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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Well, last week, I

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Speaker 1: guess you know, Thursday, Friday, Saturday down in Miami, there

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Speaker 1: was a crypto investor conference and very well attended, well

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Speaker 1: covered in the business media. And what's also notable is

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Speaker 1: that people actually went. It wasn't virtual, it was a

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Speaker 1: real conference where real people got together talking all things crypto.

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Speaker 1: I look at bitcoin today, it's pretty much unchanged here,

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Speaker 1: just over thirty six thousand dollars per coin, but there's

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Speaker 1: certainly been a lot of volatility in the crypto market.

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Speaker 1: Let's get the latest with Jeff Dorman. He's the c

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Speaker 1: i O of ARCA. Arc is a digital asset from Jeff.

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Speaker 1: Thanks so much for joining us here. I love to

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Speaker 1: get your thoughts. Just let's start with bitcoin, because that's

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Speaker 1: the cryptocurrency or the crypto asset class or asset that

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Speaker 1: people are most familiar with talk us about the volatility

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Speaker 1: of bitcoin. What does that tell you? Sure? Thanks for

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Speaker 1: having me. I mean, like, the volatility is happening because

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Speaker 1: this is a new asset class, and new asset classes

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Speaker 1: don't have the same structure, they don't have the same players. Uh,

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Speaker 1: And it's largely driven by momentum and algorithmic quantitative traders

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Speaker 1: to date um. You know, I think that will change

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Speaker 1: over time as it becomes of a larger and more

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Speaker 1: adopted asset. In fact, you're already seeing it's starting to

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Speaker 1: decline a little bit because this is touching so many people.

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Speaker 1: But you know, volatility happens when you have a lot

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Speaker 1: more retail traders and momentum traders than you do fundamental investors.

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Speaker 1: And that's natural for an asset that doesn't really have

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Speaker 1: any fundamental underpinning. Are we looking at a little bit

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Speaker 1: of stability here around thirty six thousand dollars right now? Sure?

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Speaker 1: Things as pretty quickly, Uh, you know, I think I think, Look,

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Speaker 1: there's a couple of things that drive bitcoins value, right

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Speaker 1: and it's obviously not traditional fundamental valuation technique. That's true

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Speaker 1: of other assets and digital assets, but not bitcoin. But

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Speaker 1: what we know about bitcoin specifically is there's a couple

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Speaker 1: of factors that have driven you have low rates and

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Speaker 1: the declining dollar that's still very much in play. Nothing's

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Speaker 1: changing there. Therefore, this should still be a pretty strong

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Speaker 1: macro asset. You have institutional money entering the space. Nothing's

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Speaker 1: changed there. We have, you know, tons of investors coming

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Speaker 1: into our funds. Other funds are saying the same thing.

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Speaker 1: Money is pouring in everywhere you look into this asset

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Speaker 1: class because of what I've said before, low rates and

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Speaker 1: a low dollar, right where else are you going to

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Speaker 1: go to invest your money? Um? You know, really the

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Speaker 1: only thing has changed is recent narratives. You know, if

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Speaker 1: you are going to watch bitcoin go up from ten

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Speaker 1: thousand to sixty thousand every time Elon Musk tweets positively, well,

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Speaker 1: then by definition when him and other corporations pull out,

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Speaker 1: that's going to have a negative effect as well. So

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Speaker 1: I think the volatility is based on you know, a

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Speaker 1: lack of UH conviction around UH the path that it

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Speaker 1: takes to get higher. But ultimately bitcoins of binary bet

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Speaker 1: it's either going to be worth a lot more if

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Speaker 1: this is adopted as a true store of value and currency,

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Speaker 1: or it's gonna be worth a lot less if it doesn't.

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Speaker 1: And everything in between is there's a lot of fun

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Speaker 1: to trade, but not necessarily indicative of the end result. Jeff,

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Speaker 1: you say money is pouring into this asset class, where's

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Speaker 1: the money coming from? Is a retail Are you seeing

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Speaker 1: institutional buy in? Where are you seeing it? Well, institutional buying,

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Speaker 1: you know, in the traditional investing world, typically means your

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Speaker 1: asset allocators, right, your pensions, your endowments, your sovereign wealth.

