WEBVTT - Strategies To Succeed In Digital Currency 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 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.840 at Bloomberg dot com slash podcast. Well, last week, I 0:00:22.840 --> 0:00:26.079 guess you know, Thursday, Friday, Saturday down in Miami, there 0:00:26.239 --> 0:00:30.520 was a crypto investor conference and very well attended, well 0:00:30.560 --> 0:00:34.280 covered in the business media. And what's also notable is 0:00:34.360 --> 0:00:37.080 that people actually went. It wasn't virtual, it was a 0:00:37.240 --> 0:00:41.040 real conference where real people got together talking all things crypto. 0:00:41.000 --> 0:00:43.959 I look at bitcoin today, it's pretty much unchanged here, 0:00:44.120 --> 0:00:47.320 just over thirty six thousand dollars per coin, but there's 0:00:47.360 --> 0:00:50.040 certainly been a lot of volatility in the crypto market. 0:00:50.080 --> 0:00:52.120 Let's get the latest with Jeff Dorman. He's the c 0:00:52.400 --> 0:00:56.040 i O of ARCA. Arc is a digital asset from Jeff. 0:00:56.040 --> 0:00:58.240 Thanks so much for joining us here. I love to 0:00:58.280 --> 0:01:01.400 get your thoughts. Just let's start with bitcoin, because that's 0:01:01.480 --> 0:01:05.520 the cryptocurrency or the crypto asset class or asset that 0:01:05.600 --> 0:01:10.640 people are most familiar with talk us about the volatility 0:01:10.640 --> 0:01:15.120 of bitcoin. What does that tell you? Sure? Thanks for 0:01:15.120 --> 0:01:19.640 having me. I mean, like, the volatility is happening because 0:01:19.720 --> 0:01:22.440 this is a new asset class, and new asset classes 0:01:22.480 --> 0:01:25.200 don't have the same structure, they don't have the same players. Uh, 0:01:25.240 --> 0:01:29.920 And it's largely driven by momentum and algorithmic quantitative traders 0:01:29.959 --> 0:01:32.759 to date um. You know, I think that will change 0:01:32.800 --> 0:01:34.880 over time as it becomes of a larger and more 0:01:35.600 --> 0:01:38.200 adopted asset. In fact, you're already seeing it's starting to 0:01:38.200 --> 0:01:40.720 decline a little bit because this is touching so many people. 0:01:41.240 --> 0:01:43.720 But you know, volatility happens when you have a lot 0:01:43.760 --> 0:01:47.880 more retail traders and momentum traders than you do fundamental investors. 0:01:47.880 --> 0:01:49.760 And that's natural for an asset that doesn't really have 0:01:49.800 --> 0:01:53.760 any fundamental underpinning. Are we looking at a little bit 0:01:53.760 --> 0:01:59.040 of stability here around thirty six thousand dollars right now? Sure? 0:01:59.520 --> 0:02:03.160 Things as pretty quickly, Uh, you know, I think I think, Look, 0:02:02.880 --> 0:02:05.680 there's a couple of things that drive bitcoins value, right 0:02:05.680 --> 0:02:09.880 and it's obviously not traditional fundamental valuation technique. That's true 0:02:09.880 --> 0:02:12.360 of other assets and digital assets, but not bitcoin. But 0:02:12.400 --> 0:02:14.560 what we know about bitcoin specifically is there's a couple 0:02:14.600 --> 0:02:16.560 of factors that have driven you have low rates and 0:02:16.600 --> 0:02:19.360 the declining dollar that's still very much in play. Nothing's 0:02:19.400 --> 0:02:22.720 changing there. Therefore, this should still be a pretty strong 0:02:22.760 --> 0:02:26.280 macro asset. You have institutional money entering the space. Nothing's 0:02:26.360 --> 0:02:28.600 changed there. We have, you know, tons of investors coming 0:02:28.600 --> 0:02:30.440 into our funds. Other funds are saying the same thing. 