Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all harnessing the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube and now also on Bloomberg Quick Take. We talked
Speaker 1: about volume being light in terms of the trade here,
Speaker 1: and that makes maybe some sense as we get ready
Speaker 1: for a holiday week next week and get into the weekend.
Speaker 1: But I will say when it comes to news, I
Speaker 1: can't almost every day. I think this week when I
Speaker 1: would look at the most right on the Bloomberg where
Speaker 1: it was in the past eight hours or past one hour,
Speaker 1: it was all about f t X and Sam Bank
Speaker 1: been freed. And I gotta say this includes this next
Speaker 1: story which today which I it's a story I love
Speaker 1: and it's a must read. It is a most read
Speaker 1: on the Bloomberg. It is about what f t X is,
Speaker 1: Sam Bankman, Freed said when we asked him, our Bloomberg
Speaker 1: team asked him about some different things and the red
Speaker 1: flags that were raised over the summer. So delighted to
Speaker 1: have back with us, Bloomberg News investing reporter Annimal. So
Speaker 1: she's been all over this story. She's back in our
Speaker 1: Bloomberg Interactive broker's studio. Love this story, feel like it's
Speaker 1: so important right when we like kind of are now
Speaker 1: looking back. So first of all, tell us about the
Speaker 1: story and how you guys laid it out. So um
Speaker 1: back in August, um I was working with Hannah Miller
Speaker 1: and Anna Arera here at Bloomberg and we were just
Speaker 1: kind of talking about how something was fishy with f
Speaker 1: t X, and at the time, SPF was on this
Speaker 1: mega buying spree. He was buying up all these bankrupt
Speaker 1: companies and just throwing money left and right, and we
Speaker 1: just sort of started to like, the more we looked
Speaker 1: into f t X, the more we we were like,
Speaker 1: where is he getting all this money? What's going on here?
Speaker 1: And what on earth is this company Alameda that's operating
Speaker 1: on the side that he also owns, and none of
Speaker 1: this was like, you know, it was known that Alameda
Speaker 1: existed and was out there, but like there seemed to
Speaker 1: be some pretty glaring conflicts of interest. So we thought
Speaker 1: that we could write a story about how in traditional finance, um,
Speaker 1: that that's not that's not really kosher, it's not really
Speaker 1: copacetic to have a market maker kind of operating under
Speaker 1: the same umbrella as an exchange. Sure enough, here we
Speaker 1: are after interviewing him about it in August, and uh,
Speaker 1: it's all over the news. In the hindsight, I mean,
Speaker 1: this was just the tip of the iceberg, this hunch,
Speaker 1: this kind of fishiness, that's right. Um, so in hot yeah, hindsight,
Speaker 1: it was it was really just the tip of the iceberg.
Speaker 1: Um what was actually happening? So okay, So it raises
Speaker 1: the question Annie about you know, if you're a company,
Speaker 1: if you very better capital firm, and you go out
Speaker 1: and you're looking for investments, you have certain types of
Speaker 1: due diligence, and oftentimes what you do is you look
Speaker 1: at the makeup of the board, for example, or you
Speaker 1: look at balance sheets and you'd get you know, you'd
Speaker 1: dig under the hood. Journalists don't necessarily get to do
Speaker 1: that when they're interviewing subjects unless they get access to
Speaker 1: those things. Um, what adventure capitals miss? Why did venture
Speaker 1: capitals miss this? I mean, one big thing venture capital
Speaker 1: missed was that you know, the audit, the auditor that
Speaker 1: first of all, not all pieces of this empire were audited,
Speaker 1: but a piece that was was audited by Like, this
Speaker 1: was a thirty two billion dollar company and they had
Speaker 1: an auditor that was like so far from anyone's radar,
Speaker 1: that was like the first auditor in the metaverse. Like
Speaker 1: you know, I mean, no matter what you think of
Speaker 1: the metaverse, that should send up a red flag to you.
Speaker 1: If you're a venture capital, Zuckerberg would come out and say, hey,
Speaker 1: we're still working this exactly, like you're like, come out exactly.
Speaker 1: So that's a red flag. But then, I mean, digging
Speaker 1: a little bit deeper, the relationship between Alameda and f
Speaker 1: t X should have been a red flag, and it
Speaker 1: was out there. It was in the white paper that
Speaker 1: f t X put out of it's exchange that it
Speaker 1: has Alameda in the background. And by the way, Alameda
Speaker 1: was founded before f t X, um there was a
Speaker 1: clear linkage there. So I mean, these are all things
Speaker 1: like you'd at least at a minimum want to know,
Speaker 1: like what kind of access does Alameda have to your
Speaker 1: exchange data, like information on your customers and what they're doing.
