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

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

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

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

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

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Speaker 1: at Bloomberg dot com slash podcast. Pandemic trends here in

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Speaker 1: the United States are really trending in the right direction.

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Speaker 1: Pandemic is on its back foot as vaccinations continue to rise.

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Speaker 1: And then of course we have from the CDC yesterday

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Speaker 1: relaxed mask requirements and that is good news for a

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Speaker 1: lot of business. And Taylor, you're saying you can't even

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Speaker 1: get a spot in a pilates class in the city, right,

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Speaker 1: I know, you know, they're booked at full capacity and

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Speaker 1: everyone is jammed back. I had to hurry and rush

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Speaker 1: to get my spots, So, like everyone else, that is

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Speaker 1: good to hear. So I'd say another group of businesses

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Speaker 1: that need this economy to reopen is the hotel business.

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Speaker 1: Let's talk about that. J Stein. He's the chief executive

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Speaker 1: officer for the Dream Hotel Group. Jake, thanks so much

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Speaker 1: for joining us here. I would love to get your

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Speaker 1: thoughts as to where we are right now with your

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Speaker 1: hotel business visa v maybe six months ago. Thanks Paul Tell,

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Speaker 1: Thanks thanks for having me on. Yeah, so good progress

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Speaker 1: for the last six months. Nationally, New York City just

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Speaker 1: starting to make some progress. As you know. We're opening

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Speaker 1: up a two new uh two new hotels this month

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Speaker 1: or reopening i should say, the Dream Midtown and the

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Speaker 1: Dream Downtown. Dream Midtown actually opens today. So we're thrilled

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Speaker 1: to uh here with the with the staff and welcoming

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Speaker 1: back employees that have been furloughed for over a year.

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Speaker 1: It's just so nice to see their faces. And we'll

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Speaker 1: do the same thing about ten days later for the

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Speaker 1: Dream Downtown crew. And then we have two more hotels

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Speaker 1: that are closed, the Chat Wall and the Time, which

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Speaker 1: we hope to have open maybe in the next sixty

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Speaker 1: days as well. So a lot of things moving to

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Speaker 1: New York. UH. Still a long way to go to build.

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Speaker 1: The occupancy is back up to reasonable levels, but certainly

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Speaker 1: you're starting to see a little bit of light at

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Speaker 1: the end of shun office point. You know, it was

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Speaker 1: interesting we heard from Airbnb last night, UH and and

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Speaker 1: really highlighting that the urban tourists has not quite come back.

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Speaker 1: We're still doing a lot of vacation homes outside big cities.

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Speaker 1: When are you hoping that that urban tourist really does

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Speaker 1: come back? Yeah, I would disagree with that. I mean,

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Speaker 1: I certainly not back to the sense where they're back

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Speaker 1: all the way, but certainly it is moving in in

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Speaker 1: other markets. New York is just starting, but Miami is

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Speaker 1: I'm sure you've heard stories is very strong in our

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Speaker 1: urban product of the dream of South Beach. The dream

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Speaker 1: in Nashville really started to bounce back. UH pootain beverage

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Speaker 1: very strong, but also on the room side, back over

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Speaker 1: levels now UH and the dream in Hollywood as well.

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Speaker 1: We're seeing good traction in l A starting to uh

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Speaker 1: to move. So I think that you are starting to

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Speaker 1: see people coming back to the urban centers. UH and

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Speaker 1: as museum start to uh reopen and larger percentages, baseball

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Speaker 1: games and and all those kinds of things. Certainly with

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Speaker 1: restaurants and a lot of relaxation there on the amount

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Speaker 1: of people, it's a big attraction to come to New

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Speaker 1: York and certainly when we get Broadway open in September, UH,

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Speaker 1: it's gonna be game changing. So, Jay, what is your

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Speaker 1: expectation for New York New York. I'm sure those are

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Speaker 1: obviously key key properties for you. How do you expect

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Speaker 1: the occupancy to ramp up based only maybe some of

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Speaker 1: your experience and some of your other markets. Yeah, it's

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Speaker 1: a little tough to say. Nobody really knows. I'm optimistic.

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Speaker 1: I think people want to come to New York one

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Speaker 1: just you know, for the fun of it. But you know,

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Speaker 1: there's eight million people that people need to come and

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Speaker 1: visit Um that they haven't seen him a long time,

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Speaker 1: family and friends, So I think we may be a

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Speaker 1: little surprised. And beautiful weather, uh this was always one

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Speaker 1: of the best times of the year to be in

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Speaker 1: the city. I think we'll start to see the numbers

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Speaker 1: rebound and hopefully by the fall we start creeping back

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Speaker 1: up into those uh six. You know, we will normally

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Speaker 1: run here in New York, which is twenty higher than

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Speaker 1: the rest of the country. So it's just a very

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Speaker 1: different in general. You know, we have to talk about

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Speaker 1: the labor shortage going on right now. Are your employees

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Speaker 1: coming back to work or do you have to incentivize

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Speaker 1: them with higher pay? You know, we're just starting here

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Speaker 1: in New York, so we haven't had too much difficulty,

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Speaker 1: but we're bringing back from a very small staff where

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Speaker 1: you know, we'll probably only be in the twenty occupancy

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Speaker 1: range in the first month, so that's you know, a

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Speaker 1: third of what we normally do, and so there'll be

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Speaker 1: a much much, much fewer employees than normal. But nationally, Uh,

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Speaker 1: it's very difficult getting employees. And I'm sure you're hearing

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Speaker 1: that every day. Uh. And it was talking something about

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Speaker 1: markets before COVID, you know, don't get me wrong, um,

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Speaker 1: but now and I'm sure it has to do with

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Speaker 1: the enhanced unemployment and stimulus and things like that certainly

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Speaker 1: play a part of it. Um. So your labor is

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Speaker 1: a very very uh difficult aspect for our industry right now.

