WEBVTT - The Case For Crypto After Market Meltdown 

0:00:00.800 --> 0:00:04.040
<v Speaker 1>Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

0:00:04.040 --> 0:00:06.920
<v Speaker 1>my co host Matt Miller. Every business day we bring

0:00:06.960 --> 0:00:11.520
<v Speaker 1>you interviews from CEOs, market pros, and Bloomberg experts, along

0:00:11.560 --> 0:00:15.600
<v Speaker 1>with essential market moving news. Find the Bloomberg Markets Podcast

0:00:15.640 --> 0:00:18.439
<v Speaker 1>on Apple Podcasts or wherever you listen to podcasts, and

0:00:18.480 --> 0:00:22.360
<v Speaker 1>at Bloomberg dot com slash podcast. Now, let's focus in

0:00:22.640 --> 0:00:25.959
<v Speaker 1>again on crypto after what we saw yesterday, it was

0:00:26.079 --> 0:00:30.520
<v Speaker 1>pretty mind blowing a drop down to thirty thousand and

0:00:30.560 --> 0:00:32.680
<v Speaker 1>then a rally back up to forty. Right now we're

0:00:32.720 --> 0:00:37.480
<v Speaker 1>trading at forty one thousand, six d forty five dollars.

0:00:37.479 --> 0:00:40.760
<v Speaker 1>What drove those moves as well as probably a number

0:00:40.760 --> 0:00:44.640
<v Speaker 1>of things together, But there is probably no other better

0:00:44.760 --> 0:00:47.680
<v Speaker 1>expert um with whom we could speak about this than

0:00:47.720 --> 0:00:51.680
<v Speaker 1>Bobby Lee is the founder and CEO of Ballet, also

0:00:51.840 --> 0:00:55.480
<v Speaker 1>co founder and former CEO of um btc C, the

0:00:55.520 --> 0:00:59.280
<v Speaker 1>longest running bitcoin exchange. Bobby Um, thanks very much for

0:00:59.280 --> 0:01:02.000
<v Speaker 1>your time this more thing. What do you think happened yesterday?

0:01:02.040 --> 0:01:05.360
<v Speaker 1>Was it just sort of Elon Musk doing an about face?

0:01:05.600 --> 0:01:13.080
<v Speaker 1>Plus um the Chinese authorities saying you can't use bitcoin again? Yes,

0:01:13.280 --> 0:01:15.360
<v Speaker 1>thank you for having me. It is it was a

0:01:15.400 --> 0:01:19.080
<v Speaker 1>confluence of things. Certainly it started with Emon Musk's you know,

0:01:19.200 --> 0:01:21.640
<v Speaker 1>you turn on bitcoin, so to speak, at least from

0:01:21.640 --> 0:01:25.039
<v Speaker 1>a perspective of using it as a accepted currency for

0:01:25.080 --> 0:01:29.320
<v Speaker 1>a purchase of TESTA vehicles. Uh you turned about this, uh,

0:01:29.520 --> 0:01:34.440
<v Speaker 1>you know, late last week. And um, certainly. The other

0:01:34.480 --> 0:01:37.840
<v Speaker 1>aspect is the Chinese regulatory so called the new ban

0:01:37.959 --> 0:01:42.480
<v Speaker 1>on bitcoin. But to analyze that, China didn't actually issue

0:01:42.560 --> 0:01:45.840
<v Speaker 1>anything new. There was no new rules or anything. It

0:01:45.920 --> 0:01:49.520
<v Speaker 1>was just a rehash of what it has previously published

0:01:49.680 --> 0:01:52.760
<v Speaker 1>in September of two thousand seventeen. So it's a confluence

0:01:52.800 --> 0:01:56.000
<v Speaker 1>of those two events which spooked the market. And then

0:01:56.040 --> 0:01:58.320
<v Speaker 1>of course there's a third factor which is very popular.

0:01:58.400 --> 0:02:02.640
<v Speaker 1>Bitcoin is a is the factor of the trading, leverage trading.

0:02:03.240 --> 0:02:06.040
<v Speaker 1>So people may not be aware of this, but bitcoin,

0:02:06.160 --> 0:02:09.079
<v Speaker 1>besides being traded on a smart market, uh, there's a

0:02:09.160 --> 0:02:12.120
<v Speaker 1>high volume activity in the futures, you know, sort of

0:02:12.240 --> 0:02:16.120
<v Speaker 1>leverage trading market, and when there's news events, you know,

0:02:16.240 --> 0:02:20.200
<v Speaker 1>the the short sellers take advantage of it and really

0:02:20.240 --> 0:02:23.880
<v Speaker 1>hammer the people holding the long position, and that really

0:02:23.919 --> 0:02:27.360
<v Speaker 1>helped drive it down a thirty dollars. So, Bobby, let's

0:02:27.360 --> 0:02:31.959
<v Speaker 1>talk about that volatility. Generally speaking, across the securities markets,

0:02:31.960 --> 0:02:35.640
<v Speaker 1>that kind of volatility is not welcome, is considered not healthy.