Speaker 1: I mean to say, nothing of like sending money from
Speaker 1: f t X to Alameda, UM, which is outlandish. Well,
Speaker 1: it's kind of amazing. I do love this story. Everybody
Speaker 1: should read it just got to Bler dot com. But
Speaker 1: it's interesting, Like you say on ft X is relationship
Speaker 1: with Alameda Bank, Ben Freed said over the summer, as
Speaker 1: of today, there wasn't that much of one there, so
Speaker 1: maybe who knows, maybe at that point it wasn't I
Speaker 1: don't know. No, I think basically at this point we
Speaker 1: like cannot believe anything he ever said on the record
Speaker 1: or ever um. But looking back on his comments, it
Speaker 1: was kind of like it was astonishing because we asked
Speaker 1: him very specific questions about the relationship between these two
Speaker 1: firms and where he lived for example, and like he
Speaker 1: wasn't a to answer anything. Will help me out with
Speaker 1: her because going back to what Tim says, and we've
Speaker 1: been talking about this all week, that you know, venture
Speaker 1: capitalists tend to love these crazy people. You know that
Speaker 1: often look a little bit offbeat and are seen as
Speaker 1: geniuses and brilliant, right and and are okay with it
Speaker 1: and the quirkiness. And yet as you guys lay out
Speaker 1: the living arrangements for f t X and Alamedia employees
Speaker 1: like that, he couldn't really answer where he lived or
Speaker 1: slept like you looking back, is it just like, wait
Speaker 1: a minute, this is a simple question. Yeah, there are
Speaker 1: pretty simple questions that I don't think people were really
Speaker 1: like asking him um or they didn't care. And to
Speaker 1: your point about how he looked and acted, I think
Speaker 1: sometimes there's a group think that goes on with vcs
Speaker 1: or anyone. But like you think, like, oh, well, I've
Speaker 1: seen genius look like this before, in for example, like
Speaker 1: a Mark Zuckerberg, like someone who's like not like flashy,
Speaker 1: like handsome, dashing, like you know, good like media gets
Speaker 1: into it too. Yeah, yeah, of course we love a
Speaker 1: story correct. But but I will say any to your point,
Speaker 1: I think you're spot on someone like Mark Zuckerberg. Think
Speaker 1: about Facebook's origin story. Right, A bunch of folks drop
Speaker 1: out of Harvard, they moved to California. They all lived
Speaker 1: together like there, you know, college roommates of some sort Apple, right,
Speaker 1: and a garage and Cooper Tino, those sorts of things.
Speaker 1: So it's it makes sense in hindsight, but at the
Speaker 1: time it's not necessarily glaring. That's true. I mean, yeah,
Speaker 1: A more charitable interpretation is like any startup begins from
Speaker 1: you know, humble origins by definition, and I think what
Speaker 1: maybe broke down along the way is how fast, how
Speaker 1: rapidly this thing was growing? Right, So it took many
Speaker 1: years for Apple to become Apple, it took many years
Speaker 1: for Amazon to become Amazon, and this crypto thing, and
Speaker 1: maybe there was no frame of reference on how fast
Speaker 1: something could grow, but um, but things were moving, progressing
Speaker 1: really fast. F t X started in right, and now
Speaker 1: now it's as of this year, it was a thirty
Speaker 1: two billion dollar company, you know, just throwing out cash
Speaker 1: on all these um, all these various types of investments.
Speaker 1: So I mean that rapid growth maybe they thought was
Speaker 1: the new normal for crypto or something that they couldn't miss.
Speaker 1: But um, it does kind of give you pause looking back, Ednie,
Speaker 1: looking back, and of course, you know Monday morning quarterbacking,
Speaker 1: what would you have maybe pushed him further on or
Speaker 1: our team should have pushed him further on, or just
Speaker 1: media in general, an investors should have pushed him further on,
Speaker 1: or what would you have asked differently. That's a really
Speaker 1: good question. I mean, I think that all journalists are thinking.
Speaker 1: So many journalists had exposure to him or gave him
Speaker 1: exposure to the world, and it's a bit of a
Speaker 1: soul searching moment for the industry about the exposure that
Speaker 1: he got. Um, I'm proud of the questions we asked him.
Speaker 1: I never interviewed SPF other than this interview to ask
Speaker 1: about alany. But of course I wish I hadn't figured
Speaker 1: out that he was siphoning funds perhaps like or or
Speaker 1: you know, even some of the even some of the
Speaker 1: like dicier stuff under the hood. Um. Of course, you know,
Speaker 1: even looking back at what we printed, like we took
Speaker 1: certain things to be true that he said about like
Speaker 1: how the business was doing right. We you know, we
Speaker 1: said that he said that it earned a certain amount
Speaker 1: of money. And now in the bankruptcy filings, even even
Speaker 1: John Ray says, I don't know if any of the
Speaker 1: financials I have in charge formerly oversaw the liquidation of
Speaker 1: Enron and is now overseeing the same like liquidation of
Speaker 1: f t X said, I've never seen like a situation
Speaker 1: like this. I'm not sure if I can trust the
Speaker 1: financials that I have in front of me, so knowing
Speaker 1: knowing what we know now, and and all the reporting
Speaker 1: that you've done and that others have done, what you've
Speaker 1: read about what what Sam Bateman Freed has said? What
Speaker 1: are some I don't want to use the term lie,
Speaker 1: because you know they're there are different there are different
Speaker 1: things associated with lying. But I mean, what are some
Speaker 1: things that you saw that he said that We're definitely
Speaker 1: not true? I mean, definitely not true. He told us
Speaker 1: on the record that there wasn't there wasn't really a
Speaker 1: relationship between FTX and Alameda. We know that that's absolutely
Speaker 1: unequivocally false. No way was that true? Um he talked
Speaker 1: about his living arrangements. He couldn't really answer, um, so
Speaker 1: it's hard to know. I mean, I don't think at
Speaker 1: all anymore that he like quickly had changed his living
Speaker 1: arrangements like no way, he said, I mean, this is
Speaker 1: one of the funny ones. He said that by some measures,
Speaker 1: like they are the most regulated exchange in the world,
Speaker 1: which is hilarious. I mean, it was even hilarious. Then
Speaker 1: like to suggest that this this offshore exchange crypto exchange
Speaker 1: in the Bahamas, like has any level of Like I've
Speaker 1: covered exchanges, they have a lot of roles. And that's
Speaker 1: a feature, not a bug of putting in a certain place.
