WEBVTT - Markets, Broadcom, Crypto, And Freelance Work (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.360 at Bloomberg dot com slash podcast. You know, we've got 0:00:22.360 --> 0:00:24.680 the market again, as Greig was just reporting up a 0:00:24.680 --> 0:00:26.480 one and a half percent, so pretty decent week here. 0:00:26.520 --> 0:00:29.120 The question is for a lot of folks, uh, dead 0:00:29.160 --> 0:00:31.960 cat bounce or is maybe this market trying to find 0:00:32.000 --> 0:00:34.479 inform some type of bottom here. Let's check in with 0:00:34.520 --> 0:00:38.479 Scott Ladner, chief investment officer of Horizon Investments. Uh, Scott, 0:00:38.520 --> 0:00:41.800 thanks so much for joining us. Despite you being from 0:00:41.920 --> 0:00:44.159 UNC Chapel Hill, we decided to have you on. Hopefully 0:00:44.159 --> 0:00:46.879 it'll go well. What are you looking at, Scott as 0:00:46.920 --> 0:00:49.080 you take a look at these last few days here? 0:00:49.120 --> 0:00:51.280 Maybe the market you're trying to find a bottom here? 0:00:51.640 --> 0:00:53.680 How how do you guys think about it? Yeah? I 0:00:53.720 --> 0:00:55.680 mean if you think that this trading kind of kind 0:00:55.680 --> 0:00:59.920 of reechs of like hope, um right, hoping this is 0:01:00.040 --> 0:01:03.160 over Um, it is very technical in nature. It is 0:01:03.200 --> 0:01:05.920 not happening on a lot of volume. Um, you know. 0:01:05.959 --> 0:01:08.759 And and look, markets don't go one direction forever, right, 0:01:08.800 --> 0:01:10.720 So it has been seven or eight weeks of this 0:01:10.840 --> 0:01:14.119 sort of malaise and just kind of grinding lower. Um. 0:01:14.120 --> 0:01:15.880 This this doesn't look a little bit of a deal 0:01:15.880 --> 0:01:19.119 of a relief rally. But I mean, unfortunately, it's it's 0:01:19.120 --> 0:01:21.160 really tough to lose sight of the main points. And 0:01:21.240 --> 0:01:23.520 the main point is the Fed has told us they 0:01:23.560 --> 0:01:26.400 want tighter financial conditions and and uh you know that 0:01:26.400 --> 0:01:28.080 that is that is the way they're going to try 0:01:28.080 --> 0:01:30.280 to control inflation. They want tighter financial condissions to bring 0:01:30.440 --> 0:01:33.800 the band down. Um and until dar unless that changes, uh, 0:01:33.840 --> 0:01:35.480 you know this this is probably we're probably in the 0:01:35.959 --> 0:01:39.720 cell rallies kind of mode. Alright. Interesting, Um, you know 0:01:39.760 --> 0:01:42.240 Matt Miller jumped out for some reason, left to do 0:01:42.319 --> 0:01:44.440 do something about doing a TV interview. But not to worry, 0:01:44.440 --> 0:01:47.119 because pretty good to saw the Anpty seat jump right in. Cretty. 0:01:47.160 --> 0:01:49.160 Thanks for so much for filling in here. Appreciate it. 0:01:49.200 --> 0:01:52.720 I'll take any opportunity to coinker Sweeney um and and 0:01:52.800 --> 0:01:55.880 Scott you should know Paul gives everyone who's not duke 0:01:56.120 --> 0:01:58.840 a hard time. And usually I'll come in and defend them. 0:01:58.880 --> 0:02:01.480 But for you, I'm a U V A M. So 0:02:01.760 --> 0:02:03.440 I'm going to draw on your own. Yeah, you're on 0:02:03.440 --> 0:02:07.320 your on this one. Um. I have to ask about 0:02:07.440 --> 0:02:11.200 these recession odds that everyone's talking about. It's it's it's 0:02:11.880 --> 0:02:14.480 it's kind of wild to see, at least for me, 0:02:14.639 --> 0:02:17.400 that the market or the economy. I should say, it's 0:02:17.440 --> 0:02:19.480 not the same thing. I should point out the economy 0:02:19.840 --> 0:02:22.600 is growing at a two percent clip, and here we 0:02:22.639 --> 0:02:25.359 are talking about an outright recession. So especially going from 0:02:25.360 --> 0:02:29.160 two to below zero in the span of a couple 0:02:29.160 --> 0:02:34.760 of quarters. Maybe are those fears realistic? I mean pretty 0:02:34.960 --> 0:02:38.960 it's you know, a year ago. We should probably say no. Um, 0:02:39.040 --> 0:02:41.920 But I