Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Sure compatison here for a good conversation to start the
Speaker 2: morning off, and of course we devolve that to a
Speaker 2: dollar discussion and on from there. She's focused on crypto.
Speaker 2: We'll get to that in a moment. Her effort at
Speaker 2: the Council on Foreign Relations is noticed. I can't say
Speaker 2: enough about the new edition of Foreign Affairs magazine. You'll
Speaker 2: see it in the next couple days or so. It's
Speaker 2: just absolutely extraordinary. I've got to go to dollar here
Speaker 2: right now? Is dollar heads?
Speaker 1: Your money?
Speaker 2: Is it threatened by all that's going on in Washington?
Speaker 3: Longer term, yes, I think there is a threat to
Speaker 3: the dollar from some of these policies. The US relies
Speaker 3: on demand for treasuries and the idea that the Treasury
Speaker 3: is going to be the biggest bond mark in the world.
Speaker 3: Liquid safe, always transactional, and if you're putting tariffs on
Speaker 3: allies as well as adversaries, over time, they may want
Speaker 3: to diversify away from those assets. Now, there aren't a
Speaker 3: lot of places for them to go, but one place
Speaker 3: we've seen clearly over the last couple of years is gold.
Speaker 3: And you are seeing data showing China reducing its treasury holdings.
Speaker 3: Obviously we know Russia did over the last several years.
Speaker 3: So the policies we're putting forward today, I think do
Speaker 3: create some risk. Now there's new sources of demand that
Speaker 3: we can talk about when we get to crypto, but
Speaker 3: when we think about foreign holdings of US bonds, I
Speaker 3: think that is a source of risk that could push
Speaker 3: yields higher and weigh on growth.
Speaker 4: You know, does it do you get a sense that
Speaker 4: this White House, this economic team at the White House,
Speaker 4: that they have a sense that, generally speaking, markets do
Speaker 4: not like uncertainty, whether it's uncertainty of policy, uncertainly uncertainty
Speaker 4: of rhetoric. Is that something that has an audience do
Speaker 4: you think down there in DC? Or is it just
Speaker 4: kind of overshadowed by this is a president that wants
Speaker 4: to do what he wants to do.
Speaker 3: President Trump has said in the last few weeks that
Speaker 3: he knows there might be some short term pain to
Speaker 3: to these long term goals. I think there's probably a
Speaker 3: degree of pain reflected in the markets that would get
Speaker 3: his and his team's attention and maybe cause them to
Speaker 3: take a step back at least temporarily. But I don't
Speaker 3: honestly know if today, looking at the sell off we
Speaker 3: saw in the stock market last week and the continued
Speaker 3: softness we're seeing this week registers.
Speaker 2: I look at the follow through of all this, and
Speaker 2: I guess I go back, like a lot of people,
Speaker 2: to real GDP.
Speaker 1: The fact is.
Speaker 2: Atlanta GDP now a snapshot of where we are right
Speaker 2: now is coming in with a vengeance. Do you sense
Speaker 2: a momentum to uh, you know, to make some news
Speaker 2: here on a What's today Tuesday?
Speaker 4: Tuesday?
Speaker 1: On a Tuesday morning.
Speaker 2: Yes, I'm worrying about I got the stitches out from
Speaker 2: where the damn dog bit me.
Speaker 1: Just as simple as I can.
Speaker 2: Are we heading towards two point five percent or lower
Speaker 2: real GDP?
Speaker 3: Well, here's what's so interesting, Tom. You know, last year
Speaker 3: GDP was much stronger than expected. We've gone into this
Speaker 3: year strong. We've seen that in the most recent earning season.
Speaker 3: But that's all backward looking. What drives the economy is
Speaker 3: confidence and incomes. So people still have incomes. The job
Speaker 3: market's still strong outside of certain DC agencies. I don't
Speaker 3: mean to be snarky about that, but confidence is where
Speaker 3: we're seeing some question marks. The other piece that's changing
Speaker 3: is economic surprises. A lot of economists revised up their
Speaker 3: expectations immediately after the election. What we've seen over the
Speaker 3: last several weeks now is data coming in below expectations, disappointing,
Speaker 3: and that indicator coming down.
Speaker 4: Now.
Speaker 3: I want to be careful on causation, but it's correlating
Speaker 3: beautifully with the ten year yield. So the market's pricing
Speaker 3: in two fed cuts again, the ten year yield is
Speaker 3: getting lower. All of that is coming hand in hand
Speaker 3: with both worries about the forward looking economic outlook and disappointments.
Speaker 2: Yea to four digits, Paul pattersons in the room, so
Speaker 2: we got to, you know, go four decimal points alutely
Speaker 2: one point eight nine nine four on the ten year realield.
