1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you 2 00:00:05,360 --> 00:00:07,640 Speaker 1: along with my co host Lisa brahma Witz. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penel podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:24,720 Speaker 1: that Bloomberg dot Com. Time to check in with Bloomberg Opinion. 8 00:00:24,720 --> 00:00:27,200 Speaker 1: We're joined by opinion calumnist John Authors. John is a 9 00:00:27,240 --> 00:00:29,280 Speaker 1: senior editor for Bloomberg Markets, joining us here in our 10 00:00:29,280 --> 00:00:32,120 Speaker 1: Bloomberg and Director Brooker Studio. So, John, we need an 11 00:00:32,159 --> 00:00:34,400 Speaker 1: update on Brexit. A lot of moving pieces over the 12 00:00:34,440 --> 00:00:37,160 Speaker 1: last twenty four hours. Can you give us kind of 13 00:00:37,280 --> 00:00:39,680 Speaker 1: just the latest lay of the land and where army 14 00:00:39,760 --> 00:00:42,559 Speaker 1: right now? The latest leg of the lands. We can 15 00:00:42,600 --> 00:00:48,519 Speaker 1: assume that that the plan that's Boris Johnson was putting 16 00:00:48,520 --> 00:00:52,720 Speaker 1: into place, that he would basically frighten everybody into letting 17 00:00:52,800 --> 00:00:56,440 Speaker 1: him have a no deal Brexit is dead. Doesn't necessarily 18 00:00:56,440 --> 00:00:58,760 Speaker 1: mean it won't happen some other way, but that strategy 19 00:00:58,800 --> 00:01:02,600 Speaker 1: has been decisively to feed it. The question now is 20 00:01:02,880 --> 00:01:09,279 Speaker 1: whether we actually have another general election and what point 21 00:01:09,440 --> 00:01:13,080 Speaker 1: that happens now. The critical thing, and I think possibly 22 00:01:13,120 --> 00:01:17,039 Speaker 1: the critical misjudgment that Johnson and his team made, is 23 00:01:17,080 --> 00:01:21,720 Speaker 1: that there was a change in the rules under David Cameron. 24 00:01:22,240 --> 00:01:24,679 Speaker 1: It was meant to be part of a big sweeping 25 00:01:24,880 --> 00:01:27,240 Speaker 1: change of of the British constitution. In fact it was 26 00:01:27,280 --> 00:01:30,319 Speaker 1: just about the only big thing that got passed, so 27 00:01:30,360 --> 00:01:33,880 Speaker 1: that now we have something approaching a fixed term parliament. 28 00:01:34,360 --> 00:01:37,280 Speaker 1: And for the previous century or so you had to 29 00:01:37,319 --> 00:01:39,959 Speaker 1: have an election within five years of the previous one, 30 00:01:40,200 --> 00:01:42,520 Speaker 1: but the prime minister could go to the country earlier 31 00:01:42,560 --> 00:01:45,360 Speaker 1: than that if they felt like it greatly increased the 32 00:01:45,360 --> 00:01:48,120 Speaker 1: strength of incumbency. In Factor and Blair were popular prime 33 00:01:48,120 --> 00:01:52,360 Speaker 1: ministers and they went early rather than get another mandate 34 00:01:52,360 --> 00:01:56,360 Speaker 1: before doing something unpopular. That is no longer an option. 35 00:01:56,680 --> 00:01:58,920 Speaker 1: Now you have to serve five years and if you 36 00:01:59,000 --> 00:02:02,360 Speaker 1: want to hold a another election you need sixty six 37 00:02:02,400 --> 00:02:05,960 Speaker 1: point six percent of the MP's labor has thirty eight 38 00:02:06,120 --> 00:02:10,600 Speaker 1: percent of MPs labor is not totally united, but it's 39 00:02:10,720 --> 00:02:16,960 Speaker 1: probably able to block any attempt at an election. As um, 40 00:02:17,040 --> 00:02:19,720 Speaker 1: we don't have a precedent for what goes on under 41 00:02:19,760 --> 00:02:23,120 Speaker 1: these new sets of rules. Some people think that the 42 00:02:23,160 --> 00:02:27,040 Speaker 1: rest of Parliament, we just say, Boris, you're stuck. You're there, 43 00:02:27,639 --> 00:02:30,240 Speaker 1: you don't have a majority, but you're still in the job. 44 00:02:30,760 --> 00:02:33,040 Speaker 1: I don't understand why this is positive. I'm trying to 45 00:02:33,040 --> 00:02:36,560 Speaker 1: stay so there's no snap election. They're going to block that. 46 00:02:36,880 --> 00:02:40,280 Speaker 1: But Boris Johnson basically doesn't have full authority or power 47 00:02:40,320 --> 00:02:43,800 Speaker 1: to go forth with negotiations with lack thereof, so this 48 00:02:44,120 --> 00:02:47,480 Speaker 1: just makes the UK kind of hamstrung. I don't see 49 00:02:47,480 --> 00:02:49,760 Speaker 1: how this gets them further away from a hard Brexit. 50 00:02:49,880 --> 00:02:53,760 Speaker 1: It gets okay, it's positive because precisely as you said, 51 00:02:54,120 --> 00:02:57,560 Speaker 1: Boris Johnson doesn't have as much authority as people thought 52 00:02:57,560 --> 00:02:59,120 Speaker 1: he did, and they weren't happy about Is having so 53 00:02:59,200 --> 00:03:03,359 Speaker 1: much authority because they didn't trust his judgment. More broadly, 54 00:03:04,000 --> 00:03:08,600 Speaker 1: the market really dislikes the idea of no deal brexit. 55 00:03:09,080 --> 00:03:11,160 Speaker 1: We now know that we have a very strong majority 56 00:03:11,200 --> 00:03:14,360 Speaker 1: in Parliament against it, and it looks thanks to the 57 00:03:14,360 --> 00:03:17,800 Speaker 1: fact that Parliament has stronger power over deciding when an 58 00:03:17,840 --> 00:03:20,639 Speaker 1: election happens and it used to that they can insist 59 00:03:21,000 --> 00:03:24,200 Speaker 1: that a no deal is ruled out before we even 60 00:03:24,240 --> 00:03:28,960 Speaker 1: have an election. It is an ungodly mess to use 61 00:03:29,000 --> 00:03:33,000 Speaker 1: my own term from my column this morning, and the 62 00:03:33,040 --> 00:03:36,520 Speaker 1: prospect for volatility is high, the prospect for good governance 63 00:03:36,640 --> 00:03:40,320 Speaker 1: is very low. From the point of view of British assets, 64 00:03:40,400 --> 00:03:44,840 Speaker 1: they have been priced on an increasing probability of no 65 00:03:45,000 --> 00:03:49,080 Speaker 1: deal anything other than anything other than no deal. Frankly, 66 00:03:49,920 --> 00:03:53,080 Speaker 1: they are amply priced for that risk, and that risk 67 00:03:53,160 --> 00:03:58,520 Speaker 1: swamps all other things. It doesn't make Britain attractive investment particularly, 68 00:03:58,560 --> 00:04:02,600 Speaker 1: but it does make it an appealingly priced investment. All right, 69 00:04:02,680 --> 00:04:06,640 Speaker 1: So give us your best guess as to next steps. 