WEBVTT - ETFs, CPI, Housing, And Crypto (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 --> 0:00:23.080 at Blueberg dot com slash podcast. Boy, I'm looking at 0:00:23.239 --> 0:00:26.360 w t I crude oil pushing a hundred twenty bucks 0:00:26.360 --> 0:00:30.400 a barrel. It's pretty unbelievable. Pretty bike, that's that's the 0:00:30.440 --> 0:00:32.320 way to go. Yeah, I'm the e bike is the 0:00:32.320 --> 0:00:34.680 way to go, all right, Tom Johnston, he's a partner 0:00:34.720 --> 0:00:37.440 Blue Horizon. I'm sorry, Tim Johnson, Thank you very much, 0:00:37.520 --> 0:00:41.360 Tim Johnson, partner Blue Horizon. Blue Horizon b n E 0:00:41.360 --> 0:00:44.240 E t F is listed on the NASDAC. I'm sorry. 0:00:44.560 --> 0:00:47.320 N y s E b n E is the ticker 0:00:47.600 --> 0:00:50.200 Blue Horizon New Energy Economy. I want to talk new 0:00:50.280 --> 0:00:54.200 energy because I think about oil barrel, I'm thinking about solar, 0:00:54.320 --> 0:00:57.000 I'm thinking about when I'm thinking about e bikes. Tim, 0:00:57.000 --> 0:00:58.840 thanks so much for joining us here. Talk to us 0:00:58.880 --> 0:01:02.960 about what you're doing Blue Horizon New Energy Economy. What 0:01:03.080 --> 0:01:04.920 is the e t F that you guys have and 0:01:05.000 --> 0:01:08.200 kind of what's the focus. Yeah, thank you for having me. 0:01:08.400 --> 0:01:11.600 So we have an index e t F, as you said, 0:01:11.600 --> 0:01:15.440 which is called Blue Horizon New Energy Economy one Index, 0:01:15.880 --> 0:01:18.720 and what we do is we cover five key segments 0:01:19.040 --> 0:01:22.840 across the new energy thematic, which we then subdivide into 0:01:22.840 --> 0:01:26.160 twenty five sub segments with a hundred name holding And 0:01:26.200 --> 0:01:29.759 what we're trying to do is actually reflect this transition 0:01:29.800 --> 0:01:32.800 you just talked about w t I and what's going 0:01:32.840 --> 0:01:36.040 on and what we would consider the old energy world. 0:01:36.440 --> 0:01:38.840 But we all know, as you said, we were transitioning 0:01:38.880 --> 0:01:41.920 into this new energy economy. The bikes is one part 0:01:42.000 --> 0:01:44.480 of of that, but of course there's a whole range 0:01:44.480 --> 0:01:48.600 of different things including solar and generation all the way 0:01:48.640 --> 0:01:51.520 through to how we consume that energy that we see 0:01:51.520 --> 0:01:55.000 as being an important investment thematic going forward for the 0:01:55.080 --> 0:02:01.080 decade become and beyond. So who are the holdings here, um, 0:02:01.440 --> 0:02:05.640 in this e t F And are they all public companies? Um? 0:02:05.680 --> 0:02:09.520 Are they all you know, clean energy? What are we 0:02:09.520 --> 0:02:13.600 talking about? Yeah? Absolutely so they're all public companies. We 0:02:13.639 --> 0:02:17.280 have a rigorous process where we go by, uh, these 0:02:17.360 --> 0:02:22.400 five sub segments which cover emobility, energy storage, performance materials, 0:02:22.880 --> 0:02:27.640 energy distribution, and energy generation. And what we do is 0:02:27.720 --> 0:02:30.280 we have a team that we've brought together from industry 0:02:30.720 --> 0:02:34.840 with expertise in these different various backgrounds. And what we 0:02:34.880 --> 0:02:38.600 do is we evaluate companies that are listed not just 0:02:38.680 --> 0:02:42.480 in North America but but around the world to first 0:02:42.520 --> 0:02:45.680 of all, evaluate them from first principle's perspective, to understand 0:02:45.960 --> 0:02:48.960 the underlying principles of their business and to be able 0:02:49.000 --> 0:02:51.360 to rate them accordingly. But then we also look at 0:02:51.400 --> 0:02:54.360 things like liquidity and other aspects which are important to 0:02:54.480 --> 0:02:58.680 build together effectively. What it is a fund that reflects 0:02:58.720 --> 0:03:02.320 this new energy transition in a in a very comprehensive way. 0:03:02.680 --> 0:03:06.280 All right, So, Tim, I'm all in on new energy, 0:03:06.320 --> 0:03:10.119 alternative energy. You know, I get