Speaker 1: I mean, if you wanted to be regulated. He moved
Speaker 1: the whole operationally, moved Alameda from California to Hong Kong
Speaker 1: and then to the Bahamas. All right, Annie, thank you
Speaker 1: so much. You're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well,
Speaker 1: nothing like a hardcore ultimatum to get people to get
Speaker 1: off the fence. In this case, we're talking about the
Speaker 1: Twitter fence, and we're talking about Elon Muskin what he
Speaker 1: gave Twitter employees and ultimatum to either commit to the
Speaker 1: company's new hardcore work environment or get it out. And
Speaker 1: also most recently, he's saying that all of the social
Speaker 1: media platform software engineers must come to its headquarters for
Speaker 1: a meeting this afternoon, even urging employees to fly to
Speaker 1: San Francisco to be there in person. Does everyone have
Speaker 1: a private jet? I don't think the question. Kurt Wagner
Speaker 1: wrote that piece along with Maxwell Adler, and Kurt Wagner
Speaker 1: joins us now Viasm from San Francisco's technology reporter for
Speaker 1: Bloomberg News. He has been all over this story, Kurt.
Speaker 1: Good to have you back with us. I want to
Speaker 1: start with the fact that I can still use Twitter
Speaker 1: right now. And last night before I went to bed,
Speaker 1: it was like Twitter was on death row awaiting to
Speaker 1: be executed. And I wake up this morning and there
Speaker 1: it is. It still works. What's going on? Yeah, I
Speaker 1: mean last night Twitter was like a very sad place
Speaker 1: if you if you like the product and use it,
Speaker 1: because you're right, it felt like everyone was just you know,
Speaker 1: the night before the world ending or something like that. Um,
Speaker 1: but Twitter is working. You know. Everything we are hearing
Speaker 1: in in in uh you know reporting is that there
Speaker 1: was a lot of concern that because there's been so
Speaker 1: many people who have left, that eventually there's going to
Speaker 1: be this you know, um technical kind of cascade, right
Speaker 1: that maybe one part of the service is going to
Speaker 1: have a bug and you know it's going to lead
Speaker 1: to other features not working, and that eventually we're going
Speaker 1: to start to see like long outages or it's certainly
Speaker 1: gonna be hard for them to ship any new teachers
Speaker 1: because they're going to be just in maintenance mode this
Speaker 1: whole time. But for today, of course, it seems to
Speaker 1: still be working, and I certainly hope that's the case
Speaker 1: going forward. It does feel though, like this is going
Speaker 1: to be something that that slowly starts to happen over
Speaker 1: the next couple of weeks. I mean, how do we
Speaker 1: mean not a publicly held company, so it's kind of
Speaker 1: weird now we don't have perhaps the transparency, visibility and
Speaker 1: right ealing can kind of say whatever he wants, it
Speaker 1: feels like about this company. But what are you hearing
Speaker 1: from folks who are inside the company and for those
Speaker 1: of us who use Twitter, you know about kind of
Speaker 1: the reliability of this platform. Yeah, I mean, these these concerns,
Speaker 1: the ones that I just shared with you, are are
Speaker 1: coming from those people, right, Like these are people who
Speaker 1: are much smarter about the engineering and about the tech
Speaker 1: than I am. Right, and they're leaving the company, and
Speaker 1: they're saying we're not sure who's left, right, Like, Hey,
Speaker 1: I'm I was on a team that helped, you know,
Speaker 1: keep the timeline running, and everyone on my team is gone. Right, Like,
Speaker 1: that's the kind those are the kinds of stories that
Speaker 1: we're starting to hear from people, right. And I think
Speaker 1: the argument from you know, supporters of Evan has been well,
Speaker 1: Twitter used to be much smaller than it is now
Speaker 1: and it was still abled to operate, And that's of
Speaker 1: course very true. I think it's very different to you know,
Speaker 1: build up to let's say two thousand employees versus start
Speaker 1: at seven thousand and then ripped five thousand of those
Speaker 1: people out within a two week stretch, right. It just
Speaker 1: creates a lot of chaos and uncertainty and so um,
Speaker 1: you know, this is where the concern lies that maybe
Speaker 1: the product isn't going to be as stable as it
Speaker 1: should be. And there's a really kind of an a
Speaker 1: side story was that Jaguar land rover to recruit fire,
Speaker 1: Twitter and Facebook workers. I mean there's companies out there saying,
Speaker 1: you know, on a city of San Francisco's coming out
Speaker 1: and saying, hey, we've got positions. I would imagine, though, Kurt,
Speaker 1: that those positions don't pay what you know Twitter would
Speaker 1: pay for engineers. Uh, Kurt, I don't know how everyone's
Speaker 1: supposed to go to the office today. If the office
Speaker 1: is closed. Yeah, you you and me both right. So
Speaker 1: last night there was a company wide email that said, uh,
Speaker 1: we're closing the offices, were restricting badge access. And the
Speaker 1: explanation I got from some folks who received that em
Speaker 1: know was the feeling was that they don't exactly know
Speaker 1: who still works at Twitter right now because so many people, um,
Speaker 1: you know it didn't accept the muskus asked to be hardcore,
Speaker 1: and so they're sort of sifting through, like, Okay, who
Speaker 1: actually still works here? So, for example, folks who are
Speaker 1: not planning to work at Twitter any longer still have
Speaker 1: access to their email. It's still have access to Slack
Speaker 1: things like that, and so thinking once they closed the
Speaker 1: office in order to sort of figure out, okay, you know,
Speaker 1: who should still have access to this so we don't
Speaker 1: have rogue employees kind of coming in. But you know,
Speaker 1: then he says, today, hey, everyone needs to show up
Speaker 1: on the tenth floor to uh have an in person meeting.