Speaker 1: That's an ian linga number top go.
Speaker 4: These are the top stories on the Bloomberg terminal. Tom,
Speaker 4: guess what's number one here? Your favorite bitcoin? Bitcoin slides
Speaker 4: below ninety thousand is crypto selloff gathers steam to me,
Speaker 4: I know you're recently at with a piece and CFR
Speaker 4: on the crypto. I kind of just view bitcoin is
Speaker 4: just a sense of risk appetite out there in the marketplace.
Speaker 1: That's it is. Are we saying risk off a little
Speaker 1: bit here?
Speaker 3: Yeah, I mean it's Bitcoin correlates very well with tech stocks,
Speaker 3: which is not surprising. At the end of the day.
Speaker 3: Cryptocurrencies are a form of fintech. So when you see,
Speaker 3: you know, the mag seven come down, it's not shocking
Speaker 3: to me to see Bitcoin come down. If that sell off,
Speaker 3: if Navidia disappoints tomorrow, boy, I think you see bitcoin
Speaker 3: going down further. But it gets me back to our
Speaker 3: treasury point earlier. President Trump, in one of his executive orders,
Speaker 3: is very explicitly supporting the development of digital assets and
Speaker 3: crypto and specifically stable coin. And I want to highlight
Speaker 3: this because to the degree stable coins gather momentum, gather assets,
Speaker 3: they're backed by the dollar. Ones are backed by treasuries
Speaker 3: and other cash like assets. This is a source of
Speaker 3: demand for treasuries that I think Treasury Secretary Bessett is
Speaker 3: keeping a close eye on tether, just that one has
Speaker 3: something like one hundred and thirteen billion dollars worth of
Speaker 3: treasury and treasury like securities.
Speaker 4: Today.
Speaker 2: Rebecca Pattison with this of course on your morning commute
Speaker 2: and also on YouTube. Subscribe to Bloomberg Podcast growing each
Speaker 2: and every day.
Speaker 1: Can't say enough about YouTube premium.
Speaker 2: I'm reading the book Mark Richard's book on YouTube and
Speaker 2: YouTube premium. Sure, I'm glad I did. It's sort of
Speaker 2: slick and all that. Let's go back to JP Morgan
Speaker 2: and Bestmer's trust. Is there an underlying bitcoin?
Speaker 1: Please?
Speaker 2: Where's the underlying to support a theory of bitcoin?
Speaker 3: I mean, bitcoin itself to me anyway, remains a speculative asset.
Speaker 3: And I'm not saying that lightly. The Bank for International
Speaker 3: Settlements did a really detailed report about a year and
Speaker 3: a half ago. It's worth reading, talking about the development
Speaker 3: of crypto, and it highlights, based on a global survey,
Speaker 3: a very detailed global survey, that the bulk of owners
Speaker 3: of bitcoin today are young men under the age of
Speaker 3: thirty five, retail investors, and it's a momentum trade.
Speaker 2: Yeah, I should say worldwide, folks. And you see me
Speaker 2: say this on social The leadership here is Raphael our
Speaker 2: au Er at the Bank of International Settlements. He has
Speaker 2: the best whatever your belief on bitcoin, I mean, you know,
Speaker 2: Matt Miller should read it.
Speaker 1: Yes, if you can find his past code to cashtow
Speaker 1: is Rebecca.
Speaker 4: Is this administration? I mean, I think President trumpets some point,
Speaker 4: whether it's campaign or where, describe yourself as a crypto president.
Speaker 4: Is this a crypto presidency? Is this something where the
Speaker 4: next four years we can see the US regulatory framework
Speaker 4: support crypto in.
Speaker 3: This country one hundred percent. I think over the next
Speaker 3: six twelve months we will see regulatory clarity which is
Speaker 3: going to allow more integration between crypto assets and the
Speaker 3: traditional banking system. And I think it probably will get
Speaker 3: more broad adoption, so it won't just be the young men,
Speaker 3: it will be more types of investors. And that's good
Speaker 3: for crypto in that it'll reduce volatility by having more liquidity.
Speaker 3: The risk one needs to watch is that as it
Speaker 3: gets bigger and more integrated, it becomes a source of
Speaker 3: systemic risk. You know, if you have a hack like
Speaker 3: we did this past week in by bit right one
Speaker 3: hundred or sorry, one point five billion dollar hack of
Speaker 3: a cold wallet which is supposed to be saved right
Speaker 3: cold while it is offline, but that happened in the
Speaker 3: United States, we would have contagion and and that you know,
Speaker 3: it's not just going to be Silicon Valley bank. It
Speaker 3: would be broader. So that's the thing one needs to
Speaker 3: watch out for. You can have regulation to give them
Speaker 3: the ability to grow and innovate, you still have to
Speaker 3: have a few consumer guardrails there.