it. But boy, it's 0:03:10.120 --> 0:03:13.120 six dollars a gallon for gas. I'm like, crank up 0:03:13.160 --> 0:03:17.080 the the drills, crank up the refineries. Let's get some 0:03:17.080 --> 0:03:19.400 more supply on the market. You can't do it that fast, 0:03:19.520 --> 0:03:22.880 I guess. So are you sensing you know, in this 0:03:23.000 --> 0:03:26.400 environment where now, Tim, with with these higher energy prices 0:03:26.440 --> 0:03:32.600 a greater incentive for companies for consumers to embrace alternative 0:03:32.600 --> 0:03:34.640 how are you thinking about that because wait for me, 0:03:34.720 --> 0:03:37.760 it kind of goes both ways. Yeah, no, absolutely, and 0:03:37.760 --> 0:03:40.800 it is a cyclical cycle. Right with with any new 0:03:40.880 --> 0:03:45.400 technology or emerging industries, you're going to have waves where 0:03:45.480 --> 0:03:50.000 you're seeing the growth of these segments across the economies 0:03:50.040 --> 0:03:53.160 around the world. And so what we see is, you know, 0:03:52.920 --> 0:03:55.080 you know, over the last couple of years, we've seen 0:03:55.400 --> 0:03:58.680 a real portion terms of all let's say, the old 0:03:58.800 --> 0:04:02.440 energy We've had a lot of background issues associated with 0:04:03.040 --> 0:04:07.120 the conflicts, but also the broader things that are affecting 0:04:07.120 --> 0:04:12.119 the economy around COVID, etcetera. That have put pressure on pricing, 0:04:12.280 --> 0:04:16.400 which includes the old energy commodities. But what we know 0:04:16.680 --> 0:04:18.720 is that the world is shifting. The world is shifting 0:04:18.760 --> 0:04:22.560 away from this old energy economy to this new energy economy, 0:04:22.839 --> 0:04:25.960 and it's happening right now. It's happening under our feet. 0:04:26.360 --> 0:04:28.720 And so what we see is that whilst the old 0:04:28.839 --> 0:04:32.960 energy economy is is important and relevant today and we're 0:04:32.960 --> 0:04:35.960 seeing high prices as you said, in the oil sector, 0:04:36.279 --> 0:04:38.880 we do believe that this will all swing back and 0:04:38.920 --> 0:04:42.799 it will come back to favor these new energy companies 0:04:42.920 --> 0:04:46.719 that are really going to benefit from our entire shift 0:04:46.760 --> 0:04:48.960 in terms of how this economy works. What do you 0:04:49.000 --> 0:04:52.280 make of the recent moves in the price. I mean 0:04:52.320 --> 0:04:57.240 we're looking at right now, be any um, but we 0:04:57.360 --> 0:05:00.880 ban up at thirty in the thirties, but almost thirty 0:05:00.880 --> 0:05:03.640 four at the beginning of last year. What's going on 0:05:03.680 --> 0:05:07.240 with price? Yeah? Absolutely so. One of the benefits of 0:05:07.279 --> 0:05:10.800 having this broad range hundred name index is if you 0:05:10.839 --> 0:05:15.159 look across our volatility across the segment against the piers, 0:05:15.279 --> 0:05:17.599 but if you also look at the maximum draw down, 0:05:18.000 --> 0:05:21.640 you'll see that we generally outperform out piers in this sector. 0:05:22.160 --> 0:05:24.440 And so what we say is that this is a 0:05:24.600 --> 0:05:29.279 great part of your long term portfolio. This isn't something 0:05:29.320 --> 0:05:32.040 that we recommend people trade in and out on on 0:05:31.960 --> 0:05:35.200 on a regular basis. It's more about if you believe 0:05:35.240 --> 0:05:38.040 in this transition to this new energy world, this new 0:05:38.120 --> 0:05:41.240 energy economy, then this is a great cornerstone for your 0:05:41.440 --> 0:05:46.440 for your portfolio as you look to transition through different 0:05:46.480 --> 0:05:51.239 segments and different macro backdrops. Tim just real quick thirty seconds. 