70 00:04:06,640 --> 00:04:08,800 Speaker 1: How does this play out? Are we? You know, as 71 00:04:08,800 --> 00:04:13,440 Speaker 1: we get to October one? Well, it's going to be 72 00:04:13,560 --> 00:04:18,080 Speaker 1: very difficult. I don't think. I don't think there is 73 00:04:18,200 --> 00:04:22,720 Speaker 1: a lot that Johnson himself can do about it at 74 00:04:22,800 --> 00:04:26,200 Speaker 1: this point, because his legs really have been cut from 75 00:04:26,360 --> 00:04:30,800 Speaker 1: under him. They've basically overplake their hand and now they've 76 00:04:31,360 --> 00:04:37,279 Speaker 1: the bluff has been called. Now the question becomes, can 77 00:04:37,400 --> 00:04:41,600 Speaker 1: the opposition to Brexits actually get its act together and 78 00:04:41,680 --> 00:04:45,279 Speaker 1: agree on something having failed to do so for the 79 00:04:45,360 --> 00:04:48,480 Speaker 1: last three years? What's the deadline for Boris Johnson in 80 00:04:48,600 --> 00:04:51,680 Speaker 1: terms of another election or when his tenure might be 81 00:04:51,800 --> 00:04:56,920 Speaker 1: up just naturally? Okay, So again, I'm not seeing how 82 00:04:56,960 --> 00:05:01,800 Speaker 1: this resolves in any positive way. There is there is 83 00:05:01,920 --> 00:05:05,440 Speaker 1: no I really really cannot imagine he's going to be 84 00:05:05,440 --> 00:05:08,440 Speaker 1: allowed to drag on for another three years. It might 85 00:05:08,520 --> 00:05:13,520 Speaker 1: be moderately amusing Jacob, Jacob re smug decides he's going 86 00:05:13,560 --> 00:05:15,960 Speaker 1: to make a habit of lying across three seats for 87 00:05:16,040 --> 00:05:20,800 Speaker 1: this that that that really could be quite amusing. You 88 00:05:21,279 --> 00:05:24,159 Speaker 1: how to do government better than yes? We do, yes, 89 00:05:24,240 --> 00:05:26,719 Speaker 1: but but you did have a big revolution when you 90 00:05:26,800 --> 00:05:28,920 Speaker 1: thought that you might have a better notion than we did. 91 00:05:29,279 --> 00:05:35,839 Speaker 1: So there we go. Um No, thats basically this is 92 00:05:35,960 --> 00:05:39,400 Speaker 1: purely the market reaction at the moment, and the notion 93 00:05:39,440 --> 00:05:44,160 Speaker 1: that this is positive is purely because um people really, 94 00:05:44,560 --> 00:05:48,080 Speaker 1: people in the investment community really think no deal is 95 00:05:48,120 --> 00:05:50,440 Speaker 1: a bad idea, and I personally do agree with them, 96 00:05:50,520 --> 00:05:53,280 Speaker 1: and no deal is not completely out of the question. 97 00:05:53,360 --> 00:05:56,200 Speaker 1: Now there is still Nigel Farage out there. One of 98 00:05:56,240 --> 00:05:59,440 Speaker 1: the possibilities is that this completely blessed burst the Conservatives 99 00:05:59,480 --> 00:06:02,640 Speaker 1: balloon and that the Brexit Party becomes the biggest party 100 00:06:02,640 --> 00:06:06,599 Speaker 1: when we finally have an election. But ultimately the ball 101 00:06:06,640 --> 00:06:09,280 Speaker 1: is in the cult of the anti Brexity is they 102 00:06:09,320 --> 00:06:12,480 Speaker 1: have to work out a way of doing things now 103 00:06:12,520 --> 00:06:14,760 Speaker 1: that that bluff has been called for. John Boris Johnson 104 00:06:14,800 --> 00:06:17,320 Speaker 1: and the Brexities. John Author's thank you so much for 105 00:06:17,360 --> 00:06:20,200 Speaker 1: being with us. It's always fabulous get your perspective, especially 106 00:06:20,200 --> 00:06:23,320 Speaker 1: on Brexit, which is I just shrug, which doesn't really 107 00:06:23,360 --> 00:06:26,880 Speaker 1: translate on on radio. John Author is a senior editor 108 00:06:26,920 --> 00:06:29,279 Speaker 1: for Bloomberg Markets, turning us here in our Bloomberger Active 109 00:06:29,279 --> 00:06:47,200 Speaker 1: Broker Studios. As the market kind of jogs around this 110 00:06:47,480 --> 00:06:49,640 Speaker 1: range and doesn't really make a big move in one 111 00:06:49,640 --> 00:06:52,360 Speaker 1: way or another. There's a question kind of hanging over 112 00:06:53,120 --> 00:06:56,240 Speaker 1: investment managers, which is when do they make a big move, 113 00:06:56,480 --> 00:06:58,880 Speaker 1: when do they sort of dip their toe in or 114 00:06:58,920 --> 00:07:01,720 Speaker 1: pull their money out? Winning us now, David Kotak, chairman 115 00:07:01,720 --> 00:07:04,760 Speaker 1: and chief investment officer at Cumberland Advisers. He joins us 116 00:07:04,760 --> 00:07:07,400 Speaker 1: here in our Bloomberg Intera Active Broker Studios. David, we 117 00:07:07,520 --> 00:07:10,680 Speaker 1: love having you on. Thank you for being here. What 118 00:07:10,720 --> 00:07:13,520 Speaker 1: are you doing at this point? Are you sitting on 119 00:07:13,560 --> 00:07:16,320 Speaker 1: your hands like everybody says they are in terms of 120 00:07:16,360 --> 00:07:19,840 Speaker 1: real money investment? At least it's always a pleasure. It's 121 00:07:20,160 --> 00:07:22,600 Speaker 1: we've had a big change since the last time we 122 00:07:23,240 --> 00:07:29,320 Speaker 1: talked last week we saw three rounds in our quantitative 123 00:07:29,360 --> 00:07:34,080 Speaker 1: work on sentiment that was saying panic and fear is 124 00:07:34,120 --> 00:07:37,960 Speaker 1: now rife in the markets. And that's appropriate when you 125 00:07:38,000 --> 00:07:41,240 Speaker 1: see the kind of headline risk we've had day after day. 126 00:07:42,080 --> 00:07:45,600 Speaker 1: We became nearly fully invested in the US stock market 127 00:07:45,880 --> 00:07:49,720 Speaker 1: in those sell offs. So I said here today and yesterday, 128 00:07:49,760 --> 00:07:52,000 Speaker 1: when I had my head handed to you, having just 129 00:07:52,160 --> 00:07:55,880 Speaker 1: gone in the week before, it was looking pretty bleak. 