1
00:00:00,800 --> 00:00:04,040
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside

2
00:00:04,040 --> 00:00:06,920
Speaker 1: my co host Matt Miller. Every business day we bring

3
00:00:06,960 --> 00:00:11,520
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

4
00:00:11,520 --> 00:00:15,560
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast

5
00:00:15,560 --> 00:00:18,439
Speaker 1: called Apple Podcast or wherever you listen to podcasts, and

6
00:00:18,480 --> 00:00:22,000
Speaker 1: at Bloomberg dot com slash podcast. Let's bring an Anastasia.

7
00:00:22,000 --> 00:00:26,040
Speaker 1: I'm rosso chief's chief investment strategist for I Capital. Anastasia.

8
00:00:26,239 --> 00:00:30,200
Speaker 1: What the first half of the year plus declining SMP.

9
00:00:30,840 --> 00:00:34,120
Speaker 1: We've got double digit declines and the Bloomberg's corporate bond

10
00:00:34,120 --> 00:00:37,879
Speaker 1: indext treasury bond indext, the sixty forty portfolio is dead.

11
00:00:38,200 --> 00:00:42,240
Speaker 1: What do we do in the second half? Yeah, well,

12
00:00:42,240 --> 00:00:46,560
Speaker 1: it has been a very very dell difficult and challenging start.

13
00:00:46,600 --> 00:00:51,159
Speaker 1: You write, it's sixty forty portfolios down almost se year today,

14
00:00:51,280 --> 00:00:54,880
Speaker 1: so it's really been um a tough start. But I

15
00:00:54,920 --> 00:00:57,480
Speaker 1: do think as a result of that, a lot of

16
00:00:57,520 --> 00:00:59,920
Speaker 1: things that it needed to correct did correct in the

17
00:01:00,080 --> 00:01:02,200
Speaker 1: first half of the year. And when you think about it,

18
00:01:02,240 --> 00:01:04,800
Speaker 1: we did a lot of heavy lifting. We came into

19
00:01:04,800 --> 00:01:06,920
Speaker 1: the year thinking we might get three rate hikes from

20
00:01:06,920 --> 00:01:09,240
Speaker 1: the FED and instead we're gonna get to three percent

21
00:01:09,440 --> 00:01:11,840
Speaker 1: or higher on the FED funt rate by the end

22
00:01:11,880 --> 00:01:14,320
Speaker 1: of the year. So that's a huge pivot that needed

23
00:01:14,360 --> 00:01:16,960
Speaker 1: to happen, and as a result, we needed to see

24
00:01:17,000 --> 00:01:19,480
Speaker 1: the reset and valuations. But we have seen that. If

25
00:01:19,520 --> 00:01:21,880
Speaker 1: you look at the NASTAC evaluation, the p went from

26
00:01:21,880 --> 00:01:25,160
Speaker 1: thirty five times to two times or so today, so

27
00:01:25,520 --> 00:01:29,399
Speaker 1: that's a significant correction. We've seen the crypto craze that

28
00:01:29,680 --> 00:01:31,480
Speaker 1: you know it was alive, and while at the tail

29
00:01:31,520 --> 00:01:35,839
Speaker 1: end of UM take take a big leg lower and

30
00:01:35,880 --> 00:01:37,880
Speaker 1: I think some of that needed to happen as well,

31
00:01:37,880 --> 00:01:41,000
Speaker 1: that froth needed to come out. So as a result,

32
00:01:41,120 --> 00:01:43,039
Speaker 1: as I think about the second half of the year,

33
00:01:43,480 --> 00:01:45,800
Speaker 1: I do still think we're not out of the woods

34
00:01:45,840 --> 00:01:47,920
Speaker 1: yet and there's gonna be challenges and we could talk

35
00:01:47,960 --> 00:01:50,520
Speaker 1: about some of this. I think something's may break. But

36
00:01:50,680 --> 00:01:53,240
Speaker 1: having said that, we're not a forty seven hundred anymore.

37
00:01:53,320 --> 00:01:55,800
Speaker 1: We're thirty seven on the SMP and if we would

38
00:01:56,040 --> 00:01:59,920
Speaker 1: go down to thirty so that might be justified by

39
00:02:00,040 --> 00:02:03,440
Speaker 1: multiples and earnings, that's still a lot less down to

40
00:02:03,480 --> 00:02:05,480
Speaker 1: go that where we started the year, well, that's still

41
00:02:05,560 --> 00:02:10,680
Speaker 1: higher than where we were when the COVID crisis forced

42
00:02:10,720 --> 00:02:14,840
Speaker 1: governments around the world to shut down completely their economies.

43
00:02:14,880 --> 00:02:19,880
Speaker 1: I mean, let's not forget how serious that was. Right, Um,

44
00:02:19,919 --> 00:02:22,960
Speaker 1: it's it's been a bad quarter for the sixty portfolio,

45
00:02:23,160 --> 00:02:29,079
Speaker 1: but last year was aces We went from the end

46
00:02:29,120 --> 00:02:31,959
Speaker 1: at the end of one after a global pandemic. I mean,

47
00:02:32,120 --> 00:02:37,639
Speaker 1: was that justified? Well, I think it was at the time, perhaps, right.

48
00:02:37,720 --> 00:02:39,680
Speaker 1: I mean, there was nothing to stop it because the

49
00:02:39,720 --> 00:02:43,880
Speaker 1: FED was incredibly easy. We've had zero percent interest rate

50
00:02:43,960 --> 00:02:46,880
Speaker 1: and people feel comfortable taken on risk. The beta trade

51
00:02:47,040 --> 00:02:49,600
Speaker 1: was very much alive and well, and you know, justified

52
00:02:49,680 --> 00:02:53,000
Speaker 1: by where the FED was and the risk appetite that

53
00:02:53,120 --> 00:02:56,400
Speaker 1: was there. But it's certainly not justified today. But I

54
00:02:56,400 --> 00:02:58,919
Speaker 1: would make the point is I don't think we need

55
00:02:58,960 --> 00:03:01,800
Speaker 1: to go to where we were just during the pandemic

