WEBVTT - Separating Digital Duds From Valuable NFT Art 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.080 at Bloomberg dot com slash podcast. Let's get over though, 0:00:22.160 --> 0:00:24.599 right now to Roger Dickerman. He's the founder and CEO 0:00:24.640 --> 0:00:28.760 of artifacts UM. The website is artifacts a R T 0:00:28.920 --> 0:00:31.680 I f e X dot Art. They just held a 0:00:32.000 --> 0:00:37.280 show UM Digital Icons plus Miami or Digital Icons and 0:00:37.360 --> 0:00:42.280 Miami on June seven with a bunch of artwork, original artwork, 0:00:42.320 --> 0:00:44.920 three D sculpture and f t s. That should be 0:00:44.920 --> 0:00:46.440 your clue as to what we're gonna talk about, so 0:00:46.560 --> 0:00:50.320 non fungible tokens. Roger, thanks for joining us. What what 0:00:50.440 --> 0:00:53.639 did you actually show at the show? Are we talking 0:00:53.640 --> 0:00:56.560 about physical art that you hang on the wall, three 0:00:56.640 --> 0:00:59.400 D sculptures like three D in real life? Or was 0:00:59.480 --> 0:01:03.200 there the were these all sort of computer renders that 0:01:03.320 --> 0:01:05.720 It's a pleasure to be here. Thank you for having me. 0:01:05.840 --> 0:01:08.360 So what we showed was digital art and so the 0:01:08.400 --> 0:01:11.000 proxy is the real world. Imagine a painting on your 0:01:11.040 --> 0:01:13.560 wall that would be a two D and imagine a 0:01:13.680 --> 0:01:16.399 sculptor took that painting, a character in that painting, and 0:01:16.440 --> 0:01:19.440 made it a literal sculpture three D version of that. 0:01:19.760 --> 0:01:21.560 We're doing that in the digital sphere. So we have 0:01:21.680 --> 0:01:24.320 the two D version of an artist's artwork, and we 0:01:24.400 --> 0:01:27.280 have a digital sculpture that can be displayed all over 0:01:27.319 --> 0:01:30.520 the place in three D. Four Can you define, Roger, 0:01:30.800 --> 0:01:37.280 what is a non fungible token? Think digital ownership. So 0:01:37.480 --> 0:01:40.520 think a digital artist for the past several decades making 0:01:40.560 --> 0:01:43.760 fabulous art, doing it on behalf of a brand, a commission, 0:01:43.760 --> 0:01:46.399 a contract. They had no way to do that on 0:01:46.440 --> 0:01:48.720 their own. One one of my favorite stories an artist 0:01:48.760 --> 0:01:51.720 named Bill ellis part of the Artifacts project. He worked 0:01:51.720 --> 0:01:54.360 for an ad agency and he had Nike Lebron James 0:01:54.360 --> 0:01:56.920 come to him for his work, but he had to 0:01:56.960 --> 0:01:58.920 do it under the ad agency's brand. That was a 0:01:58.960 --> 0:02:02.320 sixty five dollar contract. He got paid less than five dollars. 0:02:02.680 --> 0:02:05.840 Non Flungible tokens allow a creator like that to go 0:02:05.920 --> 0:02:09.400 directly to consumer, to collector with valuable artwork and make 0:02:09.400 --> 0:02:15.240 a transaction. But what I don't understand is say, um, 0:02:15.280 --> 0:02:18.720 I made a three D digital render of a Ducati 0:02:18.800 --> 0:02:21.920 Panagali and I photo shot by dog Steve driving it. 0:02:22.840 --> 0:02:25.920 I could sell the n f T to Paul. That 0:02:26.040 --> 0:02:30.400 guarantees him the rights to own that digital file, and 0:02:30.400 --> 0:02:33.160 then I could just give it away copies of it 0:02:33.240 --> 0:02:36.520 to anyone else. Right, So does Paul really own it? 0:02:37.720 --> 0:02:40.680 This is a great question, right, he owns the spot 0:02:40.680 --> 0:02:42.840 on the blockchain. Now you can look at physical artwork. 