WEBVTT - Bloomberg Intelligence: Biden Impact on U.S Carmakers, Fed Minutes, Nvidia Earnings 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple Car, playing Android Auto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.480 or watch us live on YouTube. 0:00:25.040 --> 0:00:27.040 You know, we love the big take stories here at 0:00:27.040 --> 0:00:29.880 Bloomberg News, almost like on a daily basis, puts out 0:00:29.920 --> 0:00:34.159 these big take stories, really deep dives, deeply reported. Teams 0:00:34.400 --> 0:00:36.920 of people focused on this thing and they go deep 0:00:36.920 --> 0:00:38.879 and they get good data, good reporting. And today is 0:00:38.960 --> 0:00:43.280 a big one. Biden's EV dreams are a nightmare for 0:00:43.400 --> 0:00:45.800 Tesla in the US car industry. Craig Trudell joins US 0:00:45.800 --> 0:00:51.080 Global Autos editor for Bloomberg News on Zoom from London. So, Craig, 0:00:51.200 --> 0:00:53.320 this is a big deal here because President Biden, that 0:00:53.360 --> 0:00:57.440 Inflation Reduction Act putting a lot of money behind EV's here. 0:00:57.480 --> 0:01:01.080 But you can't take China out of the here. What's happening. 0:01:02.600 --> 0:01:05.600 Yeah, I think this is a really challenging thing that 0:01:05.640 --> 0:01:08.240 the Biden administration was trying to do. Right, they were 0:01:08.240 --> 0:01:11.080 trying to jump start the EV industry in the US. 0:01:11.600 --> 0:01:13.520 I would say, you know, you can give them high 0:01:13.520 --> 0:01:15.720 marks for what they've done in terms of the amount 0:01:15.720 --> 0:01:20.959 of manufacturing investment they've attracted. It's it's really been remarkable 0:01:21.040 --> 0:01:24.000 the the response that we've seen there. On the other 0:01:24.120 --> 0:01:27.160 side of the equation, the demand side, I think, you know, 0:01:27.200 --> 0:01:30.560 the marks are way more mixed, and I think, you know, 0:01:30.600 --> 0:01:33.760 the challenges that we're going to see in the years 0:01:33.800 --> 0:01:36.840 to come, you know, assuming, of course, Ira you know, 0:01:37.120 --> 0:01:39.960 stands up if we see a change in the White 0:01:39.959 --> 0:01:43.920 House later this year. But you know, whether or not 0:01:44.520 --> 0:01:48.360 manufacturers can sort of pull off what Biden you know, 0:01:48.600 --> 0:01:51.360 is asking of them, which is to really set up 0:01:51.360 --> 0:01:55.880 a EV and battery supply chain that is less reliant 0:01:55.920 --> 0:01:59.240 on China, and it eventually is just not reliant on China. 0:01:59.320 --> 0:02:02.360 And that's proving to be an extremely difficult task. And 0:02:02.360 --> 0:02:04.720 that's what we try to lay out today in ways 0:02:04.760 --> 0:02:08.040 that are you know, really it's a it's a complicated issue. 0:02:08.720 --> 0:02:11.519 You know. Tesla everyone thinks about, as. 0:02:11.400 --> 0:02:13.920 You know, being a very sort of made in America 0:02:14.400 --> 0:02:16.920 car brand, and and you know, they sort of are 0:02:16.960 --> 0:02:20.760 recognized as one legitimately, but you know, when given the 0:02:20.800 --> 0:02:25.880 opportunity to import batteries because of the fact that the IRA, 0:02:26.280 --> 0:02:30.400 you know, didn't really necessarily grow some teeth until the beginning. 0:02:30.000 --> 0:02:30.560 Of this year. 0:02:30.600 --> 0:02:32.920 We saw, you know, just in a matter of months 0:02:33.320 --> 0:02:35.639 Tesla import two and a half billion dollars worth of 0:02:36.080 --> 0:02:37.400 EV batteries from China. 0:02:37.600 --> 0:02:41.440 Wow, and Craig, that's happening, because it feels like every 0:02:41.440 --> 0:02:43.840 time we talk about GM for Tesla, a lot of 0:02:43.840 --> 0:02:48.000 these companies are losing money making their evs. So what 0:02:48.120 --> 0:02:51.400 was the point of the IRA if not to kind 0:02:51.400 --> 0:02:54.640 of streamline I guess the kind of inputs of of 0:02:54.680 --> 0:02:55.359 these batteries. 0:02:56.880 --> 0:02:59.880 I think what you have here is a situation where 0:03:00.080 --> 0:03:03.520 you know, Joe Mansion was was, you know, the player 0:03:04.120 --> 0:03:06.960 who you know, Washington really just had to sort of 0:03:07.000 --> 0:03:09.760 bend to his will, and he was really reluctant to 0:03:10.639 --> 0:03:13.959 you know, allow for electric vehicles to continue to get 0:03:14.000 --> 0:03:17.560 tax credits. He was opposed to them. And he said, okay, industry, 0:03:18.160 --> 0:03:20.480 well we'll give you these tax credits, but you build 0:03:20.520 --> 0:03:24.600 me a supply chain that, of course, you know, sort 0:03:24.600 --> 0:03:26.880 of didn't take into account sort of you know the 0:03:26.919 --> 0:03:30.359 complexities of the supply chain and the fact that China 0:03:30.600 --> 0:03:33.400 is just so dominant in this space and they've really 0:03:34.040 --> 0:03:36.920 sort of you know, methodically, you know, for a time 0:03:37.040 --> 0:03:40.880 quietly you know built this this you know, staggeringly strong 0:03:40.920 --> 0:03:44.960 position in terms of you know, the control of you know, 0:03:45.000 --> 0:03:48.840 the inputs, whether it's you know, nickel and lithium graphite. 0:03:49.320 --> 0:03:51.800 You know, these inputs are going to be really really 0:03:51.800 --> 0:03:56.640 difficult to source, not only just you know, whether their 0:03:56.880 --> 0:04:00.000 mind in China, but whether they're sort of process and refined, 0:04:00.000 --> 0:04:04.520 and you know, the sort of cost difference that the 0:04:04.560 --> 0:04:07.720 WES is going to have to sort of overcome really 0:04:07.800 --> 0:04:10.280 just can't be you know, sort of overstated at this point. 0:04:10.800 --> 0:04:12.720 And folks, if you want to see this article, it's 0:04:12.760 --> 0:04:16.240 fantastic article. Really deeply reporting. Great graphics makes it easy 0:04:16.279 --> 0:04:18.640 for me because I like the pictures. Bloomberg dot Com 0:04:18.640 --> 0:04:20.800 slash a big take is kind of where you find it. 0:04:21.000 --> 0:04:23.760 Big team effort. So you know, Craig, I see in 0:04:23.760 --> 0:04:26.440 your reporting here. In twenty twenty three, the IRA required 0:04:26.480 --> 0:04:29.280 that at least half of the value of battery components 0:04:29.560 --> 0:04:31.479 had to be assembled in North America and that forty 0:04:31.520 --> 0:04:34.640 percent of the raw materials had to be sourced from 0:04:34.680 --> 0:04:37.240 the US. And in twenty twenty seven, that raw material 0:04:37.279 --> 0:04:39.600 requirement is going to double to eighty percent. Are those 0:04:39.680 --> 0:04:42.800 numbers are they can they be achieved in that timeframe? 0:04:44.279 --> 0:04:47.120 I think that's that's one of the things that you know, 0:04:47.160 --> 0:04:49.480 it sort of depends on which company you ask. 0:04:49.560 --> 0:04:50.839 And I think, you know. 0:04:50.800 --> 0:04:54.039 Some of the concerns that the industry is having here 0:04:54.160 --> 0:04:56.880 is the fact that some of these raw materials the 0:04:56.920 --> 0:04:58.520 prices have really collapsed. 0:04:58.560 --> 0:04:59.840 And you know. 0:04:59.800 --> 0:05:02.919 That that you would sort of think, oh, that's a 0:05:02.920 --> 0:05:05.279 good thing for the auto companies. But if you're trying 0:05:05.320 --> 0:05:09.080 to build a supply chain in North America for these 0:05:09.279 --> 0:05:12.840 raw materials and the prices for them have absolutely you know, 0:05:12.839 --> 0:05:14.800 sort of the bottom has come out. I think of 0:05:15.240 --> 0:05:18.919 lithium in particular, you've seen this dramatic, you know drop 0:05:19.480 --> 0:05:24.320 in prices that significantly undermines the economics of those projects. 0:05:24.320 --> 0:05:27.039 And so, you know, I think the raw materials in 0:05:27.120 --> 0:05:30.880 particular are a real challenge. I think battery components will 0:05:30.920 --> 0:05:33.200 be less of a challenge. But even there, it is 0:05:33.800 --> 0:05:35.800 a matter of you can't just sort of snap your 0:05:35.839 --> 0:05:38.520 fingers and open up a bunch of plants for these 0:05:38.560 --> 0:05:42.400 various components. You know, it does take time, you know, 0:05:42.480 --> 0:05:46.360 to put you know, dig up the ground and put 0:05:46.440 --> 0:05:51.039 up these these plants that are coming, but are taking 0:05:51.080 --> 0:05:52.120 some time and. 0:05:52.120 --> 0:05:56.560 Graig across the auto makers. I'm looking at the reporting again, 0:05:56.640 --> 0:05:59.320 seven of Tesla's twelve models sold in the US fully 0:05:59.320 --> 0:06:02.400 cleared the eye R raise sourcing hurdles and qualified for 0:06:02.480 --> 0:06:06.400 the tax credit. What percentage of evs being sold in 0:06:06.400 --> 0:06:08.680 the US are clearing that hurdle? 0:06:10.640 --> 0:06:13.799 I think because Tesla is still so dominant in the US, 0:06:14.600 --> 0:06:17.960 we're at a point where, you know, the evs that 0:06:18.600 --> 0:06:22.000 do the most volume are largely qualifying at the moment. 