1
00:00:00,840 --> 00:00:04,000
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

2
00:00:04,040 --> 00:00:05,280
Speaker 1: my co host Matt Miller.

3
00:00:05,640 --> 00:00:09,600
Speaker 2: Every business day we bring you interviews from CEOs, market pros,

4
00:00:09,720 --> 00:00:13,600
Speaker 2: and Bloomberg experts, along with essential market moving news.

5
00:00:14,160 --> 00:00:17,279
Speaker 1: Find the Bloomberg Markets Podcast called Apple Podcasts or wherever

6
00:00:17,400 --> 00:00:20,520
Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

7
00:00:21,160 --> 00:00:22,680
Speaker 1: I want to get to our next guest, Jennifer Lee.

8
00:00:22,800 --> 00:00:26,960
Speaker 1: She's a senior economist managing director at BIMO Capital Markets. Jennifer,

9
00:00:27,080 --> 00:00:30,880
Speaker 1: lots of economic data this week, and likely we'll have

10
00:00:31,160 --> 00:00:33,000
Speaker 1: you know an effect on what we hear from our

11
00:00:33,000 --> 00:00:35,400
Speaker 1: photo reserve in the coming months. What are you looking

12
00:00:35,400 --> 00:00:37,760
Speaker 1: at this week in terms of the eco data?

13
00:00:39,400 --> 00:00:41,239
Speaker 3: Good morning everyone, Thanks for having me on. Sorry I'm

14
00:00:41,240 --> 00:00:43,159
Speaker 3: still laughing about the bike to nowhere. That's how I

15
00:00:43,159 --> 00:00:48,159
Speaker 3: feel sometimes with so for this this week, I think

16
00:00:48,200 --> 00:00:50,559
Speaker 3: all the key numbers are coming out tomorrow, although this

17
00:00:50,640 --> 00:00:53,559
Speaker 3: morning is a reports on GDP was a little bit

18
00:00:53,640 --> 00:00:56,320
Speaker 3: kind of interesting. Even though we saw that downward revision,

19
00:00:56,960 --> 00:00:59,880
Speaker 3: it was all due to inventories and net trade, but

20
00:01:00,000 --> 00:01:02,680
Speaker 3: I noticed that the consumer spending portion was still a

21
00:01:02,720 --> 00:01:05,440
Speaker 3: little bit, just a smidge higher, which is kind of interesting,

22
00:01:06,160 --> 00:01:08,560
Speaker 3: but tomorrow's PC numbers, so it will be will be

23
00:01:08,600 --> 00:01:10,680
Speaker 3: definitely the key because it's going to show you how

24
00:01:10,880 --> 00:01:11,760
Speaker 3: Q three is beginning.

25
00:01:11,800 --> 00:01:14,399
Speaker 4: So that's interesting too because this is a revision to

26
00:01:14,440 --> 00:01:18,080
Speaker 4: that and you are seeing consumer spending revised higher there

27
00:01:18,160 --> 00:01:21,240
Speaker 4: and those expectations. When I look at the ECFC function

28
00:01:21,280 --> 00:01:23,959
Speaker 4: in the Bloomberg terminal that takes sort of the estimates

29
00:01:24,000 --> 00:01:26,520
Speaker 4: for the average what economists are expecting, you don't see

30
00:01:26,760 --> 00:01:29,400
Speaker 4: even a quarterly contraction anymore coming up for the next

31
00:01:29,480 --> 00:01:32,160
Speaker 4: few quarters. So when you do have so many economists

32
00:01:32,160 --> 00:01:35,039
Speaker 4: expecting that potentially we could see a recession in the

33
00:01:35,040 --> 00:01:37,280
Speaker 4: next few quarters, how do you square that away? When

34
00:01:37,280 --> 00:01:39,959
Speaker 4: you have data like this, it's being revised to the upside,

35
00:01:41,200 --> 00:01:42,600
Speaker 4: so we are well.

36
00:01:42,600 --> 00:01:44,640
Speaker 3: Actually, it was interesting because when you look at the components,

37
00:01:44,680 --> 00:01:47,319
Speaker 3: it was all durables that actually was revised lower, but

38
00:01:47,560 --> 00:01:50,120
Speaker 3: again it was upward divisions to services and that's where

39
00:01:50,160 --> 00:01:52,280
Speaker 3: all the demand has been. But we actually have a

40
00:01:52,320 --> 00:01:54,680
Speaker 3: contraction for the first quarter. I had to look at

41
00:01:54,720 --> 00:01:57,240
Speaker 3: my in my notes here for the first quarter actually

42
00:01:57,440 --> 00:01:59,760
Speaker 3: in around the turn of the year, because we are

43
00:01:59,800 --> 00:02:02,080
Speaker 3: still looking for the for growth to slow overall We're

44
00:02:02,120 --> 00:02:05,200
Speaker 3: not looking for that hard landing that many were calling for,

45
00:02:05,240 --> 00:02:07,320
Speaker 3: you know, just a number of months ago. We're still

46
00:02:07,320 --> 00:02:08,919
Speaker 3: looking for that soft landing. And so for all the

47
00:02:08,960 --> 00:02:11,920
Speaker 3: data are putting in that direction, things are slowing, which

48
00:02:11,960 --> 00:02:13,560
Speaker 3: is not a bad thing. Is what the Fed wants.

49
00:02:13,560 --> 00:02:17,919
Speaker 3: This is what they really really want, and I think

50
00:02:18,000 --> 00:02:20,720
Speaker 3: in terms of the consumer just to have them pulling

51
00:02:20,760 --> 00:02:23,520
Speaker 3: back a little bit and eventually just taking all the

52
00:02:23,520 --> 00:02:25,280
Speaker 3: spending off the table at some point in the early

53
00:02:25,360 --> 00:02:28,680
Speaker 3: in the new year will help again growth slow even further,

54
00:02:28,840 --> 00:02:30,840
Speaker 3: but not have that hard landing.

55
00:02:32,080 --> 00:02:34,560
Speaker 1: So if there is not a hard landing here, how

56
00:02:34,600 --> 00:02:37,400
Speaker 1: do you think the Federal Reserve will kind of interpret

57
00:02:37,440 --> 00:02:38,040
Speaker 1: some of this data?

58
00:02:38,080 --> 00:02:38,400
Speaker 5: Will they?

59
00:02:38,639 --> 00:02:41,240
Speaker 1: I mean, they could very well pat themselves on the back,

60
00:02:41,280 --> 00:02:42,760
Speaker 1: take a little bit of a victory lap, and just

61
00:02:42,840 --> 00:02:45,200
Speaker 1: kind of stand pat for a while. Is that something

62
00:02:45,320 --> 00:02:48,400
Speaker 1: you foresee or did they do? You feel like they

63
00:02:48,440 --> 00:02:50,040
Speaker 1: may feel like they have more work to do in

64
00:02:50,080 --> 00:02:51,440
Speaker 1: terms of pushing rates up a little bit.

65
00:02:53,480 --> 00:02:55,440
Speaker 3: It's a it's all going to dependent. I mean, it

66
00:02:55,480 --> 00:02:57,840
Speaker 3: sounds wishy washy, but that's you know, unfortunately, that is

67
00:02:57,880 --> 00:02:59,960
Speaker 3: the case. Is everything is data dependent. I don't know

68
00:03:00,040 --> 00:03:02,480
Speaker 3: they're gonna be doing victory laps. Just judging from what

69
00:03:02,800 --> 00:03:05,920
Speaker 3: Fetcher Powell said last week in Wyoming, I don't think

70
00:03:05,960 --> 00:03:08,600
Speaker 3: they're doing any victory lapse. You're still watching everything very carefully.

71
00:03:08,600 --> 00:03:10,360
Speaker 3: He did get, by the way, give a nod to

72
00:03:10,440 --> 00:03:13,040
Speaker 3: the more to the better inflation data of late, but

73
00:03:13,040 --> 00:03:14,800
Speaker 3: he said it's just far too soon, and we already

74
00:03:14,880 --> 00:03:16,760
Speaker 3: knew that. I mean, a couple of months of better

75
00:03:16,760 --> 00:03:21,240
Speaker 3: inflation data is are definitely not enough to uh to

76
00:03:21,240 --> 00:03:23,760
Speaker 3: to have them be very very comfortable. I think they

77
00:03:23,800 --> 00:03:26,600
Speaker 3: need a lot more than that. But for sure, our

78
00:03:26,639 --> 00:03:29,320
Speaker 3: official call is still that they are going to stay

79
00:03:29,320 --> 00:03:31,960
Speaker 3: the course and keep watching the data and not do anything.

80
00:03:32,240 --> 00:03:34,200
Speaker 3: And of course there is a risk. I still think

81
00:03:34,200 --> 00:03:37,520
Speaker 3: that the risk is to is to raise race if

82
00:03:37,520 --> 00:03:41,640
Speaker 3: things do not cool or or cool more than they

83
00:03:41,720 --> 00:03:43,520
Speaker 3: want or less than they want. You know, I'm trying

84
00:03:43,560 --> 00:03:46,560
Speaker 3: to say, of course, all the latest jobs data have

85
00:03:46,600 --> 00:03:48,720
Speaker 3: been very interesting as well. With the ADP this morning,

86
00:03:49,160 --> 00:03:51,560
Speaker 3: I don't take too much stock in it because it's

87
00:03:51,600 --> 00:03:54,000
Speaker 3: sometimes quite locky compared to what the official data say.

88
00:03:54,040 --> 00:03:56,920
Speaker 3: But you know, overall we have seen that slowly in

89
00:03:57,280 --> 00:04:02,000
Speaker 3: growth in job growth, in job demanded, lower job openings,

90
00:04:02,000 --> 00:04:04,640
Speaker 3: though there are fewer job openings out there, still far

91
00:04:04,720 --> 00:04:06,720
Speaker 3: more than the number of unput Americans out there, So

92
00:04:06,760 --> 00:04:09,080
Speaker 3: it's still tight, but at least we're all heading in

93
00:04:09,120 --> 00:04:09,800
Speaker 3: that right direction.

94
00:04:10,040 --> 00:04:12,280
Speaker 4: We talk so much about whether or not we'll see

95
00:04:12,280 --> 00:04:14,800
Speaker 4: the Fed potentially raise at least one more time here,

96
00:04:15,040 --> 00:04:17,960
Speaker 4: but what about just how long that they keep rates

97
00:04:18,000 --> 00:04:20,240
Speaker 4: at an elevated level there, and how long are you

98
00:04:20,320 --> 00:04:22,080
Speaker 4: expecting that to potentially happen.

99
00:04:23,640 --> 00:04:27,120
Speaker 3: So we are looking officially for the first rate cut

100
00:04:27,160 --> 00:04:29,679
Speaker 3: to come probably sometime in the mid middle of twenty

101
00:04:29,720 --> 00:04:33,640
Speaker 3: twenty four, mid year, so another year from now. We've

102
00:04:33,640 --> 00:04:35,560
Speaker 3: actually been pushing that out a little bit more just

103
00:04:35,600 --> 00:04:37,480
Speaker 3: because the data have shown that the US economy is

104
00:04:37,480 --> 00:04:39,840
Speaker 3: a lot more resilient than anyone I would have hoped

105
00:04:39,839 --> 00:04:42,839
Speaker 3: for at this point we're expected so if anything, they're

106
00:04:42,880 --> 00:04:46,560
Speaker 3: going to keep rates for higher for longer.

107
00:04:46,920 --> 00:04:47,520
Speaker 5: So a lot.

108
00:04:47,600 --> 00:04:49,080
Speaker 3: So I don't think again, we're not going to see

109
00:04:49,120 --> 00:04:51,560
Speaker 3: another rate cut or a rate cut coming until at

110
00:04:51,600 --> 00:04:53,560
Speaker 3: the earliest middle of next year.

111
00:04:54,640 --> 00:04:58,200
Speaker 1: We're going to get obviously, on Friday, the change in

112
00:04:58,240 --> 00:05:00,840
Speaker 1: non form payrolls consensus it is for a gain of

113
00:05:00,839 --> 00:05:02,840
Speaker 1: one hundred and seventy thousand. That would be down from

114
00:05:02,920 --> 00:05:05,280
Speaker 1: prior period of one hundred and eighty seven thousand.

115
00:05:05,279 --> 00:05:05,440
Speaker 5: But.

116
00:05:06,920 --> 00:05:09,440
Speaker 1: Unemployment rate kind of sticking around three and a half percent.

117
00:05:09,680 --> 00:05:12,320
Speaker 1: Where do you think that unemployment rate goes I have

118
00:05:12,440 --> 00:05:15,160
Speaker 1: no idea how this labor economy is working. We got

119
00:05:15,160 --> 00:05:17,839
Speaker 1: the jolt s Nummer come down yesterday. But where do

120
00:05:17,839 --> 00:05:21,360
Speaker 1: you think the unemployment rate ultimately goes higher?

121
00:05:21,680 --> 00:05:23,359
Speaker 3: If you have to pick a direction, it will be higher,

122
00:05:23,360 --> 00:05:25,960
Speaker 3: but not too much higher. Probably something in the in

123
00:05:26,000 --> 00:05:29,279
Speaker 3: the mid four I believe we have This is all

124
00:05:29,960 --> 00:05:31,599
Speaker 3: to be expected at some point, like when you have

125
00:05:31,720 --> 00:05:34,320
Speaker 3: over five hundred basis points of rate hikes coming from

126
00:05:34,320 --> 00:05:36,320
Speaker 3: the Federal Reserve in such a short amount of time.

127
00:05:36,560 --> 00:05:38,599
Speaker 3: At some point, you know, again, we're already seeing that

128
00:05:38,680 --> 00:05:42,200
Speaker 3: job growth slowing. The demand for jobs are also starting

129
00:05:42,240 --> 00:05:44,760
Speaker 3: to wane a little bit, So we're going to start

130
00:05:44,760 --> 00:05:47,200
Speaker 3: seeing that unemployment rate inch a little bit higher, but

131
00:05:47,240 --> 00:05:49,800
Speaker 3: it's not going to be ratcheting higher. And at the

132
00:05:49,800 --> 00:05:52,560
Speaker 3: same time, they're still demand out there for certain categories

133
00:05:52,560 --> 00:05:54,880
Speaker 3: of workers. Maybe not you know, on a broader scale,

134
00:05:54,880 --> 00:05:57,800
Speaker 3: but certain areas like construction, we're still lacking even on

135
00:05:57,839 --> 00:06:00,359
Speaker 3: the technology side. You know, I hearing stories about you know,

136
00:06:00,600 --> 00:06:03,000
Speaker 3: shortage of engineers, for example, and not enough even though

137
00:06:03,000 --> 00:06:04,960
Speaker 3: we've got all this money coming in on the fiscal

138
00:06:05,040 --> 00:06:09,000
Speaker 3: side to build all these facilities to create semiconductors, we

139
00:06:09,040 --> 00:06:11,919
Speaker 3: don't have enough people who are trained to build for

140
00:06:11,960 --> 00:06:15,880
Speaker 3: that certain particular technologies. So certain pockets are still going

141
00:06:15,920 --> 00:06:18,080
Speaker 3: to be a lot more demand. But broadly speaking, just

142
00:06:18,160 --> 00:06:20,760
Speaker 3: because of slower growth, because of higher interest rates, we're

143
00:06:20,760 --> 00:06:22,719
Speaker 3: going to start seeing that jobles rate into a little

144
00:06:22,760 --> 00:06:23,240
Speaker 3: bit higher.