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Speaker 1: It's not really coming from there yet. I think there's

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Speaker 1: a lot of complating the word institutional here in the

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Speaker 1: market because all of a sudden hedge funds got involved,

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Speaker 1: and all of a sudden corporate treasurers got involved. The

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Speaker 1: reality is most of the buying power of bitcoin is

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Speaker 1: still family offices, high net worth, you know, not necessarily

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Speaker 1: in the hedge fund itself, but generally the owners of

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Speaker 1: a hedge fund in their own personal accounts. There is

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Speaker 1: definitely real money coming in from the institutional world, but

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Speaker 1: it's not the traditional institutional asset allocators yet. What what's

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Speaker 1: going to change that? Um? Quite frankly, I'm not sure

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Speaker 1: it ever does. Uh. You know, the institutional investors that

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Speaker 1: we speak to the pensions and down with sovereign walls, etcetera.

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Speaker 1: They're more interested in the rest of the asset class. Uh.

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Speaker 1: You know a lot of times I talk about digital

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Speaker 1: assets the same way I talk about et s. Right,

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Speaker 1: you would never say, hey, I'm an EPF investor. You say, well,

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Speaker 1: what kind of ETF investor? Are you invested in healthcare

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Speaker 1: stocks or you know, bond EPs, or are you invested

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Speaker 1: in gold ets? Right? The e t F itself is

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Speaker 1: just a structure, and what's in the structure is what's

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Speaker 1: relevant from an investing standpoint, And the same thing is

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Speaker 1: happening with digital assets. We have different types of digital assets.

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Speaker 1: Some are asset backed, some have revenue pass throughs, some

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Speaker 1: are more like technology protocols and platforms, and others are

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Speaker 1: cryptocurrency and money like bitcoins. I think the institutional investors

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Speaker 1: largely gravitate towards the ones that have real fundamental analysis

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Speaker 1: attached to them, which is the asset back tokens and

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Speaker 1: the companies with real revenue and cash flows. I get

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Speaker 1: asset back tokens, I get um, but bitcoin is the

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Speaker 1: only one where the token really has become a store

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Speaker 1: of value. Um. You know that's not asset backed. The

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Speaker 1: other interesting Uh, crypto plays like Athereum have a great platform,

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Speaker 1: but I don't see any reason to buy the token.

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Speaker 1: I think that was true historically, and I would have

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Speaker 1: agreed with you two years ago. But what's happening now

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Speaker 1: is Ethereum is an ecosystem that other applications are building upon.

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Speaker 1: Right in some way, thethereum is the app store, and

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Speaker 1: all the other tokens are the apps that are built

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Speaker 1: in the app store. Uh. You know how does the

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Speaker 1: app store make money? It makes money on the transactions

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Speaker 1: that are happening inside of that app store. And that's

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Speaker 1: basically what ethereum is doing. To date. Uh, the token

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Speaker 1: has accrued none of that economic value. But with a

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Speaker 1: new proposal that is going into place called e I

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Speaker 1: Pine and it's shipped from proof of work to proof mistake,

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Speaker 1: there actually are going to be real cash flows that

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Speaker 1: eventually a crew back to the token holders. So it

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Speaker 1: is changing a little bit. And that's what's so interesting

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Speaker 1: about this asset class is, Uh, these tokens can be

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Speaker 1: representative of one thing on day one and ultimately morphin

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Speaker 1: change throughout the evolution of of the investment um that

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Speaker 1: the you know, the theorium itself is still kind of

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Speaker 1: difficult for traditional investors to get their hands around because

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Speaker 1: it is this like broader GDP ecosystem thing. But the

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Speaker 1: applications that are built on top of ethereum are generally

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Speaker 1: real companies with real revenues and real cash flows, and

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Speaker 1: the tokens can be modeled using a DCF analysis or

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Speaker 1: a dividend field model, and that's what we focus on

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Speaker 1: an ARCA, and that's what a lot of institutional investors

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Speaker 1: are focused on as well. And that includes defy uh,

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Speaker 1: some gaming assets and a lot of other ones that

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Speaker 1: are that are coming down the pikes in the future

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Speaker 1: as well. All right, Jeff, just real quickly thirty seconds,

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Speaker 1: what's the next mile post that you're looking for? As

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Speaker 1: this market, this asset class continues to develop and evolved. Uh.