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Speaker 1: What is the business like in your Miami hotel? Is

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Speaker 1: it back to normal? I see, I see watched the

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Speaker 1: news every night for months and these people are parting

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Speaker 1: like there is no pandemic. So how's your hotel doing

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Speaker 1: down there? Yeah? So I wouldn't say it's like there's

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Speaker 1: no pandemic. I mean you do see those that's what

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Speaker 1: you see on TV because they interviewed certain people but

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Speaker 1: I was there yesterday. I was at the dream In

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Speaker 1: in Miami for the whole day. I was in the

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Speaker 1: Durham unscripted yesterday a day before that. And I've been

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Speaker 1: traveling all over all over to all about properties, but

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Speaker 1: Miami is definitely the highest demand right now. UM. You know,

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Speaker 1: people eating indoors without masks, That's the same thing you

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Speaker 1: have in New York City. So it's not like it's

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Speaker 1: you know, the wild wild West that day, the way

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Speaker 1: people describe it, it's really not. What's it been like

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Speaker 1: traveling on the planes and stuff. Um, for the most plot,

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Speaker 1: I've been on a lot of flights, four flights in

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Speaker 1: the last three days, UM. And last week I was

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Speaker 1: on four flights as well. I was in Louisville, I

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Speaker 1: was in Nashville, UM, went through Atlanta, went through Detroit. UM.

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Speaker 1: So yeah, there's a lot of people. I was shocked.

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Speaker 1: I had to go through Charlotte yesterday. It looked completely

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Speaker 1: normal in the terminal, right, Okay, alright, busy, most people

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Speaker 1: being very courteous and wearing the mask for people taking

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Speaker 1: a little little little bit of liberties with that. All right,

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Speaker 1: all right, well hopefully, well we can continue this reopening

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Speaker 1: in a safe way and and get folks back out there.

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Speaker 1: J Stein, chief executive officer of the Dream Hotel Group.

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Speaker 1: They're opening one of the New York properties today and

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Speaker 1: another one on the twenty six, So that's good to

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Speaker 1: see properties here in New York City coming back. This

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Speaker 1: is Bloomberg. It seems like the discussion has moved from

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Speaker 1: the pandemic, two vaccinations, and now this week it seems

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Speaker 1: to be mask or no mask. That seems to be

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Speaker 1: where the conversation is going. Let's get the latest on

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Speaker 1: all of these issues with Lawrence Soer. We always appreciate

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Speaker 1: her giving us some time every week. Lawrence Sowers is

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Speaker 1: socio Professor of Emergency Medicine that the Johns Hopkins School

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Speaker 1: of Medicine. I should know that the Bloomberg School of

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Speaker 1: Public Health at Johns Hopkins is supported by Michael Lare Bloomberg,

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Speaker 1: founder of Bloomberg LP and Bloomberg Philanthropies, and this radio

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Speaker 1: and TV operation. So, Lauren, we're having the CDC update there.

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Speaker 1: I guess their mask mandate, so if you're fully vaccinated,

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Speaker 1: you don't really have to wear mass in most situations.

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Speaker 1: Do you think that's the right message? Yeah, I think, Um,

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Speaker 1: you know, the CDC is continuing to get data and

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Speaker 1: and that is in turn influencing their policies, and we're

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Speaker 1: seeing it happened rapidly, right like in real time. I

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Speaker 1: think for me, the message doesn't change much as as

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Speaker 1: we think about how we are going to actually evaluate

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Speaker 1: whether people are vaccinated or not. And so until we

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Speaker 1: have a system in which we have higher coverage, we

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Speaker 1: have lower incidents and we know who's vaccinated. I don't

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Speaker 1: see this UM changing at least my personal behavior and

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Speaker 1: probably many cities, states, and and and companies behaviors and

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Speaker 1: policies on masking. Lauren, can you help me understand how

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Speaker 1: do eight fully vaccinated members of the Yankees baseball team

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Speaker 1: test positive for COVID? Yeah, it's a great question. I

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Speaker 1: think what we're seeing is breakthrough cases. And so what

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Speaker 1: we're going to look to hear from the Yankees or

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Speaker 1: from um, you know, the health departments that's going to

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Speaker 1: be managing those breakthrough cases, is was it a variant strain? UM?