145
00:06:23,320 --> 00:06:25,800
Speaker 4: Well across this pond. We do have the ECB having

146
00:06:25,839 --> 00:06:28,240
Speaker 4: a meeting on September fourteenth, that is ahead of the

147
00:06:28,240 --> 00:06:31,160
Speaker 4: Federal Reserves decision on September twentieth, but we are going

148
00:06:31,200 --> 00:06:34,320
Speaker 4: to get some Eurozone inflation numbers on Thursday. How do

149
00:06:34,360 --> 00:06:36,400
Speaker 4: you square away the issues when it comes to the

150
00:06:36,400 --> 00:06:39,599
Speaker 4: inflation that Christine Leguard is clearly trying to fight and

151
00:06:39,680 --> 00:06:42,560
Speaker 4: indicated that at Jackson Hole last week, versus what fetchair

152
00:06:42,640 --> 00:06:44,720
Speaker 4: Jerome pal is trying to do in the United States.

153
00:06:46,279 --> 00:06:48,880
Speaker 3: It's funny they're mentioning the ECB, because I for the ECB,

154
00:06:48,960 --> 00:06:51,440
Speaker 3: it's almost like a coin toss right now. If anything,

155
00:06:51,480 --> 00:06:54,400
Speaker 3: I would right now our official review, my official view

156
00:06:54,440 --> 00:06:56,279
Speaker 3: is still that they're going to stay the course, just

157
00:06:56,320 --> 00:06:59,800
Speaker 3: given that inflation has come down from those highs, given

158
00:06:59,839 --> 00:07:01,599
Speaker 3: that all the hawks or most of the hawks have

159
00:07:01,680 --> 00:07:04,400
Speaker 3: started to tone down their hawkishness, and the fact that

160
00:07:04,480 --> 00:07:06,960
Speaker 3: China is slowing considerably as well. So I think that

161
00:07:07,080 --> 00:07:10,120
Speaker 3: might be enough to put the lot of the ECB

162
00:07:10,240 --> 00:07:11,720
Speaker 3: to sort of step aside a little bit. And she

163
00:07:11,800 --> 00:07:14,800
Speaker 3: sort of hinted at that at that July meeting. However,

164
00:07:15,440 --> 00:07:17,400
Speaker 3: the flat fact that inflation is still sticky. We got

165
00:07:17,440 --> 00:07:20,360
Speaker 3: three new pieces of data overnight. Belgium, for example, it

166
00:07:20,400 --> 00:07:23,240
Speaker 3: was like all over the map, Belgium CPI was relatively steady.

167
00:07:23,760 --> 00:07:27,120
Speaker 3: German CPI edged a little bit lower, which is key,

168
00:07:27,160 --> 00:07:29,720
Speaker 3: but it's just it wasn't as low as consensus had expected.

169
00:07:30,000 --> 00:07:33,200
Speaker 3: And in Spain inflation rose for the second month in

170
00:07:33,200 --> 00:07:34,960
Speaker 3: a row. So it's going to show that. I don't

171
00:07:34,960 --> 00:07:37,240
Speaker 3: think we're going to go in to get a very

172
00:07:37,240 --> 00:07:40,360
Speaker 3: clear signal from tomorrow's inflation report, and I think that

173
00:07:40,400 --> 00:07:43,640
Speaker 3: will be put the ECB still at play for September.

174
00:07:44,360 --> 00:07:46,640
Speaker 1: Well, most importantly, how are things in Canada.

175
00:07:48,640 --> 00:07:51,440
Speaker 3: Things are slowing. It is actually slowing a little bit

176
00:07:51,480 --> 00:07:54,240
Speaker 3: more than we had a little bit more actually than

177
00:07:54,240 --> 00:07:55,600
Speaker 3: what's happening in the US. We're going to get some

178
00:07:55,680 --> 00:07:58,000
Speaker 3: key data this week. On Friday, we're going to get

179
00:07:58,000 --> 00:07:59,480
Speaker 3: our We're going to Foly going to release our real

180
00:07:59,520 --> 00:08:02,520
Speaker 3: GDP for the second quarter, and we're looking for growth

181
00:08:02,560 --> 00:08:05,200
Speaker 3: to slow to about a one point two percent a wicepace,

182
00:08:05,560 --> 00:08:07,440
Speaker 3: which is about half of what we saw in Q one.

183
00:08:07,600 --> 00:08:09,440
Speaker 3: We had a strong start to the year that we've

184
00:08:09,440 --> 00:08:12,600
Speaker 3: been doing, dealing with a lot of wildfires almost see

185
00:08:12,680 --> 00:08:15,240
Speaker 3: the coast to coast, labor strikes and all that's going

186
00:08:15,280 --> 00:08:17,000
Speaker 3: to weigh on the second court. Of course, higher interest

187
00:08:17,040 --> 00:08:20,880
Speaker 3: rates and consumers here are a lot more susceptible I

188
00:08:20,880 --> 00:08:23,680
Speaker 3: guess two rates than they are in the US, So

189
00:08:23,760 --> 00:08:25,440
Speaker 3: I think we are going to see slower growth. It's

190
00:08:25,440 --> 00:08:26,800
Speaker 3: just something by the way, that the Bag of Canada

191
00:08:26,840 --> 00:08:29,239
Speaker 3: is going to very much welcome because inflation is still

192
00:08:29,600 --> 00:08:32,720
Speaker 3: too sticky. So as long as inflation or the economy

193
00:08:32,760 --> 00:08:35,439
Speaker 3: continues to slow, which we're expecting in the second quarter,

194
00:08:35,720 --> 00:08:38,160
Speaker 3: that will allow the Bag of Canada to stay also

195
00:08:38,200 --> 00:08:39,400
Speaker 3: on hold for the rest of the year.

196
00:08:39,600 --> 00:08:42,400
Speaker 1: Hi, Jennifer, thanks so much. We appreciate getting the global view,

197
00:08:42,400 --> 00:08:45,200
Speaker 1: including our good friends to Northern Canada. Jennifer Lee, Senior

198
00:08:45,200 --> 00:08:48,600
Speaker 1: Economists and Managing director at BMO Capital Markets, that is

199
00:08:48,720 --> 00:08:50,040
Speaker 1: Bank of Montreal.

200
00:08:51,240 --> 00:08:55,120
Speaker 6: You're listening to the Team Can't Live program Bloomberg Markets

201
00:08:55,160 --> 00:08:58,240
Speaker 6: weekdays at ten am Eastern on Bloomberg dot Com, the

202
00:08:58,320 --> 00:09:01,319
Speaker 6: iHeartRadio app and the Blow our Business app, or listen

203
00:09:01,360 --> 00:09:05,000
Speaker 6: on demand wherever you get your podcast.

204
00:09:05,040 --> 00:09:05,240
Speaker 7: All.

205
00:09:05,440 --> 00:09:08,360
Speaker 4: We did get a few different data points on the

206
00:09:08,440 --> 00:09:10,959
Speaker 4: housing side today, so we were just talking about earlier

207
00:09:11,240 --> 00:09:14,400
Speaker 4: the pending home sales unexpectedly rising for a second month,

208
00:09:14,440 --> 00:09:17,480
Speaker 4: but also we did see that mortgage applications also rose

209
00:09:17,720 --> 00:09:19,200
Speaker 4: in the latest week. So I want to get straight

210
00:09:19,200 --> 00:09:22,800
Speaker 4: to our next guest, Odetta Cushy, Deputy chief Economists at

211
00:09:22,800 --> 00:09:25,760
Speaker 4: First American, who's joining us on zoom to discuss the

212
00:09:25,840 --> 00:09:28,080
Speaker 4: latest data in the housing market. Thanks so much for

213
00:09:28,200 --> 00:09:31,200
Speaker 4: joining us. Walk us through these latest data points and

214
00:09:31,200 --> 00:09:33,440
Speaker 4: what this really tells us about the housing market at

215
00:09:33,440 --> 00:09:35,800
Speaker 4: this point, because we do know that mortgage rates are

216
00:09:35,880 --> 00:09:40,000
Speaker 4: at about a two decade high at this point, that's right.

217
00:09:40,080 --> 00:09:42,199
Speaker 8: So the recent increase in pending home sales, this is

218
00:09:42,200 --> 00:09:44,040
Speaker 8: a second month in a row that there's been a

219
00:09:44,320 --> 00:09:47,679
Speaker 8: modest increase in pending home sales, which is a leading

220
00:09:47,679 --> 00:09:50,920
Speaker 8: indicator of a future sales. That's really a testament to

221
00:09:50,960 --> 00:09:53,600
Speaker 8: the strength of the demand side of the equation. There's

222
00:09:53,679 --> 00:09:57,400
Speaker 8: still quite a bit of pent up demand for homes,

223
00:09:57,679 --> 00:10:01,520
Speaker 8: but insufficient supply to meet that demand. So some cautious

224
00:10:01,600 --> 00:10:04,400
Speaker 8: optimism in the latest numbers. We saw this morning a

225
00:10:04,440 --> 00:10:08,760
Speaker 8: weekly increase in purchase mortgage applications, although again a very

226
00:10:08,840 --> 00:10:11,960
Speaker 8: modest increase on a year over year basis. We're still

227
00:10:12,200 --> 00:10:15,880
Speaker 8: quite low both for mortgage applications and pending home sales.

228
00:10:16,120 --> 00:10:18,960
Speaker 8: But you really see the strength of demand even in

229
00:10:19,000 --> 00:10:21,240
Speaker 8: such a high interest rate environment and such a low

230
00:10:21,280 --> 00:10:22,360
Speaker 8: inventory environment.

231
00:10:22,600 --> 00:10:25,880
Speaker 4: What is the catalyst because typically the springtime is more

232
00:10:25,880 --> 00:10:27,719
Speaker 4: of the boom there when you do see that when

233
00:10:27,720 --> 00:10:29,840
Speaker 4: it comes to home sales, but this is a little

234
00:10:29,840 --> 00:10:32,959
Speaker 4: bit later than that. Why is that, Well, the.

235
00:10:32,880 --> 00:10:36,559
Speaker 8: Pent up demand there's been a lot of multiple offer situations,

236
00:10:36,600 --> 00:10:38,520
Speaker 8: and so you know, the folks that are losing out

237
00:10:38,559 --> 00:10:41,400
Speaker 8: on those multiple offer situations are on the sidelines, ready

238
00:10:41,440 --> 00:10:43,640
Speaker 8: to jump in when there is sort of a house

239
00:10:43,679 --> 00:10:47,280
Speaker 8: out there that meets their needs and what they're looking for.

240
00:10:47,400 --> 00:10:50,200
Speaker 8: And so maybe a little break from seasonality there.

241
00:10:51,000 --> 00:10:54,840
Speaker 1: So odetta is I'm going at the bank rate thirty

242
00:10:55,160 --> 00:10:59,760
Speaker 1: year fixed mortgage seven point five three percent. Is there

243
00:10:59,760 --> 00:11:02,760
Speaker 1: a level where that needs to decline, where that might

244
00:11:02,960 --> 00:11:06,440
Speaker 1: free up sellers to maybe say, all right, I can

245
00:11:06,520 --> 00:11:09,559
Speaker 1: in fact part with my lower rate mortgage and maybe

246
00:11:09,600 --> 00:11:11,480
Speaker 1: put my home on the market. Is there a break

247
00:11:11,520 --> 00:11:13,680
Speaker 1: given number out there that you think might be the

248
00:11:13,679 --> 00:11:14,440
Speaker 1: magic number?

249
00:11:15,920 --> 00:11:18,480
Speaker 8: Well, that's the big question right now. More than ninety

250
00:11:18,520 --> 00:11:22,520
Speaker 8: percent of existing homeowners are locked into rates below six percent,

251
00:11:22,640 --> 00:11:25,920
Speaker 8: So certainly we need to see something below seven percent

252
00:11:26,000 --> 00:11:28,640
Speaker 8: to even see some movement there. There's not a lot

253
00:11:28,679 --> 00:11:32,320
Speaker 8: of financial incentive for existing home owners to drop those

254
00:11:32,480 --> 00:11:35,400
Speaker 8: record low mortgage rates that they locked into at this point.

255
00:11:35,720 --> 00:11:39,000
Speaker 8: So I think, you know, well under seven percent, probably

256
00:11:39,000 --> 00:11:41,880
Speaker 8: below six percent to unlock some of that inventory.

257
00:11:42,720 --> 00:11:45,120
Speaker 4: We did see July opending sales rise the most in

258
00:11:45,160 --> 00:11:47,800
Speaker 4: the West and also actually increase in the South, but

259
00:11:48,080 --> 00:11:51,200
Speaker 4: probably not surprisingly, they did fall in the Northeast. What

260
00:11:51,280 --> 00:11:53,960
Speaker 4: kind of dynamics are you seeing from a regional perspective

261
00:11:54,000 --> 00:11:55,040
Speaker 4: at this point?

262
00:11:55,880 --> 00:11:59,400
Speaker 8: So the West is that's your traditionally more expensive markets,

263
00:11:59,440 --> 00:12:01,760
Speaker 8: and those are all the markets where we've seen the

264
00:12:01,800 --> 00:12:04,840
Speaker 8: most severe price declines from the peak, and so in

265
00:12:04,840 --> 00:12:07,680
Speaker 8: a higher mortgage rate environment, something needs to give, and

266
00:12:07,720 --> 00:12:10,680
Speaker 8: in this instance it has to be price. So the

267
00:12:10,720 --> 00:12:13,520
Speaker 8: areas where we're seeing price adjust to the reality of

268
00:12:13,559 --> 00:12:16,320
Speaker 8: higher mortgage rates, they're seeing a little bit more activity.

269
00:12:16,360 --> 00:12:18,200
Speaker 8: So in this instance, it would be the West Coast,

270
00:12:18,240 --> 00:12:19,920
Speaker 8: those traditionally more expensive markets.

271
00:12:20,600 --> 00:12:24,120
Speaker 1: So if there really aren't a lot of existing home

272
00:12:24,200 --> 00:12:27,720
Speaker 1: sales in the market or available on the market, are

273
00:12:27,920 --> 00:12:30,480
Speaker 1: are the builders making up any of that kind of

274
00:12:30,640 --> 00:12:33,480
Speaker 1: shortfall by just building more houses new houses?

275
00:12:34,440 --> 00:12:38,440
Speaker 8: That's right, builders are picking up market share. Traditionally, existing

276
00:12:38,440 --> 00:12:41,760
Speaker 8: home inventory makes up about ninety percent of total inventory.