0:06:22.080 --> 0:06:26.000 But I think the fact that those raw material requirements 0:06:26.040 --> 0:06:29.719 that kick in next year and then escalate in the 0:06:29.800 --> 0:06:33.119 years that follow that's really where we're going to see 0:06:33.160 --> 0:06:36.200 even more of a sort of you know, level of 0:06:36.600 --> 0:06:39.919 screws put on the industry. But but I think, you know, 0:06:40.000 --> 0:06:43.520 the other carmaker that I think is particularly well positioned, 0:06:43.520 --> 0:06:46.040 I would just call out to General Motors. I think 0:06:46.320 --> 0:06:50.000 the fact that they have a localized supply chain, UH 0:06:50.560 --> 0:06:54.320 for batteries, they have a joint venture with a Korean 0:06:54.720 --> 0:06:55.640 battery supplier. 0:06:56.120 --> 0:06:59.320 We're seeing, you know, more and more of those partnerships. 0:06:59.360 --> 0:07:02.599 You know, for about following suit Stilantis, the maker of 0:07:03.000 --> 0:07:07.840 Jeep and Chrysler, you know, similar deal where they're setting 0:07:07.920 --> 0:07:11.440 up battery plants in North America and sort of on 0:07:11.520 --> 0:07:13.800 and on. But those projects, I would say, are much 0:07:13.840 --> 0:07:17.560 further behind where we have Tesla, which you know for 0:07:17.680 --> 0:07:20.960 years has been making batteries out Nevada with Panasonic and 0:07:21.080 --> 0:07:23.400 GM which has a partnership with. 0:07:23.520 --> 0:07:25.120 LG in US. 0:07:25.440 --> 0:07:28.720 Hey, Craig, I think the narrative out there just kind 0:07:28.760 --> 0:07:31.560 of the bigger picture on EV's right now is, Gee, 0:07:32.040 --> 0:07:35.560 maybe demand isn't as high as we all thought at 0:07:35.600 --> 0:07:38.480 one point. We've got you know, the big automate manufacturers 0:07:38.480 --> 0:07:41.679 pulling back like Ford for example. Loss is still big. 0:07:42.160 --> 0:07:44.520 What's your understanding when you talk to your sources as 0:07:44.520 --> 0:07:47.160 to how people are thinking about the ultimate demand for 0:07:47.240 --> 0:07:50.280 EV's over the next one to three to five years. 0:07:51.600 --> 0:07:55.240 I think, you know, perversely, it was a challenge that 0:07:55.440 --> 0:07:58.080 you know, for a time, you know, business was too good. 0:07:59.560 --> 0:08:03.280 The fact that you know, for a while there, uh you. 0:08:03.200 --> 0:08:07.120 Know, so many companies uh you know actually had back orders. 0:08:07.560 --> 0:08:07.640 Uh. 0:08:07.720 --> 0:08:09.160 Tesla in particular, you. 0:08:09.080 --> 0:08:12.240 Know, had demand issues as opposed to a supply issue 0:08:12.560 --> 0:08:15.120 that you know really sort of caused this uh you know, 0:08:15.280 --> 0:08:19.040 unsustainable you know, jacking up of prices. The fact that 0:08:19.040 --> 0:08:21.760 that has had to come down, I would say more 0:08:21.800 --> 0:08:25.400 dramatically than we've seen for the rest of the industry 0:08:25.440 --> 0:08:29.600 has had all sorts of you know, unintended unintended consequences 0:08:29.640 --> 0:08:33.559 when you uh, you know, so dramatically bring down prices 0:08:33.600 --> 0:08:36.840 on the new side. Uh, the the use side is 0:08:37.679 --> 0:08:41.160 of the equation. The use vehicles really lose their value 0:08:41.160 --> 0:08:43.480 and the fact that I think evs maybe have some 0:08:43.559 --> 0:08:47.960 sort of you know, particular challenges with you know, maintaining 0:08:47.960 --> 0:08:51.160 their value. When you think about a used uh, you know, 0:08:51.280 --> 0:08:53.680 gas car, you don't worry about, you know, the engine 0:08:53.720 --> 0:08:56.679 holding up. You maybe have you know, relatively more concern, 0:08:56.840 --> 0:08:59.320 rightfully or not, as to whether or not the battery 0:08:59.360 --> 0:09:01.840 has been going to hold up. And so what we're 0:09:01.880 --> 0:09:04.800 seeing is is you know, that really come into play 0:09:04.800 --> 0:09:08.440 in terms of total cost of ownership. I think that's 0:09:08.440 --> 0:09:10.560 one of the things that we've really paid close attention 0:09:10.640 --> 0:09:13.040 to lately. I think when we step back, you know, 0:09:13.160 --> 0:09:16.400 the fact that EV's is sort of you know, the 0:09:16.559 --> 0:09:19.800 way forward, particularly in terms of you know, where the 0:09:19.840 --> 0:09:22.920 regulators want to see this industry group go. I think 0:09:23.000 --> 0:09:26.480 we've seen that China is able to make this work. 0:09:26.520 --> 0:09:30.040 We've seen that Europe is much further along in this transition. 0:09:30.160 --> 0:09:33.680 I think the question for the US is whether you know, 0:09:33.880 --> 0:09:37.440 whether we can sort of, you know, get Americans who 0:09:37.480 --> 0:09:41.480 tend to like bigger vehicles to come around to electric vehicles. 0:09:41.520 --> 0:09:43.959 I think that also adds some complications to the mix 0:09:44.040 --> 0:09:44.400 as well. 0:09:44.559 --> 0:09:46.559 All Right, Craig, thanks so much as always. Craig Trudel 0:09:46.600 --> 0:09:49.000 Global autis editor for Bloomberg News, joining US visa zoom 0:09:49.000 --> 0:09:52.440 from London. You know, I tested thanks to Matt Miller's 0:09:52.800 --> 0:09:55.920 connections with Ford, he got me a F one fifty 0:09:56.080 --> 0:09:56.880 lightning the EV. 0:09:57.280 --> 0:09:57.520 Yeah. 0:09:57.640 --> 0:09:59.200 I got the test start of that for like a week. 0:09:59.320 --> 0:10:02.760 How is it awesome? Awesome? Now I have to full disclosure. 0:10:03.080 --> 0:10:04.800 I'm a Wall Street guy. I don't drive pickup truck, 0:10:04.920 --> 0:10:07.319 so it's a first pickup truck average rope. It was awesome, 0:10:07.320 --> 0:10:09.840 and it's the first electric vehicle average drope. But the 0:10:09.880 --> 0:10:13.439 sticker price was ninety four thousand dollars and I think 0:10:13.440 --> 0:10:16.320 it's just one of the challenges that haves this cost. Yeah. 0:10:16.360 --> 0:10:18.719 No, well, and that's going to be interestingly enough, we 0:10:18.760 --> 0:10:21.280 get earnings from Rivian and Lucid after the bell today, 0:10:21.280 --> 0:10:23.360 so we're going to hear how some of these smaller 0:10:23.440 --> 0:10:26.520 ev makers are hanging in there just given as you mentioned, 0:10:26.880 --> 0:10:29.760 high costs. These companies are losing money on pretty much 0:10:29.800 --> 0:10:33.360 every car vehicle they make, and demand doesn't seem to 0:10:33.360 --> 0:10:33.920 really be there. 0:10:34.040 --> 0:10:36.720 Yeah. So anyway, big take story coming out of Bloomberg 0:10:36.720 --> 0:10:39.080 News today, looking at the you know, the battery side 0:10:39.080 --> 0:10:40.920 of it and kind of where we're sourcing all this stuff. 0:10:40.960 --> 0:10:44.319 So again Bloomberg dot com slash Big, Big Take, and 0:10:44.360 --> 0:10:45.280 that that's where you'll find it. 0:10:46.880 --> 0:10:50.760 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:50.840 --> 0:10:54.360 weekdays at ten am Eastern on applecar Play and Android 0:10:54.400 --> 0:10:57.160 Otto with the Bloomberg Business app. You can also listen 0:10:57.280 --> 0:11:00.400 live on Amazon Alexa from our flagship New York station 0:11:00.760 --> 0:11:03.480 just say Alexa playing Bloomberg eleven thirty. 0:11:04.520 --> 0:11:07.120 Let's check in with Irin Jersey here because I want 0:11:07.120 --> 0:11:08.640 to know what my Federal Reserve is going to do. 0:11:08.679 --> 0:11:10.680 I mean, that's got you know, the Fed watchers, they 0:11:10.679 --> 0:11:12.920 were pounding their chest March. We're gonna get a you know, 0:11:12.960 --> 0:11:15.920 a rate cut, six rate cuts. Yeah, and now it's 0:11:16.040 --> 0:11:19.360 kind of May. Now people are talking about June, and 0:11:19.360 --> 0:11:21.040 we've had a couple of smart people come in here 0:11:21.040 --> 0:11:22.880 over the last couple of days and say, hey, you 0:11:23.000 --> 0:11:25.760 better have a scenario where they raise he raise rate. 0:11:25.840 --> 0:11:27.760 So I have no idea what's going on. So let's 0:11:27.760 --> 0:11:30.280 bring in Iri Jersey because it's his job. Ira Jersey, 0:11:30.280 --> 0:11:34.960 Bloomberg Intelligence Chief US interest rate strategist. Ira. It seems 0:11:34.960 --> 0:11:36.840 like this thing changes day by day. And I guess 0:11:36.840 --> 0:11:39.760 that's why the good folks of Bloomberg made the warp function, 0:11:40.120 --> 0:11:42.880 because it just changes all the time. It's a fluid situation. 0:11:43.360 --> 0:11:45.360 Given kind of what we know here in the economics 0:11:45.920 --> 0:11:48.400 and some of the data we've seen, how do you 0:11:48.400 --> 0:11:50.760 think the Fed's feeling today? 0:11:50.840 --> 0:11:53.280 Yeah, so you know, we're get a lot of Fed 0:11:53.320 --> 0:11:55.800 speak this week. We have the minutes at two o'clock today, 0:11:55.640 --> 0:11:59.000 so we'll see what they were talking about in some 0:11:59.200 --> 0:12:01.880 more detailed than than we got during the press conference 0:12:02.600 --> 0:12:05.640 from the January meeting. But you know, my view has 0:12:05.640 --> 0:12:08.319 always been that we were probably gonna only get a 0:12:08.360 --> 0:12:11.240 few cuts this year, so we'd we'd thought three cuts 0:12:11.280 --> 0:12:15.040 going into the going into the year over the course, 0:12:15.080 --> 0:12:16.840 and part of the reason for that was we thought 0:12:16.840 --> 0:12:19.880 that it would be pretty slow going and getting inflation 0:12:20.040 --> 0:12:22.839 back toward the fed's target, and you know, so far 0:12:22.920 --> 0:12:25.040 that's played out more or less the way that we thought. 