think of how fast everything has been happening 0:02:41.960 --> 0:02:44.240 cycle wise. I mean that the last couple of three 0:02:44.280 --> 0:02:47.000 years I've really taught us anything is that economic cycles 0:02:47.040 --> 0:02:50.040 are just are ever more compressed. Things are happening like 0:02:50.120 --> 0:02:52.560 ever faster. Um. And and so you know, to think 0:02:52.560 --> 0:02:55.680 that we can't get like a recession and like measured 0:02:55.720 --> 0:02:58.880 in months rather than recesion matter measurement quarters or years 0:02:59.520 --> 0:03:02.120 probably is and totally crazy anymore. Just just because of 0:03:02.480 --> 0:03:04.760 how quickly everything is moving through the system and how 0:03:04.840 --> 0:03:07.720 quickly um, you know, like not only policymakers, but the 0:03:07.720 --> 0:03:10.680 market reacts, uh to you know, two changes and things. 0:03:10.760 --> 0:03:13.480 So it's you know, it's it's it's not really out 0:03:13.480 --> 0:03:15.360 of the realm to think that read they might end 0:03:15.400 --> 0:03:16.720 up in the recession. We don't think it's will be 0:03:16.760 --> 0:03:18.760 a very bad one that we do. There's there's really 0:03:18.800 --> 0:03:20.680 no there's no accesses in the system to to speak 0:03:20.880 --> 0:03:22.840 where they've been there there there in the posting ring 0:03:23.120 --> 0:03:25.760 wrung out um and there's really not not very much 0:03:25.840 --> 0:03:28.040 leverage in the system. So there's not and that's sort 0:03:28.080 --> 0:03:30.800 of the ingredients for a like a really nasty type 0:03:30.800 --> 0:03:33.919 of recession but kind of a garden variety earnings recession, 0:03:33.960 --> 0:03:35.840 industrial slowdown type of thing in the back half of 0:03:35.840 --> 0:03:37.520 the year. You know. But the market is starting to 0:03:37.520 --> 0:03:39.440 sniff that out and we think that that makes some sense. 0:03:40.280 --> 0:03:44.440 So Scott at at your shop, are you guys kind 0:03:44.440 --> 0:03:46.280 of trying to during this you know, the sell off 0:03:46.280 --> 0:03:50.200 we've had year today, trying to find safe havens or 0:03:50.680 --> 0:03:53.480 do you just say, hey, we're going to take opportunities 0:03:53.520 --> 0:03:56.080 to buy companies that we like and maybe add to 0:03:56.200 --> 0:03:58.880 positions of core holdings. How do you guys try to 0:03:58.960 --> 0:04:01.160 navigate through what has been a very tough start to 0:04:01.200 --> 0:04:03.680 the year. Yeah, I mean it has been tough start 0:04:03.720 --> 0:04:04.960 to the year, and so we've we've got a few 0:04:04.960 --> 0:04:06.760 different strategies we have. You know, one of them is 0:04:06.920 --> 0:04:09.280 is more of an algorithmic derisking and re risking strategy, 0:04:09.320 --> 0:04:11.200 and so that's that's sort of doing it something. But 0:04:11.280 --> 0:04:13.720 inside sort of the core allocation portfolios, um, you know, 0:04:13.720 --> 0:04:16.720 how how camera managing client money and those is really 0:04:17.240 --> 0:04:19.320 trying to trying to play some defense right now, trying 0:04:19.320 --> 0:04:21.159 to sort of sort of like let let the talk 0:04:21.200 --> 0:04:23.560 play out. You know, this is obviously it's tough to 0:04:23.560 --> 0:04:26.680 time anything perfectly. But but in terms of um, you know, 0:04:26.680 --> 0:04:28.280 in terms of like where we're putting money, like, we 0:04:28.320 --> 0:04:30.400 have been pretty defensive. We've been pretty US based, We've 0:04:30.440 --> 0:04:32.800 been pretty value based and like, and we don't know 0:04:32.880 --> 0:04:35.200 those are not overweights that we've had, you know, typically 0:04:35.520 --> 0:04:37.680 a lot over the last five or six years at least, 0:04:37.800 --> 0:04:39.640 especially on the value side. But we are we are 0:04:39.680 --> 0:04:40.880 just sort of trying to run out the clock a 0:04:40.880 --> 0:04:42.800 little bit. And you know, we think that time will 0:04:42.839 --> 0:04:44.800 end up healing the inflation problem, and time will end 0:04:44.839 --> 0:04:47.080 up healing some of that, some of this, uh some demands. 