160 --> 0:03:55.760 find those pharmacies so that you know where to go 0:03:55.840 --> 0:03:59.960 in case you get infected. Okay, I'm so frustrated because 0:04:00.080 --> 0:04:03.480 is if we know this is effective, and we knew 0:04:03.520 --> 0:04:07.600 there would be more spikes in cases, why do some 0:04:07.720 --> 0:04:11.000 pharmacies not have sufficient supply. You know, there's a little 0:04:11.040 --> 0:04:13.360 bit of a problem here in terms of being able 0:04:13.400 --> 0:04:16.840 to have the right accreditations to be able to do 0:04:16.920 --> 0:04:21.000 the test and UM and make the prescription at the 0:04:21.040 --> 0:04:25.479 same time. So not all pharmacies are capable or have 0:04:25.600 --> 0:04:28.480 the right accreditation to be able to do that. So 0:04:28.880 --> 0:04:32.000 more and more are doing this, more and more are available. 0:04:32.040 --> 0:04:34.919 I think the flow of the drug into the pharmacies 0:04:35.040 --> 0:04:37.159 is increasing, but I think people still have to do 0:04:37.200 --> 0:04:38.600 a little bit of work to make sure they know 0:04:38.680 --> 0:04:43.200 where to go UM, particularly because the timing of the 0:04:43.279 --> 0:04:45.680 drug is so important. You've got to take it within 0:04:45.920 --> 0:04:48.960 five days or so of symptom onset for it to 0:04:49.000 --> 0:04:53.560 be effective. And dr I mean, like Tim mentioned, we've 0:04:53.600 --> 0:04:55.320 run in a lot of the same circles and in 0:04:55.360 --> 0:04:59.960 those circles at a lot of people in that circle 0:05:00.240 --> 0:05:03.200 UM have gotten COVID just in the last couple of weeks. 0:05:03.240 --> 0:05:05.839 Definitely a wave going on. And I mean in my 0:05:05.839 --> 0:05:08.400 own personal conversations, I've heard a lot of frustration, you know, 0:05:08.480 --> 0:05:11.599 I've been triple vacs, like what what even is the 0:05:11.640 --> 0:05:14.479 point of getting the booster? And I mean, what would 0:05:14.520 --> 0:05:18.040 you say to that if it almost feels inevitable? Again, 0:05:18.120 --> 0:05:21.080 how important is that? Uh? You know, initial booster, that 0:05:21.200 --> 0:05:25.800 second booster yeah, the the second the well at least 0:05:25.880 --> 0:05:28.320 the first booster, so our third mr and A dose 0:05:28.880 --> 0:05:32.320 is very very critical to make sure that your immune 0:05:32.360 --> 0:05:38.880 response recognizes variants like delta and all macron um with 0:05:38.880 --> 0:05:42.240 with a good enough efficacy so that you can stay 0:05:42.240 --> 0:05:44.800 out of the hospital. I think one of the things 0:05:44.800 --> 0:05:47.640 that we have to realize here is is the virus 0:05:47.760 --> 0:05:52.599 has changed an incredible amount since the early days of 0:05:52.640 --> 0:05:57.760 the vaccination roll out. UM, we had incredibly high efficacy 0:05:57.839 --> 0:06:01.920 numbers early for the vaccine. The vaccine hasn't changed. The 0:06:02.040 --> 0:06:06.000 virus has gotten better at infecting us, it's gotten better 0:06:06.200 --> 0:06:09.400 at evading some of immunity. So what we're now seeing 0:06:09.480 --> 0:06:12.880 is that the vaccine it doesn't have that beautifully perfect 0:06:13.480 --> 0:06:17.159 protection that we saw initially. So the vaccines are still good. 0:06:17.520 --> 0:06:19.880 We have to work on getting the right strategy of 0:06:19.960 --> 0:06:23.440 vaccination to maintain protection. But it's really the virus that 0:06:23.480 --> 0:06:26.480 has become so much better at infecting us. Dr Pekosh, 0:06:26.560 --> 0:06:28.480 we only have thirty seconds left. I do want to 0:06:28.520 --> 0:06:33.320 briefly ask you about monkey pox, which is spreading in 0:06:33.360 --> 0:06:36.119 a handful of areas in the UK and in the US. 0:06:36.200 --> 0:06:39.160 What do