0:05:51.240 --> 0:05:54.200 I'm heading down to Texas next week. Is the US 0:05:54.240 --> 0:05:56.280 ahead or behind kind of the rest of the world 0:05:56.279 --> 0:05:59.440 in terms of some of these new energy initiatives? Yeah, 0:05:59.560 --> 0:06:02.680 The US is desperately trying to catch up, and so 0:06:02.839 --> 0:06:06.200 they've made you quite good strides. Over the last couple 0:06:06.240 --> 0:06:12.600 of years, we've seen an increase in regionalization of supply chains, 0:06:12.640 --> 0:06:15.800 and that will continue to benefit the US. The US, 0:06:15.880 --> 0:06:19.320 of course, is a major consumer of these materials and 0:06:20.040 --> 0:06:24.040 consumer of the end products which which rely on these materials, 0:06:24.520 --> 0:06:26.919 and so we see that the US will continue to 0:06:27.080 --> 0:06:29.640 enhance its position, but they still have a long way 0:06:29.680 --> 0:06:31.880 to go to catch up with other parts of the world. 0:06:31.920 --> 0:06:34.719 All right, Tim, Thanks very much, Tim Johnson, their partner 0:06:34.760 --> 0:06:37.800 at Blue Horizon. The E t F ticker is B 0:06:38.080 --> 0:06:40.560 and E and you can check it out listed on 0:06:40.640 --> 0:06:43.159 the n y C and find out the details on 0:06:43.200 --> 0:06:52.080 your Bloomberg. Well, we're gonna get some CPI data Friday, 0:06:52.360 --> 0:06:54.920 and I think the question or the issue for many 0:06:54.960 --> 0:06:58.600 investors is is just going to show us that inflation 0:06:58.880 --> 0:07:02.320 has or maybe is peeking. And that's kind of what 0:07:02.400 --> 0:07:04.320 I think some folks are looking for. Our next guess 0:07:04.360 --> 0:07:07.080 isn't so sure and a want chief US economists for 0:07:07.120 --> 0:07:11.080 Bloomberg Economics, uh, and I think so much for joining 0:07:11.160 --> 0:07:14.840 us here. When we see the CPI data on Friday, 0:07:14.880 --> 0:07:17.480 what do you expect to see. Are you looking for 0:07:17.480 --> 0:07:22.160 signs of of peak inflation? Yeah, so I'm looking for 0:07:22.400 --> 0:07:28.080 signs that services inflation is slowing and that core good 0:07:28.200 --> 0:07:34.120 inflation is um at zero or even um you know negative, 0:07:34.400 --> 0:07:38.080 because in order for inflation you're a year to be 0:07:38.160 --> 0:07:42.080 peaking soon. We really need to see the core that's 0:07:42.400 --> 0:07:47.440 inflation coming down nearly fat otherwise are my team's expectation 0:07:47.600 --> 0:07:50.400 is that we likely could see at the new peak 0:07:50.440 --> 0:07:55.120 in July and potentially another new peak in September. Wow, 0:07:55.240 --> 0:07:58.760 that's is that consensus. I just got a message from 0:07:58.840 --> 0:08:01.840 every core I s I that says, um, you know, 0:08:01.880 --> 0:08:04.440 after a spike in inflation that goes down as fast 0:08:04.480 --> 0:08:08.720 as it went up. Yeah, I mean right now, the 0:08:08.800 --> 0:08:14.119 inflationary pictures fairly mixed. It's very difficult to read because 0:08:14.160 --> 0:08:17.960 from one hand you have core versus headline issues. So 0:08:18.400 --> 0:08:22.600 headline is not speaking because gasoline prices are surging right 0:08:22.640 --> 0:08:26.880 now and food prices continue to search. Services inflation continued 0:08:26.920 --> 0:08:30.440 to search. But then uh, core inflation, the good on 0:08:30.560 --> 0:08:33.719 the good side, we see see thanks flowing. You know, 0:08:33.880 --> 0:08:38.240 targets earning yesterday tells earning forecasts yesterday tells you that 0:08:38.480 --> 0:08:42.559 demand for for good, it's cooling rapidly. And then on 0:08:42.640 --> 0:08:45.760 the other hand, you also have the pc EU deflator, 0:08:45.800 --> 0:08:49.559 which is the FED Preferred inflation indicator, and that is 0:08:49.640 --> 0:08:53.240 even cooling faster than the c p I, the core 0:08:53.400 --> 0:08:57.280 PC I mean, because they have smaller weights on a 0:08:57.360 --> 0:09:01.640 lot of stuff that's driving those fast the CPI inflation 0:09:01.760 --> 0:09:06.319 like shelter, like gasoline and used cars, right, which we 0:09:06.400 --> 0:09:09.720 all we all three categories we expect to be driving 0:09:09.800 --> 0:09:13.679 CPI inflation in the next few months. So and you know, 0:09:13.840 --> 0:09:16.400 for the headline number, which I think a lot of 0:09:16.640 --> 0:09:20.000 people obviously will focus on, I mean, it's driven by 