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Speaker 1: What vaccine did the Yankees use? UM? What were what

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Speaker 1: were their contacts? Like? UM that contact tracing is going

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Speaker 1: to become very important, and and did they become sick. Um,

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Speaker 1: and that those are all going to be important questions

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Speaker 1: that we as we continue to evaluate both our vaccine

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Speaker 1: efficacy and how we strategize the use of these other

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Speaker 1: public health activities like masking, like social distancing. Um, these

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Speaker 1: breakthrough cases become important, you know, data points that we

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Speaker 1: will continue to use to influence our policy. Lauren, do

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Speaker 1: you think you know? I was just looking at a

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Speaker 1: story talking about a story on air about wind Resorts,

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Speaker 1: the casino company they're reopening and they're dropping their mask

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Speaker 1: mandate and they're basically saying it's on the honor system.

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Speaker 1: To me, I guess that's probably how it has to go,

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Speaker 1: don't you think? And how do you think about the

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Speaker 1: vaccinative folks versus non vaccinati folks and identifying one another. Yeah,

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Speaker 1: I think it's a really hard question, um, And I

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Speaker 1: think it ends up being where you, as the individual,

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Speaker 1: have to make that choice about whether or not you're

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Speaker 1: comfortable wearing your mask if you've been vaccinated, you know,

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Speaker 1: taking off your mask if you've been vaccinated, and also

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Speaker 1: if you're even comfortable being in places where masks aren't

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Speaker 1: required anymore. Um, it's going to be a really hard

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Speaker 1: and new space for the public and local governments and

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Speaker 1: businesses to navigate. UM. I think the honor system is

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Speaker 1: all we have right now, UM and until we find

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Speaker 1: a sort of ethical and appropriate way to do this

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Speaker 1: otherwise that's what we're going to be stuck with. But

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Speaker 1: I do think that, UM, there are going to be

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Speaker 1: people who just don't want to wear a mask ask anymore, UM,

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Speaker 1: and we'll make that decision because they feel like they

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Speaker 1: can independent of their vaccine status. And so people who

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Speaker 1: feel less safe, UM, people like frontline health workers, people

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Speaker 1: like other frontline workers, like restaurants, plantation, things like that,

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Speaker 1: are going to be affected by this to a degree.

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Speaker 1: And similar news Paul Las Vegas stands also saying that

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Speaker 1: they are not requiring vaccinated guests to wear masks. So

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Speaker 1: Vegas Vegas leading the way. Vegas is open, baby, That's

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Speaker 1: all you have to to say. Lauren, just sort of

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Speaker 1: square with me. Maybe some of the mixed messages. I

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Speaker 1: was on an airplane and they said no up and

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Speaker 1: through at least September. For now, you have to wear

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Speaker 1: a mask. AM track some of the subways. So we're

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Speaker 1: getting some of the CDC guidance. But then of course,

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Speaker 1: if you're on an airplane, the rules are a little different.

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Speaker 1: But how is the coordination going. Yeah, I think we

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Speaker 1: have some work to do in the coordination setting, exactly

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Speaker 1: as you're suggesting, and a lot of it is about

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Speaker 1: communication messaging, so UM, we don't really know the full

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Speaker 1: data on airplanes and the risk of transmission. There's been

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Speaker 1: a lot of work done in the Space team with

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Speaker 1: other public transportation areas like subway, cars and trains, and

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Speaker 1: so when you're in those close quarters, masking does still

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Speaker 1: seem appropriate, and we're continuing to learn about those spaces

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Speaker 1: as these sort of natural experiments happen. UM. But I

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Speaker 1: think the reason you're still seeing that requirement UM and

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Speaker 1: those policies is because we don't fully understand the transmission

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Speaker 1: dynamics in that space, and because we know that they're

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Speaker 1: that people can't really truly sit, you know, six ft

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Speaker 1: apart that we we want to keep them masked and

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Speaker 1: safe as safe as possible, and this is a relatively easy,

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Speaker 1: relatively harmless way to do that. We appreciate you coming

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Speaker 1: in every week, Lauren and helping us kind of really

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Speaker 1: understand what's going on with this pandemic and with the vaccines.

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Speaker 1: Laurence Soer, social Professor of Emergency Medicine at the Johns

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Speaker 1: Hopkins School of Medicine. And I should know it again

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Speaker 1: that the Blue School of Public Health is supported by

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Speaker 1: Michael Bloomberg, founder Bloomberg LP, Bloomberg Philanthropies, and Bloomberg Radio

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Speaker 1: and Television. Well, if you can flashback just you know,

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Speaker 1: four or five days ago, the market was really concerned

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Speaker 1: about inflation and not just the transitory kind as well.

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Speaker 1: But uh, and that was some really weakness in the market.

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Speaker 1: We've had a couple of days very strong rebounds here,

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Speaker 1: kind of climbing back some of those losses from the

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Speaker 1: earlier in the week. But the questions where do we

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Speaker 1: go from here? Let's check in with Jeff Carbon and

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Speaker 1: he's co founder and managing partner of Cornerstone. Well, if

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Speaker 1: they have got one point two billion dollars in assets

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Speaker 1: under management, so Jeff, kind of a seesaw type of

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Speaker 1: week here. Started off very week, had some real concerns

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Speaker 1: about maybe this economy is overheating. That might prompt the

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Speaker 1: Fed to step in a little bit, but not so

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Speaker 1: much of the past couple of days. What are your

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Speaker 1: thoughts here? Yeah, no, good morningful. Yeah, we certainly the

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Speaker 1: predominant risk of inflation. And uh, it certainly started the

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Speaker 1: week off and kind of maybe we were going we

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Speaker 1: were coming down that roller coaster and now we're moving

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Speaker 1: back up. Right. Was still down probably two and a

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Speaker 1: half percent for the week, but we've had a good

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Speaker 1: recovery um from the early part. And yeah, like I think,

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Speaker 1: as you mentioned, it was that fear of the market

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Speaker 1: maybe was expecting transitory risk and we were not on

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Speaker 1: that court. We think there's more concern of inflationary pressure.