277
00:12:42,000 --> 00:12:44,760
Speaker 8: These days it's more like seventy, so builders have really

278
00:12:44,760 --> 00:12:48,440
Speaker 8: stepped up to build more homes. They're also offering incentives

279
00:12:48,600 --> 00:12:54,000
Speaker 8: rate buydowns, price declines to sort of help button entice

280
00:12:54,080 --> 00:12:55,680
Speaker 8: buyers into the new home market.

281
00:12:55,920 --> 00:12:59,400
Speaker 4: Which builders have been kind of setting themselves apart the

282
00:12:59,400 --> 00:13:01,640
Speaker 4: most in and which ones do you think are struggling

283
00:13:01,720 --> 00:13:03,840
Speaker 4: more depending on I guess which type of demographic and

284
00:13:03,880 --> 00:13:04,760
Speaker 4: you're trying to cater to.

285
00:13:06,000 --> 00:13:08,880
Speaker 8: It's really the bigger builders that have had a little

286
00:13:08,920 --> 00:13:12,120
Speaker 8: bit more power to be able to do these rate buydowns.

287
00:13:12,120 --> 00:13:14,360
Speaker 8: So I think in this market it's more advantageous to

288
00:13:14,360 --> 00:13:16,959
Speaker 8: be one of the big builders rather than the small

289
00:13:17,000 --> 00:13:20,440
Speaker 8: builders that maybe don't have the ability to offer some

290
00:13:20,520 --> 00:13:21,520
Speaker 8: of these incentives.

291
00:13:22,120 --> 00:13:22,559
Speaker 5: Oh data.

292
00:13:22,559 --> 00:13:24,120
Speaker 1: One of the things that I hear from the home

293
00:13:24,160 --> 00:13:26,960
Speaker 1: builders is, you know when they talk about their costs,

294
00:13:26,960 --> 00:13:28,559
Speaker 1: and I don't even think about it, but that's the

295
00:13:28,559 --> 00:13:31,800
Speaker 1: biggest cost. I guess it's just land and some of

296
00:13:31,840 --> 00:13:35,160
Speaker 1: these markets everybody's flocking to Texas and Florida and places

297
00:13:35,200 --> 00:13:37,440
Speaker 1: like that, Where do they get land and can they

298
00:13:37,480 --> 00:13:40,120
Speaker 1: get it on an affordable basis.

299
00:13:41,200 --> 00:13:45,360
Speaker 8: Lands it's really multiple supply side headwinds and higher costs

300
00:13:45,400 --> 00:13:48,840
Speaker 8: for builders. The cost of land certainly is higher, but

301
00:13:48,920 --> 00:13:52,120
Speaker 8: of course they also are are grappling with ongoing supply

302
00:13:52,240 --> 00:13:55,400
Speaker 8: chain headwinds right those those aren't totally gone. And of

303
00:13:55,400 --> 00:13:58,840
Speaker 8: course the price of labor has gone up. Wages in

304
00:13:58,880 --> 00:14:01,680
Speaker 8: the construction industry have gone up as well, and so

305
00:14:02,000 --> 00:14:06,160
Speaker 8: costs all around for builders have gone up, and that's

306
00:14:06,200 --> 00:14:08,640
Speaker 8: made it very difficult for them to build at that

307
00:14:08,679 --> 00:14:12,040
Speaker 8: sort of starter starter home priced here, that entry level

308
00:14:12,040 --> 00:14:16,000
Speaker 8: priced here, and that's the level that we need at

309
00:14:16,000 --> 00:14:17,800
Speaker 8: this point because it's a lot of first time home

310
00:14:17,840 --> 00:14:19,560
Speaker 8: buyers out there that have been priced out of this

311
00:14:19,680 --> 00:14:22,520
Speaker 8: market and they're looking for that starter home price here

312
00:14:22,560 --> 00:14:25,800
Speaker 8: and builders just aren't able to build at that price

313
00:14:25,880 --> 00:14:27,760
Speaker 8: point because of higher costs.

314
00:14:28,160 --> 00:14:31,440
Speaker 4: So how do we end up fixing the inventory issue

315
00:14:31,480 --> 00:14:35,120
Speaker 4: That clearly got exacerbated during the pendit pandemic, but that

316
00:14:35,240 --> 00:14:37,440
Speaker 4: was already an issue even coming out of the housing crisis.

317
00:14:38,960 --> 00:14:43,000
Speaker 8: There is some mitigating factors here on the existing home side.

318
00:14:43,080 --> 00:14:46,160
Speaker 8: Of course, if rates fall, that will help to boost

319
00:14:46,160 --> 00:14:48,560
Speaker 8: the market a bit. But we also have forty two

320
00:14:48,600 --> 00:14:51,840
Speaker 8: percent of existing homeowners who don't have a mortgage on

321
00:14:51,880 --> 00:14:55,640
Speaker 8: their home. They're free and clear on their home, and

322
00:14:55,680 --> 00:14:58,080
Speaker 8: so those are and they're sitting on a ton of equity,

323
00:14:58,120 --> 00:15:00,640
Speaker 8: and so a lot of those homeowners can sort of

324
00:15:00,640 --> 00:15:04,720
Speaker 8: be a mitigating factor amidst this rate lock in period.

325
00:15:04,800 --> 00:15:08,960
Speaker 8: They aren't financially disincentivized by higher mortgage rates because they

326
00:15:08,960 --> 00:15:11,960
Speaker 8: don't have a mortgage, and so there's that aspect on

327
00:15:12,000 --> 00:15:14,400
Speaker 8: the existing home side. On the new home side, we

328
00:15:14,520 --> 00:15:18,480
Speaker 8: just need builders to continue to build more homes, and

329
00:15:18,680 --> 00:15:21,440
Speaker 8: they do have quite a few challenges, whether it be

330
00:15:21,480 --> 00:15:24,880
Speaker 8: regulatory challenges, and so anything that can be done to

331
00:15:24,920 --> 00:15:26,920
Speaker 8: sort of ease some of those challenges for builders to

332
00:15:26,920 --> 00:15:29,520
Speaker 8: allow them to build more homes where people are looking

333
00:15:29,520 --> 00:15:29,880
Speaker 8: to buy.

334
00:15:30,040 --> 00:15:31,920
Speaker 4: How much of a concern is it for you when

335
00:15:32,160 --> 00:15:34,920
Speaker 4: they can't potentially offer some of those price points to

336
00:15:34,960 --> 00:15:38,760
Speaker 4: maybe younger buyers at this point, then.

337
00:15:38,920 --> 00:15:41,200
Speaker 8: We see that happening quite a bit. There's a lot

338
00:15:41,200 --> 00:15:43,840
Speaker 8: of buyers that are now priced out of the existing

339
00:15:43,880 --> 00:15:46,080
Speaker 8: home market, and of course the new home market is

340
00:15:46,440 --> 00:15:49,520
Speaker 8: traditionally been more expensive. It's been more expensive to buy

341
00:15:49,560 --> 00:15:52,760
Speaker 8: a new home rather than an existing home on average,

342
00:15:53,040 --> 00:15:55,040
Speaker 8: So a lot of those buyers are still on the

343
00:15:55,120 --> 00:15:59,760
Speaker 8: sidelines and waiting for rates to come down, or their

344
00:15:59,760 --> 00:16:01,760
Speaker 8: looking at a lower price point home if they can

345
00:16:01,760 --> 00:16:02,480
Speaker 8: find it in their work.

346
00:16:02,600 --> 00:16:05,040
Speaker 4: So what if people aren't willing to move out of

347
00:16:05,080 --> 00:16:07,040
Speaker 4: their house if they already locked in stay like a

348
00:16:07,080 --> 00:16:11,360
Speaker 4: two percent mortgage rador? Obviously we had rates at historic

349
00:16:11,400 --> 00:16:13,680
Speaker 4: loans which translated into mortgage rates. But what do you

350
00:16:13,720 --> 00:16:15,800
Speaker 4: do with that dynamic if people aren't willing to move,

351
00:16:16,240 --> 00:16:18,680
Speaker 4: and then obviously you would have homebuilders that need to

352
00:16:18,680 --> 00:16:19,400
Speaker 4: build homes.

353
00:16:20,440 --> 00:16:23,040
Speaker 8: That's exactly the issue that we're facing in today's market.

354
00:16:23,040 --> 00:16:26,840
Speaker 8: Existing home sales have been so depressed mostly because you know,

355
00:16:26,920 --> 00:16:30,000
Speaker 8: an existing homeowner doesn't want to let go of that home,

356
00:16:30,800 --> 00:16:32,920
Speaker 8: and that's likely a dynamic that will continue to see

357
00:16:32,960 --> 00:16:35,960
Speaker 8: play out in the housing market over the next several years.

358
00:16:36,040 --> 00:16:39,640
Speaker 8: I don't anticipate rates to go below three percent again,

359
00:16:40,040 --> 00:16:42,800
Speaker 8: and so I think that that will be constraining on

360
00:16:42,840 --> 00:16:44,120
Speaker 8: the housing market for some time.

361
00:16:44,320 --> 00:16:46,480
Speaker 1: All Right, So let's say I do the Mathodeta and

362
00:16:46,520 --> 00:16:49,359
Speaker 1: I can afford to pay a seven handle on my mortgage.

363
00:16:49,480 --> 00:16:51,840
Speaker 1: I go into a mortgage lender. Am I going to

364
00:16:51,840 --> 00:16:54,320
Speaker 1: get that loan? So?

365
00:16:54,440 --> 00:16:57,760
Speaker 8: Credit standards have eased a bit since earlier this year.

366
00:16:58,320 --> 00:17:03,480
Speaker 8: Certainly credit availability has been generally low, but it will

367
00:17:03,560 --> 00:17:07,000
Speaker 8: really depend on your borrower characteristics, right on what kind

368
00:17:07,000 --> 00:17:09,919
Speaker 8: of a borrower that you are from the perspective of

369
00:17:09,920 --> 00:17:11,640
Speaker 8: the lender. But they have eased a bit.

370
00:17:12,080 --> 00:17:14,080
Speaker 1: I think I'm a good credit Would you loan to me?

371
00:17:14,440 --> 00:17:14,840
Speaker 5: I would?

372
00:17:14,960 --> 00:17:17,600
Speaker 1: Yeah, I figured I wouldn't like certain people in this room.

373
00:17:17,640 --> 00:17:20,640
Speaker 1: I might not, but glad to see Adeta Cushy, thank

374
00:17:20,680 --> 00:17:23,000
Speaker 1: you so much for joining us. Adeta Cushy is the

375
00:17:23,080 --> 00:17:27,480
Speaker 1: deputy chief economist for First American. First American is a

376
00:17:27,480 --> 00:17:31,080
Speaker 1: financial company. They provide title settlement and risk solutions for

377
00:17:31,119 --> 00:17:33,720
Speaker 1: the real estate transactions, so they kind of get to

378
00:17:33,720 --> 00:17:34,760
Speaker 1: see the whole space there.

379
00:17:35,040 --> 00:17:38,159
Speaker 6: You're listening to the tape. Cans are live program Bloomberg

380
00:17:38,200 --> 00:17:41,800
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

381
00:17:41,840 --> 00:17:45,080
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

382
00:17:45,119 --> 00:17:47,919
Speaker 6: You can also listen live on Amazon Alexa from our

383
00:17:47,960 --> 00:17:52,359
Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

384
00:17:52,760 --> 00:17:56,600
Speaker 9: The welcome now our Bloomberg TV and Radio audience. We

385
00:17:56,640 --> 00:17:59,960
Speaker 9: are joined now by Michael Sunensheine, a great scale CEO

386
00:18:00,119 --> 00:18:02,680
Speaker 9: and Bloomber Externally Basic also joining us as well.

387
00:18:02,760 --> 00:18:03,080
Speaker 5: Michael.

388
00:18:03,119 --> 00:18:04,720
Speaker 9: It's a real pleasure. This was a big day for

389
00:18:04,760 --> 00:18:09,320
Speaker 9: you yesterday. What happens now? After the US Court sort

390
00:18:09,320 --> 00:18:11,439
Speaker 9: of gave you some runway to be able to launch

391
00:18:11,960 --> 00:18:14,320
Speaker 9: a spot bitcoin ETF? What do you do now?

392
00:18:14,640 --> 00:18:16,480
Speaker 10: Yeah, so thank you so much for having me. Let's

393
00:18:16,480 --> 00:18:19,800
Speaker 10: be clear about yesterday. So, yesterday was the culmination of

394
00:18:19,840 --> 00:18:23,600
Speaker 10: more than a year worth of litigation. The SEC denied

395
00:18:23,680 --> 00:18:27,360
Speaker 10: gbtc's conversion to an ETF. We immediately filed the lawsuit.

396
00:18:27,720 --> 00:18:30,440
Speaker 10: Fourteen months later, now we finally got a decision from

397
00:18:30,520 --> 00:18:34,280
Speaker 10: the DC Circuit and a panel of three judges unanimously

398
00:18:34,359 --> 00:18:37,560
Speaker 10: voted and agreed with gray Scale, and that actually vacates

399
00:18:37,600 --> 00:18:41,240
Speaker 10: the SEC denial order. Huge win for Gray Scale, huge

400
00:18:41,280 --> 00:18:44,120
Speaker 10: win for our investors, and really the crypto and investment

401
00:18:44,119 --> 00:18:45,119
Speaker 10: community is as a whole.

402
00:18:45,160 --> 00:18:47,280
Speaker 11: But there's a process here to the point that you're making,

403
00:18:47,400 --> 00:18:50,000
Speaker 11: and there is a chance that the SEC looks to

404
00:18:50,359 --> 00:18:54,320
Speaker 11: broaden this out, potentially fight the decision, bringing this in

405
00:18:54,320 --> 00:18:58,080
Speaker 11: front of a larger array of judges. And so if

406
00:18:58,119 --> 00:19:01,040
Speaker 11: you're thinking about that potential ahead, do you have any

407
00:19:01,080 --> 00:19:04,800
Speaker 11: concerns that the race to bring an ATF to the

408
00:19:04,840 --> 00:19:07,280
Speaker 11: market will leave you behind.

409
00:19:07,760 --> 00:19:10,600
Speaker 10: Well, So today is day one of a forty five

410
00:19:10,680 --> 00:19:13,919
Speaker 10: day period during which the SEC has the ability to

411
00:19:13,960 --> 00:19:17,680
Speaker 10: request a rehearing. Ultimately, at the end of that forty

412
00:19:17,680 --> 00:19:20,560
Speaker 10: five day process, you could expect a final mandate from

413
00:19:20,600 --> 00:19:23,639
Speaker 10: the court with operational next steps. Now, of course, in

414
00:19:23,680 --> 00:19:26,640
Speaker 10: the interim, our attorneys are going to be working proactively

415
00:19:26,720 --> 00:19:29,359
Speaker 10: with the SEC to try and make this conversion as

416
00:19:29,440 --> 00:19:32,960
Speaker 10: expeditious as possible. But we really do need to ensure

417
00:19:33,040 --> 00:19:36,040
Speaker 10: during this period we're adhering to the federal rules of

418
00:19:36,080 --> 00:19:37,000
Speaker 10: the appellate court.