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Speaker 1: For min milestone is is education um doing more things

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Speaker 1: like what you're doing in others where investors can understand

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Speaker 1: that cryptocurrency is not the right term. Cryptocurrency is a

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Speaker 1: very small subset of the market, but these other assets

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Speaker 1: are really more like quasi equity, and ultimately, I think

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Speaker 1: digital assets will end up in every company's capital structure

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Speaker 1: from you know, Netflix, the Starbucks, see delta over time,

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Speaker 1: and once you start to see the companies adopted and

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Speaker 1: you see investors understand what these assets really are, you know,

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Speaker 1: being great coordination mechanisms and growth mechanisms for companies. I

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Speaker 1: think the Narratabile change, and we'll be talking less about

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Speaker 1: bitcoin and more about the cash flow producing entities that

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Speaker 1: use a digital asset to represent that growth. Alright, very

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Speaker 1: interesting stuff, Jeff, thanks very much for talking to us.

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Speaker 1: Always a pleasure. Jeff Dorman is the chief investment officer

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Speaker 1: ARCA talking to us about how was about to say cryptocurrency,

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Speaker 1: digital assets. I think digital digital assets. They're looking at

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Speaker 1: one of them. Bitcoin just slipping under thirty six thousand,

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Speaker 1: barely thirty five thousand, nine sixty four dollars and ninety

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Speaker 1: three cents Ether trading for two thousand, seven hundred seventy eight.

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Speaker 1: This is Bloomberg. Now we're bringing Scott Kimball Portia, manager

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Speaker 1: of the Strategic Income Fund and co head of US

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Speaker 1: fixed Income at BEMO Global Asset Management. Scott, let's talk

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Speaker 1: first about what we saw happen on Friday. It was

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Speaker 1: pretty interesting with the jobs number. It was a miss,

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Speaker 1: but still I guess a pretty good number. More than

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Speaker 1: five thousand people got jobs in this economy as we

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Speaker 1: as we reopened and we saw treasuries yields just dropped.

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Speaker 1: I think it was five six basis points down to seven.

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Speaker 1: We're trading there right now. M. Does that make sense

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Speaker 1: to you, Yeah, good morning. I think it does for

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Speaker 1: a few reasons. I think that's what the jobs report signals.

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Speaker 1: First and foremost is that we are transitioning out of

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Speaker 1: the you know, the post reopening boom into a uh

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Speaker 1: an economic environment where more and more of the US's

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Speaker 1: economies own inertia is gonna have to take over, and

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Speaker 1: that growth potential and growth output is going to have

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Speaker 1: to be really driven by the underlying economic fundamentals uh

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Speaker 1: post that that big boom in the recovery, which I

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Speaker 1: think is what you saw in the outcome of the

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Speaker 1: jobs report. Uh you know, the estimates versus the the

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Speaker 1: actual print. That's not a typical. That's pretty common as

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Speaker 1: you get, you know, through these these handoff cycles where

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Speaker 1: you may not be directly in line with the number,

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Speaker 1: but the directional trend still remains pretty favorable. Treasuries, however,

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Speaker 1: probably took that as a little bit of a uh

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Speaker 1: you know, if you've seen the U seal curb be

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Speaker 1: very steep, probably taking off a little bit of the

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Speaker 1: steepness to reflect the fact that, you know, things like

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Speaker 1: inflation still have some upside risk, but the ability to

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Speaker 1: really punch through into a an explosively higher inflationary environment

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Speaker 1: is probably being a little bit tempered by this, uh

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Speaker 1: you know, this this transition in the economy, if you will.

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Speaker 1: That's kind of where I wanted to go, Scott in

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Speaker 1: terms of the discussion about inflationary concerns into this market.

