Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Masser and Tim Stenebec from Bloomberg Radio.
Speaker 1: This is Jess witten Back with John Tucker, and we
Speaker 1: have in our interactive broker studio June Grasso, Bloomberg News
Speaker 1: legal analyst and host of Bloomberg Law here, and we're
Speaker 1: also going to bring in our star equities reporter Bailey Lipscholtz.
Speaker 1: He's here in Actually he's in Zooming News. Say where
Speaker 1: is he? He's not here. It's he's always here though,
Speaker 1: So it's fine. I don't think it's a star reporter.
Speaker 1: He's working from home. Hey, it's at And we're going
Speaker 1: to talk about the next legal steps in the criminal
Speaker 1: case against former President Donald Trump. Also how these Trump
Speaker 1: leaks fact that you were talking about John earlier have
Speaker 1: been reacting this. So June, I'm going to start off
Speaker 1: with you, can you set the scene to just run
Speaker 1: down what's happened and what is ahead for this as
Speaker 1: far as when we're going into next week. So do
Speaker 1: you have a half hour. Oh you do, Okay, that's good.
Speaker 1: So the main thing is that we don't know what
Speaker 1: the charges are because it's under sealed, so we won't
Speaker 1: find out what the charges actually are, perhaps until the
Speaker 1: arrayment itself happens on Tuesday. So but what we suspect,
Speaker 1: and what's been reported and reported and reported, as John
Speaker 1: Tucker knows, is that it's supposed to be a falsifying
Speaker 1: business records charge, which is a misdemeanor, and in order
Speaker 1: to take that up to a felony, the prosecutors will
Speaker 1: have to prove that Trump falsified records to cover up
Speaker 1: a second crime, such as violating federal campaign finance law.
Speaker 1: So that's what we suspect it is. That's a novel
Speaker 1: kind of theory. New York secutors have never tried that before.
Speaker 1: And as far as the arraignment, which comes next, is
Speaker 1: that he's going to be here downtown at this is
Speaker 1: New York Criminal Court. If you've ever been to arrayments,
Speaker 1: and I've been to any, not me, but watching others
Speaker 1: being array it's like it's an assistant district attorney who's
Speaker 1: like twenty five years old, and they power through it
Speaker 1: like your arraynment if you're just a typical Joe or Jane,
Speaker 1: takes about twenty seconds. So I suspect probably will be different. Yeah,
Speaker 1: especially if they read the thirty count what CNN's reporting
Speaker 1: is a thirty count indictment, it will be longer. And
Speaker 1: I don't think it. I don't know for sure, but
Speaker 1: I think it might not be the twenty five year
Speaker 1: old assistant you know, oh you think. No, I don't
Speaker 1: know that is going to do it. But I think
Speaker 1: maybe one of the attorneys that's been working on this
Speaker 1: case might do it. So just for you know, so
Speaker 1: we actually, I mean, we might actually get a shot
Speaker 1: of Donald Trump in the hallway. They sometimes allow cameras
Speaker 1: in the hallway, so if he's walked into the courtroom
Speaker 1: through the hallway, we might actually see him. That'll account for.
Speaker 1: That'll be the purp walk we usually yeah, but not
Speaker 1: but not. I don't think he'll be in handcuffs unless
Speaker 1: he wants to be. He has said there's been talk
Speaker 1: apparently about him wanting to have a perp walk with
Speaker 1: handcuffs on. But so he'll be and you won't see
Speaker 1: he'll be booked in the DA's office. He'll be fingerprinted,
Speaker 1: the mug shot will be taken, maybe a DNA swap,
Speaker 1: I'm not sure about that. And we won't see those
Speaker 1: mug shops most likely unless some news organization says we
Speaker 1: need to see them under First Amendment grounds for some reason,
Speaker 1: I don't know what. So that's what will happen, and
Speaker 1: then the charges will be read and he'll plead not guilty,
Speaker 1: and he'll get to go home to Florida, okay with
Speaker 1: your Bankran, And I have to point out to everybody
Speaker 1: we are talking to a Harvard Law school graduate who's
Speaker 1: got extensive experience. Is this case flimsy? I can't see.
Speaker 1: I mean, I can't trade because I haven't seen the charges.
Speaker 1: I mean everyone is waiting, every lawyer is waiting to
Speaker 1: see what the charges are. You know, once that indictment
Speaker 1: is unsealed, to see if maybe there's more there than
Speaker 1: we thought. But let me just say this, I don't
Speaker 1: think that Alvin Bragg, who's a cautious kind of man,
Speaker 1: would indict a former president if he couldn't, if you
Speaker 1: didn't think he could. I remember talking to the chief
Speaker 1: judge of New Yor Sault Walkler, and he told me
Speaker 1: in New York you can indict a ham sand yes,
Speaker 1: but years later No. But this is not a hand
Speaker 1: sandwich that we're indicting. This is a former president, and
Speaker 1: you don't want to indict him just because you can
Speaker 1: indict him and so, and also, look look at what
Speaker 1: he went through with the grand jury. I mean he
Speaker 1: called witness after witness, he called witnesses for the defense
Speaker 1: to the grand jury. Then he called rebuttal witnesses. So
Speaker 1: I mean, I think there might be more there. Let's
Speaker 1: bring in Bailey to get the take happening with these
Speaker 1: SPACs that have been linked to Donald Trump? What's happening today?
Speaker 1: How have they've been before being Yeah? Right now we
Speaker 1: have Digital World, which is the spack working to take
Speaker 1: Trump media group. Public is up about eight percent, so
Speaker 1: trading around fourteen dollars. Remember SPACs typically go public around
Speaker 1: ten dollars. This one has a little bit more than
Speaker 1: ten dollars per share in cash value, so still trading
Speaker 1: at a thirty percent premium. Thirty percent and change premium
Speaker 1: to what it would be worth if this deal fell apart.
Speaker 1: Really is just a gauge or a proxy of how
Speaker 1: much news is around Trump and how much excitement could
Speaker 1: be around it. So you see digital world trading higher.
