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

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

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

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

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

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Speaker 1: at Bloomberg dot com Slash podcast. Looking at Credit Swiss

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Speaker 1: trading in Switzerland three point six four five Swiss francs.

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Speaker 1: That is unbelievable, um for one of the leading financial

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Speaker 1: services companies in Europe, one of the two stellar investment

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Speaker 1: banks wealth managers in the country of Switzerland. I need

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Speaker 1: to figure out what's going on because I saw this

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Speaker 1: headline on the Bloomberg terminal. Credit Swiss saw eighty eight

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Speaker 1: billion dollars outflows as confidence slumps, and I remember from

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Speaker 1: the Great Financial Crisis. When you see headlines like that,

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Speaker 1: whether it's Bear Sterns or Lemon, that's when it gets

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Speaker 1: really ugly. Alison Williams, she's a senior Global Banks and

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Speaker 1: Asset Managers analyst at Bloomberg Intelligence. Alison, how bad are

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Speaker 1: things at Credit Suite? I mean, those outflow numbers were stunning.

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Speaker 1: This morning, and to put it in perspective, the outflows UM,

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Speaker 1: you know, just in these several weeks are more than

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Speaker 1: the inflows of and combined. And I mean that I

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Speaker 1: guess the good news is that they said that things

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Speaker 1: have stemmed but not reversed. And so they had said

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Speaker 1: in October that they saw UM outflows in the first

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Speaker 1: couple of weeks. UM. They pointed to social media and

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Speaker 1: a lot of the reports at the time that UM,

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Speaker 1: you know, I think this is similar to what we've

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Speaker 1: seen in the past, where headlines can kind of UM

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Speaker 1: drive actual risk to UM the fundamentals of a business,

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Speaker 1: and they had pointed to that UM. But I think

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Speaker 1: certainly no one expected UM the severity that we saw.

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Speaker 1: So let me just take this down to the very

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Speaker 1: basic level. For those of our listeners who aren't well

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Speaker 1: versed in Credit Sweets. You and Paul obviously know the

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Speaker 1: bank inside now, but UM Switzerland has two big banks,

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Speaker 1: Ubs and Credit Sweets, and they're big businesses are wealth management.

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Speaker 1: They take care of money for high net worth individuals,

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Speaker 1: stemming all the way back to the days when you

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Speaker 1: had numbered accounts and everything was super secret and your

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Speaker 1: money was safe there right, So the concern is those

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Speaker 1: rich people, international wealth, they're pulling their money out of

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Speaker 1: credit sweez because they have existential concerns. Is that right? Um,

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Speaker 1: you know it is right. I mean again, when the

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Speaker 1: headlines were coming across UM, you know talking about the

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Speaker 1: headlines really focused on the bank's need for capital. Obviously

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Speaker 1: that that's something that concerns investors. Um, they've had so

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Speaker 1: many prices, they've had huge losses tied to Artagos and

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Speaker 1: um other sort of big giant hedge fund scams and

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Speaker 1: bad risk management, and now they need to raise four billion, correct,

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Speaker 1: And so you know, the good news is that they

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Speaker 1: are on that path. So they are trying to study

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Speaker 1: the downside, if you will, in terms of shoring up

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Speaker 1: the capitol. The bad news is they announced a one

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Speaker 1: point five billion pre tax loss for the quarter. I

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Speaker 1: think consensus was about seven hundred and thirty million francs.

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Speaker 1: So that is a setback in terms of some of

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Speaker 1: the capitals that they're raising. It's unclear what types of

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Speaker 1: charges might be included there. But um, you know, the

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Speaker 1: concerning thing at this point is just as I said,

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Speaker 1: the fact that we're seeing outflows or they're seeing outflows

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Speaker 1: in their core business. So the wealth and asset measurement

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Speaker 1: businesses as part of the new strategy or businesses, they're

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Speaker 1: focusing on their restructuring the investment bank, but they're going

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Speaker 1: to see a loss in both the wealthy unit and

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Speaker 1: the investment banking unit in the quarter um, and so

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Speaker 1: the key for them is really going to be two

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Speaker 1: you know, reverse course with the with these flows, I

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Speaker 1: think that's not only is it a bad quarter, but

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Speaker 1: the flows are sort of an indication of business health,

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Speaker 1: and so that sort of is cast out on the

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Speaker 1: overall strategy going forward. Clients pulled eight billion dollars. They

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Speaker 1: need four billion dollars in capital. Clients pulled eighty eight

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Speaker 1: billion dollars out in a few weeks. Crazy numbers, Alison.

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Speaker 1: I think what I learned one of the things I

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Speaker 1: learned during the Great Financial Crisis is when other firms

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Speaker 1: won't trade with me, that's when I really got a problem.

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Speaker 1: Is credit swiss at that point? Yet, Well, the I

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Speaker 1: guess the the important news is that they've really moved

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Speaker 1: away from a lot of those businesses. So prime brokerage

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Speaker 1: is the most um prone to those concerns. Right, So, um,

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Speaker 1: if your hedge fund clients start pulling balances from you

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Speaker 1: and won't trade with you. UM. Things can very quickly unravel.

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Speaker 1: But they exited that business after the Arctic goes UM hit.

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Speaker 1: They announced that they were exiting it, so that that business,

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Speaker 1: you know, nine percent of revenues had already kind of

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Speaker 1: gone away. And then the securitized products trading business UM,

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Speaker 1: which is another big business for them, is a business

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Speaker 1: that they're UM selling to Apollo. UM. The interesting wrinkle

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Speaker 1: there is that it was originally supposed to be Apolo

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Speaker 1: and Pink Pimco UM, but it seems like we haven't

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Speaker 1: gotten any financial details yet there. But it's really Apollo

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Speaker 1: that's going to be taking over that business, and so

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Speaker 1: that the trading effort that they're retaining is really slimmed

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Speaker 1: down at this point. And Allison thirty seconds, is there

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Speaker 1: any chance the government steps in here one way or

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Speaker 1: the other, either supports the bank or allows a merger

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Speaker 1: with the U b S. I don't think they need

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Speaker 1: to at this point. UM. You know that that's always

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Speaker 1: something that's a consideration. I don't think that they would

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Speaker 1: force a merger with you guys, and I'm not sure

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Speaker 1: if that necessarily solves anything, UM, But again we do

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Speaker 1: see we do need to see things right it but

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Speaker 1: the capital raise and all the business changes that we

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Speaker 1: just talked about I think are gonna help limit the

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Speaker 1: downside there, all right, good stuff as always, Matt. You know,

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Speaker 1: Allison is on a vacation day today, a t day,

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Speaker 1: Yet she still makes time to talk to us, so

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Speaker 1: we appreciate that. Alison Williams, Senior banks annalyst for Bloomberg Intelligence.

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Speaker 1: She's old school, she works big time, folks. She's been

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Speaker 1: coming to banks for decades, first of Morgan Stanley Investment Management,

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Speaker 1: where she was the shareholders some of the major banks

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Speaker 1: around the world, and now as Bloomberg Intelligence senior banks

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Speaker 1: analysts based in our Princeton, New Jersey office. Good stuff

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Speaker 1: to check in with, Allison. This is Bloomberg looking at

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Speaker 1: the Bloomberg Dollar Index itself about five point five percent

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Speaker 1: from its recent high, one of the drivers fueling you know,

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Speaker 1: a little bit more than a ten percent pop here

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Speaker 1: in the SMP five index. I want to get a

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Speaker 1: sense of kind of what's going on out there in

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Speaker 1: the markets on a day to day basis. We do

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Speaker 1: that with Vince Signarella, global macro Strategist for Bloomberg news, Vince,

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Speaker 1: have you seen peak US dollar at least maybe I

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Speaker 1: don't know for the short term. Yeah, I think so.