0:02:35.840 --> 0:02:39.720
<v Speaker 1>How do how do you view it? Yeah, I I

0:02:40.040 --> 0:02:44.839
<v Speaker 1>I see that perspective. Unfortunately, bitcoin is a global sort

0:02:44.840 --> 0:02:47.760
<v Speaker 1>of phenomenon and there and the markets are are not

0:02:47.880 --> 0:02:52.520
<v Speaker 1>well regulated. Frankly speaking, so in equities market, each country

0:02:52.600 --> 0:02:56.960
<v Speaker 1>has very strict regulatory agencies monitoring the trades and the

0:02:57.000 --> 0:02:59.360
<v Speaker 1>insider news and so on and and so forth. And for

0:02:59.440 --> 0:03:03.040
<v Speaker 1>even for the centralize things like gold and precious metals. Uh,

0:03:03.120 --> 0:03:06.480
<v Speaker 1>the exchanges are regulated. But unfortunately for bitcoin, because it's

0:03:06.480 --> 0:03:09.400
<v Speaker 1>a global phenomenon, even though you know, the coin based

0:03:09.520 --> 0:03:12.600
<v Speaker 1>gemini are regulated in the United States, you have a

0:03:12.639 --> 0:03:16.400
<v Speaker 1>lot of exchanges who are offshore and they do that

0:03:16.520 --> 0:03:20.440
<v Speaker 1>thing and it's very opaque. So so at least in

0:03:20.480 --> 0:03:23.720
<v Speaker 1>the near term, it's gonna be very hard to to

0:03:23.880 --> 0:03:28.080
<v Speaker 1>sort of, you know, try to try to control the volatility.

0:03:28.120 --> 0:03:30.040
<v Speaker 1>But as in my new books The Promise of Bitcoin,

0:03:30.080 --> 0:03:32.320
<v Speaker 1>I try to point out to people, volatility does not

0:03:32.400 --> 0:03:34.760
<v Speaker 1>equate to risk. So this is where there's a lot

0:03:34.760 --> 0:03:39.839
<v Speaker 1>of confusion. How is that. Well, so when you ask

0:03:39.880 --> 0:03:44.880
<v Speaker 1>me the question. There's an aliging assumption that volatility is bad,

0:03:45.320 --> 0:03:47.680
<v Speaker 1>and the reason is because risk is bad. You know,

0:03:47.760 --> 0:03:50.760
<v Speaker 1>something that's very high risk can be can be risky

0:03:50.840 --> 0:03:54.440
<v Speaker 1>quote unquote right. Um. But in the case of bitcoin,

0:03:54.760 --> 0:03:57.480
<v Speaker 1>what I found over the my ten years sort of

0:03:57.480 --> 0:04:01.240
<v Speaker 1>interacting with it is that it is well whisked adjusted.

0:04:01.360 --> 0:04:03.880
<v Speaker 1>In other words, I I do you know, I just

0:04:03.960 --> 0:04:06.320
<v Speaker 1>for disclosure, I want to put long position at bitcoin.

0:04:07.320 --> 0:04:11.360
<v Speaker 1>I think that, uh, it has a huge potential as

0:04:11.480 --> 0:04:15.440
<v Speaker 1>investment asset class. So I think for the for the

0:04:15.520 --> 0:04:18.400
<v Speaker 1>amount of return that I expect to see for bitcoin

0:04:18.440 --> 0:04:22.279
<v Speaker 1>in the coming five years, ten years, twenty years, I

0:04:22.320 --> 0:04:27.719
<v Speaker 1>think the volatility is well risk adjusted. I wonder about

0:04:27.760 --> 0:04:32.320
<v Speaker 1>the big whales, Bobby. Um. You know, Bloomberg has been

0:04:32.760 --> 0:04:36.960
<v Speaker 1>publishing a figure two percent of the wallets on of

0:04:37.040 --> 0:04:39.240
<v Speaker 1>the assets. I'd love to get your take on that.

0:04:39.360 --> 0:04:43.479
<v Speaker 1>And Um, the first time I ever met you was

0:04:43.560 --> 0:04:45.760
<v Speaker 1>probably about ten years ago. I was having drinks with

0:04:45.800 --> 0:04:50.000
<v Speaker 1>Matthew Mellon and Alex Waters and uh, you know, Matt

0:04:50.240 --> 0:04:55.000
<v Speaker 1>had a fair share of bitcoin that he you know,

0:04:55.120 --> 0:04:58.240
<v Speaker 1>locked up all over the place and I guess nobody

0:04:58.240 --> 0:05:00.599
<v Speaker 1>will ever access it again. The same him of course

0:05:00.760 --> 0:05:05.560
<v Speaker 1>is true with you know, massive storied steaks like Satoshi's.

0:05:06.920 --> 0:05:09.640
<v Speaker 1>What does it mean that so much of this, you

0:05:09.640 --> 0:05:11.240
<v Speaker 1>know what was you know once and more than a

0:05:11.279 --> 0:05:15.120
<v Speaker 1>trillion dollar market cap. It looks like, you know, billions

0:05:15.279 --> 0:05:19.520
<v Speaker 1>of it was just not accessible and never will be accessible. Um.

0:05:19.560 --> 0:05:22.120
<v Speaker 1>And then other billions of it could easily be moved

0:05:22.160 --> 0:05:26.560
<v Speaker 1>by one or two people. So so there is a

0:05:27.320 --> 0:05:32.640
<v Speaker 1>there is sort of the the notion that there are

0:05:32.720 --> 0:05:35.960
<v Speaker 1>rich people, you know, big whales in the industry, but

0:05:36.200 --> 0:05:39.640
<v Speaker 1>certainly nowhere, nowhere near the figures you presented of did

0:05:39.680 --> 0:05:45.479
<v Speaker 1>you say of the assets? That's what point? Maybe that

0:05:45.520 --> 0:05:48.400
<v Speaker 1>may be true of some other currencies, but certainly not

0:05:48.440 --> 0:05:52.760
<v Speaker 1>true for bitcoin. Uh. That's socially Nakamoto the the sudonymous

0:05:52.880 --> 0:05:57.680
<v Speaker 1>anonymous inventor of bitcoin. We people think he owns maybe

0:05:58.120 --> 0:06:02.400
<v Speaker 1>over a million bitcoins and that's that's the single largest holding, right,

0:06:02.440 --> 0:06:05.000
<v Speaker 1>So so if you can break it down very logically,

0:06:05.560 --> 0:06:09.800
<v Speaker 1>that's uh at most ten percent. Uh. But again he

0:06:09.880 --> 0:06:13.000
<v Speaker 1>hasn't surfaced. You know, there are a lot of rumors

0:06:13.040 --> 0:06:15.520
<v Speaker 1>that he he a should have lost his private keys.