we need to know, um, monkey pox is 0:06:39.200 --> 0:06:44.279 only transmitted after very close contact with someone who's infected UM. 0:06:44.320 --> 0:06:48.200 It's not very easy to pick up UM. The cases 0:06:48.279 --> 0:06:51.320 in the US are still very low, so for the 0:06:51.400 --> 0:06:54.839 vast majority of people, it's not a concern right now. Okay, 0:06:54.880 --> 0:06:58.679 good to hear. Dr Andy Pecosh, professor of molecular microbiology 0:06:58.800 --> 0:07:02.039 and Immunology at the Johns Hopkins University Bloomberg School of 0:07:02.080 --> 0:07:04.080 Public Health. He joins us on the phone from Baltimore, 0:07:04.279 --> 0:07:06.240 the Bloomberg School of Public Health. It is supported by 0:07:06.279 --> 0:07:10.040 Michael R. Bloomberg, the founder of Bloomberg LP and Bloomberg 0:07:10.080 --> 0:07:14.160 phom Anthropies. You're listening to Bloomberg Business Week with Carol 0:07:14.200 --> 0:07:18.680 Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:07:18.960 --> 0:07:23.000 A benchmark s G index has removed Tesla, sparked a 0:07:23.040 --> 0:07:26.320 debate about which companies do and don't pass muster with 0:07:26.360 --> 0:07:30.520 socially aware investors. We're talking about SMP. Dow Jones Indseeason 0:07:30.560 --> 0:07:34.320 removed Tesla from its SMP five hundred s G index 0:07:34.640 --> 0:07:37.480 because the company scawn environmental, social and government standards. Has 0:07:38.040 --> 0:07:40.600 remained quote fairly stable over the past year, but it's 0:07:40.600 --> 0:07:44.240 slipped down the ranks against improving global peers. Let's get 0:07:44.240 --> 0:07:47.040 into it with Shin contractor e SG analysts for Bloomberg Intelligence. 0:07:47.080 --> 0:07:50.480 She's with us in the Bloomberg Interactive broker's studio. Shaheen. 0:07:50.560 --> 0:07:54.880 What's what's not s G about Tesla? So, Tim sim 0:07:54.960 --> 0:07:57.680 great question. First, I honestly I shake Katy's excitement has 0:07:57.720 --> 0:08:01.480 been waiting to aboutin this morning. So when it comes 0:08:01.480 --> 0:08:04.560 to Tesla, it's really that S and that G that 0:08:04.640 --> 0:08:07.600 it that is the social and the government, sorry that 0:08:07.640 --> 0:08:11.480 it that it is challenged on SMP even cited it's 0:08:11.560 --> 0:08:16.160 relating to some things like racial discrimination, poor working conditions, 0:08:16.280 --> 0:08:20.560 and even on Bloomberg governance scores, for example, our executive 0:08:20.600 --> 0:08:25.240 compensation scores, they're not so great for Tesla. Okay, Shahan, 0:08:25.320 --> 0:08:27.080 you are such a nice person, but I know you 0:08:27.120 --> 0:08:28.800 have a spice to take here. So in the notes 0:08:28.960 --> 0:08:31.640 sent over, you wrote that we believe Tesla's removal from 0:08:31.640 --> 0:08:37.160 the SMP five s G index perhaps overdue. Why overdo 0:08:38.320 --> 0:08:41.319 the million dollar question? Is Tesla e s G um? 0:08:41.360 --> 0:08:45.360 I think that's highly sort of debated. Tesla is a 0:08:45.480 --> 0:08:49.640 very unique company where it's focused on the e UH 0:08:49.920 --> 0:08:53.520 seems to be sort of cater towards this impact theme. 0:08:53.559 --> 0:08:55.079 But when it comes to the S and the G, 0:08:55.320 --> 0:08:59.640 it's it faces challenges. And that's where I think that 0:08:59.679 --> 0:09:01.920 when it comes to a broody as she found E 0:09:02.120 --> 0:09:05.360 s she is at least to us all about risk mitigations. 