Speaker 1: Hi, I'MBLDNA Higher Across Acid Reporter with Bloomberg and Armed
Speaker 1: Romaine Bostic, and this week on the show, well, investors
Speaker 1: have a lot of worries to deal with inflation, COVID,
Speaker 1: the war in Ukraine, China's lockdowns, and the fresh supply
Speaker 1: chain was all of that's igniting. The list goes on.
Speaker 1: Many Monday managers have by now reduced their expectations for
Speaker 1: soccer returns this year. But what affears over recession are
Speaker 1: overblown and the second half of the year turns out
Speaker 1: better than expected. We're going to get into all of
Speaker 1: that with a well known investment advisor. But first, Romaine,
Speaker 1: welcome to the show. Thanks so much for joining us
Speaker 1: this week. You're filling in from Mike, who's galvanting in
Speaker 1: California right now. I believe California. He's on vacation. He is,
Speaker 1: he's on vacation. Hopefully he's having having a lot of fun.
Speaker 1: But I'm wondering if I tell the listeners a secret
Speaker 1: about you. Wow, Okay, you're starting off strong. Yeah, yeah,
Speaker 1: just kicking kicking, kicking things off really really strongly. You
Speaker 1: You've been a Bloomberg for something like two decades, right
Speaker 1: not to aid you. Well, you've just aged me. Yes,
Speaker 1: and I have been here one years to be exact,
Speaker 1: last January. Yeah, it's a long time, but you know,
Speaker 1: I've had a great time here, and you know, you
Speaker 1: think about all those different market cycles that you cover,
Speaker 1: the economic cycles, not only in the twenty one years
Speaker 1: i've been here, but of course, uh in my career
Speaker 1: before I haven't got here. Yeah, you're a Bloomberg TV veteran.
Speaker 1: So we're really lucky to have you this week. Um,
Speaker 1: but I do I do want to introduce our our guest.
Speaker 1: We're joined by Sylvia Jablonski this week. She's the CEO,
Speaker 1: c I O and co founder of Defiance E t
Speaker 1: F S. Welcome to the show, Sylvia, I thank you
Speaker 1: so much for having me. Happy to be here today.
Speaker 1: It's great to have you. Maybe just to start out,
Speaker 1: you can sort of give us an overview of Defiance
Speaker 1: and what you guys are forcused on. I know you're
Speaker 1: heavily focused on thematics, but just give us a little
Speaker 1: bit back on on you and the company. Yeah, sure,
Speaker 1: i'd be happy to um. So, Defiance is a company
Speaker 1: that is focused on thematic ETF investing so we'd like
Speaker 1: to think of ourselves as an E t F firm
Speaker 1: and an investment company that provides access to some of
Speaker 1: the most disruptive and and you know, futuristic themes out there. UM.
Speaker 1: We have E t F s that that cover different
Speaker 1: topics like five G quantum computing, hydrogen psychedelics, UM, the
Speaker 1: reopen trade and f t s for example. So we're
Speaker 1: really focused on that next generation trader UM. You know,
Speaker 1: the trailings involve coming down fromt the baby boomers to
Speaker 1: sort of younger people who are interested in what is technology,
Speaker 1: se semiconductors, communication and and the things things like UM
Speaker 1: that for tomorrow will look like UM. So are our
Speaker 1: main goals to come out with part of their cost
Speaker 1: efficient and giving access to these different sectors. We're also
Speaker 1: heavily invested in digital assets and and very interested in
Speaker 1: building out in that space. My role at the company
Speaker 1: is CEO and c i O, so I do a
Speaker 1: lot of work in terms of providing research, investment ideas,
Speaker 1: investment strategies just generally on you know, the market different
Speaker 1: market insight, and then also UM working on the E
Speaker 1: t F side itself, still helping with things like product
Speaker 1: development and you know, managing, uh, the overall direction of
Speaker 1: the firm. Well, Sylvia, let's start off here and really
Speaker 1: kind of talk a little bit. I think about just
Speaker 1: kind of how the investment landscape has changed. I mean
Speaker 1: down of course, starts off by aging me out real quick.
Speaker 1: So I'll just kind of pick up where she left off.
Speaker 1: You know, when I, you know, first got out of
Speaker 1: college and I started investing, I literally walked into a
Speaker 1: t row Price office of physical office, and you know,
Speaker 1: got a mutual fund and I had you know, a
Speaker 1: certain percentage of my paycheck taken out every month that
Speaker 1: then I'll go into that fund. And it was a
Speaker 1: slow slog, but that was investing for the individual investor
Speaker 1: that was investing. And what we look at today is
Speaker 1: so much different now just the options that individual investors have,
Speaker 1: both in terms of the asset classes, but also the
Speaker 1: sophistication that you get now that you have access to
Speaker 1: now that you didn't necessarily get back then, and obviously
Speaker 1: that gives you the potential for a greater return. And
Speaker 1: I guess to build a nest egg in a more
Speaker 1: layered way and into a certain extent of faster way
Speaker 1: than you could in the past when people come to
Speaker 1: you and talk to you, and not just the individual investors,
Speaker 1: but even some of the institutions here. Are they cognizant
Speaker 1: of that? Are they cognizant of just how much has changed? Yeah?