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Speaker 1: You know, obviously two camps, one being the Federal Reserve

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Speaker 1: camp where you know, the signs of inflation that we

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Speaker 1: are seeing or transitory, and the others, hey, it might

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Speaker 1: be more systemic than that. Where do you fall so

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Speaker 1: perfectly down the middle? Because I think the FED has

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Speaker 1: a lot of credibility on the inflationary front. They've they've

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Speaker 1: been telling us for over a decade that inflationary pressures

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Speaker 1: are transitory and they've been correct, and that's a long

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Speaker 1: enough streak to be more than random. So I think

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Speaker 1: that the FED has the pulse of the inflationary pressures

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Speaker 1: pretty well contained, are pretty well, pretty well contained and

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Speaker 1: pretty well figured out, except this last couple of rounds

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Speaker 1: there has been a little bit of a little bit

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Speaker 1: of whack a mole and that everywhere inflation has moved higher,

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Speaker 1: it's sort of popped up in different parts of the

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Speaker 1: CPI measures. So for instance, the most recent read on

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Speaker 1: you know, used autos. You know, that's something that historically

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Speaker 1: you look at used autos contribution to inflation, It tends

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Speaker 1: to attempts to spike and and dissipate pretty regularly. Uh.

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Speaker 1: And you can really explain why in our case, you know,

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Speaker 1: with the pandemic we had, you know, auto plants were

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Speaker 1: restricted or out put was was curtailed UM, and people

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Speaker 1: were being a little more conscious of where they where

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Speaker 1: they spent money, so replacement vehicles were driven more towards

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Speaker 1: the used market. So naturally we've seen some we saw

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Speaker 1: some some booming prices there in in uh in used autos.

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Speaker 1: But how sustainable is that going to be? That gets

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Speaker 1: back to the Fed's point. Uh. I think our position

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Speaker 1: has been that there is a directional case to be

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Speaker 1: made for inflation to continue to creve higher UM. But

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Speaker 1: it's bumping into some things that I think will constrain it.

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Speaker 1: So for instance, oil prices most prominently, Uh, you know,

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Speaker 1: we're coming up on seven dollars of barrel as we

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Speaker 1: model things out. If we break through that and you

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Speaker 1: start getting a barrel, you know, that does certainly put

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Speaker 1: upward price pressures, but the ability to pass through those

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Speaker 1: pressures starts to roll over and you start to see

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Speaker 1: that consumption will adjust downward. So there's indicator indicators like

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Speaker 1: that at that point to mechanisms where yes, inflation can

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Speaker 1: then can sort of constrains it from running away. Is it?

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Speaker 1: Is it consensus though, that we start to taper at

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Speaker 1: the end of this year, um beginning of next year,

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Speaker 1: then start to raise rates and twenty two beginning of

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Speaker 1: That's definitely the way the futures market has has has

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Speaker 1: that's definitely out the I guess the path of the

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Speaker 1: output the futures market has been favoring. UM. I think

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Speaker 1: it's probably going to be difficult to really address the

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Speaker 1: right front. Um. You know, the FED has you know,

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Speaker 1: between both tapering and transitioning interest rate policy in both cases,

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Speaker 1: between the taper tantrum and whatever occurred when Pal tried

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Speaker 1: to raise rates, whatever we want to label that UM.

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Speaker 1: In both cases, the market response, in the economic response

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Speaker 1: was pretty clear that this version of the U S

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Speaker 1: economy is going to be a little more difficult than

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Speaker 1: pass cycles to have those meaningful breakthroughs uh in in

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Speaker 1: in uh in monetary policy or so it's gonna be

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Speaker 1: our our expectation that uh capering is probably going to

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Speaker 1: take place. I think that there's definitely efficacy for that

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Speaker 1: in the economy. You're through the crisis period. As far

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Speaker 1: as transitioning monetary policy to let's say a rising rate environment.

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Speaker 1: UM wouldn't be surprised if that tail continues to push

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Speaker 1: its way down the road a little bit. Hey, Scott,

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Speaker 1: thanks so much for joining us. We really appreciate getting

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Speaker 1: your thoughts and perspective on the fixed income market. Scott Kimball,

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Speaker 1: portfolio manager of the Strategic Income Fund and co head

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Speaker 1: of US fixed Income for Bibo BIMO, a global asset

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Speaker 1: of management, getting his thoughts on fixed income market again.