0:04:47.120 --> 0:04:50.200 It's fly and balanced problem, but there's no like really 0:04:50.240 --> 0:04:52.160 quick fixed for it. And so as so long as 0:04:52.160 --> 0:04:54.080 there's no really quick fixed for it, we got gotta 0:04:54.120 --> 0:04:56.120 sort of like play along in places and place in 0:04:56.200 --> 0:04:58.360 defense and a sort of go in the boring staples 0:04:58.360 --> 0:05:01.120 types of the types of the world, um and and 0:05:01.200 --> 0:05:03.400 just you know, hang out until the until we have 0:05:03.480 --> 0:05:05.640 a chance for the Fed and Center banks to be 0:05:05.680 --> 0:05:08.159 able to pivot. Um and when that happened, and we 0:05:08.200 --> 0:05:09.520 think that there will be a chance of that to 0:05:09.560 --> 0:05:12.440 happen later later this year, um, you know, that'll be 0:05:12.520 --> 0:05:14.680 the time to really go for you know, go go 0:05:14.960 --> 0:05:18.080 gangbusters again. But you know, until then, uh, you know, 0:05:18.520 --> 0:05:21.840 until basically inflation is a secondary concern and growth is 0:05:21.880 --> 0:05:25.120 a primary concern. Until that, until that has an opportunity 0:05:25.120 --> 0:05:27.200 to happen, we discuss replay defense a little bit. It's 0:05:27.240 --> 0:05:28.960 kind of boring, but that's that's how we're that's how 0:05:29.000 --> 0:05:31.720 we're working. We have about thirty seconds here. Let's talk 0:05:31.720 --> 0:05:33.679 about the volatility. Here. We're looking at a twenty seven 0:05:33.720 --> 0:05:36.200 handle on the vix. Is it going to go back 0:05:36.520 --> 0:05:40.560 above thirty five? Let's say when we started to originally 0:05:40.560 --> 0:05:42.799 see the onset of the war in Ukraine. What's next 0:05:43.040 --> 0:05:46.080 when it comes to volatility. Yeah, I mean in terms 0:05:46.120 --> 0:05:47.280 of the ball market, is it is it that has 0:05:47.279 --> 0:05:49.919 been pretty interesting. I'm I'm an old vultility trader and 0:05:49.960 --> 0:05:54.320 it's it's um, yeah, that what we've the dynamics we've 0:05:54.320 --> 0:05:55.960 seen in the option markets over the last over the 0:05:56.000 --> 0:05:58.640 last couple of months have been somewhat striking because we 0:05:58.680 --> 0:06:00.520 have not seen any of that pan these types of 0:06:00.520 --> 0:06:03.560 things that I'm sure you guys are aware, um for 0:06:03.560 --> 0:06:06.800 for that capitulation that everybody's looking for, um. You know, 0:06:06.960 --> 0:06:08.800 we we probably do need to see the thick spike. 0:06:08.839 --> 0:06:10.599 We do need to see some of that panic thing happening. 0:06:11.000 --> 0:06:13.279 But you know, unfortunately there is little bit of like 0:06:13.279 --> 0:06:15.719 like Heisenberg and certainty principal types of things when we 0:06:15.720 --> 0:06:17.400 when we look at altimlatey market, like if you look 0:06:17.440 --> 0:06:19.320 at it too closely, it's like it'll know you'll never 0:06:19.360 --> 0:06:21.880 see it. Um. And so when everybody's looking for that, 0:06:21.960 --> 0:06:23.719 for that thing, it's you know, it makes it harder 0:06:23.760 --> 0:06:26.320 and harder to get actually a rum. So that's that's 0:06:26.360 --> 0:06:28.440 what we're looking for. That's good stuff. Scott, Really appreciate 0:06:28.440 --> 0:06:31.320 you taking the time sharing your thoughts. Scott Latner, chief 0:06:31.320 --> 0:06:35.320 investment officer Horizon Investments for unc GRED, I think he 0:06:35.360 --> 0:06:41.960 did pretty well. Maybe we'll have him back. Big tech 0:06:42.040 --> 0:06:46.240 deal goes formal today. Broadcom agreed to buy cloud computing 0:06:46.279 --> 0:06:49.280 company vm Ware for about sixty one billion dollars in 0:06:49.320 --> 0:06:51.039 one of the largest tech deals of all time, turning 0:06:51.360 --> 0:06:54.880 the chip maker into a bigger force in software. Let's 0:06:54.920 --> 0:06:56.960 get the strategy