Speaker 1: And and that's a great, great thought and a great question.
Speaker 1: And you know, I can probably age myself along with you,
Speaker 1: because that's about when I started in this industry too.
Speaker 1: And you know when I started UM. I started my
Speaker 1: career Deutsche Bank, working in baqued derivatives, and and you know,
Speaker 1: we're sort of um the younger folks, and the investment
Speaker 1: banking training program revised by the older folks to take
Speaker 1: a percentage of our UM income and put it into
Speaker 1: the SMP five hundred and the bank would match, which
Speaker 1: that never I don't know if that happens at Bloomberg,
Speaker 1: but that never happens anymore anywhere else. The bank would
Speaker 1: match it, and you just kind of leave it there.
Speaker 1: And and twenty years later, lo and behold, got a
Speaker 1: lot of money in there. Right. But UM, which is
Speaker 1: great and actually historically has worked really well. Right, we
Speaker 1: know that the SMP five hundred analyzed return is UM
Speaker 1: is about you know, twelve percenter, So so that's great.
Speaker 1: But in the last couple of years there have been
Speaker 1: all these awesome themes and and different you know sorts
Speaker 1: of movements and progressions in the market, particularly around UH
Speaker 1: technology and particularly around cryptocurrency in the blockchain, and you
Speaker 1: know a lot of these investments have really been high flyers.
Speaker 1: So for for young people, young traders that you know,
Speaker 1: have risk appetite, have sort of the income to let's say,
Speaker 1: take a chance because there's a lot of risk. You know,
Speaker 1: they have these great options in terms of what they
Speaker 1: can invest in, and and that varies from you know,
Speaker 1: bitcoin to the future of the metaverse to you web
Speaker 1: three point out to some of these concepts that don't
Speaker 1: exist yet. And you know, usually what happens with with
Speaker 1: that is it's really interesting because this is actually how
Speaker 1: how it went at at Defiance, right, we came out
Speaker 1: with the first five g e t F, and and
Speaker 1: this was you know, just just gobbled up by young
Speaker 1: retail investors, so that credit crowd, that um, that Robin
Speaker 1: Hood trader. You know, we could just tell by the
Speaker 1: size of the trades that these were not institutional players.
Speaker 1: And then you know, the e t F gets past
Speaker 1: that half a billion dollar mark and now all of
Speaker 1: a sudden, if you look at you know, you look
Speaker 1: on Bloomberg and you look at the top holders, they're
Speaker 1: they're now institutions, right, So I think what you know
Speaker 1: to your point, I think, you know, retail traders, um,
Speaker 1: young investors sort of figure out the trends before, before
Speaker 1: their trends, and then you know, when some of them
Speaker 1: really snowball and become bigger and see a lot of it,
Speaker 1: you I'm going into them. I think it piques the
Speaker 1: interest of advisors. You know, they then do their due
Speaker 1: diligence and they've got that five to tem percent sleeve
Speaker 1: of you know, sort of speculative raids or um, you know,
Speaker 1: disruptive technologies that they're willing to put money into and
Speaker 1: and and they allocate and sylvy just to keep it keep.
Speaker 1: Get get some more of your your thoughts on what's
Speaker 1: been going on with markets. I was reading this note
Speaker 1: earlier this week that said the SMP five hundred has
Speaker 1: cross above it's two hundred day moving average more than
Speaker 1: five times so far this year, a cross below it's
Speaker 1: six times so far this year. So, just how are
Speaker 1: you making sense of what's been going on with the
Speaker 1: market and how does it actually feel to be a
Speaker 1: part of this or to be invested right now? Uh?
Speaker 1: You know, I think if you ask the average investor,
Speaker 1: my my guess is that they would say it doesn't
Speaker 1: feel super good to be an investment in the market
Speaker 1: this year. It's not it's not as fun as it
Speaker 1: has been for the last decade, let's say, or you know,
Speaker 1: even even sort of like those those few months post
Speaker 1: COVID where everything you started going straight up and you know,
Speaker 1: are are all of our trading accounts look great? We
Speaker 1: all look like geniuses. And you know, now, I think
Speaker 1: the market just just has a lot of headwinds. There's
Speaker 1: a lot of uncertainty in the market right now. You have,
Speaker 1: you know, a FED that wants to raise rates for
Speaker 1: lower inflation, um and not creative recession. You know, hear
Speaker 1: about this like soft length landing. You know, inflation has
Speaker 1: been higher than ever. Um. You have issues with geopolitics.
Speaker 1: You you essentially have have all war Russia Ukraine situation.
