WEBVTT - Crypto, Geopolitical Risks and Motorcycles 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.360 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:20.960 --> 0:00:23.919 I'm gonna get right to it. Nicholas Bonsak Joints and 0:00:24.040 --> 0:00:27.400 he's the CEO and president of Strateigas Securities. Now in 0:00:27.480 --> 0:00:31.480 your bio page, Nick, it says fifty two Vanderbilt Avenue. 0:00:31.520 --> 0:00:32.320 Is that where your offices are? 0:00:32.320 --> 0:00:32.959 That's where we are. 0:00:33.040 --> 0:00:35.199 Is that the new building? No, No, that's not the 0:00:35.200 --> 0:00:35.600 new build. 0:00:35.640 --> 0:00:35.960 That's one. 0:00:36.640 --> 0:00:39.080 That's one Vanderbilt. Okay. I was just wondering if anybody's 0:00:39.080 --> 0:00:39.400 been in there. 0:00:39.800 --> 0:00:41.800 Six Its one block and much fancier away. 0:00:41.840 --> 0:00:44.680 It looks amazing, but it is is it filled? You know? 0:00:45.000 --> 0:00:46.680 I don't think the capacity is a hunt Yeah. 0:00:46.680 --> 0:00:49.880 Anyway, Matt, this is one Vanderbilt is righted by Grand Central, 0:00:50.280 --> 0:00:53.200 massive new office tower, probably one of the newest, biggest 0:00:53.200 --> 0:00:55.200 ones in the city's I've walked by it. Yeah, So 0:00:55.240 --> 0:00:57.000 I was just wondering AnyWho, All right, Nick, what are 0:00:57.040 --> 0:00:58.560 we doing here with this market? I just put up 0:00:58.560 --> 0:01:01.920 the SPX and kind of looked at on a trailing 0:01:01.960 --> 0:01:04.959 twelve month spasis rolling down three point two percent. What's 0:01:05.000 --> 0:01:07.160 the big thing here? I don't get it. 0:01:07.400 --> 0:01:09.200 You're just looking at the last twelve months, right, Yeah, 0:01:09.200 --> 0:01:10.760 because if you just look at twenty twenty two, it 0:01:10.800 --> 0:01:11.640 was a lot lot Oh. 0:01:11.720 --> 0:01:13.760 I know that I live through that, But if you 0:01:13.840 --> 0:01:15.600 just got to put in perspective, it's like, eh, we've 0:01:15.680 --> 0:01:17.520 kind of come back a little bit off those lows 0:01:17.600 --> 0:01:21.520 here from October November pretty impressively. What do you guys 0:01:21.560 --> 0:01:22.800 telling your clients these days? 0:01:22.920 --> 0:01:25.400 Yeah, I think when we look at the landscape, it 0:01:25.800 --> 0:01:28.880 seems like these building blocks for a recession and for 0:01:28.920 --> 0:01:32.920 a contracting economy are almost impossible to avoid. And so 0:01:33.520 --> 0:01:36.360 when you think back over the length of time these 0:01:36.400 --> 0:01:39.360 bear markets that are around global de leveragings, they're going 0:01:39.440 --> 0:01:42.119 to post very very strong counter trend rallies, and it's 0:01:42.160 --> 0:01:44.080 just our sense that we're in one of those right now. 0:01:44.560 --> 0:01:48.000 And moreover, the market's gotten very very narrow from the top, 0:01:48.080 --> 0:01:49.800 so it's Fang and friends that are sort of leading 0:01:49.880 --> 0:01:50.200 us here. 0:01:50.400 --> 0:01:53.480 So what's the I mean, what drives us to a 0:01:53.520 --> 0:01:59.160 recession ultimately? Is it credit crunch? Is it dropping capex? 0:01:59.400 --> 0:02:01.640 I mean, because we have three and a half percent 0:02:01.640 --> 0:02:05.360 on employment still and yeah, you know we see companies 0:02:05.400 --> 0:02:06.640 beating expectations. 0:02:07.200 --> 0:02:08.840 Uh did you see earnings? 0:02:09.280 --> 0:02:12.880 I mean, are are companies putting out decent EPs growth or. 0:02:13.639 --> 0:02:16.440 Actually they're declining, but they're beating expectations. So it's a 0:02:16.480 --> 0:02:18.320 revenue the story margin downstory. 