0:09:20.080 --> 0:09:23.280 the stuff that just consumers have to deal with every day, 0:09:23.320 --> 0:09:27.439 as you mentioned, rising gasoline prices, rising prices at the supermarket, 0:09:27.480 --> 0:09:30.920 and there's really nothing that the Federal Reserve can do 0:09:31.160 --> 0:09:35.319 to really impact those areas, is that right? Yeah, But 0:09:35.440 --> 0:09:39.119 the such objective right now is to pre empt inflation 0:09:39.280 --> 0:09:44.400 expectations to an anchor, because if expectations an anchored, then 0:09:44.679 --> 0:09:47.559 they're going to have to high create way higher in 0:09:47.720 --> 0:09:51.760 order to generate the same amount of this inflation compared 0:09:51.800 --> 0:09:56.120 to when expectations is not an anchored, and unfortunately often 0:09:56.240 --> 0:10:02.160 times it is gasoline places in food prices that dry expectations. Furthermore, 0:10:02.280 --> 0:10:05.280 another thing that the FED should be trying to preempt 0:10:05.880 --> 0:10:09.600 is the wage price spiral, and that could be generated 0:10:09.679 --> 0:10:13.320 by indexation of cost of living to CPILE. It's tied 0:10:13.360 --> 0:10:17.840 to CPI, not PCD and and that so what they're 0:10:17.880 --> 0:10:21.560 trying to do is not to lower those immediately lower 0:10:21.640 --> 0:10:24.839 those prices, gas and food prices. Indeed, it's really to 0:10:25.040 --> 0:10:28.840 pre empt expectations from it. Okay, by the way, Anna, 0:10:28.960 --> 0:10:31.520 the FED is just one piece, and I know the 0:10:31.559 --> 0:10:34.080 Biden administration would like us to believe that it's totally 0:10:34.160 --> 0:10:37.120 the FED responsibility and only the FED can deal with inflation. 0:10:37.200 --> 0:10:40.600 But clearly there are some things government can do. Gina 0:10:40.720 --> 0:10:45.120 Armando was talking about lifting some tariffs recently. What do 0:10:45.240 --> 0:10:50.920 you think Washington can and should do to help fight 0:10:51.080 --> 0:10:57.880 rising prices? Yeah, I think one immediate policy or that 0:10:58.000 --> 0:11:01.160 they could do is to make any more policy mistake. 0:11:01.760 --> 0:11:05.439 And this is about to come across a palace, but 0:11:05.640 --> 0:11:08.480 I think the student debt forgiveness, for example, the ten 0:11:08.520 --> 0:11:12.800 thousand dollars student net forgiveness, is going to be inflationary 0:11:12.880 --> 0:11:14.839 if they do so, especially as it's going to be 0:11:15.040 --> 0:11:19.480 universal and only capping a couple of making three hundred k. 0:11:20.120 --> 0:11:24.120 I estimated that, based on the advantised stations schedule of 0:11:24.240 --> 0:11:27.920 the students loan, that that it could generate an extra 0:11:28.240 --> 0:11:32.480 seventeen hundred dollars perpetually each year for a couple of 0:11:32.640 --> 0:11:37.839 making you know, uh, three k. Um, it's um, it's 0:11:37.920 --> 0:11:40.920 it's huge amount. But it won't it won't. It won't 0:11:41.120 --> 0:11:45.000 be given to any couples make making more than three k. Right. 0:11:45.040 --> 0:11:48.360 And these people who we think of as um, you know, 0:11:48.600 --> 0:11:53.319 rich people, although we've seen surveys lately showing that a 0:11:53.440 --> 0:11:55.840 lot of them are still living paycheck to paycheck. They 0:11:55.880 --> 0:12:00.079 have the highest student debt, right, but also they have 0:12:00.200 --> 0:12:03.000 been earning a lot more. These are we're talking about 0:12:03.120 --> 0:12:07.600 lawyers and PhD in economic and you know, people who 0:12:07.679 --> 0:12:11.720 could who could pay off. And I estimate that this um, 0:12:11.920 --> 0:12:15.520 this the student death forgiveness, could be contributing an additional 0:12:15.640 --> 0:12:20.199 of newer point five percentage point to inflation and this 0:12:20.440 --> 0:12:23.000 year or next year, this year to next year. So 0:12:23.880 --> 0:12:27.040 given where inflation is at right now, we certainly don't 0:12:27.080 --> 0:12:30.840 need another you know, fifty basis points higher inflation. Well, 0:12:30.840 --> 0:12:36.559 at least you've got the uh, uh, the the rescinding 0:12:36.760 --> 0:12:39.440 of the salt tax acting in the opposite direction, right, 0:12:39.440 --> 0:12:41.360 because a lot of these people live in Connecticut, New 0:12:41.440 --> 0:12:45.559 Jersey and California, and uh they're getting hit hard by 0:12:45.800 --> 0:12:50.560 state and local taxes which they can no longer deduct. Well, 0:12:51.000 --> 0:12:54.760 but that that effect had been in trains and it 0:12:54.840 --> 0:13:02.360 still hurts Anna. I limit that E shows Yeah, so Anna, 0:13:02.600 --> 0:13:03.920 you know one of the things that you know, I 0:13:04.040 --> 0:13:06.600 need to remind myself of as we think about inflation 0:13:06.720 --> 0:13:10.000 is this really is a global issue. It's not just 0:13:10.120 --> 0:13:13.320 the U S issue. And there's true is that typical 0:13:13.440 --> 0:13:15.280 anda do we typically see when the US is in 0:13:15.360 --> 0:13:18.559 a significantly inflationary environment that we see it in the 0:13:18.800 --> 0:13:22.480 rest of the world as well. Well. The things that 0:13:22.720 --> 0:13:26.720 the fact that all all many countries are seeing inflationary pressure, 0:13:26.720 --> 0:13:29.280 it means there's a common shock across the world, and 0:13:29.360 --> 0:13:32.160 that is the supply shock. But the issue is that 0:13:32.400 --> 0:13:38.320 US inflation is uniquely high um before the war in Ukraine, 0:13:38.400 --> 0:13:41.920 the US inflation is running about three percentage point higher 0:13:42.040 --> 0:13:45.839 than the rest of the advanced economy UH in the O, E, 0:13:45.920 --> 0:13:49.319 C D countries, which means that in US there's a 0:13:49.600 --> 0:13:53.480 specific demand component to the cost of our high inflation, 0:13:53.640 --> 0:13:58.520 which the Europe does not have for example. All right, Anna, 0:13:58.559 --> 0:14:01.320 thank you so much for joining us. Really appreciated. Annawan, 0:14:01.400 --> 0:14:04.360 chiefs economist for Bloomberg Economics. Check out this resume. I 0:14:04.480 --> 0:14:07.680 was just gonna say, I mean, PhD from the Economics 0:14:07.720 --> 0:14:10.560 and University of chicagoy're pretty good. They're pretty good. They 0:14:10.559 --> 0:14:12.720 have a pretty good program, and they like numbers. There 0:14:13.360 --> 0:14:17.040 be an economics and statistics statistics from Berkeley also pretty 0:14:17.040 --> 0:14:20.640 good where she worked before Bloomberg. Former Federal Reserve Principal economist, 0:14:20.760 --> 0:14:24.960 former Chief International Economist on White House Council of Economic Yeah, 0:14:25.000 --> 0:14:27.200 that's not bad. Former Deputy Director in the Office of 0:14:27.280 --> 0:14:31.040 International Economic Analysts at the U. S. Treasury, and former 0:14:31.120 --> 0:14:35.720 international economists. I also I love reading your research, So 0:14:36.160 --> 0:14:38.240 thank you very much for joining us, and I hope 0:14:38.840 --> 0:14:41.440 next time you come into New York City that join 0:14:41.640 --> 0:14:44.760 us in the studio here at seven thirty one Lexington Avenue, 0:14:44.760 --> 0:14:46.880 because we are so happy that you are working for 0:14:47.080 --> 0:14:54.800 us and along chief US economist for Bloomberg LP. Here's 0:14:54.800 --> 0:14:57.200 the story going across the Bloomberg Manley call is pretty cool. 0:14:57.560 --> 0:15:01.520 Mike Novigrats, the founder and chief executive of Galaxy Digital 0:15:01.640 --> 0:15:04.200 Holdings says that two thirds of the hedge funds that 0:15:04.280 --> 0:15:07.560 invest in cryptocurrencies will fail as a consequence of the 0:15:07.640 --> 0:15:11.080 current market downtown downturn. Not very bullish on the crypt 0:15:11.120 --> 0:15:13.600 on our next guest and you and he says, and 0:15:13.720 --> 0:15:15.840 we can get into this with our guests, but it's 0:15:15.880 --> 0:15:19.000 because the Central Bank has taken the punch bowl away. 0:15:19.160 --> 0:15:20.800 They have, I know, and that's kind of gonna be 0:15:20.800 --> 0:15:22.440 an issue on our next