56
00:03:01,880 --> 00:03:04,440
Speaker 1: or just coming out of the pandemic. Because the reason

57
00:03:04,520 --> 00:03:07,080
Speaker 1: I sort of circle this thirty five hundred level on

58
00:03:07,160 --> 00:03:10,520
Speaker 1: the SMP is because earnings estimates are higher what they

59
00:03:10,560 --> 00:03:13,480
Speaker 1: were before, but they probably need to come down some

60
00:03:13,840 --> 00:03:16,120
Speaker 1: And if we have a base case scenario that it's

61
00:03:16,200 --> 00:03:19,480
Speaker 1: not a recession but a slowdown consumer, let's slow down

62
00:03:19,480 --> 00:03:21,880
Speaker 1: that earnings revisions need to come through to the two

63
00:03:22,120 --> 00:03:24,359
Speaker 1: six or seven percent, And so you do the math

64
00:03:24,400 --> 00:03:26,440
Speaker 1: on that, and you apply a multiple of fifteen or

65
00:03:26,440 --> 00:03:29,519
Speaker 1: sixteen times, then that gets to two about thirty five

66
00:03:29,639 --> 00:03:32,720
Speaker 1: hundred on the SMP, maybe a little bit lower so

67
00:03:33,160 --> 00:03:36,880
Speaker 1: UM so yes, I think probably a little bit lower still,

68
00:03:37,120 --> 00:03:39,800
Speaker 1: but not to the levels that we saw just coming

69
00:03:39,840 --> 00:03:42,800
Speaker 1: out of So that's pretty conservative for earnings estimates. We

70
00:03:42,800 --> 00:03:46,280
Speaker 1: we've been talking um here in the newsroom about a

71
00:03:46,360 --> 00:03:50,280
Speaker 1: story that Jess Mett and Lou Wang wrote. Peloton analysts

72
00:03:50,280 --> 00:03:54,400
Speaker 1: still see Peloton tripling in price. UM analysts still see

73
00:03:54,520 --> 00:03:59,360
Speaker 1: Uber more than doubling. Analysts still see Carbona, Carvana doubling.

74
00:04:00,200 --> 00:04:04,280
Speaker 1: Um don't earnings estimates need to come down pretty significantly?

75
00:04:04,480 --> 00:04:08,080
Speaker 1: Why our cell side arnalists analysts so slow to bring

76
00:04:08,080 --> 00:04:12,440
Speaker 1: these earnings estimates down? Well, I think for some of

77
00:04:12,440 --> 00:04:14,840
Speaker 1: the companies, perhaps some of which you mentioned, they probably

78
00:04:15,040 --> 00:04:18,359
Speaker 1: do have some some further room to go. But the

79
00:04:18,400 --> 00:04:20,559
Speaker 1: reason I was referring to the six or seven percent

80
00:04:20,600 --> 00:04:24,520
Speaker 1: for the broad indusease the median earnings revision in a

81
00:04:24,560 --> 00:04:27,839
Speaker 1: recession and environment is about thirteen percent if you assume

82
00:04:27,839 --> 00:04:30,960
Speaker 1: they were not going to a full fledged several consecutive

83
00:04:31,000 --> 00:04:33,960
Speaker 1: quarters of negative GDP recession that I don't think thirteen

84
00:04:34,000 --> 00:04:37,000
Speaker 1: percent at the index level is justified. I think half

85
00:04:37,000 --> 00:04:40,160
Speaker 1: of that is the most likely scenario. And if you

86
00:04:40,160 --> 00:04:43,080
Speaker 1: look at two dollars on next twelve month earnings, you

87
00:04:43,120 --> 00:04:45,560
Speaker 1: apply that six or seven percent haircut to that and

88
00:04:45,600 --> 00:04:48,960
Speaker 1: that's what gets you to about two. So that's at

89
00:04:49,000 --> 00:04:51,800
Speaker 1: the index level. But I do think there may need

90
00:04:51,880 --> 00:04:55,360
Speaker 1: to be more Froth Moore exuberants that need to come

91
00:04:55,360 --> 00:04:58,120
Speaker 1: out of some of the sec long term secular growth trates.

92
00:04:58,560 --> 00:05:01,960
Speaker 1: And it's not universal. What's happened for the last two years.

93
00:05:02,000 --> 00:05:05,120
Speaker 1: You've seen massive acceleration and things like e commerce and

94
00:05:05,400 --> 00:05:07,320
Speaker 1: you know, perhaps the Pelicans of the world, but that's

95
00:05:07,360 --> 00:05:11,479
Speaker 1: not repeatable and those growth rates cannot possibly compare to

96
00:05:11,520 --> 00:05:13,360
Speaker 1: what they've seen in the last couple of years, so

97
00:05:13,640 --> 00:05:16,080
Speaker 1: perhaps there's more to go there, all right, Anastasia, thanks

98
00:05:16,120 --> 00:05:19,160
Speaker 1: so much for joining us. Really appreciate getting your perspective here.

99
00:05:19,160 --> 00:05:23,040
Speaker 1: A brutal first half of the year for investors. Um

100
00:05:23,120 --> 00:05:25,159
Speaker 1: you know, hopefully a little bit better in the second half,

101
00:05:25,160 --> 00:05:28,960
Speaker 1: but who knows. Anastasia amar Rosso, chief investment strategist for

102
00:05:29,040 --> 00:05:33,080
Speaker 1: I Capital and also a proud graduate of the University

103
00:05:33,080 --> 00:05:36,640
Speaker 1: of New Mexico, Los Lobos. That's very very cool there.