419
00:19:37,200 --> 00:19:40,120
Speaker 11: Do you need to refile for an ETF and if

420
00:19:40,119 --> 00:19:42,840
Speaker 11: you do need to refile or amend, are there certain

421
00:19:42,920 --> 00:19:46,080
Speaker 11: things that you would add, such as a surveillance sharing agreement.

422
00:19:46,119 --> 00:19:48,400
Speaker 11: Do you worry that the ones that already have one

423
00:19:48,760 --> 00:19:50,880
Speaker 11: have a competitive advantage to your filing.

424
00:19:51,359 --> 00:19:54,800
Speaker 10: Well, so the operational next steps on anything that Grayscale

425
00:19:54,800 --> 00:19:56,520
Speaker 10: Willer won't have to do will be contained in that

426
00:19:56,560 --> 00:19:58,959
Speaker 10: final mandate that comes out of the court. But one

427
00:19:59,000 --> 00:20:01,000
Speaker 10: of the interesting things that we actually got from the

428
00:20:01,000 --> 00:20:04,199
Speaker 10: Court in yesterday's decision was that the Court agreed with

429
00:20:04,280 --> 00:20:07,119
Speaker 10: us that the arguments we've been putting forward all along

430
00:20:07,119 --> 00:20:11,160
Speaker 10: throughout this process or such that the SEC already has

431
00:20:11,240 --> 00:20:15,320
Speaker 10: the tools it needs to approve spot bitcoin products like GBTC,

432
00:20:15,600 --> 00:20:18,840
Speaker 10: that there is sufficient surveillance between the CME where Bitcoin

433
00:20:18,920 --> 00:20:21,960
Speaker 10: Future is trade in national securities exchanges like the New

434
00:20:22,000 --> 00:20:24,920
Speaker 10: York Stock Exchange where we intend to list GBTC as

435
00:20:24,960 --> 00:20:28,280
Speaker 10: an ETF. So there really shouldn't be any further grounds

436
00:20:28,400 --> 00:20:31,280
Speaker 10: like the SEC has been relying on to continue denying

437
00:20:31,280 --> 00:20:32,919
Speaker 10: these types of products from coming to market.

438
00:20:33,800 --> 00:20:36,280
Speaker 12: Michael, you're very optimistic. Danny here by the way, and London,

439
00:20:36,320 --> 00:20:38,440
Speaker 12: great to speak with you. It makes complete sense that

440
00:20:38,480 --> 00:20:42,040
Speaker 12: you're optimistic and in a good mood. But do you

441
00:20:42,080 --> 00:20:44,200
Speaker 12: have a nagging voice at the back of your head?

442
00:20:44,280 --> 00:20:47,440
Speaker 12: That something might go wrong. What are you most afraid

443
00:20:47,480 --> 00:20:50,160
Speaker 12: of that could kind of undo some of the progress

444
00:20:50,200 --> 00:20:51,760
Speaker 12: that we saw in yesterday's decision.

445
00:20:52,359 --> 00:20:54,800
Speaker 10: Well, I think we're really at a pivotal moment here

446
00:20:54,840 --> 00:20:58,000
Speaker 10: for crypto. Certainly a lot of investors have been voicing

447
00:20:58,000 --> 00:21:02,640
Speaker 10: to us increased optimism the recent Ripple victory, now obviously

448
00:21:02,760 --> 00:21:05,399
Speaker 10: the Greyscale victory in court yesterday, as well as what

449
00:21:05,440 --> 00:21:08,000
Speaker 10: they're seeing taking place in Washington. Right you now have

450
00:21:08,440 --> 00:21:12,560
Speaker 10: draft legislation that's passing through Congress, and we're really optimistic

451
00:21:12,640 --> 00:21:16,960
Speaker 10: that there will be greater regulatory clarity for investors through

452
00:21:17,000 --> 00:21:19,120
Speaker 10: some of these types of actions. And I think if

453
00:21:19,119 --> 00:21:20,960
Speaker 10: we take an even larger step back and look at

454
00:21:20,960 --> 00:21:23,440
Speaker 10: the broader landscape, crypto has been one of the best

455
00:21:23,520 --> 00:21:26,320
Speaker 10: performing assets year to date, and coming out of this

456
00:21:26,400 --> 00:21:28,960
Speaker 10: most recent crypto winter, what we're hearing and what we're

457
00:21:28,960 --> 00:21:31,600
Speaker 10: experiencing is that investors know that crypto as an asset

458
00:21:31,640 --> 00:21:33,400
Speaker 10: class is most certainly here to stay.

459
00:21:33,760 --> 00:21:35,359
Speaker 9: Can we just come back to refiling for a second.

460
00:21:35,520 --> 00:21:37,960
Speaker 10: Sure, So, do you have to refile? We will have

461
00:21:38,040 --> 00:21:41,840
Speaker 10: to see upon the final operational procedures that come through

462
00:21:42,200 --> 00:21:44,000
Speaker 10: that final mandate that the court will issue.

463
00:21:44,160 --> 00:21:45,680
Speaker 9: So you don't know, but you may.

464
00:21:46,080 --> 00:21:48,600
Speaker 10: We don't know what the final opinion will say until

465
00:21:48,600 --> 00:21:51,200
Speaker 10: we reach the end of that period, correct, is there.

466
00:21:51,200 --> 00:21:53,680
Speaker 9: I've been reading us stuff from yesterday too that you know,

467
00:21:53,800 --> 00:21:55,679
Speaker 9: you may have won this battle but then lose the

468
00:21:55,720 --> 00:21:57,800
Speaker 9: war and that there's a bunch of other competitors now,

469
00:21:57,840 --> 00:21:59,400
Speaker 9: so now you're not gonna be the only horse in town.

470
00:21:59,680 --> 00:22:02,679
Speaker 10: Yes. So this is a topic we've talked about before, ladies.

471
00:22:02,840 --> 00:22:06,640
Speaker 10: It's really a world in which there are multiple spot products.

472
00:22:06,680 --> 00:22:08,679
Speaker 10: Is a world that Greyscale has long been ready for.

473
00:22:08,760 --> 00:22:11,399
Speaker 10: There are multiple bitcoin futures products. We believe that there

474
00:22:11,400 --> 00:22:13,080
Speaker 10: will be a world in which there are multiple spot

475
00:22:13,080 --> 00:22:17,000
Speaker 10: bitcoin products. That being said, we want investors to have choice,

476
00:22:17,240 --> 00:22:19,160
Speaker 10: and some of the things that we do think investors

477
00:22:19,200 --> 00:22:21,800
Speaker 10: will look to when they are making those allocation decisions

478
00:22:21,840 --> 00:22:24,280
Speaker 10: are the size of the fund, the liquidity of the fund,

479
00:22:24,359 --> 00:22:26,560
Speaker 10: the track record of the fund. Right, let's not forget

480
00:22:26,560 --> 00:22:29,320
Speaker 10: that GBTC is the largest bitcoin fund in the world.

481
00:22:29,520 --> 00:22:33,600
Speaker 10: It's owned by millions and millions of investors, it has

482
00:22:33,760 --> 00:22:37,000
Speaker 10: three plus percent of the outstanding bitcoin supply, and really

483
00:22:37,040 --> 00:22:41,600
Speaker 10: now has almost a ten year track record of operational success. Right,

484
00:22:41,640 --> 00:22:43,680
Speaker 10: whereas a lot of the other products coming to market

485
00:22:43,800 --> 00:22:48,240
Speaker 10: are really making use of gbtc's operations, disclosures, reporting, and

486
00:22:48,320 --> 00:22:51,320
Speaker 10: GBTC is really paving the way to broaden out that market.

487
00:22:51,359 --> 00:22:54,119
Speaker 11: There's another massive market question here, and it's not just

488
00:22:54,160 --> 00:22:57,320
Speaker 11: about the pace and time. It's about the structure and

489
00:22:57,359 --> 00:23:01,000
Speaker 11: the fees. Because if you look at Blackrock Invesco Fidelity,

490
00:23:01,040 --> 00:23:03,800
Speaker 11: these are asset managers with a history of coming in

491
00:23:03,880 --> 00:23:05,959
Speaker 11: low and if you look at the fees that you

492
00:23:05,960 --> 00:23:09,560
Speaker 11: have offered and really has made a very profitable entity

493
00:23:09,640 --> 00:23:13,600
Speaker 11: for Digital Currency Group and gray Scale, how much lower

494
00:23:13,760 --> 00:23:17,439
Speaker 11: exactly can fees get for the grayscale product in the

495
00:23:17,440 --> 00:23:18,440
Speaker 11: form of an ETF.

496
00:23:18,760 --> 00:23:21,359
Speaker 10: Well, what I've committed to historically, and we'll say again

497
00:23:21,400 --> 00:23:24,119
Speaker 10: to you today, is we are committed to lowering fees

498
00:23:24,320 --> 00:23:27,800
Speaker 10: when GBTC converts to an ETF. We'll obviously have to

499
00:23:27,800 --> 00:23:29,919
Speaker 10: come back on and talk to you about what the

500
00:23:29,960 --> 00:23:31,880
Speaker 10: fees are when that conversion actually happens.

501
00:23:32,840 --> 00:23:36,640
Speaker 11: So the other strangeness here is the discount that the

502
00:23:36,720 --> 00:23:39,679
Speaker 11: GBTC is currently trading at. You had gone from twenty

503
00:23:39,680 --> 00:23:42,760
Speaker 11: four yesterday to fifteen below neat asset value back to

504
00:23:42,840 --> 00:23:46,359
Speaker 11: twenty can you answer to this market volatility here and

505
00:23:46,440 --> 00:23:49,320
Speaker 11: the uncertainty that investors are grappling with as you head

506
00:23:49,359 --> 00:23:50,680
Speaker 11: towards this process.

507
00:23:50,600 --> 00:23:53,040
Speaker 10: Well, there's a couple of things in that dynamic. So

508
00:23:53,200 --> 00:23:57,200
Speaker 10: number one, there certainly was increased trading volume yesterday in GBTC,

509
00:23:57,520 --> 00:24:00,640
Speaker 10: a lot of excitement and enthusiasm based on the victory

510
00:24:00,800 --> 00:24:04,880
Speaker 10: that GBTC shareholders had in the court yesterday. Now, as

511
00:24:04,920 --> 00:24:08,800
Speaker 10: we eventually approach an ETF, if you'd expect that eventually

512
00:24:08,840 --> 00:24:11,919
Speaker 10: there will be an arbitrage mechanism through the ETF that

513
00:24:11,960 --> 00:24:15,240
Speaker 10: will allow for any premiums or discounts to be eliminated.

514
00:24:15,880 --> 00:24:19,720
Speaker 10: That's a really really important function of why ETFs serve

515
00:24:19,800 --> 00:24:22,000
Speaker 10: in the capacity that they do, and it's really the

516
00:24:22,040 --> 00:24:25,440
Speaker 10: core of what we've been fighting for throughout this entire lawsuit,

517
00:24:25,520 --> 00:24:28,480
Speaker 10: right is to ensure that the optimal investment structure is

518
00:24:28,520 --> 00:24:31,960
Speaker 10: there for investors and we do eliminate any premiums or discounts.

519
00:24:32,520 --> 00:24:34,720
Speaker 12: Michael, have you heard anything from the SEC over the

520
00:24:34,720 --> 00:24:37,920
Speaker 12: past twenty four hours, any updated communications or questions.

521
00:24:38,359 --> 00:24:41,520
Speaker 10: We have not heard anything from the SEC. Only just

522
00:24:41,520 --> 00:24:45,960
Speaker 10: from public reporting. We've seen certainly that the SEC is

523
00:24:46,040 --> 00:24:48,560
Speaker 10: reviewing the decision much the same way. My team and

524
00:24:48,640 --> 00:24:51,480
Speaker 10: my legal team is reviewing the decision as well, and

525
00:24:51,520 --> 00:24:53,520
Speaker 10: again it is our intention to continue to have a

526
00:24:53,560 --> 00:24:56,920
Speaker 10: proactive and constructive dialogue with the SEC during this forty

527
00:24:56,920 --> 00:24:57,719
Speaker 10: five day period.

528
00:24:59,400 --> 00:25:04,480
Speaker 9: I guess the question becomes, why here versus if crypto

529
00:25:04,520 --> 00:25:07,640
Speaker 9: and bitcoin is going to become a hotter topic overseas, right,

530
00:25:08,280 --> 00:25:10,840
Speaker 9: why launch here? Why not go somewhere else and launch.

531
00:25:10,760 --> 00:25:13,520
Speaker 10: Well, this is the center of the financial markets and

532
00:25:13,640 --> 00:25:14,840
Speaker 10: capital formation.

533
00:25:14,560 --> 00:25:16,840
Speaker 9: But clearly the US government does not like crypto.

534
00:25:17,200 --> 00:25:20,959
Speaker 10: Well, you know, from my standpoint, Greyscale now coming up

535
00:25:20,960 --> 00:25:25,440
Speaker 10: on ten years of operational history, you know, we purposely

536
00:25:25,480 --> 00:25:28,120
Speaker 10: decided to set up shop in the US, make use

537
00:25:28,160 --> 00:25:31,439
Speaker 10: of existing rules and regulations, and it's our intention to

538
00:25:31,480 --> 00:25:34,879
Speaker 10: continue to do so right enabling investors to access this

539
00:25:34,960 --> 00:25:38,520
Speaker 10: innovative asset class, but in a way that feels traditional, familiar,

540
00:25:38,560 --> 00:25:41,720
Speaker 10: and again within those regulatory you know, constraints to say

541
00:25:41,760 --> 00:25:42,760
Speaker 10: that they're often used to.

542
00:25:43,160 --> 00:25:46,280
Speaker 11: We were talking about the potential to either refile or amend.

543
00:25:46,280 --> 00:25:48,919
Speaker 11: We were talking about the SEC's frustrations with crypto and

544
00:25:48,960 --> 00:25:51,400
Speaker 11: fight against a lot of the parts of the crypto industry.

545
00:25:51,920 --> 00:25:55,160
Speaker 11: Are you specifically addressing some of the SEC's concerns when

546
00:25:55,200 --> 00:25:58,399
Speaker 11: it comes to their concerns around market manipulation, investor protection

547
00:25:58,480 --> 00:26:02,080
Speaker 11: around retail investors, and are there any changes that need

548
00:26:02,119 --> 00:26:06,480
Speaker 11: to be made before you head into a new relationship

549
00:26:06,480 --> 00:26:06,800
Speaker 11: with them.

