WEBVTT - Fed Day, Markets, And Crypto (Radio) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.439 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:24.600 at Bloomberg dot com slash podcast. Let me bring in 0:00:24.880 --> 0:00:30.280 Vince Signarelli's global macro UH strategist for Bloomberg News, to 0:00:30.360 --> 0:00:33.479 talk about. I guess central banks. It's all about central 0:00:33.479 --> 0:00:36.640 banks today, Vince. And the first question I have is 0:00:37.400 --> 0:00:40.920 something that Cameron Cries mentioned in his Macroman column. Um. 0:00:41.000 --> 0:00:44.159 The idea is that there was no vert leak that 0:00:44.360 --> 0:00:47.320 the FED purposely told the Wall Street Journal We're gonna 0:00:47.400 --> 0:00:50.360 raise seventy five basis points. And I've heard this from 0:00:50.360 --> 0:00:54.240 many market participants, some of whom claim to have actual 0:00:54.320 --> 0:00:58.600 knowledge about it. Is that possible? Do you believe it? Uh? No, 0:01:00.000 --> 0:01:02.960 aren't really honest? Would you know? UM? I don't think. 0:01:03.000 --> 0:01:06.400 I don't think the FED is of the mind to 0:01:06.520 --> 0:01:11.280 single out any one specific news source, UM to suggest 0:01:11.319 --> 0:01:14.440 that they were going to make something. Is it possible 0:01:14.520 --> 0:01:18.199 that they could raise seventy five basis points today. Absolutely, Um, 0:01:18.319 --> 0:01:21.039 but I would argue that they would be making a 0:01:21.040 --> 0:01:25.080 big mistake. The Fed really needs to explain, well, remind 0:01:25.160 --> 0:01:29.760 markets of a couple of things. Um that first of all, 0:01:29.800 --> 0:01:32.360 it takes six months from grodetary policy, that's the theory 0:01:32.520 --> 0:01:34.839 to wind its way through the economy. We just started 0:01:34.920 --> 0:01:39.000 hiking rates and expectations, I mean expectations they can affect 0:01:39.040 --> 0:01:41.920 right away. Yeah, they can, But look at the data 0:01:41.959 --> 0:01:45.160 so far. Retail sales are dropping, home prices are dropping, 0:01:45.240 --> 0:01:49.440 Compass and Reds and firing countless employees yesterday because the 0:01:49.440 --> 0:01:51.400 real estate market is cooling and they have no sales 0:01:51.440 --> 0:01:53.840 to support it. You know, this is actually if you 0:01:53.880 --> 0:01:56.320 go back to two thousand and twelve and you see 0:01:56.520 --> 0:01:58.760 look at CPI and you look at the Fed funds rate, 0:01:59.040 --> 0:02:03.360 you'll see countless gyrations in the set funds rate beginning 0:02:03.400 --> 0:02:08.440 at the end of hiking, only to crater those rates 0:02:08.440 --> 0:02:10.040 all the way back down to zero where they were 0:02:10.040 --> 0:02:13.119 in twenties fifteen when CPI collapsed, And the three month 0:02:13.160 --> 0:02:17.200 moving average of CPI across that time is pretty close 0:02:17.280 --> 0:02:19.639 to unchanged. It's it's a little higher now, but it's 0:02:19.680 --> 0:02:24.840 higher now. For supply chain reasons, for oil reasons, and 0:02:24.960 --> 0:02:29.160 for fiscal policy with overly stimulating the economy during the pandemic. 0:02:29.440 --> 0:02:32.120 Absolutely none of those things had to do with monetary policy. 0:02:32.440 --> 0:02:35.640 So acute changes in monetary policy, you're gonna make matters worse. 0:02:35.720 --> 0:02:40.959 Not that, Vince. So I'm gonna call you out of consensus. 0:02:41.120 --> 0:02:44.760 How typically your career? Are you out of consensus? Uh? 0:02:45.000 --> 0:02:49.200 About the time went years in a row? So there 0:02:49.240 --> 0:02:52.239 you go. I've never lost money, absolutely never. I've never 0:02:52.280 --> 0:02:58.000 lost money in any given years. But we're not betting 0:02:58.040 --> 0:03:01.280 on this though, right, I mean, I'm just looking at look, 0:03:01.320 --> 0:03:04.800 I'm I just um, look at this chart. If you 0:03:04.840 --> 0:03:07.600 want to access it yourself and have a Bloomberg terminal, 0:03:07.600 --> 0:03:11.760 you can type g hashtag b TV nine six two. 0:03:12.120 --> 0:03:16.280 I remember that because it's a famous Porsche Lament Porsche. 