guest. I think might have 0:15:22.640 --> 0:15:26.200 some thoughts on that time. Or Hyatt, CEO of PGM. 0:15:26.280 --> 0:15:30.200 That's the investment arm of Prudential Insurance Company. They Prudential 0:15:30.280 --> 0:15:32.920 is a lifelong resident New Jersey. They are the pride 0:15:33.040 --> 0:15:35.600 of Newark, New Jersey. We love to folks at Prudential 0:15:35.600 --> 0:15:37.880 there and what they do in Jersey time or thanks 0:15:37.920 --> 0:15:40.280 so much for joining it at PGIM. What do you 0:15:40.360 --> 0:15:43.320 guys think about crypto? What are you doing there? So 0:15:43.600 --> 0:15:45.800 you know, I think I agree with Agravats, but I think, 0:15:45.840 --> 0:15:48.560 but I think there is probably some money to be 0:15:48.680 --> 0:15:53.360 made by quantitage funds in alpha generation because there is 0:15:53.480 --> 0:15:58.480 so much speculative fear of missing out retail money flowing 0:15:58.560 --> 0:16:00.800 into crypto currencies that if you on the other side 0:16:00.840 --> 0:16:03.840 of that, you can generate alpha. Uh. And maybe it's 0:16:03.840 --> 0:16:06.280 only one third of hedge funds to do that, But 0:16:06.440 --> 0:16:08.600 we've taken more of a lens, just a cold hard 0:16:08.640 --> 0:16:12.160 look at the data because there's just so much mythology 0:16:12.480 --> 0:16:15.960 and uh and you know social media frenzy around this. 0:16:16.480 --> 0:16:18.480 We took a cold hard look at the data and said, 0:16:18.480 --> 0:16:21.200 if you take bitcoins now a teenager, it's been around 0:16:21.240 --> 0:16:23.160 for over twelve years. If you look at the data, 0:16:23.480 --> 0:16:26.320 particularly the last four years, you know, early early entrance 0:16:26.360 --> 0:16:28.400 had a great chance to make a lot of money 0:16:28.480 --> 0:16:31.000 with this. What does the data say And as a 0:16:31.160 --> 0:16:35.600 long term investment, should you hold cryptocurrencies in your portfolio 0:16:35.760 --> 0:16:39.320 as an institutional, as a sophisticated investor, Our answer is no. 0:16:39.440 --> 0:16:42.920 The data speaks volumes against that idea based on everything 0:16:43.000 --> 0:16:44.920 we see to date and what's going to happen in 0:16:44.960 --> 0:16:48.240 the near future. Why, you know, one of the encouraging 0:16:48.320 --> 0:16:53.840 things for crypto balls has been UM adoption by institutional 0:16:53.920 --> 0:16:57.240 investors and more and more banks are opening trading desks, 0:16:57.840 --> 0:17:00.880 more and more banks are looking at custody UM and 0:17:02.040 --> 0:17:06.639 it seems like the ratio of retail to institutional continues 0:17:06.720 --> 0:17:09.960 to be bullish. Do you think that that's going to 0:17:10.080 --> 0:17:13.440 turn around? Now? I think it's going to turn around. 0:17:13.560 --> 0:17:15.880 You know. Again, the trick here to be a good 0:17:15.920 --> 0:17:18.960 active investor is to look at the data. I will 0:17:18.960 --> 0:17:21.320 say yesterday we were looking at the e t f 0:17:21.480 --> 0:17:25.960 s and year to date, among the entire universe of 0:17:26.040 --> 0:17:28.760 e t s, which is a big universe. Now, um 0:17:29.200 --> 0:17:32.359 crypto e t s are the second biggest losers with 0:17:33.359 --> 0:17:36.800 draw downs. The only e t s that have lost 0:17:36.920 --> 0:17:40.200 more are Russia e t f s. So if you 0:17:40.280 --> 0:17:42.639 go all the way back to even twenty nineteen and 0:17:42.760 --> 0:17:45.560 you look at the risk adjusted return of cryptocurrency is, 0:17:45.600 --> 0:17:48.159 given the draw down, given the volatility, given all the 0:17:48.960 --> 0:17:52.080 turbulence that they have, they aren't better than bonds and stocks. 0:17:52.440 --> 0:17:54.920 If you look at the correlations, which is what institutional 0:17:54.960 --> 0:17:58.639 investors do, Is it giving me diversified return with equities, 0:17:58.680 --> 0:18:01.600 with real estate, with go old? Definitely not. It's not, 0:18:02.200 --> 0:18:03.800 you know for the first five seven years. It did 0:18:03.840 --> 0:18:06.200 for the last five years. It is giving you risk 0:18:06.359 --> 0:18:09.680 on levered access to the same risk you're getting elsewhere. 