Speaker 1: And it's like, well, which one is it is the
Speaker 1: office closing, badge access is revoked or is everyone's supposed
Speaker 1: to be there in person today. It's just it's so
Speaker 1: confusing and chaotic right now, guys and it's people who
Speaker 1: work at Twitter are really frustrated, as you can imagine
Speaker 1: with everything that's been going on. Well, and you have
Speaker 1: to wonder what listen. I know Ellen is a smart dude,
Speaker 1: but you have to wonder he paid forty a billion
Speaker 1: dollars with this company, right, and it feels like the
Speaker 1: value potentially it was a publicly held company would be,
Speaker 1: you know, continuing to go to the downside. Just twenty seconds.
Speaker 1: I mean, do we have any idea of what his
Speaker 1: longer term thinking is here? Just quickly, no quick cancers, Now,
Speaker 1: I don't I really don't. I mean you to talk
Speaker 1: a lot about maybe building payments into Twitter. That's about
Speaker 1: as as detailed as I could Right now. I'm just chuckling, Kirk,
Speaker 1: because I'm thinking about your weekend that's going to be
Speaker 1: doing a lot of work. What weekend, weekend or their
Speaker 1: weekends or holidays anymore. I don't think not for your
Speaker 1: Twitter employees or Elon Musk, Kurt. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic
Speaker 1: on Bloomberg Radio. We know wrapping up in Egypt, A
Speaker 1: lot of headlines came out of that and with that
Speaker 1: as a backdrop, Um, there's a story you'll find in
Speaker 1: the new issue Bloomberg business Week magazine that's now out
Speaker 1: on news stands, online, and on the Bloomberg. It is
Speaker 1: about the nation caught in the cross hairs of climate change.
Speaker 1: It's getting rich and here's the kick on oil, It's
Speaker 1: getting rich on coil. This story happens to also be
Speaker 1: the Bloomberg Big Take today. The story written by Monte Real,
Speaker 1: senior investigations reporter at Bloomberg News. He joins us via
Speaker 1: zoom from Chicago. Also with us this afternoon is Joel Webber.
Speaker 1: He's the editor of Bloomberg business Week. He's with us
Speaker 1: in the Bloomberg Interactive Broker's studio. Joel, I want to
Speaker 1: start off with you, um, because it is today's Big Take.
Speaker 1: It's in the upcoming issue or the current issue of
Speaker 1: Bloomberg Business Week magazine. Um, it's the nation is between
Speaker 1: a rock and a hard place right now, because so
Speaker 1: drill for oil and hope for the best. And that's
Speaker 1: basically what the I think the story really boils under.
Speaker 1: And that is an incredible paradox. And as Monty writes,
Speaker 1: the coastline of the city of this country is is
Speaker 1: actually below sea level, so rising sees present obviously a
Speaker 1: huge challenge. It is historically one of the poorest countries
Speaker 1: the world. Um. And yet with this deal with x On,
Speaker 1: they find themselves like potentially uh you know, with uh
Speaker 1: kind of a one shot at at an anormous amount
Speaker 1: of wealth and could pull themselves out of that, um poverty.
Speaker 1: But to do so also means that here we are
Speaker 1: in the world of climate change, and it puts the
Speaker 1: whole country at jeopardy to to walk this path. So,
Speaker 1: so Monty incredible story. Uh. How is this country, uh,
Speaker 1: which we call the last petro state, how is how
Speaker 1: is it uh navigating this challenge because this has been
Speaker 1: a long time in the making and only now have
Speaker 1: they really started to accelerate how much oil they're extracting
Speaker 1: from the country. Yeah. Um, so this discovery of all
Speaker 1: this oils came in so it's been about seven years now, um.
Speaker 1: And I think just to put this in a little
Speaker 1: bit of contact, Guyana is really really small. There's only
Speaker 1: about eight hundred thousand people in the whole country. And
Speaker 1: to put its economy in perspective, the size of its
Speaker 1: economy and the economic output traditionally has been about you know,
Speaker 1: one tenth of an average American mid size city. So
Speaker 1: it's a very very small economy we're talking about. And
Speaker 1: this is a huge, you know windfall of oil. It's
Speaker 1: billions of barrels of it. And so the leaders of Guyana,
Speaker 1: you know, looked at this potential windfall, which is you know,
Speaker 1: potentially worth hundreds of billions of dollars, and politically they
Speaker 1: could not pass up the chance to drill this, and
Speaker 1: so they began drilling about three years ago. And since then,
Speaker 1: Guyana has become the fastest growing economy in the world. Um.
Speaker 1: It's capital budget just in the last year, I think
Speaker 1: grew more than and um. So with all of this
Speaker 1: road of though, there are critics who are saying that
Speaker 1: the oil drilling has kind of spun out of control already.