Speaker 1: You see Rumble, which is the conservative alternative to YouTube,
Speaker 1: actually reported earnings and goes up double digits. Funware as
Speaker 1: a penny stock that's tied to Trump, also rallying, but
Speaker 1: still really down sharply over the past years. So those
Speaker 1: are the big three proxies that pretty much get a bid,
Speaker 1: whether it's good news or bad news, or really any
Speaker 1: news as it relates to the former president. We typically
Speaker 1: see these stocks really moving tandem. So what's the ideas
Speaker 1: everybody's going to be watching these outlets? I don't even
Speaker 1: know what to qualum because well, yeah, twenty four hours now,
Speaker 1: that's the view it. Trump Media owns truth Social, so
Speaker 1: kind of his ripoff of Twitter, which is where he
Speaker 1: typically posts. So we've seen engagement pretty strong numbers relatively
Speaker 1: from there. So that's kind of part of the optimism
Speaker 1: is that if Trump is making headlines, and if you
Speaker 1: are a follower or just interested in what he's doing,
Speaker 1: you're going to be spending more time on truth Social,
Speaker 1: maybe going on to Rumble, to hear Russell Grand or
Speaker 1: some other commentators who have been booted or banned from
Speaker 1: various platforms. Kind of laying out their expectations Rumble as
Speaker 1: a company that really wants to be uncancellable is the
Speaker 1: way they phrase it. So those are kind of areas
Speaker 1: that at least the perception is that if you're not
Speaker 1: wanting to listen to Bloomberg Radio or other traditional media outlets,
Speaker 1: that's where you'll kind of go for your entertainment engagement
Speaker 1: sounding boards. Bailey, you cover all things spacks. What's next
Speaker 1: for this Trump tied spack moving forward? They've been working
Speaker 1: to get this deal done. This was a deal announced
Speaker 1: back in October twenty twenty one. They've really done everything
Speaker 1: they can to get extensions. So right now their drop
Speaker 1: dead date is in September, so that means they can
Speaker 1: continue to work on getting the sign off from the
Speaker 1: likes of the Justice Department, the SEC who have been
Speaker 1: helping hold up this deal. So all eyes are on
Speaker 1: what could move forward. One thing that's interesting to note though,
Speaker 1: a few weeks ago, their CEO actually was booted from
Speaker 1: his role of Patrick Orlando, who had brought public a
Speaker 1: handful of spacks and was really a big fan of
Speaker 1: Donald Trump. So the shaking up at Digital World with
Speaker 1: their new CEO, Eric Swiders, stepping into that role could
Speaker 1: be a cause for optimism that this deal will eventually
Speaker 1: get done. But I talked to a lot of people
Speaker 1: in this back industry and they still really see this
Speaker 1: as something that probably does not actually cross the finished line,
Speaker 1: which would mean the investors who bought it at fourteen
Speaker 1: dollars today or one hundred and seventy five back in
Speaker 1: October twenty twenty one will be left with about ten
Speaker 1: dollars and thirty five cents. I've been. I've been this
Speaker 1: is unfair because I haven't seen the financials any of
Speaker 1: these companies. I mean, are they really viable. There's a
Speaker 1: lot of the beauty and curse of SPACs is that
Speaker 1: we don't really know much about what Trump Media wants
Speaker 1: to be or what it plans to be. Rumble. Uh
Speaker 1: valuation is really the big thing that an analysts are
Speaker 1: kind of skittish of. But they have seen an ability
Speaker 1: to court some of these uh call them talent or
Speaker 1: influencers to their platform. So I think that Rumble it
Speaker 1: seems like, at least looking at the fundamentals, could serve
Speaker 1: as an alternative video platform. But there's a lot of
Speaker 1: gray area around the valuation of Trump media and actually
Speaker 1: what it would look like and whether it could ever
Speaker 1: turn a profit. In June, before you go, since you're
Speaker 1: still building us, we're what are your billable hours anyway,
Speaker 1: Tuesday wednes Tuesday, it's supposed to be Tuesday, we're hearing
Speaker 1: two fifteen. Oh okay, we're hearing from home. Well that's
Speaker 1: your sort. The general. The General, it's out there. His
Speaker 1: attorneys have been talking and so he's supposedly coming in
Speaker 1: on Monday nine. If you want to go to Trump
Speaker 1: Tower to greet him, John, and then Tuesday he'll be
Speaker 1: down of the Criminal Courthouse. Excellent, and you'll be there too,
Speaker 1: I suspect. Thank you, June Grasso. It's great having you
Speaker 1: both here. June Grasso, Bloomberg New's legal analyst and Bailey
Speaker 1: lipshoal to US equities reporter for Bloomberg. You're listening to
Speaker 1: the Bloomberg Business Week podcast. Catch us live weekday afternoons
Speaker 1: from three to six Eastern Listen on Bloomberg dot com,
Speaker 1: the iHeartRadio app, and the Bloomberg Business app, or watch
Speaker 1: us live on YouTube. Andy Purty with Huawei USA. He's
Speaker 1: the chief security officer. We're going to help us detail
Speaker 1: some of the Companies twenty twenty two financial reports. Some
Speaker 1: of the particulars there, Andy, thanks for being on the program.
Speaker 1: You're in Washington. Give us some of the highlights of
Speaker 1: what the report says. Well, we have been in a
Speaker 1: difficult situation for a couple of years, and we're pleased
Speaker 1: that our business has stabilized and we are in a
Speaker 1: position to move forward. We are finding tremendous success in
Speaker 1: our five G to be business and we're investing historic
Speaker 1: amounts of money in this case twenty five point one
Speaker 1: percent of our revenue over twenty three billion dollars in
Speaker 1: R and D to help us deal with the recent
Speaker 1: unpleasantries and to help us find working with partners, the
Speaker 1: path forward to help grow our business. Hey, Andy, unpack
Speaker 1: this latest report for us. Where were the biggest takeaways? Well,
Speaker 1: the overall revenue increased slightly, Our carrier business had a
Speaker 1: slight increase. Our enterprise business to tremendous up thirty percent.
Speaker 1: That's really around our five G to be our digitalization
Speaker 1: right now, we're we work with seven hundred cities in
Speaker 1: the world two hundred and sixty seven the Fortune Global
Speaker 1: five hundred companies under under digital strategy we've got nine
Speaker 1: million developers and forty thousand ecosystent partners, and we're also
Speaker 1: announcing results of individual additional units, for example in digital
Speaker 1: power and cloud. Those are important areas for us that
Speaker 1: we look forward to driving some real progress in the
Speaker 1: years ahead. Hey, you're a subsidiary of Wawei Technologies, which
Speaker 1: we all know is the largest maker of telecom equipment.
Speaker 1: The launch of sort of a new social control era
Speaker 1: in China focuses on technology, tracking technology, whatever you want
Speaker 1: to call at this point, and you have been scrutinized
Speaker 1: on Capitol Hill, not unlike what we saw with TikTok.
Speaker 1: What is happening on that front. When it comes to
Speaker 1: the regulatory capacity in Congress, well, the two major areas.
Speaker 1: One has to do the ability to do business in
Speaker 1: the United States, and it's clear the United States is
Speaker 1: not interested in allowing us to do business in the
Speaker 1: United States. So that's a reality. We're not going to
Speaker 1: complain about it. We're going to move forward. The other
Speaker 1: is the question of trade restrictions, the ability of American
Speaker 1: companies to sell nonsensitive technologies to US. And while I
Speaker 1: applaud the efforts under the Chips Act, to bring a
Speaker 1: lot of jobs to America. You know, the fact is
Speaker 1: I'm concerned about American jobs and the semiconductor industry their
Speaker 1: ability to sell nonsensitive technologies to US. I think it
Speaker 1: could be a difficult future and I hope there might
Speaker 1: be a way to allow the sale of such nonsensitive
Speaker 1: technologies to US. And when it comes to these security issues,
Speaker 1: what did you find had the most red flags? Well,
Speaker 1: the issues over and number of years, and there really
Speaker 1: has not been anything specific. Obviously, there have been some
Speaker 1: geopolitical concerns, and so what we have tried to do
Speaker 1: around the world, in European Union, in Germany and all
Speaker 1: around the world is we try to develop and maintain
Speaker 1: the trust of our customers and the trust of the
Speaker 1: folks they have to be or their particular governments. We're
Speaker 1: a supplier or they're an operator, and so we have
Speaker 1: worked very hard on our global Cybersecurity and Privacy Insurance program,
Speaker 1: on partnering with standers bodies, on parting, for example, the
Speaker 1: telecom equipment effort that the standers bodies form to create
Speaker 1: specific requirements for telecom companies, specific testing requirements and accountability requirements.