0:03:16.320 --> 0:03:20.040 But um, it's University of Michigan inflation expectations five to 0:03:20.120 --> 0:03:23.080 ten years out and they jump up like the hockey 0:03:23.120 --> 0:03:27.079 stick in Al Gore's climate change movie. Right, I mean 0:03:27.360 --> 0:03:32.040 we're expecting now, UM, or at least the University of Michigan. Uh, 0:03:32.400 --> 0:03:35.600 people were surveyed by UM. The wolverines are looking at 0:03:35.600 --> 0:03:38.400 three point three percent inflation five to ten years out. 0:03:38.560 --> 0:03:44.280 That's what the FED needs to break. What we're what? 0:03:44.520 --> 0:03:48.120 Why why won't the economy do it forth? Why won't 0:03:48.160 --> 0:03:52.000 the drop in prices do it forth? Why won't those 0:03:52.200 --> 0:03:57.400 lack of wage growth cool demands as for them? Which 0:03:57.480 --> 0:04:01.760 is what it always does? All right? So is is 0:04:01.840 --> 0:04:05.040 a Are we in a stag inflationary environment right now? Vince? 0:04:06.280 --> 0:04:09.520 Or we potentially will be? Yeah, we were heading towards. 0:04:09.840 --> 0:04:12.000 I mean, I'm I'm I'm looking at the chart you 0:04:12.080 --> 0:04:16.039 just said of inflationary expectations. I go back to December one, 0:04:16.080 --> 0:04:19.680 interest rate through zero and at the end of the 0:04:19.760 --> 0:04:22.480 set funds rate is two and a quarter to two 0:04:22.520 --> 0:04:25.800 point five. And on that chart you're just telling me 0:04:25.839 --> 0:04:29.960 about which I looked up, Uh, the end off to 0:04:30.120 --> 0:04:34.560 the end of ten year inflationary cost tenor inflation expectations 0:04:34.560 --> 0:04:38.760 were dropping. While the spec explain that to me because 0:04:38.760 --> 0:04:42.120 they don't surprise anybody, because they forecast everything, because they 0:04:42.720 --> 0:04:46.280 use for guidance to tell us, listen, next month, we're 0:04:46.279 --> 0:04:49.400 gonna start raising rates and it'll be basis points there 0:04:49.400 --> 0:04:51.280 it'll be fifty. Like what if they just came out 0:04:51.320 --> 0:04:55.000 and shocked the market the concern is they would break something. 0:04:55.040 --> 0:04:58.360 But maybe with eight point six percent headline CPI, something 0:04:58.360 --> 0:05:02.520 needs to get broke. Well, I mean with but it's 0:05:02.520 --> 0:05:05.520 it's it's it's it's starting to slowly roll over. I 0:05:05.520 --> 0:05:10.120 mean it, you know as well as I do. Spending 0:05:10.160 --> 0:05:12.880 in general is ropping because people the wage growth to 0:05:13.000 --> 0:05:15.599 go along with the price increases. We saw that in 0:05:15.640 --> 0:05:18.320 today's retail sales comes. That's not gonna go away because 0:05:18.360 --> 0:05:20.919 the FED races rates said has not. The fact is 0:05:20.960 --> 0:05:24.599 absolutely no control of disappointment. It's supply side. What are 0:05:24.640 --> 0:05:26.400 they gonna do. They're gonna try to raise rates to 0:05:26.480 --> 0:05:29.359 further curb demare. It's already happened in the housing world. 0:05:29.480 --> 0:05:31.920 What more, what more do they need to do? Raising 0:05:32.000 --> 0:05:34.040 rates is not gonna is not gonna lower the price 0:05:34.040 --> 0:05:36.880 at the stake or or or dinner at a restaurant, 0:05:37.080 --> 0:05:39.760 or or anything else. It may lower the price of housing, 0:05:40.880 --> 0:05:42.880 but that's that's just about it. It's not gonna put 0:05:42.920 --> 0:05:45.200 more money in people's pockets so they can pay for something. 0:05:45.839 --> 0:05:49.560 You know, the set has been horrible at forecasting both 0:05:49.600 --> 0:05:54.599 inflation and economic growth since Greenspan. I mean, look a 0:05:54.680 --> 0:05:57.880 year and a half ago, they were this inflation was transitory. 0:05:58.560 --> 0:06:01.279 Now they're saying it's permanent. Why is why are these 0:06:01.320 --> 0:06:04.679 Why am I so confident what they're doing? Good point. 