0:12:25.120 --> 0:12:27.520 So so we'd been figuring that they would cut one 0:12:27.559 --> 0:12:30.920 time before the middle of the year in part to 0:12:31.040 --> 0:12:34.160 kind of get that first cut over with UH before 0:12:34.360 --> 0:12:37.440 the before the election, and that gives them some flexibility 0:12:37.480 --> 0:12:39.760 depending on what the how the numbers come in, you know. 0:12:39.840 --> 0:12:42.640 That being said, as as you noted, Paul, one of 0:12:42.679 --> 0:12:45.160 the one of the factors that that we highlighted last 0:12:45.200 --> 0:12:48.760 week was that that people are buying options on the 0:12:48.800 --> 0:12:51.400 potential for higher rates. So so there are some people 0:12:51.440 --> 0:12:53.480 who are getting a little bit concerned that there might 0:12:53.520 --> 0:12:56.360 be this tail event where maybe you know, the FED 0:12:56.440 --> 0:12:58.560 is on hold most of the year, but sometime in 0:12:58.600 --> 0:13:00.800 the in say the fourth Court or maybe just after 0:13:00.800 --> 0:13:03.640 the electure or something, they have to hike because inflation 0:13:03.720 --> 0:13:06.840 in the economy is holding up reasonably well. So so 0:13:07.000 --> 0:13:08.640 even though that you know, that's not a base case 0:13:08.679 --> 0:13:11.640 of just about anybody that that we talked to, although 0:13:11.640 --> 0:13:14.640 there are a few outliers there that that certainly think 0:13:14.679 --> 0:13:18.160 that it's a possibility. You know, I think that that 0:13:18.320 --> 0:13:20.760 you know, an on hold case is much more likely, 0:13:20.800 --> 0:13:24.000 and you've heard some people in the fixed income markets 0:13:24.040 --> 0:13:27.040 talking about that as being more and more realistic possibility 0:13:27.080 --> 0:13:29.200 that the FED just you know, doesn't cut for a 0:13:29.200 --> 0:13:30.720 long time or doesn't move at all. 0:13:31.080 --> 0:13:34.960 Yeah, iira with that notion hold higher for longer, has 0:13:34.960 --> 0:13:37.480 been something j Powell said for quite some time. You're 0:13:37.480 --> 0:13:39.800 talking about a cut coming later in the year. Are 0:13:39.800 --> 0:13:42.400 we talking September November timeframe? 0:13:43.320 --> 0:13:45.120 So September I think will be a little bit hard, 0:13:45.160 --> 0:13:47.520 even though you know, the feder Reserve says that they're 0:13:47.559 --> 0:13:49.560 a political but I think that they wouldn't want to 0:13:50.000 --> 0:13:54.559 start any new actions just prior to the election in September. 0:13:54.920 --> 0:13:57.679 Is that meeting that sits in between the conventions and 0:13:57.720 --> 0:14:00.480 the and the general elections. So I think they wouldn't 0:14:00.480 --> 0:14:03.200 start anything then, which is again another reason why thinking 0:14:03.240 --> 0:14:06.319 that that maybe they would do a move in say May, 0:14:06.400 --> 0:14:08.560 June or July, just to have it out of the 0:14:08.559 --> 0:14:12.160 way and that gives them flexibility to continue those actions. 0:14:13.000 --> 0:14:15.520 You know, It's it's definitely possible just given the strength 0:14:15.559 --> 0:14:18.680 and the data that maybe the FED doesn't move or 0:14:18.720 --> 0:14:21.120 doesn't have to move until after the election. That that's 0:14:21.640 --> 0:14:24.360 you know that there's a non zero chance of that, 0:14:24.400 --> 0:14:25.920 and I think that you know, if we continue to 0:14:25.960 --> 0:14:29.400 get data as good as we've seen recently, then then 0:14:29.400 --> 0:14:32.680 certainly that that's a possibility. Again, like our view continues 0:14:32.720 --> 0:14:34.280 to be at the moment that that the Fed will 0:14:34.320 --> 0:14:36.560 cut a few times this year, but not nearly as 0:14:36.600 --> 0:14:39.360 much as what the market was pricing, say two months ago. 0:14:39.800 --> 0:14:42.240 Hey, in your work looking at rates, what is the 0:14:42.240 --> 0:14:44.280 stuff you're working on now that maybe we're not asking 0:14:44.320 --> 0:14:45.640 you about that? Maybe we should. 0:14:46.440 --> 0:14:49.840 Yeah, well, so so you haven't asked us about supply recently, 0:14:49.920 --> 0:14:52.880 because supply is certainly something that has gotten a lot 0:14:52.880 --> 0:14:55.920 of attention in the markets recently, just with with all 0:14:55.960 --> 0:14:58.920 of the treasury bond auctions and with deficits you know, 0:14:59.040 --> 0:15:02.440 two trillion ishtops and looking like they're going to remain 0:15:02.520 --> 0:15:04.600 at those kind of levels for the next couple of years. 0:15:05.440 --> 0:15:07.080 Is something that that is still getting a lot of 0:15:07.120 --> 0:15:09.480 attention and is one of the reasons why it might 0:15:09.520 --> 0:15:11.960 be more and more difficult as time goes on, just 0:15:12.000 --> 0:15:15.520 given the stock of treasury securities outstanding for the market 0:15:15.600 --> 0:15:18.880 to to rally just because you have some supply demand 0:15:18.880 --> 0:15:21.880 and balances. But interestingly, you know, once we get through 0:15:22.680 --> 0:15:25.880 through April, it looks like the Treasury Department will be 0:15:25.920 --> 0:15:30.760 able to stabilize the treasury auctions at the levels what 0:15:30.880 --> 0:15:33.520 they'll end up in April. And because of that, you 0:15:33.640 --> 0:15:35.960 might have a better supply demand and balance. So might 0:15:36.000 --> 0:15:39.040 you might actually see more a little bit more propensity 0:15:39.120 --> 0:15:41.560 for the market to rally when we're talking about more 0:15:41.640 --> 0:15:44.600 rate cuts than it has over the last over the 0:15:44.680 --> 0:15:46.960 last year or so, as the treasury departments had to, 0:15:47.320 --> 0:15:50.720 you know, keep on increasing the size of the debt aira. 0:15:50.840 --> 0:15:52.200 What are you looking at? What matters? 0:15:52.360 --> 0:15:55.080 I was talking to a PM this morning who kind 0:15:55.080 --> 0:15:59.080 of laughed when I asked him about the minutes later today. 0:15:59.680 --> 0:16:02.640 Yes, so within the minutes, you know, it's the details, right, 0:16:02.680 --> 0:16:05.400 So the details matter, and so the two things that 0:16:05.440 --> 0:16:08.480 will be focused on or one is the normal stuff, right, 0:16:08.520 --> 0:16:11.160 it's it's what is their reaction function? Has it changed? 0:16:11.560 --> 0:16:14.640 Is there the chance that some members have gotten somewhat 0:16:14.640 --> 0:16:17.240 more cautious given the strength of the data that we 0:16:17.320 --> 0:16:20.600 had in January, And therefore, will there be a change 0:16:20.600 --> 0:16:23.080 in the dots and in some of their forecasts when 0:16:23.080 --> 0:16:25.400 we get the March when we get the March Summary 0:16:25.440 --> 0:16:28.720 of Economic Projections. But more importantly, and I guess this 0:16:28.800 --> 0:16:31.200 goes also to Paul's questions just a second ago about 0:16:31.680 --> 0:16:33.880 what we're not talking about. But it's also a balance 0:16:33.920 --> 0:16:37.960 sheet runoff, right, So it's it's completely possible that even 0:16:37.960 --> 0:16:40.400 if the Federal Reserve doesn't cut interest rates at all 0:16:40.440 --> 0:16:44.080 this year and keeps keeps rates relatively high, it is 0:16:44.160 --> 0:16:46.720 possible that the FED is going to have to reduce 0:16:46.760 --> 0:16:48.840 the amount that it's running off its balance sheet. So 0:16:48.880 --> 0:16:53.480 there's so called quantitative tightening, and they as that happens, 0:16:53.520 --> 0:16:55.320 I think the market will take that as somewhat of 0:16:55.360 --> 0:16:59.320 a Dubvish bent to the FED and the FED activities. 0:17:00.040 --> 0:17:02.600 You'll probably see things like risk assets do pretty well, right, 0:17:02.640 --> 0:17:07.280 credit spreads, tighter, equities do okay. The rate market will 0:17:07.280 --> 0:17:09.680 probably rally just a little bit on that, just as 0:17:10.680 --> 0:17:12.760 they'll take it as a duthersh signal. I don't think 0:17:12.800 --> 0:17:15.399 it is, because I think that the balance sheet policy 0:17:15.440 --> 0:17:17.400 at this point is going to be somewhat disconnected from 0:17:17.480 --> 0:17:21.240 rate policy, because balance sheet policy has other implications in 0:17:21.280 --> 0:17:23.880 the banking sector, and you know how many how much 0:17:23.880 --> 0:17:26.239 bank reserves do people need in order to comply with 0:17:26.280 --> 0:17:29.760 some of the capital regulations and the like. So that's 0:17:29.800 --> 0:17:32.040 going to be completely different. But that is something in 0:17:32.040 --> 0:17:34.439 the minutes that I'm really looking forward to to seeing 0:17:34.480 --> 0:17:36.200 what they talked about and how they're going to frame 0:17:36.240 --> 0:17:39.119 the discussion that they're going to have in March, because 0:17:39.320 --> 0:17:41.240 you know, J. Powell did say that in March they're 0:17:41.240 --> 0:17:43.560 going to start their talk about balance sheet policy. 0:17:44.000 --> 0:17:46.679 All right, So I get home my new hours. I 0:17:46.680 --> 0:17:49.240 get home in the afternoon, I turn on CBS. I 0:17:49.320 --> 0:17:54.199 see Inter Milan playing Athletico Madrid. I think that's what 0:17:54.280 --> 0:17:56.399 I was seeing. Good match. I don't know why I 0:17:56.440 --> 0:17:58.480 was on the CBS network in the middle of the afternoon. 