130 00:07:55,960 --> 00:07:59,080 Speaker 1: Today looks a little better. But the fact is we 131 00:07:59,160 --> 00:08:04,480 Speaker 1: make the case three ways. Fiscal policy is expanding. That's 132 00:08:04,520 --> 00:08:07,640 Speaker 1: a rising deficit's going to be over a trillion. That's 133 00:08:07,640 --> 00:08:12,320 Speaker 1: a Trump deficit. Monetary policy is flat too easy. There 134 00:08:12,400 --> 00:08:15,360 Speaker 1: isn't a chance interest rates go up in the United 135 00:08:15,400 --> 00:08:18,560 Speaker 1: States for the next year. They go down or stay 136 00:08:18,560 --> 00:08:21,160 Speaker 1: where they are. And the third one is the important one, 137 00:08:21,200 --> 00:08:25,640 Speaker 1: because the entire distribution of U. S Government debt is 138 00:08:25,760 --> 00:08:28,800 Speaker 1: somewhere between say one and a half and two percent 139 00:08:28,920 --> 00:08:32,480 Speaker 1: interest rates, and the inflation rate in the United States 140 00:08:32,600 --> 00:08:35,360 Speaker 1: is somewhere between one and a half and two percent, 141 00:08:35,920 --> 00:08:38,400 Speaker 1: And if you put those together, that means the real 142 00:08:38,600 --> 00:08:42,280 Speaker 1: interest rate in the United States is zero, which means 143 00:08:42,360 --> 00:08:49,080 Speaker 1: money is free, money free loose monetary, loose fiscal and 144 00:08:49,160 --> 00:08:52,199 Speaker 1: a hundred and sixty million people employed in the United 145 00:08:52,240 --> 00:08:57,160 Speaker 1: States legally with wages, and it's the wages arising. Show 146 00:08:57,200 --> 00:09:01,160 Speaker 1: me how you get to a big rush. I don't 147 00:09:01,240 --> 00:09:03,960 Speaker 1: see it. So I don't like the policy. I don't 148 00:09:04,000 --> 00:09:07,120 Speaker 1: like the trade war. I think it does a disservice 149 00:09:07,200 --> 00:09:09,960 Speaker 1: to the nation in the world, and I think navarro 150 00:09:10,160 --> 00:09:14,520 Speaker 1: Trump policy is wrong. I have to be agnostic on 151 00:09:14,760 --> 00:09:18,800 Speaker 1: policy and apply as an investment professional what I think 152 00:09:18,880 --> 00:09:21,640 Speaker 1: is the right choice. And that's what we did. Now 153 00:09:21,679 --> 00:09:23,960 Speaker 1: we'll find out if it's good red, but it's we're 154 00:09:23,960 --> 00:09:25,960 Speaker 1: in a new place here, and so of course what 155 00:09:26,000 --> 00:09:29,600 Speaker 1: we've seen almost on a daily basis is the headline risk, 156 00:09:29,640 --> 00:09:32,439 Speaker 1: which you talk about, and it kind of brings you 157 00:09:32,520 --> 00:09:35,680 Speaker 1: back to what seems to be the number one driver 158 00:09:35,880 --> 00:09:39,120 Speaker 1: of daily fluctuations in the in the markets is the 159 00:09:39,120 --> 00:09:42,360 Speaker 1: trade risk. So you, from your perspective, just have to 160 00:09:42,400 --> 00:09:44,960 Speaker 1: put that aside and think longer term. I guess, well, 161 00:09:45,040 --> 00:09:48,640 Speaker 1: I we're evolving a different position on the trade poll. 162 00:09:49,360 --> 00:09:52,760 Speaker 1: We used to think about this as a temporary phenomenon, 163 00:09:53,160 --> 00:09:55,319 Speaker 1: and the markets played that for a year and a 164 00:09:55,400 --> 00:09:59,040 Speaker 1: half and the politics of it seemed to suggest it, 165 00:09:59,640 --> 00:10:02,760 Speaker 1: but it's really happened, is I think what Trump and 166 00:10:03,240 --> 00:10:09,280 Speaker 1: his policy have done is permanently set back globalization and integration, 167 00:10:09,600 --> 00:10:13,040 Speaker 1: which was at work for decades. And the result of 168 00:10:13,040 --> 00:10:18,440 Speaker 1: globalization and integration was a declining protectionist path, and we 169 00:10:18,520 --> 00:10:23,360 Speaker 1: had it and more or less growing peace, although we 170 00:10:23,440 --> 00:10:28,800 Speaker 1: had hotspots. We are reversing that. It's a shame. What 171 00:10:28,960 --> 00:10:34,200 Speaker 1: does it mean. It means we'll have enclaves geographically instead 172 00:10:34,240 --> 00:10:38,680 Speaker 1: of globalization. So you take the US and you take Canada, Mexico, 173 00:10:39,000 --> 00:10:41,520 Speaker 1: put them together and say that's a North American place. 174 00:10:41,760 --> 00:10:43,920 Speaker 1: You have another and it'll be China centric. You have 175 00:10:43,960 --> 00:10:46,840 Speaker 1: another and it will be Europe, which is dealing now 176 00:10:46,920 --> 00:10:50,600 Speaker 1: with this monstrosity of negative interest rates. But it's a 177 00:10:50,679 --> 00:10:55,200 Speaker 1: separate enclave. And so for us, the focus then is 178 00:10:55,320 --> 00:10:57,920 Speaker 1: on this new world. We are going through what I 179 00:10:57,960 --> 00:11:01,840 Speaker 1: think is a hundred year flood and it's a major change. 180 00:11:02,120 --> 00:11:04,199 Speaker 1: And if you try to play by the old rules, 181 00:11:04,240 --> 00:11:08,280 Speaker 1: they don't work. Good example, if I have another minute, 182 00:11:09,200 --> 00:11:13,959 Speaker 1: if you take negative rates, are seventeen trillion in negative rates? 