Speaker 1: You have a strain on perhaps um you know, major commodities,
Speaker 1: oil gas, you know, and then sort of circling down
Speaker 1: depending on how how long this goes into we and
Speaker 1: different things, UM. And you know you have you have
Speaker 1: a lot of essentially fear that the combination of FED
Speaker 1: hikes and inflation will will create a situation where, um,
Speaker 1: you know, we're we're sort of in in stagculation or
Speaker 1: perhaps just don't have don't have great growth in the future.
Speaker 1: But you know, my take on this is, you know,
Speaker 1: so here we are, it makes sense. Um there there
Speaker 1: as we said, a lot of these headwinds to them market.
Speaker 1: But UM, what that means is that you're going to
Speaker 1: have this rangebound volatility. The market is going to trade,
Speaker 1: as you said, you know, in these levels, whether it's
Speaker 1: a sp other industries like NAZAC or sort of in
Speaker 1: a bear market. But what I think is that inflation,
Speaker 1: but geopolitics are likely at this point priced into the market. UM.
Speaker 1: And I think that consumer remains strong. I think that
Speaker 1: you know, historically, tightening monetary policy is followed by solid
Speaker 1: gains SMP rising at about nine percent or so. You know,
Speaker 1: companies have money, consumers are spending. Um, inflation is likely.
Speaker 1: So I actually think that we're going to have a
Speaker 1: pretty decent year. I just think that in the short
Speaker 1: term it's going to be um, not so fun. Everything
Speaker 1: you mentioned there, they seem like economic problems, and in
Speaker 1: the past, when we talk about market downturns, at least
Speaker 1: some of the bigger shocks to that market turned out
Speaker 1: to be more centered around the financial system. And I'm wondering,
Speaker 1: if you see any of the sort of economic weaknesses
Speaker 1: that everyone's pointing to today, whether that has any real
Speaker 1: material carry over into financial markets in the sense that
Speaker 1: it could cause some sort of destabilization in capital markets.
Speaker 1: You know, I think I think that if if a
Speaker 1: lot of the topics I just discussed were to go
Speaker 1: in a different place, For example, if the FED hikes
Speaker 1: you know, more aggressively, um and and sort of doesn't
Speaker 1: doesn't feel satisfied with with inflation falling, and you know,
Speaker 1: you start to see um kind of a harder landing
Speaker 1: than you know, I do think that some of that
Speaker 1: will start feeding into the market. Um. You know, banks
Speaker 1: are in good shape, so this isn't two thousand eight,
Speaker 1: right cutting some pretty good shape. The consumers in good shape.
Speaker 1: The depth servicing ratios are stronger than than they've been
Speaker 1: in decades, So you know, consumers essentially have these two
Speaker 1: shillion in savings. They have lower amounts of death than
Speaker 1: they've ever had before. Um, so I think that I
Speaker 1: think that the market can be more resilient this time.
Speaker 1: And I know famous last words, right, it's it's it's
Speaker 1: different this time. But well, it is different to a
Speaker 1: certain extent because when you look at the past cycles,
Speaker 1: say go back past a decade or two ago, you're
Speaker 1: talking about rates that were coming from a much different baseline. Here.
Speaker 1: I mean, to go from near zero to three. Let's
Speaker 1: assume that's the neutral rate here. I mean an economy
Speaker 1: or a capital market that can't withstand but three federal
Speaker 1: funds rate. Yeah, right, and then real rates are still
Speaker 1: you know, hovering, hovering, um, you know, negative levels. Right.
Speaker 1: So so that's another factor, like I just don't I
Speaker 1: think some of this is you know, some of this
Speaker 1: is an actual shaine on the market, right. But in
Speaker 1: the near term where we are today, I mean, this
Speaker 1: is very unlikely to highly impact some of the quality
Speaker 1: you know, megacap companies out there, like the Amazons, the Apples,
Speaker 1: like these companies that have pricing power, um, you know,
Speaker 1: against strong consumer, strong balance sheets, are doing buybacks and
Speaker 1: all that kind of thing. Like, I don't think it's
Speaker 1: going to impact those companies. A lot of the high
Speaker 1: growth names are you know, with high doubt levels will
Speaker 1: be impacted, but you know they're they're just always sort
Speaker 1: of in that position, right UM, where where they're volatile,
Speaker 1: and rate hikes kind of throw off the performance that
Speaker 1: But I think the broad based economy can withstand um,
Speaker 1: you know, what we're expecting anyway in terms of rate hikes.
Speaker 1: So then if if things are a little bit brighter
Speaker 1: in the second half of the year, or if we
Speaker 1: do have a sort of trade I think you call
Speaker 1: it a tradeable bottom. At this point, what are you recommending? What?
Speaker 1: What are you telling people when they ask you what
Speaker 1: they should be investing in? Yeah, so you know, it's
Speaker 1: it's important to sort of classify what type of trader
Speaker 1: you are too, right, So I think if you're looking for,
Speaker 1: you know, short term returns UM, I think that's trickier.