104
00:05:40,480 --> 00:05:43,200
Speaker 1: All right, we have yet another Supreme Court ruling. This

105
00:05:43,240 --> 00:05:45,400
Speaker 1: could be the last um we're gonna go to June

106
00:05:45,400 --> 00:05:48,680
Speaker 1: Grasso are legally analysts to talk about. The Remain in

107
00:05:48,760 --> 00:05:52,280
Speaker 1: Mexico ruling kind of fell in the direction that the

108
00:05:52,320 --> 00:05:55,239
Speaker 1: Biden Court, that the Biden administration wanted it to. Although

109
00:05:55,279 --> 00:05:58,720
Speaker 1: they lost the e p A a um uh case,

110
00:05:58,800 --> 00:06:01,719
Speaker 1: let's start with remaining Mexico. Okay, Okay, I was gonna

111
00:06:01,760 --> 00:06:04,919
Speaker 1: say that the blow to the Biden administration on the

112
00:06:04,960 --> 00:06:07,560
Speaker 1: e p A case is far greater than the wind

113
00:06:07,720 --> 00:06:10,640
Speaker 1: here on remain in Mexico. Okay, So there's it's not like, oh,

114
00:06:10,680 --> 00:06:13,120
Speaker 1: they won one and they lost one. They won one

115
00:06:13,200 --> 00:06:15,120
Speaker 1: and then they won a half of one, and then

116
00:06:15,160 --> 00:06:17,920
Speaker 1: they won and then they lost a big one. So anyway,

117
00:06:17,960 --> 00:06:20,960
Speaker 1: remain in Mexico. That's the policy that the Trump administration

118
00:06:21,400 --> 00:06:24,360
Speaker 1: put into a fact that because there's not enough room

119
00:06:24,560 --> 00:06:27,600
Speaker 1: for the immigrants crossing the border, that if they don't

120
00:06:27,600 --> 00:06:29,840
Speaker 1: have room, they would get them, they would return them

121
00:06:29,880 --> 00:06:32,080
Speaker 1: to Mexico where they would stay. And then these ten

122
00:06:32,240 --> 00:06:36,680
Speaker 1: cities that were while their asylum bid was processed, which

123
00:06:36,720 --> 00:06:41,320
Speaker 1: can take forever. So and then the ten cities grew up.

124
00:06:41,360 --> 00:06:45,360
Speaker 1: It was very dangerous. Biden administration wanted to stop that,

125
00:06:45,600 --> 00:06:49,440
Speaker 1: and two of the two of the Republican led states sued.

126
00:06:49,720 --> 00:06:51,640
Speaker 1: So here the Supreme Court said, and it was a

127
00:06:51,680 --> 00:06:55,160
Speaker 1: five to four vote because Chief Justice Roberts who and

128
00:06:55,600 --> 00:06:58,760
Speaker 1: uh Justice Brett Kavanaugh agreed with the liberals, So it

129
00:06:58,839 --> 00:07:03,320
Speaker 1: was it was those five against the four Conservatives that um,

130
00:07:03,400 --> 00:07:06,200
Speaker 1: it didn't violate the rules for him to have this

131
00:07:06,680 --> 00:07:10,040
Speaker 1: remain in Mexico to rescind the policy because he had

132
00:07:10,160 --> 00:07:13,120
Speaker 1: they had given a good explanation, unlike the DACA case

133
00:07:13,160 --> 00:07:15,480
Speaker 1: a few years ago, they had given a good explanation

134
00:07:15,520 --> 00:07:19,160
Speaker 1: and they could rescind it. Now this goes back to

135
00:07:19,360 --> 00:07:22,880
Speaker 1: the district court judge in Texas, who is who has

136
00:07:22,920 --> 00:07:26,120
Speaker 1: been really hostile to the Biden administration. So it doesn't

137
00:07:26,160 --> 00:07:28,480
Speaker 1: really end here. I mean, this could come back up again.

138
00:07:28,520 --> 00:07:30,880
Speaker 1: No one's talking about this. This could possibly come back

139
00:07:31,000 --> 00:07:36,440
Speaker 1: up again because if if the district court says that

140
00:07:36,520 --> 00:07:39,000
Speaker 1: they're sending it back to the district court for details

141
00:07:39,040 --> 00:07:41,520
Speaker 1: to be worked out. So I suppose the district court says,

142
00:07:41,560 --> 00:07:44,840
Speaker 1: you know, just still doesn't work according to the guidelines

143
00:07:44,880 --> 00:07:47,120
Speaker 1: you gave me Supreme Court. Then it could come up again.

144
00:07:47,160 --> 00:07:49,920
Speaker 1: I mean it probably won't, but it's just a possibility.

145
00:07:50,360 --> 00:07:53,520
Speaker 1: So but in this case, what was what was difficult

146
00:07:53,560 --> 00:07:56,960
Speaker 1: about this case for the states who oppose it is

147
00:07:57,000 --> 00:08:00,560
Speaker 1: that they're basically would have to tell the Biden admin allustration,

148
00:08:00,880 --> 00:08:04,280
Speaker 1: you have to engage with a foreign state, with Mexico

149
00:08:04,640 --> 00:08:07,720
Speaker 1: and get an agreement with Mexico to allow this to happen.

150
00:08:08,000 --> 00:08:11,480
Speaker 1: So they would really have been interfering in, you know,

151
00:08:11,560 --> 00:08:14,240
Speaker 1: foreign affairs, which during the Royal arguments they say, what

152
00:08:14,760 --> 00:08:16,480
Speaker 1: I remember, I think Elena Kagan said, what are we

153
00:08:16,480 --> 00:08:18,960
Speaker 1: going to tell Mexico to, you know, keep everybody here?

154
00:08:19,040 --> 00:08:23,000
Speaker 1: And well they have indeed negotiated that with the Mexicans,

155
00:08:23,000 --> 00:08:25,240
Speaker 1: which I think is crazy. But with the Trump administration,

156
00:08:27,000 --> 00:08:30,000
Speaker 1: I had confused this earlier and I'll correct myself now

157
00:08:30,080 --> 00:08:34,000
Speaker 1: with the title forty two, which that was a COVID

158
00:08:34,080 --> 00:08:36,280
Speaker 1: driven thing, right, that's still in effect. So that is

159
00:08:36,280 --> 00:08:39,959
Speaker 1: still in effect because Biden administration wanted to end that

160
00:08:39,960 --> 00:08:43,840
Speaker 1: that COVID was used. The title forty two Public health

161
00:08:43,840 --> 00:08:46,360
Speaker 1: emerge in a similar way, right to send asylum seekers

162
00:08:46,400 --> 00:08:48,800
Speaker 1: back while they're because they were worried that those asylum

163
00:08:48,840 --> 00:08:51,760
Speaker 1: seekers might spread COVID. Right, So the courts have told

164
00:08:51,760 --> 00:08:54,880
Speaker 1: the Biden administration you can't end that. So they're still

165
00:08:55,000 --> 00:08:57,800
Speaker 1: using Title forty two at the boarder and you know, secretly,

166
00:08:57,840 --> 00:09:00,600
Speaker 1: I think they might have been relieved they had Title

167
00:09:00,679 --> 00:09:04,480
Speaker 1: forty two because they are not prepared for the influx

168
00:09:04,720 --> 00:09:07,280
Speaker 1: at the border in the summer months. You know, it

169
00:09:07,320 --> 00:09:12,240
Speaker 1: starts to build up. We were given a tragic example

170
00:09:12,280 --> 00:09:15,400
Speaker 1: of how dangerous that is the last couple of days.