550
00:26:07,119 --> 00:26:09,440
Speaker 10: Well, I think we always have and will continue to

551
00:26:09,480 --> 00:26:12,639
Speaker 10: serve in a capacity that's educational with the SEC. This

552
00:26:12,680 --> 00:26:15,240
Speaker 10: is an asset class that continues to evolve very rapidly,

553
00:26:15,280 --> 00:26:18,320
Speaker 10: and we feel a tremendous responsibility to be serving in

554
00:26:18,359 --> 00:26:23,000
Speaker 10: that capacity. Specifically though Shanali to manipulation, fraud, things of

555
00:26:23,040 --> 00:26:25,720
Speaker 10: that nature. If you look closely at yesterday's opinion that

556
00:26:25,760 --> 00:26:28,360
Speaker 10: the court issued, the court agreed with us that the

557
00:26:28,400 --> 00:26:31,879
Speaker 10: SEC did not come up with substantive reasoning as to

558
00:26:31,920 --> 00:26:35,040
Speaker 10: how to explain the difference between futures and spot and

559
00:26:35,080 --> 00:26:37,680
Speaker 10: the fact that these mechanisms that we believe are already

560
00:26:37,720 --> 00:26:40,480
Speaker 10: in place to detect things like fraud and manipulation in

561
00:26:40,520 --> 00:26:42,439
Speaker 10: the bitcoin market are already present.

562
00:26:43,800 --> 00:26:46,679
Speaker 12: Michael, you mentioned earlier in this conversation that you had

563
00:26:46,720 --> 00:26:49,480
Speaker 12: some hope that Congress would take action when it comes

564
00:26:49,480 --> 00:26:50,040
Speaker 12: to regulation.

565
00:26:50,119 --> 00:26:50,920
Speaker 10: Perhaps there's more.

566
00:26:50,840 --> 00:26:54,240
Speaker 12: Appetite for them to approve and to welcome such products.

567
00:26:54,320 --> 00:26:56,119
Speaker 12: You said you haven't heard from the SEC. Have you

568
00:26:56,240 --> 00:26:58,920
Speaker 12: heard from Congress? What sort of noise are you hearing

569
00:26:59,000 --> 00:26:59,960
Speaker 12: around Capitol Hill?

570
00:27:00,400 --> 00:27:03,399
Speaker 10: So we are certainly very engaged with both sides of

571
00:27:03,440 --> 00:27:06,680
Speaker 10: the aisle in DC. There is no question now that

572
00:27:07,040 --> 00:27:11,760
Speaker 10: crypto has become actually a nonpartisan issue, right We're realizing

573
00:27:11,920 --> 00:27:16,120
Speaker 10: that so many of our legislators recognize that their underlying

574
00:27:16,119 --> 00:27:19,240
Speaker 10: constituents are involved in crypto, are increasingly going to be

575
00:27:19,240 --> 00:27:21,760
Speaker 10: involved in crypto, and they want to ensure that they're

576
00:27:22,080 --> 00:27:27,119
Speaker 10: approaching legislation in an appropriate way that protects their underlying constituents.

577
00:27:27,760 --> 00:27:31,240
Speaker 10: I am optimistic that this upcoming you know, Congress can

578
00:27:31,320 --> 00:27:34,760
Speaker 10: actually move some legislation forward. And again, I do think

579
00:27:34,800 --> 00:27:38,840
Speaker 10: it's really a pivotal time for US and other stalwarts

580
00:27:38,880 --> 00:27:41,920
Speaker 10: within the crypto space to be educating our politicians about

581
00:27:41,920 --> 00:27:45,280
Speaker 10: crypto so that they actually are looking at legislation through

582
00:27:45,320 --> 00:27:47,080
Speaker 10: a very you know, knowledgeable lens.

583
00:27:47,440 --> 00:27:49,040
Speaker 11: I'm going to push you just one more time on

584
00:27:49,080 --> 00:27:49,880
Speaker 11: the fees here.

585
00:27:49,680 --> 00:27:52,000
Speaker 10: Michael, of course you are Sonality Well.

586
00:27:52,000 --> 00:27:54,520
Speaker 11: The reason being is this is a matter of competitiveness

587
00:27:54,600 --> 00:27:56,560
Speaker 11: when we come to this market. It is also going

588
00:27:56,640 --> 00:27:59,120
Speaker 11: to determine how much retail investors are going to really

589
00:27:59,160 --> 00:28:01,680
Speaker 11: pay a product that has been more expensive than other

590
00:28:01,680 --> 00:28:04,159
Speaker 11: ETFs in the past. Give us a roadmap here on

591
00:28:04,200 --> 00:28:06,200
Speaker 11: how you're thinking about it, because you've had years to

592
00:28:06,240 --> 00:28:06,800
Speaker 11: think about it.

593
00:28:07,560 --> 00:28:11,399
Speaker 10: We have, and when GBTC converts to an ETF, we

594
00:28:11,520 --> 00:28:14,520
Speaker 10: will lower the fee. You said that it's been more

595
00:28:14,560 --> 00:28:18,800
Speaker 10: expensive than other ETFs. Notably, GBTC is not an ETF today, right,

596
00:28:18,880 --> 00:28:21,720
Speaker 10: And so when GBTC converts to an ETF and it

597
00:28:21,760 --> 00:28:24,800
Speaker 10: becomes in that product structure, and it perhaps is in

598
00:28:24,840 --> 00:28:27,880
Speaker 10: an environment with other competing products, there will be other

599
00:28:27,920 --> 00:28:30,040
Speaker 10: factors for us to consider there as well.

600
00:28:30,080 --> 00:28:30,240
Speaker 6: Right.

601
00:28:30,320 --> 00:28:33,360
Speaker 1: That was Grey Scale CEO Michael Sinstein, sitting down with

602
00:28:33,440 --> 00:28:37,639
Speaker 1: our own Donnie Berger, Shanalie Bassic, and Alex Steele here

603
00:28:37,680 --> 00:28:40,640
Speaker 1: at Bloomberg's HQ after the court. US Court ruled in

604
00:28:40,720 --> 00:28:44,040
Speaker 1: favor of the Digital Currency Asset Manager. And let's get

605
00:28:44,080 --> 00:28:46,240
Speaker 1: some more color on this because it is being held

606
00:28:46,240 --> 00:28:49,640
Speaker 1: as a very important day in the world of crypto.

607
00:28:49,680 --> 00:28:52,680
Speaker 1: Here James Seffert, he does his stuff for Living ETF

608
00:28:52,760 --> 00:28:56,880
Speaker 1: research channels at Bloomberg Intelligence. James summarize for our listeners

609
00:28:56,880 --> 00:29:00,280
Speaker 1: and our viewers here what the court ruled yesterday and

610
00:29:00,280 --> 00:29:04,320
Speaker 1: why it's important to our good friends in the crypto space.

611
00:29:05,800 --> 00:29:09,080
Speaker 7: Yeah, so Sunshine just did a good did a pretty

612
00:29:09,080 --> 00:29:11,800
Speaker 7: good job of explaining what happened there. But at the

613
00:29:11,880 --> 00:29:13,480
Speaker 7: end of the day, it was a complete and utter

614
00:29:13,520 --> 00:29:16,720
Speaker 7: rebuke of all of the SEC's arguments for denying spot

615
00:29:16,720 --> 00:29:20,360
Speaker 7: bitcoin ETFs in the past. Now specifically it was it

616
00:29:20,400 --> 00:29:24,040
Speaker 7: was in favor of Gray Scales arguments. Basically, they went

617
00:29:24,120 --> 00:29:26,400
Speaker 7: and they filed this lawsuit against the SEC and the

618
00:29:26,440 --> 00:29:29,600
Speaker 7: DC Court of Appeals, and they were saying that this

619
00:29:29,720 --> 00:29:32,080
Speaker 7: is a violation of the Administrative Procedures Act, which, to

620
00:29:32,120 --> 00:29:34,640
Speaker 7: get wonky, just means you have to treat like situations alike.

621
00:29:34,920 --> 00:29:37,720
Speaker 7: Regulator can't like look at one thing that's extremely similar

622
00:29:37,920 --> 00:29:40,000
Speaker 7: and come up with a different answer. And what this

623
00:29:40,160 --> 00:29:44,480
Speaker 7: ruling said is bitcoin futures ETFs are not substantially different

624
00:29:44,480 --> 00:29:47,440
Speaker 7: from spot bitcoin etf which anyone who's been in financial

625
00:29:47,480 --> 00:29:50,600
Speaker 7: markets knows that like futures markets are completely intertwined with

626
00:29:50,600 --> 00:29:51,760
Speaker 7: the underlying spot.

627
00:29:51,480 --> 00:29:52,960
Speaker 5: Markets of whatever they track.

628
00:29:53,000 --> 00:29:56,880
Speaker 7: There's a ninety nine point nine percent correlation here. Basically,

629
00:29:56,920 --> 00:30:00,760
Speaker 7: what the judges in this instant said is the SEC

630
00:30:00,800 --> 00:30:03,360
Speaker 7: did not do any a good job at all of

631
00:30:03,520 --> 00:30:07,440
Speaker 7: arguing why they approved futures ETFs and still denied spot

632
00:30:07,480 --> 00:30:08,400
Speaker 7: bitcoin ETFs.

633
00:30:08,720 --> 00:30:11,320
Speaker 4: So really, it doesn't mean that grey Scales Bitcoin trust

634
00:30:11,360 --> 00:30:13,760
Speaker 4: would immediately be converting to an ETF. It's like you said,

635
00:30:13,800 --> 00:30:16,200
Speaker 4: it means that the SEC did fail to explain why

636
00:30:16,240 --> 00:30:20,160
Speaker 4: it approved bitcoin futures exchange treated products, but just not

637
00:30:20,360 --> 00:30:24,120
Speaker 4: grace scals proposed products. So what does that mean next?

638
00:30:25,240 --> 00:30:28,480
Speaker 7: Yeah, so, I mean it's a complicated question because one

639
00:30:28,720 --> 00:30:30,200
Speaker 7: don't we don't fully know what it means.

640
00:30:30,200 --> 00:30:30,440
Speaker 5: Next.

641
00:30:30,440 --> 00:30:32,480
Speaker 7: I've read a bunch of these court case, these court

642
00:30:32,520 --> 00:30:34,840
Speaker 7: decisions and opinions in the past to kind of understand,

643
00:30:35,000 --> 00:30:38,680
Speaker 7: and in many cases the court will give like some

644
00:30:38,720 --> 00:30:41,280
Speaker 7: sort of deadline before X y Z happens or they

645
00:30:41,280 --> 00:30:42,920
Speaker 7: need to do this and what have you.

646
00:30:42,960 --> 00:30:45,760
Speaker 5: And they kind of didn't do that here. So they

647
00:30:45,760 --> 00:30:46,440
Speaker 5: have forty.

648
00:30:46,160 --> 00:30:49,040
Speaker 7: Five days to The SEC has forty five days to

649
00:30:49,080 --> 00:30:51,640
Speaker 7: go with an unbond hearing, which basically just means this

650
00:30:51,720 --> 00:30:54,320
Speaker 7: is a panel of three judges decided this case and

651
00:30:54,400 --> 00:30:56,560
Speaker 7: on bonk hearing you request to get one of those

652
00:30:56,600 --> 00:30:58,360
Speaker 7: would be like with all the judges on the case,

653
00:30:58,520 --> 00:31:00,200
Speaker 7: the on the court in this case, I think it's

654
00:31:00,200 --> 00:31:02,840
Speaker 7: like seventeen judges. So basically rather than just three would

655
00:31:02,840 --> 00:31:06,080
Speaker 7: be seventeen. But this was unanimous decision, right, So three

656
00:31:06,200 --> 00:31:09,680
Speaker 7: judges all agreed and the language was very strong, rebuking

657
00:31:09,720 --> 00:31:10,280
Speaker 7: everything that.

658
00:31:10,240 --> 00:31:11,120
Speaker 5: The SEC said.

659
00:31:11,200 --> 00:31:13,920
Speaker 7: So what next is I'm not really sure? Right, So

660
00:31:13,960 --> 00:31:16,240
Speaker 7: the SEC they basically what they did is they vacated

661
00:31:16,280 --> 00:31:20,840
Speaker 7: the SEC's order denying Greyscale's application to convert GBDC into

662
00:31:20,840 --> 00:31:23,920
Speaker 7: an ETF. This isn't an approval letter that GBDC can

663
00:31:23,960 --> 00:31:26,560
Speaker 7: now be an ETF. It's just your reasoning and your

664
00:31:26,640 --> 00:31:28,800
Speaker 7: why you denied. This just isn't good enough, and you

665
00:31:28,840 --> 00:31:30,959
Speaker 7: didn't do at all what you were supposed to do

666
00:31:31,520 --> 00:31:34,960
Speaker 7: in issuing this order. So what comes next is basically

667
00:31:34,960 --> 00:31:37,160
Speaker 7: trying to figure out what's the SEC gonna do. Are

668
00:31:37,160 --> 00:31:39,400
Speaker 7: they going to come back and issue another denial order

669
00:31:39,440 --> 00:31:42,600
Speaker 7: and basically say like come up with different reasons, or

670
00:31:42,640 --> 00:31:44,440
Speaker 7: are they just going to come back and approve it.

671
00:31:44,680 --> 00:31:46,080
Speaker 5: We also don't have timelines.

672
00:31:46,160 --> 00:31:47,840
Speaker 7: Is the is Greyscale going to have to just go

673
00:31:47,920 --> 00:31:49,960
Speaker 7: through this whole two hundred and forty day process again

674
00:31:50,000 --> 00:31:52,400
Speaker 7: and refile. Is there going to be some other forty

675
00:31:52,400 --> 00:31:54,640
Speaker 7: five sixty day deadline where the SEC is going to

676
00:31:54,680 --> 00:31:57,360
Speaker 7: review this and then issue a statement we really don't know.

677
00:31:58,520 --> 00:32:02,120
Speaker 1: Explain to me at least why and ETF on spot

678
00:32:02,680 --> 00:32:06,640
Speaker 1: bitcoin is better than one that's based or based on futures.

679
00:32:07,160 --> 00:32:08,360
Speaker 1: Why suspect works better?

680
00:32:09,320 --> 00:32:12,440
Speaker 7: Yeah, so Spot Bitcoin, Spot ETFs in general are just

681
00:32:12,520 --> 00:32:15,240
Speaker 7: the Holy Grail, right, I mean, the etf rapper It's

682
00:32:15,600 --> 00:32:18,640
Speaker 7: technologies makes everything very easy. You can look at gold

683
00:32:18,640 --> 00:32:21,680
Speaker 7: ETFs as a perfect example. But the reason that Spot

684
00:32:21,720 --> 00:32:24,080
Speaker 7: is better is because in futures contracts, one.

685
00:32:24,000 --> 00:32:24,880
Speaker 5: They're derivatives.

686
00:32:25,040 --> 00:32:27,760
Speaker 7: So a lot of people don't like understand exactly what

687
00:32:27,800 --> 00:32:31,000
Speaker 7: futures contracts are. And futures contracts they expire every month,

688
00:32:31,040 --> 00:32:33,160
Speaker 7: so you need to roll these contracts. So basically what

689
00:32:33,200 --> 00:32:35,440
Speaker 7: you're doing is you're buying this thing. Say you buy

690
00:32:35,560 --> 00:32:38,440
Speaker 7: the September contract, then at the end of September you

691
00:32:38,440 --> 00:32:40,560
Speaker 7: have to sell that contract and buy the October contract.