0:02:42.840 --> 0:02:47.480 To look at museum famously or infamously housing forgeries for 0:02:47.639 --> 0:02:52.280 hundreds of years, right, unbeknownst to anybody, physical paintings can 0:02:52.280 --> 0:02:55.720 be forged to. Physical drawings can be forged to. An 0:02:55.800 --> 0:02:59.239 artist can overprints, right unknown to the collectors, you face 0:02:59.320 --> 0:03:01.959 these same issue whose ownership matters? It's faked in the 0:03:02.040 --> 0:03:04.560 human DNA. People want something and they want the true 0:03:04.680 --> 0:03:06.280 version of that thing. And if he's help with that, 0:03:07.320 --> 0:03:13.280 how does a consumer you know that they're getting I 0:03:13.320 --> 0:03:17.480 guess the real thing versus fake? I mean, do you 0:03:17.560 --> 0:03:20.000 kind of think this investment market is safe? I guess that. 0:03:20.160 --> 0:03:22.400 I can't think of a different word, But do you 0:03:22.400 --> 0:03:24.360 think it's safe? It doesn't even have to be fake? Right, 0:03:24.400 --> 0:03:27.960 A copy could be exactly the same as the original, 0:03:28.040 --> 0:03:31.840 It could be the exact same code. But if you 0:03:31.840 --> 0:03:34.120 don't have the spot on the blockchain, does that make 0:03:34.160 --> 0:03:37.840 it less valuable? I believe it does. I believe it does, 0:03:37.920 --> 0:03:40.720 and I believe that you know, the platform or artist 0:03:40.840 --> 0:03:43.480 providence matter. So where are you acquiring this from. You're 0:03:43.520 --> 0:03:46.080 starting to see artists step forward with their own contracts, 0:03:46.120 --> 0:03:49.560 You're smart contracts, that is, you're starting to see, you know, platforms, 0:03:49.680 --> 0:03:52.280 established brands step forward as a trust in place to 0:03:52.480 --> 0:03:55.280 transact and both of those sources will help with that 0:03:55.440 --> 0:03:59.400 verification process. And in honestly, you know that verification process 0:03:59.600 --> 0:04:01.200 is easy year with an n f T than it 0:04:01.280 --> 0:04:03.440 is a physical painting. I think there are still issues 0:04:03.480 --> 0:04:06.560 around the the uh you know, whether the Mona Lisa right, 0:04:06.680 --> 0:04:09.960 whether it's really the Mona Lisa or not. So Roger 0:04:10.040 --> 0:04:14.000 around these halls here Bloomber, we talk a lot about investments, 0:04:14.040 --> 0:04:17.920 and I guess the question is do you consider n 0:04:18.040 --> 0:04:21.840 f t s to be a true slash real investment 0:04:21.920 --> 0:04:25.200 or is this maybe a fleeting sign of a very 0:04:25.200 --> 0:04:29.599 expensive and frothy market. There are many There are many 0:04:29.640 --> 0:04:31.800 aspects of n f t s that are just frouthy 0:04:31.880 --> 0:04:34.000 market will pass, you know, like ships sailing in the 0:04:34.080 --> 0:04:36.480 night will never hear from them again. However, here the 0:04:36.520 --> 0:04:38.840 tried and true value propositions of n f T s 0:04:38.880 --> 0:04:43.200 to break it down as art, utility and access art 0:04:43.279 --> 0:04:45.880 global art market over fifty billion dollars. That has been 0:04:45.920 --> 0:04:48.440 a thing for a long long time. Digital art is 0:04:48.480 --> 0:04:51.840 the most recent art form against several decades old. There's 0:04:51.960 --> 0:04:55.400 real value. Their auction houses like Christie's and Southeby's starting 0:04:55.440 --> 0:04:57.760 to step up to the plate and see that Christie's 0:04:57.800 --> 0:05:01.800 recently proof of sovereignty auctions tell the bees recently natively 0:05:01.920 --> 0:05:05.200 digital auctions. They are leaning into this. They understand there's 0:05:05.240 --> 0:05:08.360 value and digital art then utility. Now n ft s 0:05:08.440 --> 0:05:11.400 can do more than just art. Art lad the way. 0:05:11.480 --> 0:05:15.360 Digital artists lead the way. But we're talking about games, 0:05:15.400 --> 0:05:17.680 we're talking about our tickets will be n f t s. 0:05:17.720 --> 0:05:20.680 We're talking about our jerseys and future metaverses will be 0:05:20.760 --> 0:05:22.760 n fp They're gonna be around for a long time. 0:05:22.839 --> 0:05:25.520 The question there, with utility in mind, what can your 0:05:25.600 --> 0:05:28.760 n f T do? And then lastly access You see 0:05:28.800 --> 0:05:32.560 these fabulous cases of artists, creatives and beyond opening the 0:05:32.640 --> 0:05:34.719 doors with their n f T s. For example, another 0:05:34.800 --> 0:05:37.279 artist is part of our project, Robbie Trivino on his 0:05:37.360 --> 0:05:41.080 own he's UH Magic the Gathering Tool music. He did 0:05:41.120 --> 0:05:43.840 some covers for them. He's built a social profile to 0:05:43.920 --> 0:05:46.480 several hundred thousand people, and he was able to sell 0:05:46.520 --> 0:05:49.320 a key. It's an access key. It's an art piece, 0:05:49.360 --> 0:05:52.360 but also a key to future prints of his future, 0:05:52.360 --> 0:05:54.479 access points of his future meet and griefs of his 0:05:54.560 --> 0:05:57.760 future gatherings of his And I believe he he grossed 0:05:57.760 --> 0:06:02.080 over a hundred thousand dollars yesterday. Tool uses that guy's 0:06:02.160 --> 0:06:06.480 art a lot. Yeah, And and I love um tool 0:06:06.920 --> 0:06:10.360 so much, and I love the artwork as well, But 0:06:10.560 --> 0:06:12.920 I just to me, I don't get the value, like 0:06:13.120 --> 0:06:15.320 is it do you use it as a screen saver then? 0:06:15.520 --> 0:06:19.400 Or is it like on your iPhone? Um, it seems 0:06:19.480 --> 0:06:23.560 different from having what we consider to be the actual 0:06:23.640 --> 0:06:27.279 mona Lisa, you know what's interesting? You touch on that. 0:06:27.560 --> 0:06:29.920 And I make this point a lot. And I think 0:06:29.960 --> 0:06:34.040 as this market develops, we're gonna see two things spearhead 0:06:34.360 --> 0:06:37.080 this notion of how do you display digital art, which 0:06:37.080 --> 0:06:40.279 will help with that value connection. We're gonna see better 0:06:40.360 --> 0:06:43.839 frames flat out better frames, frames that you can put 0:06:43.880 --> 0:06:46.200 on your wall in your home that will blow any 0:06:46.200 --> 0:06:49.440 physical frame away. They will be thin, they will be sleek, 0:06:49.480 --> 0:06:51.359 they'll be able to look traditional if you want, to 0:06:51.440 --> 0:06:53.360 be able to build into the wall if you want, 0:06:53.400 --> 0:06:55.360 and they are going to blow your mind. The art 0:06:55.400 --> 0:06:57.479 will be able to move, it will change based on 0:06:57.600 --> 0:07:00.800 time of day, It will be programmed to do different things. 0:07:01.160 --> 0:07:03.520 N f T s are really going to shine when 0:07:03.560 --> 0:07:06.240 those frames improve. And then also in digital lands. You know, 0:07:06.240 --> 0:07:10.040 we talk about futuristic movies, right ready Player one, Steven Spielberg. 0:07:10.360 --> 0:07:12.720 You get into that future world in which people spend 0:07:12.720 --> 0:07:15.240 a little bit more time in these digital universes when 0:07:15.240 --> 0:07:18.480 the display used cases improved there, and you can take 0:07:18.520 --> 0:07:20.920 your n f T into those digital worlds where you 0:07:20.960 --> 0:07:25.000 spend a lot of time. That's also going to drive value. Alright, 0:07:25.400 --> 0:07:28.040 very cool to me. The most interesting thing is just 0:07:28.080 --> 0:07:30.480 talking about these concepts and trying to wrap my forty 0:07:30.560 --> 0:07:33.040 seven year old brain around them. I like it. I 0:07:33.080 --> 0:07:35.440 like it. Roger, thanks so much for joining us. Roger Dickerman, 0:07:35.480 --> 0:07:39.720 their founder and CEO of Artifacts, talking to us about 0:07:39.840 --> 0:07:43.480 non fungible tokens. It has you have to admit that 0:07:43.560 --> 0:07:50.920 It's definitely a fascinating topic. This is Bloomberg right now. 0:07:50.960 --> 0:07:53.200 I want to bring in Darren Williams. He's the CEO 0:07:53.440 --> 0:07:57.360 of Southern Bank Corps. Southern Bank Corps is a for profit, 0:07:57.680 --> 0:08:01.960 mission driven community developed develop financial institution. They're based in 0:08:02.120 --> 0:08:05.120 the Mississippi Delta. UH. Darren, thanks so much for joining 0:08:05.200 --> 0:08:07.680 us here. UM. I love to start off with you 0:08:07.760 --> 0:08:09.880 just kind of giving us a thirty thousand foot view 0:08:10.040 --> 0:08:13.360 of Southern Bankcorps. Who are you guys, and just give 0:08:13.400 --> 0:08:15.520 us a sense of the type of business that you 0:08:15.560 --> 0:08:19.000 guys are pursuing. Sure, Paul, first of all, thanks for 0:08:19.040 --> 0:08:21.400 having us on so Southern Bank Corp. We are, as 0:08:21.400 --> 0:08:24.280 you said, a community development financial institution or a c 0:08:24.360 --> 0:08:26.960 d f B I. We're about two billion in assets, Fidget. 