WEBVTT - The Latest On Inflation, Crypto Records, And Market Bubbles 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.480 at Bloomberg dot com Slash podcast. Let's get over to UM. 0:00:23.520 --> 0:00:26.400 Lisa ericson right now, Senior VP and co headed Public Markets, 0:00:26.400 --> 0:00:31.600 the Public Markets Group at US Bank Wealth Management, Lisa, UM, 0:00:31.640 --> 0:00:34.920 I wonder what you think as we look at inflation 0:00:35.000 --> 0:00:37.440 numbers that are either shockingly high like the p p 0:00:37.600 --> 0:00:41.559 I number yesterday, or even higher than expected like the 0:00:41.600 --> 0:00:47.440 cp I number today, does that concern you, Well, absolutely mad. 0:00:47.520 --> 0:00:50.320 It's something that we're keeping an eye on, and while 0:00:50.360 --> 0:00:53.600 our base cases that some of those inflationary pressures do 0:00:53.720 --> 0:00:59.880 come down over the remainder of this year and into 0:01:00.320 --> 0:01:03.680 UM certainly, the fact that we've got a pretty broad 0:01:03.680 --> 0:01:07.279 based basket of goods that are contributing to the inflation number, 0:01:07.680 --> 0:01:10.440 and the fact that it's taking some time for both 0:01:10.480 --> 0:01:13.520 the labor market and the supply chains to adjust is 0:01:13.560 --> 0:01:16.600 something that we want to keep our eyes on right, tins. 0:01:16.680 --> 0:01:20.000 Inflation is so broad based. I'm wondering what concerns you 0:01:20.040 --> 0:01:24.040 the most. Energy is a really easy thing to point out, 0:01:24.120 --> 0:01:26.759 and you think about the ripple effects for but are 0:01:26.760 --> 0:01:30.520 there places that are maybe less obvious that we should 0:01:30.560 --> 0:01:35.199 also be concerned about. Yeah, well, I think to your point, 0:01:35.360 --> 0:01:38.360 it's it's really two things. So one is just the 0:01:38.400 --> 0:01:41.839 fact that it's really across the broader base. So while 0:01:41.920 --> 0:01:45.320 you have some areas like energy that can be more 0:01:45.400 --> 0:01:48.520 volatile over time, what you see is, you know, over 0:01:48.520 --> 0:01:51.200 the last few months is really looking at the basket 0:01:51.240 --> 0:01:54.120 of goods. It's not just some of the areas that 0:01:54.200 --> 0:01:57.840 historically can fluctuate some as much, but also some of 0:01:57.840 --> 0:02:02.520 the stickier types of I think that are increasing. So 0:02:02.760 --> 0:02:05.320 that really is a concern, and I think, um, you know, 0:02:05.640 --> 0:02:08.600 the other issue is how much that then begins to 0:02:09.240 --> 0:02:13.200 affect inflation expectations going forward. And as we look at it, 0:02:13.240 --> 0:02:16.080 what we see is that there are some elevation in 0:02:16.080 --> 0:02:20.640 inflation expectations over the next couple of years as a result. Um, 0:02:20.680 --> 0:02:22.720 but you know, over the longer term, what we see 0:02:22.760 --> 0:02:26.680 is that those are trending down. So again, um, you know, 0:02:26.760 --> 0:02:28.640 that's The other thing I think we really want to 0:02:28.680 --> 0:02:31.799 watch is not just where the basket goes right now, 0:02:31.880 --> 0:02:37.160 but how that's affecting the expectations going forward. What do 0:02:37.240 --> 0:02:41.280 you expect in terms of the SMP right now? Um, 0:02:41.280 --> 0:02:45.560 we're I think up about year to date. Last year 0:02:45.720 --> 0:02:48.960 was a good seventeen percent gain, the year before that 0:02:49.120 --> 0:02:55.360 was almost Do we can we really move much further higher? Yeah? 0:02:55.440 --> 0:02:58.400 Great question that. Well, we're still optimistic on the US 0:02:58.440 --> 0:03:01.680 equity market and the SMPS five. And the reason why is, 0:03:01.760 --> 0:03:04.079 you know, overall, if you look at it, we've got 0:03:04.120 --> 0:03:07.800 a pretty nice context. Despite what some of the worries 0:03:07.880 --> 0:03:10.880 we are talking about with respect to inflation. If you 0:03:10.919 --> 0:03:14.560 step back and look at the indicators underpinning growth, for example, 0:03:14.960 --> 