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Speaker 1: The ten year Treasury remains down at one point five

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Speaker 1: seven percent. All right, the Bloomberg Big Take story today,

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Speaker 1: it's just fascinating people are finding those who took part

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Speaker 1: in the January six Capital siege via social media and

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Speaker 1: are helping federal officers arrest them. We're seeing it all

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Speaker 1: through about our social media feeds. David Yaffee Belny did

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Speaker 1: some work on this. He's a legal reporter for Bloomberg News. David,

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Speaker 1: it seems like, you know, everybody in the social media

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Speaker 1: feeds are seeing you know, stories and of of of

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Speaker 1: people that have been identified as taking part in the

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Speaker 1: Capital siege. How wide spread is that, um? So, you know,

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Speaker 1: right after the siege on January six, there was kind

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Speaker 1: of a wave of activism from people who just regular

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Speaker 1: people watching the footage at home who were outraged at

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Speaker 1: what had happened and wanted to do something about it, um,

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Speaker 1: find some way to bring the perpetrators to justice. And

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Speaker 1: so you had this kind of initial rush to identify

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Speaker 1: people who were there that was initially focused on some

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Speaker 1: of the kind of most most prominent people in the

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Speaker 1: in the photos and videos. Um, you know, the man

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Speaker 1: with his feet up on Nancy closy desk, or the

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Speaker 1: guy and the kind of animal head dress who's walking

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Speaker 1: through the capitol, and and and that you know, there

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Speaker 1: were you know, thousands of people all over social media

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Speaker 1: sort of participating in that in that effort, and it's

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Speaker 1: sort of evolved in an interesting way since then. We're

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Speaker 1: now kind of trying to track down, um, sort of

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Speaker 1: less well known participants in the riot and pulled and

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Speaker 1: sort of the background with some of those photos and

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Speaker 1: and and try to really get a comprehensive sense thats

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Speaker 1: who was involved. So you got one guy that the

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Speaker 1: lead guy. I love his picture. He looks kind of

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Speaker 1: like Indiana Jones. Um who's helping to find out who

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Speaker 1: these people are? Um. I guess he's a guy who

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Speaker 1: doesn't have a job, so he has the ability to

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Speaker 1: spend the time to spend forty hours a week on

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Speaker 1: the internet looking for for these dudes. Yeah. The way,

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Speaker 1: the way he put it to me is that he

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Speaker 1: was living at home with his girlfriend and and she

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Speaker 1: would log onto her computer to do her actual job,

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Speaker 1: and he would log onto his computer and do his

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Speaker 1: kind of sedition hunting gig for for a few months.

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Speaker 1: You know. Uh, Like so many people, he found it

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Speaker 1: difficult to get consistent work during the pandemic. He's an

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Speaker 1: actor in Canada, and those sorts of opportunities were drawing up. Um,

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Speaker 1: and so yeah, it was really a combination of kind

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Speaker 1: of curiosity and pandemic induced boredom that sort of motivated

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Speaker 1: him to get involved with this. And he just started

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Speaker 1: spending you know, hours and hours a day pouring through

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Speaker 1: photos and videos trying to kind of catalog images where

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Speaker 1: you can see the same person multiple times, to sort

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Speaker 1: of put together like a comprehensive account of all the

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Speaker 1: evidence of a particular individuals involvement. And eventually that allowed

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Speaker 1: him to identify somebody, um who's who was charged by

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Speaker 1: the FBI, UM and and his work was was cited

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Speaker 1: in the arrest affidavit, UM, sort of underlying that that charge, David,

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Speaker 1: don't we have a bunch of like n Essay blackbriar

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Speaker 1: nerds who can do this stuff in their sleep? Um,

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Speaker 1: you know, in in theory we do. And And look,

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Speaker 1: the federal investigation has made a lot of progress over

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Speaker 1: the past few months. Nearly five people have been arrested.

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Speaker 1: And that's not all because of the work of these

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Speaker 1: sort of online tradition hunters, but there was there was

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Speaker 1: just so much footage UM and so many people involved

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Speaker 1: in such pressure to move quickly on this um that

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Speaker 1: I think the government was appreciative of the of the

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Speaker 1: public's help. Um, you know, and I when I talked

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Speaker 1: to the FBI about this, you know, they they said,

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Speaker 1: you know, in dozens and dozens of cases, these sorts

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Speaker 1: of tips have proved helpful, um, and they're asking for

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Speaker 1: more help as they, you know, continue to try to

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Speaker 1: round up you know, hundreds more people who were involved

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Speaker 1: in the riot and haven't been brought to justice so far. So,

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Speaker 1: I know, David, the Senate Republicans recently blocked a bill

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Speaker 1: in Congress to create an independent September eleven style commissioned

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Speaker 1: to investigate the riots. So does that mean we're you know,

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Speaker 1: we're basically just relying on uh, the FBI and some

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Speaker 1: of these amateurs to kind of bring people to justice

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Speaker 1: as it were, UM to it to an extent, yes,

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Speaker 1: I mean, you know, the the the investigations presumably going

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Speaker 1: to succeed in putting some of these people in prison.