0:06:16.480 --> 0:06:20.600
<v Speaker 1>So the next the next biggest holdings would be would

0:06:20.600 --> 0:06:24.360
<v Speaker 1>be those of those custodial providers, something like coin based

0:06:24.360 --> 0:06:28.719
<v Speaker 1>custody or these large exchanges with a large wallet holding

0:06:28.760 --> 0:06:31.480
<v Speaker 1>a lot of bitcoins, but in reality that is really

0:06:31.560 --> 0:06:36.720
<v Speaker 1>held on custody for you know, thousands or even millions

0:06:36.760 --> 0:06:40.880
<v Speaker 1>of customers. So that point is very well dispersed. I

0:06:40.880 --> 0:06:44.719
<v Speaker 1>wouldn't worry about anything like that. But by the way,

0:06:45.320 --> 0:06:48.839
<v Speaker 1>in reality on on in the physical world, you have

0:06:48.920 --> 0:06:52.240
<v Speaker 1>that phenomenon as well. You know, uh, you know what

0:06:52.320 --> 0:06:54.719
<v Speaker 1>percentage of wealth is owned by what percentage of people?

0:06:55.160 --> 0:06:57.360
<v Speaker 1>People say, you know their figures, you know, under ten

0:06:57.400 --> 0:07:01.039
<v Speaker 1>percent of the people own physic sound of the world's wealth,

0:07:01.080 --> 0:07:05.960
<v Speaker 1>whether it's real estate, equities or or other stuff. Right, Hey, Bobby,

0:07:05.960 --> 0:07:08.280
<v Speaker 1>thank you so much for joining us. We really appreciate

0:07:08.320 --> 0:07:11.320
<v Speaker 1>getting your thoughts here. Fascinating story. Lots of volatility in

0:07:11.360 --> 0:07:14.520
<v Speaker 1>the crypto world we've seen just just this week. Bobby Lee,

0:07:14.640 --> 0:07:17.920
<v Speaker 1>founder and CEO Ballet, is also co founder and former

0:07:17.960 --> 0:07:21.480
<v Speaker 1>CEO of bt C c UH. He's also an author

0:07:21.960 --> 0:07:26.160
<v Speaker 1>recent book out entitled The Promise of Bitcoin, The Future

0:07:26.160 --> 0:07:27.680
<v Speaker 1>of Money and How It Can Work for You that

0:07:27.720 --> 0:07:34.280
<v Speaker 1>came out on May eighteen. Some more news out of

0:07:34.280 --> 0:07:37.160
<v Speaker 1>Morgan Stanley today, Big shake up in the leadership ranks.

0:07:37.160 --> 0:07:39.600
<v Speaker 1>And this follows on what we just saw earlier from

0:07:39.680 --> 0:07:42.720
<v Speaker 1>JP Morgan. So some more changes that Morgan saying, let's

0:07:42.720 --> 0:07:44.560
<v Speaker 1>see what it means. We bring in our expert. That

0:07:44.560 --> 0:07:47.800
<v Speaker 1>would be Alison Williams. She's a senior banks analyst for

0:07:47.880 --> 0:07:50.280
<v Speaker 1>Bloomberg Intelligence. So Alison, what do you make of some

0:07:50.320 --> 0:07:52.840
<v Speaker 1>of the changes here? It looks like Mr Gorman is

0:07:53.440 --> 0:07:58.600
<v Speaker 1>setting up a race for potentially a successor. Here's that

0:07:58.640 --> 0:08:01.600
<v Speaker 1>I would say, Um, you know, the two sort of

0:08:01.720 --> 0:08:06.800
<v Speaker 1>leading candidates UH emerging from the announcements are no surprise.

0:08:07.600 --> 0:08:10.880
<v Speaker 1>Um he did say, at least occurring to Bloomberg News. Um,

0:08:10.960 --> 0:08:13.480
<v Speaker 1>he did say he expects to stand from at least

0:08:13.480 --> 0:08:16.440
<v Speaker 1>three more years. But then according to the the the

0:08:16.480 --> 0:08:21.440
<v Speaker 1>official announcement, you know, basically making the head of institutional

0:08:21.520 --> 0:08:25.440
<v Speaker 1>Ted Pics and the head of Wealth Management Andy Stafferstein

0:08:25.640 --> 0:08:29.560
<v Speaker 1>as as sort of the the co UH presidents and

0:08:29.640 --> 0:08:32.240
<v Speaker 1>so front running. I guess the front runners and the

0:08:32.320 --> 0:08:36.440
<v Speaker 1>air apparent, And both of these executives have done UM

0:08:36.480 --> 0:08:39.200
<v Speaker 1>a great job over the years. Tech Pic, as you know,

0:08:39.800 --> 0:08:43.679
<v Speaker 1>UM started out with leadership in the equities business and

0:08:43.679 --> 0:08:46.760
<v Speaker 1>then took over all of global trading they are the

0:08:46.760 --> 0:08:51.040
<v Speaker 1>global equities revenue leader, and UM, despite the fact that

0:08:51.040 --> 0:08:53.400
<v Speaker 1>that's sort of the biggest association with them, they have

0:08:53.600 --> 0:08:56.840
<v Speaker 1>really gained a lot of share in fixed income and

0:08:56.880 --> 0:09:00.439
<v Speaker 1>then on the wealth management side, obviously that's a business

0:09:00.520 --> 0:09:02.960
<v Speaker 1>that's done very well and become sort of the bigger

0:09:03.120 --> 0:09:05.880
<v Speaker 1>part of the bank, especially with two recent large deals.