0:09:05.480 --> 0:09:08.480 So when it comes to a company managing sort of 0:09:08.480 --> 0:09:12.120 the recent opportunities within its regulatory environment or within its 0:09:12.200 --> 0:09:15.360 operating environment, that's why we cannot ignore the S, M, 0:09:15.400 --> 0:09:19.000 the G. And that's where I think, Um, if we 0:09:19.080 --> 0:09:24.160 have to unpack ees she e perhaps fits Tesla. Tesla 0:09:24.240 --> 0:09:25.800 can be in an back found, it can be in 0:09:25.840 --> 0:09:28.640 an environmental fund, but in a broody as she found 0:09:29.480 --> 0:09:33.560 Artaic is perhaps not, and that is debatable. I will 0:09:33.600 --> 0:09:37.640 say that, well, so so what does fit into the 0:09:37.720 --> 0:09:42.040 category B S G if if Tesla doesn't, So it's 0:09:42.080 --> 0:09:45.679 really about companies that are managing their recent opportunities that 0:09:45.720 --> 0:09:49.160 are material I see sort of Tesla is one that 0:09:49.280 --> 0:09:52.560 people confuse the as she with sort of impact, right, 0:09:52.800 --> 0:09:54.840 what is doing good on the world versus E S? 0:09:54.880 --> 0:09:59.120 She is sure within that framework, but more about what 0:09:59.240 --> 0:10:02.000 are the as an opportunities that impact my bottom line 0:10:02.000 --> 0:10:04.760 and how am I managing that? So it's it's it's 0:10:04.800 --> 0:10:07.720 all about fitting within that framework. And there are multiple 0:10:07.760 --> 0:10:09.880 companies that sort of cater to this, but we have 0:10:10.000 --> 0:10:12.800 to separate E S SHE from an impact theme, if 0:10:12.840 --> 0:10:16.680 that makes sense. And so this is the specifically talking 0:10:16.679 --> 0:10:19.040 about the S and P five hundred s G index 0:10:19.120 --> 0:10:21.839 that Tesla was removed from. Do you think that other 0:10:22.200 --> 0:10:26.800 index providers could follow suit? Uh, that's that's a hard one. 0:10:26.840 --> 0:10:29.439 Like I said, you know, Tesla still today is the 0:10:29.480 --> 0:10:33.680 most debated or one of the most debated UH stocks 0:10:33.679 --> 0:10:37.800 out there. So it's this SMP removal I think fuels 0:10:37.840 --> 0:10:41.080 this debate. But according to our analysis, many are the 0:10:41.120 --> 0:10:42.920 E S SHE funds whard it. In fact, it is 0:10:43.400 --> 0:10:45.760 highly included stock in E S SHE funds. And this 0:10:46.200 --> 0:10:49.640 we'll just it's just going to continue that debate. What 0:10:49.760 --> 0:10:51.760 we're investing in audience, What does it need to know 0:10:52.200 --> 0:10:55.800 about investing in E S G companies? I think the 0:10:55.840 --> 0:11:00.280 main thing to understand is labels and what you see king. 0:11:01.440 --> 0:11:04.080 If you're impacting in the SC fund and you're seeking 0:11:04.120 --> 0:11:06.960 some kind of impact investing, that is a little sort 0:11:06.960 --> 0:11:10.400 of divided. So it's understanding what you want and then 0:11:10.480 --> 0:11:13.679 understanding the kind of fund that meets that I call 0:11:13.800 --> 0:11:16.360 it sort of looking under the hood. That makes sense. 0:11:16.400 --> 0:11:18.600 And when I hear you say impact, I mean I 0:11:18.640 --> 0:11:22.079 think disruption. I think disruptive companies. Is that sort of 0:11:22.120 --> 0:11:24.600 the definition that you're using as well? I think if 0:11:24.600 --> 0:11:28.240 it is additionality, what is the additionality in terms of 0:11:28.280 --> 0:11:32.360 either mission reductions, diversity, social governance issues that you're creating 0:11:32.800 --> 0:11:35.319 or is hes? She is more risk mitigation, like are 0:11:35.360 --> 0:11:37.440 you managing the risk that are in front of you 0:11:37.760 --> 0:11:40.839 relating to non financial indicators. At the end of the day, 0:11:40.880 --> 0:11:42.520 does this matter just in the last thirty seconds we 0:11:42.559 --> 0:11:46.400 have for Tesla. Uh, that's a good question. Um, I 0:11:46.440 --> 0:11:49.240 don't know. It's going to continue to fuel this debate. 