0:03:18.160 you know they're universally as strong, and we see the 0:03:18.280 --> 0:03:21.360 trend of movement of those indicators as continuing to be 0:03:21.480 --> 0:03:25.480 positive when we measure across a broad range. And you 0:03:25.520 --> 0:03:28.480 know that's also being reflected in corporate earning. So, as 0:03:28.520 --> 0:03:32.280 we all know, third quarter earnings reports came in very nicely, 0:03:32.320 --> 0:03:34.760 and that again was across the board as opposed to 0:03:34.840 --> 0:03:38.240 being limited to a couple of sectors. So you've got 0:03:38.240 --> 0:03:41.000 the fundamental support there for the market, I think to 0:03:41.080 --> 0:03:44.520 your point, you know, as we move into the question 0:03:44.600 --> 0:03:47.120 is really going to be you know how that continues 0:03:47.160 --> 0:03:50.600 to play out, you know, as some of the initial 0:03:51.040 --> 0:03:54.880 reopening spurt comes off, and then again as we've been 0:03:54.920 --> 0:03:57.320 talking about with the trajectory of what's going to happen 0:03:57.360 --> 0:04:01.640 with inflation, there's been so much talk about bubbles lately, 0:04:02.040 --> 0:04:04.520 I mean all year really, and then we've kept on 0:04:05.240 --> 0:04:07.960 charging higher. You know, Matt and I were looking at 0:04:07.960 --> 0:04:10.520 the screens. Just the Rivian IPO today is set for 0:04:11.360 --> 0:04:14.360 a very healthy pop as it starts to trade, and 0:04:14.440 --> 0:04:17.159 so we're unhealthy depending on how you look. Yeah, depending 0:04:17.360 --> 0:04:19.960 that was our big debate, do you pop or not? Um? 0:04:20.160 --> 0:04:23.880 And so that's the thing. Are you worried about valuations? 0:04:24.000 --> 0:04:27.320 If everybody is so constructive here, at what point do 0:04:27.320 --> 0:04:30.400 you start to get concerns that things are worth so 0:04:30.480 --> 0:04:34.279 much more than they're actually earning. Yeah. No, that's a 0:04:34.320 --> 0:04:37.360 great point, and you know, valuations is something to keep 0:04:37.400 --> 0:04:39.280 an eye on. But as we look at it, I 0:04:39.279 --> 0:04:43.000 think just the current low level of interest rates really 0:04:43.040 --> 0:04:46.440 actually makes valuations in what we would call the high 0:04:46.440 --> 0:04:49.240 side off fair but not excessive. So if you just 0:04:49.279 --> 0:04:53.160 look again at history and how much, uh, you know, 0:04:53.200 --> 0:04:57.080 earning yields are pricing over where interest rates are now, 0:04:57.160 --> 0:05:01.719 we actually see that they're above average, meaning that stocks 0:05:01.720 --> 0:05:05.200 are actually giving you a nice premium in terms of 0:05:05.360 --> 0:05:09.880 the potential return relative to fixed income um compared to 0:05:09.960 --> 0:05:13.039 that spread historically. So again it's something we want to 0:05:13.120 --> 0:05:15.520 keep an eye on. But in an environment like today, 0:05:15.600 --> 0:05:18.960 where again you see both the macro indicators as well 0:05:19.000 --> 0:05:22.400 as what's going on with corporate operations and earnings coming 0:05:22.400 --> 0:05:27.640 in very nicely, those valuations can be more easily justified. Lisa, 0:05:27.640 --> 0:05:29.200 great to get some time with you, Thanks so much 0:05:29.360 --> 0:05:32.719 for joining us. Lisa ericson their senior VP and co 0:05:32.920 --> 0:05:37.600 head of the Public Markets Group at US Bank Wealth Management. 0:05:41.880 --> 0:05:44.600 Let's get over right now to David Kat's, chief investment 0:05:44.640 --> 0:05:48.280 officer and President Matrix Asset Advisors. Have been talking a 0:05:48.320 --> 0:05:50.640 lot about inflation today, David, and we did see a 0:05:50.720 --> 0:05:55.080 higher print than anticipated on the cp I. What's your 0:05:55.080 --> 0:05:59.160 take so short term, there's no question inflation has picked 0:05:59.240 --> 0:06:02.040 up to a very eating full level. We don't think 0:06:02.080 --> 0:06:04.360 it's going to go away, but we do think it's 0:06:04.400 --> 0:06:09.000 going to trend lower starting in early two and we 