0:02:18.400 --> 0:02:19.880 Yeah, yeah, I mean I think when you look at 0:02:19.880 --> 0:02:22.760 the margin contraction and went to your question where the 0:02:22.800 --> 0:02:25.560 market goes, it's earnings and interest rates on one side, 0:02:25.840 --> 0:02:27.680 and liquidity and labor on the other side. 0:02:27.720 --> 0:02:29.280 And liquidity and labor are winning. 0:02:29.639 --> 0:02:31.080 You know, I would I would make the point as 0:02:31.200 --> 0:02:33.000 as as Paul, did you know with respect to the 0:02:33.000 --> 0:02:37.920 earnings the earnings results, they're okay, but you know, so 0:02:38.120 --> 0:02:41.120 far those expectations have continued to come way in and 0:02:41.200 --> 0:02:42.560 your earnings are expected to be flat? 0:02:42.639 --> 0:02:45.960 Yere on here, all right, talk to us about Matt 0:02:46.000 --> 0:02:47.200 likes this flat would be great? 0:02:47.280 --> 0:02:47.440 Right? 0:02:48.400 --> 0:02:50.520 Flat Wouldlast week we were talking to Phil Orlando last 0:02:50.560 --> 0:02:52.600 week and things S and P earnings this year going 0:02:52.639 --> 0:02:54.280 to be one hundred and ninety dollars compared to like 0:02:54.560 --> 0:02:55.240 twenty last year. 0:02:55.320 --> 0:02:56.880 Yes, that's not good. Now we need to up year. 0:02:56.960 --> 0:03:00.720 It's last year. It's the like the immaculate deleveraging exactly. 0:03:00.960 --> 0:03:03.760 All right, Matt likes this ETF business. You've got to 0:03:03.840 --> 0:03:10.120 strategius macro thematic opportunities. ETF symbol is sa MT. What 0:03:10.120 --> 0:03:11.440 are you guys doing in that ETF. 0:03:11.680 --> 0:03:14.680 Yeah, So when you look at thematic investing, and particularly 0:03:14.680 --> 0:03:18.160 thematic ETFs, they are almost always monoligned. They come out 0:03:18.160 --> 0:03:21.000 with one big idea which requires the investor to be 0:03:21.080 --> 0:03:23.400 right on the time and right on the theme. And 0:03:23.600 --> 0:03:26.760 the nature of our work is thematic and moreover, it's 0:03:26.800 --> 0:03:29.639 this idea of thematic rotation. So we want to be 0:03:29.720 --> 0:03:33.359 able to have the flexibility to see the themes that 0:03:33.400 --> 0:03:37.320 are gathering momentum in the marketplace and rotate into them 0:03:37.360 --> 0:03:39.440 and have some exposure to them for a period of 0:03:39.480 --> 0:03:41.040 time and then move along. 0:03:40.840 --> 0:03:41.960 As the business cycle does. 0:03:42.000 --> 0:03:45.960 And so this thematic ETF really will have exposures three 0:03:46.080 --> 0:03:48.040 or four or five themes at a time and then 0:03:48.080 --> 0:03:49.080 move on as they evolve. 0:03:49.480 --> 0:03:51.360 So what kind of themes are we talking about? 0:03:52.080 --> 0:03:55.440 So right now, our biases are a little bit more defensive, 0:03:55.480 --> 0:03:58.880 so we actually have recession protection is an important theme. 0:03:59.240 --> 0:04:02.000 Cash flow risk detocrats is another important theme. And then 0:04:02.040 --> 0:04:04.360 a third, which is a little off pieced from the 0:04:04.440 --> 0:04:06.840 business cycles specifically, is deglobalization. 0:04:07.600 --> 0:04:10.040 Is de globalization really a thing? I grew up when 0:04:10.600 --> 0:04:13.320 we're all about globalization. I mean, if you didn't do 0:04:13.360 --> 0:04:15.120 a stint in Tokyo and you didn't do a stint 0:04:15.200 --> 0:04:17.320 in London, you had no career on Wall Street? 0:04:17.360 --> 0:04:20.200 Correct, I mean, is that a thing? 0:04:20.440 --> 0:04:23.400 So globals? I mean, really, how much can you really deglobalize? 0:04:23.440 --> 0:04:24.839 I mean, Apple is still going to be making a 0:04:24.839 --> 0:04:25.720 ton of stuff in China. 0:04:25.800 --> 0:04:28.360 Yeah, I have I had the same view, perhaps you did, 0:04:28.720 --> 0:04:30.400 or at least as is suggested by the nature of 0:04:30.440 --> 0:04:34.159 your question, before Russia invaded Ukraine and so before that, 0:04:34.240 --> 0:04:35.400 I thought deglobalization was. 0:04:35.440 --> 0:04:37.080 Some sort of an academic talking point. 