183 00:11:14,080 --> 00:11:18,199 Speaker 1: I know you follow that closely, and Lisa especially follows bonds. Yes, 184 00:11:18,280 --> 00:11:22,000 Speaker 1: for a long time, so you so you say, okay, 185 00:11:22,400 --> 00:11:26,520 Speaker 1: discount any asset with a negative interest rate, and the 186 00:11:26,600 --> 00:11:30,160 Speaker 1: ultimate mass says it's worth infinity. Now we know that's 187 00:11:30,160 --> 00:11:34,880 Speaker 1: not possible. So all bond models don't work when the 188 00:11:35,000 --> 00:11:39,360 Speaker 1: duration is longer than the maturity. The bond model doesn't work. 189 00:11:39,760 --> 00:11:44,000 Speaker 1: When you discount assets at these interest rates, you get 190 00:11:44,080 --> 00:11:50,680 Speaker 1: prices which change behavior extraordinarily. Okay, so all this kind 191 00:11:50,720 --> 00:11:54,720 Speaker 1: of comes down to why you just shifted your money 192 00:11:54,720 --> 00:11:57,840 Speaker 1: into equities? Is that correct? So? Well, that's right, we 193 00:11:58,000 --> 00:12:00,400 Speaker 1: took up the weight in equities and we're fully invested. 194 00:12:00,440 --> 00:12:05,640 Speaker 1: When the SNPI index yield is higher than the ten 195 00:12:05,760 --> 00:12:10,520 Speaker 1: year treasury? Would you buy the ten year treasury with 196 00:12:10,679 --> 00:12:14,440 Speaker 1: your money? My answer when that question comes to me 197 00:12:14,920 --> 00:12:17,920 Speaker 1: is no. But then I guess the flip side of 198 00:12:17,920 --> 00:12:20,880 Speaker 1: that is, do you think that that bonds are going 199 00:12:20,920 --> 00:12:23,520 Speaker 1: to underperform given that relationship, or do you think that 200 00:12:23,559 --> 00:12:25,800 Speaker 1: stocks just need to rally a whole bunch more to 201 00:12:25,880 --> 00:12:28,240 Speaker 1: sort of right size everything and then just returns will 202 00:12:28,280 --> 00:12:32,920 Speaker 1: generally be lower going forward. I think bonds underperform in 203 00:12:33,040 --> 00:12:37,440 Speaker 1: price as yields get restored if we don't have a 204 00:12:37,559 --> 00:12:43,640 Speaker 1: global recession or depression, If we don't repeat smooth, Holly. 205 00:12:43,760 --> 00:12:47,520 Speaker 1: And in the mature economies and the US which is 206 00:12:47,600 --> 00:12:52,320 Speaker 1: se now services, it's not that likely. You can't make 207 00:12:52,400 --> 00:12:55,040 Speaker 1: that case so strongly, or at least I can't. I 208 00:12:55,080 --> 00:12:57,959 Speaker 1: hear it all the time. The world's coming to an end. 209 00:12:58,320 --> 00:13:01,440 Speaker 1: Here's a code talk forecast. The world won't come to 210 00:13:01,520 --> 00:13:04,000 Speaker 1: an end. And if I'm wrong, you can tell me 211 00:13:04,040 --> 00:13:07,320 Speaker 1: how wrong. So, David, should we be are you thinking? 212 00:13:07,520 --> 00:13:09,800 Speaker 1: You know, when we've heard from some people as it 213 00:13:09,920 --> 00:13:14,000 Speaker 1: is perhaps a new world order, less global perhaps, but 214 00:13:14,080 --> 00:13:17,559 Speaker 1: that suggests that global growth is going to be less 215 00:13:17,600 --> 00:13:20,120 Speaker 1: going forward over the next ten twenty years, and perhaps 216 00:13:20,120 --> 00:13:22,800 Speaker 1: it was over the prior periods. I think you're right. 217 00:13:22,920 --> 00:13:28,800 Speaker 1: I think, Paul, global growth slows because we have impediments 218 00:13:28,840 --> 00:13:32,840 Speaker 1: to it now instead of assistance to it. You know, 219 00:13:32,960 --> 00:13:35,920 Speaker 1: for me, this is tough. I spent my entire adult 220 00:13:36,000 --> 00:13:40,800 Speaker 1: life in in philanthropic work and in geopolitical work with 221 00:13:40,960 --> 00:13:47,760 Speaker 1: organizations devoted to globalization and integration, attaining peace and a 222 00:13:47,880 --> 00:13:52,040 Speaker 1: higher standard of living worldwide. And it's all coming apart. 223 00:13:52,520 --> 00:13:56,839 Speaker 1: And the reason it's coming apart is a misguided policy 224 00:13:56,920 --> 00:14:03,040 Speaker 1: that originates in Washington. That's awful. So it's hard as 225 00:14:03,080 --> 00:14:06,000 Speaker 1: on the policy. But I sit with my partners in 226 00:14:06,000 --> 00:14:08,319 Speaker 1: the firm and I said, we don't make this policy. 227 00:14:08,520 --> 00:14:11,559 Speaker 1: Our job is by cell hold for a client. And 228 00:14:11,600 --> 00:14:14,040 Speaker 1: now we have an entry, and we have an entry 229 00:14:14,040 --> 00:14:17,800 Speaker 1: because the world looks so ugly and crazy, right. Interesting. 230 00:14:17,880 --> 00:14:20,680 Speaker 1: David Kota, thank you so much, as always, uh for 231 00:14:20,840 --> 00:14:24,360 Speaker 1: your comments now saying I think very interesting to take away, 232 00:14:24,440 --> 00:14:27,680 Speaker 1: lisays Mr Kotalk is fully invested in equities, using the 233 00:14:27,760 --> 00:14:30,600 Speaker 1: recent volatility, of the recent weakness in the markets to 234 00:14:30,640 --> 00:14:32,640 Speaker 1: get a little bit more restive on the equity side. 235 00:14:32,720 --> 00:14:35,600 Speaker 1: I think that it's really poignant that he said that 236 00:14:35,600 --> 00:14:37,320 Speaker 1: this is a hundred year of flood, that this is 237 00:14:37,760 --> 00:14:41,600 Speaker 1: sort of turning a lot of fundamental assumptions on their heads, 238 00:14:42,080 --> 00:14:44,840 Speaker 1: and what does that mean about how you look at 239 00:14:44,960 --> 00:14:48,040 Speaker 1: investing and just in general, how to call your perceptions 240 00:14:48,200 --> 00:14:50,960 Speaker 1: really important outlook. Yeah, very very it's a different view 241 00:14:50,960 --> 00:14:53,320 Speaker 1: and it's certainly one that makes a lot of sense, 242 00:14:53,360 --> 00:14:56,400 Speaker 1: and it's uh, it's probably perhaps just kind of recognizing 243 00:14:56,400 --> 00:14:59,440 Speaker 1: how