0:06:09.040 --> 0:06:11.279 think it will get down to a manageable level. So 0:06:11.600 --> 0:06:14.280 we're looking for inflation to stabilize somewhere under like three 0:06:14.320 --> 0:06:17.400 and a half percent. We don't think it's ultimately going 0:06:17.480 --> 0:06:20.120 to derail the financial markets, but it does mean that 0:06:20.160 --> 0:06:22.640 we do think bond rates should be going up and 0:06:22.720 --> 0:06:26.000 and the Feds next move at some point we'll be 0:06:26.040 --> 0:06:31.279 moving rate higher. Well, how do you play the smp 0:06:32.040 --> 0:06:35.039 I mean, we're not seeing major losses here, even on 0:06:35.080 --> 0:06:38.159 its second day of declines after a very steady rally. 0:06:38.480 --> 0:06:39.880 What are you buying? How do you how do you 0:06:39.880 --> 0:06:42.160 deal with this for the rest of the year. So so, 0:06:42.200 --> 0:06:45.000 we've been pretty bullish about stocks this year in light 0:06:45.040 --> 0:06:47.440 of the most recent run up. We would not be 0:06:47.520 --> 0:06:51.200 throwing new money into the market basically because the market 0:06:51.240 --> 0:06:53.880 is pretty fully valued. However, there are a lot of 0:06:54.000 --> 0:06:56.720 very good businesses that haven't done nearly as well as 0:06:56.760 --> 0:06:59.599 the overall market, that are selling it fifteen or less 0:06:59.680 --> 0:07:02.000 times earnings, and we think there in lies the opportunity, 0:07:02.040 --> 0:07:04.400 so we think you want to be selective. Lots of 0:07:04.520 --> 0:07:07.919 very good businesses out there. Um, you know, companies like 0:07:07.920 --> 0:07:11.160 an am Gen or Beckton Dickinson haven't done a lot 0:07:11.200 --> 0:07:15.200 but the businesses are doing well, very attractive valuations. UH 0:07:15.280 --> 0:07:18.800 five serve in the technology and financial space as a 0:07:18.920 --> 0:07:22.360 very strong company. They have an activist involved. Yet the 0:07:22.360 --> 0:07:24.680 stock is down for the year. We think that easily 0:07:24.680 --> 0:07:28.440 as like twenty or thirty percent upside. Zimmer is a 0:07:29.240 --> 0:07:32.320 knee and hip replacement company. They just had a fairly 0:07:32.440 --> 0:07:35.320 mediocre quarter. Part of it was because of the COVID 0:07:35.400 --> 0:07:38.360 pick up. As COVID comes under control again, we think 0:07:38.360 --> 0:07:41.720 it's a great reopening play. Um. So there are definitely 0:07:41.760 --> 0:07:44.840 opportunities out there, but we would not get involved with 0:07:44.880 --> 0:07:47.400 the things that are really hot. We don't think now 0:07:47.520 --> 0:07:49.760 is a great time to be throwing money at the 0:07:49.920 --> 0:07:54.000 electric vehicle area or the battery area because we think 0:07:54.000 --> 0:07:56.240 a lot of those areas are very fully priced. Well. 0:07:56.280 --> 0:07:59.360 Even with that said, you see Rivan today poised for 0:07:59.520 --> 0:08:03.680 a really healthy pop if you could get syndicate. I 0:08:03.720 --> 0:08:05.880 hope you got it right. I mean, you know that 0:08:05.920 --> 0:08:09.200 those retail traders are also going to be loving that today. 0:08:09.280 --> 0:08:10.880 You know, how do you feel about a lot of 0:08:10.880 --> 0:08:13.640 these moonshot projects that are kind of happening in the 0:08:13.680 --> 0:08:15.480 world right now. At the end of the day, it 0:08:15.600 --> 0:08:20.800 does certainly seem like there's a whole generation of investors 0:08:21.400 --> 0:08:24.560 ready to jump on them. So it's a little bit 0:08:24.560 --> 0:08:27.920 worrisome to us. The that market has been exceptionally hot, 0:08:28.120 --> 0:08:31.640 and right now the electric vehicle car companies and batteries 0:08:31.680 --> 0:08:35.000 are assuming that everybody that's involved is going to be successful, 0:08:35.000 --> 0:08:38.600 and not only successful, but wildly successful. That's simply not 0:08:38.640 --> 0:08:40.959 going to be the case. So yes, the stocks and 0:08:41.080 --> 0:08:44.280 open up very richly. We think it's not going to 0:08:44.320 --> 0:08:46.719 be a