0:02:30.800 --> 0:02:33.560 Money is pouring in everywhere you look into this asset 0:02:33.600 --> 0:02:35.880 class because of what I've said before, low rates and 0:02:35.919 --> 0:02:37.400 a low dollar, right where else are you going to 0:02:37.480 --> 0:02:39.960 go to invest your money? Um? You know, really the 0:02:39.960 --> 0:02:42.840 only thing has changed is recent narratives. You know, if 0:02:42.880 --> 0:02:45.240 you are going to watch bitcoin go up from ten 0:02:45.280 --> 0:02:48.799 thousand to sixty thousand every time Elon Musk tweets positively, well, 0:02:48.840 --> 0:02:51.519 then by definition when him and other corporations pull out, 0:02:51.800 --> 0:02:53.960 that's going to have a negative effect as well. So 0:02:54.080 --> 0:02:56.320 I think the volatility is based on you know, a 0:02:56.400 --> 0:03:01.040 lack of UH conviction around UH the path that it 0:03:01.080 --> 0:03:03.520 takes to get higher. But ultimately bitcoins of binary bet 0:03:03.520 --> 0:03:05.680 it's either going to be worth a lot more if 0:03:05.680 --> 0:03:07.880 this is adopted as a true store of value and currency, 0:03:08.120 --> 0:03:09.680 or it's gonna be worth a lot less if it doesn't. 0:03:09.720 --> 0:03:12.320 And everything in between is there's a lot of fun 0:03:12.360 --> 0:03:15.799 to trade, but not necessarily indicative of the end result. Jeff, 0:03:15.800 --> 0:03:18.600 you say money is pouring into this asset class, where's 0:03:18.639 --> 0:03:21.079 the money coming from? Is a retail Are you seeing 0:03:21.120 --> 0:03:26.520 institutional buy in? Where are you seeing it? Well, institutional buying, 0:03:26.840 --> 0:03:30.079 you know, in the traditional investing world, typically means your 0:03:30.080 --> 0:03:33.280 asset allocators, right, your pensions, your endowments, your sovereign wealth. 0:03:33.720 --> 0:03:36.080 It's not really coming from there yet. I think there's 0:03:36.080 --> 0:03:39.000 a lot of complating the word institutional here in the 0:03:39.000 --> 0:03:41.080 market because all of a sudden hedge funds got involved, 0:03:41.120 --> 0:03:43.760 and all of a sudden corporate treasurers got involved. The 0:03:43.800 --> 0:03:46.800 reality is most of the buying power of bitcoin is 0:03:46.840 --> 0:03:50.960 still family offices, high net worth, you know, not necessarily 0:03:51.000 --> 0:03:53.320 in the hedge fund itself, but generally the owners of 0:03:53.320 --> 0:03:56.160 a hedge fund in their own personal accounts. There is 0:03:56.160 --> 0:03:59.520 definitely real money coming in from the institutional world, but 0:03:59.560 --> 0:04:03.839 it's not the traditional institutional asset allocators yet. What what's 0:04:03.840 --> 0:04:07.800 going to change that? Um? Quite frankly, I'm not sure 0:04:07.880 --> 0:04:10.960 it ever does. Uh. You know, the institutional investors that 0:04:11.000 --> 0:04:13.200 we speak to the pensions and down with sovereign walls, etcetera. 0:04:13.240 --> 0:04:15.280 They're more interested in the rest of the asset class. Uh. 0:04:15.360 --> 0:04:17.560 You know a lot of times I talk about digital 0:04:17.640 --> 0:04:19.680 assets the same way I talk about et s. Right, 0:04:19.720 --> 0:04:22.039 you would never say, hey, I'm an EPF investor. You say, well, 0:04:22.080 --> 0:04:24.520 what kind of ETF investor? Are you invested in healthcare 0:04:24.560 --> 0:04:27.360 stocks or you know, bond EPs, or are you invested 0:04:27.400 --> 0:04:29.800 in gold ets? Right? The e t F itself is 0:04:29.839 --> 0:04:32.120 just a structure, and what's in the structure is what's 0:04:32.160 --> 0:04:34.280 relevant from an investing standpoint, And the same thing is 0:04:34.279 --> 0:04:36.839 happening with digital assets. We have different types of digital assets. 0:04:36.880 --> 0:04:39.920 Some are asset backed, some have revenue pass throughs, some 0:04:40.000 --> 0:04:42.800 are more like technology protocols and platforms, and others are 0:04:42.800 --> 0:04:46.279 cryptocurrency and money like bitcoins. I think the institutional investors 0:04:46.400 --> 0:04:50.080 largely gravitate towards the ones that have real fundamental analysis 0:04:50.120 --> 0:04:52.360 attached to them, which is the asset back tokens and 0:04:52.440 --> 0:04:56.320 the companies with real revenue and cash flows. I get 0:04:56.440 --> 0:05:01.160 asset back tokens, I get um, but bitcoin is the 0:05:01.200 --> 0:05:04.400 only one where the token really has become a store 0:05:04.440 --> 0:05:08.880 of value. Um. You know that's not asset backed. The 0:05:08.960 --> 0:05:15.080 other interesting Uh, crypto plays like Athereum have a great platform, 0:05:15.320 --> 0:05:17.320 but I don't see any reason to buy the token. 