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Speaker 1: But beyond that, you've got to look at you know,

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Speaker 1: the FED and what the FED is gonna do. And

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Speaker 1: it's almost that Goldilocks theory, right, because the FED is

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Speaker 1: under the pressure of if they let the market overheat

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Speaker 1: too much, we get too much inflation, inflation runs hot. Um,

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Speaker 1: if they move too slow, we're a little bit behind

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Speaker 1: and things fall, and you know, they gotta just do

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Speaker 1: it just right, right. We needed to be perfect. And

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Speaker 1: it's going to be that induced FED induced language. Right,

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Speaker 1: we gotta see what they're gonna say. It's gonna as

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Speaker 1: the importance that we're watching right now. You know, Jeff,

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Speaker 1: you you're hitting on a point that I want to

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Speaker 1: go next. I read a Bloomberg opinion article from Muhammad

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Speaker 1: hillary In earlier this week, and he hinted that the

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Speaker 1: FED is really doing us a disservice by insisting and

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Speaker 1: insisting and insisting in that inflation is transitory and leaving

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Speaker 1: no room for anything else. And he comes out and

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Speaker 1: says that instead of looking at a single baseline, they

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Speaker 1: should be looking at a range of scenarios and not

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Speaker 1: be holding this single baseline to a degree of conviction

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Speaker 1: that isn't supported right now in some of the data.

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Speaker 1: Is the FED doing us a little bit of a disservice?

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Speaker 1: I believe so. And I you know, watch Mohammed and

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Speaker 1: talk to him and really keep a close eye on

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Speaker 1: what he does, because he's brilliant. So in the FED

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Speaker 1: and the FEDS forgetting that every major crash in history

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Speaker 1: has been preceded by the FED tightening right and there.

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Speaker 1: So the language is so going back to the messaging

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Speaker 1: is so important. Um, you know, we've taped, we've continued

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Speaker 1: to taper, what a undred and twenty billion dollars per month.

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Speaker 1: We can probably start pulling off the I mean that

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Speaker 1: the economy is heating, it's heated, up right, we've had

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Speaker 1: that big recover. We can certainly lay off the put

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Speaker 1: a little bit of the take off the gas a

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Speaker 1: bit and maybe start by tapering little um. Maybe not immediately,

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Speaker 1: but we need to have the plan to do so,

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Speaker 1: because yeah, this is that trend and we don't transitory

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Speaker 1: inflation is not there go you know, look at the

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Speaker 1: gas pumps, look at food. We can see the you know,

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Speaker 1: some of the with other commodities, whether it be corn

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Speaker 1: et cetera. The prices are rising. So inflation is definitely

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Speaker 1: out there a lot stronger than there that they may

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Speaker 1: be seeing. So we definitely have a different different opinion

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Speaker 1: between the Treasury Secretary Yelling and Jerome Powell UH on

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Speaker 1: the FED. So we're we're we're seeing more inflationary pressure

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Speaker 1: and we're starting to get concerned about it right now,

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Speaker 1: and that's why we're backing off a bit. We're taking

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Speaker 1: some of the UH high A BEATA positions and going

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Speaker 1: a little bit more conservative right now. All right, talk

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Speaker 1: to us, Jeff about where you're going, where you think

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Speaker 1: your clients should be going. If in fact, uh we

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Speaker 1: are you know, kind of facing potentially some tapering, if

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Speaker 1: not outright rate increases. Yeah. Uh yeah, so so Paul,

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Speaker 1: we've been you know, I think when I sent some notes,

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Speaker 1: you know, we've been moving a little little bit out

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Speaker 1: of those uh uh reopening trades. Although Norwegian Cruise Line

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Speaker 1: this morning is having a really good day and but

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Speaker 1: at the same time you were seeing Disney not so good. Right,

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Speaker 1: So we've really moved away from some of those reopening

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Speaker 1: um and high data positions, trying to go a little

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Speaker 1: higher quality. We're moving up, you know, quality, big names,

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Speaker 1: higher market cap, and really important for us is cash flow,

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Speaker 1: right we want to see really good cash flows. Where

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Speaker 1: do you go What sectors we like? Continue to like industrials.

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Speaker 1: We still like the financials, especially regionals and some brokerage.

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Speaker 1: We do think that's a good space in this economy. Uh. Energy,

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Speaker 1: and we're adding some healthcare back in at this point.