0:04:37.160 --> 0:04:41.000 But now you have supply chain, now you have sort 0:04:41.000 --> 0:04:44.000 of reshoring, Now you have sort of this BiPOL this 0:04:44.040 --> 0:04:46.679 polarization where you've got, you know, new groups of countries 0:04:46.720 --> 0:04:49.760 that are banding together, maybe not outwardly to be against 0:04:49.760 --> 0:04:52.920 the United States, but ostensibly could be against the United States. 0:04:53.240 --> 0:04:55.320 And so companies and countries are going to have to 0:04:55.320 --> 0:04:57.880 pull together their resources in a very different way than 0:04:57.880 --> 0:05:00.719 we did, you know for the eighty year after the 0:05:00.720 --> 0:05:01.440 Second World War. 0:05:01.760 --> 0:05:05.160 It'll be interesting because uh, you know, it's friend shoring 0:05:05.200 --> 0:05:07.400 more than on shoring, right, because we're not bringing that's 0:05:07.400 --> 0:05:10.320 a production back to just the US. We're also putting 0:05:10.360 --> 0:05:13.520 it in Mexico and Canada, and it seems like that's 0:05:13.560 --> 0:05:17.800 going to work. You have another ETF, right, the strateigous 0:05:17.880 --> 0:05:19.960 Global Policy Opportunities ETF. 0:05:20.640 --> 0:05:24.039 What's that about, same idea with thematic rotation, but far 0:05:24.120 --> 0:05:26.760 less dependence, almost no dependence on the business cycle and 0:05:26.800 --> 0:05:28.480 all dependence on the political cycle. 0:05:28.640 --> 0:05:31.480 So as the winds have change blowing Washington and we've. 0:05:31.360 --> 0:05:34.640 Got an all democratic uh you know, Congress and White House, 0:05:34.760 --> 0:05:37.840 or the opposite measure and Republican, we will move the 0:05:37.839 --> 0:05:38.960 themes around. 0:05:38.680 --> 0:05:40.080 To be offensive and defensive. 0:05:40.120 --> 0:05:43.359 Companies vote with their money for better or for worse, 0:05:43.960 --> 0:05:46.400 and we view that and I believe we've been able 0:05:46.440 --> 0:05:49.560 to shown dead over time that helps their earnings grow. 0:05:49.880 --> 0:05:51.440 So what what made you get into this? 0:05:51.520 --> 0:05:54.680 I mean, before you started Strategius, you were at some 0:05:54.760 --> 0:05:57.880 of the most important businesses on the street Morgan Stanley 0:05:58.000 --> 0:06:01.919 is SI legendary stuff. Right, then you go in with 0:06:02.080 --> 0:06:05.880 Jason to start Fritiguis what got you into the ETF 0:06:05.960 --> 0:06:06.680 side of things? 0:06:06.960 --> 0:06:10.160 Well, Macro, which is our business, is pretty low barrier 0:06:10.160 --> 0:06:11.640 to entry. If you've got enough of you go in 0:06:11.680 --> 0:06:13.640 an email system, you can be in the business. So 0:06:14.000 --> 0:06:17.000 we decided we would try to find the investable conclusion 0:06:17.040 --> 0:06:19.960 with every research note we put out, and that ultimately 0:06:20.000 --> 0:06:22.520 became stock baskets. And then when you look at those 0:06:22.520 --> 0:06:26.120 stock baskets over time, they basically fall into three time categories. 0:06:26.160 --> 0:06:29.280 You've got really short dated stuff that nobody can invest in, 0:06:29.560 --> 0:06:31.920 you're so close to it it's impossible. But then you've 0:06:31.960 --> 0:06:34.960 got intermediate term stuff and long term stuff, and those 0:06:34.960 --> 0:06:38.440 things are very interesting for portfolio construction. So we got 0:06:38.480 --> 0:06:41.480 into the stock basket business. That became themes and then 0:06:41.520 --> 0:06:43.920 clients started asking, hey, this would be really great if 0:06:43.960 --> 0:06:45.800 we could put it into a managed account, and then 0:06:45.839 --> 0:06:47.719 you evolve into ETFs. 0:06:47.279 --> 0:06:50.920 So what are the assets and management for your ETFs? Generally, so, we. 0:06:50.880 --> 0:06:52.800 Have just over one hundred million in the complex we 0:06:52.839 --> 0:06:55.719 lost we launched them late last year, and we managed 0:06:55.720 --> 0:06:58.719 about eight hundred million in our asset manager. 