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Speaker 1: That it made the point about the high er smp

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Speaker 1: uh five d they've been in a reverse correlation, an

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Speaker 1: inverse correlation since it was from March at west in August. Uh,

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Speaker 1: it's holding for now and with a bid and risk,

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Speaker 1: I would expect the dollar to continue to suffer. Talk

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Speaker 1: to me about the Bloomberg Dollar Index itself, Well, what's

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Speaker 1: the differentiation here between that index and the d x Y,

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Speaker 1: which used to be kind of the traditional Street benchmark. Yeah, well,

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Speaker 1: you're actually talking to probably the expert on the subject.

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Speaker 1: The Bloomberg Dollar Index was derived from the Wall Street

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Speaker 1: Journal Dollar Index, of which I am the co inventor.

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Speaker 1: Very cool. The difference is, uh, it includes many, many

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Speaker 1: more currencies than the Ice Dollar Index. The Ice Dollar

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Speaker 1: index was recently revamped. It was initially based on just

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Speaker 1: four currencies from basically trade data in ninety two. Uh.

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Speaker 1: The dollar doesn't move so much on trade data anymore.

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Speaker 1: It moves on financial flows, US, fixed income flows, etcetera.

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Speaker 1: You know it does. Trade does affect the dollar, no doubt,

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Speaker 1: but the financial flows are a much much bigger effect,

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Speaker 1: and that's what the Bloomberg Dollar Index is taken into account,

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Speaker 1: including more currencies, so it's a much broader level for

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Speaker 1: the dollar. The Ice Dollar Index, I think, uh, these days,

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Speaker 1: fifty eight percent of it is composed of the Euro,

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Speaker 1: so it's it's almost really a euro index than it

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Speaker 1: is a straight dollar index. But it is widely traded,

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Speaker 1: so it does get a lot of press. But but

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Speaker 1: the thing is it's often quoted, right. I'll hear Tom

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Speaker 1: throw around d x y instead of b B d

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Speaker 1: x y, and then I think, yeah, that is how

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Speaker 1: not as useful? You know, Yeah, I think that's just

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Speaker 1: the old habit because it's been around for fifty years. Um,

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Speaker 1: you know in the Bluemer Dollar Index is you know,

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Speaker 1: a handful of years. I mean they've they've retro retrot

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Speaker 1: it to capture the past, but it's realistically only been

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Speaker 1: around I think since two tho fourteen, off top of

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Speaker 1: my head something like that. So, um, the Ice Dollar

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Speaker 1: Index obviously traded heavily on the ice um, the ice platform. Um,

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Speaker 1: It's it's just old school, hard, old habits hard to break. So,

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Speaker 1: you know, Vince, I've heard increasingly I guess maybe since

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Speaker 1: the Great Financial Crisis, a lack of liquidity in quote

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Speaker 1: unquote the market, whether it's fixed income, especially on treasuries,

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Speaker 1: that's the thing that but I don't hear about it

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Speaker 1: in currencies. Talk to us about how liquidity has evolved

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Speaker 1: across you know, certain asset classes over the last dozen years.

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Speaker 1: So if I if I showed you there was a

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Speaker 1: little red book that used to go around every year,

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Speaker 1: and it was done by a bank that no longer exists,

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Speaker 1: And what it did was it captured all the banks

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Speaker 1: that traded far in exchange all across the world, and

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Speaker 1: it was roughly an inch thick. And and so liquidity

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Speaker 1: was very backtick in the eighties and nineties because you

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Speaker 1: had all these banks around. Now liquidity is pretty much

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Speaker 1: provided by give or take ten major players. But the

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Speaker 1: volumes have risen considerably. And that's because we've learned electronic

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Speaker 1: as opposed to pupil trading over a telephone. So the

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Speaker 1: market's grown to like five point three triling and uh,

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Speaker 1: it's liquidity is provided pretty much by by ten players,

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Speaker 1: and and they're they're making markets all the time except

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Speaker 1: for when the market moves abruptly. So no it's that's

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Speaker 1: that's totally true. So like if you if I were

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Speaker 1: making a price to you know, X y Z corporation

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Speaker 1: back in the day, uh, and they dealt on that

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Speaker 1: price whether the market moved and was my tough luck.

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Speaker 1: Now as soon as the electronic markets trip, and whether

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Speaker 1: it's algo driven or a big order driven, whatever the

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Speaker 1: case may be, if that price changes, the electronic platform

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Speaker 1: disqualifies or decus the trade. So the corporation or the

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Speaker 1: bank that's trying to deal on that price doesn't get

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Speaker 1: that price. They get the next one, and it could

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Speaker 1: be kind of far away if if somebody's doing enough size.

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Speaker 1: So you know, in a way, the market mayors, the

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Speaker 1: market makers, or I should say that the takers of

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Speaker 1: the market, the corps of financial companies, etcetera. In in

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Speaker 1: chasing the banks to do tighter and tighter and tighter

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Speaker 1: spreads actually hurt themselves because now the liquidity shortages work

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Speaker 1: against them when they're there, because the market moves abruptly

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Speaker 1: and they don't get the price they think they're going

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Speaker 1: to get. And this is how we get things like

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Speaker 1: remember when oil traded negative, Yes, just no liquid to

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Speaker 1: be there at least was paid to take a barrel

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Speaker 1: of oil. Still got it? You get those that's where

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Speaker 1: you get those called fat finger trades. If you will

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Speaker 1: good stuff. I'm sure I would have been, you know,

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Speaker 1: a victim of that at some point. Vincignarella, global macro

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Speaker 1: strategist for Bloomberg News, joining us here giving us a

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Speaker 1: sense of what's happening out there in the markets. And again,

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Speaker 1: the the Bloomberg Dollar Index b b d x Y

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Speaker 1: on your Bloomberg terminal, it's all about five and a

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Speaker 1: half percent from it's just recent high a uh several

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Speaker 1: weeks ago. It's off about a half a percent today,

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Speaker 1: so a little bit of a pullback in the dollar.

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Speaker 1: One of the proving to be one of the drivers

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Speaker 1: here is VINCEU was just mentioning of uh stocks actually

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Speaker 1: out there, so uh interesting to see that correlation coming up.

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Speaker 1: I'm gonna call that w T a coud oil. It's

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Speaker 1: all four point seven percent here, seventy seven dollars from

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Speaker 1: w T a coudrail. That gets my tention. We are

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Speaker 1: sitting in the studio here, me and Paul with our

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Speaker 1: friend Katie Greifeld. She is a cross asset reporter, so

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Speaker 1: she's across everything from single stocks to E T F

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Speaker 1: s too, Crypto, uh and cats. She covers cat for

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Speaker 1: us as well, but the cats, well, cats and coins

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Speaker 1: is the name of her newsletter. Oh would you like

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Speaker 1: to join Love Too? You don't subscribe, I don't know

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Speaker 1: everything actually a pretty exclusive list. If you would like

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Speaker 1: to be on, you have to tell me your work

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Speaker 1: email and I will add you. Okay. Uh, by the way,

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Speaker 1: you say that a lot. Do you not send it

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Speaker 1: to personal emails? I used to send it. I got

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Speaker 1: a lot of gmails, and then the gmails on the

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Speaker 1: list got a little weird. Oh you know, you have

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Speaker 1: to send me your work email so I can keep

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Speaker 1: you accountable. Okay, let's talk about the latest in the

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Speaker 1: ft X saga. Um, just when you think you can't

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Speaker 1: get any more news, Sam Bankman Freed goes and writes

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Speaker 1: a letter to employees. Yeah, he certainly he lost it.