171
00:09:15,480 --> 00:09:18,160
Speaker 1: Let's get to the e p A. Uh decision, which

172
00:09:18,160 --> 00:09:21,160
Speaker 1: you think is more important, was a big blow to

173
00:09:21,200 --> 00:09:24,480
Speaker 1: the Biden administration. Well, you know, it's it's cutting back

174
00:09:24,720 --> 00:09:27,400
Speaker 1: on the e p A, which is the agency that

175
00:09:27,520 --> 00:09:32,960
Speaker 1: handles this, their ability to set rules to curb climate change.

176
00:09:33,320 --> 00:09:36,480
Speaker 1: So it's a huge blow and you know, one wonders,

177
00:09:36,600 --> 00:09:38,719
Speaker 1: now what's going to happen. And also, as I you

178
00:09:38,720 --> 00:09:42,319
Speaker 1: know I mentioned before this, the conservatives on this court

179
00:09:42,559 --> 00:09:46,839
Speaker 1: are against what is called the administrative state. They want

180
00:09:46,920 --> 00:09:50,559
Speaker 1: to cut back on the agency's rules, on the agency's

181
00:09:50,559 --> 00:09:53,719
Speaker 1: ability to you know, to put rules into effect all

182
00:09:53,760 --> 00:09:57,600
Speaker 1: the different federal agencies. And you know, you know, if

183
00:09:57,640 --> 00:10:02,520
Speaker 1: Congress were there to stay been and make rules, this

184
00:10:02,559 --> 00:10:06,920
Speaker 1: wouldn't be quite as big of a loss. And conservatives

185
00:10:06,920 --> 00:10:09,840
Speaker 1: who push this through, who pushed these through, know that

186
00:10:09,840 --> 00:10:12,280
Speaker 1: that's the case that Congress is not going to start

187
00:10:12,320 --> 00:10:14,400
Speaker 1: passing rules now. Do they want it to go back

188
00:10:14,440 --> 00:10:16,640
Speaker 1: to the states, as this the state's rights issue from

189
00:10:16,679 --> 00:10:18,800
Speaker 1: the conservatives on the Spreme Court, I think it's a

190
00:10:20,000 --> 00:10:21,800
Speaker 1: I think I don't know if it's a state's rights

191
00:10:21,800 --> 00:10:24,800
Speaker 1: issue as much as it's we don't want these administrative

192
00:10:24,800 --> 00:10:28,559
Speaker 1: agencies to be making decisions their bureaucrats, and it should

193
00:10:28,600 --> 00:10:32,079
Speaker 1: be the elected representatives of the people making these kinds

194
00:10:32,080 --> 00:10:34,520
Speaker 1: of decisions. But you know, how is I don't know

195
00:10:34,520 --> 00:10:36,880
Speaker 1: how other than people that are trained in this and

196
00:10:36,880 --> 00:10:40,400
Speaker 1: do it for a living, you want them making decisions

197
00:10:40,440 --> 00:10:42,920
Speaker 1: about it, you know, just the big government. I guess

198
00:10:42,920 --> 00:10:46,120
Speaker 1: you just don't want the Washington big government. You know,

199
00:10:46,400 --> 00:10:48,920
Speaker 1: it's sort of drained the swamp in a different in

200
00:10:48,960 --> 00:10:53,280
Speaker 1: a different respect. So it's interesting how these uh, how

201
00:10:53,600 --> 00:10:55,760
Speaker 1: people in this country looking at it from outside, because

202
00:10:55,760 --> 00:10:58,640
Speaker 1: I lived in Germany for years, fall on different sides

203
00:10:58,679 --> 00:11:01,880
Speaker 1: of the ideological For example, they want small government, but

204
00:11:01,920 --> 00:11:05,400
Speaker 1: they want huge border control right. They don't want the

205
00:11:05,400 --> 00:11:08,320
Speaker 1: government to be able to decide anything, but not not

206
00:11:08,360 --> 00:11:11,520
Speaker 1: the important decisions, but the death penalty, right, because that's

207
00:11:11,520 --> 00:11:14,640
Speaker 1: not a very important decision. No, it's um no one

208
00:11:14,720 --> 00:11:17,920
Speaker 1: said it makes sense, right, but that that's our Supreme Court.

209
00:11:17,960 --> 00:11:20,079
Speaker 1: And they have ruled. And so now they go on

210
00:11:20,520 --> 00:11:24,640
Speaker 1: summer vacation and we'll see what they do. Twelve o'clock

211
00:11:24,679 --> 00:11:27,760
Speaker 1: they're going to have Tom Brown Jackson sworn in. So

212
00:11:27,840 --> 00:11:31,320
Speaker 1: I think they'll all have champagne and then split champion split.