0:06:58.520 --> 0:07:01.720 And you guys are staying with thematic investing? Is that 0:07:01.800 --> 0:07:04.000 kind of where you guys think you add vague? 0:07:03.720 --> 0:07:05.120 That's where we're comfortable. 0:07:05.560 --> 0:07:07.200 There's a lot of people who do a lot of things, 0:07:07.240 --> 0:07:09.440 and we think we're comfortable with thematic. 0:07:09.440 --> 0:07:12.360 And I mean you're macro masters, right, That's why people 0:07:12.480 --> 0:07:16.200 go to strtigis what do you think about You've already 0:07:16.200 --> 0:07:17.480 given us your view on recession. 0:07:17.760 --> 0:07:18.640 How does the FED. 0:07:18.440 --> 0:07:21.000 React to that? They're likely going to raise next week? 0:07:21.440 --> 0:07:26.840 I think that's a consensus overwhelmingly. Do they raise again 0:07:26.880 --> 0:07:29.240 after that? Are they going to cut in twenty twenty three? 0:07:29.280 --> 0:07:31.800 These are the questions we ask everyone, So what's your take? 0:07:31.920 --> 0:07:33.880 Listen. We do think they're going to go again. 0:07:34.080 --> 0:07:36.840 We think the labor market gives them more than sufficient 0:07:36.880 --> 0:07:40.760 cover to do so. Our view is that the Powell 0:07:40.800 --> 0:07:43.640 and the FED are very worried about what happened in 0:07:43.640 --> 0:07:46.400 the nineteen seventies and they want to make sure that 0:07:46.440 --> 0:07:50.400 they arrest inflation expectations back to an acceptable level. They'll 0:07:50.400 --> 0:07:53.840 probably pause thereafter. My suspicion is that they've done a 0:07:53.880 --> 0:07:55.960 lot of damage to the economy that we haven't even 0:07:56.000 --> 0:07:58.960 caught up with. Yet we'll probably cutting next year at 0:07:58.960 --> 0:08:01.640 some point. But remember, a cut is not the same 0:08:01.960 --> 0:08:04.640 optimism that pivot, you know, provided us. I mean a 0:08:04.640 --> 0:08:07.480 cut is because something is broken, and that would be 0:08:07.560 --> 0:08:09.160 when the recession comes hits us. 0:08:09.600 --> 0:08:12.840 Yeah, I just can't you know, I hear the recession call. 0:08:13.960 --> 0:08:16.680 I just with unemployment at three and a half percent. 0:08:17.920 --> 0:08:20.880 Yeah, I mean, listen, labor and liquidity, right, So unemployment 0:08:21.240 --> 0:08:23.360 is not giving you the signposts for a recession. 0:08:23.600 --> 0:08:29.120 It's also difficult for US equity knuckleheads to understand long 0:08:29.200 --> 0:08:32.960 invariable lags. We just don't get that. I don't understand 0:08:33.000 --> 0:08:34.360 what happens after next week. 0:08:34.400 --> 0:08:34.920 I never have. 0:08:35.120 --> 0:08:37.040 I mean, most investors say, hey, the market's up, so 0:08:37.080 --> 0:08:37.480 what's wrong? 0:08:38.200 --> 0:08:39.960 Cokette? A good quarter? Isn't that all I need to know? 0:08:40.000 --> 0:08:41.640 Yeah, but that's why we need people like this, because 0:08:41.640 --> 0:08:44.680 they actually look ahead, and we're not very good at. 0:08:44.679 --> 0:08:46.800 How concerned are you about the consumer out there? Because 0:08:46.800 --> 0:08:49.320 I mean, admittedly, Matt and I don't we're kind of 0:08:49.880 --> 0:08:51.600 stuck here in the metro New York area. We don't 0:08:51.640 --> 0:08:53.240 get to see the real world. I don't think the 0:08:53.240 --> 0:08:54.240 consumer's doing out there. 0:08:54.480 --> 0:08:57.600 They are increasingly using credit as well, so transfer payments, 0:08:57.640 --> 0:08:59.000 stop jobs are okay. 0:08:59.360 --> 0:09:01.920 Savings dobbies are blowing through. 