0:06:04.920 --> 0:06:07.360 That's a good point, alright, Vince. That's why we had 0:06:07.360 --> 0:06:10.840 you on because we need the non consensus call from 0:06:10.880 --> 0:06:13.960 time to time, and Vince usually brings that game. Vince Signarella, 0:06:14.279 --> 0:06:22.360 global macro strategist at Bloomberg News. I want to bring 0:06:22.400 --> 0:06:24.680 in next guest, Jennifer Lee. She's a senior economist and 0:06:24.680 --> 0:06:28.920 managing director Demo Capital Markets. Jennifer Obviously, uh, we were 0:06:28.920 --> 0:06:31.320 focusing on the ECB earlier this morning, on their surprise 0:06:31.360 --> 0:06:33.560 announcement kind of a nothing burger. I guess, as some 0:06:33.600 --> 0:06:36.920 people are saying, now all eyes turned to this Federal Reserve, 0:06:37.000 --> 0:06:39.520 and I would think the consensus feels like seventy five 0:06:39.560 --> 0:06:43.280 basis points, although we just had Vince Signarella, macro strategist 0:06:43.279 --> 0:06:45.080 for Bloomberg News saying, you know, they don't really have 0:06:45.160 --> 0:06:47.960 to do that. Fifty would be Okay, what are you 0:06:48.000 --> 0:06:52.279 expecting this afternoon? It depends on who you're asking in 0:06:52.320 --> 0:06:54.760 our group about what we're protecting. But I think I 0:06:54.800 --> 0:06:58.840 think right now seventy basis points is probably the most 0:06:58.880 --> 0:07:00.920 likely outcome just give in that. It's almost like they 0:07:00.960 --> 0:07:03.920 backed themselves into a corner having that story come out. 0:07:04.080 --> 0:07:06.400 I don't know whether or not leak or not up 0:07:06.480 --> 0:07:08.760 a purposeful leak, but it's almost like if they don't 0:07:08.800 --> 0:07:12.040 do seventy five basis points, it won't go over well 0:07:12.080 --> 0:07:15.120 with the markets. Um, so it probably STUDI five basis 0:07:15.120 --> 0:07:17.360 points and maybe a lot more hawkish language. By the way, 0:07:17.360 --> 0:07:20.880 you're not alone out there. I've noticed, Uh sometimes a 0:07:20.960 --> 0:07:25.200 chief strategists like Marco Kolanovitch doesn't agree with his chief 0:07:25.200 --> 0:07:28.560 economist or his CEO. So, um, it seems like the 0:07:29.120 --> 0:07:34.640 people within our group, by the way, well, uh, the 0:07:34.680 --> 0:07:38.240 problem is obviously inflation, and the FED needs to deal 0:07:38.280 --> 0:07:41.800 with that. Whether it goes fifty now or seventy five 0:07:41.920 --> 0:07:44.560 now and then seventy five next week or fifty next 0:07:44.560 --> 0:07:48.480 week probably probably isn't that important, right Are they going 0:07:48.520 --> 0:07:51.920 to be able to get prices down? Can they really 0:07:51.960 --> 0:07:54.000 do anything about it? Vince was saying, you know what, 0:07:54.040 --> 0:07:58.240 this isn't something that monetary policy can necessarily solve. So 0:07:58.440 --> 0:08:01.320 monson paulicit being as the class sick blunt instrument. I mean, 0:08:01.400 --> 0:08:04.000 there's the supply side. Um, of course, all the supply 0:08:04.080 --> 0:08:07.320 factors energy prices as well from the war, that has 0:08:07.360 --> 0:08:09.800 been a big contributor to to inflation. But at the 0:08:09.840 --> 0:08:12.280 same time, on the demand side, all the money that 0:08:12.280 --> 0:08:15.520 people saved during the pandemic broadly speaking, of course, all 0:08:15.520 --> 0:08:19.320 the fiscal support that has caused a huge um increase 0:08:19.360 --> 0:08:22.280 in demand, all that contempt demand. So what the FED 0:08:22.440 --> 0:08:24.280 was trying to do and what most central bankers are 0:08:24.280 --> 0:08:26.680 trying to do is basically a collaborative. I can say 0:08:26.720 --> 0:08:29.680 that claber of the demand side with higher rates, and 0:08:29.720 --> 0:08:33.640 that will at least go some way to bring inflation lower. 