0:11:49.400 --> 0:11:52.160 That's I think what we've what we sort of settled on. 0:11:52.360 --> 0:11:56.080 Whether you know, the MSCI indices are the broad shared 0:11:56.160 --> 0:11:59.040 with the passive funds and they still hold TESLA so 0:11:59.679 --> 0:12:01.720 in the in the grand scheme things. We just think 0:12:01.720 --> 0:12:03.800 it's going to feel this debate. We know what's going 0:12:03.840 --> 0:12:07.080 to annoy Elon Musk at least tweet. He's tweeted about 0:12:07.080 --> 0:12:09.360 it quite a bit. She can contractor E s G 0:12:09.480 --> 0:12:13.000 analyst for Bloomberg Intelligence within the Bloomberg Interactive Broker Studio. 0:12:13.040 --> 0:12:14.360 But you know he tweets about a lot of stuff. 0:12:14.360 --> 0:12:19.240 He certainly does. He does. This is Bloomberg Business Week 0:12:19.400 --> 0:12:23.400 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:12:23.520 --> 0:12:26.400 Bloomberg Radio. Well, if you've been listening to our program 0:12:26.400 --> 0:12:28.240 over the past ten days or so, you've you've heard 0:12:28.280 --> 0:12:30.000 quite a bit about the collapse of Luna and the 0:12:30.040 --> 0:12:33.760 algorithmic stable coin Terra USD. Terra's coins were supposed to 0:12:33.760 --> 0:12:36.040 be the future of money, but they relied on confidence, 0:12:36.200 --> 0:12:39.520 which can vanish in an instant. Zeke Fox and Shan 0:12:39.679 --> 0:12:42.000 right about the sixty billion dollar collapse in the new 0:12:42.040 --> 0:12:45.360 issue of Business Week magazine. It's available on newsstands, on 0:12:45.400 --> 0:12:48.800 the Bloomberg terminal and at Bloomberg dot com Slash business Week. 0:12:49.120 --> 0:12:52.160 Zeke Fox's financial investigations reporter at Bloomberg News. He's with 0:12:52.240 --> 0:12:54.719 us in the studio in New York. Joe Webber is 0:12:54.760 --> 0:12:57.760 the editor of Bloomberg Business Week. He joins us on 0:12:57.760 --> 0:13:02.000 the access line from Brooklyn. What I really like about 0:13:02.280 --> 0:13:06.240 Zeke and Muya's story is that it focuses not just 0:13:06.320 --> 0:13:09.040 on what happened and what went wrong, but it also 0:13:09.120 --> 0:13:15.480 includes uh, personal stories of people who lost a lot 0:13:15.520 --> 0:13:20.520 of money betting big on crypto in this space. Yeah, 0:13:20.800 --> 0:13:23.560 it's it was kind of shocking because for all of 0:13:23.600 --> 0:13:26.920 the kind of the headlines and all the stories and 0:13:26.960 --> 0:13:30.199 the the stuff of UM of what had gone wrong 0:13:30.240 --> 0:13:35.000 with Tera, which UM you know, taras usd was UM 0:13:35.280 --> 0:13:38.200 a stable coin UM and Luna was attached to it. 0:13:38.320 --> 0:13:41.040 Like for all of that, we had not really got 0:13:41.080 --> 0:13:43.920 to hear from story of stories of like real people 0:13:43.960 --> 0:13:47.560 who had money attached to this stuff and UM. Once 0:13:47.800 --> 0:13:51.120 all of that was vaporized, you know, people were left 0:13:51.160 --> 0:13:55.440 looking at holding paper bags basically UM. And and it's 0:13:55.480 --> 0:13:59.720 sort of an interesting space in general because of UM, 0:13:59.760 --> 0:14:02.120 you know, stable coins being a thing that we've asked 0:14:02.400 --> 0:14:06.119 to write about on on multiple times, uh on multiple occasions. 0:14:06.600 --> 0:14:09.640 And he had an amazing tether odyssey last year, and 0:14:09.720 --> 0:14:12.679 so immediately we're just like, Zeke, can you tell us 0:14:12.720 --> 0:14:14.800 more about the space? So, so, Zeke, would you discover 0:14:14.840 --> 0:14:17.480 as you as you dove into your reporting and some 0:14:17.520 --> 0:14:19.840 of the stories that you found along the way. Yes, 0:14:19.960 --> 0:14:23.640 So if you are not a crypto person, this coin 0:14:23.720 --> 0:14:26.600 that collapsed it would just sound insane. I mean it 0:14:26.720 --> 0:14:29.440 