0:09:07.480 --> 0:09:09.720
<v Speaker 1>I don't want to sound too cynical, but are you

0:09:09.760 --> 0:09:14.040
<v Speaker 1>allowed to choose UM two white men as possible successors

0:09:14.080 --> 0:09:19.720
<v Speaker 1>these days? It seems like such a faux pa. Well

0:09:19.840 --> 0:09:23.960
<v Speaker 1>these I mean, the one UM positive on the diversity

0:09:24.080 --> 0:09:27.640
<v Speaker 1>front is that they are promoting the head of investor Relations,

0:09:27.640 --> 0:09:32.760
<v Speaker 1>Sharon Yeshiva to UM, the head to to the CFO role.

0:09:33.040 --> 0:09:36.920
<v Speaker 1>So that was so I think that's a positive UM.

0:09:37.000 --> 0:09:40.920
<v Speaker 1>But building a bench takes time, and I think that's

0:09:41.760 --> 0:09:44.719
<v Speaker 1>UM important for all the firms. As we know, diversity

0:09:44.800 --> 0:09:47.439
<v Speaker 1>is something that you need to grow over time. And

0:09:47.640 --> 0:09:53.719
<v Speaker 1>for Morgan Stanley, these you know, these two UM executives

0:09:53.720 --> 0:09:57.760
<v Speaker 1>have run those two divisions and they really were sort

0:09:57.760 --> 0:10:01.320
<v Speaker 1>of the most clear cut choice is j Morgan. On

0:10:01.360 --> 0:10:04.880
<v Speaker 1>the other hand, UM, you know what's interesting is CFO

0:10:05.120 --> 0:10:09.480
<v Speaker 1>Marianne Lake, who has probably a much longer standing with

0:10:09.559 --> 0:10:13.880
<v Speaker 1>the investment relationship with the investment community than her her

0:10:13.920 --> 0:10:20.720
<v Speaker 1>new co head Jennifer keep sack Um. But certainly Marianne

0:10:20.760 --> 0:10:25.080
<v Speaker 1>has long been considered a potential for that role, Jennifer

0:10:25.120 --> 0:10:28.520
<v Speaker 1>as well in recent years, whereas Morgan family just does

0:10:28.559 --> 0:10:31.680
<v Speaker 1>not have that bench, but perhaps trying to build it

0:10:31.720 --> 0:10:35.120
<v Speaker 1>a little bit now, Alison. You know, we think about

0:10:35.120 --> 0:10:38.640
<v Speaker 1>you know, financial titans. Obviously Jamie Diamond right now is

0:10:38.840 --> 0:10:42.360
<v Speaker 1>the leader. Give us a sense of how shareholders and

0:10:42.559 --> 0:10:45.040
<v Speaker 1>folks like you who you know spend a lot of

0:10:45.040 --> 0:10:47.320
<v Speaker 1>time in the financial services industry. How does Mr Gorman

0:10:47.440 --> 0:10:51.200
<v Speaker 1>kind of stack up in terms of his tenure. Well,

0:10:51.240 --> 0:10:55.720
<v Speaker 1>he's done a great job and I would say that um,

0:10:55.760 --> 0:10:58.280
<v Speaker 1>you know, especially I think in the early years he

0:10:58.640 --> 0:11:02.760
<v Speaker 1>made some tough voices within the organization. I think that

0:11:02.760 --> 0:11:06.079
<v Speaker 1>that in general, um, he's been shareholder friendly over the

0:11:06.160 --> 0:11:10.760
<v Speaker 1>years in terms of um, you know, focusing on things

0:11:10.800 --> 0:11:15.360
<v Speaker 1>like uh cost control. They've um pretty much delivered all

0:11:15.400 --> 0:11:19.560
<v Speaker 1>of the targets they set um over the several year tenure.

0:11:20.200 --> 0:11:23.960
<v Speaker 1>And I think the investment community really likes the shift

0:11:24.120 --> 0:11:28.720
<v Speaker 1>at the bank more towards the more stable wealth management business.

0:11:29.480 --> 0:11:32.080
<v Speaker 1>But again They've had great success on the institutional side

0:11:32.480 --> 0:11:34.640
<v Speaker 1>as well, even though it's a lesser part of their

0:11:34.720 --> 0:11:39.400
<v Speaker 1>their business. Now, so what does I mean in terms

0:11:39.440 --> 0:11:44.040
<v Speaker 1>of the league tables here? Who are the rising stars?

0:11:44.320 --> 0:11:49.439
<v Speaker 1>Where does Morgan Stanley fit into the picture? Well, Morgan Stanley,

0:11:49.960 --> 0:11:52.840
<v Speaker 1>as I noted earlier, they're they're the leader in global

0:11:52.880 --> 0:11:56.120
<v Speaker 1>equities trading, so that's I think been been strong and

0:11:56.120 --> 0:11:59.679
<v Speaker 1>they've gained share um in fixed income. The other notable

0:12:00.080 --> 0:12:03.560
<v Speaker 1>edition for Morgan Stanley is you know, as an equities

0:12:03.640 --> 0:12:08.160
<v Speaker 1>underwriter and as a leader in M and A. So

0:12:08.240 --> 0:12:11.839
<v Speaker 1>it's really Morgan Stanley, JP Morgan and Golden Sex are

0:12:11.880 --> 0:12:14.560
<v Speaker 1>sort of the you know as we say they're they're

0:12:14.559 --> 0:12:18.480
<v Speaker 1>the consistent leaders in equity, undant underwriting and traditional I

0:12:18.559 --> 0:12:21.800
<v Speaker 1>p o s over time, although they have been less

0:12:21.840 --> 0:12:25.000
<v Speaker 1>active than perhaps some others in facts, they've also done

0:12:25.000 --> 0:12:28.959
<v Speaker 1>business there um. Both Goldman and Morgan Stanley are are

0:12:29.040 --> 0:12:34.200
<v Speaker 1>less strong on the death diversus someone like JP Morgan um,

0:12:34.240 --> 0:12:36.760
<v Speaker 1>but they do get sort of a talent and expected

0:12:36.760 --> 0:12:39.040
<v Speaker 1>to get a tale in there in M and A. Um.