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Speaker 1: You know it's interesting. It's I feel like this would

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Speaker 1: be shocking in any other case. But you know, he

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Speaker 1: was tweeting so furiously for so long, furiously just describing

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Speaker 1: the pace. It's probably not too surprising to see him

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Speaker 1: formalize his thoughts in a letter. I don't think it

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Speaker 1: was received that well, necessarily, I don't know. I can't

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Speaker 1: believe it was. Now he points out that they had,

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Speaker 1: and you gotta take whatever he says with a grain

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Speaker 1: of salt, right because he still maintains that they have

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Speaker 1: nine billion dollars in assets. Yeah, it is, they had

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Speaker 1: sixty he did. Yeah, it's interesting to see. I don't

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Speaker 1: know what reality he's operating in versus um what reality

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Speaker 1: is coming to light in court. We did have first

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Speaker 1: emotions yesterday, and again the f t X lawyers have

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Speaker 1: made very very clear at this point SPF does not

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Speaker 1: speak for f t X or for Alimato and is

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Speaker 1: not involved in these processes. Do we have the authorities?

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Speaker 1: I don't know which authority would be the FBI, for example,

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Speaker 1: as anybody sat down with this guy, brought him into

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Speaker 1: the office in New York, in Washington, d C, in Miami,

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Speaker 1: wherever I know he's I guess he's in the Bahamas,

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Speaker 1: is what I hear, and said, what's going on here?

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Speaker 1: I believe they would like to I think us uh,

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Speaker 1: the d O J would like to meet with him

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Speaker 1: in New York. I remember reading that story last week.

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Speaker 1: We know that Congress would like to as well. In

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Speaker 1: the Bahamas. It's not like he's on the other side

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Speaker 1: of the here. It's not too bad of a trip.

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Speaker 1: It's not that far in terms of you know what.

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Speaker 1: His parents need to go get him. I mean, we

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Speaker 1: can sit here and talk about the fallout from the bankruptcy.

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Speaker 1: It's massive. A lot of counterparties had serious exposure. What's

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Speaker 1: happened to Genesis, what's happened to Gemini Um, the customers

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Speaker 1: who got the short shrift? I feel horrible for them,

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Speaker 1: But the bottom line is his parents need to go

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Speaker 1: get him. That's a child. You know. My youngest brother

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Speaker 1: is either thirty six or thirty seven, I can't remember,

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Speaker 1: but he's still a little kid. Like if something like

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Speaker 1: this happened to him, I would go and physically get

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Speaker 1: him and bring him home. He is he's thirty right, Yeah,

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Speaker 1: that's he's only I don't understand the Yeah, I don't

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Speaker 1: understand the legal side of it. The was their fraud,

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Speaker 1: I don't know it sure, just from reading looks like

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Speaker 1: there may have been. So why is you know, you

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Speaker 1: go get Bernie made off on the you know, sixty

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Speaker 1: seven street wherever they grabbed them. They got him pretty quick.

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Speaker 1: It was only a matter of days. But but you know,

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Speaker 1: I look at bitcoin, it's up one today, six d

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Speaker 1: bucks of coin. It's kind of holding in there. It's

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Speaker 1: down from the twenty level, but it seems like the

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Speaker 1: market investors haven't bailed on all things cryptofi look at

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Speaker 1: bitcoin is a proxy? Yeah, no, I think this is

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Speaker 1: one of the interesting subtext that's going on. I know

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Speaker 1: we've discussed this on this radio talking about how is

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Speaker 1: bitcoin still resilient right now? And actually Cathy Wood of

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Speaker 1: our investment management was on Bloomberg Radio on TV yesterday

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Speaker 1: and she addressed that that the Bitcoin blockchain, the Ethereum blockchain,

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Speaker 1: they've been running very smoothly. So this isn't necessarily a

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Speaker 1: Bitcoin problem. This is all of these centralized sort of

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Speaker 1: monstrosity conglomer it's sort of compresents. This is the point

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Speaker 1: I make constantly. And the thing is, it doesn't matter

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Speaker 1: your take on Bitcoin. You could you can believe it's

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Speaker 1: a Ponzi scheme, you can say it's worthless. I can

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Speaker 1: understand the arguments on both sides um, But at the

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Speaker 1: end of the day, this isn't about how Bitcoin performs.

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Speaker 1: This isn't about how Ethereum performs. This isn't about how

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Speaker 1: doge coin performs. This is about how an exchange, a

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Speaker 1: centralized exchange, duped so many people into thinking that it

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Speaker 1: was running an orderly business exactly. It's more about the

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Speaker 1: systems that have spawned around Bitcoin. But Bitcoin itself, I mean,

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Speaker 1: it's just a ledger, it's just basically a data center, uh,

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Speaker 1: and it hasn't had any issues, whereas you think of

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Speaker 1: some of the other blockchains I mean unrelated to uh

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Speaker 1: this entire blow up over over the past three weeks,

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Speaker 1: but the Salanta blockchain, for example, that had to be

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Speaker 1: shut on and off many times during the summer. Different

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Speaker 1: blockchains have run into different problems at certain points. But

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Speaker 1: Bitcoin ethereum no such issues. So you look at the

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Speaker 1: price of bitcoin, and there are still a lot of

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Speaker 1: whales out there. For example, I really think the marginal

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Speaker 1: seller at this point is gone. If you're looking at

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Speaker 1: this news and you're sitting on bitcoin still, you're probably

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Speaker 1: a true believer. You're probably you've forgotten your quote or

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Speaker 1: you bought it seven dollars or a hundred dollars, you know,

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Speaker 1: so you're not going to sell all right. C Z

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Speaker 1: c Z is this guy and I don't know his name,

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Speaker 1: but I'm just going to use his his initial. That's

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Speaker 1: the cool thing to do. That's a cool thing to do.

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Speaker 1: Is he just is there any reason to believe that

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Speaker 1: Bloomberg employee is that serious? You did not know that?

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Speaker 1: So is there any reason to believe that he's more

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Speaker 1: legitimate less legitimate of the versus SPF or his business

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Speaker 1: hasn't blown up? That's right, and so doesn't have customers

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Speaker 1: who just lost millions of dollars? So is he the

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Speaker 1: kind of lender of last resort? Is he a savior?

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Speaker 1: For think he in a certain way has enjoyed portraying that.

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Speaker 1: And it's interesting there was a Bloomberg News exclusive that

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Speaker 1: Genesis and trying to raise one billion dollars in fresh capital.

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Speaker 1: There had been talks with Binance that funding failed to materialize.

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Speaker 1: I don't think we can call him the lender of

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Speaker 1: last resort because you look at what happened. You've never

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Speaker 1: been that right exactly. And I don't think there are

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Speaker 1: any saviors left at this point, at least not in

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Speaker 1: the crypto world. Well is I don't see for example,

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Speaker 1: JP Morgan stepping in, City Bank stepping in saying we're

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Speaker 1: gonna backstop. This market provides some liquidity. I just don't

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Speaker 1: see any of that, and that to me, maybe it's

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Speaker 1: just I'm just too old school. That's a little bit

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Speaker 1: of a war. But the market doesn't need backstop. That's

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Speaker 1: the thing. The market does not It was necessary. Yeah, okay, okay.

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Speaker 1: They just took everybody's money, put it all on black

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Speaker 1: one and lost and lost is what it looks like.