Speaker 2: Our listeners and viewers know where I am on this,
Speaker 2: and I think Mss Patterson knows where I am on this.
Speaker 1: So let's cut to the chase.
Speaker 2: First thing I did this morning is from peak to
Speaker 2: where we are now, bitdog is down twenty percent.
Speaker 1: That's not a currency.
Speaker 2: We've got all sorts of ira etf Eric Beltcheunas, Blackrock, this, that.
Speaker 1: And the other doing it.
Speaker 2: What should we say to those people if we pop
Speaker 2: down another ten percent? I mean horrific bear markets in
Speaker 2: the equity market are negative thirty five percent.
Speaker 1: If we get that in bitcoin.
Speaker 2: And we're now letting everybody have bitcoin, what's going to
Speaker 2: be the.
Speaker 3: Out Well again my concern. I think to the degree
Speaker 3: digital assets encourage more financial innovation in the United States,
Speaker 3: that's great, right. Our financial system is creative and broad
Speaker 3: and deep, and that helps the US economy. What we
Speaker 3: need to be mindful of is that the pool of
Speaker 3: people today, not in the future, but today who are
Speaker 3: trading bitcoin and these currencies aren't necessarily aware of how
Speaker 3: to save for retirement in a safe, methodical way. This
Speaker 3: is not an easy path to retirement riches, and if
Speaker 3: they lose their money, they have less ability to buy
Speaker 3: a home to invest for the longer term. So understanding
Speaker 3: the volatility of what they're buying. That's I hope that
Speaker 3: these cryptocur companies do a lot more education going forward
Speaker 3: to help these people invest in these assets wisely. Right now,
Speaker 3: I don't see a lot of evidence of that.
Speaker 2: Paul Out on YouTube live chat, Thank You Live, Chack
Speaker 2: can be very smart. Subscribe to Bloomberg podcasts. This guy
Speaker 2: one word tulips.
Speaker 4: One of the things that is the regulatory environment. Like
Speaker 4: in the last administration, in the Bide administration, Gary Ganser,
Speaker 4: I expected him. I think a lot of people did that.
Speaker 4: A he understood crypto and B he was going to
Speaker 4: take a forceful hand and kind of pushing the regulatory
Speaker 4: framework forward, which most participants are asking for.
Speaker 1: Yes, yes he did not. Really.
Speaker 4: What do we know about this administration, the Trump administration.
Speaker 3: Well, there's In the last administration, there was some debate
Speaker 3: fight whatever word you want to use, between the different
Speaker 3: regulatory agencies on who would be the lead on digital assets.
Speaker 3: I think in this administration, we're likely to see a
Speaker 3: lighter touch, probably led by the CFTC rather than the SEC.
Speaker 3: I think we'll get some legislation from Congress through probably
Speaker 3: in the next few months, which will also create a
Speaker 3: clear path. And these companies need it, they deserve it right.
Speaker 3: They need to know the rules of the road, and
Speaker 3: the banks and other asset manageers need to know the
Speaker 3: rules of the road. So I do think this administration
Speaker 3: is going to be incredibly helpful on that front. Again,
Speaker 3: my hope and my ask if I could, if I
Speaker 3: could be there in the White House today, would be,
Speaker 3: please don't forget some consumer protection, some consumer guardrails.
Speaker 1: Do you have in your head?
Speaker 2: A price of bitcoin south where everybody starts wringing their hands.
Speaker 2: I mean we're eighty nine thousand, is it eighty? Is
Speaker 2: at fifty?
Speaker 1: I mean, I have no idea.
Speaker 3: So my worst case scenario, a realistic worst case scenario,
Speaker 3: would be that we get some disappointment out of one
Speaker 3: of the big tech companies in Navidia, whoever it is,
Speaker 3: it doesn't matter, and we get more of a concerted
Speaker 3: sell off, maybe in response to tariffs, China puts some
Speaker 3: holds on us tech companies acting in China. Those sorts
Speaker 3: of maneuvers, you get a bigger sell off in tech,
Speaker 3: which is not impossible given valuations, given ownership, and that
Speaker 3: contagion pulls down cryptocurrencies in a meaningful way because these
Speaker 3: investors own crypto and they own meme stocks, and they
Speaker 3: own a lot of tech, and so they get hit
Speaker 3: on both fronts. That could get some momentum and pull
Speaker 3: down the broader market. I don't know if anyone buys
Speaker 3: that dip, because they just need to be covering their
Speaker 3: losses at that point.
Speaker 2: Well again, and the retailization of this is where I
Speaker 2: have my radar.
Speaker 1: Rebecca, thank you so much,