0:05:18.960 --> 0:05:20.640 I think that was true historically, and I would have 0:05:20.640 --> 0:05:22.920 agreed with you two years ago. But what's happening now 0:05:23.120 --> 0:05:28.039 is Ethereum is an ecosystem that other applications are building upon. 0:05:28.160 --> 0:05:30.240 Right in some way, thethereum is the app store, and 0:05:30.279 --> 0:05:32.200 all the other tokens are the apps that are built 0:05:32.200 --> 0:05:34.640 in the app store. Uh. You know how does the 0:05:34.680 --> 0:05:37.360 app store make money? It makes money on the transactions 0:05:37.360 --> 0:05:39.520 that are happening inside of that app store. And that's 0:05:39.560 --> 0:05:42.760 basically what ethereum is doing. To date. Uh, the token 0:05:42.839 --> 0:05:45.279 has accrued none of that economic value. But with a 0:05:45.320 --> 0:05:47.760 new proposal that is going into place called e I 0:05:47.800 --> 0:05:51.280 Pine and it's shipped from proof of work to proof mistake, 0:05:51.520 --> 0:05:53.479 there actually are going to be real cash flows that 0:05:53.520 --> 0:05:56.039 eventually a crew back to the token holders. So it 0:05:56.120 --> 0:05:57.839 is changing a little bit. And that's what's so interesting 0:05:57.880 --> 0:06:00.880 about this asset class is, Uh, these tokens can be 0:06:00.960 --> 0:06:03.960 representative of one thing on day one and ultimately morphin 0:06:04.120 --> 0:06:09.400 change throughout the evolution of of the investment um that 0:06:09.560 --> 0:06:11.960 the you know, the theorium itself is still kind of 0:06:11.960 --> 0:06:14.360 difficult for traditional investors to get their hands around because 0:06:14.400 --> 0:06:17.719 it is this like broader GDP ecosystem thing. But the 0:06:17.720 --> 0:06:21.239 applications that are built on top of ethereum are generally 0:06:21.240 --> 0:06:23.400 real companies with real revenues and real cash flows, and 0:06:23.400 --> 0:06:25.720 the tokens can be modeled using a DCF analysis or 0:06:25.760 --> 0:06:27.400 a dividend field model, and that's what we focus on 0:06:27.400 --> 0:06:29.080 an ARCA, and that's what a lot of institutional investors 0:06:29.080 --> 0:06:32.200 are focused on as well. And that includes defy uh, 0:06:32.240 --> 0:06:34.719 some gaming assets and a lot of other ones that 0:06:34.720 --> 0:06:36.400 are that are coming down the pikes in the future 0:06:36.440 --> 0:06:39.320 as well. All right, Jeff, just real quickly thirty seconds, 0:06:39.360 --> 0:06:42.240 what's the next mile post that you're looking for? As 0:06:42.279 --> 0:06:47.920 this market, this asset class continues to develop and evolved. Uh. 0:06:48.200 --> 0:06:51.720 For min milestone is is education um doing more things 0:06:51.720 --> 0:06:54.640 like what you're doing in others where investors can understand 0:06:54.640 --> 0:06:57.479 that cryptocurrency is not the right term. Cryptocurrency is a 0:06:57.560 --> 0:07:00.880 very small subset of the market, but these other assets 0:07:00.880 --> 0:07:03.440 are really more like quasi equity, and ultimately, I think 0:07:03.480 --> 0:07:06.160 digital assets will end up in every company's capital structure 0:07:06.240 --> 0:07:09.520 from you know, Netflix, the Starbucks, see delta over time, 0:07:09.840 --> 0:07:12.320 and once you start to see the companies adopted and 0:07:12.320 --> 0:07:15.440 you see investors understand what these assets really are, you know, 0:07:15.480 --> 0:07:19.440 being great coordination mechanisms and growth mechanisms for companies. I 0:07:19.520 --> 0:07:21.600 think the Narratabile change, and we'll be talking less about 0:07:21.640 --> 0:07:24.520 bitcoin and more about the cash flow producing entities that 0:07:24.600 --> 0:07:28.000 use a digital asset to represent that growth. Alright, very 0:07:28.040 --> 0:07:30.320 interesting stuff, Jeff, thanks very much for talking to us. 0:07:30.920 --> 0:07:34.440 Always a pleasure. Jeff Dorman is the chief investment officer 0:07:34.720 --> 0:07:38.560 ARCA talking to us about how was about to say cryptocurrency, 0:07:38.640 --> 0:07:42.560 digital assets. I think digital digital assets. They're looking at 0:07:42.560 --> 0:07:45.360 one of them. Bitcoin just slipping under thirty six thousand, 0:07:45.640 --> 0:07:49.240 barely thirty five thousand, nine sixty four dollars and ninety 0:07:49.360 --> 0:07:52.960 three cents Ether trading for two thousand, seven hundred seventy eight. 