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Speaker 1: I mean, I haven't done any forensic accounting here, but

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Speaker 1: it seems like forensic accounting will be very difficult. But

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Speaker 1: at this point in terms of the companies, when you

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Speaker 1: think about who Genesis is probably trying to raise money from,

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Speaker 1: at this point, it's probably traditional finance players. It's interesting

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Speaker 1: that no one has stepped up. But then you think

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Speaker 1: about Sequoia having to basically come out and say, I'm sorry,

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Speaker 1: we did a bad job of due diligence here. That's

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Speaker 1: probably I don't know, spooking a lot of Maybe some

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Speaker 1: of these would be saviors. Otherwise. Matt Levin's Money, Money Stuff,

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Speaker 1: Money Stuff Yesterday, which is that must read every day

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Speaker 1: I have my alert set up. He basically says, you know,

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Speaker 1: the instry doesn't need more bitcoin, I e. C Z

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Speaker 1: stepping in. He needs dollars like the stuff that I haven't,

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Speaker 1: you know, you know, the people actually can spend and

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Speaker 1: that's what it really needs. And so we'll see how

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Speaker 1: that plays that. Katie Greifeld, Cross asset reporter joining US

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Speaker 1: Live Broker Studio. We appreciate that. Gold Stark. Let's bring

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Speaker 1: in Matt Siegel now, he's ahead of digital asset research

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Speaker 1: at Van Neck. He's been on the street for a

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Speaker 1: slid fifteen years. Before that, he was a producer here

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Speaker 1: at Bloomberg and he also worked for The Money Honey

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Speaker 1: or he worked for him. Yeah, back whever at seeing BC. Um,

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Speaker 1: but it's great to have you back in the office

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Speaker 1: and especially to focus on the crypto story. Um. You

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Speaker 1: have been in the space for a long time, the

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Speaker 1: kind of I don't know what does Cathy would call it,

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Speaker 1: that you've been on the cutting edge right of the

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Speaker 1: sort of uh future investments. What do you think about

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Speaker 1: where we are now in crypto? I mean, is there

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Speaker 1: a future or is f t X kind of the

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Speaker 1: big bang that's going to end at all. We're gonna

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Speaker 1: deep deep crypto winter and that's going to be the

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Speaker 1: time when the news flow is most negative and it's

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Speaker 1: easiest to become a hater in the space. So we're

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Speaker 1: dealing with kind of three concurrent major stories here. The

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Speaker 1: first is, you know, the apparent fraud and siphoning of

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Speaker 1: funds by SPF and his family, and you know, recovery

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Speaker 1: of that may impact the recovery in the bankruptcy courts.

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Speaker 1: And since there's so many counterparties tied into this, whether

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Speaker 1: it's Block five, Voyager, etcetera, UH, that has implications for

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Speaker 1: the recoveries going forward. It is whether or not he

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Speaker 1: has charged and his personal assets or on recoveries. I

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Speaker 1: have a lot of listeners writing in with the same

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Speaker 1: question over the last few days and really the last

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Speaker 1: couple of weeks, um how likely our customers to get

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Speaker 1: anything back to recover assets The recovery process in this

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Speaker 1: in these cases UH like Mount Cox can stretch into six, seven,

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Speaker 1: eight years, It would could be longer than that with

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Speaker 1: a case of this complexity we are getting. We have

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Speaker 1: visibility of FTX customer and bankruptcy claims that are trading

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Speaker 1: you know, at three to eight cents on the dollar,

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Speaker 1: So you know, if you're buying them today, if you're

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Speaker 1: buying them today, that's the type of recovery that that's

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Speaker 1: a Matt Miller haircut right there, three cents on the dollar.

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Speaker 1: But Mount Cox, what was the final outcome of that?

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Speaker 1: I mean that's been now a decade, right, Yeah, I

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Speaker 1: can't remember exactly what the what the claims that were

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Speaker 1: propels Magic the gathering online exchange was stood for. I

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Speaker 1: think they recovered a significant amount. And you know in

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Speaker 1: the made off case there were real recoveries here there,

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Speaker 1: but uh, from what we know so far, from what

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Speaker 1: we read, uh, and here from John Ray, like there

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Speaker 1: weren't even records kept at f t X. It's going

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Speaker 1: to be difficult. Yeah, there's multiple loans made between counterparties

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Speaker 1: owned by the same guy that were not disclosed to

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Speaker 1: institutional investors when private shares were sold in the market

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Speaker 1: on us soil last year, breaking the terms of service

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Speaker 1: that were pretty clearly written on their website. Hard to

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Speaker 1: see it any other way that that he is personally

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Speaker 1: liable for the chunk of it looks bad for Sam

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Speaker 1: Bankman Freed at least from this perspective, which I guess

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Speaker 1: is why you're still in the Bahamas. Does this is

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Speaker 1: this critical moment for the industry in terms of perhaps

426
00:24:03,040 --> 00:24:07,720
Speaker 1: regulation and should this industry be regulated? If so, is

427
00:24:07,760 --> 00:24:11,280
Speaker 1: there a consensus who should do it? Well, let's let's

428
00:24:11,280 --> 00:24:13,239
Speaker 1: just take a step back and like talk about the

429
00:24:13,280 --> 00:24:16,719
Speaker 1: two other big stories that are going on besides the

430
00:24:16,720 --> 00:24:20,400
Speaker 1: ft X bankruptcy specifically, and both of them are connected

431
00:24:20,400 --> 00:24:23,080
Speaker 1: to regulation. You know. The second is that there's a

432
00:24:23,080 --> 00:24:27,719
Speaker 1: hacker who stole funds off the ft X exchange is

433
00:24:28,040 --> 00:24:31,000
Speaker 1: still currently holding about two fifty million dollars worth of

434
00:24:31,040 --> 00:24:35,040
Speaker 1: bitcoin and ethereum that he or she has laundered through

435
00:24:35,160 --> 00:24:40,560
Speaker 1: a mix of second tier exchanges and and blenders. And

436
00:24:40,840 --> 00:24:43,119
Speaker 1: you know what my question is, are we sure now

437
00:24:43,160 --> 00:24:46,120
Speaker 1: that that was a hack? And I know that Um

438
00:24:46,160 --> 00:24:49,520
Speaker 1: in his kind of off the record Twitter d m

439
00:24:50,160 --> 00:24:52,960
Speaker 1: uh interview with The Box Sam bankman Free did say

440
00:24:53,000 --> 00:24:56,720
Speaker 1: it was a hack. But some people have speculated that um,

441
00:24:56,760 --> 00:25:01,080
Speaker 1: the Bahamian authorities may have instructed f t X employees

442
00:25:01,080 --> 00:25:05,400
Speaker 1: to move assets. That's a separate sum where the Bahamian

443
00:25:05,400 --> 00:25:09,080
Speaker 1: authorities have now it seems capitulated and will let the

444
00:25:09,119 --> 00:25:12,200
Speaker 1: bankruptcy take place in New York and so we should

445
00:25:12,240 --> 00:25:14,200
Speaker 1: get visibility into those funds. But there's this other three

446
00:25:14,240 --> 00:25:17,200
Speaker 1: hundred million dollars in bitcoin and eath that's been laundered.

447
00:25:17,240 --> 00:25:20,359
Speaker 1: It it looks like the way that the Lazarus Group,

448
00:25:20,359 --> 00:25:22,480
Speaker 1: which is connected to North Korea, has laundered funds in

449
00:25:22,480 --> 00:25:26,399
Speaker 1: the past, at least according to US authorities. But tracing

450
00:25:26,520 --> 00:25:29,400
Speaker 1: and potentially getting hands on those funds could also impact

451
00:25:29,720 --> 00:25:32,680
Speaker 1: the recovery in bankruptcy in a material way. But you

452
00:25:32,720 --> 00:25:35,600
Speaker 1: can always see them, right. I talked to Um the

453
00:25:35,640 --> 00:25:38,880
Speaker 1: co one of the co founders of Chain Analysis yesterday,

454
00:25:38,960 --> 00:25:41,600
Speaker 1: and he said, we have our eye on those assets.