692
00:32:40,560 --> 00:32:41,960
Speaker 5: And it's called rolling your futures.

693
00:32:42,360 --> 00:32:45,240
Speaker 7: And if the futures market is in contango, which basically

694
00:32:45,320 --> 00:32:47,720
Speaker 7: means if when you're selling your ETF if it goes

695
00:32:47,760 --> 00:32:49,680
Speaker 7: from if when you're selling your futures, if you have

696
00:32:49,720 --> 00:32:52,040
Speaker 7: to sell that that September futures contract and when you

697
00:32:52,040 --> 00:32:55,680
Speaker 7: buy October the October contract is more expensive. You're losing

698
00:32:55,680 --> 00:32:57,920
Speaker 7: out at a cost because you're selling, you're selling low

699
00:32:57,960 --> 00:33:00,960
Speaker 7: and buying high, So there's additional call and constantly rolling

700
00:33:01,000 --> 00:33:03,280
Speaker 7: these futures. Now those costs can go in reverse. But

701
00:33:03,320 --> 00:33:05,240
Speaker 7: all it really means is it's not necessarily going to

702
00:33:05,320 --> 00:33:07,960
Speaker 7: track the exact price of spot bitcoin over a really

703
00:33:08,000 --> 00:33:11,120
Speaker 7: long term period. So over short term, for traders who

704
00:33:11,160 --> 00:33:13,840
Speaker 7: want a couple days exposure, maybe even a couple weeks exposure,

705
00:33:13,960 --> 00:33:16,560
Speaker 7: these futures ETFs are very good at giving exposure to bitcoin.

706
00:33:16,640 --> 00:33:18,239
Speaker 7: But for buy and hold investors who want to hold

707
00:33:18,280 --> 00:33:20,280
Speaker 7: this for a long term, or hold this for years,

708
00:33:20,320 --> 00:33:23,280
Speaker 7: or what have you, like, the spot market is just

709
00:33:23,280 --> 00:33:26,000
Speaker 7: so much better. And this is exemplified in twenty twenty three.

710
00:33:26,080 --> 00:33:29,400
Speaker 7: So right now, futures ets like biddoh, the largest one

711
00:33:29,400 --> 00:33:32,160
Speaker 7: in the US, is trailing spot bitcoin by eight percent

712
00:33:32,240 --> 00:33:32,840
Speaker 7: this year.

713
00:33:33,360 --> 00:33:34,640
Speaker 5: Going back to twenty twenty one.

714
00:33:34,720 --> 00:33:38,360
Speaker 7: If before spop, before bitcoin futures ETFs were even approved,

715
00:33:38,680 --> 00:33:41,080
Speaker 7: I mean those numbers go up to fifty sixty percent

716
00:33:41,200 --> 00:33:43,480
Speaker 7: over a one year time period. Now, the future's market

717
00:33:43,480 --> 00:33:45,760
Speaker 7: has gotten more efficient and that's unlikely to happen again.

718
00:33:45,800 --> 00:33:47,680
Speaker 7: But you're still, like I said, the other date, you're

719
00:33:47,720 --> 00:33:50,160
Speaker 7: trailing spot by eight percent, which that's a cost.

720
00:33:50,240 --> 00:33:51,560
Speaker 5: That's a big cost that.

721
00:33:51,720 --> 00:33:54,560
Speaker 7: You're taking on if you're investing in these bitcoin futures ets.

722
00:33:54,680 --> 00:33:56,680
Speaker 4: We only have about a minute left, but the SEC

723
00:33:56,920 --> 00:33:59,600
Speaker 4: is set to issue initial orders Friday on at least

724
00:33:59,640 --> 00:34:05,400
Speaker 4: six spockcoin, spit bitcoin ETF applications. What are you expecting

725
00:34:05,440 --> 00:34:05,920
Speaker 4: to happen?

726
00:34:06,920 --> 00:34:08,919
Speaker 7: Yeah, so we actually just published a note this morning

727
00:34:09,040 --> 00:34:13,040
Speaker 7: talking about this case and those applications. My base case

728
00:34:13,080 --> 00:34:14,480
Speaker 7: is that those are going to be delayed. So the

729
00:34:14,480 --> 00:34:16,759
Speaker 7: way this process works is there's a whole bunch of

730
00:34:16,840 --> 00:34:20,239
Speaker 7: deadlines forty five days, forty five days, ninety days, sixty days,

731
00:34:20,239 --> 00:34:22,480
Speaker 7: and until the last one they can just choose to

732
00:34:22,560 --> 00:34:24,400
Speaker 7: delay rather than approve or deny. When they get to

733
00:34:24,440 --> 00:34:26,120
Speaker 7: the last one, you have to approve, he deny. All

734
00:34:26,160 --> 00:34:30,280
Speaker 7: these deadlines coming up on Friday, they can opt to delay,

735
00:34:30,320 --> 00:34:32,560
Speaker 7: and it's very easy to do. I just think the SEC,

736
00:34:32,960 --> 00:34:34,640
Speaker 7: I mean, it's not out of the complete realm of

737
00:34:34,640 --> 00:34:36,879
Speaker 7: possibility that they just go ahead and approve these things.

738
00:34:36,920 --> 00:34:40,400
Speaker 7: It might be a nice little pushback against gray Scale

739
00:34:40,719 --> 00:34:43,000
Speaker 7: for winning this court case, but theoretically grey Scale would

740
00:34:43,000 --> 00:34:45,480
Speaker 7: then be able to launch GBDC as an ETF very

741
00:34:45,520 --> 00:34:48,759
Speaker 7: quickly after, but we're expecting delay on those orders. So

742
00:34:49,040 --> 00:34:51,359
Speaker 7: we don't expect anything because the SEC is likely trying

743
00:34:51,400 --> 00:34:53,040
Speaker 7: to get things in order. As Sun and Shine said

744
00:34:53,040 --> 00:34:55,160
Speaker 7: in his interview, they haven't heard anything from the SEC.

745
00:34:55,200 --> 00:34:57,040
Speaker 7: There's been a public statement that they are viewing the

746
00:34:57,080 --> 00:35:00,200
Speaker 7: opinion from the DC circuit. So I think the the

747
00:35:00,280 --> 00:35:02,200
Speaker 7: SEC is basically just getting their ducks in a row

748
00:35:02,239 --> 00:35:05,440
Speaker 7: and they're just gonna basically punt on this connect to deadline,

749
00:35:05,560 --> 00:35:08,160
Speaker 7: which is what they've done historically with these deadlines.

750
00:35:08,239 --> 00:35:10,840
Speaker 1: All right, James, excellent stuff. As always, you kind of

751
00:35:10,920 --> 00:35:13,640
Speaker 1: laid it out there, force a big, big day for

752
00:35:13,719 --> 00:35:17,759
Speaker 1: the crypto space. James c for ETF Research analyst for

753
00:35:17,840 --> 00:35:21,600
Speaker 1: Bloomberg Intelligence. Down there in our Princeton campus.

754
00:35:22,600 --> 00:35:26,040
Speaker 6: You're listening to the team. Ken's are live program Bloomberg

755
00:35:26,080 --> 00:35:29,440
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot com,

756
00:35:29,520 --> 00:35:32,680
Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listen

757
00:35:32,719 --> 00:35:35,000
Speaker 6: on demand wherever you get your podcasts.

758
00:35:36,520 --> 00:35:38,480
Speaker 1: Let's talk about these markets. Let's do it for with

759
00:35:38,520 --> 00:35:40,960
Speaker 1: someone who does this stuff for a living, Ron Sanchez.

760
00:35:40,960 --> 00:35:44,399
Speaker 1: He's EVP and CIO at Fiduciary Trust inter National joining

761
00:35:44,440 --> 00:35:46,600
Speaker 1: us live in our Bloomberg Interactive Brokers studio. Thanks for

762
00:35:46,640 --> 00:35:49,680
Speaker 1: making it and run. What do you make of this market? Again,

763
00:35:49,760 --> 00:35:53,480
Speaker 1: some folks on the street Scockprone City says some people

764
00:35:53,520 --> 00:35:55,440
Speaker 1: may be playing catch up for the remainder of the

765
00:35:55,520 --> 00:35:57,280
Speaker 1: year and that might push markets a little bit higher.

766
00:35:57,800 --> 00:35:59,680
Speaker 1: How are you guys thinking about these markets?

767
00:36:00,120 --> 00:36:04,759
Speaker 13: So, markets have been tricky this year, and I think

768
00:36:04,760 --> 00:36:07,839
Speaker 13: there has been some catch up. Our view has been

769
00:36:07,920 --> 00:36:10,440
Speaker 13: the entire year is that we do believe in the

770
00:36:10,480 --> 00:36:13,400
Speaker 13: soft landing. I think those that have been looking for

771
00:36:13,440 --> 00:36:14,960
Speaker 13: a recession have.

772
00:36:15,000 --> 00:36:17,200
Speaker 14: Been will continue to wait.

773
00:36:18,040 --> 00:36:21,719
Speaker 13: One has not materialized in our expectations, is one will

774
00:36:21,800 --> 00:36:25,160
Speaker 13: not for the balance of the year into twenty four.

775
00:36:25,560 --> 00:36:28,840
Speaker 13: So we think from a market perspective, we saw a

776
00:36:28,880 --> 00:36:31,759
Speaker 13: lot of people jump into this market embrace the soft

777
00:36:31,840 --> 00:36:36,879
Speaker 13: landing in July and again market returns for the year

778
00:36:36,920 --> 00:36:40,600
Speaker 13: to date have been obviously quite surprising and quite favorable.

779
00:36:40,600 --> 00:36:43,759
Speaker 13: But I do think they reflect a well entrenched or

780
00:36:43,800 --> 00:36:46,480
Speaker 13: embedded soft landing that is now consensus.

781
00:36:46,640 --> 00:36:49,200
Speaker 4: So how do you advise clients to position in this

782
00:36:49,280 --> 00:36:50,320
Speaker 4: type of environment?

783
00:36:51,480 --> 00:36:54,080
Speaker 13: So, again, after the sort of the market return here,

784
00:36:54,120 --> 00:36:57,160
Speaker 13: it gets a little tricky, And as I said earlier,

785
00:36:57,200 --> 00:36:59,920
Speaker 13: I do believe that our expectations are that it's a

786
00:37:00,080 --> 00:37:02,600
Speaker 13: soft landing, and I think that is in price, and

787
00:37:02,680 --> 00:37:06,400
Speaker 13: so I think from an expectation standpoint, you want to

788
00:37:06,440 --> 00:37:08,759
Speaker 13: sort of be patient here. I do expect sort of

789
00:37:08,840 --> 00:37:09,839
Speaker 13: choppy markets.

790
00:37:09,600 --> 00:37:10,360
Speaker 14: Or range bound.

791
00:37:10,800 --> 00:37:13,960
Speaker 13: I think that range bound not only relates to the

792
00:37:14,040 --> 00:37:16,520
Speaker 13: S and P five hundred, but also fixed income as well.

793
00:37:17,239 --> 00:37:20,080
Speaker 13: And I think we're looking at sort of an incremental

794
00:37:20,440 --> 00:37:21,480
Speaker 13: return profile for.

795
00:37:21,440 --> 00:37:23,680
Speaker 14: The balance of the year, but we should hold our.

796
00:37:23,560 --> 00:37:28,239
Speaker 13: Gains and so again sort of a reasonably neutral view.

797
00:37:28,360 --> 00:37:31,160
Speaker 4: Are your clients typically more longer term investors?

798
00:37:31,320 --> 00:37:33,319
Speaker 14: They are indeed really long time so.

799
00:37:33,360 --> 00:37:34,560
Speaker 4: Right, so you're not going to be making changes.

800
00:37:34,719 --> 00:37:37,200
Speaker 13: We would not be a sort of uber tactical here

801
00:37:37,280 --> 00:37:41,520
Speaker 13: and sort of outguess ourselves. Markets are reasonably priced here,

802
00:37:41,719 --> 00:37:46,279
Speaker 13: and again, in the absence of a sharp contraction and

803
00:37:46,360 --> 00:37:48,600
Speaker 13: economic activity, we would stay invested.

804
00:37:48,840 --> 00:37:50,960
Speaker 1: So where are you in terms of your allocation? I

805
00:37:51,000 --> 00:37:53,080
Speaker 1: don't know the equities fixing coming, I know what else

806
00:37:53,120 --> 00:37:55,280
Speaker 1: you throw in our alternatives? Kind of where's your allocation today?

807
00:37:55,440 --> 00:37:59,040
Speaker 1: Maybe how's that different from normal times or other times?

808
00:38:00,040 --> 00:38:03,960
Speaker 13: So from a global perspective, we are neutral the US

809
00:38:04,000 --> 00:38:08,120
Speaker 13: and underweight international. Again, I think from sort of the

810
00:38:08,239 --> 00:38:11,280
Speaker 13: US is the outlier here with the strongest growth pattern

811
00:38:11,600 --> 00:38:15,200
Speaker 13: by far. There are challenges, as we all know, in

812
00:38:15,440 --> 00:38:19,759
Speaker 13: in emerging markets as specifically the largest one in China

813
00:38:20,440 --> 00:38:23,520
Speaker 13: and Europe is going to be sort of challenged as well.

814
00:38:23,520 --> 00:38:26,000
Speaker 13: They've had a great return profile sort of in earlier

815
00:38:26,040 --> 00:38:29,200
Speaker 13: in the year here, but our expectations that's pretty slow

816
00:38:29,239 --> 00:38:32,600
Speaker 13: growth in that government. So again we're neutral US slide

817
00:38:32,640 --> 00:38:36,839
Speaker 13: underweight outside of the US, and within fixed income we

818
00:38:36,920 --> 00:38:40,680
Speaker 13: are neutral and with sort of an eye towards some

819
00:38:41,080 --> 00:38:45,520
Speaker 13: finding fixed income here reasonably attractive and looking to potentially

820
00:38:45,840 --> 00:38:46,600
Speaker 13: extend duration.

821
00:38:46,760 --> 00:38:48,319
Speaker 1: Well, so, okay, so I can go to the two

822
00:38:48,360 --> 00:38:49,880
Speaker 1: year and a couple of days aore, I get at

823
00:38:49,920 --> 00:38:52,120
Speaker 1: five percent in a two year treasury, Why don't you

824
00:38:52,239 --> 00:38:54,920
Speaker 1: just go there and then go head out to the beach.

825
00:38:54,840 --> 00:38:55,719
Speaker 4: Or money market funds?

826
00:38:55,800 --> 00:38:56,520
Speaker 1: Right, money market for.