Speaker 1: All those things we find gives the ability for most
Speaker 1: of the countries in the world to be able to
Speaker 1: push back and say no, there isn't a problem with
Speaker 1: while we take we take cybersecurity seriously, we take privacy seriously.
Speaker 1: And frankly, as I hear all this commotion, I hope
Speaker 1: the United States is going to take privacy production a
Speaker 1: whole lot more seriously than than we have in the past.
Speaker 1: National privacy legislation will be good. That's not going to
Speaker 1: be good enough to help address the risk involving, for example,
Speaker 1: social media companies. Well, how much of what Huawei does
Speaker 1: around the world relates to governments keeping tabs under people? Well,
Speaker 1: it doesn't. I mean, the issue of surveillance is not
Speaker 1: something that we do. You know, there's I mean supplying
Speaker 1: that the components to enable that. Well, the issues about
Speaker 1: what products you sell that could be misused and throw
Speaker 1: a very rough analogy, the idea of a hammer can
Speaker 1: be used for good, it can be used for bad.
Speaker 1: We don't help governments create special algorithms or special technologies
Speaker 1: that they can use to abuse people. And we are
Speaker 1: working globally to participate in the development of ethical principles
Speaker 1: for some of these things that go beyond the issue
Speaker 1: of complying with the individual requirements in individual country. And
Speaker 1: we think those kinds of efforts are what's going to
Speaker 1: be necessary to help address the risk of misuse by governments.
Speaker 1: And there's definitely a risk there is there a path
Speaker 1: back into the United States. There is so much business
Speaker 1: to do around the world, so many places where people
Speaker 1: right now are anxious for us to do business, so
Speaker 1: we are not really pursuing the possibility of doing business
Speaker 1: in the United States. And frankly, I'm glad that at
Speaker 1: least we can share some of the lessons we're learning
Speaker 1: about how countries and companies, how governments can benefit from
Speaker 1: the new technology, so that hopefully the United States, not
Speaker 1: with us, but hopefully the United States can ramp up
Speaker 1: their efforts to get the benefits of these technologies and
Speaker 1: to grow the competitiveness of America. And one of the
Speaker 1: great shortcomings has to do with our talent, our workforce,
Speaker 1: because we're really not stepping up for the future. Andy,
Speaker 1: you brought up government and legislation earlier. What do you
Speaker 1: think specifically needs to be in that with regards to privacy, Well,
Speaker 1: I think we've seen some examples of what shouldn't be
Speaker 1: in there. And I defer to the privacy experts as
Speaker 1: to what and the industry experts as to what should
Speaker 1: be in privacy legislation. But I think there need to
Speaker 1: be more than those kinds of requirements because the minimal
Speaker 1: requirements that you can get legislatures to agree on are
Speaker 1: not going to be good enough given the risk. One
Speaker 1: of the lessons we learned two years ago these major
Speaker 1: cyber attacks on trusted American companies Solar Winds of Microsoft
Speaker 1: Exchange Forever, proved there's no such thing as trusted suppliers.
Speaker 1: They're trusted, but the bad guys can hack into them.
Speaker 1: So whoever's got data, whoever has important functions. And as
Speaker 1: we move into five genable technologies automation, machine, the machine, communication,
Speaker 1: sensor to machine, we have to make sure that those
Speaker 1: systems are going to be running. So we have to
Speaker 1: make sure that no matter who the supplier is, they're
Speaker 1: objective and transparent basis for knowing whether those products and services,
Speaker 1: whether those data are protected. And I think the leaders
Speaker 1: of cybersecurity United States are moving in the right direction,
Speaker 1: but we've got to really ramp up those efforts to
Speaker 1: promote assurance transparency and accountability. What is the future hold
Speaker 1: for your company in terms of technology, Well, right now,
Speaker 1: the proofcase of the five G to business, the digitalization
Speaker 1: of industries and sub industries is so exciting, and the
Speaker 1: benefits of smart mining and ports and manufacturing, the efforts
Speaker 1: we're working with the major carriers in the world to
Speaker 1: help produce the carbon footprint to help meet the UN
Speaker 1: goals we are actively participating, and how to generate green energy,
Speaker 1: how to transport it, how to save it, how to
Speaker 1: increase the efficiency of everything that's done, and find ways
Speaker 1: to use more green energy. And so the future is
Speaker 1: very very bright, particularly with the strong partners that we
Speaker 1: have around the world. And you're talking about green energy,
Speaker 1: what specifically are those strategies Whenever you were talking to
Speaker 1: how to improve all of this, Well, you have some
Speaker 1: existing technology that you them to be more efficient. So
Speaker 1: for example, in the carrier networks, data centers and base
Speaker 1: stations that kind of like antennas use up a lot
Speaker 1: of energy. So using technology sometimes with algorithms to try
Speaker 1: to take advantage of when they're not being used to
Speaker 1: reduce the power consumption. And in terms of whether they're
Speaker 1: stored outside or inside, where you have to use the
Speaker 1: air conditioning. Those kinds of techniques can increase efficiency and
Speaker 1: can promote a reduction in the carbon footprint. And the
Speaker 1: fact is that hardcore research and development, working with our
Speaker 1: partners to try to develop green energy and how to
Speaker 1: bring it forward, how to find ways to deliver power
Speaker 1: that's based on green energy is something that we're working
Speaker 1: hard on and we're making substantial progress on. It's it's
Speaker 1: exciting to be part of that. You mentioned smart mining
Speaker 1: would give me the dummies definition me being the dummy
Speaker 1: for smart training. So for example, you know how drone
Speaker 1: pilots can don't have to be on the battlefield. So increasingly,
Speaker 1: and we've got a number of examples in Africa and
Speaker 1: shine on other places where you create special five G
Speaker 1: special power requirements that can be five G underground, so
Speaker 1: you can you can have the sensor, you can have
Speaker 1: the machines so that they can control the equipment without
Speaker 1: going down in the mines. There's one mind of my
Speaker 1: colleague told me about he visited that's three thousand meters
Speaker 1: underground and the working shift for the workers is four weeks.
Speaker 1: They have to go down there for four weeks. So
Speaker 1: the idea of having this technology that can allow not
Speaker 1: only the operations, but the monitor of safety. So you
Speaker 1: have like at thirty meter giant machine, it's it's it's
Speaker 1: it's doing the mining, and you have multiple cameras to monitor.
Speaker 1: So you use an AI algorithm to stitch together the
Speaker 1: videos along that thirty meter strip so that the operator
Speaker 1: can monitor it and you can have a and those
Speaker 1: who are providing oversight for safety and control and resilience
Speaker 1: they can monitor it. Also. It's the same thing with reports.
Speaker 1: The ability to have automation can increase efficiency and help
Speaker 1: cut down on some of the supply chain bottle next
Speaker 1: or there and manufacturing. Generally, the greater efficiency the manufacturing
Speaker 1: process is going to save money and reduce energy consumption.
Speaker 1: And this stuff is all very exciting. Andy, thanks a lot,
Speaker 1: Andy purty Uahwei's USA Chief security officer detail like some
Speaker 1: of the financial report of the company's twenty two financial results.