455
00:25:41,680 --> 00:25:44,240
Speaker 1: We're not gonna lose sight of them. It's not like

456
00:25:44,280 --> 00:25:46,840
Speaker 1: these blenders are sophisticated enough that they baffle us. It

457
00:25:47,000 --> 00:25:50,960
Speaker 1: just makes it more difficult. Yeah, and you've got conflicting

458
00:25:51,040 --> 00:25:53,320
Speaker 1: jurisdictions on the regulation side. So will it be the

459
00:25:53,359 --> 00:25:55,639
Speaker 1: same parties who are going after that funds as who

460
00:25:55,680 --> 00:25:59,439
Speaker 1: are investigating Sbfuh. You know, we don't know. And a

461
00:25:59,480 --> 00:26:01,479
Speaker 1: lot of the reason for that, as to your question,

462
00:26:02,119 --> 00:26:05,800
Speaker 1: is that the regulatory landscape is very fragmented. So you said,

463
00:26:05,800 --> 00:26:08,280
Speaker 1: there's two other issues, Um, one was the hack once

464
00:26:08,320 --> 00:26:12,879
Speaker 1: the hack, one is the fraud and the personal taking

465
00:26:12,880 --> 00:26:16,160
Speaker 1: of funds by SPF, and then the third is Genesis,

466
00:26:16,200 --> 00:26:19,480
Speaker 1: which is, you know, the largest institutional counterparty, the only

467
00:26:19,520 --> 00:26:23,439
Speaker 1: full service regulated crypto prime broker in the US. Uh.

468
00:26:23,560 --> 00:26:26,720
Speaker 1: And it's hard to do business as an institutional investor

469
00:26:26,760 --> 00:26:29,280
Speaker 1: and not touch Genesis in some way. They also have

470
00:26:29,440 --> 00:26:32,880
Speaker 1: connecting claims to block five. Um, so all of it

471
00:26:32,960 --> 00:26:38,880
Speaker 1: kind of yes, so a lot of bankruptcies here. Um,

472
00:26:38,920 --> 00:26:40,840
Speaker 1: if you want to do business in this country, I

473
00:26:40,880 --> 00:26:45,800
Speaker 1: guess in cryptom you have had to deal with one

474
00:26:45,800 --> 00:26:50,520
Speaker 1: of those counterparties, right, Yes. Uh, maybe Jamie Diamond was

475
00:26:50,600 --> 00:26:53,000
Speaker 1: right at least at this stage, which is like you've

476
00:26:53,040 --> 00:26:55,280
Speaker 1: thought he's right since the very I don't know. I mean,

477
00:26:55,320 --> 00:26:59,200
Speaker 1: Japen Morgan just filed for a bitcoin wallet two days ago,

478
00:26:59,280 --> 00:27:03,600
Speaker 1: a trademark. Yes, So maybe these people sometimes say one

479
00:27:03,680 --> 00:27:05,880
Speaker 1: thing one thing can do another And it's the sentiment

480
00:27:05,920 --> 00:27:08,920
Speaker 1: that you express which is most common at a market. Bottoms,

481
00:27:09,040 --> 00:27:13,160
Speaker 1: explain what you were telling us about El Salvador harnessing

482
00:27:13,200 --> 00:27:17,240
Speaker 1: the power of volcanoes. There's a headline on the Bloomberg

483
00:27:17,320 --> 00:27:22,080
Speaker 1: terminal this morning that El Salvador has tabled a new

484
00:27:22,240 --> 00:27:26,119
Speaker 1: securities law that would permit the government to transfer digital

485
00:27:26,119 --> 00:27:29,359
Speaker 1: assets to and FRO and would pave the way for them,

486
00:27:29,440 --> 00:27:35,520
Speaker 1: issuing a billion dollar bond on the bitcoin network would

487
00:27:35,520 --> 00:27:38,919
Speaker 1: be the first sovereign blockchain bond. But they would use

488
00:27:38,960 --> 00:27:43,880
Speaker 1: those proceeds to build essentially bitcoin minds what on top

489
00:27:43,960 --> 00:27:47,639
Speaker 1: of their volcanoes and use the geothermal energy as power.

490
00:27:48,720 --> 00:27:51,639
Speaker 1: There's a lot of carbon in the world that's stranded,

491
00:27:51,880 --> 00:27:54,800
Speaker 1: not because it's dirty or there's no use for it economically,

492
00:27:54,840 --> 00:27:57,960
Speaker 1: but because the nations or entities that control it don't

493
00:27:58,000 --> 00:28:01,760
Speaker 1: have the resources to build how voltage transmission lines with

494
00:28:01,800 --> 00:28:05,160
Speaker 1: all that copper and all that infrastructure. Uh so. El

495
00:28:05,200 --> 00:28:08,240
Speaker 1: Salvador is one such case where they're rich and natural resources.

496
00:28:08,280 --> 00:28:11,240
Speaker 1: It's a country full of volcanoes and geothermal energy, but

497
00:28:11,359 --> 00:28:14,800
Speaker 1: there's no transmission down into the city. So they have

498
00:28:14,960 --> 00:28:18,000
Speaker 1: built a bitcoin mine about one mega watts worth of

499
00:28:18,080 --> 00:28:20,120
Speaker 1: power at the top of the volcano as a test

500
00:28:20,160 --> 00:28:23,680
Speaker 1: case so that they can print their own money. Rather

501
00:28:23,720 --> 00:28:26,359
Speaker 1: than having the poorest country in the world's monetary policy

502
00:28:26,480 --> 00:28:28,560
Speaker 1: tied to the monetary policy of one of the richest

503
00:28:28,560 --> 00:28:31,440
Speaker 1: countries in the world, it never makes much sense. It's

504
00:28:31,440 --> 00:28:34,480
Speaker 1: a real loss of sovereignty. El Salvador went to a

505
00:28:34,520 --> 00:28:37,160
Speaker 1: dollar economy forty years ago when they had a civil

506
00:28:37,160 --> 00:28:41,200
Speaker 1: war that increases a lot of domestic tension. So this

507
00:28:41,560 --> 00:28:43,800
Speaker 1: bitcoin gambit for them, the first country in the world

508
00:28:43,840 --> 00:28:47,040
Speaker 1: to make bitcoin legal tender is a way of restoring

509
00:28:47,080 --> 00:28:51,440
Speaker 1: sovereignty and introducing some degree of negotiating leverage versus an

510
00:28:51,440 --> 00:28:55,360
Speaker 1: I m F who has become arguably rather heavy handed

511
00:28:55,360 --> 00:28:57,160
Speaker 1: in some of their demands. So they can make bitcoin

512
00:28:57,240 --> 00:29:00,680
Speaker 1: with all handos. I learned something new. I mean, this

513
00:29:00,680 --> 00:29:02,520
Speaker 1: guy met Sego, I don't know, and he was just

514
00:29:02,560 --> 00:29:04,680
Speaker 1: in El Salvador. How is it? How is it? Were

515
00:29:04,720 --> 00:29:09,960
Speaker 1: you spending bitcoin when you were there? Yes? Yeah, so

516
00:29:09,960 --> 00:29:12,440
Speaker 1: they use it. They use it. Yeah, they used for

517
00:29:12,480 --> 00:29:15,480
Speaker 1: a serving lesson in bitcoin, paid for serving lesson in

518
00:29:15,480 --> 00:29:18,320
Speaker 1: bitcoin in El Salvador. They used the Lightning network, which

519
00:29:18,360 --> 00:29:20,520
Speaker 1: is something I was Yeah, they used the Lightning network,

520
00:29:20,560 --> 00:29:24,000
Speaker 1: which makes it easier to uh, to handle in terms

521
00:29:24,000 --> 00:29:27,320
Speaker 1: of spending and receiving. But I think that's so cool.