Speaker 1: There's a lot of complaints that environmental regulations have kind
Speaker 1: of been tossed to the wayside um, and there's a
Speaker 1: lot of criticism of the contract itself with Excellent Mobil,
Speaker 1: which is drilling new at all um. A lot of
Speaker 1: people say that in terms of that contract were lopsided
Speaker 1: in favor of the of the company at the expense
Speaker 1: of the residents of the country. Hey, Monty, I was
Speaker 1: pretty struck when you wrote about the ecology of the
Speaker 1: island and what what there is in the rainforest where
Speaker 1: people don't live. Talk a little bit about what you
Speaker 1: see there and and and really this area of the
Speaker 1: world and what it has to offer. Yeah, So Guyana
Speaker 1: is you know, it is one of the most sparsely
Speaker 1: populated countries in the Western Hemisphere. And you know, part
Speaker 1: of the reason for that is of those eight hundred
Speaker 1: thousand people, not them live right along the coast in
Speaker 1: a narrow strip, and so a lot of the interior
Speaker 1: of the country is forested. It's about eight covered in forest.
Speaker 1: And so there are just the unbelievably beautiful parts of
Speaker 1: Guyana and there are these you know, big plateaus with waterfalls. Um,
Speaker 1: you know, there's all sorts of endangered species there. So
Speaker 1: it's really this kind of ecological treasure. And one of
Speaker 1: the ironies of the story is that Guyana, before they
Speaker 1: embraced drilling oil, they were seen as a country that
Speaker 1: was really leading UM efforts at conservation and ecological confservation particularly.
Speaker 1: So want to help me out here, because in your
Speaker 1: report you say that Guyana's leaders have promised to create
Speaker 1: a different kind of petro state, an environmentally sustainable one
Speaker 1: that uses oil revenue to build a more adorable infrastructure
Speaker 1: powered by renewable energy. Are they not doing that or
Speaker 1: is that ultimately where they're going? Well, that's where they
Speaker 1: say they're going. They've they've how do they plan? What's that?
Speaker 1: How do they do that? Well, so they have a
Speaker 1: plan that's um called the Low Carbon Development Strategy, and
Speaker 1: so what they want to do is use much of
Speaker 1: the oil revenue to build one infrastructure to kind of
Speaker 1: protect against climate change. And that would include things like
Speaker 1: reinforcing the sea wall. There's a sea wall right now
Speaker 1: that runs along two miles of coastline and that that
Speaker 1: needs to be reinforced and expanded because the Caribbean is
Speaker 1: projected to rise, um, you know, up to six feet
Speaker 1: by the century if if things stay on the course
Speaker 1: as they are. So part of the money would go
Speaker 1: to infrastructure like that, part of it would go to
Speaker 1: bill um building basically a new energy grid that would
Speaker 1: be a post oil energy grid. So the leaders say
Speaker 1: that they want to use this money, basically use oil
Speaker 1: money to finance the transition away from one and it
Speaker 1: sounds paradoxical and um, you know it sounds you know,
Speaker 1: on first blushed, I guess like something that goes against
Speaker 1: most you know, kind of environmental thinking, like to embrace
Speaker 1: oil production. Um you know this comes. Yeah, it comes
Speaker 1: years after the developed countries of the world have promised
Speaker 1: to wean themselves off of the oil. The Guyana will
Speaker 1: will make the argument that it's not fair to a
Speaker 1: developing country, um to not be able to have some
Speaker 1: of the benefits from the oil industry when the developed
Speaker 1: world has benefited from industrialisay Asian and the benefits of
Speaker 1: fossil fuels and contributed to line shared climate change, which
Speaker 1: countries like Guyana right stuck with the Well, I have
Speaker 1: to say so much in this story. Um, it's a
Speaker 1: really great deep breed and I'm thinking even for this
Speaker 1: weekend of the upcoming holiday weekend, UM, really worth getting into.
Speaker 1: And this is the quandry that you find any developing
Speaker 1: nations um in Uh, thank you so much. Monte Real,
Speaker 1: Senior investigations reporter at Bloomberg News. Joining us via zoom
Speaker 1: in Chicago. Joe Weber, editor of Bloomberg Business Week, joining
Speaker 1: us right here in our studio of the new wi
Speaker 1: sho of Bloomberg Business Week. Check it out. It is
Speaker 1: out on newsstands, online, and on the Bloomberg terminal. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. It's really all
Speaker 1: about crypto. Kind of perfect considering the last couple of
Speaker 1: weeks in the collapse of f t X and the undoing,
Speaker 1: if you will, of SPF and his empire. And in
Speaker 1: our weekly crypto segment, we've got an entrepreneur in Trench
Speaker 1: to in the crypto world. Yeah, we're talking to Alexander Dreyfus,
Speaker 1: the founder and CEO of it's a global blockchain company,
Speaker 1: it's called Chili's and then also the CEO of the
Speaker 1: sports app socio dot Com. Alexander joins us via zoom
Speaker 1: from Malta this afternoon. Alexander, good to have you with us. Um.