0:08:33.880 --> 0:08:36.800 Maybe not quickly as quickly as we had expected, but 0:08:36.920 --> 0:08:41.320 it will go some way towards doing that. So also today, Jennifer, 0:08:41.320 --> 0:08:43.960 we had some economic data come out this morning. UM, 0:08:44.000 --> 0:08:46.840 retail sales a little bit weaker than expected. Any read 0:08:46.840 --> 0:08:49.920 through there for you, It wasn't as I mean, I 0:08:50.040 --> 0:08:52.440 don't think we should, even though consensus including US had 0:08:52.600 --> 0:08:56.520 had a small increase expected for May. I don't think 0:08:56.520 --> 0:08:59.280 some of the details were too too shocky. Um. A 0:08:59.320 --> 0:09:00.760 lot of it was ours. I think that I was 0:09:00.800 --> 0:09:03.640 going a half percent or something like that. Gasoline, gasoline 0:09:03.640 --> 0:09:05.960 and sales are up a lot, but even X autos 0:09:05.960 --> 0:09:08.520 and X gas, you know, still up mildly. Some of 0:09:08.559 --> 0:09:11.000 the discretionary stuff was interesting, like sporting goods. I think 0:09:11.000 --> 0:09:13.240 we're still higher and people were still dining out, so 0:09:13.360 --> 0:09:16.440 it wasn't all negative. But of course this is just 0:09:16.720 --> 0:09:19.000 the start, and I think we're gonna start seeing the 0:09:19.040 --> 0:09:22.520 big slow down cutting from the consumer. So how big 0:09:22.600 --> 0:09:25.040 is the question right especially considering how much the consumer 0:09:25.800 --> 0:09:29.559 um contributes to US economy growth. Is it going to 0:09:29.600 --> 0:09:34.160 be big enough to bring us into a recession? Well, 0:09:34.960 --> 0:09:37.320 right now, we're thinking more of a growth recession in 0:09:37.400 --> 0:09:40.400 terms of like just floor grows and starting to bring 0:09:40.440 --> 0:09:43.719 the unemployment rate a little bit higher. UM, not an 0:09:43.720 --> 0:09:47.520 outrates recession that we are all accustomed to hearing about. 0:09:47.720 --> 0:09:50.760 Does everyone in your group expect just that, Jennifer, Yes, 0:09:50.880 --> 0:09:54.040 that is because that is a very widespread view with 0:09:54.080 --> 0:09:57.320 an opera on our group. UM. I will continue to 0:09:57.400 --> 0:09:59.439 lean on the fact that as of right now, the 0:09:59.520 --> 0:10:02.319 labor mark it continues to be super strong, but that 0:10:02.480 --> 0:10:04.640 cannot last forever. And I think I mentioned this at 0:10:04.679 --> 0:10:07.560 least over the last few months, that you know, anyone 0:10:07.600 --> 0:10:10.280 who has several different job offers out there, you know, 0:10:10.360 --> 0:10:12.080 I hope that they're taking one of them now because 0:10:12.080 --> 0:10:14.400 it's not going to be available forever. I mean, you 0:10:14.440 --> 0:10:17.760 can I'm imagining companies who perhaps have been looking for 0:10:17.920 --> 0:10:19.200 I don't know, I'm gonna say, like, you know, a 0:10:19.240 --> 0:10:21.480 dozen people to hire, and if they haven't been able 0:10:21.480 --> 0:10:23.080 to fill those jobs, mean at this point they were 0:10:23.080 --> 0:10:25.720 thinking maybe we don't need them, you know, and demands 0:10:25.720 --> 0:10:28.080 starting to taper off, maybe we won't be needing all 0:10:28.120 --> 0:10:29.720 those you know, we don't won't be needed to hire 0:10:29.760 --> 0:10:32.440 all theople of people. So you have to imagine that 0:10:32.440 --> 0:10:35.520 it's going to start tapering off at some point. So Jennifer, 0:10:35.559 --> 0:10:38.160 just going back to last Friday with that CPI print, 0:10:38.200 --> 0:10:40.679 which was such a surprise I think to the marketplace, 0:10:40.720 --> 0:10:44.160 and we saw it into trading in the markets Friday, 0:10:44.240 --> 0:10:48.680 Monday and Tuesday. UM, a little bit of hindsight here. 0:10:49.400 --> 0:10:53.360 What's your kind of main takeaway from that. I feel 0:10:53.440 --> 0:10:58.199 that every country around the world continues to perhaps misread 0:10:58.240 --> 0:11:02.120 the inflation data or kind of expect some expecting plation 0:11:02.160 --> 0:11:05.600 to start tapering off, but again it hasn't happened. Jeff Standon, 0:11:05.679 --> 0:11:07.960 this is why you're seeing all these central banks. You know, 0:11:08.040 --> 0:11:10.360 doing stepping up to do more, you know, except of 0:11:10.400 --> 0:11:12.960 course for the bag Japan. But um, you know again 0:11:12.960 --> 0:11:16.080 because we always it's just it's just continued to surprise 0:11:16.120 --> 0:11:17.520 on the high side, and I think it's going to 0:11:17.520 --> 0:11:20.800 continue doing so until it doesn't. By the way, I 0:11:20.840 --> 0:11:23.360 was thinking today, I was putting together a list of 0:11:23.400 --> 0:11:27.400 the things I could fund shorting jgbs. I mean, what 0:11:27.600 --> 0:11:31.960 a cake walk, right? What are jgbs Japanese government bonds. 