0:08:27.000 --> 0:08:29.760 Two locations spread out through the Arkansas makes the Delta 0:08:30.160 --> 0:08:32.079 UH and one of the most persistently poor community of 0:08:32.120 --> 0:08:36.319 the United States. Our our our communities are largely rules 0:08:36.360 --> 0:08:39.600 and financial, African American and low wealth communities. We are 0:08:39.640 --> 0:08:44.080 in place where many banks have fled with bank consolidation. UM. 0:08:44.360 --> 0:08:46.840 Happened across the country for you know, you know, two 0:08:46.920 --> 0:08:49.880 dozen years now. The number of banks and rule and 0:08:50.040 --> 0:08:52.480 underserving low wealth communities continues to shrink, and we know 0:08:52.760 --> 0:08:55.000 when those communities don't have access to account of credit 0:08:55.160 --> 0:08:57.679 and traditional financial products and services, then they are often 0:08:58.160 --> 0:09:02.199 um inundated with predator are types of alternative financial services. 0:09:02.200 --> 0:09:06.360 So we've served those communities where others have chosen to play. 0:09:07.080 --> 0:09:11.120 So last week Square announced the allocation of million dollars 0:09:11.120 --> 0:09:14.200 as part of this hundred million dollar investment. You're making 0:09:14.200 --> 0:09:17.480 a minority and underserved communities. How are you doing that? 0:09:17.559 --> 0:09:20.920 How are you getting them help? Well? We well, first 0:09:20.920 --> 0:09:24.480 of all, let me say we're extremely um pleased and 0:09:24.559 --> 0:09:27.720 excited to have Square as a shareholder. Square, of course 0:09:27.880 --> 0:09:31.840 is a has a superior payments platform. They are a 0:09:31.920 --> 0:09:34.560 final sal technology company, one of the best around, and 0:09:34.559 --> 0:09:36.439 so they have their endorsements. To have their support in 0:09:36.440 --> 0:09:40.120 their partnership means a great deal. They invested common equity 0:09:40.160 --> 0:09:43.360 mopen million dollar common equity investment in Southern which will 0:09:43.400 --> 0:09:46.360 allow us to grow and expand, to go deeper UH 0:09:46.400 --> 0:09:48.840 and to go further in the market we serve, and 0:09:48.840 --> 0:09:51.800 and to expand traditional places and UH. In fact, one 0:09:51.800 --> 0:09:54.000 of the things that we're very focused on is increasing 0:09:54.240 --> 0:09:58.760 and expanding our financial technology ourselves. So we u over 0:09:58.800 --> 0:10:01.120 the last four years of develop a cloud based corp 0:10:01.200 --> 0:10:03.720 process of which is the back off the bank UM 0:10:03.960 --> 0:10:07.199 and on that platform we build digital verticals or the 0:10:07.320 --> 0:10:10.520 fintech apps. So to have one of the world's leading 0:10:10.559 --> 0:10:13.960 fintech companies UH partner with us, we are excited about 0:10:13.960 --> 0:10:16.320 what we might learn from them. UH. So their investments 0:10:16.360 --> 0:10:18.320 are going to really help us to go deeper and 0:10:18.440 --> 0:10:21.480 further in helping to serve those who often left out 0:10:21.520 --> 0:10:24.920 and left behind, forgotten about by the financial services space. Darren, 0:10:25.000 --> 0:10:27.840 you know when Matt and I speak to UM CEO 0:10:27.960 --> 0:10:29.640 is like yourself. You'll always like to get a sense 0:10:29.679 --> 0:10:32.920 of how the pandemic has impacted their business, their market. 0:10:33.320 --> 0:10:34.959 Love to get a sense. We know that some of 0:10:35.000 --> 0:10:39.320 the underserved communities around this country were uh disproportionately impacted 0:10:39.320 --> 0:10:42.720 by the pandemic, by the economic disruption. Tell us about 0:10:42.760 --> 0:10:46.839 your markets and your business and your customers. So, Paul, 0:10:47.200 --> 0:10:49.240 you know, one thing that that you have to think 0:10:49.280 --> 0:10:52.440 about is even prior to the pandemic, the Delta region 0:10:52.480 --> 0:10:55.319 is one of the most persistent poor community United States. 