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Speaker 1: But there are broader questions about what happened on January six,

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Speaker 1: you know, the extent to which far right groups were

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Speaker 1: coordinating with each other, um, you know, public figures who

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Speaker 1: may have been present or may have helped people behind

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Speaker 1: the fiends and what they're role was there. There's these

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Speaker 1: sort of broader historical questions that the investigation might not

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Speaker 1: ultimately answer, in which you know, people had hoped some

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Speaker 1: sort of bipartisan report would explore. And so one of

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Speaker 1: the things that's motivating these sedition hunters now is to

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Speaker 1: try to kind of ship away at some of those, uh,

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Speaker 1: those questions using the sort of open source resources that

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Speaker 1: they have to hand, um and really kind of fill

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Speaker 1: in where we're sort of Congress is sort of not

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Speaker 1: taking action. It's ironic that both groups seem to use discord, right.

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Speaker 1: I Mean, you've got the Q and On people on

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Speaker 1: there as well as the sedition hunters. Is there a

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Speaker 1: risk that, you know, if the FBI keeps on begging

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Speaker 1: if you see something, say something, you know, watch your

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Speaker 1: neighbor and give us a call, do we risk some

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Speaker 1: kind of East German Stazi surveillance state culture. I mean,

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Speaker 1: I think that's definitely a concern. I mean, some of

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Speaker 1: these amateur fisition hunters are using facial recognition technology to

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Speaker 1: try to to try to target people who are at

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Speaker 1: the capital on January six, and the fact that that

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Speaker 1: sort of technology is freely available to members of the

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Speaker 1: public and that you know, anybody with you know, some

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Speaker 1: sort of software engineering background can kind of put together

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Speaker 1: relatively quickly a kind of facial recognition due to me

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Speaker 1: is definitely is definitely troubling. And these all sorts of

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Speaker 1: civil liberties concerns or they could make a mistake, David,

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Speaker 1: they could get someone innocent in hot water. Yeah. Absolutely,

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Speaker 1: and we've i mean, we've seen that in the aftermath

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Speaker 1: of January six, that people have been identified, you know,

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Speaker 1: and named publicly who weren't actually actually there. Now, to

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Speaker 1: their credit, a lot of the groups that are coordinating

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Speaker 1: some of the sedition hunting activity are going to great

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Speaker 1: lengths to prevent that sort of thing from happening. They're

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Speaker 1: urging their followers never to publicly identify somebody by name,

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Speaker 1: and always to submit that information to the FBI, which

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Speaker 1: can then go and verify those tips, you know, UM

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Speaker 1: through its sort of more sophisticated means. And you know,

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Speaker 1: you definitely see in some SBI RST after dated Oh

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Speaker 1: you know, we've got ten tips about this case, and

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Speaker 1: eight of them were wrong, but you know, you're the

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Speaker 1: two that turned out to be correct, and that's how

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Speaker 1: we arrested this person. UM, so you know, I think

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Speaker 1: I think that these groups are conscious of that risk

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Speaker 1: and are trying to avoid making mistakes. But of course

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Speaker 1: there's no way that you can control just thousands of

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Speaker 1: people on the Internet. Really interesting story. I love the

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Speaker 1: big take. Um it's such a cool uh new thing

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Speaker 1: that we have on the Bloomberg And David, your your

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Speaker 1: story is awesome. I love also the layout. It's really

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Speaker 1: well done. So thanks very much for joining us on

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Speaker 1: this one, David, Daffy Bellini talking to us about the

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Speaker 1: amateur Internet sleuths who are trying to take down, um,

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Speaker 1: the capital rioters who you know, did things like serious

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Speaker 1: bodily damage to a lot of the police. There's just

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Speaker 1: trying to defend our nation's capital. This is Bloomberg, all right.