Speaker 1: You're listening to Bloomberg Business Week right here on Bloomberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six eastre on Bloomberg Radio,
Speaker 1: the Bloomberg Business app and YouTube You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty. So we've got
Speaker 1: another great guest in our lineups of Cappy Cranning Ger
Speaker 1: and she's the former director of the Consumer Financial Protection Bureau,
Speaker 1: also vice president of regulatory Affairs at solid Labs. She's
Speaker 1: on Zoom from Washington, DC. And so solid or solid
Speaker 1: saw do you pronounce that? Solidust correct? Solidists excuse me, solidusta, sorry,
Speaker 1: butcher that but we corrected it. So Solidust Labs. So,
Speaker 1: to give some context to our listeners, it's a crypto
Speaker 1: market surveillance firm that works with exchanges, regulators and investment
Speaker 1: firms to flag market manipulation and other risk issues. And so, Kathy,
Speaker 1: I want you to break this down for us because
Speaker 1: obviously we've had the wake of multiple bank collapses. We've
Speaker 1: also had FTX in recent months. What happened with that
Speaker 1: situation is still ongoing obviously, right, But then how exactly
Speaker 1: has all this ended up impacting the crypto market specifically,
Speaker 1: and it has a dramatic impact. Look, I believe in
Speaker 1: the future of the digital asset space. I think it's
Speaker 1: the future of the Internet. That's why I joined this industry,
Speaker 1: and I'm excited to be, you know, wearing a white
Speaker 1: hat at Solidus Labs, which as you noted, you know,
Speaker 1: looks for manipulation and seeks to root out fraud in
Speaker 1: this space. But the news of FTX, the tentacles that
Speaker 1: FTX had across the globe, to regulators, to policy makers,
Speaker 1: it was looked at as a as a leader in
Speaker 1: some respects in the conversation around what regulation and what
Speaker 1: responsible market participants should do. And you see that it
Speaker 1: was a big scam, and as you noted, additional charges
Speaker 1: were brought this week and more keeps coming on that.
Speaker 1: But look, fraud is not new and certainly digital asset
Speaker 1: markets did not invent it. You see this in traditional finance.
Speaker 1: There are regular enforcement actions against the biggest banks and
Speaker 1: institutions you know, in financial services on a not infrequent basis.
Speaker 1: And also there are scammers who are always going to
Speaker 1: seek to take advantage of people unfairly, and the hope
Speaker 1: is that prosecutors go after them and to the fullest
Speaker 1: extent of the law. They managed to claw back funds
Speaker 1: and make people who are hurt whole in the cryptospace,
Speaker 1: is am I correct to say, it's the platforms where
Speaker 1: all the who can this has been taken place, Like,
Speaker 1: the platforms perform an important role to the extent that
Speaker 1: you've got intermediaries in the space. Of course, one of
Speaker 1: the promises and directions of digital asset markets is decentralization,
Speaker 1: so you don't always necessarily have to have that intermediary
Speaker 1: in the middle. But but look, many of us don't
Speaker 1: want to manage our own wallets individually and understand, you know,
Speaker 1: the details of the security that would be needed to
Speaker 1: engage directly in the space. So you're going to have
Speaker 1: platforms in the future, and some of the core issues
Speaker 1: are really around what these underlying sets are and then
Speaker 1: therefore which regulatory structure UM you know is required of them. Um,
Speaker 1: there is still a requirement around transparency and fairness and disclosure,
Speaker 1: and many of the good market participants in this space
Speaker 1: are doing that to the best of their ability, complying
Speaker 1: with the law that you applies to them, using capabilities
Speaker 1: like we provide a solid as labs UM. But there
Speaker 1: are also those that are not doing that, And I
Speaker 1: got to ask the obligatory question is is this a
Speaker 1: currency or a commodity. I mean, who who's the regulator.
Speaker 1: You're getting to the heart of the matter. That is
Speaker 1: part of the challenge. I do fundamentally believe the digital
Speaker 1: assets are not just a one nature. It's not one
Speaker 1: type of asset. And so the question of you know
Speaker 1: what is it is, you know, an asset by asset
Speaker 1: assessment that is not you know, foreign to lawyers who
Speaker 1: are looking at those things. That are you know, instruments
Speaker 1: in traditional finance, and there are clear rules around securities.
Speaker 1: We talk a lot about the Howie test and the
Speaker 1: Reeves test, but those need to be applied, and the
Speaker 1: platforms are saying we're applying those tests, and Chairman Gensler
Speaker 1: is saying, um, you know, I don't think so. So
Speaker 1: there's a lot to be worked out definitely in the
Speaker 1: courts on that front that is completely separate from you know,
Speaker 1: fraud and bad actors. Wanted to make sure I said
Speaker 1: that pretty clearly. And what are your thoughts on Senator
Speaker 1: Elizabeth Warren in her position on crypto Because I know
Speaker 1: that the Senate obviously has a particular stance on the
Speaker 1: market regulation, but what's going on there and how do
Speaker 1: you see all that playing out? Like I think Congress
Speaker 1: needs to engage in this space, and members need to
Speaker 1: be educated and understand the technology, think through the best
Speaker 1: way to put a specific regulatory framework into place. I'm
Speaker 1: one of the people that leaves Congress needs to act
Speaker 1: on that front. And so you have members that are
Speaker 1: really engaged and have spent the time you know Senator's
Speaker 1: Lummis and Jillibrand at a bipartisan bill they issued last year.
Speaker 1: They're working on it again and going to reissue that
Speaker 1: this year. You have leadership on the House Financial Services
Speaker 1: Committee two that is excited about well trying to tackle
Speaker 1: the issues around stable coins and market structure. The Agriculture
Speaker 1: committees in the House and the Senate to really engaging
Speaker 1: in this space. So there are going to be a
Speaker 1: lot of different perspectives, and I just fundamentally believe, as
Speaker 1: I said, that the future of the Internet, in the
Speaker 1: future of so many things about how our economy can operate,
Speaker 1: innovate and be accessible for the future is in this technology.
Speaker 1: But there are risks and those need to be weighed,
Speaker 1: as does the right regulatory regime. Where are we in
Speaker 1: the regulatory front, I mean, in a nutshell, is it happening? Uh?
Speaker 1: It's happening through the courts. That's likely. Let's not really regulations.
Speaker 1: That's more like you've got to do this, guys. Yeah,
Speaker 1: that's that's that's the unfortunate part about this. You're seeing
Speaker 1: it through enforcement actions from the SEC and the cftc um,
Speaker 1: some of them clearly designed to try to put the
Speaker 1: bounds around around crypto assets and define them as securities
Speaker 1: or commodities, but not in a direct way, not by
Speaker 1: issuing notice in common regulation um. And that's where you
Speaker 1: get to Congress too, because in some respects Congress needs
Speaker 1: to solve some of these issues. But you do also
Speaker 1: have the sec issuing regulations around custody that encompass certainly
Speaker 1: many aspects of traditional finance, but also encompass crypto assets.
Speaker 1: I mean, does the is the industry welcoming all this?
Speaker 1: I mean they were obviously, you know, one of the
Speaker 1: reasons for being is to avoid that or not be
Speaker 1: regulated or whatever. Do they now welcome it or what?
Speaker 1: The industry has been pretty consistent, although it is hard
Speaker 1: with the centralization to talk about it as one industry.