Speaker 1: First of all, Malta. Why are you in Malta? Very
Speaker 1: much for the invitation. I've been in Malta for sixteen years,
Speaker 1: even though you public guess that I have a French accent,
Speaker 1: and I've been there just because I was working in
Speaker 1: the online gaming industry for fifteen years before cryptos. So
Speaker 1: that was the place where I moved and I'm happy
Speaker 1: to be here. Well, tell us a little bit about
Speaker 1: your companies, because from what I understand is as to
Speaker 1: mention your founder and CEO of the global blockchain company Chills,
Speaker 1: and I hope we're saying it correctly. Are we actually
Speaker 1: do it perfectly? Okay, we're all worried. We did practice
Speaker 1: a lot. And then you've got um your CEO of
Speaker 1: socios dot com and Socios is powered by chilis our
Speaker 1: chill is UM. So help me out and and forgive
Speaker 1: me because the past two weeks and f t X
Speaker 1: and SBF, you know, we are realizing that there's not
Speaker 1: always so much transparency when it comes to things in
Speaker 1: the crypto world. So explain if you were the relationships
Speaker 1: within those two companies that you are CEO both CEO
Speaker 1: of Yes, it's pretty easy. So first of all, uh,
Speaker 1: we are a blockchain. ChIL is a blockchain number thirtiest
Speaker 1: today thing in the in the rankings. And what we
Speaker 1: provide is an infrastructure for the sports industry to create
Speaker 1: a concept that we invented called fanto Kinds and these
Speaker 1: fantokends are used on a consumer app called socials dot
Speaker 1: com which has like one point eight million users something
Speaker 1: like that. And our business is to try to help
Speaker 1: sports property all over the world to engage and monitors
Speaker 1: their fan base. And the idea is that a fund
Speaker 1: can buy a fanto can that gives them the right
Speaker 1: to vote on some decision of the club and get
Speaker 1: some like membership benefits um provided by the team of
Speaker 1: like by us. That's how it started for a half
Speaker 1: years ago and now we are like we work with
Speaker 1: a hundred seventy teams all over the world, three hundred employees, etcetera.
Speaker 1: And how how many have you sold a lot? We
Speaker 1: have seventy teams launched, I will say, and it generated
Speaker 1: a few hundred millions of dollar probably for the last
Speaker 1: two years. Actually, why Alexander, does it have to be
Speaker 1: on the blockchain? Why can't teams do this without blockchain technology?
Speaker 1: I love that question. So the reality is that sports
Speaker 1: fan or not in the stadium, not in the city,
Speaker 1: not even in the country of the team they were supporting.
Speaker 1: So we were looking to create something that was both
Speaker 1: valuable for a fun and scalable for a team. And
Speaker 1: what is valuable for a fun is to have a
Speaker 1: voice to be recognized. So the fact that you can
Speaker 1: vote on the blockchain, unlike the sms that you send,
Speaker 1: you know, on the TV show a Saturday night, where
Speaker 1: you have absolutely zero transparency about who's gonna be voted
Speaker 1: out on the TV show. Here the voting of you
Speaker 1: deciding as a fun something related to your team is
Speaker 1: on the blockshin And that was actually the foundation of
Speaker 1: what we've done. So these fan tokens that you said
Speaker 1: you've sold and generated a few hundred million dollars, I
Speaker 1: guess in revenue. I'm assuming those fan coins. Can they
Speaker 1: be bought back by fans. Yes, because they're they're on
Speaker 1: the blockchain, because there are digital assets, they are treadible,
Speaker 1: and therefore they are available to the market where more
Speaker 1: or less anywhere in the world. So and in terms
Speaker 1: of and again forgive me, because we're dealing with the
Speaker 1: backtrap of the last two weeks. So those coins, do
Speaker 1: you keep fifty of the like? Do you do you
Speaker 1: leverage them? Do you do something with those coins? I'm
Speaker 1: just curious if all of a sudden everybody that has
Speaker 1: fan coins came in and said I want to buy
Speaker 1: them back, could you do it? No, you cannot readem them.
Speaker 1: It's you know, it's like a membership program. Wants you
Speaker 1: buy it, it's yours. If you want to sell it
Speaker 1: to someone else, you can see that a little bit
Speaker 1: as a collectible. There is nothing that is it's not redeemable,
Speaker 1: there is no collateral. Is just a digital membership that
Speaker 1: has scarcity where fans can trade it against each other
Speaker 1: if they want. And so how many members do you have?
Speaker 1: One point eight million? One point eight million? Okay, hey Alexander. Again,
Speaker 1: with the context of everything that's happened the last two weeks,
Speaker 1: I mean, this has certainly been a momentous time when
Speaker 1: it comes to web three, when it comes to everything
Speaker 1: that's even tertiarily related to crypto. I'm just wondering what
Speaker 1: that does to your business, the way that you're watching
Speaker 1: this news unfold from f t X, from finance and
Speaker 1: the like. Does it damage the reputation of the industry
Speaker 1: and to to the extent that it hits you, It's
Speaker 1: disappointing for me as an entrepreneur because I met some
Speaker 1: actually have been in Bahamas, so I know them very well.
Speaker 1: I like to say to our and that's what I
Speaker 1: said to our colleagues, it doesn't impact us, but it
Speaker 1: affects us. It doesn't impact us as a business because
Speaker 1: we have no relationship we have we we had zero exposure.
Speaker 1: But it affects us obviously as an industry because of
Speaker 1: course we are in a crypto space. Having said so,
Speaker 1: we are not that, we are not an ex change.
Speaker 1: We're not in a business of lending money. We're on
Speaker 1: a sports space. Could go to zero tomorrow morning, we
Speaker 1: will still have a business. And that's a big difference.
Speaker 1: And what I think is gonna we're gonna realize in
Speaker 1: the next hopefully six six months to one year, is
Speaker 1: blockchain sascripto is not just about finance. There are other
Speaker 1: utility or their application and offully one of us is this, Hey, Alexander,
Speaker 1: just got about thirty seconds. Have you talked to SPF? Definitely?