213
00:11:31,679 --> 00:11:32,920
Speaker 1: You know. It used to be there there was a

214
00:11:33,000 --> 00:11:36,000
Speaker 1: story that one of the justices used to have have

215
00:11:36,040 --> 00:11:37,920
Speaker 1: a limo waiting to take him to the airport right

216
00:11:37,920 --> 00:11:41,040
Speaker 1: after the least is exactly all right, Joan Grasso, Bloombridge Legal, Anos,

217
00:11:41,040 --> 00:11:45,719
Speaker 1: thank you so much, all R. Let's check out with

218
00:11:45,760 --> 00:11:50,240
Speaker 1: Everett Millman here. Uh he does all that commodity stuff

219
00:11:50,320 --> 00:11:52,040
Speaker 1: for hold on, hold on, hold on, hold on. It

220
00:11:52,080 --> 00:11:55,520
Speaker 1: looks at all kinds of coins, but also Gainesville that's right,

221
00:11:55,559 --> 00:11:58,720
Speaker 1: that's right, at Gainesville Coins chief market Strategies. But crypto,

222
00:11:58,880 --> 00:12:01,080
Speaker 1: yah know, so let's start with crypt dough. All right,

223
00:12:01,120 --> 00:12:05,360
Speaker 1: we got Everett Crypto print. We were below, we were

224
00:12:05,400 --> 00:12:09,199
Speaker 1: down to eight. What's going on in the world that

225
00:12:09,240 --> 00:12:14,160
Speaker 1: crypto here, right? I think it's worth noting that the crypto,

226
00:12:14,240 --> 00:12:17,079
Speaker 1: entire crypto market as a whole has been falling dramatically,

227
00:12:17,120 --> 00:12:19,760
Speaker 1: So it's not just Bitcoin, although that's obviously the one

228
00:12:19,800 --> 00:12:22,080
Speaker 1: that we're all going to focus on. I think that

229
00:12:22,160 --> 00:12:24,600
Speaker 1: this is a sign of crypt crypto winter being in

230
00:12:24,679 --> 00:12:27,400
Speaker 1: full force, and a lot of what's caused Bitcoin to

231
00:12:27,440 --> 00:12:32,280
Speaker 1: go down is really exogenous to the to the coin itself. Uh.

232
00:12:32,480 --> 00:12:35,679
Speaker 1: We've seen that it has lately followed the stock market lower,

233
00:12:36,000 --> 00:12:38,280
Speaker 1: and I think we can reason our way to why

234
00:12:38,320 --> 00:12:41,160
Speaker 1: that is the case. That a lot of more institutional

235
00:12:41,320 --> 00:12:44,680
Speaker 1: holders are now in the bitcoin space, and so as

236
00:12:44,720 --> 00:12:48,160
Speaker 1: stocks fall, they liquidate their bitcoin UM. And the fact

237
00:12:48,160 --> 00:12:52,320
Speaker 1: that other crypto projects, other crypto lenders starting to see

238
00:12:52,360 --> 00:12:55,839
Speaker 1: some cracks and failing UM. They often use bitcoin as collateral,

239
00:12:56,320 --> 00:12:58,480
Speaker 1: So we've seen a lot of selling of bitcoin to

240
00:12:58,520 --> 00:13:02,400
Speaker 1: try and probably of other cryptos correct. So I think

241
00:13:02,440 --> 00:13:04,680
Speaker 1: those are the main culprits here. UM. Yeah, there have

242
00:13:04,720 --> 00:13:07,640
Speaker 1: been a number of failures or now we have heard

243
00:13:07,920 --> 00:13:11,400
Speaker 1: uh it reported that Three Arrows is being forced to

244
00:13:11,559 --> 00:13:16,199
Speaker 1: liquidate UM and I've also seen forecasts for bitcoin to

245
00:13:16,280 --> 00:13:20,560
Speaker 1: fall down to twelve thousand. Still, to put it in perspective, Everett,

246
00:13:20,600 --> 00:13:23,319
Speaker 1: I heard um someone say earlier is the worst quarter

247
00:13:23,400 --> 00:13:26,640
Speaker 1: for bitcoin since Q three of eleven. So I looked

248
00:13:26,679 --> 00:13:30,000
Speaker 1: back at the price action in Q three of twenty

249
00:13:30,080 --> 00:13:33,280
Speaker 1: eleven bitcoin at that point. It wasn't that nineteen thousand

250
00:13:33,400 --> 00:13:36,319
Speaker 1: or twelve thousand, or seven thousand or three thousand. It

251
00:13:36,360 --> 00:13:39,559
Speaker 1: went from sixteen dollars to five dollars. So we've come

252
00:13:39,600 --> 00:13:43,640
Speaker 1: a long way, baby, Absolutely. I think when you zoom

253
00:13:43,640 --> 00:13:45,480
Speaker 1: out like that, that is a great way to look

254
00:13:45,520 --> 00:13:48,800
Speaker 1: at it. And most of the early adopters and some

255
00:13:48,960 --> 00:13:51,920
Speaker 1: of the people who are old heads in bitcoin, they've

256
00:13:51,920 --> 00:13:54,640
Speaker 1: seen this sort of cyclical pattern time and time again

257
00:13:54,679 --> 00:13:57,680
Speaker 1: over the past ten years, so kind of retracing back

258
00:13:57,679 --> 00:14:00,760
Speaker 1: to where our starting point was. Anyone who has been

259
00:14:00,800 --> 00:14:03,920
Speaker 1: holding along the way is very happy with the performance

260
00:14:04,000 --> 00:14:07,600
Speaker 1: of their cryptos um and particularly for bitcoin being the biggest,

261
00:14:07,760 --> 00:14:10,880
Speaker 1: most recognizable one. At some point every nice seen me

262
00:14:11,000 --> 00:14:14,520
Speaker 1: recall folks, you know, as we're all learning about crypto

263
00:14:14,559 --> 00:14:17,720
Speaker 1: and bitcoin, uh talking about it. Maybe bitcoin is a

264
00:14:17,760 --> 00:14:21,000
Speaker 1: hedge for inflation, but that doesn't appear to be the case,

265
00:14:21,040 --> 00:14:24,480
Speaker 1: does it. Well, that has not played out thus far

266
00:14:24,680 --> 00:14:27,360
Speaker 1: as I mentioned, I think it is those exogenous factors.

267
00:14:27,400 --> 00:14:31,160
Speaker 1: But by its design, bitcoin is supposed to be a

268
00:14:31,240 --> 00:14:36,320
Speaker 1: deflationary currency. The supply of bitcoin every four years UM.