Speaker 1: But to be clear, those who are the platforms that
Speaker 1: you mentioned earlier, John, and those that are in intermediaries
Speaker 1: in the space. They know they have regulatory responsibilities under
Speaker 1: current law. They know there are regulatory responsibilities that need
Speaker 1: to be shaped and take into account the differences with
Speaker 1: these assets and the differences with these markets. And so
Speaker 1: that's something that you know, we've put forth as the industry,
Speaker 1: a lot of different ideas around this, and do want
Speaker 1: to see Congress act and do want to see the
Speaker 1: SEC and the CFTC engage. What do you think is
Speaker 1: the most realistic way to try to address fraud because
Speaker 1: we've seen so many instances and scandals, as you know,
Speaker 1: especially even in recent months in the crypto world. It
Speaker 1: is incredibly disheartening. There's no other way to say it.
Speaker 1: And some of it is just you know, unfortunately the
Speaker 1: nature of anything that's new. You know, you noted I
Speaker 1: was the director of the CFPB. The types of scams
Speaker 1: and frauds that you know, really go after vulnerable populations.
Speaker 1: You know, they're they're constant, so they're not unique to
Speaker 1: digital assets. But I see an opportunity, and we see
Speaker 1: it in our ability at SOLIDUS to identify RUG polls.
Speaker 1: We can preclude those bad actors from at all benefiting
Speaker 1: from and getting the funds off ramped out of the
Speaker 1: blockchain ecosystem, so therefore completely disincentivizing deploying the scam to
Speaker 1: begin with. And so those are some of the things
Speaker 1: that the technology can really facilitate. You know, they they
Speaker 1: they deploy a token you can only buy, you can't
Speaker 1: actually sell, you can't get out of it. And then
Speaker 1: you know, the person who actually deployed that does a
Speaker 1: rug pole, pulls all the funds and it escapes with
Speaker 1: those funds. If you can identify that as a run
Speaker 1: poll and stop them from escaping with the funds, there's
Speaker 1: no benefit then in deploying the scams to begin with.
Speaker 1: And that's something this technology facilitates. I have a reverse barometer.
Speaker 1: Whenever people talk about it at the barbershop, I've run
Speaker 1: and that's all they were talking about it a few
Speaker 1: years ago. Crypt Though, Kathy, thanks a lot. I appreciate it.
Speaker 1: That was interesting. Kathy Craniger the vice president of regulatory
Speaker 1: regulatory Affairs at Solidust Laboratories. They worked with the exchanges
Speaker 1: and presumably on the regulatory front as well. You are
Speaker 1: listening the Bloomberg Radio, you know what, JT. I'm very
Speaker 1: excited about our next guest because this is a company
Speaker 1: that's female run by their strategy. So we have Stephanie Blake,
Speaker 1: the chief executive officer Highlights Studios on Zoom California. No,
Speaker 1: you're still invited. We're not going to kick you out JT.
Speaker 1: And So Stephanie, I hear you're taking old iconic buildings
Speaker 1: and turning them into something cool. Tell us about what
Speaker 1: Skylight Studio is in what you do. Hi. Yeah, So
Speaker 1: Skylight we are placemaking and Venny development of management firm,
Speaker 1: and we focus on adaptive reuse. We were founded actually
Speaker 1: in two thousand and eight, so similar times, if not
Speaker 1: potentially worse for commercial real estate, but for us, we
Speaker 1: drive creative revenue streams and new uses too often historic
Speaker 1: or underutilized properties by bringing in brands Fortune one hundred
Speaker 1: companies to do experiences, to foster sort of a new
Speaker 1: way of gathering and entertainment. And we've been doing it
Speaker 1: for the last fifteen years, looking from the Highline to
Speaker 1: Moningham Station, the Ferry Building in San Francisco, Gardli Square, Detroit.
Speaker 1: So that is that is what we've been doing. And
Speaker 1: I think see a ton of opportunity right now. Oh, Stephanie,
Speaker 1: let me paint the picture for you. Where are we
Speaker 1: fifty eighth and Okay, so I don't know where I am.
Speaker 1: Look out the window, Well, look downstairs. There used to
Speaker 1: be Starbucks. Remember in this build there was an H
Speaker 1: and M on the first floor. Gone. The container store
Speaker 1: has gone. Victoria Store there now instead of the start. Well,
Speaker 1: Matt Miller thinks it's a front for something out. There's
Speaker 1: a Victoria's Secret that's gone. What is the state of
Speaker 1: commercial real estate? From where you sit? Yeah, from where
Speaker 1: we said, I think that there's often a trend. You know,
Speaker 1: I think what was it now as of ten years
Speaker 1: and change ago? Retail was in question? What is the future?
Speaker 1: Was the future of the ground floor? I think right now,
Speaker 1: with you know, COVID having accelerated the question mark of
Speaker 1: a lot of these traditional uses. What gets you out
Speaker 1: the door? What is the use of the built environment?
Speaker 1: Do you need to go to work? I think that's
Speaker 1: the question mark that's happening. And I think a lot
Speaker 1: of the transactions that have sort of been the foundation
Speaker 1: of commercial real estate with fortune one hundred tens expecting
Speaker 1: them to continue, where office was not a question. Everyone
Speaker 1: needs to go to work, Everyone needs a place to
Speaker 1: go with that in question and combination with how retail
Speaker 1: has continued to evolve, I think that there's an opportunity
Speaker 1: now to really rethink how people are using space, how
Speaker 1: people come and interact and why. And I think that's
Speaker 1: where we're seeing this conversience of a venue being the
Speaker 1: new anchor of development where you can put F and
Speaker 1: B that rotates. It can enable you to welcome the
Speaker 1: future by thinking about how, you know, an entertainment concept
Speaker 1: might be paired with a retail concept paired with culinary
Speaker 1: and I think that's the future. Is this collaborative approach
Speaker 1: to space? Tell us more about how you're working with landlords? Yeah,
Speaker 1: so we work with landlords in many different ways. Our
Speaker 1: partnerships with landlords often look like they have space and
Speaker 1: they're not sure exactly how to create dynamic and vibrant
Speaker 1: sort of differentiators. So I think the same way that
Speaker 1: it was always was at fitness, food amenity, space was
Speaker 1: what was driving office and tenants back and in the building,
Speaker 1: and it was of an important sort of intersect for
Speaker 1: us when we work with landlords. Now we come to
Speaker 1: the table with how do you think about a venue?
Speaker 1: How do you think about the negative space in your building,
Speaker 1: in your corridors, in your outdoor spaces, and what is
Speaker 1: the programming that's going to not just be a beautifully
Speaker 1: designed space or have the right food, but how are
Speaker 1: you going to encourage interaction and encourage sort of using
Speaker 1: programming and experiences and events to help encourage people to
Speaker 1: interact and use the space. There's so many amenity spaces
Speaker 1: now that are being built still and are not being used.
Speaker 1: And I think that's where we've actually partnered a lot
Speaker 1: with architects alongside landlords to provide the heartbeat against the design.
Speaker 1: And I think that in the challenges where everybody wants
Speaker 1: to work from home nowaday, I mean, it's got to
Speaker 1: be incredibly challenging for you. Do people come to you, landlords,
Speaker 1: businesses and say I want my people back in the office.