Speaker 1: You know, I think the machines and high frequency guys
Speaker 1: do a great job with that, but I think you know,
Speaker 1: the average investor that was doing well with UM, you know,
Speaker 1: kind of day trading over the past year, it becomes
Speaker 1: little are dangerous just because you do have so much
Speaker 1: range round volatility. You know, just look at the difference
Speaker 1: in in the NAZAC for example, UM, over the last
Speaker 1: couple of days and the performance there. But I think
Speaker 1: if you have, you know, an appetite to be a
Speaker 1: long term investor and to get really the deal of
Speaker 1: a century, I think, UM, you know, take a step
Speaker 1: back and look at names like Apple, Google, Microsoft Again,
Speaker 1: you've got negative real rates, companies with strong balance sheets,
Speaker 1: pricing power UM, consumers willing to spend money we tell,
Speaker 1: you know, we tell sales rising, and then just the
Speaker 1: theme of cyber security, cloud um, you know, metaverse, web
Speaker 1: three point oh, the future of all technology kind of
Speaker 1: hangs in the balance of these companies. So I just
Speaker 1: you know, and I think even the semi conductors like
Speaker 1: Niviti and m D they're just been absolutely crushed. UM.
Speaker 1: I just think that, you know, the longer term outlook
Speaker 1: for those names, it's going to be what buying Apple
Speaker 1: was ten years ago. You know, that's you're you're going
Speaker 1: to see those compounded returns. I also love the reopen trade.
Speaker 1: You know, we know that spending is going from goods
Speaker 1: to services UM, and it is increasing, but you know,
Speaker 1: lifting the mask mandates UM. You know this this post
Speaker 1: COVID getting out of the house. There I mean, there's
Speaker 1: just so much pent up demand to travel. You know,
Speaker 1: Delta earnings UM call was pretty awesome, Like March is
Speaker 1: the best year that they had ever in terms of
Speaker 1: like business bookings. That's a good trade. Hotels, cruises, you know, caristinos, airlines.
Speaker 1: I mean, that's a good place to look in the
Speaker 1: near term. Yeah, I think Mike Reagan would agree, considering
Speaker 1: that he just got on a flight out to California
Speaker 1: and Sylvia. I've done a lot of booking travel myself
Speaker 1: here for personal reasons over the last few months, though,
Speaker 1: But I do wonder are we in a situation, at
Speaker 1: least in the short term, where all of that pent
Speaker 1: up demand sort of overwhelmed supply. I mean, anyone who's
Speaker 1: tried to book a flight knows that prices are considerably
Speaker 1: higher than what you would have paid a couple of
Speaker 1: years ago. Even finding a ticket at all can be
Speaker 1: kind of difficult given some of the capacity constraints that
Speaker 1: some of these airlines that put themselves in. And you're
Speaker 1: seeing that with other services businesses as well, including a cruise,
Speaker 1: ships and some hotels and resorts. Yeah, and that's a
Speaker 1: great you know, that's a great point, and I think
Speaker 1: that that is actually one of the one of the
Speaker 1: major contributing factors to inflation. It's you know, sort of
Speaker 1: similar but also different to the supply chain issues with
Speaker 1: semiconductors and trying to buy a car and things like that.
Speaker 1: But you know, all of that is going to take
Speaker 1: time to to shake out, and it feels like we're
Speaker 1: in the peak of it. I mean, I agree with you.
Speaker 1: I I just booked myself some tickets to Greece and
Speaker 1: um to to go see some family there after a
Speaker 1: couple of years of not going because of COVID, and
Speaker 1: you know, the tickets just looking at them a week
Speaker 1: before you know, the sort of announcement of RuSHA versus Ukraine,
Speaker 1: to to looking at them two weeks after that started happening.
Speaker 1: I mean, the tickets just absolutely skyrocketed. So I felt
Speaker 1: that pain too. But I think that I think that
Speaker 1: airlines understand that they're going to have to go back
Speaker 1: to UM efficiency, and you know, the news we're getting
Speaker 1: from a lot of them is that it's been better
Speaker 1: in terms of hiring. You know, they're paying more UM,
Speaker 1: They're they're finally sort of like getting a lot of
Speaker 1: the positions filled and whatnot. So it takes some time
Speaker 1: to to you know, settle in with all of this.
Speaker 1: But again, I think we're sort of like at the
Speaker 1: peak of the worst of that romane. If if Mike
Speaker 1: has a hard time booking his return flight back from California,
Speaker 1: you are more than welcome to be the new co host.
Speaker 1: He can just stay there. Yeah, he can just stay there.
Speaker 1: But Sylvia, um, you mentioned the shift uh in spending
Speaker 1: from goods to services, which a lot of people have
Speaker 1: been anticipating for a while now, And actually I was
Speaker 1: reading another note earlier this week that said SMP companies
Speaker 1: are just much more geared towards goods than they are services.