0:09:01.800 --> 0:09:05.480 Their savings and don't listen, remember the money illusion when 0:09:05.480 --> 0:09:07.960 this is all over. Inflation makes things look okay or 0:09:08.000 --> 0:09:10.800 look better, and they're not. They're deteriorating on the inside. 0:09:11.280 --> 0:09:13.319 I tell you I've had enough of this inflation thing. 0:09:13.320 --> 0:09:15.200 I mean, I'm you know, well, I think you know what. 0:09:15.400 --> 0:09:19.480 We have had inflation paired with much higher bank balances 0:09:19.480 --> 0:09:22.040 than we're used to because we all got free cash 0:09:22.160 --> 0:09:25.640 passed out to us. And now that you know, we're 0:09:25.679 --> 0:09:28.760 done saving money, so we're working off the bank balances. 0:09:28.800 --> 0:09:31.560 Plus we're putting much more on credit cards. It's just 0:09:31.600 --> 0:09:33.560 going to hit us. We're in a great mood and 0:09:33.559 --> 0:09:36.360 everything looks great now yeap, until it hits us, and 0:09:36.360 --> 0:09:39.000 then all of a sudden, next time we'll bring better news. 0:09:38.760 --> 0:09:41.480 All right, Nicholas, thanks so much for joining us. Nicholas Bonsaks, 0:09:41.480 --> 0:09:45.240 CEO and President of Strateigist Securities joining us live here 0:09:45.240 --> 0:09:47.640 in our Bloomberg Interactive Brooker Studio, so we appreciate it. 0:09:47.720 --> 0:09:51.240 Making the walk up from Midtown a couple of blocks away. 0:09:51.400 --> 0:09:55.520 There you're listening to the team Ken's Are Live program 0:09:55.640 --> 0:09:59.600 Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot com, 0:09:59.640 --> 0:10:02.520 the Hard Radio app, and the Bloomberg Business App, or 0:10:02.559 --> 0:10:04.960 listen on demand wherever you get your podcast. 0:10:06.800 --> 0:10:09.480 We're going to talk crypto, and my old buddy Matt 0:10:09.520 --> 0:10:10.720 Siegel is here in the studio. 0:10:11.000 --> 0:10:14.080 Used to be he used to work here at Bloomberg. 0:10:14.120 --> 0:10:16.560 Then he went to get a real job on Wall Street, 0:10:16.679 --> 0:10:19.000 and now he's over at van k where he runs 0:10:19.040 --> 0:10:22.680 there Crypto Research MATC. Great to have you back in 0:10:22.720 --> 0:10:25.200 the studio with us. Go ahead and put that microphone 0:10:25.280 --> 0:10:28.080 right there in front of your face. And before we 0:10:28.120 --> 0:10:30.760 get to the price action and what you think about 0:10:30.800 --> 0:10:35.240 regulation and everything. I noticed that two new groups have 0:10:35.400 --> 0:10:42.000 joined the I guess the competition to try and become 0:10:42.040 --> 0:10:45.880 the executors of the bankrupt Celsius business. 0:10:46.440 --> 0:10:47.240 One of them is. 0:10:47.400 --> 0:10:52.360 Errington Capital and a whole group of bidders under the 0:10:52.920 --> 0:10:56.720 name Fahrenheit I guess, And another one is Gemini. And you, guys, 0:10:57.240 --> 0:11:01.439 and you already work closely with the Winklev crypto business. 0:11:01.600 --> 0:11:04.120 Why do you want to get into that into that race? 0:11:04.320 --> 0:11:07.040 Why do you think it would be helpful to help 0:11:07.080 --> 0:11:08.160 to unwind Celsius? 0:11:09.360 --> 0:11:12.360 Well, the bigger picture here, Matt, is that every crypto 0:11:12.679 --> 0:11:18.200 lender has gone bankrupt and there are multiple bankruptcy cases 0:11:18.280 --> 0:11:21.000 right now to try to sort out these assets and 0:11:21.440 --> 0:11:25.840 maximize the return for customers and token holders. 