the markets have changed out there. David Kotak, chairman, 244 00:14:59,440 --> 00:15:01,720 Speaker 1: a chief investor and officer Cumbler and Advisors, thank you 245 00:15:01,760 --> 00:15:04,240 Speaker 1: very much for joining us, giving you your thoughts on 246 00:15:04,320 --> 00:15:23,800 Speaker 1: the market. The question heading into the September f O 247 00:15:23,960 --> 00:15:26,600 Speaker 1: m C meeting is not whether the Federal Reserve will 248 00:15:26,640 --> 00:15:30,600 Speaker 1: cut rates, but whether they will signal substantial further cuts 249 00:15:30,920 --> 00:15:33,160 Speaker 1: later in the year and next year. Joining us now 250 00:15:33,160 --> 00:15:34,680 Speaker 1: to get a sense of what the pulse is in 251 00:15:34,760 --> 00:15:37,760 Speaker 1: FED world is Christopher Condon, his Federal Reserve reporter for 252 00:15:37,880 --> 00:15:40,920 Speaker 1: Bloomberg News. So, Chris, we are getting some Fed speak 253 00:15:41,040 --> 00:15:43,960 Speaker 1: this week. We heard from Boston FED President Eric rosen 254 00:15:44,000 --> 00:15:46,320 Speaker 1: Gren yesterday. We're going to hear from J. Powell on Friday. 255 00:15:46,520 --> 00:15:49,320 Speaker 1: What have we heard? What are we expecting to hear? Well, 256 00:15:49,360 --> 00:15:52,680 Speaker 1: we're hearing more about a split committee, really one I 257 00:15:52,720 --> 00:15:57,200 Speaker 1: think where the majority still sits with J. Powell uh 258 00:15:57,240 --> 00:16:00,000 Speaker 1: and his signal recently at Jackson Hole that there will 259 00:16:00,080 --> 00:16:04,440 Speaker 1: be another rate cut coming in September. UM. But there's 260 00:16:04,640 --> 00:16:08,560 Speaker 1: a good handful of regional presidents that are not comfortable 261 00:16:09,160 --> 00:16:12,240 Speaker 1: with cutting again. A couple of them are voters, namely 262 00:16:12,360 --> 00:16:15,720 Speaker 1: Eric rose and Gren. Esther George from Kansas City will 263 00:16:15,720 --> 00:16:20,480 Speaker 1: probably be another dissenter. Although she hasn't spoken publicly since 264 00:16:21,080 --> 00:16:24,040 Speaker 1: UM the last meeting. Rose and Gren has a couple 265 00:16:24,080 --> 00:16:28,800 Speaker 1: of times, however, UM and he's making a case that, yes, 266 00:16:28,920 --> 00:16:32,920 Speaker 1: the risks are growing to the US economy, obviously from 267 00:16:32,920 --> 00:16:37,520 Speaker 1: the deteriorating trade picture, but the damage there is confined 268 00:16:37,640 --> 00:16:44,080 Speaker 1: mainly to business sector, to manufacturing, especially whereas the consumer, 269 00:16:44,600 --> 00:16:47,960 Speaker 1: which counts for about sevent of GDP in the US, 270 00:16:48,280 --> 00:16:51,680 Speaker 1: is roaring on just fine because of tight labor market 271 00:16:52,240 --> 00:16:56,840 Speaker 1: and UH steadily increasing wages, not dramatically, but steadily, and 272 00:16:56,920 --> 00:17:00,200 Speaker 1: so the consumers continuing to spend in the consumer has 273 00:17:00,240 --> 00:17:03,880 Speaker 1: the ability to carry the US economy to at least 274 00:17:04,200 --> 00:17:07,399 Speaker 1: two percent growth this year. Yes, So, Christopher, you mentioned 275 00:17:07,440 --> 00:17:11,760 Speaker 1: the manufacturing and business spending, and we saw that the 276 00:17:11,760 --> 00:17:14,200 Speaker 1: I s M data came out the last week. We 277 00:17:14,280 --> 00:17:16,879 Speaker 1: showed manufacturing contracting for the first time, I guess in 278 00:17:17,160 --> 00:17:20,199 Speaker 1: three years, with at nine point one reading below that 279 00:17:20,240 --> 00:17:23,000 Speaker 1: Matt at the important fifty level. So to what extent 280 00:17:23,040 --> 00:17:27,480 Speaker 1: do you think that'll give the Hawks some ammunition? UM? Yeah, 281 00:17:27,560 --> 00:17:30,919 Speaker 1: I think it certainly will. But you know, there's a 282 00:17:30,920 --> 00:17:33,679 Speaker 1: lot of agreement on I would say, the diagnosis and 283 00:17:33,720 --> 00:17:38,879 Speaker 1: not the prescription here across the committee, people seem to 284 00:17:38,960 --> 00:17:43,440 Speaker 1: agree that the base case is still pretty good, um, 285 00:17:43,560 --> 00:17:46,399 Speaker 1: and that the risks are rising. The question is it 286 00:17:46,440 --> 00:17:50,600 Speaker 1: does all this turmoil and the business side, particularly in manufacturing, 287 00:17:50,720 --> 00:17:54,760 Speaker 1: begin to infect the consumer side. And the bridge there 288 00:17:55,320 --> 00:17:57,600 Speaker 1: is the jobs market. That's what a lot of people 289 00:17:57,640 --> 00:17:59,200 Speaker 1: are going to be watching. We've got a big jobs 290 00:17:59,280 --> 00:18:02,879 Speaker 1: number coming on Friday, the August non farm prey rolls. 291 00:18:03,280 --> 00:18:07,320 Speaker 1: And you know, the idea is if um businesses which 292 00:18:07,320 --> 00:18:11,119 Speaker 1: are already drawing back on plans for expansion, you know, 293 00:18:11,160 --> 00:18:15,159 Speaker 1: delaying or even just canceling investment plans, if they also 294 00:18:15,359 --> 00:18:18,600 Speaker 1: begin to lay off workers, and that gives us one 295 00:18:18,680 --> 00:18:22,879 Speaker 1: or two bad jobs numbers that could spook the consumer. 