0:11:31.960 --> 0:11:34.880 I'm just gonna I'm just gonna borrow Japanese tenure bonds, 0:11:35.480 --> 0:11:38.599 sell them short and then like instead of a mortgage, 0:11:38.720 --> 0:11:42.040 or instead of corporate financing, or instead of selling treasuries, 0:11:42.080 --> 0:11:45.679 the US government could fund operations shorting jgbs. It's a 0:11:45.960 --> 0:11:48.559 there's no loss, there's no downside of this trade, Jennifer 0:11:50.040 --> 0:11:52.280 and Governor Caruda could continues to say that, you know 0:11:52.320 --> 0:11:55.040 that their economy is a lot different and that is 0:11:55.040 --> 0:11:57.760 not the time to raise rates. There you go, all right, 0:11:57.840 --> 0:12:00.520 Jennifer Lee. Always appreciate getting a few minutes of your 0:12:00.559 --> 0:12:03.200 time on this FED days. We wait the FED statement 0:12:03.280 --> 0:12:08.559 two pm. Wall Street time. I am back here stuck 0:12:08.559 --> 0:12:12.040 in New York City, UM, with my friend Katie Greifeld, 0:12:12.920 --> 0:12:15.480 with whom I anchor every Monday, the E T F 0:12:15.559 --> 0:12:18.839 I Q Show on Bloomberg Television times on Mondays, Wednesdays. 0:12:18.920 --> 0:12:23.160 Sometimes on Wednesdays we're waiting for a decision from upper upper, 0:12:23.280 --> 0:12:27.679 upper management on that. But she also focuses big lely 0:12:28.040 --> 0:12:32.079 on cryptocurrencies and it has been a world of hurt. 0:12:32.440 --> 0:12:35.800 Katie Gray felt, what with what was it called tara 0:12:36.760 --> 0:12:41.719 Um Luna and then UM what was the Celsius? And 0:12:41.840 --> 0:12:46.959 now Three Arrows? What's names? I From what I can 0:12:47.000 --> 0:12:50.680 tell talking to UM investors to traders, this is just 0:12:50.800 --> 0:12:55.800 looking like a beautiful liquidation cascade that obviously, with Tera 0:12:55.880 --> 0:12:58.040 blowing up, we knew that a lot of people, a 0:12:58.080 --> 0:13:01.360 lot of high profile backers were involved in Tera, and 0:13:01.559 --> 0:13:04.240 you've sort of seen the slow drip out of that. 0:13:04.400 --> 0:13:07.720 Slow is a relative term. Everything happens faster in crypto, 0:13:07.880 --> 0:13:11.079 and now it seems like, uh, this is really happening, 0:13:11.640 --> 0:13:14.160 uh with a much greater intensity. A lot of leverage 0:13:14.200 --> 0:13:15.800 is getting flushed out right now. And there's a lot 0:13:15.800 --> 0:13:18.120 of questions about a lot of those names you just mentioned, 0:13:18.160 --> 0:13:20.560 such as Three Arrows and some of the other big 0:13:20.600 --> 0:13:22.720 hedge funds in the space. All right, talk to us 0:13:22.720 --> 0:13:25.920 about coin Base, because that you know, a lot of 0:13:25.920 --> 0:13:28.439 folks were leading the financial services industry and saying, oh, 0:13:28.520 --> 0:13:33.960 this platform, this is the future. Um speaking of Cascade, Yes, 0:13:34.120 --> 0:13:35.920 and then boy and a lot of folks lost their 0:13:36.000 --> 0:13:37.680 jobs and so on. So what do we know about 0:13:37.679 --> 0:13:41.040 these trading platforms? Uh? You know, everybody just focuses on 0:13:41.080 --> 0:13:42.760 the bitcoin and the price of bitcoin because you can 0:13:42.760 --> 0:13:44.360 see it on your Bloomberg terminal, But how about some 0:13:44.360 --> 0:13:46.760 of these exchanges, the kind of the plumbing. It's a 0:13:46.760 --> 0:13:48.760 great point that it's not just the price of bitcoin. 