269
00:14:36,480 --> 00:14:39,200
Speaker 1: The pace of the supply growth gets cut in half,

270
00:14:39,480 --> 00:14:41,800
Speaker 1: the so called happening UM. And so this is a

271
00:14:41,880 --> 00:14:46,920
Speaker 1: deflationary design. And although that does solve the inflationary problem

272
00:14:46,960 --> 00:14:49,200
Speaker 1: that we have with fiat money UM as far as

273
00:14:49,200 --> 00:14:52,280
Speaker 1: I can tell, it introduces a second problem, which is

274
00:14:53,200 --> 00:14:56,200
Speaker 1: relates back to one of the oldest principles in economics,

275
00:14:56,240 --> 00:15:00,880
Speaker 1: known as Gresham's law that good or bad money drives good. Essentially,

276
00:15:00,920 --> 00:15:03,720
Speaker 1: people want to spend cheap money that's losing its value

277
00:15:04,000 --> 00:15:06,600
Speaker 1: and hold on to the money that is rising in value.

278
00:15:06,880 --> 00:15:10,800
Speaker 1: So if indeed bitcoin is supposed to be deflationary over time,

279
00:15:11,360 --> 00:15:14,760
Speaker 1: it begs the question why on earth would anyone spend

280
00:15:14,800 --> 00:15:17,240
Speaker 1: bitcoin At a certain point, UM, you would want to

281
00:15:17,320 --> 00:15:20,960
Speaker 1: keep bitcoin and spend everything else. So I think that's

282
00:15:21,080 --> 00:15:24,400
Speaker 1: very many years of still out down the road. But

283
00:15:24,480 --> 00:15:28,360
Speaker 1: it does bring up an interesting philosophical question about what

284
00:15:28,640 --> 00:15:32,800
Speaker 1: is sound money and it is bitcoin actually money? UM.

285
00:15:32,840 --> 00:15:35,560
Speaker 1: I think it's quite fair that the CFTC is going

286
00:15:35,600 --> 00:15:38,920
Speaker 1: to be regarding it as a commodity because bitcoin does

287
00:15:39,040 --> 00:15:43,600
Speaker 1: convert electricity into new coins, so it is sort of

288
00:15:43,600 --> 00:15:47,520
Speaker 1: backed by a commodity. Okay, good stuff evert moment, appreciate it.

289
00:15:47,720 --> 00:15:51,120
Speaker 1: Love getting your thoughts here. All things commodities and most

290
00:15:51,400 --> 00:15:56,320
Speaker 1: notably crypto. Over the last we learned something new. Gresham's Law.

291
00:15:56,480 --> 00:16:00,880
Speaker 1: We're going for it, named in eighteen sixty by economist

292
00:16:01,000 --> 00:16:05,920
Speaker 1: Henry Dunning McLeod after Sir Thomas Gresham. Thank goodness for Google.

293
00:16:05,920 --> 00:16:12,920
Speaker 1: Everett Millman, chief market analyst for Gainesville Coin, The building

294
00:16:13,160 --> 00:16:16,520
Speaker 1: of real estate, construction and all that good stuff. John Fish,

295
00:16:17,200 --> 00:16:21,040
Speaker 1: CEO and chairman of Suffer Construction Company, joins us here. John,

296
00:16:21,080 --> 00:16:22,720
Speaker 1: thanks so much for joining us here. We'll get to

297
00:16:22,760 --> 00:16:25,760
Speaker 1: the kind of the interest rate story angle in a bid,

298
00:16:25,800 --> 00:16:27,640
Speaker 1: but I want to just talk to you about if

299
00:16:27,640 --> 00:16:29,560
Speaker 1: you want to go out and build a building, whether

300
00:16:29,560 --> 00:16:33,000
Speaker 1: it's a residential real estate or commercial real state as

301
00:16:33,000 --> 00:16:36,200
Speaker 1: a construction guy, John, can you get the labor? Can

302
00:16:36,280 --> 00:16:38,600
Speaker 1: you get the raw materials? If you do get the

303
00:16:38,680 --> 00:16:40,920
Speaker 1: raw materials, do you have to pay through the nose?

304
00:16:40,960 --> 00:16:42,480
Speaker 1: Give us a sense of what it's like to actually

305
00:16:42,560 --> 00:16:45,440
Speaker 1: build something today, you know, Matt Paul, thank you very

306
00:16:45,480 --> 00:16:47,880
Speaker 1: much for the opportunity. Again, it's probably one of both

307
00:16:47,920 --> 00:16:51,160
Speaker 1: challenging times iron industry has had over the last five years.

308
00:16:51,360 --> 00:16:53,880
Speaker 1: Again you pointed out the material cost are as high

309
00:16:53,880 --> 00:16:56,440
Speaker 1: as I've ever been, and again the shortage of labor

310
00:16:56,440 --> 00:16:58,120
Speaker 1: across the board and this is just not the East

311
00:16:58,120 --> 00:17:00,960
Speaker 1: Coast but the entire country right now. And again because

312
00:17:00,960 --> 00:17:03,640
Speaker 1: it's a demand for talent out there is one person

313
00:17:03,680 --> 00:17:05,679
Speaker 1: for every two job openings. When you think about that,

314
00:17:05,760 --> 00:17:08,040
Speaker 1: and that's detrimental lab business. What it does, it drives

315
00:17:08,080 --> 00:17:09,959
Speaker 1: up wages. At the end of the day, wages over

316
00:17:10,000 --> 00:17:13,000
Speaker 1: the last eighteen months have grown up substantially in the

317
00:17:13,040 --> 00:17:15,560
Speaker 1: same thing with material costs. And then you introduced the

318
00:17:15,560 --> 00:17:18,720
Speaker 1: concept of supply chain. I mean that also again creates

319
00:17:18,720 --> 00:17:20,919
Speaker 1: a tremendous amount of disruption. What we've seen in the

320
00:17:20,920 --> 00:17:23,600
Speaker 1: construction industry right now, in the realist industry is a

321
00:17:23,600 --> 00:17:26,480
Speaker 1: tremendous amount of uncertainty in our industry as a whole

322
00:17:26,840 --> 00:17:29,400
Speaker 1: doesn't feel well when when there's a deal of uncertainty,