522
00:29:27,360 --> 00:29:31,640
Speaker 1: You know, about two of El salvador remittances are sent

523
00:29:31,880 --> 00:29:35,240
Speaker 1: via the bitcoin network. That may sound like a low number,

524
00:29:35,280 --> 00:29:39,360
Speaker 1: but the country about twenty gdp is remittances, and the

525
00:29:39,360 --> 00:29:43,040
Speaker 1: World Bank has a report that the corridors that have

526
00:29:43,160 --> 00:29:46,840
Speaker 1: the highest fees for remittances are the poorest countries in

527
00:29:46,880 --> 00:29:49,800
Speaker 1: the world. So this is the reason why bitcoin can

528
00:29:49,840 --> 00:29:53,840
Speaker 1: still provide value because it seems so One other country,

529
00:29:53,960 --> 00:29:57,360
Speaker 1: Central African Republic, has also the bitcoin legal tender. Central

530
00:29:57,360 --> 00:30:00,560
Speaker 1: African Republic uses the last colonial currency and existence the

531
00:30:00,560 --> 00:30:04,160
Speaker 1: c f A franc where they are forced to deposit

532
00:30:04,840 --> 00:30:06,840
Speaker 1: of all their foreign exchange reserves at the Bank of France,

533
00:30:06,880 --> 00:30:09,520
Speaker 1: who has veto power over how they are spent and

534
00:30:09,560 --> 00:30:13,120
Speaker 1: who uses that to coerce the country into signing these

535
00:30:13,120 --> 00:30:15,920
Speaker 1: commercial agreements where France gets right at first refusal on

536
00:30:15,960 --> 00:30:19,120
Speaker 1: their natural resources. So if you look at like what

537
00:30:19,240 --> 00:30:22,440
Speaker 1: the new Prime Minister of Italy has been highlighting, it's

538
00:30:22,480 --> 00:30:27,160
Speaker 1: these types of colonial arrangements. Uh, you know, bitcoin cryptocurrencies,

539
00:30:27,160 --> 00:30:29,960
Speaker 1: they're a call option on a different financial future in

540
00:30:30,000 --> 00:30:34,320
Speaker 1: which these arrangements are broken and neutral energy based money

541
00:30:34,640 --> 00:30:38,240
Speaker 1: you know, grows. And that's kind of what Thomas Edison

542
00:30:38,240 --> 00:30:40,840
Speaker 1: and Henry Ford suggested a hundred years ago. You know

543
00:30:40,920 --> 00:30:44,240
Speaker 1: that it seems hard to imagine now, but that's why

544
00:30:44,240 --> 00:30:46,760
Speaker 1: the price of these assets are down in the last year.

545
00:30:46,880 --> 00:30:50,240
Speaker 1: I want to get back to um this the Genesis

546
00:30:50,360 --> 00:30:53,760
Speaker 1: Gemini story, which I think is fascinating. Really the Genesis

547
00:30:54,400 --> 00:30:59,320
Speaker 1: UM GBTC story. Uh, does Barry Silbert find money for

548
00:30:59,400 --> 00:31:04,120
Speaker 1: this whole? If you look at the last time Genesis

549
00:31:04,200 --> 00:31:07,160
Speaker 1: raised capital, it was exactly a year ago at the

550
00:31:07,200 --> 00:31:09,760
Speaker 1: peak of the market. Nice job. It was at an

551
00:31:09,760 --> 00:31:13,720
Speaker 1: equity value of ten billion dollars. Soft Bank lad that round.

552
00:31:14,120 --> 00:31:18,160
Speaker 1: Google's venture arm also participated. So soft Bank doesn't have

553
00:31:18,200 --> 00:31:20,240
Speaker 1: the money, right they need that they're owed five billion

554
00:31:20,280 --> 00:31:24,600
Speaker 1: by by Masyoshi San. I don't see Google leading that round.

555
00:31:24,640 --> 00:31:28,600
Speaker 1: So the existing investors, it seems like, are not going

556
00:31:28,640 --> 00:31:33,840
Speaker 1: to put new money into this. Uh. Regulated institutions like banks,

557
00:31:34,800 --> 00:31:39,480
Speaker 1: you know, still have regulatory uncertainty around it, so they're

558
00:31:39,520 --> 00:31:42,680
Speaker 1: they're likely has to be a new entity that puts

559
00:31:42,680 --> 00:31:46,840
Speaker 1: money into it, or possibly a haircut. And and then GBTC,

560
00:31:47,040 --> 00:31:50,960
Speaker 1: I mean they're trading at what fort below that asset value?

561
00:31:51,000 --> 00:31:55,840
Speaker 1: How does that work out? Bitcoin et F could be

562
00:31:55,920 --> 00:32:00,920
Speaker 1: approved under a different regulatory regime. That seems unlikely unless

563
00:32:01,000 --> 00:32:06,200
Speaker 1: the HR Department, if this administration makes some changes. Otherwise

564
00:32:07,120 --> 00:32:14,360
Speaker 1: gray Scale could um break the law and redeem anyway? Well,

565
00:32:14,560 --> 00:32:17,560
Speaker 1: they've been I believe I have done that in the past,

566
00:32:17,600 --> 00:32:21,680
Speaker 1: and we're centered by the SEC that that's a possibility, um,

567
00:32:21,720 --> 00:32:25,720
Speaker 1: but raising capital and or haircuts seeming as most likely option.

568
00:32:25,800 --> 00:32:28,600
Speaker 1: All right, we're getting into Luis a little bit, but

569
00:32:28,720 --> 00:32:30,360
Speaker 1: because I'm gonna get this guy back in here. Yes,

570
00:32:30,400 --> 00:32:32,240
Speaker 1: I mean, he knows what he's talking about. Matt seguy's

571
00:32:32,280 --> 00:32:34,400
Speaker 1: head of digital asset Research. I don't know what the

572
00:32:34,400 --> 00:32:36,200
Speaker 1: hell that is. But he's at Van Neck, which is

573
00:32:36,360 --> 00:32:39,240
Speaker 1: I just learned, is a very cool that he does

574
00:32:39,320 --> 00:32:42,600
Speaker 1: know what it is asset management firm and super duper smart.

575
00:32:42,640 --> 00:32:45,720
Speaker 1: And he was a former producer here at Bloomberg Television,

576
00:32:45,720 --> 00:32:48,320
Speaker 1: which is of course minor stop along the number one

577
00:32:48,440 --> 00:32:55,280
Speaker 1: on his resume. We appreciate him coming in here. John

578
00:32:55,320 --> 00:32:59,240
Speaker 1: Deer and Company Deer and Coke symbols d on your

579
00:32:59,240 --> 00:33:02,480
Speaker 1: Bloomberg terminal four forty five cents right now, A five

580
00:33:02,560 --> 00:33:06,680
Speaker 1: point seven today. It hit a fifty two week high

581
00:33:06,880 --> 00:33:11,440
Speaker 1: today and it also hit an all time high today.

582
00:33:11,520 --> 00:33:14,480
Speaker 1: And that's saying something. This company went public back in

583
00:33:16,240 --> 00:33:20,040
Speaker 1: all time high today. Some good, good numbers out of Moline, Illinois.

