WEBVTT - Broadcasting Live from Bloomberg Invest 0:00:02.920 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg business Week inside from the reporters and 0:00:13.080 --> 0:00:16.640 editors who bring you America's most trusted business magazine plus 0:00:16.720 --> 0:00:20.800 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.760 --> 0:00:30.360 Carol Master along with Tim Stenovik, live at Bloomberg invest 0:00:30.480 --> 0:00:33.040 in downtown Manhattan. Well, the nowzech one hundred. You know 0:00:33.040 --> 0:00:34.959 some of the numbers. It's up nearly forty percent from 0:00:34.960 --> 0:00:37.320 the late October low and video is up more than 0:00:37.320 --> 0:00:39.680 one hundred and fifty percent this year, one five h 0:00:39.840 --> 0:00:42.760 percent this year. Super micro computers up two hundred percent, 0:00:42.880 --> 0:00:45.440 Metas up more than forty Netflix is up forty. 0:00:45.479 --> 0:00:46.280 I mean, we could go. 0:00:46.280 --> 0:00:47.279 On and on and on. 0:00:47.640 --> 0:00:49.400 Alphabet thirty percent so far this year. 0:00:49.800 --> 0:00:52.280 Even better, Let's get to someone who is constantly tracking 0:00:52.280 --> 0:00:55.120 the global equity market and patterns, who earlier at Bloomberg 0:00:55.160 --> 0:00:57.639 invest talked about tech, talked about the tech bubble two 0:00:57.680 --> 0:01:00.960 point zero or nuts with us as Bomberg Intelligence Global 0:01:01.000 --> 0:01:04.160 had a portfolio strategy and chief equity strategist, Gina mard Adams. 0:01:04.200 --> 0:01:08.400 She's here on site at Bloomberg invest So a bubble, 0:01:08.800 --> 0:01:09.399 yeah your name? 0:01:09.520 --> 0:01:10.920 Well did you first of all, did you ask the 0:01:10.959 --> 0:01:13.360 audience if they thought no, okay, good, okay? 0:01:13.800 --> 0:01:15.840 I had no time only only to share all of 0:01:15.880 --> 0:01:17.560 my immense amount of slides. 0:01:19.200 --> 0:01:21.000 And the research shows that yeah. 0:01:21.120 --> 0:01:23.240 So look, a lot of the research we did really 0:01:23.280 --> 0:01:25.920 just compared the current environment to nineteen ninety nine, which 0:01:25.959 --> 0:01:28.160 I think most people think of as the classic bubble. 0:01:28.319 --> 0:01:31.240 But we do look at three really key differences between 0:01:31.800 --> 0:01:34.759 today's market environment and bubbles of the past. The first 0:01:34.840 --> 0:01:38.120 is sentiment and price trend. What we've seen in the 0:01:38.120 --> 0:01:40.000 market over the last five years is an eighty five 0:01:40.080 --> 0:01:42.440 percent ascension in prices. If you can look at big 0:01:42.480 --> 0:01:45.959 bubbles like the late nineteen nineties, the late nineteen twenties, 0:01:46.440 --> 0:01:50.360 you had four hundred percent gains in some cases, you know, 0:01:50.400 --> 0:01:53.040 at least two hundred percent. So this is just a 0:01:53.080 --> 0:01:55.920 tiny gain over the last five years because we've had 0:01:55.920 --> 0:02:01.280 those major corrections in the process. The second thing to 0:02:01.320 --> 0:02:04.800 think about is really fundamentals. When you look at valuations, 0:02:05.040 --> 0:02:08.000 you know, valuation spreads are nowhere near peak levels of 0:02:08.040 --> 0:02:11.520 even twenty twenty one, which you could claim was the 0:02:11.520 --> 0:02:15.160 market bubble, or two thousands, so valuation spreads are nowhere 0:02:15.200 --> 0:02:17.560 near those levels. Valuation spreads when we look at the 0:02:17.600 --> 0:02:20.480 most expensive stocks and compare those to the least expensive stocks, 0:02:20.520 --> 0:02:24.679 I do believe are the best representative of what sort 0:02:24.720 --> 0:02:27.960 of market sentiment or froth exists, because the earnings environment 0:02:28.040 --> 0:02:32.160 has really supported rotation into those more expensive stocks. For 0:02:32.200 --> 0:02:35.440 the most part, the priciest stocks in the index are 0:02:35.440 --> 0:02:37.880 actually the price that the stocks that have earnings growth, 0:02:37.880 --> 0:02:39.960 because there just hasn't been a lot of earnings growth elsewhere. 0:02:40.680 --> 0:02:42.680 You're just back from traveling, yes, and I'm sure you've 0:02:42.680 --> 0:02:45.840 been talking about this. Yes, Are there believers? Are people 0:02:45.880 --> 0:02:47.400 more skeptical about the runout? 