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Speaker 1: Are you moving up in credit quality as well? Absolutely? Yeah,

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Speaker 1: we're definitely better quality. I think it's high quality around

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Speaker 1: the across the board, right, Um. The you know, you

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Speaker 1: can move on from credit quality not just in our

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Speaker 1: equity positions, but credit quality within the bonds that we're

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Speaker 1: holding as well. And you know with the bond market,

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Speaker 1: that's that's the toughest place to be right now with

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Speaker 1: I think we got the aggregate bond index down what

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Speaker 1: two and a half percent for the year. Um, we're

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Speaker 1: losing money, and then um on our on the bond side,

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Speaker 1: and then try to find some place in cash. It's

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Speaker 1: that losing money safely positioned because inflation is somewhere you

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Speaker 1: call it one seven to two, and we're getting into

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Speaker 1: banks list than you know, if we're lucky ten basis points,

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Speaker 1: if if we could find it somewhere, so it's it's

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Speaker 1: definitely a fixed income market is a is a tough

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Speaker 1: tough place to be right now. All right, Jeff, Hey,

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

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Speaker 1: your thoughts on these markets here. Jeff Carbone he's co

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Speaker 1: founder and managing partner for Cornerstone Wealth. Again, we started

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Speaker 1: off this market on this week on a very down note, uh,

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Speaker 1: retracing some of those losses here in the past couple

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Speaker 1: of days. We'll keep you up to date on those

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Speaker 1: markets right now that we want to talk crypto. What

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Speaker 1: a wild week it's been for crypto. Taylor, It's almost

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Speaker 1: been like the Elon Musk effect. Does he does Elon

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Speaker 1: like crypto does Elon not like crypto? And I think

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Speaker 1: we're back to Elon likes crypto, but certainly been a

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Speaker 1: volatile week for the crypto space, and I suspect people

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Speaker 1: that traffic there and trade there and invest there are

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Speaker 1: are used to that. John Wu he's a president of

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Speaker 1: Ava Labs. Uh. He joins us once again to kind

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Speaker 1: of get us the latest on what is going on

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Speaker 1: with crypto. And I guess one of the interesting stories

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Speaker 1: John was, you know, Ellen initially saying maybe I'm not

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Speaker 1: really supporting crypto because the whole E s G issue,

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Speaker 1: it takes too much power to mind crypto. What's your

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Speaker 1: view of that whole storyline, Hey, Paul, Hey Taylor. So

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Speaker 1: you know, Elon has a flair for the dramatic, obviously,

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Speaker 1: but that statement where he said he's no longer accepting

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Speaker 1: bitcoin for transactions in terms of buying Tesla actually was

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Speaker 1: killing three birds with one stone, and it was quite

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Speaker 1: brilliant on his part, because there's no one buying Tesla's

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Speaker 1: right now using bitcoin. There's tax implications and and obviously

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Speaker 1: when there are transactions happening, you do need to you know,

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Speaker 1: mind and validate and secure all of this, and that

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Speaker 1: does require a lot of energy. So in one statement,

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Speaker 1: he basically kept his green initiative. He also did not

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Speaker 1: hurt his testla sales and he really, like you know,

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Speaker 1: was actually kind of a brilliant statement, and he's got

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Speaker 1: that flare for the dramatic, so good for him. Um,

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Speaker 1: But his point is correct. There is a lot of

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Speaker 1: wasteful spend when you have bitcoing and mining, and that's

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Speaker 1: because you basically for every transaction you ultimately need to secure, validating,

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Speaker 1: create a next block. Right now, the energy consumption in

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Speaker 1: the bitcoin ecosystem is roughly one thirty terot watts an

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Speaker 1: hour per year, and people have said that's the equosal

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Speaker 1: of the consumption of countries like Argentina or Norway, So

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Speaker 1: that's a lot of consumption, and a lot of that

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Speaker 1: is carbon footprints that are just you know, not very green.

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Speaker 1: So he has a lot of good points. What's even

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Speaker 1: worse is the way this works is it's not necessary.

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Speaker 1: You know, the proof of work concept for mining and

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Speaker 1: bitcoin is you have to solve math problems in order

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Speaker 1: to have the right to create the next block. But

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Speaker 1: the way it's set up, it's almost like a lottery system.

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Speaker 1: So the more chances you have, the more likely you're

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Speaker 1: rewarded bitcoin and given the right to create the next block.

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Speaker 1: Now that means you need more computing power, you need

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Speaker 1: more hardware, and you need to consume more energy. This

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Speaker 1: is all useless work. There is no reason for this

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Speaker 1: is just mining companies competing against each other. It doesn't

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Speaker 1: make the securing and the validating and transactions and creating

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Speaker 1: a next block more efficient. Unfortunately, a lot of this

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Speaker 1: just useless work. John Though there was some pushback after

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Speaker 1: the Elon Musk tweet, many people who are bullish on crypto.

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Speaker 1: I believe Mike Novograps Right of Galaxy, someone that we

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Speaker 1: speak with frequently, a lot of other millionaires and billionaires

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Speaker 1: and investors said that, yeah, it might use some carbon now,

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Speaker 1: but the future is renewable energy and we're working on

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Speaker 1: getting there. Does that have any validation to it that

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Speaker 1: eventually it can become a positive renewable way to mine.