0:17:58.520 --> 0:18:01.960 That's another question, Ira, What was I watching yesterday? 0:18:02.760 --> 0:18:06.040 So the Champions League? I guess, so that the best 0:18:06.320 --> 0:18:08.639 the best teams in Europe all play each other, or 0:18:08.640 --> 0:18:10.760 the teams that won their leagues and or came in 0:18:10.800 --> 0:18:13.159 the top a couple of spots in their leagues. So 0:18:13.200 --> 0:18:16.560 Athletico Madrid would be playing Milan in the Champions League. 0:18:16.560 --> 0:18:18.320 The reasons middle of the day is because it's evening 0:18:18.359 --> 0:18:18.880 in Europe. 0:18:19.359 --> 0:18:22.119 So my question was why was it on CBS network. 0:18:22.160 --> 0:18:25.000 I'm not watching some silly soap operas or game shows 0:18:25.080 --> 0:18:26.879 or something like that. So that's for that's for me. 0:18:27.040 --> 0:18:28.600 That's the media question. I'll call my friends. 0:18:28.600 --> 0:18:31.119 So, yeah, CBS has the has the rights to the 0:18:31.160 --> 0:18:33.880 Champions League, just like just like NBC has the rights 0:18:33.920 --> 0:18:35.840 to the Premier League and the like. So you're going 0:18:35.920 --> 0:18:38.200 to see it on whatever network you know bought those 0:18:38.280 --> 0:18:39.119 rights in the US. 0:18:39.200 --> 0:18:43.199 So who is favorite in the Champions League? Is that it? 0:18:44.119 --> 0:18:44.320 Yeah? 0:18:44.359 --> 0:18:47.600 I think it has to be last year's champions Manchester City, Right, 0:18:47.640 --> 0:18:49.480 there's still one of the Kreme de la Crem's. But 0:18:49.640 --> 0:18:53.760 you know name, you know, the Milan teams and Byron 0:18:53.880 --> 0:18:57.440 Munich and PSG like those teams can never be ruled 0:18:57.480 --> 0:18:58.200 out for sure. 0:18:59.359 --> 0:19:03.040 I'm an inter. So you're watching that Send zero. I've 0:19:03.080 --> 0:19:05.280 been to the Cent zero. Oh really Yeah? Some ac 0:19:05.400 --> 0:19:07.880 Milan play there back in the day. So that's awesome. Yeah, 0:19:07.880 --> 0:19:10.280 it's pretty cool. They are insane over there, the stuff 0:19:10.280 --> 0:19:12.359 that they do. I mean they light stuff on fire, 0:19:12.800 --> 0:19:16.320 fireworks and it's just crazy. All right, Very good, Ira Jersey, 0:19:16.359 --> 0:19:18.360 thanks so much. As always, Ira Jersey. He's our chief 0:19:18.440 --> 0:19:21.600 US Interest rates strategist. He's also our go to soccer 0:19:21.640 --> 0:19:24.080 officient out of you're. 0:19:23.880 --> 0:19:28.119 Listening to the Bloomberg Intelligence podcast. Catch us Live weekdays 0:19:28.119 --> 0:19:30.920 at ten am Eastern on Affo car, playing Android Auto 0:19:31.000 --> 0:19:33.919 with the Bloomberg Business app. Listen on demand wherever you 0:19:34.000 --> 0:19:37.680 get your podcasts, or watch us live on YouTube. 0:19:38.359 --> 0:19:40.280 Bailey, you know it's bad when your cab driver says, 0:19:40.320 --> 0:19:42.320 are you going to be listening to the Nvidia call today? 0:19:42.400 --> 0:19:42.720 No way? 0:19:42.760 --> 0:19:44.879 I mean this is going to be missing. So the 0:19:44.880 --> 0:19:47.480 implied volatility which you showed you from the Bloomer turmal 0:19:47.800 --> 0:19:49.680 is ten percent and for a company with one hundred 0:19:49.720 --> 0:19:52.000 and one point seven trillion market app that could be 0:19:52.000 --> 0:19:55.080 some shekels gained the lost here here coming up sore. 0:19:55.119 --> 0:19:57.200 Gene Monster joins us because we have to get the 0:19:57.200 --> 0:19:59.480 bottom line here and Gene can certainly do that. Geene 0:19:59.520 --> 0:20:03.000 Monsters partner, co founder deep Water Asset Management. He's been 0:20:03.040 --> 0:20:06.480 all over the tech space for decades. Hey, Gene, have 0:20:06.520 --> 0:20:09.600 you ever seen anything like this where a company has 0:20:09.640 --> 0:20:12.520 not only a big impact I guess on itself on 0:20:12.720 --> 0:20:15.159 but even in its sector, but also kind of the 0:20:15.200 --> 0:20:19.840 broader market mentality and video is really outsized, isn't it? 0:20:21.560 --> 0:20:27.040 Absolutely? Answer your question, I've maybe seen it back when 0:20:27.600 --> 0:20:29.960 the iPod iPhone was starting to get going, and that 0:20:30.000 --> 0:20:32.760 an outsized impact on overall tech. But if you put 0:20:32.760 --> 0:20:36.280 that into perspective, that was iPhone sixteen years ago, so 0:20:36.359 --> 0:20:39.000 it's been a long time. When you think about the 0:20:39.000 --> 0:20:43.480 transformation of AI, it's understandable that and video has gotten 0:20:43.560 --> 0:20:47.200 attention and the expanding market cap that it's had over 0:20:47.240 --> 0:20:49.800 the past year, because of course it is in a 0:20:49.800 --> 0:20:53.960 poll position. It is benefiting tremendously from this AI infrastructure. 0:20:54.440 --> 0:20:56.960 That of course is all in the rear view mirror, 0:20:57.000 --> 0:20:59.879 and it's all about looking forward. But to answer your question, 0:21:00.000 --> 0:21:03.080 and this is pretty special times we're in one just 0:21:03.119 --> 0:21:06.480 final thought, outside of their earnings here, if I look 0:21:06.560 --> 0:21:09.840 back over the past year and look what's happened to 0:21:10.119 --> 0:21:14.120 Nvidia relative tech expectations, how they've beat expectations, what they've 0:21:14.160 --> 0:21:18.359 done to guidance that period those three quarters, That's something 0:21:18.440 --> 0:21:22.080 I have never seen multi billion dollar company beating by 0:21:22.160 --> 0:21:24.959 thirty forty to fifty percent, guiding up by twenty percent, 0:21:25.000 --> 0:21:27.800 and then beating that upward guide by another thirty forty percent. 0:21:28.240 --> 0:21:32.080 It is simply breathtaking from a tech investors perspective. 0:21:32.200 --> 0:21:33.960 Yeah, folks, so what you just heard is really has 0:21:33.960 --> 0:21:38.240 some gravitusk because Jean's been investing in analyzing tech companies 0:21:38.280 --> 0:21:40.840 for decades here, you've seen them from the cradle to 0:21:40.880 --> 0:21:43.320 the grave, So that means something one point seven bill 0:21:43.480 --> 0:21:45.560 truly in market cap. Company here stocks up up two 0:21:45.600 --> 0:21:48.280 hundred and thirty percent over the trailing twelve months, So Gene, 0:21:48.280 --> 0:21:51.680 that tells me, boy, the bar is extraordinarily high here. 0:21:52.440 --> 0:21:54.679 What's a win for this company? What's a loss for 0:21:54.720 --> 0:21:58.400 this company? Here? After the close, I. 0:21:58.320 --> 0:22:00.800 Don't know what the stock's going to do tomorrow. It's 0:22:00.880 --> 0:22:03.240 hard really when you see that kind of volatility built 0:22:03.240 --> 0:22:05.280 in the options. That means there is a lot of 0:22:05.359 --> 0:22:08.880 jocking beyond what's going on with kind of fundamental investors. 0:22:08.920 --> 0:22:11.240 So anything can happen. The stock could be up big 0:22:11.640 --> 0:22:14.280 on the print and could fade tomorrow. The opposite could 0:22:14.320 --> 0:22:18.119 happen too. From my perspective, what is most important is 0:22:18.560 --> 0:22:23.600 understanding how the commentary for the company is going to 0:22:23.720 --> 0:22:27.440 impact calendar twenty five revenue growth. And just to kind 0:22:27.440 --> 0:22:29.760 of put this in a quick perspective, the company's going 0:22:29.840 --> 0:22:32.040 to grow this quarter at around two hundred and fifty 0:22:32.080 --> 0:22:36.040 percent year ofvery year. The growth expectations for calendar twenty 0:22:36.040 --> 0:22:38.840 four is sixty four percent, a pretty big slode on 0:22:38.840 --> 0:22:41.200 because the law of large numbers and then another big 0:22:41.200 --> 0:22:44.960 slowdown in twenty five down to seventeen percent. So effectively, 0:22:45.119 --> 0:22:48.399 investors recognize this company has been through just a breath 0:22:48.440 --> 0:22:52.160 taking growth period here. But the general consensus is that 0:22:52.280 --> 0:22:55.760 the business is going to hit the wall. And even 0:22:55.800 --> 0:22:57.760 if you look at the valuation right now, it's actually 0:22:57.760 --> 0:23:00.639 a pretty reasonable valuation. It trades essentially in line with 0:23:00.680 --> 0:23:04.800 its earnings growth expectations for twenty five. So to answer questions, 0:23:04.800 --> 0:23:08.800 what I'm looking for tonight is for CFO Jensen Wong 0:23:08.960 --> 0:23:11.520 just to reiterate what he has said related to where 0:23:11.520 --> 0:23:14.680 we are with an AI and just to briefly recap 0:23:14.760 --> 0:23:17.960 that he has this these four talking points. He talks 0:23:17.960 --> 0:23:21.280 about these four waves of AI and the current phase 0:23:21.320 --> 0:23:25.160 that we're just starting in is BAI infrastructure. That's the hyperscalers, 0:23:25.160 --> 0:23:29.120 that's AI startups. Phase two is enterprise applications that would 0:23:29.119 --> 0:23:32.480 be like copilot. Phase three is going to be heavy 0:23:32.520 --> 0:23:35.159 industry getting generit of AI, and he said that is 0:23:35.200 --> 0:23:39.399 the largest opportunity. Phase four is sovereign nations. I mean, 0:23:39.400 --> 0:23:42.440 there's a lot here. So my bottom line is that 0:23:42.800 --> 0:23:47.840 if investors ultimately walk away from this quarter tomorrow, tonight 0:23:48.080 --> 0:23:51.040 next week and say we're still very early in this 0:23:51.359 --> 0:23:54.359 and Nvidia has got a great pole position, then those 0:23:54.400 --> 0:23:58.960 expectations for calendar twenty five probably start moving higher, which 0:23:59.000 --> 0:24:02.080 is ultimately going to be for the stock and gene when. 0:24:01.960 --> 0:24:04.520 We look at it from a valuation standpoint, about thirty 0:24:04.560 --> 0:24:06.879 times twenty twenty five EPs. 0:24:07.240 --> 0:24:09.280 When you look at what the path. 0:24:09.040 --> 0:24:11.919 Forward that you're mentioning Foreign Video looks like, is it 0:24:12.040 --> 0:24:14.480 just continuing to grow the AI PI, if you will, 0:24:14.560 --> 0:24:17.560 or is it being able to fend off would be rivals. 