Speaker 1: They don't want to come back, but if you give
Speaker 1: me some ideas, maybe we can change that. I personally are, yeah,
Speaker 1: you're on tap. But and I think I mean my
Speaker 1: early days, I grew up at Google in my yea, um,
Speaker 1: but I will say yes. So that is one challenge
Speaker 1: absolutely that we're brought to all the time. How do
Speaker 1: we get tenants back, how do we do you know
Speaker 1: is it food? Is it? What is the thing? And
Speaker 1: I think people have hung their hat on its food
Speaker 1: and fitness. I think the other challenge, or the other
Speaker 1: way in which we're a solution is if you design
Speaker 1: a venue that's used by tenants. Example, you know what
Speaker 1: we're doing right now at Penn District in the middle
Speaker 1: of midtown or in San Francisco with the auditorium at
Speaker 1: three four five Montgomery Um. There's an opportunity to think
Speaker 1: about a lot of companies who are not coming in daily,
Speaker 1: when do they come together? They want to come together,
Speaker 1: when they're bringing various departments together, when they have meetings,
Speaker 1: when they have announcements. And it's interesting because we were
Speaker 1: for a very long time the types of assets we
Speaker 1: had when we created a venue was often for external purposes.
Speaker 1: How do we wow our clients, how do we share
Speaker 1: a product launch? Now it's how do we actually bring
Speaker 1: our employees together and be able to show them why
Speaker 1: do you need to be together? What is the value
Speaker 1: being together? And how do we create a meaningful experience?
Speaker 1: And so there's an opportunity for some of these buildings
Speaker 1: to be used not just by the tenants having the
Speaker 1: amenity where you can bring people together, whether it's a
Speaker 1: beautiful auditorium, you have programming, that's an option that can
Speaker 1: create different ideas and experiences. But also how do you
Speaker 1: bring an outside tenants to use the space as well?
Speaker 1: And I think there's an intersection now where meetings have
Speaker 1: risen exponentially. Today. I think it's a two hundred and
Speaker 1: sixty billion dollar market. By twenty twenty six, it's predicted
Speaker 1: to be a five hundred plus billion dollar market. And
Speaker 1: so people are spending to bring their employees together, whether
Speaker 1: it's in the office or another space. And I think
Speaker 1: that's that's the value that you can bring. It's deepanie
Speaker 1: when it comes to higher interest rates, how has that
Speaker 1: been impacting the rulant state environment in your view? Yeah,
Speaker 1: I mean where do you get thirty seconds to say
Speaker 1: where we fit? You know, we've been able to come
Speaker 1: to deals to sort of derisk the opportunity from whether
Speaker 1: it's an investment or landlord perspective or a buyer's perspective. Obviously,
Speaker 1: interest rates will decrease transactions, which is again where you
Speaker 1: want to be able to bring in the best of
Speaker 1: many industries to use a space. It cannot just be
Speaker 1: office and expecting these tenants to come back and sign
Speaker 1: the twenty year leases. By creating venues, it enables you
Speaker 1: to use the best of these markets and the best
Speaker 1: of these industries to come together for meeting space as
Speaker 1: a catalyst to then enable other tenants to come in
Speaker 1: and share that space. And I think there's a lot
Speaker 1: of value in how that can be created. Did you
Speaker 1: get the lunch today upstairs? I did not have time.
Speaker 1: I was you didn't have time. You let that go away.
Speaker 1: It was tuna. It was like a tuna, So it
Speaker 1: was all right, Stephanie Blake, I can't look at gift
Speaker 1: tuna in the mouth, CEO. It's Skylight Studios, some unique
Speaker 1: real estate venue development. Stephanie, thanks a lot. We appreciate it.
Speaker 1: And you are listening to Bloomberg Radio. Sounds like a
Speaker 1: jazz station. Now you're listening to the Bloomberg Business Week podcast.
Speaker 1: Catch us live weekday afternoons from three to six eastre
Speaker 1: on Bloomberg Radio, the Bloomberg Business app and YouTube. You
Speaker 1: can also listen live on Amazon Alexa from our flagship
Speaker 1: New York station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 1: I'm talking I gradual queezing bed. We're talking Basall Grew
Speaker 1: and gay Lord Perrot see the DOMI I think we're
Speaker 1: switching gears now too. We are. I'm guessing baseball we are.
Speaker 1: Why don't you pick it up for its we have.
Speaker 1: We're gonna have Juel Weber here. He's the editor of
Speaker 1: Bloomberg business Week here in the Interest in the studio.
Speaker 1: He's not working from home. No, he's gonna right here
Speaker 1: with us, right here. We're also are gonna have Jerry Smith.
Speaker 1: He's a media reporter for Bloomberg News on the phone
Speaker 1: in New York City. So they're gonna talk to us
Speaker 1: about Jerry's latest Bloomberg BusinessWeek story. Watching your favorite team
Speaker 1: could cost you more than Netflix. So this is really interesting.
Speaker 1: And I can start off with Jerry first breakdown and
Speaker 1: just set the scene for this story for us, because
Speaker 1: I know there's so many people that are interested in
Speaker 1: this right now. Sure, Yeah, especially with opening Day in
Speaker 1: the baseball right yesterday, we're seeing more and more of
Speaker 1: these local sports channels that are trying to reach the
Speaker 1: cord cutters, the people who've canceled their cable subscription. So
Speaker 1: they are introducing online services that where you can watch baseball, basketball,
Speaker 1: and hockey in your local market without a cable subscription.
Speaker 1: Now I go back. I'm going to date myself what
Speaker 1: you guys probably do too. But I used to watch
Speaker 1: on Picks Channel eleven locally. I was expecting you to
Speaker 1: say radio, Well, you can hear it on radio too,
Speaker 1: but no, I would watch Phil Rossotto, Scooter and Bill
Speaker 1: White with the Yankee games. Those days are over, I
Speaker 1: guess right. So the money around rights is really what
Speaker 1: this comes down to a feeling. This is Joel buzz Away,
Speaker 1: thank you. There we go. So the tensions here are
Speaker 1: between the owners who own the teams and can decide
Speaker 1: who gets to distribute it. Um, So what's the model
Speaker 1: when this works? What does it look like? Because what
Speaker 1: ultimately we're describing here is something that the burdens being
Speaker 1: put on the fans. But when when? What is everybody
Speaker 1: vuying for here? In terms of what the business model
Speaker 1: can look like? Okay, so I have to pay ten
Speaker 1: dollars for a hot dog, fifteen dollars for a beer,
Speaker 1: and now if I want to watch it, yea for day,
Speaker 1: pay up for that. Okay, But Jerry, who's doing it? Right?
Speaker 1: I think we don't know yet I think this is
Speaker 1: all pretty early. I mean, these local sports channels are
Speaker 1: really way behind in terms of streaming. If you think
Speaker 1: about Netflix, they started streaming two thousand and seven, and
Speaker 1: sixteen years later, Um, you know, the Yes network which
Speaker 1: broadcasts the Yankees, finally introduced the streaming service. You know,
Speaker 1: these are channels that made a ton of money in
Speaker 1: the old cable business model. Um, everybody paid for cable.
Speaker 1: Everybody paid for these channels, even if they never watched
Speaker 1: a game. Um. And now these channels are trying to
Speaker 1: build a business outside that cable model, and they're charging
Speaker 1: twenty or thirty dollars a month in some cases for
Speaker 1: the service. And really, these are channels, these are online
Speaker 1: channels that are meant to protect the old business. Uh,
Speaker 1: they're meant to you know, they're not going to charge
Speaker 1: five or six dollars a month because then they're going
Speaker 1: to upset their distributors, the direct TVs and the copy
Speaker 1: But the fans, it's like, I'm not paying this and
Speaker 1: I'm just not going to watch the game. Are though?