Speaker 1: So as this shift unfolds, we can actually start to
Speaker 1: see small cap companies start to benefit more as people
Speaker 1: start spending more on services, just because there's many more
Speaker 1: restaurants and leisure hotel those types of stocks within the
Speaker 1: rust of two thousands. So I'm wondering if you've been
Speaker 1: thinking about that and whether or not that also makes
Speaker 1: sense to you. Yeah, I mean I think that that's
Speaker 1: you know, it's a very broad based indexed and you know,
Speaker 1: while some of these names are represented there, I would
Speaker 1: rather just go to the source with this one. You know,
Speaker 1: I'd rather just kind of trade the sector itself, like
Speaker 1: I'd look at airlines, I look at hotels. I'd look
Speaker 1: at you know, cruise ships, and and maybe even some
Speaker 1: single stock names like the entertainment types of names. Um,
Speaker 1: just because I think that you know, a lot of
Speaker 1: a lot of a lot of the names in the
Speaker 1: small cap index will will definitely have some growth struggles
Speaker 1: in terms of you know, increased wraith and and whatnot.
Speaker 1: I do think that they'll you know, have more of
Speaker 1: an issue and say some of the mega cap stocks
Speaker 1: I'm still in the mega stock camp versus small caps. Well,
Speaker 1: I am curious so too. I mean to Danna's point
Speaker 1: too about the idea of of how the market is structure,
Speaker 1: or at least how we think it's xt you're here,
Speaker 1: There's been a lot of talk here about I guess,
Speaker 1: how you do more fundamental analysis in a world where
Speaker 1: companies are more wedded to not just services, but even
Speaker 1: sort of intangible items. Here, you don't really value a
Speaker 1: company like an alphabet or even an Apple for that matter,
Speaker 1: which sells physical goods, but they don't necessarily have that
Speaker 1: physical footprint that you know, the old school companies that
Speaker 1: you know, we would know like a ge or a
Speaker 1: Boeing or something like that would have And I wonder
Speaker 1: how you have to shift your mindset when you're trying
Speaker 1: to create, uh some sort of model for what value
Speaker 1: really is these days. Yeah, that's a great point. And
Speaker 1: if you think about you know, sort of the the
Speaker 1: number one thing that you know, you learn finance in
Speaker 1: terms of like fundamental analysis, right, you have to understand
Speaker 1: the company, You have to understand what they're intending to
Speaker 1: invest in. Um, you know, what they're doing exactly, who
Speaker 1: their competitors are. And there are definitely some things in
Speaker 1: our world, like metaverse for example, that that most people
Speaker 1: just don't really understand, but replacing super high valuations on right. Um,
Speaker 1: So I think though that you know, the way I
Speaker 1: look at things is in terms of actual analysis, Like
Speaker 1: you continue to study the financial reports of the company,
Speaker 1: You check the debt, you check the cash on hand.
Speaker 1: You know, you sort of take a look and compare,
Speaker 1: you know, what each company is doing to his or
Speaker 1: her competitor. But my big focus is is and you know,
Speaker 1: this is sort of a uh maybe a symptom or
Speaker 1: a benefit of working for thematic um investment firm is
Speaker 1: where is the it's where is the puck going? What
Speaker 1: are the secular um technological trends of the future. You know,
Speaker 1: what are we trying to do while we're trying to
Speaker 1: you know, fight climate change. So then you know that
Speaker 1: that's gonna take a really long time. But if you
Speaker 1: think about what that opens up for, it could be hydrogen,
Speaker 1: it could be green metals, and then you know you
Speaker 1: can kind of do your your fundamental analysis on a
Speaker 1: lot of the companies in that space. You know, if
Speaker 1: I think about again, communication, UM, semiconductors, things like AD
Speaker 1: I mean with Navidia and and D. You know, are
Speaker 1: a lot of people argue that there are very high
Speaker 1: valuations and this is kind of you know, where they
Speaker 1: should be. And you know, I disagree. I think they're
Speaker 1: they're grossly undervalued because they're they're part of every single
Speaker 1: you know, future secular trend, whether it's electric vehicles, whether
Speaker 1: it's UM you know, powering your your your coffee maker,
Speaker 1: or or you know, missile targeting during a war or
Speaker 1: UM you know everything basically AI A, A g R,
Speaker 1: you know all that stuff. So you mentioned the metaverse.
Speaker 1: You take something like metaverse or augmented reality, and there's
Speaker 1: still a lot of questions as to what's the tangible
Speaker 1: use case for some of that stuff. Yeah, it may
Speaker 1: be fun to play, but is there sort of a
Speaker 1: longer term strato you there that is going to make
Speaker 1: that a necessity in our lives? Yeah, So I think
Speaker 1: I think we could have like a very we could
Speaker 1: probably spend an hour debating, you know, the metaverse. And
Speaker 1: it's funny because I I do spend many years to
Speaker 1: making this with people work at Facebook that are working
Speaker 1: on it. In terms of just like on a basic level,
Speaker 1: I would rather go walking in the park than than
Speaker 1: you know, put on a headset and like maybe be
Speaker 1: in a park but with the head set on and
Speaker 1: like not looking at the birds of the trees around
Speaker 1: me and like you know, playing basketball versus getting a
Speaker 1: cool avatar with you know whatever. But but I think
Speaker 1: web three point oh is more of a tangible reality.