0:12:39.080 --> 0:12:42.440
<v Speaker 1>Goldman is the clear revenue leader there um. But again,

0:12:42.920 --> 0:12:45.079
<v Speaker 1>the three players that I talked about are are very

0:12:45.120 --> 0:12:47.480
<v Speaker 1>active and that's the business that we expect is very

0:12:47.679 --> 0:12:51.360
<v Speaker 1>strong fundament with support, Alison, are these are these league

0:12:51.360 --> 0:12:53.280
<v Speaker 1>table standings and you can see them in many different

0:12:53.280 --> 0:12:56.080
<v Speaker 1>ways in the Bloomberg with League Rammy go, etcetera. Are

0:12:56.400 --> 0:13:02.880
<v Speaker 1>they important to UM equity returns? Does it? Does it

0:13:03.040 --> 0:13:05.360
<v Speaker 1>really play through and how investors can make money on

0:13:05.400 --> 0:13:08.599
<v Speaker 1>these banks? Sure? And and so I think that's the

0:13:08.800 --> 0:13:13.160
<v Speaker 1>that's the key point, because what matters to investors is profitability. UM.

0:13:13.200 --> 0:13:17.000
<v Speaker 1>But Morgan Stanley as well as the largest US banks

0:13:17.000 --> 0:13:20.160
<v Speaker 1>have benefited from sort of a virtuous cycle of scale

0:13:20.200 --> 0:13:23.920
<v Speaker 1>and spending and so UM. The benefit of scale is

0:13:23.960 --> 0:13:27.080
<v Speaker 1>that UM, it gives you more money to invest in technology.

0:13:27.120 --> 0:13:29.839
<v Speaker 1>That's been the key battleground for financial companies over the

0:13:29.880 --> 0:13:34.439
<v Speaker 1>last decade. And so that's where the scale has been helpful. Alice,

0:13:34.480 --> 0:13:36.840
<v Speaker 1>thanks so much for joining us. Always great to get

0:13:37.320 --> 0:13:40.680
<v Speaker 1>UM your insight. Alison Williams is a senior industry analyst

0:13:40.720 --> 0:13:44.480
<v Speaker 1>Global Investment, Banks and Asset Management for Bloomberg Intelligence. Talking

0:13:44.480 --> 0:13:47.839
<v Speaker 1>to us about the new succession plan over at Morgan

0:13:47.920 --> 0:13:55.640
<v Speaker 1>Stanley really our top story today, this is Bloomberg. Yeah, UM,

0:13:55.720 --> 0:13:58.280
<v Speaker 1>let's get over right now to Burt Flexinger. We had

0:13:58.320 --> 0:14:00.880
<v Speaker 1>the pleasure of speaking with Burt bree Flee and and

0:14:00.920 --> 0:14:05.040
<v Speaker 1>we're rudely interrupted UM the other day on the retail

0:14:05.679 --> 0:14:10.360
<v Speaker 1>UM earnings UH rampage that we saw over the last

0:14:10.400 --> 0:14:12.959
<v Speaker 1>few days. It just went on and on yesterday. He's

0:14:13.000 --> 0:14:15.400
<v Speaker 1>managing director of Strategic Resource Group, and he can come

0:14:15.440 --> 0:14:18.600
<v Speaker 1>back on thankfully and share a couple more minutes with us.

0:14:18.840 --> 0:14:21.320
<v Speaker 1>But what did you think after we got you know,

0:14:21.480 --> 0:14:29.160
<v Speaker 1>all of the UM UH, Walmart, Target, Macy's. I mean,

0:14:29.200 --> 0:14:34.080
<v Speaker 1>we got really lows home depot, just a ton of

0:14:34.160 --> 0:14:37.680
<v Speaker 1>big box retailers out as well. How does the economy

0:14:37.680 --> 0:14:42.880
<v Speaker 1>look from from a consumer perspective? I UH, Paul, Paul,

0:14:42.880 --> 0:14:48.040
<v Speaker 1>and Matt. The the economy looks spectacular from a consumer perspective.

0:14:48.160 --> 0:14:52.760
<v Speaker 1>Consumers have paid down seven fifty million dollars in debt

0:14:53.040 --> 0:14:58.400
<v Speaker 1>or about of total debt and are ready to spend.

0:14:58.440 --> 0:15:01.800
<v Speaker 1>But the interesting thing is is you reference from yesterday

0:15:01.840 --> 0:15:07.960
<v Speaker 1>is UM. Nobody's talking about leadership, innovation, inflation, and obesity,

0:15:08.120 --> 0:15:15.560
<v Speaker 1>which all UM unconventionally combine to really drive up retail.

0:15:15.720 --> 0:15:18.360
<v Speaker 1>On the Bloomberg terminal and the S and P x

0:15:18.440 --> 0:15:23.720
<v Speaker 1>RT index retails up about a year to date and

0:15:23.880 --> 0:15:27.320
<v Speaker 1>about a hundred and forty ttm or trailing twelve months.