Speaker 1: Oh they are. We think maybe I'm not a very
Speaker 1: good chan Then I think if you're a real sports fan,
Speaker 1: you're you're still subscribing to cable. I mean that the
Speaker 1: people who still have cable, they get it for sports,
Speaker 1: maybe for news. Um, you know. I think this is
Speaker 1: something for the future where these channels think that there's
Speaker 1: you know, core cutters out there that they can bring
Speaker 1: back into the fold. But I think that most of
Speaker 1: the people who want to watch their local sports game
Speaker 1: are probably already subscribing to cable and continuing to do so.
Speaker 1: So the thing with this streaming effort is that it
Speaker 1: actually is like pretty difficult to get the quality right.
Speaker 1: What are some of the customers saying about what the
Speaker 1: experience has been like so far. Yeah, this is it's
Speaker 1: a very different challenge than putting a movie or a
Speaker 1: TV show on a streaming service. Live sports, it's just
Speaker 1: technically more difficult. You see a lot of examples of
Speaker 1: streaming services where it'll be the last couple of minutes
Speaker 1: of a game and it'll buffer, or if you're going
Speaker 1: to do it, do it right then. Yeah. So I
Speaker 1: gotta pay for this and it doesn't work, Yeah, pay
Speaker 1: a lot. Yeah, I mean these are yeah, these are
Speaker 1: cable channels that it's not in their DNA too. They
Speaker 1: don't have technology people in house they have to outsource
Speaker 1: to work on this. They you know, they're not like
Speaker 1: Netflix with an army of engineers who can figure out
Speaker 1: how to make the stream perfect. So yeah, we've seen
Speaker 1: a lot of examples. So when I call customer service
Speaker 1: at their channel or whatever, they're going to pick up
Speaker 1: the phone seem sorry, sir, we'll refund you. Or there
Speaker 1: is at outsource that part too, but yeah, yeah, yeah, sorry, Jerry,
Speaker 1: we're having too much fun. No, no, it's I would
Speaker 1: love to hear what happens when you actually call a
Speaker 1: customer service at any of these streaming services. That's assuming
Speaker 1: they have customers. So one of the ones that caught
Speaker 1: my attention was the Diamonds Sports Group, which is actually
Speaker 1: the largest US owner of local sports channel but even
Speaker 1: just this month they filed for bankruptcy. So what happened,
Speaker 1: what happened there, and what's the aftermath going to look? Claim? Yeah,
Speaker 1: so this is um I mean, they are sort of
Speaker 1: unique because this was a four years ago. Their owner
Speaker 1: bought these nineteen sports channels and took on a huge
Speaker 1: amount of debt, over eight billion dollars a debt, and
Speaker 1: did so at probably the worst possible time, Because this
Speaker 1: is when cord cutting was really starting to accelerate. So
Speaker 1: you combine having a huge amount of debts with a
Speaker 1: business that's shrinking pretty quickly, and you know, they filed
Speaker 1: for bankruptcy protection a few weeks ago. And it's a
Speaker 1: really huge story in the sports world because, you know,
Speaker 1: teams and the players are affected by this. The team
Speaker 1: owners get a lot of revenue from these these local
Speaker 1: sports rights and that goes to payroll paying. Yeah, those
Speaker 1: my next question how much of these exorbitant salaries that
Speaker 1: the players get. But how does it fold into the
Speaker 1: mix there? Yeah, I think that's something to watch. Probably
Speaker 1: not something we'll see affecting player salaries tomorrow, but in
Speaker 1: a couple of years. It's these channels and a lot
Speaker 1: of people don't think these teams are ever going to
Speaker 1: get the kind of money from the sports channels that
Speaker 1: they did when the cable business was much healthier. So
Speaker 1: you could see a situation where some of these smaller
Speaker 1: market teams and there's it's really the smaller market teams
Speaker 1: that are getting pinched by this. Um they could um,
Speaker 1: you know, have trouble paying for the best players. And
Speaker 1: then you look at um, you know, major League Baseball
Speaker 1: and the haves and the have not sort of get
Speaker 1: wider and wider apart because of it. So, Jerry, we
Speaker 1: only have about forty seconds left. But where does it
Speaker 1: go from here? Yeah, I mean, I think in the
Speaker 1: streaming services it remains to be seen how many people
Speaker 1: are willing to pay between twenty and thirty dollars a month. Um,
Speaker 1: I mean one of the things to think about is
Speaker 1: how good are the teams on the field. Um. You
Speaker 1: know what, when when your team really stunk, it was
Speaker 1: still very annoying to call your cable company and cancel. Now,
Speaker 1: when the team that you're paying thirty dollars a month
Speaker 1: to stream if they have a bad season, you can
Speaker 1: cancel that streaming service in two seconds. And great Friday story,
Speaker 1: by the way, Bloomberg Business Week editor Joel Webber and
Speaker 1: Bloomberg News Media reporter Jerry Smith watching your favorite team
Speaker 1: could quest you more than Netflix and our as engineer
Speaker 1: Sebastian reminds me that yes, Yankees, yes network does have
Speaker 1: their own streaming So okay, all right, have to sneak
Speaker 1: that in there you go, you're listening to Bloomberg Radio,
Speaker 1: Bloomberg Business Week. In fact, you're listening to the Bloomberg
Speaker 1: Business Week podcast. Catch us live weekday afternoons from three
Speaker 1: to six Eastern Listen on Bloomberg dot com, the iHeart
Speaker 1: Radio app and the Bloomberg Business App, or watch us
Speaker 1: live on YouTube. I'm Rocael, Oh Journal, how about you
Speaker 1: let me drive? Oh? No, no, no no, no, who's going home? Honey? Please?
Speaker 1: I'll do the bridey Rebels. I don't want to drive.
Speaker 1: It's good question. This is the drive to the globe.
Speaker 1: Just that funkimmu thing. Well, driver up to go down
Speaker 1: on Bloomberg Radio. All right, this is Jessminton back with
Speaker 1: John Tucker, and I'm excited to speak with our next guest,
Speaker 1: jt So we have David Dietz, who's managing principal and
Speaker 1: senior investment strategist at Pepack Private Wealth Management. He's on
Speaker 1: the phone from Summit, New Jersey, and David, I'm glad
Speaker 1: you're here with us, because, as you know, this is
Speaker 1: the end of what's been a gangbuster first quarter, especially
Speaker 1: when you're looking at the NASTAC one hundred on pace
Speaker 1: for its best quarterly gain since twenty twenty and the
Speaker 1: second best in the past decade. So I want you
Speaker 1: to unpack this for us and wrap it up as
Speaker 1: far as how have you been positioning in the past
Speaker 1: quarter and what have you been potentially buying the dip on. Yeah,
Speaker 1: absolutely pleasure to be with you guys this afternoon. So
Speaker 1: you know, the Q one basically what was pounded last
Speaker 1: year did spectacularly wellness first quarter. So we know that
Speaker 1: ASDAK was down thirty five percent last year, it's led
Speaker 1: the indexes this year up about twenty percent. As an
Speaker 1: accelerates here at the end of the day, Well, the DAW,
Speaker 1: which is the best of the three indexes last year
Speaker 1: middlely down but down less than ten percent, is the
Speaker 1: lagrin in the group. It may end up perhaps one percent.