0:07:53.080 --> 0:08:00.640 This is Bloomberg. Now we're bringing Scott Kimball Portia, manager 0:08:00.800 --> 0:08:03.800 of the Strategic Income Fund and co head of US 0:08:03.840 --> 0:08:08.200 fixed Income at BEMO Global Asset Management. Scott, let's talk 0:08:08.240 --> 0:08:10.440 first about what we saw happen on Friday. It was 0:08:10.440 --> 0:08:13.400 pretty interesting with the jobs number. It was a miss, 0:08:13.440 --> 0:08:15.200 but still I guess a pretty good number. More than 0:08:15.200 --> 0:08:19.040 five thousand people got jobs in this economy as we 0:08:19.120 --> 0:08:24.240 as we reopened and we saw treasuries yields just dropped. 0:08:24.760 --> 0:08:27.480 I think it was five six basis points down to seven. 0:08:27.520 --> 0:08:31.520 We're trading there right now. M. Does that make sense 0:08:31.520 --> 0:08:35.640 to you, Yeah, good morning. I think it does for 0:08:35.679 --> 0:08:39.319 a few reasons. I think that's what the jobs report signals. 0:08:39.360 --> 0:08:42.160 First and foremost is that we are transitioning out of 0:08:42.200 --> 0:08:46.600 the you know, the post reopening boom into a uh 0:08:46.640 --> 0:08:50.200 an economic environment where more and more of the US's 0:08:50.400 --> 0:08:53.320 economies own inertia is gonna have to take over, and 0:08:53.320 --> 0:08:55.840 that growth potential and growth output is going to have 0:08:55.960 --> 0:09:00.760 to be really driven by the underlying economic fundamentals uh 0:09:00.800 --> 0:09:03.400 post that that big boom in the recovery, which I 0:09:03.440 --> 0:09:05.880 think is what you saw in the outcome of the 0:09:06.440 --> 0:09:09.760 jobs report. Uh you know, the estimates versus the the 0:09:09.800 --> 0:09:13.000 actual print. That's not a typical. That's pretty common as 0:09:13.000 --> 0:09:15.800 you get, you know, through these these handoff cycles where 0:09:16.200 --> 0:09:18.439 you may not be directly in line with the number, 0:09:18.480 --> 0:09:22.880 but the directional trend still remains pretty favorable. Treasuries, however, 0:09:23.280 --> 0:09:26.040 probably took that as a little bit of a uh 0:09:26.080 --> 0:09:27.559 you know, if you've seen the U seal curb be 0:09:27.720 --> 0:09:30.400 very steep, probably taking off a little bit of the 0:09:30.440 --> 0:09:33.400 steepness to reflect the fact that, you know, things like 0:09:33.520 --> 0:09:36.880 inflation still have some upside risk, but the ability to 0:09:36.880 --> 0:09:40.959 really punch through into a an explosively higher inflationary environment 0:09:41.160 --> 0:09:44.680 is probably being a little bit tempered by this, uh 0:09:44.760 --> 0:09:47.200 you know, this this transition in the economy, if you will. 0:09:47.760 --> 0:09:49.800 That's kind of where I wanted to go, Scott in 0:09:49.880 --> 0:09:53.400 terms of the discussion about inflationary concerns into this market. 0:09:53.520 --> 0:09:55.640 You know, obviously two camps, one being the Federal Reserve 0:09:55.720 --> 0:09:58.400 camp where you know, the signs of inflation that we 0:09:58.440 --> 0:10:00.559 are seeing or transitory, and the others, hey, it might 0:10:00.559 --> 0:10:04.839 be more systemic than that. Where do you fall so 0:10:05.720 --> 0:10:08.199 perfectly down the middle? Because I think the FED has 0:10:08.240 --> 0:10:12.080 a lot of credibility on the inflationary front. They've they've 0:10:12.120 --> 0:10:15.040 been telling us for over a decade that inflationary pressures 0:10:15.080 --> 0:10:18.079 are transitory and they've been correct, and that's a long 0:10:18.200 --> 0:10:20.960 enough streak to be more than random. So I think 0:10:20.960 --> 0:10:24.120 that the FED has the pulse of the inflationary pressures 0:10:24.760 --> 0:10:27.560 pretty well contained, are pretty well, pretty well contained and 0:10:27.559 --> 0:10:31.360 pretty well figured out, except this last couple of rounds 0:10:31.400 --> 0:10:33.200 there has been a little bit of a little bit 0:10:33.200 --> 0:10:36.880 of whack a mole and that everywhere inflation has moved higher, 0:10:36.960 --> 0:10:39.320 it's sort of popped up in different parts of the 0:10:39.320 --> 0:10:42.320 CPI measures. So for instance, the most recent read on 0:10:42.480 --> 0:10:46.079 you know, used autos. You know, that's something that historically 0:10:46.160 --> 0:10:49.120 you look at used autos contribution to inflation, It tends 0:10:49.120 --> 0:10:54.040 to attempts to spike and and dissipate pretty regularly. Uh. 0:10:54.120 --> 0:10:56.360 And you can really explain why in our case, you know, 0:10:56.440 --> 0:10:59.120 with the pandemic we had, you know, auto plants were 0:10:59.240 --> 0:11:02.720 restricted or out put was was curtailed UM, and people 0:11:02.760 --> 0:11:05.080 were being a little more conscious of where they where 0:11:05.080 --> 0:11:08.360 they spent money, so replacement vehicles were driven more towards 0:11:08.360 --> 0:11:11.440 the used market. So naturally we've seen some we saw 0:11:11.480 --> 0:11:15.319 some some booming prices there in in uh in used autos. 0:11:15.360 --> 0:11:17.760 But how sustainable is that going to be? That gets 0:11:17.800 --> 0:11:21.560 back to the Fed's point. Uh. I think our position 0:11:21.600 --> 0:11:23.880 has been that there is a directional case to be 0:11:23.960 --> 0:11:27.200 made for inflation to continue to creve higher UM. But 0:11:27.720 --> 0:11:31.480 it's bumping into some things that I think will constrain it. 0:11:31.559 --> 0:11:35.480 So for instance, oil prices most prominently, Uh, you know, 0:11:35.480 --> 0:11:37.800 we're coming up on seven dollars of barrel as we 0:11:37.880 --> 0:11:40.080 model things out. If we break through that and you 0:11:40.080 --> 0:11:45.000 start getting a barrel, you know, that does certainly put 0:11:45.080 --> 0:11:48.760 upward price pressures, but the ability to pass through those 0:11:48.760 --> 0:11:51.640 pressures starts to roll over and you start to see 0:11:51.679 --> 0:11:55.760 that consumption will adjust downward. So there's indicator indicators like 0:11:55.800 --> 0:11:59.080 that at that point to mechanisms where yes, inflation can 0:11:59.160 --> 0:12:02.040 press higher, but the economic output starts to suffer, which 0:12:02.080 --> 0:12:05.840 then can sort of constrains it from running away. Is it? 0:12:05.880 --> 0:12:09.320 Is it consensus though, that we start to taper at 0:12:09.320 --> 0:12:12.199 the end of this year, um beginning of next year, 0:12:12.240 --> 0:12:14.559 then start to raise rates and twenty two beginning of 0:12:17.360 --> 0:12:20.440 That's definitely the way the futures market has has has 0:12:20.720 --> 0:12:22.640 that's definitely out the I guess the path of the 0:12:22.640 --> 0:12:26.360 output the futures market has been favoring. UM. I think 0:12:26.400 --> 0:12:29.360 it's probably going to be difficult to really address the 0:12:29.440 --> 0:12:32.840 right front. Um. You know, the FED has you know, 0:12:33.280 --> 0:12:39.520 between both tapering and transitioning interest rate policy in both cases, 0:12:39.520 --> 0:12:43.160 between the taper tantrum and whatever occurred when Pal tried 0:12:43.160 --> 0:12:46.880 to raise rates, whatever we want to label that UM. 0:12:46.920 --> 0:12:49.760 In both cases, the market response, in the economic response 0:12:50.360 --> 0:12:52.920 was pretty clear that this version of the U S 0:12:52.960 --> 0:12:55.640 economy is going to be a little more difficult than 0:12:55.679 --> 0:12:59.760 pass cycles to have those meaningful breakthroughs uh in in 0:13:00.360 --> 0:13:03.760 in uh in monetary policy or so it's gonna be 0:13:04.640 --> 0:13:08.800 our our expectation that uh capering is probably going to 0:13:08.880 --> 0:13:11.400 take place. I think that there's definitely efficacy for that 0:13:11.440 --> 0:13:14.160 in the economy. You're through the crisis period. As far 0:13:14.200 --> 0:13:18.760 as transitioning monetary policy to let's say a rising rate environment. 