0:10:55.080 --> 0:10:58.160 It suffered from a number of ill effects of just 0:10:58.800 --> 0:11:02.360 uh you know, just poverty, lack of educational opportunities like 0:11:02.440 --> 0:11:04.560 economic opportunities, and so that's why we do the work 0:11:04.600 --> 0:11:06.600 that we do. That's why our work really focused on 0:11:06.640 --> 0:11:08.959 things that are proven to build wealth and move people 0:11:09.000 --> 0:11:12.520 from financial UH insecurity, financial security, and so the markets 0:11:12.520 --> 0:11:14.840 that we served that were suffering prior to the pandemics, 0:11:14.880 --> 0:11:18.040 but like um many markets, the pandemic had had a 0:11:18.120 --> 0:11:22.119 had a huge impact on on retail, on on our hotels, 0:11:22.640 --> 0:11:26.160 on our restaurant customers. We were able to provide the 0:11:26.160 --> 0:11:31.320 paycheck Protection Dollar program UH to almost twenty three hundred 0:11:31.360 --> 0:11:33.880 businesses in our markets, about a hundred and fifty million 0:11:33.920 --> 0:11:36.360 dollars and paycheck protection dollars that we provided, and many 0:11:36.360 --> 0:11:38.000 of them, many of the customers that we talked, we 0:11:38.000 --> 0:11:41.280 actually we actually did a survey and some fifty percent 0:11:41.360 --> 0:11:43.679 of them said they had no other alternative UH and 0:11:43.679 --> 0:11:47.360 would have probably closed down but for those paycheck protection dollars. 0:11:47.360 --> 0:11:50.320 And so really we're proud to provide that SBA program 0:11:50.600 --> 0:11:54.480 that support to them and they are slowly recovering UH 0:11:54.520 --> 0:11:56.360 and it's it's it's hitting that some are doing better 0:11:56.400 --> 0:11:59.560 than others, but they without that, the devastation would have 0:11:59.559 --> 0:12:04.360 been much worse. You, um you were spearheading that ten 0:12:04.400 --> 0:12:07.840 billion dollar push, and you also were working with Jamie 0:12:07.880 --> 0:12:11.200 Diamond at JP Morgan David Solomon at Goldman Sachs on 0:12:11.400 --> 0:12:15.959 President Trump's Great American Economic Revival initiative. How do you 0:12:16.600 --> 0:12:20.600 see that we're continuing with this new administration, Well, I 0:12:20.600 --> 0:12:23.360 can I can tell you that the first meeting, the 0:12:23.440 --> 0:12:26.040 kind of the financial services team we had with President Trump. 0:12:26.360 --> 0:12:32.040 Really proud that David Solomon, Brian Wannahan, UMU and others 0:12:32.440 --> 0:12:36.880 really encouraged administration to um support and invest and make 0:12:36.960 --> 0:12:38.800 it and and and and support the efforts. Had a 0:12:38.800 --> 0:12:41.559 car about to make sure those paycheck protection dollars went 0:12:41.600 --> 0:12:44.640 to minority depositor institutions and to see the bias because 0:12:44.679 --> 0:12:46.840 we serve those who are often left out and left 0:12:46.840 --> 0:12:49.880 behind and don't have access to larger banks. And so 0:12:50.000 --> 0:12:52.280 really proud to have that partnership. And now that Wall 0:12:52.280 --> 0:12:56.080 Street partnership UH is taking taken additional form. So Brian 0:12:56.080 --> 0:12:59.160 mornahand in Bank America also made a multimillion dollar investment 0:12:59.240 --> 0:13:01.400 of them just just some time they go. And so 0:13:01.640 --> 0:13:05.560 really please at these partnerships with cit if I, NBIS 0:13:05.720 --> 0:13:09.520 and and and Corporate America continues to flourish. Also proud 0:13:09.520 --> 0:13:11.720 of the philanthrophic community, which has been a long time 0:13:11.880 --> 0:13:16.080 support of mission focused banks are even redoubling their efforts. 0:13:16.160 --> 0:13:19.080 And now the government you asked really about theerka's response. 