0:18:09.760 --> 0:18:12.399 You're not getting un correlated returns. Is it a safe 0:18:12.440 --> 0:18:15.520 haven you know, gold has five thousand years of history 0:18:15.600 --> 0:18:19.120 and intrinsic uses in industry and jewelry that does make 0:18:19.160 --> 0:18:21.480 it a decent long term inflation head never a great 0:18:21.480 --> 0:18:24.040 shot term, but a good long term inflation hedge in 0:18:24.119 --> 0:18:26.280 the only incidence of inflation, and we boy, we have 0:18:26.359 --> 0:18:29.720 it in spades. Now Bitcoin is moving in the opposite 0:18:29.760 --> 0:18:32.160 direction to infish, and it's not acting as a safe haven. 0:18:32.240 --> 0:18:34.199 It's not acting as a hedge. It didn't act as 0:18:34.240 --> 0:18:36.880 a safe haven in in COVID, so it's not really 0:18:36.920 --> 0:18:39.320 playing the digital goal role. It's not really But maybe 0:18:39.359 --> 0:18:41.160 that's just now. I mean, if you look at maybe 0:18:41.240 --> 0:18:45.800 four thousand, nine hundred and ninety three years ago, gold 0:18:45.880 --> 0:18:50.000 had like a five year spot of correlation. So it's 0:18:50.080 --> 0:18:51.920 always easier to say that these are the sort of 0:18:52.000 --> 0:18:54.359 early pangs of a new asset class, and you know 0:18:54.400 --> 0:18:56.439 it's going to be volatile and it's going to stabilize. 0:18:56.480 --> 0:18:58.840 But twelve years is a long time guy. So there's 0:18:58.840 --> 0:19:01.120 a lot of data now that that's showing it's not true. 0:19:01.119 --> 0:19:03.480 And I think I see two other headwinds coming down 0:19:03.520 --> 0:19:06.560 the road. One is regulators are getting smart around this 0:19:06.720 --> 0:19:09.600 and finally catching up. You know, regulation lags by several years. 0:19:09.640 --> 0:19:12.399 We've seen it in tech, we're now seeing it with cryptocurrency. 0:19:12.520 --> 0:19:15.239 They're gonna be big regulatory headwinds from China all the way. 0:19:15.280 --> 0:19:16.879 They can just ban it and they have, you know, 0:19:16.960 --> 0:19:20.600 the mining of cryptocurrency. But regulators around the world are 0:19:20.640 --> 0:19:22.200 catching up on this and that's going to be a 0:19:22.240 --> 0:19:25.640 big headwind. And second, I think maybe it's two three 0:19:25.680 --> 0:19:27.800 years down the road, maybe it's five. But when you 0:19:27.880 --> 0:19:30.639 have the digital dollar, the digital or the digital staring 0:19:30.680 --> 0:19:34.119 and all those stuffs are working CBDCs, why would I 0:19:34.280 --> 0:19:37.640 Why would I buy a stable coin that has liquidity risk, 0:19:37.720 --> 0:19:39.840 that has credit risks with unclear reserves when I can 0:19:39.920 --> 0:19:43.399 buy the digital dollar. Now all the infrastructure that cryptocurrencies 0:19:43.400 --> 0:19:45.640 have built, that is going to be where I think 0:19:45.720 --> 0:19:48.040 the value is. It's in the picks and the shovels, 0:19:48.119 --> 0:19:51.200 not in the goal. Cd d C is central bank 0:19:51.280 --> 0:19:55.400 digital currency. Okay, shown off? Now all right, so Matt, 0:19:55.440 --> 0:19:57.399 we've been calling out some of the resumes of some 0:19:57.480 --> 0:20:00.800 of our guests today. Listen to this guy, Tamar PhD 0:20:00.880 --> 0:20:03.840 in economics from Oxford University. They're pretty good, but they're 0:20:03.880 --> 0:20:06.920 pretty good. Right now, he's in a radio station talking bitcoin, 0:20:07.680 --> 0:20:10.640 how the mighty have fallen? I mean when you look 0:20:10.640 --> 0:20:12.280 at like a I guess when I think about it, 0:20:12.320 --> 0:20:13.879 and I spent so long on the Wall Street and 0:20:13.920 --> 0:20:16.480 I figured it like if Wall streets into it, then 0:20:16.560 --> 0:20:19.040 it's kind of real, you know. And uh, And I 0:20:19.160 --> 0:20:22.200 just don't see the Jamie Diamonds of the world embracing crypto. 