0:13:19.200 --> 0:13:22.560 UM wouldn't be surprised if that tail continues to push 0:13:22.600 --> 0:13:25.040 its way down the road a little bit. Hey, Scott, 0:13:25.080 --> 0:13:27.480 thanks so much for joining us. We really appreciate getting 0:13:27.520 --> 0:13:30.960 your thoughts and perspective on the fixed income market. Scott Kimball, 0:13:31.240 --> 0:13:34.760 portfolio manager of the Strategic Income Fund and co head 0:13:34.920 --> 0:13:38.800 of US fixed Income for Bibo BIMO, a global asset 0:13:38.880 --> 0:13:41.480 of management, getting his thoughts on fixed income market again. 0:13:41.520 --> 0:13:44.960 The ten year Treasury remains down at one point five 0:13:45.040 --> 0:13:50.839 seven percent. All right, the Bloomberg Big Take story today, 0:13:50.840 --> 0:13:53.920 it's just fascinating people are finding those who took part 0:13:54.000 --> 0:13:57.280 in the January six Capital siege via social media and 0:13:57.320 --> 0:13:59.840 are helping federal officers arrest them. We're seeing it all 0:13:59.840 --> 0:14:02.880 through about our social media feeds. David Yaffee Belny did 0:14:02.880 --> 0:14:06.439 some work on this. He's a legal reporter for Bloomberg News. David, 0:14:06.480 --> 0:14:08.760 it seems like, you know, everybody in the social media 0:14:08.840 --> 0:14:12.640 feeds are seeing you know, stories and of of of 0:14:12.640 --> 0:14:15.719 people that have been identified as taking part in the 0:14:15.920 --> 0:14:20.960 Capital siege. How wide spread is that, um? So, you know, 0:14:21.040 --> 0:14:23.680 right after the siege on January six, there was kind 0:14:23.720 --> 0:14:26.520 of a wave of activism from people who just regular 0:14:26.560 --> 0:14:28.960 people watching the footage at home who were outraged at 0:14:29.000 --> 0:14:31.520 what had happened and wanted to do something about it, um, 0:14:31.720 --> 0:14:34.440 find some way to bring the perpetrators to justice. And 0:14:34.480 --> 0:14:38.000 so you had this kind of initial rush to identify 0:14:38.280 --> 0:14:41.240 people who were there that was initially focused on some 0:14:41.320 --> 0:14:43.480 of the kind of most most prominent people in the 0:14:43.560 --> 0:14:46.160 in the photos and videos. Um, you know, the man 0:14:46.240 --> 0:14:49.000 with his feet up on Nancy closy desk, or the 0:14:49.040 --> 0:14:52.160 guy and the kind of animal head dress who's walking 0:14:52.160 --> 0:14:55.000 through the capitol, and and and that you know, there 0:14:55.000 --> 0:14:57.200 were you know, thousands of people all over social media 0:14:57.240 --> 0:15:00.240 sort of participating in that in that effort, and it's 0:15:00.280 --> 0:15:03.080 sort of evolved in an interesting way since then. We're 0:15:03.120 --> 0:15:06.560 now kind of trying to track down, um, sort of 0:15:06.640 --> 0:15:09.280 less well known participants in the riot and pulled and 0:15:09.320 --> 0:15:11.600 sort of the background with some of those photos and 0:15:11.600 --> 0:15:13.960 and and try to really get a comprehensive sense thats 0:15:13.960 --> 0:15:18.840 who was involved. So you got one guy that the 0:15:18.960 --> 0:15:21.320 lead guy. I love his picture. He looks kind of 0:15:21.320 --> 0:15:25.640 like Indiana Jones. Um who's helping to find out who 0:15:25.680 --> 0:15:28.760 these people are? Um. I guess he's a guy who 0:15:28.760 --> 0:15:31.120 doesn't have a job, so he has the ability to 0:15:31.160 --> 0:15:34.200 spend the time to spend forty hours a week on 0:15:34.240 --> 0:15:38.160 the internet looking for for these dudes. Yeah. The way, 0:15:38.280 --> 0:15:39.800 the way he put it to me is that he 0:15:39.880 --> 0:15:41.840 was living at home with his girlfriend and and she 0:15:41.840 --> 0:15:44.280 would log onto her computer to do her actual job, 0:15:44.320 --> 0:15:46.360 and he would log onto his computer and do his 0:15:46.480 --> 0:15:49.320 kind of sedition hunting gig for for a few months. 