584
00:33:20,120 --> 00:33:22,680
Speaker 1: Christian's good for America. That's by the America. It's good

585
00:33:22,720 --> 00:33:25,760
Speaker 1: for the farmers. Boy, we are internationally broadcast, so that's right.

586
00:33:25,800 --> 00:33:28,960
Speaker 1: I'm not biased towards one country or the other, necessarily

587
00:33:29,160 --> 00:33:32,040
Speaker 1: as you wear your green flannel shirt. But I'm happy.

588
00:33:32,120 --> 00:33:35,920
Speaker 1: I'm happy about the middle story for America. Christilo, he's happy.

589
00:33:35,920 --> 00:33:38,840
Speaker 1: Equity Research channels to Bloomberg Intelligence. Chris talked to us

590
00:33:38,840 --> 00:33:42,880
Speaker 1: about this quarter. What what's going right for dear? What's

591
00:33:42,920 --> 00:33:46,520
Speaker 1: the basis for their positive outlook? Yeah, a lot of

592
00:33:46,600 --> 00:33:48,920
Speaker 1: going right. UM, it was a real solid quarter and

593
00:33:48,960 --> 00:33:52,880
Speaker 1: against some pretty elevated expectations going into the print UM

594
00:33:52,920 --> 00:33:56,120
Speaker 1: and really driven by a very strong top line sales

595
00:33:56,120 --> 00:34:00,400
Speaker 1: in the period where UM they were sixty and their

596
00:34:00,440 --> 00:34:04,120
Speaker 1: profitable large agg business and that's really being driven by

597
00:34:04,280 --> 00:34:08,120
Speaker 1: UM robust double digit pricing and higher volume. As some

598
00:34:08,160 --> 00:34:11,560
Speaker 1: of these supply disruptions seem to be easing, demand for

599
00:34:11,600 --> 00:34:14,640
Speaker 1: farm equipment continues to be remarkably strong and it really

600
00:34:14,640 --> 00:34:18,080
Speaker 1: doesn't appear to be showing any signs of slowing into three.

601
00:34:18,719 --> 00:34:21,880
Speaker 1: You have some healthy farm fundamentals, You have order books

602
00:34:21,880 --> 00:34:24,480
Speaker 1: that already extend into the second half of next year.

603
00:34:24,640 --> 00:34:27,120
Speaker 1: Inventories are tight, we have a lot of pent up

604
00:34:27,120 --> 00:34:29,960
Speaker 1: demand due to the supply challenges. So it's certainly a

605
00:34:30,000 --> 00:34:33,000
Speaker 1: favorable setup for deer heading into next year. Tell us

606
00:34:33,040 --> 00:34:37,600
Speaker 1: about the American farmer Chris, because we don't know anything

607
00:34:37,640 --> 00:34:39,520
Speaker 1: about it from here in New York. I am from

608
00:34:39,560 --> 00:34:41,160
Speaker 1: the Great State of Ohio, so I'm from the live

609
00:34:41,239 --> 00:34:43,000
Speaker 1: in the Garden State. Does that mean anything? I don't

610
00:34:43,000 --> 00:34:45,480
Speaker 1: think they have farms there? Okay, they actually they do

611
00:34:45,600 --> 00:34:48,120
Speaker 1: obviously have a lot of farming in Jersey as well.

612
00:34:48,160 --> 00:34:53,359
Speaker 1: But uh, you know, is the family farms still a thing?

613
00:34:53,800 --> 00:34:57,319
Speaker 1: Is this? Are there small business farms? Are they midsized?

614
00:34:57,520 --> 00:34:59,960
Speaker 1: Have corporate farms taken over? What's what is the state

615
00:35:00,040 --> 00:35:03,399
Speaker 1: to the American farmer? Yeah? So you know, if if

616
00:35:03,440 --> 00:35:06,000
Speaker 1: you look at the health of the farm economy UM,

617
00:35:06,200 --> 00:35:09,280
Speaker 1: especially over the last three years, it's it's been remarkably healthy.

618
00:35:09,320 --> 00:35:11,879
Speaker 1: We're going to set another record this year for net

619
00:35:11,920 --> 00:35:14,919
Speaker 1: farm income UM and that's really being supported by these

620
00:35:14,960 --> 00:35:17,960
Speaker 1: elevated crop prices that we're seeing. You know, part of

621
00:35:17,960 --> 00:35:22,560
Speaker 1: that stemming from Russia's invasion of Ukraine and some adverse

622
00:35:22,600 --> 00:35:25,560
Speaker 1: weather UM. So we we think that's going to provide

623
00:35:25,640 --> 00:35:28,959
Speaker 1: a favorable backdrop even as we move into next year

624
00:35:29,560 --> 00:35:31,279
Speaker 1: UM as some of those grain flows out of the

625
00:35:31,320 --> 00:35:34,880
Speaker 1: Black Sea region UM are restricted UM. And then you

626
00:35:34,920 --> 00:35:38,239
Speaker 1: also have a lack of fertilizer availability due to the war,

627
00:35:38,840 --> 00:35:42,200
Speaker 1: so we think crop eels will still be somewhat lower UM,

628
00:35:42,239 --> 00:35:44,400
Speaker 1: which is going to limit some of this replenishment of

629
00:35:44,440 --> 00:35:47,880
Speaker 1: depleted grainstock piles. So that's going to support this elevated

630
00:35:47,920 --> 00:35:51,800
Speaker 1: crop price environment. That being said, farmers are also facing

631
00:35:52,400 --> 00:35:56,400
Speaker 1: UM significantly higher input costs, whether it's fertilizer or fuel.

632
00:35:57,000 --> 00:36:00,920
Speaker 1: But because of this these higher grain price is UM,

633
00:36:01,000 --> 00:36:03,879
Speaker 1: they're able to invest in equipment UM, which helps them

634
00:36:04,040 --> 00:36:07,240
Speaker 1: to be more productive and efficient on the form and

635
00:36:07,400 --> 00:36:10,520
Speaker 1: ultimately drives higher profits for them. So so long as

636
00:36:10,600 --> 00:36:13,640
Speaker 1: cross prices are elevated UM, it's still supportive of of

637
00:36:13,719 --> 00:36:16,759
Speaker 1: spending on new equipment. And the labor story at a

638
00:36:16,840 --> 00:36:20,680
Speaker 1: Deer made headlines for a while. UM. Has that been

639
00:36:21,000 --> 00:36:24,240
Speaker 1: worked out? Is the union satisfied with what they got

640
00:36:24,360 --> 00:36:26,880
Speaker 1: or are there any strikes on the horizon? Yeah, no,

641
00:36:27,200 --> 00:36:30,640
Speaker 1: the the the U a W contract was ironed out

642
00:36:30,680 --> 00:36:34,240
Speaker 1: earlier in this fiscal year for them. UM. You know, labor,

643
00:36:35,120 --> 00:36:38,080
Speaker 1: labor across the industrial sector, you know, continues to be

644
00:36:38,120 --> 00:36:41,560
Speaker 1: a problem UM, and labor I think is one of

645
00:36:41,560 --> 00:36:44,520
Speaker 1: the headwinds that Deer and others will face as we

646
00:36:44,560 --> 00:36:48,280
Speaker 1: move into next year. UM and you know DearS pouring

647
00:36:48,320 --> 00:36:51,759
Speaker 1: a lot of money into autonomy and autonomous equipment. UM.