behind it, Let's get the numbers behind 0:06:57.000 --> 0:07:01.000 it with Wujenhoe, senior hardware analysts for Bloomberg and Leigence. Uh, 0:07:01.120 --> 0:07:02.800 we'll talk to us about broadcast. Like, what I know 0:07:02.839 --> 0:07:05.359 about Broadcom is this is a company that grows pretty 0:07:05.440 --> 0:07:08.080 much or large part through acquisitions, and this is a 0:07:08.200 --> 0:07:10.520 big one vm Ware. Talk to us about the strategy 0:07:10.560 --> 0:07:12.920 behind the deal. Sure, hey, thanks for having me on. 0:07:13.040 --> 0:07:16.520 Paul so um No, the CEO of Broadcom has been 0:07:16.600 --> 0:07:20.000 laying out this, uh the birse of action strategy ever 0:07:20.080 --> 0:07:23.720 since it's made it the a acquisition in and um 0:07:23.880 --> 0:07:27.120 you know, it has essentially grown from a chip business 0:07:27.680 --> 0:07:32.200 back to about of of its sales coming from software 0:07:32.360 --> 0:07:35.520 through c A as well as a ManTech adding VM 0:07:35.600 --> 0:07:39.280 whare just extends and grows its software exposure to about 0:07:39.880 --> 0:07:43.600 of total sales, so it actually extends to where wants 0:07:43.640 --> 0:07:47.040 to go directionally going over the long time, it kind 0:07:47.080 --> 0:07:48.960 of seems like this is coming into a broader trend 0:07:49.040 --> 0:07:52.559 of chip makers wanting to diversify and video is another 0:07:52.640 --> 0:07:56.480 example looking going into you know, graphics chips to diversify 0:07:56.520 --> 0:07:58.640 the different kinds of things they make. Is this something 0:07:58.720 --> 0:08:01.560 we can start to expect from the likes of Advanced 0:08:01.600 --> 0:08:05.720 micro Devices for example, or Qualcom. What's your take? Sure? So, 0:08:05.880 --> 0:08:08.920 so AMDs actually starts to make that transition away from 0:08:09.040 --> 0:08:13.000 the CPU chip and and UH. They've also made other 0:08:13.400 --> 0:08:15.960 other acquisitions like that the zy Links deal that they've 0:08:16.000 --> 0:08:18.760 made UH to to get away from just being a 0:08:18.840 --> 0:08:22.440 CPU but also be a data processor unit or a 0:08:22.560 --> 0:08:27.400 cloud computing UH and and storage processing unit. So we 0:08:27.560 --> 0:08:31.560 do expect to see these UM UH silo chip companies 0:08:31.800 --> 0:08:35.280 to potentially extend and and broaden out that footprint, especially 0:08:35.360 --> 0:08:38.400 given how much cash at the generator over the past 0:08:38.480 --> 0:08:42.360 couple of years, given the strong cycle that they've enjoyed. Um. 0:08:42.760 --> 0:08:46.080 You know, Broadcome is somewhat unique, uh in a sense, 0:08:46.440 --> 0:08:49.679 different from Video to some degree with creating and and 0:08:49.760 --> 0:08:52.280 the reason is it's because I do think that UM, 0:08:52.480 --> 0:08:55.119 the CEO is trying to look for ways to diversify 0:08:55.200 --> 0:08:59.240 its business away from a very cyclical chip business and 0:08:59.480 --> 0:09:01.520 and VM it does that. I want to call out 0:09:01.720 --> 0:09:04.920 Dina Bass and Leona Baker from Bloomberg Newsday reported on 0:09:05.040 --> 0:09:09.839 this deal back on May one. Um, and you know 0:09:10.080 --> 0:09:13.960 the stock this is this offers a premium to that date, 0:09:14.160 --> 0:09:16.839 you know, kind of before the Bloomberg News story came out. 0:09:17.440 --> 0:09:19.760 Is thisn't a creative deal? Is this dilutive? What's it 0:09:19.760 --> 0:09:23.640 gonna do to Broadcom's earnings and all that kind of stuff? Yeah, 0:09:23.679 --> 0:09:26.719 that was my tastic reporting by by Bloomberg News on that. 0:09:26.880 --> 0:09:30.120 So so we we did the deal in math Um. 0:09:30.760 --> 0:09:33.640 It seems to be earnings neutral if you add the 0:09:33.679 --> 0:09:38.040 two companies together. Uh, there may be some uh some 0:09:38.240 --> 0:09:41.360 some cost imagies that they can yield immediately. And UM, 0:09:41.679 --> 0:09:43.440 you know, we think that it could be an EPs 0:09:43.480 --> 0:09:46.240 