Speaker 1: And I think that you know, the technologies that will
Speaker 1: will power that or things that will also power the metaverse.
Speaker 1: So I think that you know, there is enough of
Speaker 1: a market for that, um but I would rather focus
Speaker 1: on sort of like web web three point or decentralized
Speaker 1: finance appear to appear, you know, transaction, the cryptocurrency, the
Speaker 1: blockchain opportunities. Um you know sort of how that changes
Speaker 1: the world. And I think that that is very very tangible,
Speaker 1: like you don't think about things like, um, you know,
Speaker 1: how how could that impact like shipping? Right? So, so
Speaker 1: smart contracts imagine you know all the build ups that
Speaker 1: we had in ports, for example, once Web three point
Speaker 1: I was sort of powered, and you have this smart contract,
Speaker 1: you can literally build in every single point of efficiency,
Speaker 1: like you know, the ships stay here for this amount
Speaker 1: of days because the port is cloud drops this off here.
Speaker 1: You know that there's just or even on a trading desk, right,
Speaker 1: you have back office mental office, like the twenty five
Speaker 1: functions to settle wound trade. All of that could be
Speaker 1: done with smart contracts. So there are these big you know,
Speaker 1: um uh you know use cases for for Web three
Speaker 1: point on. The stocks that won't make that up, And
Speaker 1: they happen to be the same stocks that are, you know,
Speaker 1: fighting to build the metaverse. So I think they get
Speaker 1: the benefit on the Web three outside. And you you
Speaker 1: mentioned cryptocurrencies, and I wanted to actually ask you what
Speaker 1: what's been behind your bullish call. I think you like
Speaker 1: both bitcoin and ether. I'm not sure what else you
Speaker 1: like in the cryptocurrency space, but what are some of
Speaker 1: the factors behind your call there? Yeah, again, going going
Speaker 1: back to UM, you know, the future of web three, oh,
Speaker 1: and the central finance. You know, all of that will
Speaker 1: be essentially powered by by a blockchain and cryptocurrency and
Speaker 1: you know ethere UM and UM they're going to be
Speaker 1: sort of the building blocks for for that for for
Speaker 1: the next iteration of what we know to we will
Speaker 1: know to be the Internet. UM. And then I think,
Speaker 1: you know, I just I really like the use case, right,
Speaker 1: I think that UM, you have El Salvador adopting it,
Speaker 1: you have UM, you have a lot of these like
Speaker 1: major cities trying to launch digital assets. There's this great
Speaker 1: desire to try to figure out how to make this work. UM.
Speaker 1: And I'm bullish on it because you know, institutions have
Speaker 1: jumped into it, they're buying it up. PTF products have
Speaker 1: been approved. You know, there are trust products out there,
Speaker 1: like gray Scale, bit wise, like through the billions, and
Speaker 1: all of that is you know, essentially through the purchasing
Speaker 1: of bitcoin and some of the other cryptocurrencies out there.
Speaker 1: So I'm just very bullish on the space in terms
Speaker 1: of investment, opportunity, what it's going to do for the future.
Speaker 1: I think people like exchanging um, you know, cryptocurrency for
Speaker 1: goods and services to It's just it's so new for us,
Speaker 1: and we don't really do a day to day but
Speaker 1: you know, there is this huge, um, huge contingent of
Speaker 1: people that actually you know, live their lives that way. Um,
Speaker 1: and I think it's going to spill over and become
Speaker 1: more mainstream. Do you think do you worry at all
Speaker 1: about the potential risk that a major government the US, Europe, China, uh,
Speaker 1: would at some point try to, I guess stand in
Speaker 1: the way of the progress that we've seen with cryptocurrency,
Speaker 1: either with their own digital currency or just some sort
Speaker 1: of stringent regulation. Yeah. I mean I think I think
Speaker 1: like China is really likely to do They've already done it, right.