got up to this is a sixty billion dollar collapse, 0:14:29.520 --> 0:14:32.680 which in like traditional finance would be like big news. 0:14:33.080 --> 0:14:35.760 And basically, this was a coin that was supposed to 0:14:35.760 --> 0:14:38.880 always be worth one dollar because you could trade it 0:14:38.960 --> 0:14:42.720 for one dollar worth of a second coin, and you 0:14:42.840 --> 0:14:45.760 might say like, well, why do I want the second coin, 0:14:46.440 --> 0:14:49.440 and to that they would say, don't think about that 0:14:49.480 --> 0:14:54.680 too much. We're gonna pay you interest, and like it 0:14:54.720 --> 0:14:56.760 seems kind of like if it sounds kind of flimsy 0:14:56.800 --> 0:14:59.160 to you, it sounded kind of flimsy to a lot 0:14:59.200 --> 0:15:01.600 of people in crypto, but that didn't stop it from 0:15:01.600 --> 0:15:06.480 amassing like huge amounts of assets. And then last week 0:15:07.960 --> 0:15:10.440 it all like came crashing down. And I spent a 0:15:10.440 --> 0:15:14.120 while trying to talk to regular investors who had sunk 0:15:14.120 --> 0:15:17.280 their savings into this and found that, I mean, people 0:15:17.400 --> 0:15:20.400 really believed in it to the they sunk like their 0:15:20.400 --> 0:15:22.760 whole net worth into this. I know Katie's dying to 0:15:22.880 --> 0:15:24.680 come in on this because you know so much about 0:15:24.680 --> 0:15:26.920 this space, but I do have to ask thank you. 0:15:27.000 --> 0:15:29.320 I do have to ask Zeke, because you mentioned that, um, 0:15:29.360 --> 0:15:31.280 it would sound insane to a lot of people. I 0:15:31.720 --> 0:15:34.840 think one thing that perhaps gave people confidence was some 0:15:34.920 --> 0:15:37.840 of the backers. Right, you had Galaxy Digital Holdings, you 0:15:37.840 --> 0:15:40.840 had Jumped Trading, you had the venture investment arms of 0:15:41.120 --> 0:15:44.880 coin Based Global and Finance. Those are those are real names? Yeah, 0:15:44.960 --> 0:15:48.040 I mean this guy seemed legit. This was one of 0:15:48.080 --> 0:15:53.880 the biggest cryptocurrencies and it's uh creator, Doe Kwan, was 0:15:53.920 --> 0:15:56.360 like a major figure in the crypto world, and he 0:15:56.440 --> 0:16:00.720 was saying that this system he developed was going to 0:16:00.840 --> 0:16:03.680 be the future of finance. And in crypto there are 0:16:03.680 --> 0:16:05.200 a lot of projects that are sort of based on 0:16:05.240 --> 0:16:07.800 this idea of like, I don't know fake it until 0:16:07.840 --> 0:16:10.360 you make it. And there was this idea that if somehow, 0:16:10.400 --> 0:16:12.400 if it got going big enough and it really did 0:16:12.480 --> 0:16:15.400 become the future of finance, then whatever flaws there were 0:16:15.440 --> 0:16:18.040 in the business model could be kind of papered over, 0:16:18.560 --> 0:16:21.440 and that if we could just get it going, then 0:16:21.480 --> 0:16:25.200 the things that seemed maybe a bit ponzi ish about 0:16:25.200 --> 0:16:29.480 the plan would not be catastrophic. And tell us about 0:16:29.520 --> 0:16:32.320 what was happening as this went wrong, because as you 0:16:32.400 --> 0:16:35.560 lay out in your piece, this death spiral that it 0:16:35.720 --> 0:16:38.240 entered into this is something we see in money market 0:16:38.280 --> 0:16:41.480 funds that we see we can see in banks, this 0:16:41.600 --> 0:16:47.960 sort of run that just these these institutions that can't meet. Yeah, 0:16:48.000 --> 0:16:52.080 I mean. The idea was if Terra, the stable coin, 0:16:52.400 --> 0:16:56.600 dropped below a dollar, that arbitrageurs would come in and 0:16:56.600 --> 0:17:01.200 they'd buy Tara because they could trade one Terra for 0:17:01.440 --> 0:17:05.040 one dollar worth of the second coin, Luna. And so 0:17:05.119 --> 0:17:08.760 like if Luna went down to you know, ten cents, 0:17:08.880 --> 0:17:12.239 you would get ten lunas for your Terra and you 0:17:12.240 --> 0:17:15.080 would still be happy. So that would the arbitragures buying 0:17:15.200 --> 0:17:17.119 Terra would push the price of Terra back up to 0:17:17.160 --> 0:17:20.439 a dollar. But the problem was that as people started 0:17:20.440 --> 0:17:24.439 to worry the they bought, they were issued huge amounts 0:17:24.440 --> 0:17:26.520 of Luna, more and more Luna, and even though these 0:17:26.560 --> 0:17:28.720 giant piles of Luna were in theory worth the dollar, 0:17:29.359 --> 0:17:32.080 the selling of the Luna pushed on the price of Luna. 0:17:32.400 --> 0:17:34.760 More and more lunas issued. By the end of the 0:17:34.760 --> 0:17:39.200 week there were like trillions of Lunas out there, and 0:17:39.440 --> 0:17:42.520 basically you couldn't sell Luna at at any price. So 0:17:42.560 --> 0:17:46.959 like this initial problem that the value of the dollar 0:17:47.040 --> 0:17:50.520 coin was based on the second made up coin, like 0:17:50.600 --> 0:17:52.920 it worked great for like a year. In the end 0:17:53.480 --> 0:17:56.840 it was an issue. There was no like fundamental support 0:17:56.920 --> 0:17:59.840 for the value of the second coin, Luna, which led 0:17:59.840 --> 0:18:05.280 to this death spiral. Okay, markets have just been on 0:18:05.359 --> 0:18:10.280 pins and needles of late, and this one really rocked 0:18:10.640 --> 0:18:14.360 sort of the crypto space. And I'm curious how how 0:18:14.359 --> 0:18:18.560 it's reverberating, uh, since since you know, so much of 0:18:19.359 --> 0:18:22.560 uh interest in this space is sort of you know, speculative, 0:18:23.800 --> 0:18:26.800 is there a risk that um, you know, other other 0:18:26.840 --> 0:18:31.119 houses in the crypto space get rocked? Um Still, you know, 0:18:31.240 --> 0:18:35.280 it seems like during the panic that wiped like ten 0:18:35.920 --> 0:18:39.840 or more off the market value of all cryptocurrencies. But 0:18:39.960 --> 0:18:43.000 things seem to have stabilized. And one thing that was 0:18:43.040 --> 0:18:46.560 surprising about talking to people that invested in Terra is 0:18:46.600 --> 0:18:49.720 that most of them weren't like, oh, no, I've been 0:18:49.760 --> 0:18:52.880 I've been had, I'd better, I better stop with this plan. 0:18:53.440 --> 0:18:56.479 They were saying, let me find the next coin that 0:18:56.760 --> 0:18:58.560 is going to be worth you know, gonna go up 0:18:58.560 --> 0:19:01.639 a hundred times, so I can make back whatever. Some 0:19:01.760 --> 0:19:04.639 of them stayed in Terra in Luna because Do Kwan, 0:19:04.760 --> 0:19:07.119 the founder, he was kind of teasing that there was 0:19:07.160 --> 0:19:10.880 going to be some sort of rescue. That hasn't really happened. Yes, 0:19:11.200 --> 0:19:13.600 for during the week, he kept teasing there was a rescue. 0:19:13.960 --> 0:19:17.919 Now he's talking about a plan to revive the whole system, 0:19:17.960 --> 0:19:20.919 which seems really unlikely. But just before I came on here, 0:19:20.960 --> 0:19:22.960 I was looking on Twitter and people were talking about 0:19:23.440 --> 0:19:26.760 Luna going to the moon again. Because in the crypto world, 0:19:26.840 --> 0:19:29.560 you've got a coin that's really close to zero, instead 0:19:29.600 --> 0:19:33.359 of saying wow, that that's yeah, yeah, how far can 0:19:33.400 --> 0:19:36.000 it fall? Yeah, because a lot of rooms to rise. Zeke, 0:19:36.040 --> 0:19:38.560 what does all this mean for for actual stable coins 0:19:38.600 --> 0:19:40.480 like Tether that you've done a lot of reporting on. 0:19:40.480 --> 0:19:44.159 We about thirty seconds left. So Tether is supposedly backed 0:19:44.160 --> 0:19:47.600 