0:13:19.480 --> 0:13:22.920 So for the CD five space, there's some twelve billion 0:13:23.000 --> 0:13:26.120 dollars that's coming to the C five space through the 0:13:26.160 --> 0:13:30.319 government support. And in fact, today Vice President Harris is 0:13:30.360 --> 0:13:32.440 going to make an announcement UH and she's gonna be 0:13:32.440 --> 0:13:36.000 introduced by Lisa mensa Opportunity Financial Network, one of our 0:13:36.120 --> 0:13:39.280 leading trade associations for cd if by loan funds UH 0:13:39.280 --> 0:13:42.199 and they're going to talk about the this administrative support 0:13:42.480 --> 0:13:44.280 of this industry and so really proud to have that 0:13:44.320 --> 0:13:47.080 attention focused on right now. All right, Darren, thanks so 0:13:47.160 --> 0:13:49.040 much for joining us. Darren was one of the Bloomberg 0:13:49.480 --> 0:13:53.240 fifty and he continue to lead the push to help 0:13:53.360 --> 0:13:56.280 those UH. Support those probably is a better way to 0:13:56.280 --> 0:13:58.960 say it, that are under banked in the Mississippi Delta 0:13:59.000 --> 0:14:03.360 area and throughout the u US. Let's bring in Ben 0:14:03.400 --> 0:14:06.959 Emmons UH. He is a Managing director at Global Macro Strategy, 0:14:07.440 --> 0:14:10.800 UM of Global macro Strategy at Medley Global Advisor has 0:14:10.800 --> 0:14:14.920 been up been getting your notes and absolutely loving your research. 0:14:15.720 --> 0:14:17.880 Let me get your take first on the inflation debate, 0:14:17.920 --> 0:14:21.560 because this is obviously the focus of markets. On the 0:14:21.600 --> 0:14:26.360 one hand, you've got fiscal stimulus of five trillion and 0:14:26.440 --> 0:14:30.120 more coming, um, monetary easing of an extra well four 0:14:30.160 --> 0:14:33.680 trillion on the balance sheet, and then some um pent 0:14:33.800 --> 0:14:38.640 up demand by consumers with fient savings rates, um companies 0:14:38.680 --> 0:14:43.200 that are investing capex and UH and spending money like 0:14:43.280 --> 0:14:47.440 they haven't in many, many years. And what's holding us 0:14:47.440 --> 0:14:51.280 back then from from real inflation that's gonna stick around 0:14:51.280 --> 0:14:56.280 for a while. Man, thanks having us again. Um, yeah, 0:14:56.400 --> 0:14:59.520 that's it's actually an interesting question. Maps to the extent 0:14:59.600 --> 0:15:03.200 of that, how do you define transitory as we talk 0:15:03.280 --> 0:15:05.360 about it? Right? Like, you know, if you look at 0:15:05.360 --> 0:15:08.280 the PPI data today, you drill in that you see 0:15:08.280 --> 0:15:11.760 the autose and sector example that was off the charts, 0:15:11.800 --> 0:15:14.000 it's like twenty seven or thirty eight percent year and 0:15:14.000 --> 0:15:17.440 your change in producer prices on those and that that 0:15:17.560 --> 0:15:20.280 sounds a lot like a peak inflation, right, That's very extreme. 0:15:20.720 --> 0:15:22.440 I think that's what markets are looking at. If you 0:15:22.440 --> 0:15:25.359 get these kinds of jumps in these sort of categories 0:15:25.760 --> 0:15:29.720 becomes almost untenable while you cannot really sustain that price level, 0:15:30.160 --> 0:15:32.880 whereas the art factors that you mentioned, of all the 0:15:32.920 --> 0:15:35.360 spent of demand and savings and cap acts, that's all 0:15:35.400 --> 0:15:38.600 working itself through the economy could sustain at least a 0:15:38.680 --> 0:15:41.640 higher level of inflation that we've had pre pandemic, when 0:15:41.640 --> 0:15:44.520 we were really in a low inflation environment. So I 0:15:44.520 --> 0:15:47.200 think if you square too, I think we have a 0:15:47.240 --> 0:15:51.680 transitory narrative about, yes, you have excessive price increases in 0:15:51.760 --> 0:15:54.440 some categories, that this happened to be a major demand 0:15:54.480 --> 0:15:58.120 because as we unmine this pandemic slowly, at the same time, 0:15:58.120 --> 0:16:01.440 there's an underlying current that is clearly pointing to that 0:16:01.520 --> 0:16:04.880 at least the growth of the economy stays stronger, and 0:16:04.960 --> 0:16:07.360 that should lead us at least closer to that long 0:16:07.440 --> 0:16:11.040 term average of what the Fed wants. Two. Looking at 0:16:11.040 --> 0:16:13.880 the high