0:02:48.520 --> 0:02:50.359 You know, I think there are a lot of skeptics. 0:02:50.400 --> 0:02:52.440 There are a lot of people that are just very worried. 0:02:53.639 --> 0:02:57.760 The concern really really emanates from concentration risk, though, which 0:02:57.919 --> 0:03:00.320 is the third kind of third point of how this 0:03:00.440 --> 0:03:04.880 environment is different, because we're incredibly sensitive today to what 0:03:05.000 --> 0:03:07.200 goes on in tech. I mean, before the advent of 0:03:07.240 --> 0:03:11.320 even the AI acceleration, tech was thirty percent of the 0:03:11.320 --> 0:03:13.399 market cap of the S and P five hundred back 0:03:13.400 --> 0:03:16.080 in the peak of the market bubble in ninety nine 0:03:16.120 --> 0:03:17.880 two thousand. We didn't get that, you know, it was 0:03:17.960 --> 0:03:22.200 just there, just wasn't this kind of influence. AI in 0:03:22.240 --> 0:03:25.200 particular has an extraordinary amount of influence, and it's a 0:03:25.280 --> 0:03:28.320 global phenomenon, and that's what fear. But what sparks a 0:03:28.360 --> 0:03:31.600 lot of fear is we are very dependent upon a 0:03:31.639 --> 0:03:37.120 continued solid environment for tech stocks. Can we trust tech stocks? 0:03:37.200 --> 0:03:39.240 Can we trust these companies are going to be able 0:03:39.280 --> 0:03:40.800 to put up this kind of earnings growth? It is 0:03:40.840 --> 0:03:44.360 anticipated by the consensus? And can you make money in 0:03:44.400 --> 0:03:46.760 an environment where such a few amount of stocks is 0:03:46.760 --> 0:03:49.520 actually carrying the index growth? And so there's a frustration. 0:03:49.640 --> 0:03:52.119 You gave us questions that we should probably ask can 0:03:52.200 --> 0:03:55.320 we trust? Can you make money? Yeah? 0:03:55.360 --> 0:03:55.800 You can? 0:03:55.920 --> 0:03:58.920 But it's very narrow, okay, right, And it's very difficult 0:03:58.960 --> 0:04:02.480 to beat the index. Think about across markets. Most major 0:04:02.520 --> 0:04:07.520 markets have stronger index level returns down in the United 0:04:07.560 --> 0:04:12.400 States over this quarter, yet the index is up. It's 0:04:12.440 --> 0:04:15.640 the same in many markets around the world. So it's 0:04:15.720 --> 0:04:17.960 really difficult if you're an active manager to be the 0:04:17.960 --> 0:04:21.680 index without leaning really heavily into AI in tech right now. 0:04:21.720 --> 0:04:23.120 And that makes folks fair, which. 0:04:22.920 --> 0:04:24.880 Just kind of feeds thing, right, The momentum. 0:04:25.760 --> 0:04:26.200 It does. 0:04:26.400 --> 0:04:28.799 I think that there has been this very big earnings 0:04:28.839 --> 0:04:32.520 case for tech stocks, though in AI stocks at large, 0:04:32.560 --> 0:04:34.520 and that's going to change in the second half of 0:04:34.520 --> 0:04:35.840 this year. And this is what we spend a lot 0:04:35.880 --> 0:04:38.160 of our time talking about, is can we get that 0:04:38.720 --> 0:04:42.960 incremental change in fundamentals that can support rotation into other 0:04:43.000 --> 0:04:45.680 parts of the market. We've been waiting and waiting and 0:04:45.720 --> 0:04:48.720 waiting for it. We've also been contending with this rolling 0:04:48.760 --> 0:04:51.360 recession throughout various industries for the last two years. It's 0:04:51.360 --> 0:04:55.240 just really difficult for investors who are accustomed to kind 0:04:55.240 --> 0:04:58.440 of the cycle, the economic cycle driving everything, and this 0:04:58.480 --> 0:04:59.920 has been a very different cycle. 0:05:00.080 --> 0:05:02.400 Gina, How are you in the team thinking about productivity 0:05:02.440 --> 0:05:05.880 growth as a result of AI being implemented at companies 0:05:05.920 --> 0:05:07.000 that are not tech companies. 0:05:07.120 --> 0:05:11.120 Yeah, we think about it. It's not in any numbers yet. No, 0:05:11.600 --> 0:05:15.520 it's not in any numbers. It's not even mentioned by companies. 0:05:15.520 --> 0:05:17.200 So the way that you work on it, But how 0:05:17.200 --> 0:05:19.080 do you think about that that it's like, Okay, we're 0:05:19.080 --> 0:05:22.080 talking about all the AI. Yeah, that's happening in terms 0:05:22.160 --> 0:05:25.039 of the training of these lams, all the chips that 0:05:25.240 --> 0:05:28.679 Nvidia is selling all the chips that folks are buying, 0:05:29.320 --> 0:05:30.880 but what's the ultimate. 