secretive deal, especially given that it's a cashion stock deal. 0:09:46.640 --> 0:09:51.559 A longer term, Broadcom expects to have eight point five 0:09:51.640 --> 0:09:57.160 billion dollars in um iba DA out of vm Ware. 0:09:57.200 --> 0:10:00.280 That's an additional four billion dollars in ibadalla over the 0:10:00.360 --> 0:10:02.680 next three or five years. And it all fits within 0:10:02.960 --> 0:10:07.360 um broadcom strategy now now in terms of the share 0:10:07.520 --> 0:10:09.400 and in terms of valuation, and I think this is 0:10:09.440 --> 0:10:12.040 where you're going out, Paul. You know, we rounded the 0:10:12.160 --> 0:10:15.600 valuation math and it's quite frankly, given how much UH 0:10:15.720 --> 0:10:19.439 the software sector and technology evaluations dropped over the past 0:10:19.520 --> 0:10:24.160 month or so, the deal valuation isn't UM stretched. I 0:10:24.200 --> 0:10:27.080 mean we calculated to be five times easy to sales 0:10:27.400 --> 0:10:31.000 twenty times UM twenty times on a four P basis, 0:10:31.200 --> 0:10:35.320 and that's consistent with larger broad tech names. Yeah, that's 0:10:35.360 --> 0:10:37.439 kind of where I wanted to go would because it 0:10:37.520 --> 0:10:39.080 seems like, you know, a lot of folks are not well, 0:10:39.120 --> 0:10:40.440 not a lot of folks, but a couple of tech 0:10:40.480 --> 0:10:42.320 folks that I chatted, which is in the last month 0:10:42.440 --> 0:10:44.640 or so kind of you mentioned. Kind of what you're 0:10:44.640 --> 0:10:47.600 saying is there could be some some bargains out there, 0:10:47.640 --> 0:10:50.560 given how much some of these tech names have sold off. 0:10:50.600 --> 0:10:54.559 Do you anticipate seeing some more m and a going forward? Well, 0:10:54.920 --> 0:10:58.240 give me where the valuations are UM I. I think 0:10:58.360 --> 0:11:01.720 that the larger companies who are talking with smaller companies 0:11:01.760 --> 0:11:06.240 in the past UH may start becoming a bit more 0:11:06.280 --> 0:11:08.960 active right now. Now. The question is is that are 0:11:09.040 --> 0:11:12.480 are they willing sellers now? And given how much ware 0:11:12.520 --> 0:11:15.599 the valuation has has come down, and if there's a 0:11:15.640 --> 0:11:18.640 concern that this is going to be UH in an 0:11:18.720 --> 0:11:22.360 extended period of lower valuations, some of these CEOs who 0:11:22.400 --> 0:11:25.080 have held out for higher valuations, they have to rethink 0:11:25.120 --> 0:11:28.240 that the strategy of either going alone or being under 0:11:28.280 --> 0:11:30.559 the umbrella of a large company. So there might be 0:11:30.640 --> 0:11:32.719 a mix of both going forward, and there might be 0:11:32.880 --> 0:11:37.240 some increased deal activity, especially given how much valuations of 0:11:37.559 --> 0:11:40.640 pull pack. I'd really like talking about supply chains here 0:11:40.640 --> 0:11:42.520 because something bringing it back to end video. I know 0:11:42.559 --> 0:11:44.520 we're talking about Broadcom. It don't worry. I'll connect the 0:11:44.600 --> 0:11:48.400 dots and video here. In their earnings said that we 0:11:48.480 --> 0:11:51.640 see the demand, we know that we can grow. What's 0:11:51.679 --> 0:11:54.800 getting in our way is these UH COVID lockdowns, the 0:11:54.800 --> 0:11:57.920 supply chain issues. We're not able to meet our capacity. 0:11:58.280 --> 0:12:02.640 Will Broadcom have the same issue, um Well, Broadcom said 0:12:02.679 --> 0:12:06.080 on the call that they haven't seen those issues. UM 0:12:06.720 --> 0:12:09.240 as a matter of fact, they reported darning this UH 0:12:09.559 --> 0:12:14.880 this morning and essentially UH they beat expectations, and a 0:12:14.960 --> 0:12:17.319 lot of it has to do with UM on the 0:12:17.400 --> 0:12:19.079 networking side. Part of it has to do with it 0:12:19.160 --> 0:12:22.679 they're not directly manufacturing the chips, and they're relying a 0:12:22.840 --> 0:12:26.520 lot more on t SMC too to manufacture the chips 