0:11:27.120 --> 0:11:29.760 So we just saw last week that. 0:11:29.720 --> 0:11:33.559 The bankruptcy judge in the Voyager case allowed that sale 0:11:33.640 --> 0:11:37.839 to Binance to proceed. So all the leverage has been 0:11:37.840 --> 0:11:40.360 brought out of this ecosystem with the bankruptcy of all 0:11:40.360 --> 0:11:43.440 these lenders, and now it's for the bankruptcy courts to 0:11:43.480 --> 0:11:46.000 clean up the mess and see who can maximize the 0:11:46.080 --> 0:11:50.880 return for these unsecured creditors. So I can confirm, you know, 0:11:50.880 --> 0:11:54.200 the court documents yesterday revealed that two additional bidders have 0:11:54.440 --> 0:11:58.640 joined as qualified bidders to administer these assets and try 0:11:58.640 --> 0:12:01.160 to maximize the return for token holders. Vanik has teamed 0:12:01.200 --> 0:12:05.120 with Gemini on one of those bids, and we think, 0:12:05.240 --> 0:12:08.600 you know, the details will be clear tomorrow at the auction, 0:12:09.440 --> 0:12:12.960 but look forward to putting forward the case that we 0:12:13.000 --> 0:12:14.839 have the best way to administer these assets in a 0:12:14.880 --> 0:12:18.320 regulatory compliant way to maximize the return for the customers. 0:12:18.360 --> 0:12:21.559 Is the lending business Is the crypto lending business dead? 0:12:23.000 --> 0:12:25.240 Just here in the US or is it worldwide? For example, 0:12:25.320 --> 0:12:28.200 Nexso I talked to Anthony Trenschev quite a bit, and 0:12:28.320 --> 0:12:30.600 right now I think he might be in Dubai because 0:12:30.640 --> 0:12:35.880 he's not welcome in his country where there are lawsuits pending. 0:12:35.920 --> 0:12:40.360 But that business still exists, right Is it one of 0:12:40.400 --> 0:12:42.120 the last Is it going to die out as well? 0:12:42.200 --> 0:12:45.679 Is there no good business case for crypto lending. 0:12:47.320 --> 0:12:49.599 The business? The crypto lending business is dead in the 0:12:49.720 --> 0:12:53.720 US for retail customers, so Nexo is now out of 0:12:53.720 --> 0:12:58.559 that business. Everyone is out of that business. It's available 0:12:58.600 --> 0:13:02.560 for institutional counter but there are few large balance sheets 0:13:02.600 --> 0:13:06.720 participating in the space. And so one consequence of the 0:13:06.760 --> 0:13:10.679 FTX bankruptcy is that an increasing amount of cryptoactivity has 0:13:10.720 --> 0:13:15.040 moved on chain into self custody wallets and DeFi. That 0:13:15.160 --> 0:13:19.559 is largely an x US phenomenon. So the short answer 0:13:19.600 --> 0:13:21.640 to your question is, yes, it's dead in the US. 0:13:21.720 --> 0:13:24.120 Has it moved overseas? And that's what we're seeing, you know, 0:13:24.160 --> 0:13:26.240 with so many of these announcements. It's on the tape 0:13:26.240 --> 0:13:28.120 today that Gemini is looking to set up an off 0:13:28.160 --> 0:13:31.520 short derivatives exchange Coinbase, talking about that last week. There's 0:13:31.600 --> 0:13:36.200 no other choice when the regulator here is presenting you know, 0:13:36.280 --> 0:13:38.360 impossible paths. 0:13:38.840 --> 0:13:43.280 Why is the crypto lending space dead? And what does 0:13:43.320 --> 0:13:46.040 that say about the market overall or the regulators? 0:13:46.679 --> 0:13:48.840 Well, it's the centralized lending space. 0:13:49.040 --> 0:13:51.640 Why am I spending any attention on crypto space when 0:13:51.679 --> 0:13:54.640 I can't even finance it? They can't get it financed? 0:13:55.400 --> 0:13:58.440 Well, you can in DeFi, but there you know, there 0:13:58.480 --> 0:14:00.800 needs to be larger balance sheets to step up and 0:14:00.840 --> 0:14:03.400 fill the void that the collapse of these centralized lenders 0:14:03.440 --> 0:14:06.160 has led to. And that you know, that's a fair criticism. 0:14:06.200 --> 0:14:09.520 This is a bear asset, so it's a little more 0:14:09.559 --> 0:14:11.280 difficult to set up a lend and borrow. 0:14:11.400 --> 0:14:13.600 So, as Matt mentioned, talk to us about the regulatory 0:14:14.559 --> 0:14:17.280 aspect here, because just in your notes you say the 0:14:17.280 --> 0:14:20.840 Biden White House is trying to kill crypto? How are 0:14:20.880 --> 0:14:22.920 they doing it? And at one point like so, why 0:14:22.960 --> 0:14:24.560 would they want to do that? Don't we want to 0:14:24.640 --> 0:14:25.360 lead that business? 