296 00:18:23,200 --> 00:18:26,520 Speaker 1: Rob Kaplan, the president of the Dallas FED, talked about that. 297 00:18:26,600 --> 00:18:29,399 Speaker 1: He's he's supportive of a ray cut in September, and 298 00:18:29,440 --> 00:18:33,040 Speaker 1: he worries that if the f o MC waits to 299 00:18:33,119 --> 00:18:36,600 Speaker 1: see a real sign that consumer spending is starting to 300 00:18:36,640 --> 00:18:39,239 Speaker 1: nose down, then they've waited a bit too long. Does 301 00:18:39,280 --> 00:18:42,359 Speaker 1: the data even matter at this point? Oh well, that 302 00:18:42,520 --> 00:18:45,280 Speaker 1: always matters, I think. But the reason why I ask 303 00:18:45,359 --> 00:18:47,960 Speaker 1: that is because at this point it seems like uncertainty 304 00:18:48,040 --> 00:18:51,280 Speaker 1: is the prevailing word. They're worried about uncertainty, creating some 305 00:18:51,400 --> 00:18:56,560 Speaker 1: uncertainty for uncertainty at businesses with uncertainty, and you know 306 00:18:56,600 --> 00:18:59,359 Speaker 1: that basically it's gonna slow spending and that they just 307 00:18:59,400 --> 00:19:01,040 Speaker 1: want to get a out of that. I mean, it 308 00:19:01,119 --> 00:19:03,760 Speaker 1: does not seem to be connected to you know, maybe 309 00:19:03,800 --> 00:19:06,200 Speaker 1: perhaps the inflation readings, but I mean, it doesn't seem 310 00:19:06,240 --> 00:19:08,600 Speaker 1: like anything could come out of the job's reporting Friday 311 00:19:08,840 --> 00:19:11,879 Speaker 1: they would make them not cut rates. So I agree 312 00:19:11,920 --> 00:19:14,040 Speaker 1: with that, Yes, yeah, I mean, and the short and 313 00:19:14,320 --> 00:19:16,680 Speaker 1: you always you know that you're not going to get 314 00:19:16,680 --> 00:19:19,240 Speaker 1: a dramatic move one way or the other based on 315 00:19:19,240 --> 00:19:22,040 Speaker 1: one or two data points. It's more of the accumulation. 316 00:19:22,119 --> 00:19:24,080 Speaker 1: So in that sense, I really do agree with you 317 00:19:24,160 --> 00:19:27,719 Speaker 1: that they're they're going to cut in September um. But 318 00:19:27,760 --> 00:19:31,359 Speaker 1: you know, there's a bigger decision waiting for this committee 319 00:19:31,440 --> 00:19:34,640 Speaker 1: is and that's at what point do they switch, even 320 00:19:34,720 --> 00:19:39,040 Speaker 1: the majority that's in favor of this mid cycle adjustment, 321 00:19:39,720 --> 00:19:42,520 Speaker 1: what point do they change gears and say no, we're 322 00:19:42,560 --> 00:19:46,880 Speaker 1: aheaded for a deeper downturn and we better start cutting harder. 323 00:19:47,359 --> 00:19:50,480 Speaker 1: That's where the argument of trying to use your limited 324 00:19:51,000 --> 00:19:55,239 Speaker 1: ammunition fast and aggressively starts to come into play. They 325 00:19:55,240 --> 00:19:59,480 Speaker 1: are not there yet, but you know they're thinking about that, 326 00:20:00,119 --> 00:20:02,720 Speaker 1: and the in the data as that accumulates will help 327 00:20:02,760 --> 00:20:06,440 Speaker 1: inform them there for sure. So Chris, just real quickly, UM, 328 00:20:06,440 --> 00:20:08,600 Speaker 1: how common is it to have you know the number 329 00:20:08,640 --> 00:20:10,480 Speaker 1: of dissenters that we seem to have on the FMC 330 00:20:10,720 --> 00:20:14,440 Speaker 1: right now? I would say it's not uncommon, particularly where 331 00:20:14,480 --> 00:20:17,840 Speaker 1: it's confined to the regional presidents. Um, you know, you'll 332 00:20:17,840 --> 00:20:22,240 Speaker 1: only have you know the potential for two dissenting voters there. Again, 333 00:20:22,880 --> 00:20:25,040 Speaker 1: where in the background too, there will be some other 334 00:20:25,920 --> 00:20:29,280 Speaker 1: uh certain probably I would say three or four other 335 00:20:29,320 --> 00:20:32,960 Speaker 1: regional presidents that afterwards come out saying they weren't really 336 00:20:32,960 --> 00:20:36,480 Speaker 1: comfortable with this. Uh. It gets a lot more dramatic 337 00:20:36,520 --> 00:20:41,240 Speaker 1: if we eventually see a governor UM expressing severe discomfort. 338 00:20:41,280 --> 00:20:44,280 Speaker 1: We're not quite there. So I don't think it's that 339 00:20:44,480 --> 00:20:47,320 Speaker 1: highly unusual at this point. Very good, Christopher Connan, Thank 340 00:20:47,359 --> 00:20:49,600 Speaker 1: you so much for joining us Chris as the Federal 341 00:20:49,600 --> 00:20:52,600 Speaker 1: Reserve reporter for Bloomberg News, joining us from our Washington 342 00:20:52,680 --> 00:21:11,480 Speaker 1: d C Bureau. Let's talk cryptocurrencies. Facebook made a big 343 00:21:11,520 --> 00:21:13,760 Speaker 1: gus splash schuck a month or so ago with their 344 00:21:13,960 --> 00:21:17,359 Speaker 1: libre product, their cryptocurrency entrance into the market. Let's get 345 00:21:17,400 --> 00:21:19,600 Speaker 1: an update on kind of where that market stands. Welcome 346 00:21:19,640 --> 00:21:24,879 Speaker 1: William Quickly. He's CEO of w a X Worldwide Asset Exchange. 347 00:21:25,119 --> 00:21:28,040 Speaker 1: He's also co founder of Tether. He joins us from 348 00:21:28,040 --> 00:21:30,480 Speaker 1: our l A studio. Williams, thanks so much for joining us. 349 00:21:30,800 --> 00:21:34,720 Speaker 1: You know, I guess cryptocurrencies for the broad audience kind 350 00:21:34,720 --> 00:21:38,919 Speaker 1: of took a higher profile when Facebook made that announcement 351 00:21:39,000 --> 00:21:42,399 Speaker 1: about its Libra crypto product. Give us, give us a 352 00:21:42,400 --> 00:21:45,000 Speaker 1: sense of kind of where you think the cryptocurrency market 353 00:21:45,080 --> 00:21:48,800 Speaker 1: is right now. First, I would say, Uh, the fact 354 00:21:48,840 --> 00:21:52,159 Speaker 1: that Facebook is finally considering doing what we call a 355 00:21:52,200 --> 00:21:55,960 Speaker 1: stable coin, which is issuing a token that's backed by 356 00:21:56,040 --> 00:21:58,520 Speaker 1: the US dollar and and a basket of other goods 357 00:21:59,119 --> 00:22:01,800 Speaker 1: is a is a strong indication that companies of that 358 00:22:01,920 --> 00:22:06,440 Speaker 1: size finally realized the value of incorporating blockchain into their 359 00:22:06,440 --> 00:22:09,679 Speaker 1: basic business. So there's a lot of other reasons why 360 00:22:09,680 --> 00:22:13,000 Speaker 1: why Facebook is is doing uh, what we call a 361 00:22:13,040 --> 00:22:17,600 Speaker 1: stable coin, other than simply saving money. Uh. The entire 362 00:22:18,119 --> 00:22:24,320 Speaker 1: uh cross border international payment business is very difficult. It's slow, 363 00:22:24,400 --> 00:22:28,080 Speaker 1: it's expensive, and when you think about somebody like Facebook, 364 00:22:28,080 --> 00:22:31,520 Speaker 1: they've got two billion people on their platform. They could 365 00:22:31,600 --> 00:22:34,680 Speaker 1: instantly create a currency if you will that would be 366 00:22:35,320 --> 00:22:37,320 Speaker 1: one of the biggest, if not the biggest, in the world. 