0:12:26.640 --> 0:12:29.199 for them, and they don't have the graphics. They don't 0:12:29.240 --> 0:12:32.560 need the PCB boards or broader supply chain to help 0:12:33.200 --> 0:12:37.719 UM to have a built out kit for for instance. Now, ironically, 0:12:37.920 --> 0:12:41.760 vm Ware mis consensus expectations by about three percent when 0:12:41.800 --> 0:12:44.600 they reported this morning, and they didn't give much detail 0:12:44.640 --> 0:12:46.160 on the call, but I suspect that it has had 0:12:46.200 --> 0:12:49.280 to do with supply chain because their hardware providers could 0:12:49.320 --> 0:12:53.720 not provide the the equipment needed to load VM or software. 0:12:53.960 --> 0:12:58.360 So you are seeing the supply side affect other areas 0:12:58.880 --> 0:13:02.320 UM UH in the tech chain. You know, it's interesting, 0:13:02.360 --> 0:13:05.080 you know, with the zero COVID policy coming out of China, 0:13:05.760 --> 0:13:07.520 I guess you could pay in a bear case that 0:13:08.160 --> 0:13:10.880 this supply chain issue, particularly reach the chips and other 0:13:10.880 --> 0:13:13.040 things coming out of China any going away anytime soon? 0:13:13.160 --> 0:13:17.120 Is it? Well, Cisco addressed it on their call UM 0:13:17.920 --> 0:13:20.080 a couple of weeks back, and essentially what they're saying 0:13:20.200 --> 0:13:23.880 is that, look, uh, the shutdowns of lockdowns may be 0:13:24.600 --> 0:13:29.000 lifted in June, but you have this whole backlog of 0:13:29.120 --> 0:13:32.520 suppliers who really want to get the products out the door, 0:13:32.880 --> 0:13:36.320 and you have this, uh, this huge logistics problem going 0:13:36.440 --> 0:13:38.520 on going past you. And even if it is UM 0:13:39.600 --> 0:13:43.000 the shutdown being being lifted. So I agree with you, Paul, 0:13:43.120 --> 0:13:45.760 this isn't going to end in the in the second quarter, 0:13:46.280 --> 0:13:48.439 nor are we going to see an easing of the 0:13:48.480 --> 0:13:51.120 pressure going into the third quarter. Um. Some of the 0:13:51.320 --> 0:13:55.000 chipmakers are always pushing back. The supply chain isn't going 0:13:55.040 --> 0:13:57.800 into the middle of three now, uh, And I was 0:13:57.840 --> 0:14:01.760 calling for the middle of two. So yeah, it's it's 0:14:01.800 --> 0:14:04.600 it's gonna be tough times for the hard hardware vendors, 0:14:04.960 --> 0:14:07.680 chip makers as well as the companies who are looking 0:14:07.720 --> 0:14:11.280 to buy UM buy hardware as well. Ye. Absolutely, it's 0:14:11.280 --> 0:14:13.839 the supply chain issue that is not going away anytime 0:14:13.920 --> 0:14:15.480 soon for large parts of the economy. And I'm thinking 0:14:15.480 --> 0:14:17.360 about the auto industry, you know, you think about all 0:14:17.400 --> 0:14:19.320 the chips to go in the auto industry, and if 0:14:19.360 --> 0:14:21.400 this is going to be an issue. Um, I have 0:14:21.560 --> 0:14:24.120 to see what those folks are saying. Lugin Hoe, he's 0:14:24.160 --> 0:14:26.800 a senior hardware analyst for Bloomberg Intelligence, one of the 0:14:26.840 --> 0:14:29.640 best on the street. We appreciate having access uh to 0:14:29.840 --> 0:14:31.800 him and his analysis. Again, you can read all of 0:14:31.920 --> 0:14:35.000 his analysis and that of Bloomberg Intelligence. Be I go 0:14:35.280 --> 0:14:40.680 on the terminal. All right, let's talk crypto here, but 0:14:40.720 --> 0:14:41.920 I want to talk about it. You know, when we 0:14:41.960 --> 0:14:43.880 talk crypto often we just kind of fall back and say, 0:14:43.880 --> 0:14:45.640 you know, bitcoin, where is it trading? Well, it's trading 0:14:45.680 --> 0:14:48.760 off about one point three percent today, nine thousand, four hundred. 