Speaker 1: So that's one theme. The other theme, of course, is
Speaker 1: when you start looking at you know what sectors did best,
Speaker 1: it is those NASDAC sectors, the information technology, the communications
Speaker 1: group up you know, about ten percent just this month
Speaker 1: of March, about twenty percent for the year. Those sectors
Speaker 1: were given up for dead and now you know they're
Speaker 1: they're off to the races again. Those sectors that did
Speaker 1: a little bit better last year relative to the overall
Speaker 1: market really didn't do well, and that may be the opportunity.
Speaker 1: We'll see. But you know, the financials are down about
Speaker 1: seven percent, and then you got the energy untill these
Speaker 1: real estate and is surprisingly healthcare also are down negative.
Speaker 1: Right you mention financials, have you been buying the dip
Speaker 1: that we've seen so far the past couple weeks with
Speaker 1: a pullback in bankstocks. So it's a very controversial area.
Speaker 1: We just don't know what people are thinking, you know,
Speaker 1: deposits moving in, deposits moving out. But if I had
Speaker 1: to make one call here, it would be the group
Speaker 1: of regional banks, any one bank. They're very opaque, is
Speaker 1: very hard to figure out how those deposit flows are going.
Speaker 1: But I think one thing that investors need to keep
Speaker 1: in mind, it's not just a financial issue with those
Speaker 1: regional banks. It's a political issue. And here's why. You know,
Speaker 1: you've got politicos and places like South Carolina and Iowa
Speaker 1: and Ohio. The last thing, ultimately, they want to tell
Speaker 1: their up and coming businesses. If you want to loan,
Speaker 1: put your tie on and grovel to the big Wall
Speaker 1: Street banks and hope they hand you some money and
Speaker 1: spend some time with you. That's not going to work politically,
Speaker 1: they want too big to fail in each of their stage, Right,
Speaker 1: So how are you advising clients to position with all
Speaker 1: of that going on? There are no there are no
Speaker 1: no brainers in this business. But certainly one way to
Speaker 1: play it is to get an etf of regional banks
Speaker 1: a package. The idea is this asset class isn't going away.
Speaker 1: Any One bank might have a misstep, You're not quite
Speaker 1: sure what's in their portfolio, but there's a group they
Speaker 1: cannot go away. I'm looking here just the worst twenty
Speaker 1: performers in the SMP five hundred for March. Eighteen of
Speaker 1: them are banks, and all but one are trading now
Speaker 1: at single digit price earnings ratio when that overall mark
Speaker 1: has moved up from seventeen to eighteen. So you know
Speaker 1: will happen in the next couple of weeks? Who knows?
Speaker 1: But you know why wouldn't over the next few years
Speaker 1: they double or triple. I hate to be nervous Nelly here,
Speaker 1: but I will point out some of the major average,
Speaker 1: well particular the SP five hundred, being driven by kind
Speaker 1: of a narrow band of stocks, right, David, Should I
Speaker 1: be nervous? Certainly? I think some of the upside has
Speaker 1: been taken away So, for example, the Information Technology Group
Speaker 1: was trading at a twenty pe at the start of
Speaker 1: the quarter. Now it's done so well that price ranst
Speaker 1: rations at twenty four. Now could it go higher? Sure,
Speaker 1: at the start of last year it was twenty eight.
Speaker 1: But here's the problem for the bulls and that in
Speaker 1: that type of a bet. Last year, the two year
Speaker 1: treasury in the beginning of the year was just three
Speaker 1: quarters of one percent. Today is over four percent, almost
Speaker 1: seven times more. And the fact of the matter is
Speaker 1: you have to moderate your pees once the competing investments
Speaker 1: like bonds, interest rates keep going up. So I don't
Speaker 1: think it's going to go up to twenty eight. So
Speaker 1: I think it's brought forward some of the games for
Speaker 1: the year. And heck, if you could close the year
Speaker 1: at fifteen percent sixty percent of NAZAC, why wouldn't you
Speaker 1: do that? So I probably would be taking some profits
Speaker 1: from that area and rotating into the healthcare, real estate,
Speaker 1: financial services area. Okay, Now, how much of the rise
Speaker 1: do you suppose is predicated on the idea that we're
Speaker 1: going to see cuts later this year from the FED
Speaker 1: A lot. You know, it all starts with inflation, and
Speaker 1: although part of the reason February were so bad, as
Speaker 1: we got a very hot number for January. We just
Speaker 1: saw this morning a softer than expected PC deflator inflation number,
Speaker 1: which apparently is the one that defed prefers. So we
Speaker 1: are gradually seeing a rolling over in Inflation certainly is
Speaker 1: much less hot than it was for example last summer.
Speaker 1: Is not going to go in any one direction in
Speaker 1: a straight line, but it seems to be receiving and
Speaker 1: that makes interesting commodities down. Obviously, with the higher interest rates,
Speaker 1: real estate is under pressure, auto sales are under pressure,
Speaker 1: so the economy is cooling. That will allow interest rates
Speaker 1: to come back down. I mean, at one point the
Speaker 1: two year was over five, now just over four. That helps,
Speaker 1: and ultimately, you know, the markets dictate to the Fed
Speaker 1: what they're going to do. Ultimately, it's not the Fed
Speaker 1: to tell the markets's what's going to happen. And I
Speaker 1: think ultimately, and we're seeing some signs in the last
Speaker 1: pressure that to maybe only be one more rate hike,
Speaker 1: the Fed will be less of a headwind than it
Speaker 1: was last year. And that's great. David, What about tech
Speaker 1: stocks that have been on such a tear this year?
Speaker 1: How are you positioning in that corner of the market.
Speaker 1: So you know, I think you want to be a
Speaker 1: little bit more selective because those valuations have been have
Speaker 1: moved up. But but some may offer still some good opportunities.
Speaker 1: So for example, Meta was one of the meta platforms,
Speaker 1: was one of the best performers, up about seventy percent
Speaker 1: in the first quarter, but it's price to earnings face
Speaker 1: show is still under twenty. And of course, you know
Speaker 1: Zuckerberg's on a tear. This is the years of efficiency,
Speaker 1: so he's cutting out all sorts of excess costs, reducing
Speaker 1: Catholic expenditures into met A, moving into AI, and of
Speaker 1: course it's a unique property which billions of people tuning
Speaker 1: into their social media platforms every day. And if the
Speaker 1: economy doesn't go into a hard recession, that social media
Speaker 1: advertising is going to pick up. That may be something
Speaker 1: that you want to continue to play, even though it's
Speaker 1: done so well so far this year. David from the
Speaker 1: Great State of New Jersey? How your property taxes? David?
Speaker 1: Oh source subject. You know, I love New Jersey because
Speaker 1: I'm so close to the arching you guys, I should
Speaker 1: point well, I'm done at the shore. So um. Anyway,
Speaker 1: Consumer discretionary stuts. I should point out just I don't
Speaker 1: have any discretion anymore when it comes to dim so anyway,
Speaker 1: that's the best performance. David Dates were managing principal and
Speaker 1: senior investment Strategies at Private Wealth Managements on the phone
Speaker 1: from Son of New Jerseys. These is the Bloombird Business
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