0:24:20.359 --> 0:24:23.200 Well, I think that just the pie the TAM expansion. 0:24:23.200 --> 0:24:25.200 I mean, this has been one of the talking points 0:24:25.240 --> 0:24:28.000 from AMD. If you look at what they've said at 0:24:28.000 --> 0:24:31.240 their analyst day last fall versus what they've said a 0:24:31.320 --> 0:24:36.080 month ago. They've basically said that their addressable market would 0:24:36.119 --> 0:24:38.720 four x, and then that was three four months ago, 0:24:38.760 --> 0:24:40.480 and a month ago they said it with two x 0:24:40.480 --> 0:24:42.720 from that four x. I mean, these are just it's 0:24:42.800 --> 0:24:45.520 mind boggling kind of how fast these numbers are going up. 0:24:45.520 --> 0:24:47.920 And the reason why they're saying that is they're seeing 0:24:47.960 --> 0:24:52.040 the odor flow and so ultimately, and Video has got 0:24:52.040 --> 0:24:55.280 an amazing product. They've got a product cycle coming up 0:24:55.359 --> 0:24:59.160 they have basically a code and operating system that works 0:24:59.200 --> 0:25:02.280 around what these chips do. It's a developer platform, that's 0:25:02.280 --> 0:25:05.360 a better way to say it. So, but if they've 0:25:05.400 --> 0:25:08.000 got such high market share right now eighty five percent 0:25:08.080 --> 0:25:11.440 in the GPU market, it's really about continuing to expand 0:25:11.480 --> 0:25:13.440 the TAM and I think that that's ultimately going to happen. 0:25:13.520 --> 0:25:17.000 I mean, I'm in the camp that AI is going 0:25:17.080 --> 0:25:20.360 to be more transformative. Twice is transformative what the Internet 0:25:20.880 --> 0:25:24.600 has been, which is hard to wrap your head around that, 0:25:24.680 --> 0:25:27.600 but I think that there's and video is just in 0:25:27.640 --> 0:25:30.080 a great position relative to that opportunity. 0:25:30.560 --> 0:25:33.280 Well, you know, gen, one of my questions is, you know, 0:25:33.440 --> 0:25:35.520 just as a layperson here as it relates to tech spending, 0:25:35.520 --> 0:25:38.399 how much of this tech spending associated with AI do 0:25:38.440 --> 0:25:42.560 you believe is incremental versus maybe just shifting it around 0:25:42.560 --> 0:25:43.920 from other budgets Here. 0:25:45.640 --> 0:25:48.920 The most commentary we've heard is from those big tech companies. 0:25:48.920 --> 0:25:53.920 Those are the hyperscalers. That's the companies like Google and Meta, Microsoft. 0:25:54.040 --> 0:25:56.200 Apple hasn't said as much, but they're going to get 0:25:56.200 --> 0:25:58.800 more into this, but what they've shared is that it 0:25:58.880 --> 0:26:03.240 is incremental. I've talked about you know, their typical run 0:26:03.320 --> 0:26:07.280 rate of CAPEX. Let's just call that at a typical 0:26:07.320 --> 0:26:10.920 growth rate of ten fifteen percent a year, and those 0:26:10.960 --> 0:26:13.520 growth rates, the spending in CAPEX is going to go up, 0:26:13.600 --> 0:26:16.080 call it twenty five thirty percent. This is an average 0:26:16.080 --> 0:26:17.639 if you look at some of those big companies. So 0:26:18.160 --> 0:26:21.520 this is incremental. I mean they're seeing this as you 0:26:21.600 --> 0:26:24.320 have to pay to play to invest in the future, 0:26:24.359 --> 0:26:26.880 and so I think it is incremental. When you when 0:26:26.920 --> 0:26:30.680 you kind of process, like go through the theory of 0:26:31.040 --> 0:26:35.199 this incremental spend, that's how you get expanding addressable markets. 0:26:35.240 --> 0:26:37.639 Is when you get that incremental spend. When things are 0:26:37.640 --> 0:26:40.119 shuffling around, it's hard to get those expanding markets. But 0:26:40.280 --> 0:26:42.440 in this case, I think it is. It is true. 0:26:42.480 --> 0:26:46.000 This is just a whole new infrastructure that's being built 0:26:46.440 --> 0:26:49.560 largely on GPUs versus the old infrastructure on CPUs, and 0:26:49.600 --> 0:26:51.360 that is incremental spend. 0:26:51.520 --> 0:26:54.399 And gene As we've seen the valuation skyrocket and it's 0:26:54.520 --> 0:26:57.879 leaping above a number of well known names, the Metas 0:26:57.880 --> 0:26:58.120 and the. 0:26:58.040 --> 0:26:59.080 Berkshires of the world. 0:26:59.400 --> 0:27:03.040 Can we catch Microsoft Microsoft just south of three trillion 0:27:03.040 --> 0:27:05.720 dollars in market value compared to Nvidia's one point seven. 0:27:08.560 --> 0:27:11.280 I think the AI opportunity is big enough that it 0:27:11.400 --> 0:27:14.720 can catch that. I mean if in fact I'm right, 0:27:15.000 --> 0:27:17.280 and I mean our firm is the firm deep water 0:27:17.480 --> 0:27:20.000 firm believes that this is you know, ninety nine out 0:27:20.000 --> 0:27:22.760 of a scale of zero to one hundred. Is AI 0:27:22.920 --> 0:27:27.119 electricity is one hundred. It's that close and the internet's fifty. 0:27:27.119 --> 0:27:31.360 If that's true, Yes, there is continues to be this 0:27:31.520 --> 0:27:34.400 upside to I don't want to get carried away by 0:27:34.400 --> 0:27:36.120 the way in the moment of kind of the hype. 0:27:36.160 --> 0:27:38.760 I'm just trying to step back and again, I don't 0:27:38.760 --> 0:27:40.560 know what the stock is going to do tomorrow, but 0:27:40.640 --> 0:27:44.119 I do have a sense about how impactful AI is 0:27:44.200 --> 0:27:47.120 ultimately going to be. And so what is that kind 0:27:47.119 --> 0:27:50.280 of that high end of the market cap expansion When 0:27:50.320 --> 0:27:53.400 I was talking about that fourth point sovereign nations, this 0:27:53.480 --> 0:27:57.240 is countries needing to have their own AI to really 0:27:57.280 --> 0:28:01.040 reflect their intelligence and their culture. There are some pretty 0:28:01.400 --> 0:28:05.600 bold and big objectives that these very deep pockets are 0:28:05.600 --> 0:28:08.520 going after. When you think about that relative to the 0:28:08.560 --> 0:28:10.520 market cap, you can build a case that it can 0:28:10.520 --> 0:28:11.200 go much higher. 0:28:11.240 --> 0:28:13.119 Gene, thanks so much again, always appreciate getting your time. 0:28:13.200 --> 0:28:15.280 Gen Munster, managing partner and co founder of deep Water 0:28:15.320 --> 0:28:18.239 Asset Management in Nvidia. After the close gene Monster, one 0:28:18.240 --> 0:28:20.080 of the best voice coming out of the valley. 0:28:21.600 --> 0:28:25.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:28:25.560 --> 0:28:29.080 weekdays at ten am Eastern on applecar Play and Android 0:28:29.119 --> 0:28:31.879 Auto with the Bloomberg Business app. You can also listen 0:28:32.000 --> 0:28:35.080 live on Amazon Alexa from our flagship New York station, 0:28:35.440 --> 0:28:38.240 Just Say Alexa playing Bloomberg eleven thirty. 0:28:39.480 --> 0:28:41.600 Potentially a big day in the market today. After the clothes, 0:28:41.640 --> 0:28:43.480 we get in Vidia reporting. We'll see what it means 0:28:43.480 --> 0:28:46.120 for that stock, for the tech sector, for the market overall. 0:28:46.760 --> 0:28:48.320 So let's just get a sense of what's happening out 0:28:48.320 --> 0:28:49.600 there in this market place. 0:28:49.640 --> 0:28:49.880 Here. 0:28:50.080 --> 0:28:52.440 Carol Pepper joins us. She's a founder and CEO of 0:28:52.520 --> 0:28:58.080 Pepper International. Joining us on a zoom call from NYC. Carol, 0:28:58.080 --> 0:29:00.360 thanks so much for joining us here. I don't know 0:29:00.400 --> 0:29:02.760 if you're a tech geek or you're into this old 0:29:03.120 --> 0:29:05.560 in vidio thing, but boy, it's certainly had an impact 0:29:06.120 --> 0:29:08.240 on this market. Certainly the AI has been a big, 0:29:08.240 --> 0:29:10.880 big narrative for this market. How do you think about that? 0:29:12.240 --> 0:29:15.560 Well, AI is the next large trend that people need 0:29:15.600 --> 0:29:16.120 to ride. 0:29:16.960 --> 0:29:19.480 As you know, I manage money for family offices that 0:29:19.600 --> 0:29:21.960 have greater than one hundred million dollars in net worth, 0:29:22.040 --> 0:29:25.200 So we're always looking for the important long term trends. 0:29:25.280 --> 0:29:28.480 And when Vidias burst on the scene and began to 0:29:28.560 --> 0:29:33.360 support the development of AI, it became a very interesting stock. 