0:15:27.800 --> 0:15:31.840
<v Speaker 1>And at the same time, we have record obesity levels

0:15:31.040 --> 0:15:37.440
<v Speaker 1>for adults from toddlers to teens. They're gonna need bigger clothes.

0:15:37.520 --> 0:15:41.880
<v Speaker 1>Inflation means restaurants are uncompetitive on costs. People eating more

0:15:41.920 --> 0:15:47.600
<v Speaker 1>at home, and uh be between clothing consumables, hard goods

0:15:47.600 --> 0:15:52.920
<v Speaker 1>and soft goods advantage lows, advantage BJS and advantaged calls,

0:15:53.640 --> 0:15:56.240
<v Speaker 1>all of whom reported record breaking numbers, and all of

0:15:56.280 --> 0:16:00.040
<v Speaker 1>whom have great leaders and tremendous boards. From an E,

0:16:00.240 --> 0:16:03.080
<v Speaker 1>S G and diversity standpoint, it is interesting that people

0:16:03.120 --> 0:16:06.400
<v Speaker 1>got fatter staying home. You would have thought maybe they'd

0:16:06.440 --> 0:16:10.760
<v Speaker 1>eat healthier. Um, that's not what happened. I guess it's

0:16:10.840 --> 0:16:16.960
<v Speaker 1>John Mackie once once once told me consumers want proverbial

0:16:17.040 --> 0:16:20.680
<v Speaker 1>quote unquote sin in salvation. They want salvation with natural

0:16:20.680 --> 0:16:25.680
<v Speaker 1>and organics. But when their floods and major natural disasters,

0:16:26.440 --> 0:16:29.480
<v Speaker 1>the foods full flavor, salt, and sugar are the first

0:16:29.520 --> 0:16:31.400
<v Speaker 1>to sell out in the stores, and the last to

0:16:31.480 --> 0:16:35.000
<v Speaker 1>go are the natural and organic items. Hey Bert, didn't

0:16:35.040 --> 0:16:37.000
<v Speaker 1>you hear any from any of these companies. Supply chain

0:16:37.280 --> 0:16:39.000
<v Speaker 1>challenges here we've heard that in a lot of industries,

0:16:39.040 --> 0:16:41.000
<v Speaker 1>are they being able to get the product they need

0:16:41.120 --> 0:16:44.880
<v Speaker 1>on the shelves? Yes, supply chain and and UH to

0:16:45.040 --> 0:16:50.280
<v Speaker 1>be b JS, Lowe's Lows UH respective credit they're investing

0:16:50.320 --> 0:16:53.560
<v Speaker 1>record capital and inventories. But also it's Marshall Merrifield and

0:16:53.600 --> 0:16:57.920
<v Speaker 1>the directors of the West Coast Sports Unwind. The backlog

0:16:58.120 --> 0:17:02.240
<v Speaker 1>is more ships seafair as containers come through the West Core,

0:17:02.800 --> 0:17:07.040
<v Speaker 1>West Coast Golf and Eastern ports. UH, you'll see a

0:17:07.119 --> 0:17:11.720
<v Speaker 1>record amount of special situation inventory marked H to sell

0:17:12.320 --> 0:17:16.960
<v Speaker 1>great margins and great treasure hunts for costco b JS

0:17:17.040 --> 0:17:20.880
<v Speaker 1>and and Lows and the others UH to really capitalize

0:17:20.920 --> 0:17:26.080
<v Speaker 1>on the logistics and supply chain being UH completely jammed

0:17:26.160 --> 0:17:30.280
<v Speaker 1>up for fifteen months and opening up to record breaking

0:17:30.280 --> 0:17:33.360
<v Speaker 1>shipments between now and New Year's which means it will

0:17:33.400 --> 0:17:36.240
<v Speaker 1>be a great memorial data, labor Day, back to school

0:17:36.280 --> 0:17:39.359
<v Speaker 1>and certainly holiday selling to all right, Bert, thanks so

0:17:39.400 --> 0:17:41.720
<v Speaker 1>much for jumping on with us. We always appreciate getting

0:17:41.800 --> 0:17:45.600
<v Speaker 1>your thoughts on all things retail. Bert Flickinger, Managing Director

0:17:45.640 --> 0:17:49.159
<v Speaker 1>as Strategic Resource Group, was a busy, busy week for

0:17:49.440 --> 0:17:52.320
<v Speaker 1>retailer earnings generally coming in very very strong, as you

0:17:52.320 --> 0:17:55.760
<v Speaker 1>would expect easy comparisons. Plus, this economy is opening up.

0:17:55.800 --> 0:18:01.840
<v Speaker 1>This is Bloomberg. Now, let's get into the world of

0:18:01.880 --> 0:18:04.160
<v Speaker 1>retail investing. And I don't mean, you know, buying chairs

0:18:04.200 --> 0:18:07.240
<v Speaker 1>of Kmart or Kroger, but I mean, um, you know

0:18:07.320 --> 0:18:13.520
<v Speaker 1>Wall Street bets, diamond hands, Reddit um boards about game

0:18:13.600 --> 0:18:17.600
<v Speaker 1>stop and alt coins to the moon. Mr Lena a

0:18:17.600 --> 0:18:20.280
<v Speaker 1>golf of Polo who joins US now personal finance reporter

0:18:20.280 --> 0:18:22.520
<v Speaker 1>at Bloomberg News. She wrote one of the most read

0:18:22.600 --> 0:18:26.560
<v Speaker 1>stories on the terminal today and Mr Lenna, I have

0:18:26.600 --> 0:18:30.040
<v Speaker 1>to say it's a little bit depressing, um reading about

0:18:30.080 --> 0:18:35.639
<v Speaker 1>this sad dude, Eric Hackney, who's uh his wife Brittany,

0:18:35.760 --> 0:18:37.560
<v Speaker 1>and he's got a couple of kids, and he just

0:18:37.640 --> 0:18:41.080
<v Speaker 1>wants to get rich fast, right without having to do anything.