0:14:26.440 --> 0:14:29.560 Well, there's definitely mixed messages from the White House, right, 0:14:29.600 --> 0:14:33.440 So on the one hand they like to say that 0:14:33.640 --> 0:14:36.440 there's no value behind this tech, right, that it's a ponzi. 0:14:36.800 --> 0:14:38.640 And on the other hand, the White House devoted more 0:14:38.640 --> 0:14:41.600 than ten pages in their recent Economic outlook to talking 0:14:41.680 --> 0:14:45.000 about crypto. So there's a bit of schizophrenia here as 0:14:45.040 --> 0:14:49.280 to how much power this technology has. And I think 0:14:49.320 --> 0:14:51.760 that's something that the policymakers are coming to terms with. 0:14:52.600 --> 0:14:56.000 The Instincts of this White House are to micromanage and 0:14:56.240 --> 0:15:02.000 control and crypto is you know, takes different mechanisms to 0:15:02.040 --> 0:15:04.360 do that. We haven't sorted out what the rules are. 0:15:04.680 --> 0:15:08.360 Regulators are asking for things that the ecosystem participants can't provide. 0:15:08.520 --> 0:15:11.600 They're getting slapped with lawsuits and enforcement actions. Why not 0:15:12.080 --> 0:15:15.600 just geofence US customers and move offshore? And that's what's 0:15:15.600 --> 0:15:17.600 going to happen. And if you ask why it matters, 0:15:17.640 --> 0:15:21.000 it's because the D dollarization theme is something that's real. 0:15:21.760 --> 0:15:25.200 You know multiple what is that theme? The D dollarization theme? 0:15:25.360 --> 0:15:26.760 Because I'm just going to speak for our audience. 0:15:26.880 --> 0:15:30.120 It was on the View last week, Yeah, you know. 0:15:31.360 --> 0:15:33.120 The View with like Woope Goldberg. 0:15:33.360 --> 0:15:36.840 Yes, oh they're talking about it and then everyone's talking 0:15:36.840 --> 0:15:39.720 about it. So what I mean is that the tokenization 0:15:39.920 --> 0:15:42.880 story that you're talking about or or do you mean 0:15:43.480 --> 0:15:45.240 a move away from FIAT or just a move away 0:15:45.240 --> 0:15:47.440 from the green back a. 0:15:47.400 --> 0:15:50.200 Move away from the green back right. So many of 0:15:50.360 --> 0:15:54.600 US trading partners partners are objecting to our debt and 0:15:54.680 --> 0:15:58.640 definite deficit position, and are objecting to our use of 0:15:58.680 --> 0:16:04.520 funds in Russia on US social programs whatever it may be. Well, 0:16:04.880 --> 0:16:09.520 I mean Saudi Arabia, Iran, China, Russia, China each did 0:16:09.560 --> 0:16:13.359 you know that even Japan is buying energy from Russia above. 0:16:13.400 --> 0:16:14.880 The US set price cap? 0:16:15.160 --> 0:16:17.720 Because have you ever been to Tokyo in August? It's 0:16:17.800 --> 0:16:20.040 kind of hard to live without affordable air conditioning. So 0:16:20.080 --> 0:16:22.960 the realities that you can't print energy, you can only 0:16:23.000 --> 0:16:26.920 print FIAT. That is coming into stark understanding by our 0:16:26.960 --> 0:16:30.640 trading partners who are selling treasuries and looking for neutral 0:16:30.800 --> 0:16:34.360 third party assets. We saw today in the Ft Central 0:16:34.360 --> 0:16:36.560 Bank gold purchases were up one hundred and fifty percent 0:16:36.640 --> 0:16:39.960 last year to a record, So gold has played that 0:16:40.080 --> 0:16:43.480 role for millennia, right, and we think bitcoin has a 0:16:43.560 --> 0:16:44.880 role to play there as well. 0:16:45.360 --> 0:16:48.200 So bitcoin moved up to over thirty thousand, has dropped 0:16:48.200 --> 0:16:50.680 a little bit. I'm guessing people taking profit here, But 0:16:54.120 --> 0:16:56.520 how come this asset? I mean, I guess you've already 0:16:56.520 --> 0:16:57.960 answered that question. I was going to say, why do 0:16:58.000 --> 0:17:00.680 people have faith even after the collapse of FTX and 0:17:00.720 --> 0:17:04.719 now binance is under scrutiny. But you know it's going 0:17:04.760 --> 0:17:07.600 to be difficult to deal if you can't trade it, right, 0:17:08.920 --> 0:17:11.760 Where are Americans going to go to buy and sell bitcoin? 