0:13:48.800 --> 0:13:51.520 You have an entire industry built around it as well. 0:13:51.559 --> 0:13:54.000 And if you think about coin Base, obviously, the news 0:13:54.040 --> 0:13:55.600 from this week was that they're going to lay off 0:13:55.640 --> 0:13:58.640 eight of their workforce. This, of course, I mean they've 0:13:58.679 --> 0:14:02.280 hired aggressively just this year, a loan adding. I think people, 0:14:02.720 --> 0:14:05.520 this isn't entirely just a crypto problem. I mean, we've 0:14:05.520 --> 0:14:07.240 heard about a lot of crypto layoffs, but if you 0:14:07.240 --> 0:14:09.360 think about what's happening in the broader economy, we're seeing 0:14:09.360 --> 0:14:11.840 it with a bunch of other companies as well. I mean, 0:14:11.880 --> 0:14:15.280 if you think about what we heard about Amazon and Walmart, 0:14:15.320 --> 0:14:18.520 they overstaffed too. It's just that this is hitting at 0:14:18.520 --> 0:14:21.280 a very painful time for crypto and you are seeing 0:14:21.360 --> 0:14:23.440 again some of the biggest names out their coin base 0:14:23.520 --> 0:14:26.520 having to announce these massive layoffs. We heard from Block 0:14:26.600 --> 0:14:30.560 five this week as well, laying off of their workforce. Interestingly, though, 0:14:30.680 --> 0:14:32.840 krack In just today another exchange came out and said 0:14:32.840 --> 0:14:36.320 that there are launching a global hiring push. So some 0:14:36.480 --> 0:14:38.880 of these firms are trying to swim against the current here. Yeah. 0:14:38.920 --> 0:14:42.040 Actually I got to talk to Nick Carter yesterday from 0:14:42.080 --> 0:14:46.360 Castle Island Ventures. I was very excited about that. Him mustache. Yes, 0:14:46.520 --> 0:14:49.480 his mustache is awesome, and he says, plus, he also 0:14:49.600 --> 0:14:52.840 is one of the smartest voices on crypto. He was 0:14:53.160 --> 0:14:56.480 one of the first UM financial analysts on crypto on 0:14:56.520 --> 0:14:59.840 the street. And um he says, Look, if you're if 0:14:59.840 --> 0:15:04.120 you a good smart engineer with good experience, which a 0:15:04.160 --> 0:15:05.920 lot of those people from coin based are, it's gonna 0:15:05.920 --> 0:15:08.640 be no problem for you to find another job in 0:15:09.040 --> 0:15:13.440 crypto or in tech. In in a broader sense. Um, 0:15:13.600 --> 0:15:16.600 but there is an issue, it seems with steaked ether 0:15:17.120 --> 0:15:21.040 like this first became apparent UM when when we saw 0:15:21.240 --> 0:15:26.840 that uh lido one platform was holding thirty one of 0:15:27.040 --> 0:15:30.640 all steaked ether. It's a custodian right for others. And 0:15:30.640 --> 0:15:33.840 and now, um, we've heard that the difficulty bomb has 0:15:33.840 --> 0:15:36.440 been delayed. This was a way to kind of speed 0:15:36.520 --> 0:15:39.800 up the merger from proof of work ether to proof 0:15:39.880 --> 0:15:45.120 of steak ether. Now Three Arrows has been liquidating its 0:15:45.120 --> 0:15:48.640 steaked ether for regular ether. What's what's going on with 0:15:48.680 --> 0:15:51.040 this with the merge, as they call it, the switch 0:15:51.160 --> 0:15:54.640 to a more environmentally friendly way of minding crypto. It's 0:15:54.640 --> 0:15:57.240 a great question. We've been waving on the merged for 0:15:57.280 --> 0:15:59.320 a while. The latest we know is it's supposed to 0:15:59.360 --> 0:16:02.880 take place later this year. And like you said, I 0:16:02.880 --> 0:16:05.760 mean this ties back into the Three Rows capital conversation. 0:16:06.040 --> 0:16:08.560 One of the most prolific crypto hedge funds out there. 