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Speaker 1: It's better, but even if it's renewable, it's still displacing

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Speaker 1: um the use for other things that you need to

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Speaker 1: consume energy. So it's better, for sure, and there is carbon,

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Speaker 1: there's wind power, but it's still displacing you know, um,

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Speaker 1: the need for the use energy for other things. So, John,

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Speaker 1: you mentioned you mentioned that the current way that crypto

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Speaker 1: is being mine is not the most efficient. What are

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Speaker 1: some more efficient ways that you think this industry needs

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Speaker 1: to go towards. Well, I think a lot of the

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Speaker 1: newer blockchains are using a proof of stake method, which

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Speaker 1: is a much more an improved way of doing things

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Speaker 1: because it's literally like one million of the times more efficient, um.

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Speaker 1: And instead of using physical hardware and mining and using

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Speaker 1: energy to secure and validate, you're effectively putting your coin

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Speaker 1: or putting up you know, security pots. I think of

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Speaker 1: it for the right to vote and the right to

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Speaker 1: secure the blocks and the transactions, and that is literally

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Speaker 1: so much more efficient way, and there's no useless work,

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Speaker 1: so to speak. John, you mentioned something at the beginning

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Speaker 1: of your first answer about the tax implications, and this

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Speaker 1: brings up the question about what is bitcoin? What is

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Speaker 1: the real value? Is it a store of value or

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Speaker 1: is it a form of payment? And that tax issue

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Speaker 1: this week has brought up a lot of conversations about well,

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Speaker 1: maybe that's why you don't use it to pay. You

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Speaker 1: keep it as a store of value, right, What is

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Speaker 1: the use case for bitcoin, it is a store of value.

429
00:23:06,119 --> 00:23:09,200
Speaker 1: It is the it's taking share from the nine trillion

430
00:23:09,359 --> 00:23:12,879
Speaker 1: dollars of gold that's out there, and that is the

431
00:23:12,960 --> 00:23:16,240
Speaker 1: number one use case. There are new blockchains that are

432
00:23:16,280 --> 00:23:21,040
Speaker 1: far more efficient, more green, and have the ability for utility.

433
00:23:21,240 --> 00:23:26,639
Speaker 1: There's a buddy ecosystem of other blockchains that have actual

434
00:23:26,840 --> 00:23:31,120
Speaker 1: use cases on top of their blockchains. John, if one

435
00:23:31,160 --> 00:23:33,520
Speaker 1: of our listeners wanted to get exposure to just this

436
00:23:33,560 --> 00:23:37,560
Speaker 1: whole crypto thing, how would you recommend they do it?

437
00:23:37,680 --> 00:23:41,439
Speaker 1: Do they buy a piece of bitcoin? Is there? What

438
00:23:41,480 --> 00:23:44,399
Speaker 1: do you think is the best way to do that? Well, Listen,

439
00:23:44,680 --> 00:23:47,040
Speaker 1: I still agree with Mike no regrets that bitcoin is

440
00:23:47,040 --> 00:23:50,400
Speaker 1: going to go a lot higher. Um, you know, bitcoin

441
00:23:50,960 --> 00:23:53,639
Speaker 1: right now is still used to the store of value,

442
00:23:53,640 --> 00:23:57,040
Speaker 1: and you know the whole space is two trillion dollars

443
00:23:57,080 --> 00:24:01,960
Speaker 1: and and bitcoins again, gold is nine trillion, And every

444
00:24:01,960 --> 00:24:04,919
Speaker 1: single last year I think there was um close to

445
00:24:05,000 --> 00:24:08,640
Speaker 1: like fifty billion dollars in new influence to gold and

446
00:24:09,359 --> 00:24:11,760
Speaker 1: a lot of that is going to come into bitcoin

447
00:24:12,280 --> 00:24:15,080
Speaker 1: over the over the years. So, first of all, I

448
00:24:15,119 --> 00:24:17,439
Speaker 1: still agree with him that bitcoin is going to go higher.

449
00:24:17,480 --> 00:24:19,720
Speaker 1: But to get exposure to the states more and more

450
00:24:19,800 --> 00:24:23,440
Speaker 1: people are now looking below the folds and speak on

451
00:24:23,600 --> 00:24:25,760
Speaker 1: like when you search it is not just about daycoin.

452
00:24:26,000 --> 00:24:31,280
Speaker 1: There there are other blockchain ecosystems that are actually thriving.

453
00:24:31,800 --> 00:24:34,520
Speaker 1: Of the labs the place I work at, the software

454
00:24:34,520 --> 00:24:38,600
Speaker 1: company that that launched the lance the blockchain, we already

455
00:24:38,640 --> 00:24:41,800
Speaker 1: have a more even more efficient than a therem in

456
00:24:41,920 --> 00:24:45,560
Speaker 1: terms of a greenness if you will, and and has

457
00:24:46,119 --> 00:24:49,720
Speaker 1: the characteristics that we all desire for better utility, which

458
00:24:49,800 --> 00:24:54,560
Speaker 1: is scale, no latency whatsoever, and closing a transaction as

459
00:24:54,600 --> 00:24:57,720
Speaker 1: well as the ability to have very low prices for

460
00:24:57,800 --> 00:25:02,160
Speaker 1: a transaction. So for investor, I would definitely look at

461
00:25:02,240 --> 00:25:05,280
Speaker 1: new things that are coming up that are inflecting right

462
00:25:05,280 --> 00:25:07,600
Speaker 1: now because part of the reason, let's be honest, fall

463
00:25:07,800 --> 00:25:09,560
Speaker 1: people want to get into this because they seemed the

464
00:25:09,600 --> 00:25:12,960
Speaker 1: great terms in some of the top coins. And that's

465
00:25:12,960 --> 00:25:16,200
Speaker 1: really like the first two right now, Etherory and Bitcoin.