323
00:17:30,119 --> 00:17:33,520
Speaker 1: so um, you don't see or do you see inflation

324
00:17:33,680 --> 00:17:37,520
Speaker 1: rolling over. We've noticed in some places, um, for example,

325
00:17:37,720 --> 00:17:41,280
Speaker 1: goods that you would find at Walmart and target um,

326
00:17:41,280 --> 00:17:44,480
Speaker 1: they've overstocked. Critty Gupta is just on talking to us

327
00:17:44,520 --> 00:17:48,120
Speaker 1: about shipping costs which have rolled over slightly. UM still

328
00:17:48,160 --> 00:17:51,280
Speaker 1: not cheap by any means UM. And we're watching for

329
00:17:51,480 --> 00:17:55,520
Speaker 1: softening of other UH inflation or other metrics. Do you

330
00:17:55,560 --> 00:17:59,520
Speaker 1: see any of that in construction? We not as of yet.

331
00:17:59,600 --> 00:18:01,080
Speaker 1: I think it's gonna happen. I think in the next

332
00:18:01,119 --> 00:18:03,720
Speaker 1: quarter we're probably gonna see things slowing itself down. We're

333
00:18:03,720 --> 00:18:06,720
Speaker 1: still climbing from a cost perspective point of view across

334
00:18:06,720 --> 00:18:09,240
Speaker 1: the country, and I do think as this negative news

335
00:18:09,320 --> 00:18:11,840
Speaker 1: comes back into the marketplace, people gonna start putting the

336
00:18:11,880 --> 00:18:13,800
Speaker 1: brakes on a little bit preen the day. But I

337
00:18:13,800 --> 00:18:15,400
Speaker 1: would say this, Matt and Paul, We've been a long

338
00:18:15,400 --> 00:18:17,320
Speaker 1: way to go. You're at eight point six percent inflation

339
00:18:17,400 --> 00:18:19,359
Speaker 1: right now at this particular point time, we don't do

340
00:18:19,440 --> 00:18:21,560
Speaker 1: well into it down to the three the two and

341
00:18:21,560 --> 00:18:23,399
Speaker 1: a half percent levels. And so at the end of

342
00:18:23,440 --> 00:18:25,000
Speaker 1: the day, I think we've got a ways to go,

343
00:18:25,080 --> 00:18:26,639
Speaker 1: and I think the only way to do it is

344
00:18:26,640 --> 00:18:28,880
Speaker 1: the FED continue to put the squeeze on, and that's

345
00:18:28,960 --> 00:18:31,800
Speaker 1: raising interest rates. And again I will say this r

346
00:18:31,880 --> 00:18:35,000
Speaker 1: very you know, defensively is I think we we we

347
00:18:35,080 --> 00:18:36,959
Speaker 1: need a recession at this point in time. I think

348
00:18:37,000 --> 00:18:39,399
Speaker 1: it's the only way to sort of choke off the

349
00:18:39,440 --> 00:18:42,639
Speaker 1: inflationary pressures that are on the economy right now and

350
00:18:42,640 --> 00:18:44,560
Speaker 1: get it over with quickly, because I do think because

351
00:18:44,600 --> 00:18:47,080
Speaker 1: of the fact that consumers still has almost five point

352
00:18:47,080 --> 00:18:49,679
Speaker 1: four trillion dollars and savings in their pocket, once we

353
00:18:49,760 --> 00:18:52,080
Speaker 1: sort of ring out this inflation and the consumers on

354
00:18:52,119 --> 00:18:54,320
Speaker 1: the sidelines that comes back into the ballpark all of

355
00:18:54,320 --> 00:18:56,320
Speaker 1: a sudden, we're going to see the economy moving back

356
00:18:56,359 --> 00:18:58,760
Speaker 1: up again. So I'm bullish in the long term. I

357
00:18:58,760 --> 00:19:01,119
Speaker 1: think we've got a period of time twelve to eighteen

358
00:19:01,119 --> 00:19:03,080
Speaker 1: months that it's going to be challenging right now. And

359
00:19:03,119 --> 00:19:05,439
Speaker 1: my attitude is, hey, let's let's put the brakes on,

360
00:19:05,680 --> 00:19:08,240
Speaker 1: let's get this over with. Let's rebalance the labor market,

361
00:19:08,280 --> 00:19:11,760
Speaker 1: let's rebalance the supply chain, uh, and get back to work.

362
00:19:12,600 --> 00:19:15,880
Speaker 1: John on the commercial side, UM, you know, I think

363
00:19:15,920 --> 00:19:19,040
Speaker 1: the work from home thing, getting back to the office thing,

364
00:19:19,119 --> 00:19:21,680
Speaker 1: the how people are gonna be working going forward is

365
00:19:21,720 --> 00:19:24,960
Speaker 1: still very much influx UH in the United States. As

366
00:19:25,000 --> 00:19:27,840
Speaker 1: you talk to some of your bigger clients, how are

367
00:19:27,880 --> 00:19:32,080
Speaker 1: they thinking about office space going forward. I think most

368
00:19:32,160 --> 00:19:35,439
Speaker 1: companies right now are re engineering how they're using this space,

369
00:19:35,560 --> 00:19:37,800
Speaker 1: which is which, which is smart. But at the end

370
00:19:37,840 --> 00:19:40,560
Speaker 1: of the day, again, I think it's a short term phenomena. Okay,

371
00:19:40,600 --> 00:19:43,000
Speaker 1: we might be talking about twelve, eighteen, twenty four months out,

372
00:19:43,200 --> 00:19:44,600
Speaker 1: but at the end of the day, the only way

373
00:19:44,640 --> 00:19:47,159
Speaker 1: to build culture, the only way to get promoted, is

374
00:19:47,200 --> 00:19:48,639
Speaker 1: people to be back at work at the end of

375
00:19:48,640 --> 00:19:51,480
Speaker 1: the day. And we are social animals as human beings,

376
00:19:51,520 --> 00:19:53,959
Speaker 1: and what we need we we we thrive on that energy.