0:29:34.240 --> 0:29:36.880 The reporting today whether it's up or down, and whether 0:29:36.920 --> 0:29:39.640 the market likes it short term, it's a long term play. 0:29:39.720 --> 0:29:40.440 So I tell. 0:29:40.280 --> 0:29:42.800 People on a fear day when in video is perhaps 0:29:42.800 --> 0:29:45.840 down a bit, even perhaps after earnings are announced, it 0:29:45.920 --> 0:29:47.880 might go down slightly for a few days. 0:29:48.000 --> 0:29:51.400 That's what happens. That's a stock to buy and hold 0:29:51.480 --> 0:29:51.960 long term. 0:29:52.000 --> 0:29:54.120 Ten years from now, you'll be very glad you bought 0:29:54.120 --> 0:29:57.040 that security because it's it's really a way to start 0:29:57.080 --> 0:29:59.520 riding the trend, as is Microsoft, by the way, because 0:29:59.520 --> 0:30:03.080 Microsoft is not going to let Nvidia take that whole market. 0:30:03.120 --> 0:30:06.280 They're starting to develop some new technology as well toward AI. 0:30:06.960 --> 0:30:09.320 So caro, what else do you like in the call 0:30:09.360 --> 0:30:13.480 it AI semiconductor space. Then if buying the dip or 0:30:13.680 --> 0:30:16.160 sell off on Nvidia and kind of the ripple effects 0:30:16.360 --> 0:30:18.080 does play out, where else would you be looking to 0:30:18.080 --> 0:30:18.880 put money to work. 0:30:19.680 --> 0:30:22.320 Well, I just think you want to go with a 0:30:22.360 --> 0:30:23.760 big basket if you can. 0:30:23.840 --> 0:30:26.200 So for a lot of the investors out there that 0:30:26.240 --> 0:30:28.920 aren't necessarily buying single stocks, you can look at even 0:30:29.280 --> 0:30:32.360 baskets like QQQ. There are other AI baskets that are 0:30:32.360 --> 0:30:34.680 going to be coming out very shortly, you know. 0:30:35.200 --> 0:30:37.040 I think you buy market leaders right now. 0:30:37.080 --> 0:30:39.760 So I would stick with Nvidia for your main play 0:30:39.800 --> 0:30:42.680 on AI and Microsoft at the moment. It doesn't mean 0:30:42.680 --> 0:30:45.720 there won't be new players that are interesting coming forward, 0:30:45.760 --> 0:30:49.240 but at the moment, market leaders have continued to lead. 0:30:49.400 --> 0:30:52.440 So this has been a market where the biggest, biggest 0:30:52.440 --> 0:30:55.440 caps with the most money whatever sector you're looking at, 0:30:55.520 --> 0:30:58.640 or leading. So don't get too cute, buy the leaders 0:30:58.720 --> 0:31:00.680 just on a fear day when you can get in 0:31:00.680 --> 0:31:01.600 at a decent price. 0:31:01.680 --> 0:31:04.800 All right, Carol, So you're mentioning in Nvidia, Microsoft two 0:31:04.840 --> 0:31:07.560 of the Magnificent seven people wanting to call it the 0:31:07.760 --> 0:31:12.440 Fab five. Is a shout out to the Michigan basketball team. 0:31:12.800 --> 0:31:16.040 What's your take on the rest of the group, just 0:31:16.160 --> 0:31:19.440 giving kind of the divide that we've seen within Nvidia 0:31:19.720 --> 0:31:21.640 really kind of carrying the baton at this point. 0:31:22.840 --> 0:31:25.240 Yeah, Well, the one I would toss out, which is 0:31:25.480 --> 0:31:27.800 which I think will get tossed out itself, is Tesla. 0:31:28.440 --> 0:31:30.520 I mean, I think Elon musk is. 0:31:30.640 --> 0:31:33.280 You know, his attention is to divide between too many things, 0:31:33.360 --> 0:31:36.680 and he's becoming a political liability. He's putting himself far 0:31:36.760 --> 0:31:39.640 out on the spectrum. So that's the one that I 0:31:39.680 --> 0:31:41.360 would toss. I don't think they're going to be a 0:31:41.360 --> 0:31:43.920 market leader five years from now at all, because his 0:31:44.400 --> 0:31:47.640 attention is too split and he's too troublesome. So I 0:31:47.720 --> 0:31:49.840 get rid of Tesla and I'd buy the others as 0:31:49.840 --> 0:31:52.640 a basket. My favorite stock for years and yours. 0:31:52.360 --> 0:31:53.160 Has been Amazon. 0:31:53.320 --> 0:31:56.120 I think that will continue to be a strong leader. 0:31:56.120 --> 0:32:00.360 They're continuing to expand, and that they will take. 0:32:00.200 --> 0:32:03.000 Over the pharmacy spase eventually. That's something they're trying to do, 0:32:03.200 --> 0:32:04.920 and that's the stock to watch. 0:32:05.160 --> 0:32:07.720 Hey, Carol, you've been in this managing you know, the 0:32:07.720 --> 0:32:12.080 wealth of these high networth families for decades. Now. How 0:32:12.080 --> 0:32:14.600 does that change? How's that business change? What are your clients? 0:32:14.800 --> 0:32:16.880 Are your clients today different than maybe they were twenty 0:32:16.960 --> 0:32:17.360 years ago? 0:32:18.360 --> 0:32:21.160 Yeah, I think family offices and high net worth individuals 0:32:21.200 --> 0:32:24.680 have become extremely sophisticated. Over the last twenty years, most 0:32:24.720 --> 0:32:28.520 of them have pulled the acid allocation decision and the 0:32:28.560 --> 0:32:32.520 stock selection decision inside of their own private family offices. 0:32:32.560 --> 0:32:34.880 That's what I do. I act as a CIO to 0:32:35.000 --> 0:32:38.240 the single family offices. They used to give all of 0:32:38.240 --> 0:32:40.640 those decisions to the banks, but that's like you know, 0:32:40.800 --> 0:32:42.760 handing the fox the keys to the henhouse. 0:32:42.800 --> 0:32:44.240 They understand that. 0:32:44.280 --> 0:32:47.560 Banks are actually like supermarkets, and you should go shopping 0:32:47.600 --> 0:32:49.360 at a bank with a list of what you want. 0:32:49.800 --> 0:32:52.240 For example, don't let the bank tell you how much 0:32:52.320 --> 0:32:55.040 large cap growth to put in your portfolios. You tell 0:32:55.080 --> 0:32:57.320 the bank what you want and you let them show 0:32:57.360 --> 0:32:58.320 you the products that they have. 0:32:58.480 --> 0:33:02.800 So the power balance has really changed. Now we see family. 0:33:02.480 --> 0:33:06.480 Offices taking control of their risk appetite, their asset allocation. 0:33:07.080 --> 0:33:09.920 They're not following every trend that comes out on the street. 0:33:10.000 --> 0:33:13.480 You know, suddenly Germany's gonna outperform the US, or some 0:33:13.800 --> 0:33:15.720 trend will be pushed by Wall Street for a few 0:33:15.720 --> 0:33:18.640 months and then fizzle. The families aren't buying it. You know, 0:33:18.760 --> 0:33:21.479 the families were out of China long before the general 0:33:21.520 --> 0:33:24.720 market was. Because the bankers don't like to admit mistakes 0:33:24.720 --> 0:33:27.960 so they don't pivot very quickly. But the family offices 0:33:28.000 --> 0:33:30.760 can pivot in a day and change their mind about something. 0:33:30.880 --> 0:33:34.320 So that's why they tend to be really leading investors. 0:33:34.920 --> 0:33:38.320 They're into these trends long before everybody else is because 0:33:38.320 --> 0:33:40.160 they have no one to answer to about themselves. 0:33:40.840 --> 0:33:44.040 And Carol, with kind of that topic in mind, how 0:33:44.040 --> 0:33:45.800 far out are you going at this point in time 0:33:46.040 --> 0:33:48.040 on the risk curve you mentioned in video really kind 0:33:48.040 --> 0:33:49.800 of setting the tone for AI and being a long 0:33:49.880 --> 0:33:52.640 term buying opportunity. You're focusing on some of these big 0:33:52.680 --> 0:33:56.200 tech names. Are you dabbling and putting exposure into smaller 0:33:56.520 --> 0:33:58.760 maybe emerging technologies. 0:33:59.320 --> 0:34:00.320 Yeah, I mean Eaton. 0:34:00.480 --> 0:34:03.440 Family offices tend to look at direct smaller place, so 0:34:03.480 --> 0:34:06.000 we go in at the very early stage, sometimes pre 0:34:06.080 --> 0:34:09.520 seed or seat stage, into venture capital. We don't tend 0:34:09.600 --> 0:34:12.440 to be you know, in the pink sheets or the 0:34:12.480 --> 0:34:15.200 small publics. Those are in difficult places. That's why you 0:34:15.239 --> 0:34:17.640 see now a lot more companies staying private and then 0:34:17.680 --> 0:34:21.640 going public with a billion dollar valuation because there's a graveyard. 0:34:21.719 --> 0:34:24.120 Unfortunately with a lot of small caps. They'll rally for 0:34:24.160 --> 0:34:27.920 a few days and then they'll die again. So we 0:34:28.000 --> 0:34:30.880 take the bets in the small companies, in directs or 0:34:30.920 --> 0:34:33.880 in private equity not so much fun sometimes funds, but 0:34:33.960 --> 0:34:37.920 more direct frankly, and then go for the market leaders 0:34:37.960 --> 0:34:41.200 in the market. And that's how we sort of split 0:34:41.239 --> 0:34:44.480 the risk reward scenario. 0:34:44.160 --> 0:34:45.880 There than cal on the side. 0:34:45.960 --> 0:34:48.520 How much what do your clients ask of you as 0:34:48.520 --> 0:34:51.560 it relates to alternative investments and if to the extent 0:34:51.600 --> 0:34:53.279 they have that, how do you scratch that? 0:34:54.440 --> 0:34:54.640 Oh? 0:34:54.680 --> 0:34:58.239 Well, it's Alternatives are a huge part of family office portfolios. 0:34:58.320 --> 0:35:01.520 Sometimes they're thirty to forty percent of portfolios. Why because again, 0:35:01.600 --> 0:35:04.680 family offices can go into things like venture debt, they 0:35:04.680 --> 0:35:07.640 can go into private lending, they can go into all 0:35:07.719 --> 0:35:11.080 kinds of you know, esoteric areas or very specialized real 0:35:11.200 --> 0:35:13.880 estate plays in an area that they know well. So 0:35:14.239 --> 0:35:18.719 alternatives are huge for family offices because generally there's more risk, 0:35:18.760 --> 0:35:21.600 there's less liquidity, but there's more return and alternatives and 0:35:21.640 --> 0:35:24.720 that's something family offices can definitely handle. 