466
00:25:16,400 --> 00:25:18,080
Speaker 1: But if you want to find the next ones, you've

467
00:25:18,080 --> 00:25:20,080
Speaker 1: got to look at who's got the most utility go

468
00:25:20,240 --> 00:25:23,200
Speaker 1: forward and they should look um, you know, be a

469
00:25:23,200 --> 00:25:26,679
Speaker 1: little to top two. John, it was interesting the timing

470
00:25:26,720 --> 00:25:29,680
Speaker 1: of all of this. We did here yesterday that Colonial

471
00:25:29,720 --> 00:25:34,880
Speaker 1: Pipeline did indeed pay their ransom of five million dollars

472
00:25:34,880 --> 00:25:37,200
Speaker 1: to get that pipeline back up and running, and while

473
00:25:37,240 --> 00:25:40,400
Speaker 1: they paid it in crypto, And we had a conversation

474
00:25:40,480 --> 00:25:43,800
Speaker 1: earlier with Tim O'Brien of our Bloomberg opinion saying that

475
00:25:43,880 --> 00:25:47,080
Speaker 1: other people indeed have paid, and they've all been requesting

476
00:25:47,119 --> 00:25:52,199
Speaker 1: bitcoin and cryptos. Everyone says, well, there's a form of payment,

477
00:25:52,240 --> 00:25:54,679
Speaker 1: there's a paper trail, so it's actually really good. But

478
00:25:55,080 --> 00:25:58,000
Speaker 1: I'm not seeing anyone who's paying ransom and crypto being

479
00:25:58,480 --> 00:26:01,680
Speaker 1: brought to justice here. Is there a paper trail then?

480
00:26:01,920 --> 00:26:07,240
Speaker 1: If so, why are ransom attackers asking to be paid

481
00:26:07,280 --> 00:26:12,840
Speaker 1: in crypto? Well, there is some it's pseudonymity, it's not

482
00:26:12,920 --> 00:26:16,359
Speaker 1: true anonymity, and it is global, so it makes it,

483
00:26:16,480 --> 00:26:21,240
Speaker 1: you know, a little separated from other financial systems. So

484
00:26:21,359 --> 00:26:25,159
Speaker 1: does because it's border lists. It's harder for jurisdictions to

485
00:26:25,200 --> 00:26:29,080
Speaker 1: go after certain people, but it is you can if

486
00:26:29,119 --> 00:26:31,919
Speaker 1: you really want to do the work. Attach um the

487
00:26:32,000 --> 00:26:35,520
Speaker 1: actual people behind it um just like any other form

488
00:26:35,800 --> 00:26:40,160
Speaker 1: of human my understanding, looking at studies done from very

489
00:26:40,160 --> 00:26:44,639
Speaker 1: reputable firms, the percentage of fraud as in crypto is

490
00:26:44,680 --> 00:26:47,840
Speaker 1: really not more than any other system it just gets

491
00:26:47,920 --> 00:26:51,960
Speaker 1: highlighted because of the crypto nature and the association of

492
00:26:52,040 --> 00:26:55,800
Speaker 1: the early days. Hey, John wall Street and has a

493
00:26:55,840 --> 00:26:59,640
Speaker 1: new sheriff in town, Gary Ginstler at the SEC. This

494
00:26:59,720 --> 00:27:01,720
Speaker 1: is a mark when I think about crypto that is

495
00:27:01,720 --> 00:27:05,040
Speaker 1: just crying out for some regulation that we're just one

496
00:27:05,080 --> 00:27:08,040
Speaker 1: blow up away from somebody saying, hey, is somebody looking

497
00:27:08,080 --> 00:27:10,520
Speaker 1: at this? What do you think? How do you think

498
00:27:10,520 --> 00:27:15,640
Speaker 1: the regulatory framework is going to develop a evolve around

499
00:27:15,640 --> 00:27:19,440
Speaker 1: all things crypto going forward? So having been in the

500
00:27:19,480 --> 00:27:22,240
Speaker 1: space for a long time, the regulatory framework has actually

501
00:27:22,280 --> 00:27:25,440
Speaker 1: already evolved and it's getting better every single day. There's

502
00:27:25,480 --> 00:27:29,000
Speaker 1: no doubt. There's still a lot of gray area, and uh,

503
00:27:29,200 --> 00:27:33,879
Speaker 1: the Gary and the new SEC commissioners need to continue

504
00:27:33,960 --> 00:27:37,200
Speaker 1: to give guidance. But I think we're getting better every

505
00:27:37,240 --> 00:27:40,040
Speaker 1: single day. I mean remember in two thousand seventeen with

506
00:27:40,119 --> 00:27:44,040
Speaker 1: the I c oh boom um that led to the

507
00:27:44,200 --> 00:27:46,720
Speaker 1: SEC coming in to finding what needs to be done,

508
00:27:47,000 --> 00:27:49,000
Speaker 1: and things are done a lot better than they used

509
00:27:49,000 --> 00:27:52,120
Speaker 1: to be. So it is getting better every single day.