Speaker 1: Not definitely. Are you a little angry though, as someone
Speaker 1: who's also kind of in this world to see what
Speaker 1: has happened just quickly, I'm frustrated and disappointed because it
Speaker 1: damaged an industry that didn't need it. That alright, we're
Speaker 1: gonna we're gonna leave it there. Look forward to hearing
Speaker 1: more about your business going forward. Alexander Dreyfus, founder and
Speaker 1: CEO of the global blockchain company Chill is Uh. He's
Speaker 1: also CEO of the blockchain platform for fan engagement and
Speaker 1: fan monetization of sports team at socio dot Com Socios,
Speaker 1: as we mentioned, is powered by Chills. Just so that
Speaker 1: we understand that relationship. And Alexander joining us via zoom
Speaker 1: in Malta. I'm broom journal. Yeah, but you let me drive? No, no, no,
Speaker 1: who's please gravels? I want to drive. It's a good question.
Speaker 1: Good drive. This is the drive to the clothes on
Speaker 1: Bloomberg Radio. All right, everybody, just about ten minutes left
Speaker 1: in today's trading session. We are getting ready to wrap
Speaker 1: up the day as well as the trading week. And
Speaker 1: uh we've seen some buying once again into uh these
Speaker 1: last few minutes. That means everything in terms of those
Speaker 1: major equity averages were now in the green so as
Speaker 1: Charlie mentioned, um, not at our highs, although it looks
Speaker 1: like the down the SNP getting close, SMP though up
Speaker 1: seven tents of a percent. Same story for the Dow
Speaker 1: Jones Industrial Average and the NASA just eating out a
Speaker 1: little bit of a game and it's gonna be for
Speaker 1: the week, Carol, The doubt more than one tenth of
Speaker 1: one percent if it sticks right here, barely barely. Let's
Speaker 1: get into with Aaron Kennon, co founder and CEO of
Speaker 1: Clear Harbor Asset Management. They've out of over a billion
Speaker 1: dollars in assets under management. Aaron joined us this afternoon
Speaker 1: once again from Stanford, Connecticut. You can see him if
Speaker 1: you're watching on quick Take or on YouTube. Aaron, good
Speaker 1: to have you with us this afternoon. How are you doing?
Speaker 1: Just great, Tim, Thanks for having me back. So what's
Speaker 1: going on with the markets right now? Because Carol mentioned
Speaker 1: volatility today. Throughout much of the day, we saw stocks
Speaker 1: moving between gains and losses. But we're seeing a little
Speaker 1: bit of conviction right now. What's your take? Yeah, I mean, clearly,
Speaker 1: we've don't take much away from a low voalt volume
Speaker 1: day ahead of ahead of Thanksgiving on a Friday. But um,
Speaker 1: you know, if you look at just sort of on
Speaker 1: a quarter to date basis just taking a taking a
Speaker 1: slightly higher level view, clearly, you know, we've seen the
Speaker 1: dollar finally depreciate about seven percent from the peak from
Speaker 1: late September, and on the heels of that we saw
Speaker 1: a nice risk trade occur over over that period. So
Speaker 1: equities are up ten eleven twelve percent depending on the
Speaker 1: index of the global indices are up about eleven almost
Speaker 1: twelve percent. US smps up a little over ten percent
Speaker 1: over that period, and and even the bond markets called
Speaker 1: a reasonable bit the broad sort of Bloomberg aggregate up
Speaker 1: one point one. So, um, you know, we think that's
Speaker 1: that that sort of augurs reasonably well. The Fed did
Speaker 1: a lot of job owning this week, Tim and Carroll,
Speaker 1: as we saw, you know, trying to keep it's even
Speaker 1: hard to job owning. Yeah, that's right, I mean, trying
Speaker 1: to keep the sort of hawkish tone embedded in the market.
Speaker 1: But you know, the market is currently pricing another hundred
Speaker 1: basis points. They've already done four hundred and so we're
Speaker 1: the latter innings of of a tightening cycle, and we're
Speaker 1: starting to see incipient levels of deceleration on inflation, and so,
Speaker 1: you know, I think that bodes well for you know,
Speaker 1: the Fed to get out of our way for at
Speaker 1: least the back half of two thousand and twenty three.
Speaker 1: I do feel the narrative has definitely changed from Fed
Speaker 1: Fed officials um, Aaron, even if they're not using the
Speaker 1: word pivot there of talking around it. And I laughed
Speaker 1: at when we've got a most read story by our
Speaker 1: Scott excuse me, by our Steve Matthews and Serena you
Speaker 1: where it's talking about Wall Street economist split on whether
Speaker 1: FED cuts rates. That we're starting to think about a
Speaker 1: FED cut next year as a possibility. That to me
Speaker 1: is a real big shift in the narrative. Yeah, I agree, Carol,
Speaker 1: And I think there's also, you know, an anticipation that
Speaker 1: the FEDS policies do in fact work with that that
Speaker 1: lag and we're gonna start to see employment. We're certainly
Speaker 1: seeing the anecdotal evidence of employment employment softening that the
Speaker 1: jolt statu hasitly softened on the margin. Um. And so
Speaker 1: maybe the FED does move that aggregate demand curve to
Speaker 1: such a degree after let's say, hitting that five terminal rate,
Speaker 1: that we start to see the economic deceleration that they
Speaker 1: anticipated and and I suspect over the next two quarters
Speaker 1: we'll see a reasonably significant change in in the data
Speaker 1: set and that that'll set up for an interesting two
Speaker 1: thousand and twenty three. But we have earnings to to
Speaker 1: really think about and we have the gridlock in Congress,
Speaker 1: we don't have that fiscal stimulus that that we had
Speaker 1: over the last couple of years to sort of serves
Speaker 1: that tail wind for growth. Uh. And we have a
Speaker 1: demographic picture that every year just looks a little worse.