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Speaker 1: Apparently I guess Jeff Bezos July is set to launch

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Speaker 1: into space on one of those Blue Origin flights. Let's

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Speaker 1: get the latest on this deal. Like, I think he's

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Speaker 1: not gonna be alone either. Ed Ludlow, he's an auto

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Speaker 1: reporter for Bloomberg News, joins us from the Bloomberg nine

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Speaker 1: sixties studio, and San Francis a rocket reporter. He's a

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Speaker 1: rocket reporter now, is what he is uh ed. So

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Speaker 1: Jeff Bezos going into space, This seems like a big

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Speaker 1: deal for me. But I guess if you're one of,

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Speaker 1: if not the richest person in the world, you can

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Speaker 1: do those things. Yeah, it's a pretty small group of

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Speaker 1: people that have the ability to do that, right. So

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Speaker 1: this is Blue Origins debut passenger. They call them astronauts,

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Speaker 1: you know, private astronauts, but their passengers because it's a

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Speaker 1: Philly autonomous craft. And he is going to go up

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Speaker 1: with his brother Mark Bezos and one lucky I suppose

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Speaker 1: auction winner. So right now, the highest bidder for the

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Speaker 1: third seat has put two point eight million dollars down.

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Speaker 1: That's it, you say, that's it. I mean, you know

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Speaker 1: top took him and somebody paid sixty nine million dollars

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Speaker 1: for an n f T of a people picture. Yeah,

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Speaker 1: I know, but the you know, the risks associated with

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Speaker 1: being launched into orbit and budding n f T s.

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Speaker 1: I don't think they're on par right, But you know,

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Speaker 1: they're going to continue this auction until mid June when

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Speaker 1: they'll close it. Highest bidder gets to go up with

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Speaker 1: the Bezos bros. Um it's an eleven minute journey, you know,

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Speaker 1: you go to the Carmen Line, which is about a

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Speaker 1: hundred kilometers above above Earth. You know, it's kind of

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Speaker 1: the internationally recognized boundary of space from Earth. And then

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Speaker 1: you come straight back down in the capsule. So when

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Speaker 1: the capsule separates from the booster, the new Shepherd booster,

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Speaker 1: it falls by itself with parachute, you know, very leisurely

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Speaker 1: ride is the booster. I mean, are we talking about

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Speaker 1: top check here? Is it going to land again on

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00:23:01,880 --> 00:23:05,199
Speaker 1: some autonomous ship in the ocean or is it ghetto? No,

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Speaker 1: it's automous. I think what's interesting about Blue Origin is

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00:23:08,040 --> 00:23:10,880
Speaker 1: that they you know, they clearly want to get some

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00:23:11,000 --> 00:23:13,439
Speaker 1: kind of milestone win if you if you go all

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00:23:13,480 --> 00:23:16,280
Speaker 1: the way back to two thousand and twelve, they were

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00:23:16,320 --> 00:23:21,000
Speaker 1: the first actually land a booster autonomously, ahead of SpaceX

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00:23:21,000 --> 00:23:23,679
Speaker 1: by about a month, one calendar month. But the thing is,

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00:23:24,040 --> 00:23:27,679
Speaker 1: Blue Origin has only done fifteen consecutive test flights of

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00:23:27,720 --> 00:23:31,280
Speaker 1: its technology by this point over a ten year period.

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00:23:31,320 --> 00:23:33,800
Speaker 1: SpaceX has done more than a hundred and twenty five

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00:23:33,840 --> 00:23:38,320
Speaker 1: successful flights. So, you know, Bezos is I don't know

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00:23:38,320 --> 00:23:40,280
Speaker 1: if it's the right expression, putting his money where his

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00:23:40,320 --> 00:23:42,719
Speaker 1: mouth is, but he you know, This is a company

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00:23:42,760 --> 00:23:44,920
Speaker 1: that he has put one billion dollars into on an

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00:23:44,960 --> 00:23:49,560
Speaker 1: annual basis um. He has spoken very competitively about it

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00:23:49,720 --> 00:23:52,199
Speaker 1: about how his it's been his childhood dreams go to space,

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00:23:52,640 --> 00:23:55,119
Speaker 1: and you know he's going to go up him, going

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00:23:55,200 --> 00:23:58,800
Speaker 1: to put his mouth where his money is exactly the opposite, right,