0:14:48.760 --> 0:14:50.960 It's kind of been a fairly stable range down in 0:14:51.040 --> 0:14:52.960 that area. But I'm gonna talk about just the broader 0:14:53.440 --> 0:14:56.280 topics of crypto. Was actually a fairly big topic of 0:14:56.320 --> 0:15:00.440 conversation in Davos, Switzerland, which is wrapped up today. Danielle Dixon, 0:15:00.720 --> 0:15:05.520 CEO and executive Director of the Stellar Development Foundation, joins us. 0:15:05.600 --> 0:15:07.680 Daniel First, I love for you just to quickly tell 0:15:07.760 --> 0:15:12.640 us what the Stellar Development Foundation is. Great, Yes, thank 0:15:12.680 --> 0:15:14.880 you for having me. The Stellar Development Foundation is a 0:15:14.960 --> 0:15:17.920 non stock and entity and nonprofit entity that's focused on 0:15:17.960 --> 0:15:21.320 the growth and development of the Stellar foundation of Stellar Network. 0:15:21.640 --> 0:15:24.440 Really we're focused on creating equitable access to the global 0:15:24.480 --> 0:15:29.600 financial system using Stellar's blockchain technology. So what was the 0:15:30.800 --> 0:15:32.800 topic or how are people in Davos, how are they 0:15:32.880 --> 0:15:36.920 thinking about crypto as you had your conversations throughout the week. Yeah, 0:15:36.960 --> 0:15:39.720 it's really kind of fascinating. This year in DAVOSK there 0:15:39.800 --> 0:15:43.520 were crypto companies and blockchain companies that filled the whole promenade, 0:15:43.600 --> 0:15:46.320 which is the areas outside of Congress. In Congress, I 0:15:46.440 --> 0:15:48.680 was on one panel UM and they didn't have very 0:15:48.760 --> 0:15:51.800 many actually crypto focused panels, but we I think they 0:15:51.880 --> 0:15:53.800 only had one crypto focused panel and the rest of 0:15:53.840 --> 0:15:56.520 them they sort of layered crypto into remittances and whatnot. 0:15:56.840 --> 0:15:59.080 But there was a lot of discussion around sustainability, not 0:15:59.200 --> 0:16:01.280 surprisingly but because they focus a lot on proof of 0:16:01.320 --> 0:16:04.800 work and proof of steak UH consensus mechanisms. Stellars is 0:16:04.840 --> 0:16:07.360 a different mechanism, it's proof of agreement, so there's a 0:16:07.440 --> 0:16:10.720 different sustainability. We're actually very sustainable from the standpoint of 0:16:10.760 --> 0:16:12.760 the network. So there was a lot of focus there 0:16:13.080 --> 0:16:16.840 outside of the Congress. In the in the area, there's 0:16:16.880 --> 0:16:21.200 discussions just around regulation, global sort of focusing on the 0:16:21.240 --> 0:16:24.400 global pieces of regulation and also in the US UH 0:16:24.520 --> 0:16:27.080 and the need for us to be able to create 0:16:27.240 --> 0:16:30.240 some really strong stability because we've taken so many steps 0:16:30.280 --> 0:16:34.040 forward as an industry and we need to focus on sustainability, 0:16:34.240 --> 0:16:36.440 but as well, we need to focus on just continuing 0:16:36.520 --> 0:16:40.280 to really highlight the use cases, the really good use cases, 0:16:40.400 --> 0:16:43.000 so that we can demonstrate to governments and regulators all 0:16:43.040 --> 0:16:45.800 over the world the value that blockchain brings to their region. 0:16:46.640 --> 0:16:48.880 I have to ask here, when we're talking about cryptocurrencies, 0:16:48.960 --> 0:16:51.000 let's put this in the perspective of it's not just 0:16:51.240 --> 0:16:54.840 the crypto players in kind of competing in the space 0:16:54.960 --> 0:16:56.680 right now, you're actually looking at the e c B, 0:16:56.880 --> 0:16:59.920 the p BOC looking at creating a digital you want 0:17:00.120 --> 0:17:03.680 a digital euro, I think a digital doll or maybe 0:17:03.680 --> 0:17:06.080 a little bit far away. But I have to ask, 0:17:06.480 --> 0:17:09.080 when you think about that from a regulatory standpoint, and 0:17:09.480 --> 0:17:14.200 those actually backed by these major central banks, what is 0:17:14.480 --> 0:17:18.520 the value or what is the appeal of cryptocurrencies. Well, 0:17:18.600 --> 0:17:20.760 so the fact of the matter is, once stellar, we 0:17:20.800 --> 0:17:23.399 focus a lot on stable coins, and CBDCs are an 0:17:23.400 --> 0:17:25.240 asset that we would love to have because we focus 0:17:25.320 --> 0:17:29.320 on payments and payments. Really you want to use a 0:17:29.400 --> 0:17:32.960 stable coin or a CBDC because it's going to create 0:17:33.040 --> 0:17:35.480 trust and going to create credibility. When you're sending a payment, 0:17:35.560 --> 0:17:37.040 you want to know that what you send is also 0:17:37.080 --> 0:17:39.040 what you're going to receive on the other side or 0:17:39.080 --> 0:17:40.800 the person is going to receive on the other side. 0:17:40.880 --> 0:17:44.040 So I actually think it's a really strong uh, it's 0:17:44.080 --> 0:17:46.840 a strong message that government see the value of this technology. 