great investment over the next one or two 0:08:46.800 --> 0:08:49.959 years because it's fully priced. We look at companies um 0:08:49.960 --> 0:08:53.199 like Zoom or Peloton that had all of this excitement 0:08:53.240 --> 0:08:55.439 a year ago. Those stocks are down by half to 0:08:55.520 --> 0:08:58.880 three quarters. We think it's not a great time to 0:08:58.920 --> 0:09:01.439 be speculum lative in the market right now. For the 0:09:01.480 --> 0:09:04.000 short term, it's gonna feel good, but we really believe 0:09:04.400 --> 0:09:06.480 that ultimately the music is going to stop and a 0:09:06.480 --> 0:09:09.480 lot of people are getting involved with companies that they're 0:09:09.520 --> 0:09:11.880 not paying attention to valuation and they're going to get hurt. 0:09:12.559 --> 0:09:16.400 What about companies. I mean, for example, everyone's bid up 0:09:16.400 --> 0:09:20.280 Tesla to make it a trillion dollar company, and meanwhile, 0:09:20.880 --> 0:09:25.120 uh Ford Motor Company is worth eighty billion. You know, 0:09:25.240 --> 0:09:31.240 General Motors is worth eighty five billion. Folkswagen, which has 0:09:31.679 --> 0:09:36.600 invested a ton into um the electric business is still 0:09:37.200 --> 0:09:40.600 only worth a hundred and forty billion. Do you like 0:09:40.720 --> 0:09:44.760 any of those legacy players. So, so that's a great point. 0:09:44.880 --> 0:09:47.880 Right now. Testla sells for the exact same valuation as 0:09:47.920 --> 0:09:51.520 the rest of the entire automobile industry, and we just 0:09:51.520 --> 0:09:54.360 don't think that's sustainable on the Tesla side. Uh. In 0:09:54.440 --> 0:09:57.000 terms of the other companies, um, the question is do 0:09:57.040 --> 0:09:59.840 you want to own an automobile company because more electric 0:10:00.040 --> 0:10:03.560 vehicles any of these companies make the less um oil 0:10:03.960 --> 0:10:06.600 um cars, you know, the regular combustion cars they're gonna 0:10:06.600 --> 0:10:09.360 be selling. So that is a zero sum game. In 0:10:09.440 --> 0:10:11.480 terms of the automobile industry. The one that we are 0:10:11.559 --> 0:10:15.040 most comfortable with right now is Toyota. We think they're 0:10:15.080 --> 0:10:18.160 going to be a winner in electric vehicles down the 0:10:18.240 --> 0:10:20.920 road and hybrid vehicles, and you're not paying a whole 0:10:20.960 --> 0:10:23.120 lot for it. But we think there are lots of 0:10:23.120 --> 0:10:25.360 other errors to make money in the market, and we're 0:10:25.360 --> 0:10:27.720 not spending a great deal of time on the auto sector. 0:10:28.040 --> 0:10:30.839 Bitcoin is at a record Do you think that it's 0:10:30.840 --> 0:10:35.719 an inflation hedge. We don't, um, you know, we're we're 0:10:35.840 --> 0:10:37.960 sort of old school, and old school hasn't been that 0:10:38.000 --> 0:10:40.240 helpful of late. But we like to have things on 0:10:40.280 --> 0:10:43.439 a fundamental basis. We like intrinsic value, and when you 0:10:43.520 --> 0:10:47.320 look at bitcoin, there's not a lot of intrinsic value there. So, uh, 0:10:47.360 --> 0:10:50.480 this is one that we're also pretty wary about. We 0:10:50.559 --> 0:10:53.240 don't think it ends well. Um, so we would not 0:10:53.280 --> 0:10:55.200 be putting money. And we we do believe there are 0:10:55.200 --> 0:10:57.360 a lot of people that are throwing money in, uh, 0:10:57.400 --> 0:11:00.200 simply because of fear of missing out. Everybody's talking about 0:11:00.200 --> 0:11:03.120 how wealthy they became. Uh, so they're throwing money in. 0:11:03.040 --> 0:11:05.440 And once that bubble verse, we think it can go 0:11:05.520 --> 0:11:08.160 down a lot. And what we'd say is, look at 0:11:08.160 --> 0:11:11.120 what happened during the Internet bubble of the late nineties. 0:11:11.880 --> 0:11:14.080 A number of the businesses simply went out of business, 0:11:14.080 --> 0:11:16.960 like an E Toys, but a number of great companies 0:11:16.960 --> 0:11:22.000 like Microsoft, Cisco, Intel, Um, we're all about a half 0:11:22.080 --> 0:11:25.920 to three quarters lower ten years later. So when things stop, 0:11:26.040 --> 0:11:29.600 valuation matters. David, thanks so much for joining us. David Katz, 0:11:29.679 --> 0:11:33.800 President and Chief investment Officer over at Matrix Asset advisors. 