0:16:08.920 --> 0:16:11.680 They have a lot of exposure to steaked ether and 0:16:11.720 --> 0:16:15.240 they had ten billion dollars under management. That's a lot 0:16:15.240 --> 0:16:18.200 of money. That is a lot of money. They were 0:16:18.600 --> 0:16:20.800 one of the investors in Terra. We know that they 0:16:20.840 --> 0:16:23.000 have exposures to state ether. All of the things that 0:16:23.040 --> 0:16:25.160 are kind of going wrong right now, so with steaked ether, 0:16:25.520 --> 0:16:28.880 so it's supposed to be redeemable for one ether after 0:16:29.320 --> 0:16:32.760 the merge takes place, but we don't know when exactly 0:16:32.800 --> 0:16:34.600 that's going to happen. And what's happening now is you're 0:16:34.600 --> 0:16:37.920 seeing this big dislocation between the price of staked ether 0:16:38.160 --> 0:16:43.240 and ether itself, and that is really painful for funds 0:16:43.240 --> 0:16:45.720 such as Three Rows Capital. By the way, we're seeing 0:16:45.840 --> 0:16:49.480 on Bloomberg Television, I see Michael Sunnenshine from Gray Scale 0:16:49.520 --> 0:16:53.400 Capital is talking to Guy and Alex and Three Arrows 0:16:53.480 --> 0:16:55.960 reportedly had a more than five percent stake in the 0:16:56.000 --> 0:16:59.400 Gray Scale e T F. Right, Yes, not an e 0:16:59.480 --> 0:17:04.040 T F Are you sorry? Yes? So they this is 0:17:04.200 --> 0:17:07.320 data is as of December that they had that five 0:17:07.320 --> 0:17:12.160 percent stake in uh Grace Scales Bitcoin Trust. Unclear whether 0:17:12.200 --> 0:17:15.560 they still do, unclear whether they're selling that right now 0:17:15.600 --> 0:17:18.920 in the secondary market. But I mean, if you think 0:17:18.920 --> 0:17:23.119 about hedge funds, they would sell their most liquid things first, 0:17:23.200 --> 0:17:24.680 and I don't know. I would imagine g v D 0:17:24.800 --> 0:17:27.520 two shares are a little bit more liquid than steaked ether, 0:17:27.600 --> 0:17:29.040 but it's hard to know at this point as we 0:17:29.160 --> 0:17:32.840 again just see leverage get wiped out across the industry. 0:17:33.040 --> 0:17:35.120 And you know, with that, Katie, a lot of folks 0:17:35.160 --> 0:17:37.800 are saying I told you so. Even Bill Gates kind 0:17:37.800 --> 0:17:42.679 of jumped onto that bandwagon here, who are the true believers? 0:17:42.760 --> 0:17:46.320 Where are they? Who are they in crypto? Because uh, 0:17:46.520 --> 0:17:49.840 it was obviously it is still a very big story. 0:17:50.560 --> 0:17:53.439 It was never Bill Gates, Yes, you can start with that. 0:17:53.480 --> 0:17:58.280 He was never believer, Jamie Diamond, Warren Buffett, especially really 0:17:58.320 --> 0:18:02.480 old people. Yeah, not not true believers. Well, I mean 0:18:02.520 --> 0:18:05.040 it's funny if you think about people, if you just 0:18:05.080 --> 0:18:10.320 think about what's different between now this moment and the first. 0:18:10.320 --> 0:18:13.520 It just feels like traditional Wall Street has too many 0:18:13.640 --> 0:18:17.119 arms into crypto to completely withdrawal. So we'll see if 0:18:17.160 --> 0:18:21.480 that's a layer that's involved with this crash. But it's 0:18:21.520 --> 0:18:23.560 funny to talk about sun and Shine. So he is 0:18:23.600 --> 0:18:25.800 at Gray Skill, he's the CEO. There a song to 0:18:25.840 --> 0:18:29.480 him rate before his BTV interview. He's a true believer. 0:18:29.600 --> 0:18:31.520 He's a true believer. He made the point that you 0:18:31.560 --> 0:18:33.880 see periods like this, you get a lot of leverage 0:18:34.160 --> 0:18:37.000 flushed out, and basically it leads out the players who 0:18:37.040 --> 0:18:41.320 were maybe playing it a little too fast with the 0:18:41.480 --> 0:18:44.840 leverage too cute, too cute. It tends to be a 0:18:44.840 --> 0:18:46.679 healthy period. But that's what you would expect to hear 0:18:46.720 --> 0:18:49.440 from some of those true believers. Michael sn and Shine. 0:18:49.440 --> 0:18:52.680 Absolutely right. But the bottom line, um, even though we're 0:18:52.680 --> 0:18:56.600 seeing a lot of unwinding of leverage, this isn't going away. 0:18:56.680 --> 0:18:58.600 I mean, even though we've seen a crash in the price, 0:18:58.640 --> 0:19:00.960 it's not sound like a man your anchors a weekly 0:19:01.000 --> 0:19:04.520 crypto show. Also, because I just heard David Rubinstein say 0:19:04.520 --> 0:19:07.479 that yesterday. I mean, if you think about our world, 0:19:07.560 --> 0:19:09.920 and again I'm a journalist, I have no opinions are 0:19:10.000 --> 0:19:13.360 increasingly digital world kind of makes sense that digital money 0:19:13.359 --> 0:19:16.040 would be a part of it, that our lives would 0:19:16.080 --> 0:19:18.200 move increasingly online. I mean, I think about the true 0:19:18.200 --> 0:19:21.120 directory of my own life. All right, Katy gray Felt, 0:19:21.119 --> 0:19:23.800 thank you so much for joining us as always talking 0:19:23.840 --> 0:19:27.240 about the crypto, all things crypto. She's a Cross Asset 0:19:27.320 --> 0:19:35.280 reporter Bloomberg Quick Take co anchor. We are in Dallas, Texas. 