510
00:27:52,160 --> 00:27:55,320
Speaker 1: But the industry is still relatively new. Um. You know,

511
00:27:55,359 --> 00:27:58,639
Speaker 1: bitcoin has been around for eleven years, etheriums only have

512
00:27:58,720 --> 00:28:01,199
Speaker 1: been around for like less than half of that, and

513
00:28:01,240 --> 00:28:04,040
Speaker 1: then you have all of these new coins. But the

514
00:28:04,080 --> 00:28:07,200
Speaker 1: more important thing is there's a lot of development, and Paul,

515
00:28:07,240 --> 00:28:09,200
Speaker 1: you know, that's the same as the Internet days and

516
00:28:09,280 --> 00:28:12,960
Speaker 1: the early adopters for the Internet usage was really not

517
00:28:13,040 --> 00:28:17,600
Speaker 1: the best people, if you will. However, as that show

518
00:28:17,680 --> 00:28:20,959
Speaker 1: the capabilities and the potential of the Internet, same way, uh,

519
00:28:21,320 --> 00:28:23,600
Speaker 1: the early guys and crypto have done it, and the

520
00:28:23,680 --> 00:28:28,240
Speaker 1: potential for the future use cases and disinniation and the

521
00:28:29,040 --> 00:28:31,560
Speaker 1: positive utility that have come out of this. More and

522
00:28:31,720 --> 00:28:35,600
Speaker 1: more intellectual capital is moving into the space. Some of

523
00:28:35,640 --> 00:28:40,560
Speaker 1: the smartest and brightest kids from various great universities are

524
00:28:40,600 --> 00:28:43,280
Speaker 1: coming to me every single day and wanting to join

525
00:28:43,320 --> 00:28:46,160
Speaker 1: our firm and other similar firms. So just like we

526
00:28:46,160 --> 00:28:49,440
Speaker 1: couldn't figure out in the late nineties, when we can

527
00:28:49,440 --> 00:28:51,640
Speaker 1: have streaming video, a lot of things that we can't

528
00:28:51,640 --> 00:28:54,720
Speaker 1: figure out exactly right now, they're on the com Hey, John,

529
00:28:54,760 --> 00:28:56,520
Speaker 1: thanks so much for joining us. We really appreciate you

530
00:28:56,560 --> 00:28:58,560
Speaker 1: taking your time. You always help us kind of get

531
00:28:58,560 --> 00:29:00,920
Speaker 1: a little bit more clarity on the crypto market. Is

532
00:29:00,960 --> 00:29:03,880
Speaker 1: new to so many people. John Wu president of Ava Labs.

533
00:29:03,920 --> 00:29:05,680
Speaker 1: They're based in New York, City and he's been doing

534
00:29:05,720 --> 00:29:08,120
Speaker 1: this for a long time, and uh, it's interesting. You

535
00:29:08,120 --> 00:29:09,880
Speaker 1: know what's happened. One of the things during the pandemic,

536
00:29:10,120 --> 00:29:15,920
Speaker 1: um Taylor, is my increased use of electronic banking. Okay, well, okay,

537
00:29:15,240 --> 00:29:19,960
Speaker 1: so thank you, I know. And it's just you're kind

538
00:29:19,960 --> 00:29:22,600
Speaker 1: of forced to and you get more and more comfortable

539
00:29:22,640 --> 00:29:24,280
Speaker 1: with it, as we all do with all the new

540
00:29:24,280 --> 00:29:27,280
Speaker 1: apps and new technologies. But be interesting to see how

541
00:29:27,600 --> 00:29:32,080
Speaker 1: crypto comes into, you know, the consumer experience. I was

542
00:29:32,160 --> 00:29:35,360
Speaker 1: joking on TV yesterday in the afternoon hours and my

543
00:29:35,440 --> 00:29:38,600
Speaker 1: dad texted me and said, okay, give me your thoughts

544
00:29:38,600 --> 00:29:40,680
Speaker 1: on krypto, and I thought, oh, that might be the

545
00:29:40,720 --> 00:29:44,880
Speaker 1: cell signal. Dad's getting involved here. But no, all joking aside,

546
00:29:44,920 --> 00:29:47,320
Speaker 1: I mean more and more mainstream, right. We talked about

547
00:29:47,320 --> 00:29:52,040
Speaker 1: coin base, Paul and trying to make it easy. Thanks

548
00:29:52,040 --> 00:29:55,520
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe

549
00:29:55,520 --> 00:29:59,280
Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast

550
00:29:59,280 --> 00:30:02,400
Speaker 1: platform you for her. I'm Matt Miller. I'm on Twitter

551
00:30:02,680 --> 00:30:05,959
Speaker 1: at Matt Miller N seventy three and on Fall Sweeney,

552
00:30:05,960 --> 00:30:08,600
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you

553
00:30:08,600 --> 00:30:11,040
Speaker 1: can always catch US worldwide at Bloomberg Radio,