0:17:46.960 --> 0:17:49.760 If you issue a CBDC and it's available on lots 0:17:49.800 --> 0:17:52.520 of different chains, it creates this opportunity to be able 0:17:52.560 --> 0:17:55.399 to leverage these assets in a really positive way. It 0:17:55.520 --> 0:17:59.480 creates this sort of borderless economy of scale for for 0:17:59.560 --> 0:18:01.960 folks to be able to send and receive value all 0:18:02.000 --> 0:18:04.879 over the world. Then give us, if you could just 0:18:05.000 --> 0:18:07.040 kind of an overview of kind of where we are 0:18:07.240 --> 0:18:11.719 in the regulatory environment for the crypto space. What are 0:18:11.800 --> 0:18:13.880 some of the things that you're looking at investors should 0:18:13.920 --> 0:18:16.920 be looking at. You think, Yeah, so in the US, 0:18:16.960 --> 0:18:18.640 a lot of the focus right now, I think it's 0:18:18.640 --> 0:18:21.119 going to be on stable coins. Not surprisingly, what happened 0:18:21.200 --> 0:18:23.920 with Terra and Luna a couple of weeks ago really 0:18:24.119 --> 0:18:26.920 created more and more focused on this particular issue. We've 0:18:26.960 --> 0:18:30.199 been advocating for stable coin legislation for a while now, 0:18:30.720 --> 0:18:32.960 and again this is important to us because we like 0:18:33.119 --> 0:18:35.760 to be able to have stable coins, which are just 0:18:35.920 --> 0:18:38.800 to get clarity. From our standpoint, we see stable coins 0:18:38.840 --> 0:18:40.800 as those assets that are one to went backed with 0:18:41.280 --> 0:18:44.760 fiat so currency like stable currency, and that you can 0:18:44.840 --> 0:18:47.680 hold those assets, that those assets are held in an account, 0:18:48.000 --> 0:18:51.080 that is, they're reserved and they're held in an insured account, 0:18:51.320 --> 0:18:52.960 so that you know that you're going to be able 0:18:53.000 --> 0:18:55.639 to trust and have credibility with respect to the asset 0:18:55.720 --> 0:18:57.760 that you're sending. So I think we're going to see 0:18:57.800 --> 0:19:00.800 at least in the US some regulation around on stable coins, 0:19:00.920 --> 0:19:03.840 so that basically in what I just said in terms 0:19:03.880 --> 0:19:07.280 of having audits and reserves and making sure that they're 0:19:07.320 --> 0:19:09.199 the back one to one and that there's a lot 0:19:09.240 --> 0:19:12.280 of transparency for the the companies and the end users 0:19:12.359 --> 0:19:14.320 that are leveraging those assets so that they can feel 0:19:14.359 --> 0:19:16.600 good about them. So we've see a lot of movement 0:19:16.640 --> 0:19:18.639 towards this. I think that we'll see something like this, 0:19:18.760 --> 0:19:20.800 if not by the end of this year early next year, 0:19:21.320 --> 0:19:24.320 and then there's obviously going to be focused around the 0:19:24.440 --> 0:19:27.240 trading pieces and what's happening in that market. All right, 0:19:27.320 --> 0:19:30.639 daniel thank you very much for that overview. Danielle Dixon, 0:19:30.840 --> 0:19:34.480 CEO and executive director the Stellar Development Foundation, kind of 0:19:34.480 --> 0:19:36.760 getting an overview kind of where we are on some 0:19:36.920 --> 0:19:40.040 of the big big macro issues on the crypto space. 0:19:43.880 --> 0:19:47.600 Mika Kaufman, CEO and founder of Fiber joins us simple 0:19:47.960 --> 0:19:50.000 on the New York Stock Exchange. You can punch into 0:19:50.000 --> 0:19:52.960