0:11:37.120 --> 0:11:38.720 Let me just quickly take a look at what we're 0:11:38.720 --> 0:11:43.440 seeing in terms of prices. Bitcoin trading up one percent 0:11:43.480 --> 0:11:47.040 and change three dollars up to sixty eight thousand, five 0:11:47.120 --> 0:11:51.720 hundred and nineteen, just around the record high. We also 0:11:51.760 --> 0:11:55.240 have ether trading or ethereum Um I guess ether is 0:11:55.280 --> 0:11:56.679 the is the right way to call it? Trading up 0:11:56.679 --> 0:11:59.000 one percent and change about forty nine a coin to 0:12:00.040 --> 0:12:01.720 forty nine. Let's bring in someone who knows for sure. 0:12:01.800 --> 0:12:08.200 Mike mcgloan, senior commodity strategist with Bloomberg Intelligence. Um, I guess, 0:12:08.720 --> 0:12:14.960 uh these highs? What what's behind this rise that we've seen. 0:12:15.000 --> 0:12:18.960 Is it just excess liquidity? Is it concern about inflation? 0:12:19.559 --> 0:12:23.079 Is it has China? Have China and Jamie Diamond and 0:12:23.120 --> 0:12:27.480 trashing Bitcoin again? What's going on here? Mike hey Man, Well, 0:12:26.760 --> 0:12:30.160 the the key thing is it's actually much more simpler 0:12:30.240 --> 0:12:33.199 to that than that. It's all the above. It's one 0:12:33.200 --> 0:12:35.280 of those points. Now it's November, we only have two 0:12:35.320 --> 0:12:36.840 months left than the year. There's a lot of cash 0:12:36.880 --> 0:12:39.000 on the side. Bitcoins one of the best performing assets 0:12:39.040 --> 0:12:42.360 on the planet, and a theorium is two and it's 0:12:42.800 --> 0:12:45.719 got fundamental independents that are increasing in improving. So I 0:12:45.800 --> 0:12:47.640 think that's what you've seen now is typically it is 0:12:47.640 --> 0:12:50.080 the best time of year. It's at sixty eight thousand 0:12:50.160 --> 0:12:52.080 right now. I think it's heading towards a hundred thousands. 0:12:52.080 --> 0:12:54.840 The questions when and the key the question I asked 0:12:54.880 --> 0:12:56.600 is what's going to keep it down? Now? Today was 0:12:56.640 --> 0:12:59.760 the key key barometer to that. You know, CPI printed 0:12:59.800 --> 0:13:02.480 high and expected, Bitcoin was down and Dye it popped 0:13:02.559 --> 0:13:04.800 right up. Gold was down and it popped up. You 0:13:04.840 --> 0:13:07.880 mentioned silver and earlier segment popped up. But Bitcoin is 0:13:08.600 --> 0:13:10.720 you know, it's the one with the vig it's potential 0:13:10.760 --> 0:13:12.839 upside for the future. So I look at this as 0:13:13.280 --> 0:13:15.760 you know, this is a market that's had a substantial correction. 0:13:16.000 --> 0:13:19.239 Demand and adoption are increasing, it's becoming part of every portfolio, 0:13:19.280 --> 0:13:22.520 and supplies declining. What makes that go lower? At this stage, 0:13:22.559 --> 0:13:25.319 it's pretty strong and I don't see overbought indications yet. 0:13:26.200 --> 0:13:30.920 So it's interesting because while the bitcoin, ether other coins 0:13:30.920 --> 0:13:34.439 are definitely up today, it's not everything. Guys. She was 0:13:34.520 --> 0:13:37.600 down and that was one of the I just wanted 0:13:37.600 --> 0:13:40.040 to mention it here because I don't think you're seeing 0:13:40.040 --> 0:13:44.319 everything moving lockstep necessarily anymore. Well so, no, thanks for 0:13:44.360 --> 0:13:46.640 mentioning that Sheba in you is down, and that's a 0:13:46.800 --> 0:13:50.440 speculation machine that most of us hope will just get 0:13:50.440 --> 0:13:52.200 it over with and go by and go back, just 0:13:52.360 --> 0:13:54.559 like those kind of went back. It's just a machine 0:13:54.559 --> 0:13:58.520 for speculation. And then you have pure infrastructure building in 0:13:58.559 --> 0:14:00.640 bitcoin and there, and they're just in the world a 0:14:00.640 --> 0:14:04.559 better place. She believe it was for speculators clearly undisputable. 