0:20:22.440 --> 0:20:25.080 He hates it. He hates it. And I don't see 0:20:25.119 --> 0:20:28.159 a crypto trading desk on Goldman Sacts. They might have one, 0:20:28.160 --> 0:20:30.600 I don't know, but I have one in the works. 0:20:30.720 --> 0:20:33.760 And look, it doesn't matter if Jamie Diamond and Warren 0:20:33.800 --> 0:20:37.959 Buffett and everybody else over you know five doesn't like crypto. 0:20:38.040 --> 0:20:40.680 That's not necessarily speaking that that's the question. How do 0:20:40.760 --> 0:20:44.439 you do you need the validation of Greater Wall Street 0:20:44.560 --> 0:20:47.119 too for the class you know as as you know, 0:20:47.320 --> 0:20:49.720 we manage over one point for treating and asclets, we 0:20:49.760 --> 0:20:51.960 don't need their validation. But but we do look for 0:20:52.040 --> 0:20:54.920 certain things in any new asset class. Right First, is 0:20:55.000 --> 0:20:58.680 there a stable correlation without their asset classes? B? Is 0:20:58.760 --> 0:21:00.800 there a source of value that has some sort of 0:21:00.840 --> 0:21:04.399 intrinsic purpose beyond speculation and speculation could continue you know, 0:21:04.520 --> 0:21:07.080 retail investor. Scan might make money for a while, but 0:21:07.240 --> 0:21:09.320 is there a true source of value and that is 0:21:09.359 --> 0:21:12.720 there a stable regulatory regime or the regulatory headwinds. Bitcoin 0:21:12.800 --> 0:21:15.480 and other cryptocurrencies don't meet any of that. But we 0:21:15.600 --> 0:21:17.320 are bullish because I don't want to end on a 0:21:17.400 --> 0:21:21.720 variation note. We are bullish around the innovations that accidentally 0:21:21.800 --> 0:21:25.040 happened in the creation of bitcoin. And I'm talking technology 0:21:25.080 --> 0:21:29.800 with the blockchain, blockchains, smart contracts, tokenization of real assets. 0:21:30.040 --> 0:21:32.119 I told you that real value. You're preaching to the 0:21:32.200 --> 0:21:34.240 choir here, tam or Matt has been all over this 0:21:34.359 --> 0:21:36.119 team or high thank you so much for joining us. 0:21:36.320 --> 0:21:39.399 He's the CEO of p Jim joining us in our 0:21:39.400 --> 0:21:43.119 Bloomberg and our actor Broker studio, talking crypto as it 0:21:43.200 --> 0:21:45.920 continues to evolve as potentially an ASI class for some. 0:21:49.840 --> 0:21:53.119 All right, let's talk real estate, residential real estate again. 0:21:53.240 --> 0:21:55.600 Matt's been in the market. I am now out of 0:21:55.720 --> 0:21:58.879 the market. I prefer my position. But let's talk to 0:21:58.960 --> 0:22:00.920 someone who does this stuff for I mean Kenneth Leone, 0:22:01.440 --> 0:22:05.320 research director at CFR A. Ken has housing in this country, 0:22:05.880 --> 0:22:12.360 has it peaked? So there's an incredible housing shortage. We're 0:22:12.400 --> 0:22:15.840 talking millions since the housing crisis over ten years ago. 0:22:16.440 --> 0:22:22.480 That's not going to go away. And housing probably has 0:22:22.640 --> 0:22:26.640 peaked near term because of the pressure from rising interest 0:22:26.720 --> 0:22:33.440 rates mortgage rates above five it's hurting the product categories 0:22:33.920 --> 0:22:38.280 of entry level home buyers also move up categories. And 0:22:38.400 --> 0:22:43.920 the only areas on the recent National Association Realtors Existing 0:22:44.119 --> 0:22:48.160 inventory sales that was positive was the seven hundred fifty 0:22:48.240 --> 0:22:51.200 twill a million dollar category and above a million. So 0:22:51.520 --> 0:22:54.320 we are seeing moderation. Yes, I think we've seen a peak. 0:22:54.800 --> 0:22:57.520 So uh. By the way, Ken, we've been giving people's 0:22:57.560 --> 0:23:00.200 resumes out today. So you were imaging direct to a 0:23:00.280 --> 0:23:04.320 bear Stearns Senior VP at Lehman Brothers. Um, you were, uh, 0:23:04.920 --> 0:23:07.920 the global director of Equity Research at McGraw hill Financial. 0:23:08.000 --> 0:23:10.000 You know what you're doing, You know what you're talking about. 0:23:11.400 --> 0:23:15.040 What do you expect from mortgage rates going forward? Because 0:23:15.080 --> 0:23:18.840