0:18:41.240 --> 0:18:47.440
<v Speaker 1>So um, he buys what twenty billion Australian safe Shepherd coin.

0:18:48.960 --> 0:18:53.120
<v Speaker 1>That's exactly right. I mean, you know, this is one

0:18:53.119 --> 0:18:56.280
<v Speaker 1>could say, pretty parallel to the idea of gambling, right,

0:18:56.440 --> 0:18:59.920
<v Speaker 1>Like you are basically throwing a couple of hundreds of

0:19:00.000 --> 0:19:04.080
<v Speaker 1>dollars into uh, into something that you hope will help

0:19:04.119 --> 0:19:08.640
<v Speaker 1>you get rich quick. But there's absolutely no basis of

0:19:08.680 --> 0:19:12.760
<v Speaker 1>investing in these coins because of their fundamentals. This is

0:19:13.000 --> 0:19:15.840
<v Speaker 1>a pure gamble. And the reason why people like Eric

0:19:16.000 --> 0:19:19.360
<v Speaker 1>are you know, interested in throwing their money and assets

0:19:19.400 --> 0:19:23.760
<v Speaker 1>like that, is because they've seen people become very rich

0:19:24.560 --> 0:19:27.800
<v Speaker 1>through these vehicles. And namely, I think the one that

0:19:27.880 --> 0:19:30.600
<v Speaker 1>we all look at is dodge Coin, right like, this

0:19:30.720 --> 0:19:33.680
<v Speaker 1>is a coin that started as a joke, um, and

0:19:33.760 --> 0:19:36.320
<v Speaker 1>if you threw a couple of hundred dollars into dodge

0:19:36.320 --> 0:19:39.520
<v Speaker 1>coin last July, that meant that those dollars now are

0:19:39.560 --> 0:19:43.000
<v Speaker 1>worth hundreds of thousands of dollars. And so what these

0:19:43.040 --> 0:19:46.080
<v Speaker 1>investors are are trying to figure out is what's the

0:19:46.119 --> 0:19:49.840
<v Speaker 1>next dodge Coin. And that's when the Australian Safe Shepherd

0:19:49.840 --> 0:19:53.359
<v Speaker 1>coin comes in. But also other cryptocurrencies that are really

0:19:53.480 --> 0:19:57.240
<v Speaker 1>weirdly named and exists in this sort of really weird

0:19:57.880 --> 0:20:01.720
<v Speaker 1>um like space within the crypto world called defied for

0:20:01.840 --> 0:20:05.360
<v Speaker 1>Decentralized Finance and their named you know, after dogs like

0:20:05.440 --> 0:20:08.880
<v Speaker 1>Sidau or Papua u or baby Nu, but also names

0:20:08.880 --> 0:20:11.880
<v Speaker 1>like Taco Cat and even safe Moon, you know, which

0:20:11.880 --> 0:20:15.520
<v Speaker 1>is a coin that was endorsed by Dave Portnoy just

0:20:15.640 --> 0:20:17.640
<v Speaker 1>a few a few days ago, and so you're really

0:20:17.680 --> 0:20:21.159
<v Speaker 1>seeing these coins um game traction, and what these retail

0:20:21.200 --> 0:20:23.800
<v Speaker 1>investors are trying to figure out is which one of

0:20:23.800 --> 0:20:26.160
<v Speaker 1>them is going to become the next Dodge coin, because hey,

0:20:26.240 --> 0:20:29.600
<v Speaker 1>if it happened once, it's really will happen again, right,

0:20:30.440 --> 0:20:33.119
<v Speaker 1>all right, So this is kind of begs, you know,

0:20:33.160 --> 0:20:35.720
<v Speaker 1>being an old Wall Street guy trading in you know,

0:20:35.760 --> 0:20:38.320
<v Speaker 1>the boring old stock markets, bond markets, things like that.

0:20:38.640 --> 0:20:42.199
<v Speaker 1>It just kind of begs for SMA, yes and my munis,

0:20:42.240 --> 0:20:44.600
<v Speaker 1>thank you very much, just kind of begs for some

0:20:44.680 --> 0:20:49.480
<v Speaker 1>regulatory oversight. So where do we stand on that? You know,

0:20:49.720 --> 0:20:52.800
<v Speaker 1>not really not really far into it. I mean this

0:20:53.040 --> 0:20:56.480
<v Speaker 1>space is as of now completely unregulated, which is why

0:20:56.560 --> 0:21:00.720
<v Speaker 1>you're seeing a lot of these uh you know, players

0:21:00.800 --> 0:21:04.600
<v Speaker 1>in this space come in and basically do whatever whatever

0:21:04.640 --> 0:21:07.560
<v Speaker 1>they want. I mean, the pump and dump scheme in

0:21:07.640 --> 0:21:10.399
<v Speaker 1>this industry and in this space is known as the

0:21:10.520 --> 0:21:13.640
<v Speaker 1>rug put right because creating a coin right now it's

0:21:13.680 --> 0:21:16.840
<v Speaker 1>so easy. There's all these different platforms that exists in

0:21:16.880 --> 0:21:19.879
<v Speaker 1>the DeFi space where you can basically go on log

0:21:19.920 --> 0:21:22.800
<v Speaker 1>in at a couple of parameters, and you know, ten

0:21:22.840 --> 0:21:26.000
<v Speaker 1>minutes or an hour later, you you have a coin

0:21:26.119 --> 0:21:29.000
<v Speaker 1>and then what a lot of times you know, uh,