yield, they're not very high, Ben, I mean, 0:16:13.960 --> 0:16:17.760 it's just extraordinary what's happened in that market. Just give 0:16:17.840 --> 0:16:19.880 us a sense of what your call is there, what 0:16:19.960 --> 0:16:22.840 your what, what what your take is. Yeah, I find 0:16:22.880 --> 0:16:25.360 an interesting cold, Paul, because you know, if you look 0:16:25.400 --> 0:16:28.400 at how yield has done really well, you know, if 0:16:28.400 --> 0:16:30.240 you want to invest in fixed income, that's what that's 0:16:30.280 --> 0:16:32.680 the place to be this year. Right, And and if 0:16:32.680 --> 0:16:35.160 you drill in there too, what's really driving it again, 0:16:35.280 --> 0:16:38.320 it's energy, materials and autos, right, those are the sectors 0:16:38.320 --> 0:16:41.360 have done exceptionally well. So there's a lot about I think, 0:16:41.520 --> 0:16:45.000 you know, global demands reopening. That is, you know, have 0:16:45.160 --> 0:16:47.840 investors in the in particularly those bonds, and I guess 0:16:48.360 --> 0:16:51.840 if you add in the cruise lines and the leash hospitality, 0:16:52.360 --> 0:16:54.840 they've been issuing bonds during the pandemic, and they they've 0:16:54.880 --> 0:16:58.040 been scooped up, right, So I yield is strong really 0:16:58.040 --> 0:17:00.320 because the economy is strong. It is there's very little 0:17:00.440 --> 0:17:03.120 the fault risk at this moment. But we also have 0:17:03.200 --> 0:17:05.920 to take note of the fundamental factors. You know, one 0:17:06.119 --> 0:17:08.840 key factor I think that is driving inflation is his 0:17:09.000 --> 0:17:11.639 used car component in CPI and in p p I 0:17:12.359 --> 0:17:14.639 that's not going to sustain that way. So I do 0:17:14.760 --> 0:17:17.720 think that that high yield, if it is traditionally seen 0:17:17.760 --> 0:17:21.560 in autos and related type of sectors. You know what 0:17:21.680 --> 0:17:24.239 we had back in two We've got to get an 0:17:24.280 --> 0:17:27.240 oil price change right at drove the energy sector high 0:17:27.280 --> 0:17:30.760 yield much wider somewhat could happened in this case too, 0:17:30.840 --> 0:17:33.159 once these auto prices start to correct. If you have 0:17:33.280 --> 0:17:36.840 this really like the situation where auto prices are just 0:17:36.920 --> 0:17:39.879 too high and demanded supply works itself out right, I 0:17:39.920 --> 0:17:42.360 think that's where maybe somewhat of a of a down 0:17:42.400 --> 0:17:44.399 draft could happen in high yield. What it means for 0:17:44.480 --> 0:17:47.040 broader markets will see why it It tends to be 0:17:47.119 --> 0:17:49.879 pretty slow bleed initially, but it is to be watched 0:17:49.880 --> 0:17:52.640 because it's definitely a levels that is yeah, I would say, 0:17:52.840 --> 0:17:55.680 brings us back to the two thousand seven complacency levels. 0:17:57.800 --> 0:18:00.919 What what do you think about the meme stocks that 0:18:00.960 --> 0:18:02.680 we're seeing. I spend a little time on Wall Street 0:18:02.680 --> 0:18:05.400 bets today and it just blew my mind. And it's 0:18:05.400 --> 0:18:08.240 not my first time there, right, it's but every time 0:18:08.240 --> 0:18:11.639 I go there, I'm like, holy cow. Um, there's some 0:18:11.720 --> 0:18:14.760 big dogs here and and they're doing some crazy stuff, 0:18:15.119 --> 0:18:17.440 but they've managed to push like game Stop into the 0:18:17.520 --> 0:18:20.760 Russell one thousand. Now. Um, a lot of the stocks 0:18:20.840 --> 0:18:24.200 that they're a lot of these meme stocks are big palatiners, 0:18:24.200 --> 0:18:28.800 a forty six billion dollar company, you know. Um, what's 0:18:28.800 --> 0:18:30.840 your take on on what's going on? And do you 0:18:30.840 --> 0:18:34.280 spend a lot of time now on Reddit. I don't 0:18:34.320 --> 0:18:36.679 spend much stim on Reddit, and that's but there's an 0:18:36.720 --> 0:18:39.600 interesting platform to keep keep an eye on that there 0:18:39.640 --> 0:18:41.720 is in there's a lot of sentiments and hype there 0:18:41.760 --> 0:18:45.000 about