Speaker 1: But um, in terms of the US, actually I took
Speaker 1: a lot of um, it took a lot of uh,
Speaker 1: you know, sort of positive you in um Jenny Yellin's
Speaker 1: greatest remarks because she was someone who was arguably really
Speaker 1: against this right and and you know, saying that it's
Speaker 1: just going to sort of like destroy the whole the
Speaker 1: whole system and whatnot, and just hearing her come around,
Speaker 1: not that she was you know, blessing it. I mean
Speaker 1: she certainly wasn't, but coming around to saying that, like
Speaker 1: she could see potentially the future use of this, and
Speaker 1: then you know, seeing what came out of the White
Speaker 1: House in terms of like let's let's think about thinking
Speaker 1: about it, and you know, the approval of some of
Speaker 1: these products and funds coming out just makes me think that,
Speaker 1: you know, regulators, yes, are looking to regulate this, but
Speaker 1: they're not looking to necessarily shut it down. And I
Speaker 1: think in some cases it's it's going to be it's
Speaker 1: almost like SPACs in a weird way, like I think
Speaker 1: SPAC regulation. A lot of people are saying like, oh
Speaker 1: my gosh, you guys freaking out because of you know,
Speaker 1: SPAC regulation of the SPACT. I actually think that that
Speaker 1: will be a good thing, right because people will now
Speaker 1: be confident in the financials that they're viewing and you know,
Speaker 1: the deal flows that they're seeing and you know, kind
Speaker 1: of like making sure that um, they're not you know,
Speaker 1: at a at a disadvantage to the founders of the
Speaker 1: blank check Company and whatnot. So sometimes regulation and need
Speaker 1: spaces can can be good and supportive, and speaking of SPACs,
Speaker 1: the metaverse, crypto, all of these crazy things. I think, Romaine,
Speaker 1: one of the things that Mike always tells us is
Speaker 1: our listeners are usually tuning in so that they can
Speaker 1: hear some of the craziest things that we saw in
Speaker 1: markets this weekend. I know Sylvia and I we're chatting
Speaker 1: before the podcast, and she said, there's an abundance, there's
Speaker 1: an overabundance of crazy things that have been happening in
Speaker 1: the market. So, Romaine, I hope you came prepared with
Speaker 1: something that you saw that really stuck out to you
Speaker 1: this week. Well, I mean, I honestly it's probably gonna
Speaker 1: sound a little bit boring, but honestly, the move higher
Speaker 1: that we continue to see uh in treasury yields and
Speaker 1: not just treasury yields really around the world here, and
Speaker 1: I think that when you talk about what's the narrative
Speaker 1: going forward for risk assets here, I mean a lot
Speaker 1: of it, of course, is tied to the Fed and
Speaker 1: the Central banks and tied to where benchmark yields go.
Speaker 1: And when you see these types of moves and how
Speaker 1: severe they are and how swift they are. Uh, it
Speaker 1: certainly gives you pause because it makes you wonder what
Speaker 1: are people pricing in. Are they pricing in a stronger
Speaker 1: economy or are they pricing in a weaker economy. You
Speaker 1: can look at it from both sides of the coin,
Speaker 1: and I've talked with traders who are on both sides,
Speaker 1: on either side of that trade. Uh So it's just
Speaker 1: kind of interesting to see how people interpret I guess
Speaker 1: the exact same move right, And Sylvie, I'm wondering actually
Speaker 1: how you how you would interpret that what's been going
Speaker 1: on in the churches market. Yeah, I mean, you know,
Speaker 1: I would echo that sentiment. I'm just sort of surprised
Speaker 1: by the daily move again, going back to you know,
Speaker 1: my common fun inflation and phily chain woes and pricing
Speaker 1: and things like that. I think that we're probably you know,
Speaker 1: at at a top with this, and you know, I
Speaker 1: would expect um, I would expect the tenure, for example,
Speaker 1: to to you know, come down by the end of
Speaker 1: the year UM and and sort of stabilize UM. And
Speaker 1: you know, I think like we saw it preopen today
Speaker 1: right when we when when you see this like this
Speaker 1: global bid for for sort of fond pushing equities up
Speaker 1: and and you know, looking at a green pre market
Speaker 1: and then you know, the whole thing turns around and
Speaker 1: a couple of things it starts moving. It's I think
Speaker 1: it's just all part of the same, you know, fear
Speaker 1: of inflation, fear of FED rate hikes, and people just
Speaker 1: sort of like not knowing what to do with all
Speaker 1: of it. So I think the volatility sort of persist,
Speaker 1: but it's going to it's it's yeah, it's surprising, agreed
Speaker 1: on that, but I think it's going to settle out.