0:14:04.800 --> 0:14:07.479 And then things like a Theorium there, every single cryptodology, 0:14:07.480 --> 0:14:10.360 the most widely traded Cryptosis and Planet, most of them 0:14:10.360 --> 0:14:13.080 traded in theory platforms. And then you have Bitcoin becoming 0:14:13.160 --> 0:14:16.880 global digital collateral. So to me, that's what's happening. The 0:14:16.920 --> 0:14:19.720 inflation heads. I don't really think it's so much there yet. 0:14:19.840 --> 0:14:22.160 It will be when it gets to the higher plateau. 0:14:22.240 --> 0:14:25.000 I see bitcoin in theorum right now in that price 0:14:25.080 --> 0:14:27.720 discovery stage, and it's just that time of year. Well, 0:14:27.760 --> 0:14:30.960 there's boy. Technicals are good, fundamentals are good. Where does 0:14:31.000 --> 0:14:32.640 it end up the year? That's kind of the quick 0:14:32.720 --> 0:14:34.840 key question we're all asking ourselves, what do you think 0:14:34.840 --> 0:14:40.560 about finance? Um c Z is pretty cool to interview. 0:14:40.600 --> 0:14:43.120 We have him on the network. Sometimes. He actually used 0:14:43.160 --> 0:14:45.800 to work at Bloomberg. Um. He's got to be one 0:14:45.800 --> 0:14:49.600 of the richest people in the world now and he 0:14:49.680 --> 0:14:53.120 has his own coin that's one of the biggest. C 0:14:53.320 --> 0:14:56.400 Z is just an edge vacational machinal. Every time he speaks, 0:14:56.440 --> 0:14:59.200 I shut up and I listened. The key thing I 0:14:59.240 --> 0:15:02.680 think he repped resents Matt is there's a lot of very, 0:15:02.800 --> 0:15:05.200 very wealthy young people in the space, and they have 0:15:05.280 --> 0:15:08.720 a major inclination to make the world a better place. 0:15:08.760 --> 0:15:10.960 Don't underestimate that. That's the key thing I got out 0:15:10.960 --> 0:15:14.200 of bitcoin. Everybody here wants to make a world a 0:15:14.240 --> 0:15:17.520 better place, and they have the facility, capacity and money 0:15:17.680 --> 0:15:19.920 to do it in this space. And now that the 0:15:20.000 --> 0:15:24.680 US is counting China by accepting and um properly regulating cryptos, 0:15:24.720 --> 0:15:27.280 they have a major platform. So to me, this is 0:15:27.280 --> 0:15:29.040 a bull market. No many questions when and where do 0:15:29.080 --> 0:15:30.600 you jump on? And I think that's what every money 0:15:30.640 --> 0:15:32.600 manager in the planet is saying. Okay, I might as 0:15:32.600 --> 0:15:34.320 well get off zero, and I think that's what's happening. 0:15:34.440 --> 0:15:36.560 The greater risk is being on zero with allocations to 0:15:36.720 --> 0:15:39.160 cryptos in bitcoins, Okay, help me out here. Because of 0:15:39.240 --> 0:15:43.240 this inflation hedge aspect of this. You know, crypto people 0:15:43.640 --> 0:15:48.000 so many inherently um you know with skeptical of the Fed. 0:15:48.400 --> 0:15:50.840 Do you can you poke a hole in the inflation 0:15:50.880 --> 0:15:53.360 hedge theory? Well, I think the key things can always 0:15:53.400 --> 0:15:56.320 look at it. You can't hold gold anymore without having 0:15:56.400 --> 0:15:59.920 some bitcoin and the theorum in that bucket because bitcoins 0:16:00.000 --> 0:16:02.440 clearly replacing it. Now as far as you measure inflations 0:16:02.520 --> 0:16:05.080 use the currency debasement. Let's look at this month so far. 0:16:05.400 --> 0:16:07.960 On the month, bitcoins about about ten percent right now, 0:16:08.240 --> 0:16:11.880 goals up about four and and crudels down one person. 