by hard assets in the bank, and for a while 0:19:47.680 --> 0:19:49.840 it was getting during this crisis, it got a lot 0:19:49.840 --> 0:19:52.920 of redemption requests. So far it's been able to meet them. 0:19:53.160 --> 0:19:56.320 But definitely like people in Washington and are renewing their 0:19:56.320 --> 0:19:59.119 calls to regulate stable coins because of this collapse, So 0:19:59.200 --> 0:20:01.879 I look like even more likely that's going to happen 0:20:02.560 --> 0:20:06.560 all right, could potentially see regulation around the corner. Zeke 0:20:06.600 --> 0:20:10.680 Fox's financial investigations reporter for Bloomberg News. Zeke story is 0:20:10.720 --> 0:20:13.320 featured in the new issue of Bloomberg Business Week magazine. 0:20:13.520 --> 0:20:16.520 It's available now on news stands, on the Bloomberg terminal 0:20:16.600 --> 0:20:19.480 and at Bloomberg dot com slash business Week. Joe Weber 0:20:19.600 --> 0:20:22.239 is the editor of Bloomberg Business Week. He joined us 0:20:22.240 --> 0:20:25.200 this afternoon on the access line from Brooklyn. You're listening 0:20:25.200 --> 0:20:35.320 to business Week on Bloomberg Radio. I'm room journal. Yeah, 0:20:35.400 --> 0:20:40.359 but you let me drive? Oh no, no, no no, no, honey, please, 0:20:40.480 --> 0:20:46.200 I'll do the bride revels. I want to drive. It's 0:20:46.240 --> 0:20:53.959 good question. This is the drive to the globe. Communing 0:20:55.280 --> 0:20:58.320 don on Bloomberg Radio. Well, it's hard to believe. We 0:20:58.359 --> 0:21:00.440 are already there, just ten minutes a way from the 0:21:00.520 --> 0:21:03.960 close of trading here in New York City. The Dow 0:21:04.240 --> 0:21:07.200 lower by six tenths of one percent, the S four 0:21:07.200 --> 0:21:09.200 tenths of one percent. The NASDAC. We can go ahead 0:21:09.240 --> 0:21:12.800 and call that flatboat is down to point seven five points, 0:21:12.800 --> 0:21:16.040 just three percent. Let's get into it. Cathy ends Whistle 0:21:16.240 --> 0:21:18.760 is a managing director at Morgan Stanley. She joins us 0:21:18.800 --> 0:21:22.760 on the phone from Miami. Kathy, Uh, how are things 0:21:24.480 --> 0:21:29.679 beings far? Volatile? They are uncertain. It's giving everybody a 0:21:29.720 --> 0:21:34.240 little bit of uneasiness and a lot of people asking 0:21:34.400 --> 0:21:39.280 what to do in these markets. Finally, uh, and an 0:21:39.280 --> 0:21:41.560 honest answer when I ask how you're doing? Because I 0:21:41.600 --> 0:21:43.960 ask people all the time, and I'm like, are you 0:21:44.040 --> 0:21:47.480 kidding you? Look at these markets? How are you feeling? Okay? 0:21:47.520 --> 0:21:50.840 Thank you? You ended on a great question. I want 0:21:50.840 --> 0:21:53.720 to ask you that what do you do in these markets? 0:21:53.760 --> 0:21:56.360 Do you hide out or are you looking for opportunities 0:21:56.400 --> 0:21:59.679 amid some of the sell off here, I would say 0:21:59.720 --> 0:22:02.960 a little bit of both. So for the last six 0:22:03.000 --> 0:22:07.879 months or so, our firm has been cautioning against you 0:22:07.920 --> 0:22:12.280 know exactly what's happening now. So we've been helping clients 0:22:12.359 --> 0:22:16.560 move out of growth and into value and trying to 0:22:16.640 --> 0:22:21.159 like reset portfolios where we can take advantage of UM 0:22:21.520 --> 0:22:25.560 volatility and take things that are painful and turn them 0:22:25.560 --> 0:22:30.080 into potential opportunities by like booking losses for things that 0:22:30.160 --> 0:22:33.240 we don't think will recover as well and putting that 0:22:33.280 --> 0:22:37.879 money into areas that we like. One area that, surprisingly 0:22:38.160 --> 0:22:40.919 UM I've been putting money in for clients over the 0:22:41.000 --> 0:22:45.280