648
00:36:52,040 --> 00:36:54,400
Speaker 1: Labor and also the quality of labors is kind of

649
00:36:54,440 --> 00:36:58,040
Speaker 1: an ongoing challenge on the farm. It's scarce, it's more costly,

650
00:36:58,239 --> 00:37:00,480
Speaker 1: and autonomy could help mitigate some of the allunges that

651
00:37:00,560 --> 00:37:04,200
Speaker 1: farmers face, UM, not only getting the job done more efficiently,

652
00:37:04,200 --> 00:37:07,600
Speaker 1: but also kind of in those optimal planning windows. And Chris,

653
00:37:07,640 --> 00:37:10,160
Speaker 1: you know, if I go into a car lot these days,

654
00:37:10,560 --> 00:37:12,360
Speaker 1: I don't have a lot to choose from. If I

655
00:37:12,400 --> 00:37:14,360
Speaker 1: do find something, I gotta pay M S r P.

656
00:37:14,560 --> 00:37:17,040
Speaker 1: Maybe even more than that. What's it like when I

657
00:37:17,080 --> 00:37:19,400
Speaker 1: go on a deer lot to buy a big tractor.

658
00:37:19,960 --> 00:37:23,680
Speaker 1: It's almost as bad. Um. We are at you know,

659
00:37:23,840 --> 00:37:26,840
Speaker 1: historically historically low levels, particularly if you look at the

660
00:37:26,880 --> 00:37:29,120
Speaker 1: large ac sector, which is really what moves the needle

661
00:37:29,160 --> 00:37:34,360
Speaker 1: for deer. UM. We are significantly below historical levels. We

662
00:37:34,400 --> 00:37:38,480
Speaker 1: will probably be below historical levels as we end next

663
00:37:38,560 --> 00:37:41,680
Speaker 1: year as well. UM. You know, there's so much demand

664
00:37:41,719 --> 00:37:44,279
Speaker 1: out there UM and and a lot of pent up

665
00:37:44,280 --> 00:37:48,040
Speaker 1: replacement from these multiple years of underproduction that you know,

666
00:37:48,080 --> 00:37:50,480
Speaker 1: deer's just meeting retail demand right now. They can't even

667
00:37:50,520 --> 00:37:53,440
Speaker 1: restock the dealer a lot. So we think the restocking

668
00:37:53,480 --> 00:37:57,360
Speaker 1: story could unfold into which should really help extend the

669
00:37:57,400 --> 00:38:02,759
Speaker 1: ag cycle for Deer. All right, very interesting stuff and

670
00:38:03,080 --> 00:38:05,920
Speaker 1: the stock has just been on fire. By the way.

671
00:38:05,960 --> 00:38:08,960
Speaker 1: Do you see the company taking advantage of the situation?

672
00:38:09,120 --> 00:38:11,919
Speaker 1: Can they do they have a fair amount of their

673
00:38:11,920 --> 00:38:14,080
Speaker 1: own shares and award chess, Can they go and do

674
00:38:14,160 --> 00:38:16,000
Speaker 1: some M and A? Is there anything like that going

675
00:38:16,000 --> 00:38:19,120
Speaker 1: on in the space. Yeah, you know a lot of

676
00:38:19,120 --> 00:38:21,840
Speaker 1: their investments. You know, they did a big deal for Verkin,

677
00:38:21,920 --> 00:38:25,839
Speaker 1: which is a road construction equipment company number years back,

678
00:38:25,920 --> 00:38:29,160
Speaker 1: So that should you know, play favorably into the infrastructure

679
00:38:29,160 --> 00:38:31,239
Speaker 1: built here in the US and really help kind of

680
00:38:31,280 --> 00:38:34,160
Speaker 1: give them some scale globally. Um I think a lot

681
00:38:34,160 --> 00:38:36,120
Speaker 1: of their M and A going forward will be more

682
00:38:36,320 --> 00:38:42,200
Speaker 1: focused on maybe some smaller bolt on deals around technology, autonomy, electrification,

683
00:38:42,760 --> 00:38:46,319
Speaker 1: something that gives them, you know, additional technological capabilities that

684
00:38:46,360 --> 00:38:50,279
Speaker 1: they haven't had. Um So, I think that's probably where

685
00:38:50,280 --> 00:38:52,000
Speaker 1: we're looking at if they were to do some more

686
00:38:52,120 --> 00:38:53,839
Speaker 1: M and A in the future. What did they say

687
00:38:53,840 --> 00:38:57,160
Speaker 1: about Ukraine. I'm guessing that's probably a big market for them.

688
00:38:57,520 --> 00:39:00,799
Speaker 1: What what are they saying uh, the big scheme of things.

689
00:39:00,800 --> 00:39:03,480
Speaker 1: It's like, you know, Russia, Ukraine's like two percent of

690
00:39:03,719 --> 00:39:07,920
Speaker 1: consolidated revenue. UM. You know, they've you know, suspended operations

691
00:39:07,920 --> 00:39:10,839
Speaker 1: and taking some some right offs. They're um really not

692
00:39:11,040 --> 00:39:15,520
Speaker 1: that different from any other UM industrial company. UM. That

693
00:39:15,719 --> 00:39:20,160
Speaker 1: being said, it is important uh global commodity market, particularly

694
00:39:20,200 --> 00:39:23,640
Speaker 1: with wheat and corn UM. So you know that that's

695
00:39:23,680 --> 00:39:25,360
Speaker 1: part of the reason why we were kind of in

696
00:39:25,400 --> 00:39:28,520
Speaker 1: this elevated crop price environment and probably will be for

697
00:39:28,600 --> 00:39:30,759
Speaker 1: the next couple of years. Well, I would not be

698
00:39:30,840 --> 00:39:33,080
Speaker 1: surprised if they have suppliers there as well. You know,

699
00:39:33,120 --> 00:39:37,239
Speaker 1: a lot of UM auto production gets wire harnesses for

700
00:39:37,280 --> 00:39:41,279
Speaker 1: example from Ukraine. Yeah, they they produce a lot of

701
00:39:41,560 --> 00:39:43,480
Speaker 1: a lot of gear over there, but obviously they're not

702
00:39:43,520 --> 00:39:46,680
Speaker 1: in the equation right now, so that hurts in a

703
00:39:46,719 --> 00:39:50,880
Speaker 1: lot of ways. It also changes the picture UM, as

704
00:39:50,920 --> 00:39:54,800
Speaker 1: Chris is explaining in terms of you know, uh, the

705
00:39:54,880 --> 00:39:57,400
Speaker 1: crop prices, which plays out to be to to the

706
00:39:57,440 --> 00:39:59,399
Speaker 1: to their benefit. Chris, great to talk to you, Thanks

707
00:39:59,440 --> 00:40:00,920
Speaker 1: so much for warning us. Hope we get back on

708
00:40:00,920 --> 00:40:04,719
Speaker 1: the show. Christie Alieno there equity research analysts from Bloomberg

709
00:40:04,760 --> 00:40:08,440
Speaker 1: Intelligence talking to us about deer the stock trading at

710
00:40:08,440 --> 00:40:14,239
Speaker 1: an all time high right now. Thanks for listening to

711
00:40:14,239 --> 00:40:17,759
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to

712
00:40:17,840 --> 00:40:22,000
Speaker 1: interviews of Apple Podcasts or whatever podcast platform you prefer.

713
00:40:22,360 --> 00:40:26,359
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.

714
00:40:26,960 --> 00:40:29,600
Speaker 1: On False Sweeney, I'm on Twitter at pt Sweeney Before

715
00:40:29,600 --> 00:40:32,440
Speaker 1: the podcast. You can always catch us worldwide at Bloomberg

716
00:40:32,520 --> 00:40:32,759
Speaker 1: Radio