0:35:25.160 --> 0:35:26.920 You know, my family offices, I always. 0:35:26.640 --> 0:35:29.040 Have them have at least two years worth of expenses 0:35:29.080 --> 0:35:32.160 set aside in cash and money markets earning four or 0:35:32.160 --> 0:35:34.480 five percent, and then we go take risk with longer 0:35:34.560 --> 0:35:36.000 term money so they're. 0:35:35.920 --> 0:35:38.320 Very open and very interested on alternatives. 0:35:38.680 --> 0:35:42.520 Alternatives in real estate funding, biotechs funding, you know. 0:35:42.520 --> 0:35:44.160 Research, genetic research. 0:35:44.200 --> 0:35:47.239 There's all sorts of very very interesting deals that go 0:35:47.360 --> 0:35:49.920 family office to family office and never see the inside 0:35:49.920 --> 0:35:51.160 of JP Morgan or. 0:35:51.239 --> 0:35:52.720 Oldman Sachs Carol. 0:35:53.000 --> 0:35:54.759 During my day job, when I'm not hanging out with Paul, 0:35:54.760 --> 0:35:57.719 I read about the IPO market and it still very 0:35:57.800 --> 0:36:00.640 much feels when I talk to venture cap less investors 0:36:00.640 --> 0:36:02.520 as well as kind of some of the crossover funds, 0:36:02.520 --> 0:36:05.839 that it is a investor friendly market where you can 0:36:05.920 --> 0:36:08.799 walk away on valuation or pick up some of these 0:36:08.960 --> 0:36:11.920 shares of companies in the private markets at a steep discount. 0:36:12.040 --> 0:36:14.400 How are you putting money to work in the private 0:36:14.840 --> 0:36:18.240 arena and how has that really shifted from a peak, 0:36:18.360 --> 0:36:20.239 you know, just over two years ago. 0:36:21.160 --> 0:36:24.840 Yeah, I think the private market obviously you can't expect 0:36:24.840 --> 0:36:27.120 a big and quick in and out right now. 0:36:27.520 --> 0:36:29.160 Markets drifts still very tenuous. 0:36:29.200 --> 0:36:31.439 I think they'll get less tenuous when rates come down 0:36:31.440 --> 0:36:33.680 a bit so that financing gets easier. 0:36:34.560 --> 0:36:35.960 But things have not. 0:36:36.120 --> 0:36:37.960 You know, people are out there trying to beat up 0:36:37.960 --> 0:36:40.400 the small companies and get in at the good valuation. 0:36:40.640 --> 0:36:42.920 And you know, evaluation for a company that might have 0:36:42.920 --> 0:36:45.480 been twenty million is now five and it's heartbreaking for 0:36:45.520 --> 0:36:48.960 the entrepreneurs. So you can pick up some discounts in 0:36:49.000 --> 0:36:51.720 that respect because they're just people that couldn't get funded. 0:36:52.800 --> 0:36:55.239 But you still have to look for the fundamentals, which 0:36:55.280 --> 0:36:58.239 is a very strong team, a very strong you know, 0:36:58.560 --> 0:37:01.960 go back to Michael Porter Competitive Advantage. You know, Harvard 0:37:01.960 --> 0:37:04.880 Business School, read that book. It's a classic. Why is 0:37:04.880 --> 0:37:08.399 this company in existence? And why should it win? Because 0:37:08.440 --> 0:37:10.839 if there's no winning strategy, it doesn't matter how cheap 0:37:10.840 --> 0:37:13.080 you get the company, it's just going to die. Because 0:37:13.120 --> 0:37:15.400 a lot of these companies are dying now because they can't. 0:37:15.719 --> 0:37:18.319 The old model was you just live on rounds and 0:37:18.400 --> 0:37:20.760 rounds of financing until eventually you pop. 0:37:21.320 --> 0:37:22.120 That model's gone. 0:37:22.200 --> 0:37:26.280 There's less tolerance for continually refunding. A company that can't 0:37:26.320 --> 0:37:30.440 earn can't make earnings unless it's led by somebody huge, 0:37:30.480 --> 0:37:32.560 you know, like the founder of Uber or something where 0:37:32.600 --> 0:37:34.040 you know that guy knows how to do it. But 0:37:34.400 --> 0:37:37.160 for new startups, you're looking for cash flow a lot earlier, 0:37:37.680 --> 0:37:40.319 and that gives and people are raising smaller rounds, so 0:37:40.360 --> 0:37:42.520 you get into a lot of sprinkle into some small 0:37:42.520 --> 0:37:45.040 pre seed rounds and then help the company grow is 0:37:45.120 --> 0:37:48.160 more of the strategy these days in my experience. 0:37:48.640 --> 0:37:50.920 Gotcha, Carol, we only have about thirty seconds left. One 0:37:50.920 --> 0:37:52.799 of the stocks we talked about at the top of 0:37:52.800 --> 0:37:55.840 the show, Palato Networks, down twenty six percent. This is 0:37:55.880 --> 0:37:58.840 a big cybersecurity play. Are those type of selloffs that 0:37:58.880 --> 0:38:00.279 you would look to buy? 0:38:01.480 --> 0:38:04.000 Absolutely, I don't happen to know that company very well, 0:38:04.040 --> 0:38:07.279 but yes, I mean there are the market swings a lot, 0:38:07.400 --> 0:38:09.560 So you should have your favorite names, know why you 0:38:09.680 --> 0:38:11.680 like them, now, how they're going to fit into your portfolio, 0:38:11.719 --> 0:38:13.920 and what size you want, and then wait for the 0:38:13.960 --> 0:38:15.880 fear day. You know, there'll be a fear day for 0:38:16.000 --> 0:38:18.799 Nvidia too. Even though it's so high, people have said 0:38:18.840 --> 0:38:20.719 to me, I can't get in. You know, people were 0:38:20.719 --> 0:38:23.080 saying that about Amazon ten years ago. Oh it's too high, 0:38:23.120 --> 0:38:25.840 I can't get in. So those value guys miss the 0:38:26.000 --> 0:38:28.719 entire run. So just you know, hold your breath, hold 0:38:28.760 --> 0:38:31.319 your nose, and get in on a fear day to 0:38:31.400 --> 0:38:32.080 the stocks that. 0:38:32.040 --> 0:38:32.839 You're interested in. 0:38:32.880 --> 0:38:35.279 And by the way, cybersecurity long term is a very 0:38:35.320 --> 0:38:37.600 important play and trend that is. 0:38:37.560 --> 0:38:38.320 Not going away. 0:38:38.560 --> 0:38:40.080 Hi, Carol, Thank you so much for your time. Really 0:38:40.120 --> 0:38:44.480 appreciate it. Carol Pepper, President, founder and CEO Pepper International, 0:38:44.640 --> 0:38:47.680 joining us via that Zoom thing from New York City. 0:38:47.719 --> 0:38:49.200 I appreciate getting a few minutes of your time. 0:38:50.719 --> 0:38:54.600 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:38:54.680 --> 0:38:58.200 weekdays at ten am Eastern on applecar Play and Android 0:38:58.239 --> 0:39:01.400 Auto with the Bloomberg Business. You can also listen live 0:39:01.520 --> 0:39:04.680 on Amazon Alexa from our flagship New York station, Just 0:39:04.760 --> 0:39:07.640 Say Alexa playing Bloomberg eleven thirty. 0:39:09.160 --> 0:39:13.200 Looking at bitcoin here memory of Matt Miller boys since 0:39:13.239 --> 0:39:16.120 a March low last year March of last year, except 0:39:16.120 --> 0:39:18.560 about one hundred and fifty five percent. It just had 0:39:18.600 --> 0:39:20.320 such a huge move and there's a lot of reasons 0:39:20.320 --> 0:39:23.560 behind that, including we got to spot bitcoin ETF, which 0:39:23.560 --> 0:39:25.640 I think the crypto kids are all happy about. Cave 0:39:25.719 --> 0:39:28.680 Tagupta joins and she's a founder and managing partner of 0:39:28.760 --> 0:39:32.239 Delta Blockchain Fund. She joins us on Zoom from New 0:39:32.320 --> 0:39:36.279 York City. Coveta, big move here in bitcoin. I'd love 0:39:36.320 --> 0:39:38.960 to get your thoughts about kind of what's really driving 0:39:39.000 --> 0:39:41.719 it here over the last you know, kind of eight 0:39:41.719 --> 0:39:43.360 to nine ten months. 0:39:44.600 --> 0:39:46.600 First of all, paulin Biley, thank you for having me. 0:39:48.480 --> 0:39:50.799 I think it's been a very interesting journey. People in 0:39:50.840 --> 0:39:52.600 the space already knew that. 0:39:53.080 --> 0:39:53.799 Of course, the. 0:39:53.880 --> 0:39:58.560 Anticipation of Bitcoin ETF plus the halving of bitcoin which 0:39:58.640 --> 0:40:01.600 is about to happen in May starting from April, which 0:40:01.680 --> 0:40:03.520 is going to make it more difficult to. 0:40:03.520 --> 0:40:04.840 Produce new bitcoins. 0:40:05.480 --> 0:40:08.800 So the basic principle of economics of supply and demand 0:40:08.880 --> 0:40:11.759 is going to be off. Are going to trigger a 0:40:11.800 --> 0:40:15.359 lot of bitcoin movement in a positive direction to. 0:40:15.360 --> 0:40:18.279 The downside, though with the underlying risk a lot of 0:40:18.360 --> 0:40:23.040 uncertainty from the stock markets perspective. Is fifty thousand a 0:40:23.040 --> 0:40:24.960 support level? Kind of what do you look at when 0:40:25.000 --> 0:40:29.239 you're seeing potential downside, just given how volatile bitcoin historically 0:40:29.280 --> 0:40:31.800 has been pulling back from some of these big rallies. 0:40:32.880 --> 0:40:35.919 Yeah, and I don't think this is all time high. 0:40:35.960 --> 0:40:38.360 As you said that, it is a support point. The 0:40:38.400 --> 0:40:42.480 support point may go down to early forties or mid forties, 0:40:42.960 --> 0:40:45.239 but I doubt it's going to go down before it 0:40:45.320 --> 0:40:48.040 reaches an all time higher. We see a cryptosummer end 0:40:48.080 --> 0:40:50.360 of this year to mid of next year, back to 0:40:50.480 --> 0:40:54.520 sixteen or in twenties anytime soon for an year or two. 0:40:55.120 --> 0:40:57.440 I feel like there is so much of new. 0:40:57.239 --> 0:41:00.439 Capital because of the Bitcoin ETF, which has come into 0:41:00.440 --> 0:41:03.759 the market multi billion dollars, that the there is now 0:41:03.800 --> 0:41:05.960 going to be a continuous demand for bitcoin. 