0:16:12.040 --> 0:16:14.560 I think by this time next year, the key, the bigger, 0:16:14.640 --> 0:16:17.160 bigger risk will be deflationary trends. And I pointed out 0:16:17.160 --> 0:16:19.440 clearly because it's measured on a twelve month basis. The 0:16:19.440 --> 0:16:22.000 Bloomberg because of crypto and I'm sorry, I'm sorry. The 0:16:22.000 --> 0:16:25.320 Bloomberg Command Index just reaching all time high twelve months 0:16:25.360 --> 0:16:27.640 and now it's a real high bar to beat. So 0:16:27.680 --> 0:16:30.720 and you just measure on a twelve month basis, deflationary 0:16:30.760 --> 0:16:33.840 trends will kick back in if also needs a little 0:16:33.840 --> 0:16:36.000 wobble in the stock market, and you'll see those deflation 0:16:36.000 --> 0:16:38.000 near trends come back and the FED will have to ease. 0:16:38.000 --> 0:16:40.600 And that's what bitcoin is. It's no one's project, no 0:16:40.640 --> 0:16:46.200 one's liability. Declining supply, increasing demand. Even goal has elastic supply, 0:16:46.480 --> 0:16:49.560 Bitcoin doesn't have that, and people understanding WHOA Okay, I 0:16:49.600 --> 0:16:51.200 might as well get some allocation to this. So the 0:16:51.240 --> 0:16:54.440 inflation argument, I think it's coming, but be wonderful if 0:16:54.440 --> 0:16:57.040 we get true inflation and real demand pull right now. 0:16:57.360 --> 0:16:58.760 To me, this is the kind of when you hear 0:16:58.800 --> 0:17:00.520 headlines like to that that's where you back the peak 0:17:00.520 --> 0:17:03.360 A year from now. I fully predict we're gonna have 0:17:03.400 --> 0:17:09.800 more problems with deflationary trends. What when do we know that? Um, 0:17:09.840 --> 0:17:13.560 you know mom and pop, either retail mom and pop 0:17:13.720 --> 0:17:17.800 or institutions have fully embraced crypto. Because these are I 0:17:17.800 --> 0:17:20.159 think two things we're still waiting for. Snelly and I 0:17:20.200 --> 0:17:24.359 spoke with the conservative fund manager earlier who is just 0:17:24.520 --> 0:17:29.720 not down to clown because he thinks there's too much volatility. Absolutely, 0:17:29.760 --> 0:17:31.520 there will be less alto when there's greater depth than 0:17:31.520 --> 0:17:33.399 the market reaches a higher plateau. So that's one key 0:17:33.400 --> 0:17:36.000 thing is probably're gonna miss a big monoch appreciation. The 0:17:36.040 --> 0:17:38.480 answer to that question, Matt, is very simple. When we 0:17:38.520 --> 0:17:41.399 have wide dissemination of an e t S or e 0:17:41.480 --> 0:17:44.800 t S that track a broad index attracts the crypto market, 0:17:45.200 --> 0:17:47.399 that's where we're going. It's a matter of time. The 0:17:47.560 --> 0:17:50.080 SEC knows it. If they're truly on to protect investors, 0:17:50.080 --> 0:17:51.720 they need to approve an e t F to tracts. 0:17:51.760 --> 0:17:54.879 A spot index attracts a spot markets, not you know, 0:17:54.960 --> 0:17:57.280 Bitcoin and SAM and index. That's the proper. That's why 0:17:57.359 --> 0:17:59.760 we hate most almost everybody in the planet. Tracks stocks 0:18:00.080 --> 0:18:02.120 go through NT. You have two tracks, an index. We'll 0:18:02.160 --> 0:18:04.119 get there. It's going to be many years, will be 0:18:04.160 --> 0:18:07.040 many bumps on the road, But until then, I don't 0:18:07.040 --> 0:18:08.960 think we're gonna have anything but a bull market that 0:18:09.000 --> 0:18:12.840 has dips. Alright, Mike mcglogan, thanks very much for joining us. 0:18:12.920 --> 0:18:16.480 Mike mcglonan their senior commodity strategist with Bloomberg Intelligence talking 0:18:16.520 --> 0:18:22.000 to us about KRYP Bloomberg Opinion informed perspectives and expert 0:18:22.080 --> 0:18:27.960 data driven commentary on breaking news. Alright, time for Bloomberg Opinion. 0:18:28.000 --> 0:18:31.239 We have our debt markets columnists Brian Hippata in the 0:18:31.320 --> 0:18:38.200 studio today at the Interactive Brokers Um complex inside one 0:18:38.320 --> 0:18:40.840 Lexington Avenue, the mother Ship as we call it. He's 0:18:40.880 --> 0:18:45.159 writing about the FED ignoring a key bubble risk for 0:18:45.240 --> 0:18:48.959 the stock market or maybe can I say bubbles plural? Brian, 0:18:49.119 --> 0:18:52.600 Sure you can say that crypto, but they're not saying it. No, 0:18:52.800 --> 0:18:55.040 they don't use the word bubble. No, I mean they 0:18:55.040 --> 0:18:57.560 don't say bubble. They didn't say that may even though 0:18:57.560 --> 0:19:01.360 they flagged a lot of financial stabild be concerns. And 0:19:01.400 --> 0:19:03.240 the thing