377
00:19:54,359 --> 00:19:57,240
Speaker 1: And what happens is a company maintains a competitive vantage,

378
00:19:57,600 --> 00:20:01,280
Speaker 1: I believe through their culture, and you can't build culture remotely.

379
00:20:02,880 --> 00:20:04,840
Speaker 1: So how's it look then? How's it look in Boston?

380
00:20:05,200 --> 00:20:07,240
Speaker 1: Can I tell something right now? I think overall you

381
00:20:07,280 --> 00:20:09,920
Speaker 1: know people, I would say we probably have six people

382
00:20:09,960 --> 00:20:13,600
Speaker 1: back to work generally speaking, our companies back at pcent

383
00:20:13,680 --> 00:20:15,720
Speaker 1: back to work, which I'm proud of. But at the

384
00:20:15,800 --> 00:20:17,800
Speaker 1: end of the day, I think Boston, like every other community,

385
00:20:17,840 --> 00:20:21,320
Speaker 1: is grappling with this issue because right now labor is

386
00:20:22,280 --> 00:20:24,679
Speaker 1: in demand. They have to say as to what's going

387
00:20:24,720 --> 00:20:26,359
Speaker 1: to go on with the work rules. Right now we're

388
00:20:26,400 --> 00:20:29,240
Speaker 1: seeing this with unionization at Apple, We're seeing this at

389
00:20:29,280 --> 00:20:32,359
Speaker 1: Starbucks across the board. But my senses, as the market

390
00:20:32,400 --> 00:20:34,359
Speaker 1: softens a little bit, all of a sudden, you'll have

391
00:20:34,400 --> 00:20:38,479
Speaker 1: more of a balance in the environment. And I think

392
00:20:38,520 --> 00:20:40,359
Speaker 1: that's what we need at this particular point in time,

393
00:20:40,560 --> 00:20:43,040
Speaker 1: and that's why I am a strong advocate, you know,

394
00:20:43,119 --> 00:20:45,280
Speaker 1: continue raising the rates, although I don't like it, and

395
00:20:45,600 --> 00:20:49,399
Speaker 1: in the real estate is very, very uncomfortable with with

396
00:20:49,480 --> 00:20:51,800
Speaker 1: interest rate rising because the real estate runs on credit

397
00:20:51,840 --> 00:20:54,159
Speaker 1: as we all know, and doesn't like the uncertainty. But

398
00:20:54,200 --> 00:20:55,800
Speaker 1: at the end of the day, my attitude, let's get

399
00:20:55,800 --> 00:20:58,399
Speaker 1: this pain out of the system, okay, and let's move forward,

400
00:20:58,960 --> 00:21:00,639
Speaker 1: all right. The way, I just want to say, for

401
00:21:00,720 --> 00:21:03,440
Speaker 1: those listeners who have who don't know, I have never

402
00:21:03,880 --> 00:21:06,399
Speaker 1: heard of it, been or seen it. The Boston Pops

403
00:21:06,480 --> 00:21:10,440
Speaker 1: is one of the coolest events I've ever attended in America.

404
00:21:11,000 --> 00:21:15,000
Speaker 1: Um coming up on this, I guess Sunday and Monday

405
00:21:15,480 --> 00:21:17,760
Speaker 1: it used to be five thousand people gather outside the

406
00:21:17,760 --> 00:21:19,600
Speaker 1: half Shell there to watch, and it's gonna be getting

407
00:21:19,600 --> 00:21:22,040
Speaker 1: back to numbers like that. John, do you go? Do

408
00:21:22,119 --> 00:21:24,920
Speaker 1: you watch the Pops? What we do? I'm a strong

409
00:21:24,920 --> 00:21:26,840
Speaker 1: support of the Pops. I think it's one of the best,

410
00:21:27,040 --> 00:21:29,080
Speaker 1: uh you know, organizations I think in the country. To

411
00:21:29,080 --> 00:21:31,720
Speaker 1: be honest with you, it's a huge cultural event for

412
00:21:31,760 --> 00:21:33,560
Speaker 1: the city of Boston, and I would just say this

413
00:21:33,600 --> 00:21:36,800
Speaker 1: to you, it's something that we as as Bostonians extremely

414
00:21:36,840 --> 00:21:39,159
Speaker 1: proud of. In my sense of that numbers probably up

415
00:21:39,160 --> 00:21:42,600
Speaker 1: the seven d and so we'll keep you know, we'll

416
00:21:42,600 --> 00:21:45,439
Speaker 1: hope for a good weather. All right, it's that's starting

417
00:21:45,440 --> 00:21:48,600
Speaker 1: at five in here on Bloomberg Radio Monday. It's big.

418
00:21:48,720 --> 00:21:50,400
Speaker 1: It is so much fun. I mean, I have to say,

419
00:21:50,400 --> 00:21:54,080
Speaker 1: anyone in the area, if you're close enough, get to it. Um.

420
00:21:54,119 --> 00:21:57,359
Speaker 1: It's just a great party. It really, it really gives

421
00:21:57,359 --> 00:21:59,720
Speaker 1: you that feeling that the country is coming together, which

422
00:21:59,720 --> 00:22:01,639
Speaker 1: is a feeling that we've been lacking in the past

423
00:22:01,840 --> 00:22:04,640
Speaker 1: a couple of weeks, months, or years. And we're gonna

424
00:22:04,640 --> 00:22:07,159
Speaker 1: be showing that at five pm here on Bloomberg Radio.

425
00:22:07,359 --> 00:22:09,199
Speaker 1: All right, that's coming up. We had John Fish, their

426
00:22:09,480 --> 00:22:13,600
Speaker 1: CEO and chairman STUFFI Construction Company. Thanks for listening to

427
00:22:13,600 --> 00:22:17,119
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to

428
00:22:17,160 --> 00:22:21,320
Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer.

429
00:22:21,720 --> 00:22:25,680
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.

430
00:22:26,320 --> 00:22:28,920
Speaker 1: On Fall Sweeney, I'm on Twitter at pt Sweeney Before

431
00:22:28,960 --> 00:22:31,760
Speaker 1: the podcast. You can always catch us worldwide at Bloomberg

432
00:22:31,840 --> 00:22:32,119
Speaker 1: Radio