Speaker 1: And what's something crazy you saw in markets? We I mean, honestly,
Speaker 1: it's it's like the I don't even know how much
Speaker 1: it's down now, but the hundred dollar plus UM crash
Speaker 1: of Netflix, right, I mean, I guess we don't. You know,
Speaker 1: that was my craziest thing too. I guess we're done
Speaker 1: with bridget In, right. Um No, I mean, look, I
Speaker 1: think it bodes well for Bothes, well for the reopen trade. Right,
Speaker 1: We're not watching TV anymore. We're gonna get out in
Speaker 1: the world and maybe reduce some of the subscription services
Speaker 1: and streaming and things like that. Um. But you know,
Speaker 1: I think that Netflix is very much a viable company
Speaker 1: that will be you know, that will do interesting things
Speaker 1: in the future. I think they'll have great content. People
Speaker 1: will sign up for it again. You know, once you
Speaker 1: get cold again, you're gonna start watching and and maybe
Speaker 1: like resubscribing and just paying a fee of share and
Speaker 1: whatever it is. But um, you know, I'm not buying
Speaker 1: it um here. But I am just surprised at how
Speaker 1: absolutely crushed that dot overnight. Yeah. That that that also
Speaker 1: was my craziest thing. And how could it not be
Speaker 1: at the gap between what while she was expecting in
Speaker 1: terms of new subscribers and Netflix actually losing two hundred
Speaker 1: thousand customers for the first time I think it was
Speaker 1: in a decade, was just its astounding. Yeah. And I
Speaker 1: mean the thing too, I thought was more iNeST I mean,
Speaker 1: it's good that you bring up sort of the gap
Speaker 1: between what uh they guided for and what they actually
Speaker 1: delivered here. But then you go forward and the tone
Speaker 1: that you heard out of read to Hastings and some
Speaker 1: of the other executives really didn't give you a lot
Speaker 1: of hope that this was going to turn around. But
Speaker 1: this we're still talking about a company that is still
Speaker 1: I think the number of subscribers that it has is
Speaker 1: still well above where it was pre pandemic, so it
Speaker 1: hasn't really lost all of that boom just yet. And
Speaker 1: you know, once they come up with the next uh
Speaker 1: you know, bergertain or money heist or whatever, the next
Speaker 1: big show is going to be, I guess people will
Speaker 1: flock back into it. So, Sylvia, since you stole my
Speaker 1: craziest thing, I suppose I have to actually revert back
Speaker 1: to cryptocurrencies, which I very frequently do because there's so
Speaker 1: much crazy stuff happening in that space. But I've actually
Speaker 1: been getting a lot of notes about bitcoin recently that
Speaker 1: I've been calling Bitcoin's recent moves boring, which is like,
Speaker 1: who who would have thought? It's been stuck in sort
Speaker 1: of this very narrow trading range and really hasn't been
Speaker 1: able to break out so far this year, really, and
Speaker 1: so people of started calling the moves in bitcoin boring
Speaker 1: or somebody an analystized book with I said it's been
Speaker 1: as dull as watching grass growth. So that maybe actually
Speaker 1: is you know, the non event in crypto is the
Speaker 1: craziest thing this week as well. Yeah, I would agree,
Speaker 1: and and you know, maybe for me that's another plus
Speaker 1: sign in terms of this is now an investable asset, right,
Speaker 1: because it's become a little more boring and you don't
Speaker 1: see those percent moved in it in a day or
Speaker 1: a week anymore. Um, I think the bitcoin is behaving,
Speaker 1: cryptocurrency is behaving like the NASDAC one hundred. I think
Speaker 1: if you take some of the the higher beta stocks
Speaker 1: out there, it would be you know, a perfect hedge
Speaker 1: to it. And I'm not, you know, super surprised by that.
Speaker 1: I think that at some point it's going to start
Speaker 1: just marching upwards and separating from the market a little bit.
Speaker 1: But for now, it looks like investors are you know,
Speaker 1: looking at bitcoin as as a as an equity type
Speaker 1: of play. And also, don't forget we all just paid taxes, right,
Speaker 1: and I think this is the first time where people
Speaker 1: like I mean, hopefully everybody has paid their taxes on
Speaker 1: their cypo over the years, but I don't know that
Speaker 1: that's been the case from what I've heard. You know,
Speaker 1: this was the first year where a lot of people
Speaker 1: got some some some pretty hepthy bills. And we're crypto trading,
Speaker 1: so you know, I think part of that that money
Speaker 1: that will come back into the market, cryptos is is
Speaker 1: taking some time off for for a couple of case
Speaker 1: post April A teams. Yeah, it'll be really interesting to watch.
Speaker 1: I'd heard that reason is one of the reasons that
Speaker 1: I've been selling off the last couple of weeks. Um,
Speaker 1: but I think that does it for us. I want
Speaker 1: to thank both of you for joining us remain I'm
Speaker 1: really sort of hoping Mike gets stuck in California. Maybe
Speaker 1: you can join us again next week. He knows we're
Speaker 1: we love Mike. He's my favorite death exactly. And Sylvia,
Speaker 1: thanks so much for joining us as well. It's been
Speaker 1: great to have you. Yeah, thank you so much for
Speaker 1: having me. Um, hope you hope you're both doing well
Speaker 1: all right? Thanksful Dotta, Thanks Sylvia, what goes up. We'll
Speaker 1: be back next week. Until then, you can find us
Speaker 1: on the Bloomberg Terminal website and app or wherever you
Speaker 1: get your podcasts. Would love it if you took the
Speaker 1: time to rate and review the show on Apple Podcasts
Speaker 1: so more listeners can find us. And you can find
Speaker 1: us on Twitter follow me at Veldonna Hirick. Romaine Bostick
Speaker 1: is at Romaine Bostick, and you can also follow Bloomberg
Speaker 1: Podcasts at at Podcasts, and thank you to Charlie Pellett
Speaker 1: of Bloomberg Radio. What Goes Up is produced by Stacy Wong.
Speaker 1: The head of Bloomberg Podcasts is Francesco Levie. Thanks for
Speaker 1: listening and we'll see you next time.