0:21:29.000 --> 0:21:31.879
<v Speaker 1>and that a careers with sort of bad incentives do

0:21:32.080 --> 0:21:34.760
<v Speaker 1>is they'll create a coin, they'll mint it, they'll they'll

0:21:34.760 --> 0:21:37.720
<v Speaker 1>promote it, um, but they'll buy in early and then

0:21:37.760 --> 0:21:39.879
<v Speaker 1>they'll get a lot of other people to buy into it,

0:21:40.320 --> 0:21:42.320
<v Speaker 1>and that'll cause the price to go up, and then

0:21:42.320 --> 0:21:44.440
<v Speaker 1>all of a sudden they'll just pull all of their

0:21:44.480 --> 0:21:47.480
<v Speaker 1>assets and have the price falls. So whoever invested basically

0:21:47.560 --> 0:21:51.480
<v Speaker 1>loses their money. And that is something that's happening pretty frequently.

0:21:51.520 --> 0:21:54.680
<v Speaker 1>And I mean, but can we I want two things

0:21:54.720 --> 0:21:56.000
<v Speaker 1>I have to say because I'm getting a lot of

0:21:56.000 --> 0:22:01.040
<v Speaker 1>messages here. Um, it's dog coin, not dodge coin. Doge.

0:22:01.640 --> 0:22:04.080
<v Speaker 1>It's almost it's supposed to be fun to say. It's

0:22:04.119 --> 0:22:09.000
<v Speaker 1>a ridiculous name. Um, like you know, a royal uh

0:22:09.840 --> 0:22:14.359
<v Speaker 1>person in Venice the doge. Um. I think though someone

0:22:14.440 --> 0:22:17.600
<v Speaker 1>like Eric right, um, who's who's chugging bud light my

0:22:17.840 --> 0:22:22.480
<v Speaker 1>ties and he he knows that this is a scam, right,

0:22:22.640 --> 0:22:28.200
<v Speaker 1>I mean, everyone who's involved this isn't any worse than people, um,

0:22:28.280 --> 0:22:31.560
<v Speaker 1>you know, on oxygen, smoking a pack of Marlborough's in

0:22:31.640 --> 0:22:35.600
<v Speaker 1>a casino, you know, putting their life savings into the

0:22:35.640 --> 0:22:38.160
<v Speaker 1>slot machine or even walking around New York. I see,

0:22:38.200 --> 0:22:40.919
<v Speaker 1>you know, the least fortunate people are always in the

0:22:40.960 --> 0:22:43.640
<v Speaker 1>seven eleven buying all the scratch offs with the money

0:22:43.680 --> 0:22:45.920
<v Speaker 1>that you know, they don't have to lose, right, so

0:22:46.359 --> 0:22:49.000
<v Speaker 1>this isn't any worse than that. In fact, these people

0:22:49.160 --> 0:22:54.159
<v Speaker 1>on Wall Street bets they know what they're in, but

0:22:54.200 --> 0:22:56.480
<v Speaker 1>they don't they don't mind. And I think of the

0:22:56.560 --> 0:22:59.639
<v Speaker 1>reason why they don't um and this is based clearly

0:22:59.720 --> 0:23:02.600
<v Speaker 1>on you know, having spoken to a lot of these investors,

0:23:02.680 --> 0:23:05.920
<v Speaker 1>is that they're not spending their life savings into these coins.

0:23:06.000 --> 0:23:08.920
<v Speaker 1>Right We're talking about a couple of hundred dollars, which

0:23:09.040 --> 0:23:12.960
<v Speaker 1>in their minds is safer than spending it on a

0:23:13.000 --> 0:23:16.440
<v Speaker 1>lottery tation or going to a casino. Because if you

0:23:16.520 --> 0:23:19.760
<v Speaker 1>are able to spend enough time on social media where

0:23:19.800 --> 0:23:23.040
<v Speaker 1>you're seeing uh, these coins being talked about, promote it,

0:23:23.200 --> 0:23:27.080
<v Speaker 1>and you're able to strategically get in early and pull

0:23:27.119 --> 0:23:29.760
<v Speaker 1>your money out at the right time, it could work.

0:23:30.000 --> 0:23:33.440
<v Speaker 1>Is this a safe investment? Definitely? You know, definitely not.

0:23:33.480 --> 0:23:35.679
<v Speaker 1>There's so much prism to it. But at the end

0:23:35.680 --> 0:23:38.000
<v Speaker 1>of the day, if you put in two hundred dollars

0:23:38.080 --> 0:23:40.879
<v Speaker 1>or three d dollars. That's how much you lose, and

0:23:40.920 --> 0:23:43.120
<v Speaker 1>I think a lot of people are comfortable doing that.

0:23:43.240 --> 0:23:46.359
<v Speaker 1>All right, fascinating story. Mr Lena a gulf of Polo,

0:23:46.400 --> 0:23:48.240
<v Speaker 1>Thank you so much. He's a personal financier quarter for

0:23:48.280 --> 0:23:51.600
<v Speaker 1>Bloomberg News. Thanks for listening to the Bloomberg Markets podcast.

0:23:52.040 --> 0:23:55.240
<v Speaker 1>You can subscribe and listen to interviews with Apple Podcasts

0:23:55.359 --> 0:23:59.240
<v Speaker 1>or whatever podcast platform you prefer. I'm Matt Miller. I'm

0:23:59.280 --> 0:24:03.320
<v Speaker 1>on Twitter at Matt Miller nineteen seventy three. On Fall Sweeney,

0:24:03.359 --> 0:24:06.000
<v Speaker 1>I'm on Twitter at pt Sweeney before the podcast. You

0:24:06.000 --> 0:24:08.400
<v Speaker 1>can always catch us worldwide at Bloomberg Radio