Speaker 1: And then we have debt levels that spits during COVID
Speaker 1: and are not getting much better. And so we'll probably
Speaker 1: have a debt looad in this country of three and
Speaker 1: a half times public debtload, three and a half times
Speaker 1: where we were the last time we had an inflation
Speaker 1: crisis in the seventies. So it doesn't bode well for
Speaker 1: sort of growth trending back or above trend above let's say,
Speaker 1: a two percent trend. It seems to suggest that we're
Speaker 1: going to be in a in a below two percent
Speaker 1: world for for a long while here in the US.
Speaker 1: You know, kind of glad you went there, Aer, And
Speaker 1: I do think it's important that we watched the debt
Speaker 1: loads overall, and certainly, you know, we talked a lot
Speaker 1: about specifically consumer spending and how they're spending and where
Speaker 1: they putting it. And I think that's going to be
Speaker 1: a great indicator possibly to the downside of of what happens.
Speaker 1: You did say, and I want to go back to
Speaker 1: you expect over the next two quarters to see a
Speaker 1: very different data set. Well, that data set I'm assuming
Speaker 1: mean recession or not necessarily or just kind of an
Speaker 1: extreme slowing down. Well, I think the market is trying
Speaker 1: to sort that out. As we know, the equity markets
Speaker 1: at discounting UH instrument and and certainly the volatility that
Speaker 1: we've seen of late is sort of this uncertainty around
Speaker 1: one will we will we actually enter a true recession.
Speaker 1: Maybe we already did. The nb R hasn't come out
Speaker 1: and indicated whether the prior to quarters were in fact
Speaker 1: an official recession. We'll find that out next year, I guess.
Speaker 1: But um, you know, I think that maybe the more
Speaker 1: important question is whether or not the recession is shallow
Speaker 1: or deep. If it's shallow, I think a great deal
Speaker 1: of that is sort of was was priced in at
Speaker 1: the end of September into the market. One reason why
Speaker 1: I was seen the rally it's a deeper recession. Well,
Speaker 1: this may be a sort of a false done for
Speaker 1: equities having having rallied nicely off of off of those levels,
Speaker 1: and so we're certainly being you know, extraordinary, extraordinarily mindful
Speaker 1: of that. Certainly the stickiness factor in CPI as wages
Speaker 1: and with higher wages, you tend to see margins contract.
Speaker 1: And so we're we're certainly going to keep vigilance on
Speaker 1: on that trend going into two thousand and twenty three.
Speaker 1: What do margins do in a slower growth world when
Speaker 1: wages haven't corrected and normalized and certainly an important factor.
Speaker 1: And of course globally we have, you know, another pivot,
Speaker 1: which is the zero COVID policy in China, and whether
Speaker 1: or not President She's pivot is real or not, because
Speaker 1: that has huge repercussions for global demand, demand for copper,
Speaker 1: demand for oil, uh and demand for just generally goods
Speaker 1: and services. Well, that that commodity space that we talked
Speaker 1: about that earlier and I think it's going back to
Speaker 1: China too, is so interesting. We have a ton of
Speaker 1: stories on the Bloomberg this week that even as they
Speaker 1: seem to be easing that COVID zero thinking, people are
Speaker 1: afraid to go out in the public because they're just
Speaker 1: a free They're going to get COVID And this is
Speaker 1: over in China and that's gonna impact growth over in
Speaker 1: the Chinese economy for a while. It'll impact growth, but
Speaker 1: it's also as huge global repercussions. I mean, Chinese growth
Speaker 1: is expected to be around three percent next year. It
Speaker 1: was only a few years ago we were talking seven
Speaker 1: eight type of growth. The idea that they could switch
Speaker 1: off the zero COVID switch probably increases oil demand immediately
Speaker 1: by about a million and a half barrels a day
Speaker 1: by most estimates. So as huge global repercussions. And of
Speaker 1: course the war in Ukraine is having massive negative repercussions
Speaker 1: for the price of natural gas in Europe's largest economy,
Speaker 1: in Germany. I mean that that's that's the largest economy
Speaker 1: in Europe. They need cheap natural gas to be able
Speaker 1: to do what they do, to be that industrial powerhouse
Speaker 1: they don't have, and it looks like they won't have
Speaker 1: it next year either, and maybe the year after that too. Alright, well,
Speaker 1: I monopolized monopolize of time with you. Tim's mad at me,
Speaker 1: but that's because we love talking with you. We're gonna
Speaker 1: God to get you back on soon because it's okay.
Speaker 1: You had good questions, Carol, Yeah, you know, Aaron, have
Speaker 1: a great great thanksgive and these founders CEO Clear Harbor
Speaker 1: Asset Management. Thanks for listening to Bloomberg Business Week. Download
Speaker 1: the podcast on iTunes, SoundCloud, or Bloomberg dot com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern on Bloomberg Radio or watch us live on YouTube now,
Speaker 1: also on Bloomberg Quick Take