0:15:49.320 --> 0:15:51.960 You know. Uh, Like so many people, he found it 0:15:52.280 --> 0:15:54.720 difficult to get consistent work during the pandemic. He's an 0:15:54.720 --> 0:15:58.800 actor in Canada, and those sorts of opportunities were drawing up. Um, 0:15:58.840 --> 0:16:00.960 and so yeah, it was really a combination of kind 0:16:00.960 --> 0:16:04.800 of curiosity and pandemic induced boredom that sort of motivated 0:16:04.880 --> 0:16:07.720 him to get involved with this. And he just started 0:16:07.760 --> 0:16:10.480 spending you know, hours and hours a day pouring through 0:16:10.600 --> 0:16:14.960 photos and videos trying to kind of catalog images where 0:16:15.000 --> 0:16:17.400 you can see the same person multiple times, to sort 0:16:17.400 --> 0:16:19.960 of put together like a comprehensive account of all the 0:16:20.000 --> 0:16:24.760 evidence of a particular individuals involvement. And eventually that allowed 0:16:24.840 --> 0:16:29.040 him to identify somebody, um who's who was charged by 0:16:29.080 --> 0:16:32.760 the FBI, UM and and his work was was cited 0:16:32.800 --> 0:16:37.440 in the arrest affidavit, UM, sort of underlying that that charge, David, 0:16:37.440 --> 0:16:40.880 don't we have a bunch of like n Essay blackbriar 0:16:41.080 --> 0:16:45.640 nerds who can do this stuff in their sleep? Um, 0:16:45.680 --> 0:16:47.920 you know, in in theory we do. And And look, 0:16:47.960 --> 0:16:51.000 the federal investigation has made a lot of progress over 0:16:51.040 --> 0:16:53.520 the past few months. Nearly five people have been arrested. 0:16:53.560 --> 0:16:55.520 And that's not all because of the work of these 0:16:55.520 --> 0:16:58.360 sort of online tradition hunters, but there was there was 0:16:58.440 --> 0:17:02.320 just so much footage UM and so many people involved 0:17:02.360 --> 0:17:05.760 in such pressure to move quickly on this um that 0:17:05.840 --> 0:17:07.840 I think the government was appreciative of the of the 0:17:07.840 --> 0:17:10.080 public's help. Um, you know, and I when I talked 0:17:10.119 --> 0:17:12.600 to the FBI about this, you know, they they said, 0:17:12.600 --> 0:17:15.600 you know, in dozens and dozens of cases, these sorts 0:17:15.600 --> 0:17:18.960 of tips have proved helpful, um, and they're asking for 0:17:19.040 --> 0:17:21.320 more help as they, you know, continue to try to 0:17:21.440 --> 0:17:24.040 round up you know, hundreds more people who were involved 0:17:24.040 --> 0:17:27.760 in the riot and haven't been brought to justice so far. So, 0:17:28.240 --> 0:17:30.640 I know, David, the Senate Republicans recently blocked a bill 0:17:30.680 --> 0:17:34.879 in Congress to create an independent September eleven style commissioned 0:17:34.880 --> 0:17:39.080 to investigate the riots. So does that mean we're you know, 0:17:39.400 --> 0:17:43.040 we're basically just relying on uh, the FBI and some 0:17:43.119 --> 0:17:46.240 of these amateurs to kind of bring people to justice 0:17:46.280 --> 0:17:49.560 as it were, UM to it to an extent, yes, 0:17:49.600 --> 0:17:52.800 I mean, you know, the the the investigations presumably going 0:17:52.880 --> 0:17:56.000 to succeed in putting some of these people in prison. 0:17:56.160 --> 0:17:59.160 But there are broader questions about what happened on January six, 0:17:59.240 --> 0:18:01.840 you know, the extent to which far right groups were 0:18:01.840 --> 0:18:05.680 coordinating with each other, um, you know, public figures who 0:18:05.760 --> 0:18:08.200 may have been present or may have helped people behind 0:18:08.240 --> 0:18:10.359 the fiends and what they're role was there. There's these 0:18:10.400 --> 0:18:13.720 sort of broader historical questions that the investigation might not 0:18:13.840 --> 0:18:17.240 ultimately answer, in which you know, people had hoped some 0:18:17.280 --> 0:18:20.639 sort of bipartisan report would explore. And so one of 0:18:20.680 --> 0:18:23.359 the things that's motivating these sedition hunters now is to 0:18:23.400 --> 0:18:25.760 try to kind of ship away at some of those, uh, 0:18:25.880 --> 0:18:29.080 those questions using the sort of open source resources that 0:18:29.400 --> 0:18:32.240 they have to hand, um and really kind of fill 0:18:32.320 --> 0:18:35.119 in where we're sort of Congress is sort of not 0:18:35.160 --> 0:18:40.920 taking action. It's ironic that both groups seem to use discord, right. 