827
00:38:56,760 --> 00:39:00,600
Speaker 13: Yeah, So that is one of the most interesting sort

828
00:39:00,600 --> 00:39:04,719
Speaker 13: of dynamics for a strategist with clients saying, boy, for

829
00:39:04,760 --> 00:39:07,719
Speaker 13: the first time, cash is king. I can get north

830
00:39:07,760 --> 00:39:10,520
Speaker 13: of five percent on a two year note or a

831
00:39:10,560 --> 00:39:14,720
Speaker 13: money market. But again from an equity standpoint, the SMP

832
00:39:14,960 --> 00:39:19,080
Speaker 13: is up double digit returns and so need to be

833
00:39:19,120 --> 00:39:23,200
Speaker 13: real careful about the allure of cash. It's nice to

834
00:39:23,239 --> 00:39:25,480
Speaker 13: have reserves, it's nice to be in the front end

835
00:39:25,480 --> 00:39:28,320
Speaker 13: of the curve. But again, at some point in time,

836
00:39:29,080 --> 00:39:32,960
Speaker 13: as the economy does moderate here into twenty four, the

837
00:39:33,040 --> 00:39:36,799
Speaker 13: return profile for sort of that short intermediate, meaning a

838
00:39:36,840 --> 00:39:39,080
Speaker 13: four and five year is going to be more appealing

839
00:39:39,120 --> 00:39:41,680
Speaker 13: from a total rate return standpoint. But right now five

840
00:39:41,800 --> 00:39:44,640
Speaker 13: is certainly doesn't hurt.

841
00:39:44,800 --> 00:39:46,600
Speaker 4: What do you think the catalyst would be to move

842
00:39:46,640 --> 00:39:49,920
Speaker 4: that money from say money market funds back into stocks.

843
00:39:50,719 --> 00:39:52,120
Speaker 13: So I think you saw a little bit of that

844
00:39:52,640 --> 00:39:55,680
Speaker 13: in July. Again, the allure of a risk free rate

845
00:39:55,719 --> 00:39:58,479
Speaker 13: of five, I think has pulled a lot of money

846
00:39:58,520 --> 00:40:04,000
Speaker 13: to the sidelines, and I think sort of the sort

847
00:40:04,000 --> 00:40:06,440
Speaker 13: of the soft landing has pulled people in. Those that

848
00:40:06,480 --> 00:40:10,520
Speaker 13: have been forecasting a recession have sort of come in.

849
00:40:10,600 --> 00:40:12,880
Speaker 13: I think that really was the the pop in July.

850
00:40:13,560 --> 00:40:16,239
Speaker 13: But there's plenty of dry powder here, and that's why

851
00:40:16,280 --> 00:40:18,640
Speaker 13: I think it's sort of difficult to become a sort

852
00:40:18,680 --> 00:40:22,000
Speaker 13: of bearish in this environment, both for fixed income and equity.

853
00:40:22,120 --> 00:40:25,120
Speaker 4: You said you were neutral on the US for equities correct,

854
00:40:25,360 --> 00:40:28,040
Speaker 4: so what takes you to move it even higher? For

855
00:40:28,120 --> 00:40:28,879
Speaker 4: another reading on.

856
00:40:28,880 --> 00:40:32,160
Speaker 13: That, So valuations are are definitely on the upper end.

857
00:40:32,520 --> 00:40:36,359
Speaker 13: The risk premia has compressed as equity markets have come

858
00:40:36,400 --> 00:40:39,000
Speaker 13: down a little bit, and fixed income has has gone

859
00:40:39,000 --> 00:40:41,080
Speaker 13: to four and a quarter on a ten year The

860
00:40:41,160 --> 00:40:44,680
Speaker 13: compensation for equity is not overly compelling.

861
00:40:44,280 --> 00:40:45,600
Speaker 14: From a historical standpoint.

862
00:40:45,960 --> 00:40:48,400
Speaker 13: I think for us to be a little more confident

863
00:40:48,440 --> 00:40:51,759
Speaker 13: about the return profile going forward is a little more

864
00:40:51,760 --> 00:40:57,439
Speaker 13: confidence that the economy is in a soft landing more

865
00:40:57,440 --> 00:41:01,720
Speaker 13: definitively and or high conviction, and that earnings are bottoming,

866
00:41:01,760 --> 00:41:05,239
Speaker 13: so more of the micro Once earnings have bottomed, I

867
00:41:05,280 --> 00:41:06,000
Speaker 13: think we'll look.

868
00:41:05,840 --> 00:41:06,760
Speaker 14: A little more favorably.

869
00:41:07,000 --> 00:41:09,880
Speaker 1: I'm looking at the Bloomberg Index browser, I n go

870
00:41:10,080 --> 00:41:12,880
Speaker 1: on the Bloomberg terminal and boy in the US corporate

871
00:41:12,920 --> 00:41:15,600
Speaker 1: hygyield space total return year to data six point eight

872
00:41:15,680 --> 00:41:18,680
Speaker 1: percent doesn't seem like the hy old markets too concerned

873
00:41:18,680 --> 00:41:20,800
Speaker 1: about a recession. How do you guys think about the

874
00:41:20,840 --> 00:41:21,520
Speaker 1: hygyield space?

875
00:41:21,680 --> 00:41:25,040
Speaker 13: So I think the hyold has been very, very compelling.

876
00:41:25,080 --> 00:41:26,800
Speaker 13: Here for the first time in a number of years,

877
00:41:27,040 --> 00:41:29,600
Speaker 13: you're still north of eight Three or four months ago,

878
00:41:29,719 --> 00:41:33,200
Speaker 13: you were closer to a nine. And if you believe

879
00:41:33,239 --> 00:41:36,640
Speaker 13: in the soft landing and that there wouldn't be real

880
00:41:36,680 --> 00:41:40,600
Speaker 13: pressure on credits here, that is a great carry trade

881
00:41:41,120 --> 00:41:43,040
Speaker 13: and I think it still does. And the total turn

882
00:41:43,160 --> 00:41:47,080
Speaker 13: numbers are pretty impressive. But again from evaluation standpoint, you're

883
00:41:47,120 --> 00:41:50,880
Speaker 13: talking about spreads inside of four hundred. So again, I

884
00:41:50,920 --> 00:41:54,480
Speaker 13: think the soft landing is priced into a number of markets,

885
00:41:54,760 --> 00:41:56,840
Speaker 13: but the income generation of eight and eight and a

886
00:41:56,880 --> 00:41:59,160
Speaker 13: quarter is reasonably appealing.

887
00:41:59,400 --> 00:42:03,360
Speaker 4: It's interesting because Gina Martin Adams at Bloomberg Intelligence, she

888
00:42:03,440 --> 00:42:05,799
Speaker 4: takes a close look at when you're looking at S

889
00:42:05,840 --> 00:42:08,560
Speaker 4: and P five hundred EPs growth but on a year

890
00:42:08,600 --> 00:42:10,799
Speaker 4: of a year basis, but excluding energy, if you look

891
00:42:10,800 --> 00:42:13,600
Speaker 4: at the most recent quarter, it actually was marginally higher,

892
00:42:13,840 --> 00:42:16,759
Speaker 4: and then we see that growth back to return even

893
00:42:16,840 --> 00:42:20,080
Speaker 4: close to double digits toward the end of this year

894
00:42:20,080 --> 00:42:22,240
Speaker 4: in the fourth quarter. And I know you were saying

895
00:42:22,280 --> 00:42:24,880
Speaker 4: you're waiting for earnings to bottom. Do you think that

896
00:42:24,960 --> 00:42:28,200
Speaker 4: when you're looking at energy, is it masking some of

897
00:42:28,320 --> 00:42:30,920
Speaker 4: the benefits that we're seeing in other industries as we

898
00:42:30,960 --> 00:42:34,200
Speaker 4: see that sector particularly weakend obviously with that correlation with

899
00:42:34,239 --> 00:42:36,920
Speaker 4: what we're seeing with inflation abbing and commodity prices.

900
00:42:37,120 --> 00:42:39,600
Speaker 13: That's fair, and I do think we're probably in the

901
00:42:39,600 --> 00:42:43,880
Speaker 13: process of troughing here and energy has sort of depressed

902
00:42:44,360 --> 00:42:47,680
Speaker 13: the overall earnings. But the economy has been above trend

903
00:42:48,239 --> 00:42:50,680
Speaker 13: for the last twelve months, and I do think it

904
00:42:50,719 --> 00:42:54,319
Speaker 13: is going to be is going to moderate as we

905
00:42:54,360 --> 00:42:57,120
Speaker 13: go into year end. So there is a slowing of

906
00:42:57,160 --> 00:43:01,520
Speaker 13: economic activity from an elevated level. I do think that

907
00:43:01,520 --> 00:43:04,279
Speaker 13: that evolves over the over the next two quarters where

908
00:43:04,320 --> 00:43:05,400
Speaker 13: we sort of bottom on the.

909
00:43:05,440 --> 00:43:09,360
Speaker 4: End right the once we see the repayments resumed for

910
00:43:09,480 --> 00:43:12,560
Speaker 4: federal student loans, I know that the interest just started occurring,

911
00:43:12,600 --> 00:43:15,000
Speaker 4: but those payments begin again in October. How much does

912
00:43:15,040 --> 00:43:18,120
Speaker 4: that fit into the consumer spending dynamic as far as

913
00:43:18,160 --> 00:43:19,160
Speaker 4: potentially weighing on that.

914
00:43:19,280 --> 00:43:22,640
Speaker 13: So I do think that consumer spending most likely has peaked,

915
00:43:23,120 --> 00:43:25,600
Speaker 13: and that we're our view is that we're starting to

916
00:43:25,640 --> 00:43:27,359
Speaker 13: see normalization it again.

917
00:43:27,400 --> 00:43:29,560
Speaker 14: It has above I think a couple of things. One,

918
00:43:30,080 --> 00:43:30,560
Speaker 14: as you know.

919
00:43:30,560 --> 00:43:34,080
Speaker 13: Excess savings has been very high, Labor markets have been strong,

920
00:43:34,320 --> 00:43:38,840
Speaker 13: wage gains have been solid, and there has been a

921
00:43:38,880 --> 00:43:41,359
Speaker 13: lot of pent up demands, especially for services coming out

922
00:43:41,400 --> 00:43:44,480
Speaker 13: of the pandemic they called revenge travel and I think

923
00:43:44,600 --> 00:43:47,880
Speaker 13: most of that has will remain solid but has been

924
00:43:47,920 --> 00:43:50,719
Speaker 13: above and is going to moderate and we're looking at

925
00:43:51,120 --> 00:43:54,080
Speaker 13: sort of those dynamics returning to sort of twenty nineteen

926
00:43:54,160 --> 00:43:56,200
Speaker 13: or what we would refer to as normalized levels.

927
00:43:56,719 --> 00:43:59,040
Speaker 1: What are you guys penciling in over futiary of trust

928
00:43:59,120 --> 00:44:00,480
Speaker 1: about our federal What.

929
00:44:00,400 --> 00:44:00,960
Speaker 14: Are they going to do?

930
00:44:01,000 --> 00:44:02,759
Speaker 1: Are they done or are they going to keep? Are they

931
00:44:02,760 --> 00:44:03,759
Speaker 1: going to hike one more time?

932
00:44:04,120 --> 00:44:06,480
Speaker 13: I think they're done. And so markets, as you know,

933
00:44:06,560 --> 00:44:11,120
Speaker 13: are sort of a coin toss. They're definitely pausing next

934
00:44:11,120 --> 00:44:14,759
Speaker 13: month in September, and obviously November is live and sort

935
00:44:14,800 --> 00:44:17,799
Speaker 13: of data dependent, but markets have it at a fifty

936
00:44:17,800 --> 00:44:19,239
Speaker 13: to fifty I would take the under.

937
00:44:19,080 --> 00:44:21,600
Speaker 4: What's the top question you actually hear from clients right

938
00:44:21,640 --> 00:44:23,439
Speaker 4: now more?

939
00:44:23,520 --> 00:44:25,480
Speaker 14: But the one that you referred to earlier.

940
00:44:25,480 --> 00:44:28,200
Speaker 13: This is a confusing market and a risk free rate

941
00:44:28,239 --> 00:44:28,880
Speaker 13: of five percent?

942
00:44:29,120 --> 00:44:32,040
Speaker 14: Why would I? Why would I do anything? And again,

943
00:44:32,160 --> 00:44:33,160
Speaker 14: sort of the near.

944
00:44:33,040 --> 00:44:37,440
Speaker 13: Term appeal versus long term opportunity is always It's always

945
00:44:37,440 --> 00:44:40,680
Speaker 13: the guidance and there's a persistent negativity. I guess the

946
00:44:40,680 --> 00:44:42,799
Speaker 13: biggest question of the last six months to a year

947
00:44:43,360 --> 00:44:45,360
Speaker 13: is the perpetual recession question.

948
00:44:45,440 --> 00:44:46,480
Speaker 14: When, when, when when?

949
00:44:47,280 --> 00:44:50,239
Speaker 13: And again we had a pushback pretty hard that we

950
00:44:50,280 --> 00:44:53,080
Speaker 13: didn't see it as a twenty three development and we don't.

951
00:44:52,960 --> 00:44:56,560
Speaker 4: See it in you CFC function. You don't see that obviously,

952
00:44:56,560 --> 00:44:58,680
Speaker 4: not on an annual basis, but even on a quarterly basis.

953
00:44:58,719 --> 00:45:00,000
Speaker 4: Either it's no longer there.

954
00:45:00,160 --> 00:45:02,760
Speaker 1: Yeah, it's been the I guess most widely telegraph recession

955
00:45:02,800 --> 00:45:05,239
Speaker 1: that has yet to occur. Hey, Ron, thanks for coming in.

956
00:45:05,320 --> 00:45:08,040
Speaker 1: Really appreciate it. Ron Sanchez. He is the EVP and

957
00:45:08,160 --> 00:45:11,640
Speaker 1: CIO at Fiduciary Trust Company International.

958
00:45:12,040 --> 00:45:15,160
Speaker 6: You're listening to the tape Cat's are Live program Bloomberg

959
00:45:15,239 --> 00:45:18,840
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

960
00:45:18,880 --> 00:45:22,120
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

961
00:45:22,160 --> 00:45:24,960
Speaker 6: You can also listen live on Amazon Alexa from our

962
00:45:25,000 --> 00:45:29,359
Speaker 6: flagship New York station, Just say Alexa, play Bloomberg eleven.

963
00:45:29,080 --> 00:45:33,320
Speaker 1: Thirty, Jess Menton Paul Sweeney live here in our Bloomberg

964
00:45:33,400 --> 00:45:36,880
Speaker 1: Interactive Brokers studio. Let's get a little techy here, little wonky.

965
00:45:36,920 --> 00:45:39,200
Speaker 1: Maybe we'll talk a little VR. And that's a virtual

966
00:45:39,239 --> 00:45:41,520
Speaker 1: reality for those like John Tucker that may not be

967
00:45:41,600 --> 00:45:43,359
Speaker 1: up on all that type of stuff. We might talk

968
00:45:43,400 --> 00:45:45,200
Speaker 1: a little metaverse, and if we're not careful, we might

969
00:45:45,200 --> 00:45:47,160
Speaker 1: even throw them a little AI and we can do

970
00:45:47,239 --> 00:45:49,359
Speaker 1: all of this with Dan and Brian. He's president of

971
00:45:49,520 --> 00:45:53,880
Speaker 1: the Americas and general manager for HTC. Hey, Dan, first,

972
00:45:53,920 --> 00:45:56,200
Speaker 1: just give us give us an overview kind of what

973
00:45:56,239 --> 00:45:58,360
Speaker 1: you guys do at HTC.