these stocks and seems to be communicated there quite 0:18:45.000 --> 0:18:47.720 a bit. But if you really look at that sector 0:18:47.840 --> 0:18:50.280 and just again look at the fundamental way, but I 0:18:50.320 --> 0:18:52.840 find really interesting exactly what you're telling. You have the 0:18:52.880 --> 0:18:56.000 market capitalization of some of these companies ballooning at the moment, 0:18:56.080 --> 0:18:59.720 and it's all driven by equity value increasing. And there's 0:18:59.760 --> 0:19:02.239 some companies Game Stuff is one of them a MC 0:19:02.440 --> 0:19:04.800 two and I believe it's good or actually go go 0:19:04.960 --> 0:19:07.439 one of those others two. They actually pretty levered, right, 0:19:07.440 --> 0:19:09.800 they have a lot of short term that And what's 0:19:09.800 --> 0:19:12.720 now occurring is like if you're seen with SMP last 0:19:12.760 --> 0:19:16.440 week upgrading AMC's rating to triple C plus but still 0:19:16.720 --> 0:19:20.000 the stars rating, but it's upgrading. That's exactly the effect 0:19:20.040 --> 0:19:22.679 from this this hype around that stock to start prices 0:19:22.680 --> 0:19:25.040 off a lot, keeps going up. The equity value that 0:19:25.119 --> 0:19:28.160 these to improve, the market capitalization increases, and that brings 0:19:28.200 --> 0:19:30.719 the leverage of that bounce sheet by itself down and 0:19:30.760 --> 0:19:34.600 I think this is what draws in the fundamental investors whom, 0:19:34.640 --> 0:19:37.240 as you mentioned now have to take it more seriously 0:19:37.280 --> 0:19:39.920 because those stocks have a bigger weight and say you 0:19:40.000 --> 0:19:43.560 russell one thousand index, right, so fund managers have to 0:19:43.600 --> 0:19:46.159 pay attention to these stocks, whether they like it or not. 0:19:46.800 --> 0:19:48.399 So I think if you if you look at that 0:19:48.440 --> 0:19:50.879 whole space, you want to particularly look at the companies 0:19:50.920 --> 0:19:53.199 that are that have actually short termed death and as 0:19:53.240 --> 0:19:55.560 a result can be able to deliver that that sort 0:19:55.560 --> 0:19:58.520 of speak good either indeed equity sales and use the 0:19:58.560 --> 0:20:00.920 proceeds to bring down to that and world actually value 0:20:00.920 --> 0:20:03.400 those up and the dead leverage goes in. Hey Ben, 0:20:03.440 --> 0:20:05.680 thanks so much for joining us. As always, always appreciate 0:20:05.720 --> 0:20:09.400 getting your perspective and your views across asset classes. Ben Emmons. 0:20:09.520 --> 0:20:12.960 He's a managing director Global macro Strategy at the firm 0:20:13.000 --> 0:20:16.359 medley A Global Advisors. We love talking to Ben. Again. 0:20:16.400 --> 0:20:20.120 He puts out some fascinating research notes with great regularity, 0:20:20.160 --> 0:20:22.520 I might add, and there's always a good read giving 0:20:22.520 --> 0:20:29.879 you some good thoughts for these markets. This is Bloomberg. Well, 0:20:29.920 --> 0:20:33.000 a bunch of economic data came out this morning. Retail 0:20:33.040 --> 0:20:35.080 sales a little bit weaker than expected in the month 0:20:35.119 --> 0:20:38.440 of May, although the April data will was revised higher, 0:20:38.440 --> 0:20:40.080 but the market scenes to be looking at that pp 0:20:40.200 --> 0:20:44.040 I data Producer Price index came in higher than expected, 0:20:44.080 --> 0:20:46.879 so that factors into the inflation discussion. Let's break some 0:20:46.880 --> 0:20:49.639 of these numbers down and preview what we will likely 0:20:49.760 --> 0:20:52.840 here here from FED Chairman j Pal tomorrow. We do 0:20:52.920 --> 0:20:57.439 that with Elena Shulietteva, senior US economists for Bloomberg Economics. Elena, 0:20:57.440 --> 0:21:00.640 thanks so much for joining us. Any takeaways here one 0:21:00.640 --> 0:21:02.560 way or the other out of the economic data that 0:21:02.600 --> 0:21:05.280 we saw this morning that jumped out to you. So 0:21:05.680 --> 0:21:09.919 the retail sales report, yes, at the headline it showed 0:21:09.920 --> 0:21:13.200