0:18:41.000 --> 0:18:43.520 I Mean, you've got the Q and On people on 0:18:43.600 --> 0:18:45.800 there as well as the sedition hunters. Is there a 0:18:45.920 --> 0:18:50.000 risk that, you know, if the FBI keeps on begging 0:18:50.080 --> 0:18:52.479 if you see something, say something, you know, watch your 0:18:52.520 --> 0:18:56.120 neighbor and give us a call, do we risk some 0:18:56.240 --> 0:19:01.240 kind of East German Stazi surveillance state culture. I mean, 0:19:01.240 --> 0:19:03.479 I think that's definitely a concern. I mean, some of 0:19:03.520 --> 0:19:08.080 these amateur fisition hunters are using facial recognition technology to 0:19:08.160 --> 0:19:10.359 try to to try to target people who are at 0:19:10.400 --> 0:19:13.399 the capital on January six, and the fact that that 0:19:13.480 --> 0:19:16.399 sort of technology is freely available to members of the 0:19:16.400 --> 0:19:18.480 public and that you know, anybody with you know, some 0:19:18.520 --> 0:19:21.720 sort of software engineering background can kind of put together 0:19:21.800 --> 0:19:24.720 relatively quickly a kind of facial recognition due to me 0:19:25.440 --> 0:19:28.960 is definitely is definitely troubling. And these all sorts of 0:19:28.960 --> 0:19:32.440 civil liberties concerns or they could make a mistake, David, 0:19:32.480 --> 0:19:36.840 they could get someone innocent in hot water. Yeah. Absolutely, 0:19:36.880 --> 0:19:39.320 and we've i mean, we've seen that in the aftermath 0:19:39.359 --> 0:19:42.040 of January six, that people have been identified, you know, 0:19:42.080 --> 0:19:45.639 and named publicly who weren't actually actually there. Now, to 0:19:45.720 --> 0:19:48.200 their credit, a lot of the groups that are coordinating 0:19:48.240 --> 0:19:51.359 some of the sedition hunting activity are going to great 0:19:51.440 --> 0:19:53.840 lengths to prevent that sort of thing from happening. They're 0:19:53.920 --> 0:19:57.240 urging their followers never to publicly identify somebody by name, 0:19:57.640 --> 0:20:00.280 and always to submit that information to the FBI, which 0:20:00.320 --> 0:20:03.040 can then go and verify those tips, you know, UM 0:20:03.240 --> 0:20:05.960 through its sort of more sophisticated means. And you know, 0:20:06.000 --> 0:20:08.560 you definitely see in some SBI RST after dated Oh 0:20:08.640 --> 0:20:10.840 you know, we've got ten tips about this case, and 0:20:10.960 --> 0:20:12.919 eight of them were wrong, but you know, you're the 0:20:12.960 --> 0:20:14.920 two that turned out to be correct, and that's how 0:20:14.960 --> 0:20:19.000 we arrested this person. UM, so you know, I think 0:20:19.040 --> 0:20:21.280 I think that these groups are conscious of that risk 0:20:21.359 --> 0:20:23.760 and are trying to avoid making mistakes. But of course 0:20:23.800 --> 0:20:26.000 there's no way that you can control just thousands of 0:20:26.040 --> 0:20:31.800 people on the Internet. Really interesting story. I love the 0:20:31.800 --> 0:20:36.800 big take. Um it's such a cool uh new thing 0:20:36.840 --> 0:20:39.720 that we have on the Bloomberg And David, your your 0:20:39.760 --> 0:20:41.960 story is awesome. I love also the layout. It's really 0:20:41.960 --> 0:20:45.200 well done. So thanks very much for joining us on 0:20:45.280 --> 0:20:48.480 this one, David, Daffy Bellini talking to us about the 0:20:48.520 --> 0:20:53.480 amateur Internet sleuths who are trying to take down, um, 0:20:53.560 --> 0:20:57.880 the capital rioters who you know, did things like serious 0:20:58.240 --> 0:21:00.399 bodily damage to a lot of the police. There's just 0:21:00.480 --> 0:21:08.479 trying to defend our nation's capital. This is Bloomberg, all right. 0:21:08.560 --> 0:21:14.480 Apparently I guess Jeff Bezos July is set to launch 0:21:14.680 --> 0:21:18.320 into space on one of those Blue Origin flights. Let's 0:21:18.359 --> 0:21:20.320 get the latest on this deal. Like, I think he's 0:21:20.320 --> 0:21:22.920 not gonna be alone either. Ed Ludlow, he's an auto 0:21:22.960 --> 0:21:25.720