they don't really talk about a lot is 0:19:03.359 --> 0:19:06.119 real yields. And that is something that you just see 0:19:06.160 --> 0:19:08.560 written about over and over, talked about over and over. 0:19:08.920 --> 0:19:11.640 You see real rates hit record lows and there's basically 0:19:11.680 --> 0:19:14.760 no choice but to to buy risky assets because your 0:19:14.800 --> 0:19:17.600 alternative is that you buy fixed income, you buy treasuries, 0:19:17.600 --> 0:19:20.000 and you get a negative inflation adjusted yield. It doesn't 0:19:20.080 --> 0:19:22.199 seem worth it to a lot of people. And what 0:19:22.320 --> 0:19:25.760 pops the bubble? I mean, that's a good question. I mean, 0:19:25.800 --> 0:19:29.000 I think right now you're seeing inflation go up tremendously 0:19:29.520 --> 0:19:32.520 uh and you're seeing stocks barely off there they're all 0:19:32.560 --> 0:19:35.440 time highs. So it's not clear what exactly happens the 0:19:35.440 --> 0:19:38.440 FEDS reaction function, right now is to just look through 0:19:38.440 --> 0:19:42.199 this inflation keep keep their Fed funds rate at at 0:19:42.200 --> 0:19:45.320 record lows. UM it's at the lowest since the nineteen 0:19:45.400 --> 0:19:48.560 seventies when you adjusted for inflation the Fed funds rates. 0:19:48.560 --> 0:19:51.080 So so rates are staying really low, and it's going 0:19:51.119 --> 0:19:53.400 to be a question of whether the Fed blinks, whether 0:19:53.440 --> 0:19:56.960 they flinch under political pressure. I think, uh to to 0:19:57.080 --> 0:20:00.040 do something to to slow inflation down. Next year's the 0:20:00.200 --> 0:20:03.320 crucial midterm elections. After all, the seventies were bad. By 0:20:03.359 --> 0:20:05.920 the way, Sinale, for those of you who weren't there, 0:20:06.000 --> 0:20:09.720 I'm gonna remind you that's when the Mustang turned from 0:20:09.760 --> 0:20:14.800 a boss muscle car into an embarrassment. Plus we had 0:20:15.000 --> 0:20:19.040 incredible inflation. There were uh, you know, people parked around 0:20:19.119 --> 0:20:22.280 the block waiting to get gasoline. Oil prices went nuts, 0:20:22.960 --> 0:20:25.919 and as Greg Jarrett was just saying, his mortgage was 0:20:25.960 --> 0:20:29.320 like four yeah, I mean because the Fed had to 0:20:29.400 --> 0:20:31.119 raise rates, right, and now you get a mortgage for 0:20:31.280 --> 0:20:35.840 three basically, So, uh, nominal rates are still extremely low, 0:20:36.119 --> 0:20:38.840 and that does raise this risk that if you can't 0:20:38.880 --> 0:20:41.480 get anything in fixed income, you have to go to 0:20:41.520 --> 0:20:44.159 the stock market. Some of these statistics that I cited 0:20:44.200 --> 0:20:47.119 from them from the FED Zone data is that you 0:20:47.160 --> 0:20:49.239 look at people who are sixty to seventy four, even 0:20:49.280 --> 0:20:52.240 though seventy five and older, and stockholdings have never before 0:20:52.320 --> 0:20:55.160 been such a core part of their portfolio because after 0:20:55.200 --> 0:20:58.080 a decade of near zero interest rates, uh, you just 0:20:58.119 --> 0:21:01.080 can't count on fixed income anymore, even even if you're 0:21:01.080 --> 0:21:03.680 in retirement. Well yeah, I mean the other thing about 0:21:03.680 --> 0:21:06.000 this too, is that the market is already expecting some 0:21:06.400 --> 0:21:09.040 like they're they're they're planning for rate hikes next year. Right, 0:21:09.160 --> 0:21:11.439 That's what's the plan. Right. But the thing is, what 0:21:11.520 --> 0:21:14.639 about this idea that Mary Daily had brought up to 0:21:14.800 --> 0:21:17.480 our own Mike McKee a little bit earlier, This idea 0:21:17.560 --> 0:21:20.800 that we're still in COVID this is going to be transitory. 0:21:20.840 --> 0:21:23.080 I mean that seems to be the parting line from 0:21:23.119 --> 0:21:28.560 most beneficials. But how do you know that? Yeah? I 0:21:28.560 --> 0:21:30.159 mean one of the things, Um, I don't think this 0:21:30.240 --> 0:21:32.320 is spoiling anything because I tweeted about it. If I 0:21:32.320 --> 0:21:34.040