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00:23:59,280 --> 00:24:01,879
Speaker 1: What is the risk here? I mean, what are some

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00:24:01,920 --> 00:24:05,360
Speaker 1: of the experts saying here? It's it seems to me

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Speaker 1: fairly risky, maybe more risk than you know you'd you'd

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Speaker 1: want to take. Um, what if you had a hundred

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00:24:13,200 --> 00:24:18,800
Speaker 1: and eighty six point eight at a technical level, And

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00:24:18,880 --> 00:24:22,159
Speaker 1: again I'm a reporter, I'm not a space engineer. But

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00:24:22,560 --> 00:24:24,440
Speaker 1: the thing that the difference between the capsule that Blue

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00:24:24,480 --> 00:24:30,800
Speaker 1: Origin has is that there's no onboard control. Imagine meditation

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00:24:30,920 --> 00:24:34,680
Speaker 1: room with padding around the outside, six windows and six seats.

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00:24:34,720 --> 00:24:37,119
Speaker 1: That's it. If you compare that to the Dragon capsule

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00:24:37,200 --> 00:24:41,800
Speaker 1: the SpaceX um produces. The astronauts in the SpaceX capsule

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00:24:41,880 --> 00:24:45,240
Speaker 1: have some limited ability to interact with the vessel, run checks,

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00:24:45,280 --> 00:24:48,840
Speaker 1: run controls, do some manual takeover in worst case scenarios.

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00:24:49,160 --> 00:24:52,360
Speaker 1: The Blue Origin capsule is truly autonomous. You sit there,

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00:24:52,400 --> 00:24:55,240
Speaker 1: you belt in and that's it. It's out of your control.

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Speaker 1: I guess that's slightly disconcerting. And and the frequency of

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00:24:59,160 --> 00:25:02,360
Speaker 1: tests and vol lume of tests is much less, far

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00:25:02,440 --> 00:25:05,399
Speaker 1: fewer than SpaceX is done. But they have had fifteen

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00:25:05,440 --> 00:25:09,919
Speaker 1: consecutive test flights. They've they've tested successfully. The abort features

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00:25:09,960 --> 00:25:12,200
Speaker 1: what happens in the event and of emergency. The way

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00:25:12,200 --> 00:25:15,160
Speaker 1: that it's designed is that not only does the capsule

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00:25:15,240 --> 00:25:18,160
Speaker 1: carrying the humans separate from the booster, but it gets

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00:25:18,160 --> 00:25:22,040
Speaker 1: basically a boost to change its trajectory away from the booster.

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00:25:22,480 --> 00:25:25,040
Speaker 1: There's a hard separation, which means that they you know,

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00:25:25,040 --> 00:25:27,160
Speaker 1: they wouldn't collide with each other, will come into contact

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00:25:27,359 --> 00:25:30,520
Speaker 1: and at that point the parachutes would open. But yeah,

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00:25:30,720 --> 00:25:33,000
Speaker 1: of course it's fraught with risk, you know. And I

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Speaker 1: think that less so from Bazos because we hear from

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00:25:35,600 --> 00:25:38,520
Speaker 1: him less. But Elon Musk, for example, is pretty transparent

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Speaker 1: about what those risks are. Musk wants to go to

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Speaker 1: Mars too, so he's maybe not far behind Jeff in

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Speaker 1: Billionaires in space. Ed, thanks so much for joining us,

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00:25:48,359 --> 00:25:52,080
Speaker 1: Ed Ludlow there, he's Bloomberg's well rocket reporter, but also

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00:25:52,200 --> 00:25:54,639
Speaker 1: what covers cars for us out of California. Thanks for

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00:25:54,680 --> 00:25:58,159
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and

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00:25:58,240 --> 00:26:01,800
Speaker 1: listen to interviews with Apple, pod Asks, or whatever podcast

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00:26:01,840 --> 00:26:05,360
Speaker 1: platform you prefer. I'm Matt Miller, I'm on Twitter at

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00:26:05,400 --> 00:26:09,040
Speaker 1: Matt Miller three. And I'm Fall Sweeney. I'm on Twitter

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00:26:09,080 --> 00:26:11,920
Speaker 1: at pt Sweeney. Before the podcast, you can always catch

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Speaker 1: us worldwide at Bloomberg Radio