367 00:22:38,200 --> 00:22:40,840 Speaker 1: So this is it's a very good use case what 368 00:22:40,880 --> 00:22:45,200 Speaker 1: we call stable coins, uh for for blockchain. Blockchain is 369 00:22:45,240 --> 00:22:48,840 Speaker 1: not perfect for everything. Now, in terms of your question, 370 00:22:49,080 --> 00:22:52,680 Speaker 1: what is the state of blockchain today? Uh, there has 371 00:22:52,720 --> 00:22:58,320 Speaker 1: been a ton of investment since seen back in hundreds 372 00:22:58,400 --> 00:23:01,200 Speaker 1: of businesses did what we called I c o s. 373 00:23:01,240 --> 00:23:03,639 Speaker 1: They raised lots to capital and they've been building out 374 00:23:04,200 --> 00:23:09,400 Speaker 1: really nice software systems. So we're going way beyond blockchain. 375 00:23:09,640 --> 00:23:15,240 Speaker 1: From the bitcoin perspective, Bitcoin is a is a fantastic invention, 376 00:23:15,400 --> 00:23:17,919 Speaker 1: but it lacks a lot of things. You know, it's slow, 377 00:23:18,040 --> 00:23:21,879 Speaker 1: it's expensive, and it's difficult to use. So those particular 378 00:23:21,920 --> 00:23:24,480 Speaker 1: problems are things that are now getting addressed and i'd 379 00:23:24,560 --> 00:23:28,199 Speaker 1: suspect over the second maybe the next year or so, 380 00:23:28,280 --> 00:23:33,040 Speaker 1: you're going to see a lot more businesses adopting crypto 381 00:23:33,160 --> 00:23:36,040 Speaker 1: and you're going to see them using these new types 382 00:23:36,080 --> 00:23:38,920 Speaker 1: of block chains that go way beyond the capabilities of 383 00:23:38,920 --> 00:23:41,359 Speaker 1: of the bitcoin block chain. So the concept of a 384 00:23:41,359 --> 00:23:44,480 Speaker 1: stable coin, and this is important and you're the perfect 385 00:23:44,480 --> 00:23:46,359 Speaker 1: person to be speaking about this because you're a co 386 00:23:46,440 --> 00:23:49,159 Speaker 1: founder of Tether, which is the stable coin probably that 387 00:23:49,200 --> 00:23:52,680 Speaker 1: people most note, uh, and my understanding, it's basically backed 388 00:23:52,760 --> 00:23:57,320 Speaker 1: by some currency or some commodity, or there's something backing 389 00:23:57,440 --> 00:24:00,920 Speaker 1: the value. So it's not just uh, you know, its 390 00:24:00,960 --> 00:24:03,800 Speaker 1: own kind of entity that that rises or falls based 391 00:24:03,800 --> 00:24:07,000 Speaker 1: on speculation. Am I correct? That's exactly right. So I 392 00:24:07,040 --> 00:24:10,040 Speaker 1: guess that there's there's a question, and this really gets 393 00:24:10,960 --> 00:24:14,200 Speaker 1: kind of dicey sometimes, what would you like to see 394 00:24:14,200 --> 00:24:18,480 Speaker 1: when it comes to the regulatory regime that overseas whether 395 00:24:18,920 --> 00:24:22,879 Speaker 1: the stuff that's backing the currency is actually worth what 396 00:24:22,920 --> 00:24:24,560 Speaker 1: it is. I mean, I'm I'm talking. I'm thinking about tether, 397 00:24:24,640 --> 00:24:26,800 Speaker 1: and there have been some questions about whether there are 398 00:24:26,880 --> 00:24:29,080 Speaker 1: enough dollars backing it or just sort of you know, 399 00:24:29,320 --> 00:24:32,879 Speaker 1: whether there's any you know, demonstration that they're all backed 400 00:24:32,880 --> 00:24:36,359 Speaker 1: by by dollars. Yeah. Well, first I would say, uh, 401 00:24:36,359 --> 00:24:39,200 Speaker 1: whether or not tether was backed by a dollar or not, 402 00:24:39,680 --> 00:24:43,399 Speaker 1: actually wouldn't matter if everybody agreed to take tether and 403 00:24:43,440 --> 00:24:46,520 Speaker 1: to value it at a dollar themselves, And that's actually 404 00:24:46,520 --> 00:24:49,879 Speaker 1: what's happened. There was some controversy about some cash I 405 00:24:49,880 --> 00:24:53,720 Speaker 1: think was about eight and fifty million that Tether was 406 00:24:53,800 --> 00:24:56,960 Speaker 1: unable to access because that bank account had been frozen, 407 00:24:57,400 --> 00:25:01,200 Speaker 1: not due to anything they had done. And yet the 408 00:25:01,240 --> 00:25:05,240 Speaker 1: price of tether continue to trade at just about a dollar. 409 00:25:05,640 --> 00:25:08,040 Speaker 1: So I think a lot of people want it to 410 00:25:08,119 --> 00:25:11,080 Speaker 1: be backed, and they and they would prefer it to 411 00:25:11,119 --> 00:25:14,119 Speaker 1: be backed. But what's even more important is that people 412 00:25:14,160 --> 00:25:17,800 Speaker 1: will exchange it for the value of a dollar. And UH, 413 00:25:18,400 --> 00:25:20,280 Speaker 1: to give you a sense of what I would like 414 00:25:20,440 --> 00:25:24,800 Speaker 1: to see, UH, it is almost impossible to get a 415 00:25:24,800 --> 00:25:28,800 Speaker 1: bank account if you are a blockchain based business, whether 416 00:25:28,880 --> 00:25:32,679 Speaker 1: that's tether or wax or any number of other businesses. 