0:19:35.359 --> 0:19:37.760 We bring in Matthew Forster, c I O and Managing 0:19:37.800 --> 0:19:41.359 director b n Y Melon Lockwood Advisors. Matt, it's a 0:19:41.359 --> 0:19:43.239 fed day today. I'd love you know, this is kind 0:19:43.240 --> 0:19:45.720 of all we've been talking about here on radio, on television. 0:19:45.920 --> 0:19:48.520 What do you guys at bing and Y melon thinking 0:19:48.560 --> 0:19:52.520 about your feather reserve. Well, some of them that might 0:19:52.520 --> 0:19:55.880 be sci fi fans might like to have read um 0:19:55.920 --> 0:19:58.760 Douglas Adams Hitchhiker's Guide to the Galaxy. And if you remember, 0:19:58.840 --> 0:20:01.879 that book comes with two bright bold words on the 0:20:01.880 --> 0:20:05.119 back that says, don't panic, right, And uh, you know, 0:20:05.520 --> 0:20:07.600 I think if you look at what has occurred around 0:20:07.600 --> 0:20:10.080 the world today with central banks, there's just a little 0:20:10.119 --> 0:20:14.280 tinge of panic. We have Ben Brunankee with an op ed, uh, 0:20:14.359 --> 0:20:17.199 you know, talking about the FED credibility and that this 0:20:17.280 --> 0:20:20.159 isn't the seventies. We have the e c B with 0:20:20.200 --> 0:20:23.879 this unusual communicate which talks about how they're gonna be 0:20:23.920 --> 0:20:29.280 flexible around anti fragmentation. Uh. These kinds of unusual terms 0:20:29.320 --> 0:20:33.440 and literally vague wording I think doesn't maybe help. Uh. 0:20:33.480 --> 0:20:35.639 And we also, of course have the FED decision today, 0:20:35.680 --> 0:20:37.959 where you know, there's some discussion about how far they 0:20:37.960 --> 0:20:39.879 could go and whether or not a move with just 0:20:39.920 --> 0:20:42.879 a couple of days ago, we were thinking that fifty 0:20:42.920 --> 0:20:46.520 basis points was baked into the cake. Um and here 0:20:46.560 --> 0:20:49.040 we have seventy five, then possibly even a hundred, and 0:20:49.040 --> 0:20:52.359 it looks like the market is completely shifted to having 0:20:52.600 --> 0:20:56.640 seventy five basis today points today, and usually the FED 0:20:56.720 --> 0:20:59.280 does not disappoint the markets when they've already built into 0:20:59.320 --> 0:21:01.840 that pricing, right. So I would have said fifty a 0:21:01.880 --> 0:21:04.480 few days ago, and now I think it's maybe likely 0:21:04.520 --> 0:21:07.240 that they got exactly and that's kind of what I 0:21:07.280 --> 0:21:09.880 would think consensus might be. Hey, man, as we look 0:21:09.880 --> 0:21:12.960 around here, I see a lot of your you know, 0:21:14.119 --> 0:21:16.800 the firms you do, your partners. I looking at Janie Henderson, 0:21:16.880 --> 0:21:19.240 I'm looking at you know, Eating Vance and all these folks, 0:21:19.240 --> 0:21:20.960 and they're here, which is good because it's been a 0:21:21.040 --> 0:21:23.920 couple of years. What are you hearing from your partners, 0:21:23.920 --> 0:21:26.479 the folks that you would be in my melandue business with, 0:21:26.880 --> 0:21:29.040 because it's been a crazy two and a half years 0:21:29.040 --> 0:21:31.439 and has sent and uh. Yeah. The important point for 0:21:31.520 --> 0:21:33.840 us to remember is that we work with all of 0:21:33.840 --> 0:21:36.639 these large firms here. We're there are suppliers to us 0:21:36.720 --> 0:21:39.439 on a third party asset manager. We've managed some of 0:21:39.440 --> 0:21:42.040 our own, uh, and so we work with all of 0:21:42.080 --> 0:21:44.480 them and we hear from them around products. So yesterday 0:21:44.480 --> 0:21:48.320