974
00:46:00,080 --> 00:46:00,239
Speaker 7: One.

975
00:46:00,280 --> 00:46:03,160
Speaker 15: Thanks for having me on. I really appreciate it, Paul

976
00:46:03,239 --> 00:46:06,920
Speaker 15: and Jess, and it's great to be here. What HCC

977
00:46:07,080 --> 00:46:11,040
Speaker 15: does is we are a technology company that focuses on

978
00:46:11,080 --> 00:46:13,320
Speaker 15: a lot of different areas of innovation. You know, a

979
00:46:13,360 --> 00:46:15,600
Speaker 15: lot of people know this for smartphones for many years.

980
00:46:16,960 --> 00:46:20,760
Speaker 15: We now have over the last several years index towards

981
00:46:20,920 --> 00:46:24,040
Speaker 15: virtual reality or extended reality, and we make products that

982
00:46:24,840 --> 00:46:28,520
Speaker 15: create solutions for content creators to create content for the metaverse.

983
00:46:29,400 --> 00:46:32,920
Speaker 15: We have also innovated and created solutions where you can

984
00:46:32,960 --> 00:46:37,239
Speaker 15: actually stream content for the metaverse over say a five

985
00:46:37,280 --> 00:46:41,719
Speaker 15: G network. And then we also create these headsets or

986
00:46:41,719 --> 00:46:45,560
Speaker 15: wearables that you can interact with this data and this

987
00:46:45,719 --> 00:46:49,120
Speaker 15: content in a very immersive way. So we are a

988
00:46:49,320 --> 00:46:54,080
Speaker 15: you know, a holistic data, technology and innovation company that

989
00:46:54,120 --> 00:46:56,480
Speaker 15: delivers all these different types of solutions for end users.

990
00:46:56,920 --> 00:46:59,960
Speaker 4: Your firm did conduct a survey recently about how va

991
00:47:00,000 --> 00:47:03,880
Speaker 4: our headsets are being used, particularly in healthcare and social

992
00:47:03,960 --> 00:47:07,879
Speaker 4: assistance organizations. What did you find, You know.

993
00:47:07,880 --> 00:47:12,680
Speaker 15: We found that over ninety percent of healthcare workers and

994
00:47:12,719 --> 00:47:16,279
Speaker 15: healthcare providers expect to be using this technology in the

995
00:47:16,320 --> 00:47:21,959
Speaker 15: future for training or for therapeutics. And so it really

996
00:47:22,000 --> 00:47:25,480
Speaker 15: shows a resounding, you know, endorsement of hey, this is

997
00:47:25,719 --> 00:47:29,240
Speaker 15: very effective. We know that can help with our healthcare

998
00:47:29,280 --> 00:47:32,600
Speaker 15: professionals and training them. We can do reduce training costs,

999
00:47:33,239 --> 00:47:37,120
Speaker 15: we can improve the actual training value. We can actually

1000
00:47:37,239 --> 00:47:42,520
Speaker 15: get better outcomes for our patients with better therapeutics and performance.

1001
00:47:42,640 --> 00:47:45,160
Speaker 15: So overall it becomes like a cost savings and an

1002
00:47:45,160 --> 00:47:47,520
Speaker 15: efficiency and a performance improvement in healthcare.

1003
00:47:48,080 --> 00:47:50,480
Speaker 1: So, Dan, one of the things you mentioned the met metaverse,

1004
00:47:50,520 --> 00:47:54,920
Speaker 1: and I don't think there is a concise definition of

1005
00:47:54,960 --> 00:47:59,640
Speaker 1: the metaverse, certainly not among shareholders of Meta formerly known

1006
00:47:59,640 --> 00:48:01,080
Speaker 1: as Fai Spoke, and that was a problem for the

1007
00:48:01,080 --> 00:48:05,080
Speaker 1: stock last year. To you, what is the metaverse.

1008
00:48:05,560 --> 00:48:07,480
Speaker 15: Well, it's really an extension of what we already do

1009
00:48:07,560 --> 00:48:13,359
Speaker 15: today in our internet today. It's really encompassing how you

1010
00:48:13,400 --> 00:48:16,319
Speaker 15: interact with the data. Think of yourself now as being

1011
00:48:16,360 --> 00:48:18,880
Speaker 15: able to as if you're wearing a wearable you know,

1012
00:48:18,880 --> 00:48:20,960
Speaker 15: it might be glasses, it might be VR glasses, it

1013
00:48:21,040 --> 00:48:25,400
Speaker 15: might be AR augmented reality glasses. You're simply interacting first

1014
00:48:25,440 --> 00:48:28,680
Speaker 15: party with that data and content. I gave an example

1015
00:48:29,120 --> 00:48:33,160
Speaker 15: a demo last year where we did a training for

1016
00:48:33,280 --> 00:48:37,040
Speaker 15: a knee operation and we had people that were on iPhones, iPads,

1017
00:48:37,800 --> 00:48:41,440
Speaker 15: a magical lea augmented reality glasses headset, a VR headset,

1018
00:48:41,920 --> 00:48:46,040
Speaker 15: and Android phones and we were all in this one

1019
00:48:46,080 --> 00:48:50,080
Speaker 15: space together doing this training together. But some people got

1020
00:48:50,080 --> 00:48:52,760
Speaker 15: to be in the space actually hands on doing the training,

1021
00:48:53,080 --> 00:48:56,000
Speaker 15: while other people were more of an observer. So the

1022
00:48:56,040 --> 00:48:59,160
Speaker 15: metaverse really becomes down to this very immersive, you know,

1023
00:49:00,040 --> 00:49:03,360
Speaker 15: vironment where you can interact, but it's not going to

1024
00:49:03,400 --> 00:49:05,960
Speaker 15: dismiss all the things that we use today in our

1025
00:49:06,000 --> 00:49:07,000
Speaker 15: everyday life.

1026
00:49:08,000 --> 00:49:11,640
Speaker 4: Whatever I hear metaverse, clearly, I think of Facebook, Parent

1027
00:49:11,719 --> 00:49:14,640
Speaker 4: Meta along with Apple, that are going along and spending

1028
00:49:14,640 --> 00:49:17,680
Speaker 4: a lot of money in this particular corner of the market.

1029
00:49:17,760 --> 00:49:20,160
Speaker 4: Where do you see this headed for these companies people

1030
00:49:20,160 --> 00:49:23,319
Speaker 4: are trying to kind of buy for different rivalship here

1031
00:49:23,360 --> 00:49:25,080
Speaker 4: As far as where it's headed and still a lot

1032
00:49:25,080 --> 00:49:26,480
Speaker 4: of uncertainty.

1033
00:49:26,960 --> 00:49:29,080
Speaker 15: Well, I think, you know, we're all approaching it at

1034
00:49:29,080 --> 00:49:32,480
Speaker 15: different angles. You know, Apple coming in, it's a great endorsement.

1035
00:49:32,840 --> 00:49:36,719
Speaker 15: They have great privacy policies, great data security policies that

1036
00:49:36,800 --> 00:49:40,239
Speaker 15: some of the other competitors do not have. We share

1037
00:49:40,280 --> 00:49:44,600
Speaker 15: those values as well, and that we protect our users data.

1038
00:49:44,960 --> 00:49:49,520
Speaker 15: We don't use that data to monetize it. So for us,

1039
00:49:49,680 --> 00:49:52,280
Speaker 15: you know, we're bringing solutions and value to the market

1040
00:49:52,880 --> 00:49:56,600
Speaker 15: to actually reduce costs, bring up efficiencies, bring in human

1041
00:49:56,640 --> 00:50:00,080
Speaker 15: performance improvements with training and things of that nature. Well

1042
00:50:00,760 --> 00:50:04,400
Speaker 15: clearly showing like how expensive this technology really is and

1043
00:50:04,440 --> 00:50:07,319
Speaker 15: if you're going to enter the market and not lose

1044
00:50:07,360 --> 00:50:09,880
Speaker 15: money on hardware, this is how much it really costs.

1045
00:50:10,239 --> 00:50:12,520
Speaker 15: So now you've got to see like a company like HCC,

1046
00:50:12,719 --> 00:50:15,040
Speaker 15: we come in right in the middle. People are getting

1047
00:50:15,080 --> 00:50:19,040
Speaker 15: great innovation for the price and the value. Meta they're

1048
00:50:19,080 --> 00:50:22,680
Speaker 15: really using a console you know model where they're subsidizing

1049
00:50:22,719 --> 00:50:26,200
Speaker 15: that hardware significantly and losing billions of dollars in order

1050
00:50:26,239 --> 00:50:29,680
Speaker 15: to you know, maintain that market share. But understand like

1051
00:50:29,840 --> 00:50:31,960
Speaker 15: that is all out of fear based, you know kind

1052
00:50:32,040 --> 00:50:35,719
Speaker 15: of management, and that they are very vulnerable in their

1053
00:50:35,719 --> 00:50:38,799
Speaker 15: current model to Apple and to you know, Google, an

1054
00:50:38,800 --> 00:50:41,719
Speaker 15: Android on the smartphone business to their revenue model, and

1055
00:50:41,719 --> 00:50:45,200
Speaker 15: they're trying to I think, you know, make themselves agnostic

1056
00:50:45,480 --> 00:50:48,920
Speaker 15: or you know, bolster against that vulnerability against those platforms

1057
00:50:48,960 --> 00:50:52,200
Speaker 15: and have more of a their own position. And so

1058
00:50:52,320 --> 00:50:53,920
Speaker 15: I think they're trying to buy their way out of

1059
00:50:53,960 --> 00:50:55,359
Speaker 15: that problem.

1060
00:50:55,560 --> 00:50:55,759
Speaker 10: Dan.

1061
00:50:55,960 --> 00:50:57,960
Speaker 1: When you think ahead over the next several years and

1062
00:50:58,040 --> 00:51:02,359
Speaker 1: you think about the VR business, the wearables business, how

1063
00:51:02,400 --> 00:51:05,880
Speaker 1: do you kind of think about it in a consumer

1064
00:51:06,000 --> 00:51:09,359
Speaker 1: use versus maybe business slash, you know, corporate use.

1065
00:51:10,400 --> 00:51:12,400
Speaker 15: Well, I think that you know, on the consumer side,

1066
00:51:12,440 --> 00:51:14,520
Speaker 15: you know, Meta is kind of settling the market at

1067
00:51:14,520 --> 00:51:18,080
Speaker 15: this very unnatural price point that doesn't really exist. And

1068
00:51:18,120 --> 00:51:20,440
Speaker 15: if you look at it, you know, the smartphone, comparing

1069
00:51:20,440 --> 00:51:22,600
Speaker 15: it to the early days of smartphone, you had probably

1070
00:51:22,600 --> 00:51:26,400
Speaker 15: about twelve to fifteen brands and companies you know, fighting,

1071
00:51:26,560 --> 00:51:28,640
Speaker 15: you know, in the market to grow the market, making

1072
00:51:28,680 --> 00:51:33,440
Speaker 15: a very healthy economy for you know, competition and supply

1073
00:51:33,560 --> 00:51:37,919
Speaker 15: chain and suppliers, which drove prices down. On the consumer side,

1074
00:51:37,920 --> 00:51:42,960
Speaker 15: it's really being strangled by that pricing tactic. So you're

1075
00:51:43,000 --> 00:51:45,520
Speaker 15: not seeing the competition come in because the other major

1076
00:51:45,520 --> 00:51:47,400
Speaker 15: players don't want to come in and lose their shirt

1077
00:51:48,760 --> 00:51:51,840
Speaker 15: on the enterprise and professional side, you can actually bring

1078
00:51:51,880 --> 00:51:54,960
Speaker 15: this technology for what it actually costs, and you can

1079
00:51:55,000 --> 00:51:58,480
Speaker 15: bring your companies and your partners and these types of

1080
00:51:58,480 --> 00:52:02,479
Speaker 15: customers massive value. Really see the savings right away within

1081
00:52:02,560 --> 00:52:08,000
Speaker 15: that year in terms of performance, higher retention rates with

1082
00:52:08,080 --> 00:52:11,960
Speaker 15: your training, more engagement, and if you have a diversified

1083
00:52:12,120 --> 00:52:14,920
Speaker 15: employee set that's spread out all over the world or

1084
00:52:14,960 --> 00:52:17,919
Speaker 15: all over the country, you can keep them connected right

1085
00:52:17,960 --> 00:52:21,839
Speaker 15: in these metaverse spaces. So this week I'm at the

1086
00:52:21,920 --> 00:52:27,200
Speaker 15: Industrial Immersive Conference down here in Houston, and companies like Exonmobile,

1087
00:52:28,200 --> 00:52:32,880
Speaker 15: Duke Energy, they've been using this technology since twenty sixteen,

1088
00:52:33,000 --> 00:52:35,840
Speaker 15: and they're now looking at all the different ways that

1089
00:52:35,880 --> 00:52:39,520
Speaker 15: they can be using this technology to improve site plans,

1090
00:52:39,560 --> 00:52:43,840
Speaker 15: site designs, working with their engineers in the field, and

1091
00:52:43,880 --> 00:52:47,480
Speaker 15: being able to actually see what they're working on, deconstructing

1092
00:52:48,000 --> 00:52:51,040
Speaker 15: existing platforms that are many, many years old that nobody

1093
00:52:51,040 --> 00:52:53,440
Speaker 15: knows how to work on anymore. So in terms of

1094
00:52:53,640 --> 00:52:57,120
Speaker 15: you know, growth and enterprise use and major corporations and

1095
00:52:57,160 --> 00:52:59,920
Speaker 15: brands being able to use it, we're seeing it grow

1096
00:53:00,280 --> 00:53:02,440
Speaker 15: very aggrastively on the enterprise side.

1097
00:53:02,800 --> 00:53:05,359
Speaker 1: Hey, Dan, really fascinating discussion. Thanks so much for joining

1098
00:53:05,440 --> 00:53:08,759
Speaker 1: us Dan O'Brien. He is the president of America's and

1099
00:53:08,800 --> 00:53:12,240
Speaker 1: a general manager for HTC, talking about the VR space,

1100
00:53:12,320 --> 00:53:16,520
Speaker 1: the wearable space, and then ultimately, presumably the metaverse.

1101
00:53:18,120 --> 00:53:21,239
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can

1102
00:53:21,280 --> 00:53:25,040
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1103
00:53:25,120 --> 00:53:28,840
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1104
00:53:29,040 --> 00:53:31,160
Speaker 2: at Matt Miller nineteen seventy three.

1105
00:53:31,440 --> 00:53:34,200
Speaker 1: And I'm fall Sweeney. I'm on Twitter at Ptsweeney. Before

1106
00:53:34,239 --> 00:53:37,040
Speaker 1: the podcast. You can always catch us worldwide at Bloomberg

1107
00:53:37,120 --> 00:53:38,359
Speaker 1: Radio