0:41:06.400 --> 0:41:09.160 So come to hell else? I mean, should we expect 0:41:09.360 --> 0:41:13.480 an ethereum bitcoin? I mean e ETF going forward? Is 0:41:13.480 --> 0:41:15.400 that kind of the next thing you guys are looking. 0:41:15.160 --> 0:41:19.839 For Ethereum is the technology and ether ETF. Yes, there 0:41:19.880 --> 0:41:22.440 is a conversation going on. And why not because at 0:41:22.480 --> 0:41:24.360 the end of the day, ETF is the wages for 0:41:24.440 --> 0:41:27.720 the institutional investors within us to be able to hold 0:41:27.760 --> 0:41:32.319 it in a much more credible manner and to have 0:41:32.440 --> 0:41:34.000 more capital injected in it. 0:41:34.400 --> 0:41:36.920 I am, personally, honestly at this point of time, if 0:41:36.920 --> 0:41:37.399 it's just. 0:41:37.719 --> 0:41:42.680 The price or the technology from both perspective, more bullish 0:41:42.840 --> 0:41:47.200 on Ether than Bitcoin. I do feel like the Ether 0:41:47.440 --> 0:41:50.320 has been going between two point nine to three point 0:41:50.360 --> 0:41:54.279 one kin last two three days. Again, I feel like 0:41:54.400 --> 0:41:56.120 even if it goes down a little bit, we're going 0:41:56.160 --> 0:41:58.600 to see the resting price in two But I am 0:41:58.719 --> 0:42:02.320 more bullish on Ether the overall technology for ethereum. 0:42:02.640 --> 0:42:05.799 Okay, so your bullush Ether over bitcoin. Where else are 0:42:05.800 --> 0:42:09.160 you seeing opportunities? It seemed like coinbase was seen as 0:42:09.200 --> 0:42:12.040 a big winner and a number of these other platforms 0:42:12.040 --> 0:42:16.160 and technologies just given the approval of the ETFs that 0:42:16.200 --> 0:42:16.840 Paul mentioned. 0:42:17.960 --> 0:42:21.520 Yeah, I think within the space there is a lot 0:42:21.560 --> 0:42:24.600 of technologies. The other layer twos which I'm really bullish about, 0:42:24.680 --> 0:42:27.879 or the roll ups is optimism is a big one. 0:42:28.040 --> 0:42:31.320 I do see resurrection of Solana when the DeFi institution 0:42:31.560 --> 0:42:34.359 is going to happen, and a lot of defive which 0:42:34.400 --> 0:42:37.040 is very similar to how the hedge funes work with 0:42:37.640 --> 0:42:41.560 USD or different currencies. The same thing with ether, bitcoin 0:42:41.960 --> 0:42:46.719 and with the stable coins. We have decentralized financial products 0:42:46.840 --> 0:42:50.759 like aw A, compound, a lot of lending protococols. I 0:42:50.960 --> 0:42:53.719 do feel like there's going to be an institutional staking 0:42:54.080 --> 0:42:57.040 around that and that's going to really take over a 0:42:57.080 --> 0:43:01.279 lot of technology solutions. So I'm also bid bullish on 0:43:01.360 --> 0:43:03.640 Celestia and different data layers two. 0:43:04.239 --> 0:43:08.560 So who's capta Who are you talking to? You've got 0:43:08.560 --> 0:43:11.760 a fund, you invest in companies, you see very early 0:43:11.800 --> 0:43:15.840 stage companies out there. How broad do you think is 0:43:15.920 --> 0:43:19.759 the support out there for just crypto blockchain because we 0:43:19.800 --> 0:43:21.640 still have the likes of a Jamie Diamond just giving 0:43:21.680 --> 0:43:24.960 it no love whatsoever, and I'm wondering just how deep 0:43:25.040 --> 0:43:25.680 your market is. 0:43:27.000 --> 0:43:30.160 So you do have people like Jamie Diamond who doesn't 0:43:30.160 --> 0:43:32.200 love it and very vocal about it. But at the 0:43:32.239 --> 0:43:36.840 same time, the market continues, right he has been vocal 0:43:36.880 --> 0:43:40.160 against it since sixteen or fifteen if I remember it correctly, 0:43:40.719 --> 0:43:44.720 and we didn't disappear. The market continued, it has become 0:43:44.800 --> 0:43:47.640 more strength, and I don't see a space wear JP 0:43:47.719 --> 0:43:50.440 margat at any given point of time will not offer 0:43:50.640 --> 0:43:54.319 its clients and ETF option. 0:43:54.239 --> 0:43:56.439 On Bitcoin or on Ether over time. 0:43:57.640 --> 0:44:01.880 So I do believe that the technology is here to stay. 0:44:02.320 --> 0:44:05.160 Now what form of it is going to be there 0:44:05.200 --> 0:44:07.200 and what form of token's going to be there? 0:44:07.320 --> 0:44:10.800 Some crypto and some technology tokens that will have to 0:44:10.840 --> 0:44:11.800 see within us. 0:44:11.880 --> 0:44:14.520 But one of the most interesting part about this space 0:44:14.640 --> 0:44:18.960 is it's very global. So one country, even if they 0:44:18.960 --> 0:44:21.759 have tried in the past, has not been able to 0:44:21.880 --> 0:44:23.160 really close. 0:44:22.840 --> 0:44:23.799 The chapter on it. 0:44:24.239 --> 0:44:27.719 So we continues to see countries like Abu Dhabi coming 0:44:27.800 --> 0:44:30.920 up giving licenses, or Singapore trying to be ahead of it, 0:44:31.160 --> 0:44:33.960 or countries in euro from UK to Lisbon trying to 0:44:34.000 --> 0:44:35.440 be an amazing hub. 0:44:35.640 --> 0:44:39.040 For the growth. So I just see a lot of 0:44:39.080 --> 0:44:39.960 growth in the space. 0:44:40.320 --> 0:44:44.480 Well, Kavita, you can't talk about crypto without mentioning binance 0:44:44.520 --> 0:44:49.080 and FTX. How do you approach investing given the fact 0:44:49.160 --> 0:44:52.319 that bulls will argue that bad actors are being flushed out, 0:44:52.320 --> 0:44:54.600 But on the flip side, it feels like that could 0:44:54.680 --> 0:44:58.560 just open up an opportunity for other people to take advantage. 0:44:58.920 --> 0:45:02.759 So I think the game anytime when there is finance 0:45:02.800 --> 0:45:05.680 and money and dollar involved in it, whether it's made 0:45:05.680 --> 0:45:09.480 of scheme or whether it's like anything out there, you 0:45:09.680 --> 0:45:12.319 are going to see scams, some sort of scams or 0:45:12.320 --> 0:45:15.200 some things which you don't have regulations and have a 0:45:15.239 --> 0:45:18.399 great area people really pushing beyond. So we do have 0:45:18.560 --> 0:45:21.600 FTX and finance and to be very honest, and I 0:45:21.800 --> 0:45:26.040 don't take away that what FTX did was completely stupid, 0:45:26.320 --> 0:45:28.920 which was very similar to Bernie. 0:45:28.680 --> 0:45:33.280 Made of scheme, but also the lack of regulations. 0:45:33.600 --> 0:45:36.360 Even though you understand the space is here to stay, 0:45:36.400 --> 0:45:39.440 you are still doing ETFs, you are you have companies 0:45:39.480 --> 0:45:43.799 like Coinbase going IPO which are signed by everyone. Lack 0:45:43.840 --> 0:45:47.080 of regulations from SEC is the biggest thing which hurts 0:45:47.160 --> 0:45:49.920 and push more fear or more. 0:45:49.680 --> 0:45:52.240 Scams around it. And I think that's where we should 0:45:52.239 --> 0:45:52.799 focus on. 0:45:53.480 --> 0:45:55.000 All right, Very good, Covet, I thank you so much 0:45:55.040 --> 0:45:58.719 for joining us. Coveta Gupta, founder and managing partner of 0:45:58.960 --> 0:46:01.640 Delta Blockchain Fund based here in New York, and joining 0:46:01.719 --> 0:46:04.880 us via zoom and again looking at bitcoin here fifty one, 0:46:05.320 --> 0:46:08.520 one hundred and four bitcoin and that whole heaving thing 0:46:08.680 --> 0:46:14.319 ha lvig basically reducing the number of new bitcoins that 0:46:14.400 --> 0:46:16.640 can be mined kind of just puts that a further 0:46:16.719 --> 0:46:19.640 constraint on the supply. And then that's one side of 0:46:19.680 --> 0:46:21.480 the equation. The other side of the equation, as Mike 0:46:21.560 --> 0:46:25.120 mcloan explained it to me years ago, is presumably more 0:46:25.440 --> 0:46:29.520 use cases for bitcoin, so fixed supply, presumably higher demand 0:46:29.960 --> 0:46:32.359 that should push the price up. That's Mike mcloone's pitch 0:46:32.400 --> 0:46:33.560 to me, which I could understand. 0:46:33.640 --> 0:46:36.400 Yeah, I mean that's the kind of economics, right, you know, 0:46:36.520 --> 0:46:40.040 he limit supply, increased demand, prices rise. When you look 0:46:40.080 --> 0:46:43.120 at from a seasonal perspective. One thing that stands out 0:46:43.320 --> 0:46:46.839 over last decade, best two of the three best months 0:46:46.840 --> 0:46:49.640 out of the year April and May. But bitcoin right 0:46:49.640 --> 0:46:53.919 now up twenty percent in February alone, YEP, absent of 0:46:53.960 --> 0:46:57.120 which is really not as in line with big tech 0:46:57.239 --> 0:46:58.719 as it had been historically. 0:47:00.040 --> 0:47:02.640 Seem to see how that plays out. And the spot, 0:47:02.680 --> 0:47:06.000 you know, having that spot ETF is big, and I 0:47:06.000 --> 0:47:08.200 guess there were nine ETFs that think that came out. 0:47:09.000 --> 0:47:13.600 So presumably that's expanding the base of investors in this 0:47:13.920 --> 0:47:17.200 football since it Yeah, that's what the bulls say, so 0:47:17.480 --> 0:47:20.960 we'll have to see. But the again, ETFs, let's do 0:47:21.000 --> 0:47:23.799 a blockchain. Let's do it, you know, crypto ETF, and 0:47:23.840 --> 0:47:25.480 that is perfect XBT. 0:47:25.800 --> 0:47:30.279 This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 0:47:30.520 --> 0:47:33.719 and anywhere else you get your podcasts. 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