417 00:25:33,000 --> 00:25:36,800 Speaker 1: It's very difficult, and yet there is no legislation that 418 00:25:36,880 --> 00:25:40,640 Speaker 1: says it should be difficult. In fact, usually people talk 419 00:25:40,720 --> 00:25:45,120 Speaker 1: about money laundering and tax evasion and and knowing your 420 00:25:45,160 --> 00:25:49,440 Speaker 1: customer rules. The thing is blockchains can be designed to 421 00:25:50,000 --> 00:25:53,440 Speaker 1: provide those things in an even easier way than traditional 422 00:25:53,760 --> 00:25:56,800 Speaker 1: bank wires and payments. So what I'd like to see, 423 00:25:57,080 --> 00:26:00,440 Speaker 1: but I'm not holding my breath, is Congress is give 424 00:26:00,560 --> 00:26:04,280 Speaker 1: some guidance to the regulators. And the problem right now 425 00:26:04,400 --> 00:26:07,320 Speaker 1: is no regulator in the United States anyway has been 426 00:26:07,359 --> 00:26:12,359 Speaker 1: assigned to have jurisdiction over blockchain and crypto, and as 427 00:26:12,440 --> 00:26:16,120 Speaker 1: a result, you have many, many regulators all saying, well, 428 00:26:16,160 --> 00:26:19,480 Speaker 1: it's it's our turf. And as a result, if you're 429 00:26:19,480 --> 00:26:22,479 Speaker 1: in the blockchain business, you are really forced to comply 430 00:26:22,680 --> 00:26:29,280 Speaker 1: with numerous regulators, and there's many conflicting interpretations of what 431 00:26:29,440 --> 00:26:31,800 Speaker 1: is a crypto, how blockchain works, what rules you have 432 00:26:31,880 --> 00:26:35,119 Speaker 1: to follow. And keep in mind, blockchain is not just 433 00:26:35,280 --> 00:26:38,880 Speaker 1: the United States phenomenon. In fact, the US is relatively small. 434 00:26:39,280 --> 00:26:42,680 Speaker 1: It is a it is a global phenomenon, and therefore 435 00:26:43,080 --> 00:26:46,399 Speaker 1: any business operating in blockchain is really a global business. 436 00:26:46,800 --> 00:26:49,560 Speaker 1: Now that's one reason why, of course, I think Facebook 437 00:26:49,600 --> 00:26:52,359 Speaker 1: sees the benefit. They've got two billion people. Most of 438 00:26:52,400 --> 00:26:55,120 Speaker 1: those people on their platform are outside of the United States, 439 00:26:55,720 --> 00:26:59,879 Speaker 1: and Facebook clearly has seen it needs to move away 440 00:27:00,160 --> 00:27:05,160 Speaker 1: from simply advertising as its revenue model. Reason of course, yeah, wait, 441 00:27:05,240 --> 00:27:08,480 Speaker 1: what do you think the business case is for Facebook 442 00:27:08,520 --> 00:27:11,919 Speaker 1: with Libra? Well, I will first just say it's a 443 00:27:12,000 --> 00:27:15,840 Speaker 1: fantastic idea for them to do, and I hope they 444 00:27:15,880 --> 00:27:18,440 Speaker 1: take a lot of alernings that we've done from from 445 00:27:18,480 --> 00:27:23,560 Speaker 1: Tether and incorporate them. But consider that, uh, most of 446 00:27:23,600 --> 00:27:27,240 Speaker 1: the of the platforms today, social media platforms are really 447 00:27:27,280 --> 00:27:31,040 Speaker 1: add supported and with all of the privacy concerns and 448 00:27:31,040 --> 00:27:35,120 Speaker 1: and just concerns about advertising in general. It's pretty difficult 449 00:27:35,200 --> 00:27:37,560 Speaker 1: to imagine Facebook is going to be able to continue 450 00:27:37,600 --> 00:27:40,760 Speaker 1: to grow with that as its primary revenue model. They 451 00:27:40,800 --> 00:27:43,960 Speaker 1: need to get into commerce. I think they're actually late 452 00:27:44,000 --> 00:27:46,520 Speaker 1: to the game. They bought a business I would want 453 00:27:46,520 --> 00:27:49,200 Speaker 1: to say about five or six years ago called What's App. 454 00:27:49,480 --> 00:27:53,640 Speaker 1: What's Apps as a messaging app. Five million people globally 455 00:27:53,760 --> 00:27:57,399 Speaker 1: use it. In Asia. Those messaging apps other than What's 456 00:27:57,400 --> 00:28:00,920 Speaker 1: App have tons of commerce integrate it into them. You 457 00:28:01,000 --> 00:28:02,920 Speaker 1: want to order food, you want to order a car, 458 00:28:03,040 --> 00:28:05,680 Speaker 1: you want to book an Airbnb like experience, you do 459 00:28:05,800 --> 00:28:08,760 Speaker 1: it through that app. So I've been quite surprised that 460 00:28:08,880 --> 00:28:13,400 Speaker 1: Facebook has been so slow to exploit that on its 461 00:28:13,560 --> 00:28:18,000 Speaker 1: on its What'sapp platform. But this is really about e commerce, 462 00:28:18,160 --> 00:28:21,560 Speaker 1: global e commerce, and the biggest friction point in global 463 00:28:21,640 --> 00:28:25,920 Speaker 1: e commerce is the payment mechanism because it is so 464 00:28:26,200 --> 00:28:29,880 Speaker 1: complicated and there are so many individual entities that take 465 00:28:29,960 --> 00:28:35,119 Speaker 1: a piece of every transaction and it's slow. Yeah, William Quickly, 466 00:28:35,160 --> 00:28:38,560 Speaker 1: thank you so much for being with us. Really interesting discussion. 467 00:28:38,800 --> 00:28:42,360 Speaker 1: William Quickly as chief executive officer of WAX, the Worldwide 468 00:28:42,480 --> 00:28:46,520 Speaker 1: Asset Exchange. He also is co founder of Tether, which 469 00:28:46,680 --> 00:28:49,320 Speaker 1: is probably the best known stable coin, one of the 470 00:28:49,360 --> 00:28:54,320 Speaker 1: most popular crypto assets, which is tethered to the value 471 00:28:54,720 --> 00:28:57,600 Speaker 1: of the dollar. Thanks for listening to the Bloomberg P 472 00:28:57,680 --> 00:28:59,960 Speaker 1: and L podcast. You can subscribe and listen to inner 473 00:29:00,120 --> 00:29:03,040 Speaker 1: used at Apple Podcasts or whatever podcast platform you prefer. 474 00:29:03,440 --> 00:29:06,200 Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa 475 00:29:06,200 --> 00:29:08,840 Speaker 1: Abram Woyits. I'm on Twitter at Lisa Abram Wohits. One 476 00:29:09,080 --> 00:29:11,720 Speaker 1: before the podcast, you can always catch us worldwide. I'm 477 00:29:11,720 --> 00:29:12,520 Speaker 1: Bloomberg Radio.