0:17:13.520 --> 0:17:16.600 Well, there still are a handful of exchanges operating in the. 0:17:16.640 --> 0:17:21.200 US, Armstrong even coinbase may consider moving out of the US. 0:17:21.359 --> 0:17:23.720 That's right. So just an increasing amount of this activity 0:17:23.760 --> 0:17:27.920 will take place overseas. It will take place in decentralized finance, 0:17:28.200 --> 0:17:31.439 peer to peer, and you know the US government's going 0:17:31.480 --> 0:17:33.440 to have to come to terms with that in some way. 0:17:34.000 --> 0:17:35.639 That's fascinating stuff. We're going to get you back in 0:17:35.680 --> 0:17:36.120 here again. 0:17:36.160 --> 0:17:39.040 You're no idea what's going I bought my first bitcoin 0:17:39.320 --> 0:17:44.080 at let's see you down on fourteenth Street in Alphabet City, 0:17:44.160 --> 0:17:47.320 Webster Hall at Webster Hall in the bar for six 0:17:47.400 --> 0:17:50.920 hundred dollars. But that's perod that was twenty twelve. That's 0:17:50.920 --> 0:17:52.160 peer to peer, all right, Matt. 0:17:51.960 --> 0:17:54.080 Thanks so much for joining us here. Matt Siegel, he's 0:17:54.080 --> 0:17:56.760 had of digital assets research at ven K. 0:17:57.280 --> 0:18:00.400 You're listening to the take Cat's Are Live program Blomberg 0:18:00.480 --> 0:18:04.080 Markets weekdays at ten Am Eastern on Bloomberg Radio, the 0:18:04.119 --> 0:18:07.359 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:18:07.400 --> 0:18:10.240 You can also listen live on Amazon Alexa from our 0:18:10.240 --> 0:18:15.199 flagship New York station, Just say Alexa play Bloomberg eleven thirty. 0:18:16.080 --> 0:18:17.800 Our next guest. We got to get to this guy, 0:18:18.400 --> 0:18:21.359 Ed Price. He's a principled ergo non residents and your 0:18:21.359 --> 0:18:24.119 fellow at NYU. We usual, we used to think of 0:18:24.160 --> 0:18:26.400 as a reasonable guy, I mean, and we talked about 0:18:26.480 --> 0:18:29.720 markets and stuff like that. Then I started seeing on 0:18:29.800 --> 0:18:33.440 social media the dude was in Ukraine. I mean, ed, 0:18:34.400 --> 0:18:37.480 there's a war there, my friend. You turn around. You 0:18:37.560 --> 0:18:38.800 avoid those types of places. 0:18:38.880 --> 0:18:38.960 Go. 0:18:39.040 --> 0:18:40.320 What were you doing in Ukraine? 0:18:40.560 --> 0:18:43.360 Tourism? Pool tourism, tourism, of course, yes, so just looking 0:18:43.440 --> 0:18:47.119 around Kieve, spending some money. No, in all seriousness, it 0:18:47.240 --> 0:18:48.840 was it was a personal trip. It was something that 0:18:48.880 --> 0:18:51.080 I thought I had to do. Having out Yeah, I mean, look, 0:18:51.080 --> 0:18:53.199 I've been on your show talking about Ukraine and it 0:18:53.240 --> 0:18:55.199 seems a little bit like hotter unless I actually go 0:18:55.280 --> 0:18:57.960 and see it for myself. So I met the Finance 0:18:58.000 --> 0:19:01.960 Minister Sahe Machenko, I met other officials, I met some 0:19:02.040 --> 0:19:04.520 others among the good guys, contingents. 0:19:04.760 --> 0:19:07.439 So what are your takeaways because we haven't spoken to 0:19:07.600 --> 0:19:10.000 anybody who's been in the country. 0:19:10.200 --> 0:19:13.159 Right, So there's two things going on. One you come out, 0:19:13.200 --> 0:19:15.199 it's obviously a war zone, right. You appear in this 0:19:15.280 --> 0:19:18.200 kind of Soviet era train station. There are soldiers saying 0:19:18.200 --> 0:19:21.520