0:05:31.160 --> 0:05:34.880 It's all inside tech and communications. So far, it's like 0:05:34.920 --> 0:05:38.640 this one little unit inside very big unit actually inside 0:05:38.640 --> 0:05:43.080 the broader market. So we're seeing implementation, we're seeing buying, 0:05:43.120 --> 0:05:46.160 We're seeing all of the AI impact occur inside tech 0:05:46.200 --> 0:05:51.040 and communications or TMT industries with some consumer discretionary because 0:05:51.120 --> 0:05:53.440 Amazon is a consumer discretionary company, right. 0:05:53.360 --> 0:05:54.560 So that's why. 0:05:54.760 --> 0:05:59.320 Yeah, So it's really it's very centered right now. Now, 0:05:59.360 --> 0:06:02.000 will it SPA. You know, we're tracking a number of things. 0:06:02.000 --> 0:06:04.320 We look at transcripts from companies every quarter and we 0:06:04.400 --> 0:06:07.080 track their mentions of AI and their degree of optimism 0:06:07.080 --> 0:06:09.839 around AI. We look at the Census Bureau does a 0:06:09.880 --> 0:06:13.039 lovely survey of all industries and they are planned and 0:06:13.200 --> 0:06:16.000 implementation and impacts from AI. So we look at that 0:06:16.000 --> 0:06:19.520 that's every other week. There are sectors that are starting 0:06:19.560 --> 0:06:23.560 to mention it as a potential having some potential, and 0:06:23.600 --> 0:06:27.200 that's largely financials in real estate so far. So we're 0:06:27.200 --> 0:06:31.679 watching financials in real estate. Utilities are suspiciously not mentioning AI. 0:06:32.000 --> 0:06:33.760 So that's the other side of the story is for 0:06:33.800 --> 0:06:36.320 some reason, there's this market frenzy around utilities being a 0:06:36.360 --> 0:06:40.760 huge beneficiary. Utilities companies themselves are saying, oh, stop, that's interesting. 0:06:41.240 --> 0:06:43.839 They're not even mentioning it yet, and they're not talking 0:06:43.839 --> 0:06:46.840 about it really benefiting them or spending on it. 0:06:46.960 --> 0:06:49.200 So that's fascinating because at milk and that was a 0:06:49.240 --> 0:06:52.400 big play. It wasn't Nvidia and the chips necessarily that 0:06:52.480 --> 0:06:55.200 was interesting tools, but it was and the energy needed 0:06:55.240 --> 0:06:56.120 for data centers. 0:06:56.360 --> 0:06:56.560 You know. 0:06:56.839 --> 0:06:58.800 One of the things that was interesting yesterday is pul 0:06:58.839 --> 0:07:02.440 Quirk came out corporation. They do polls, and they were 0:07:02.480 --> 0:07:05.239 talking about, yes, they were still doing maintenance, sales and stuff, 0:07:05.240 --> 0:07:07.720 but people weren't spending so much. It was another consumer 0:07:07.800 --> 0:07:11.520 discretionary or sign of a consumer discretionary slowdown. How are 0:07:11.560 --> 0:07:13.560 you thinking about that space and maybe what it tells 0:07:13.640 --> 0:07:14.600 us about those companies. 0:07:14.720 --> 0:07:17.400 But the economy, Yeah, sure, we talked about this a 0:07:17.400 --> 0:07:21.080 lot coming into twenty twenty four because we are anticipating 0:07:21.120 --> 0:07:23.320 seeing a consumer slowdown in twenty twenty four and the 0:07:23.320 --> 0:07:26.280 consumer sectors do look somewhat vulnerable to that slowdown, consumer 0:07:26.280 --> 0:07:29.240 discretionary and consumer staples. Now, what's really interesting about this 0:07:29.480 --> 0:07:32.120 is this could have very small impacts on the s 0:07:32.160 --> 0:07:34.000 and P five hundred at large. And this goes to 0:07:34.960 --> 0:07:37.280 the concentration of market cap in the S and P 0:07:37.400 --> 0:07:40.680 five hundred, which is less and less about consumers. I've 0:07:40.720 --> 0:07:42.520 been in this business long enough to remember when I 0:07:42.640 --> 0:07:44.920 really cared about what was happening for the consumer, because 0:07:44.960 --> 0:07:48.080 consumer retail was a big portion of the s and 0:07:48.120 --> 0:07:50.560 P five hundred, So not so much, it's tiny. Now, 0:07:50.640 --> 0:07:52.840 think about name and the name of retailer in the 0:07:52.880 --> 0:07:54.880 s and P five hundred. That's not Target or Walmart. 0:07:55.840 --> 0:07:59.800 You can't because yeah, or Amazon. Those are home improvement 0:08:00.760 --> 0:08:04.000 on Amazon. Yeah, Amazon, which is more a tech company 0:08:04.280 --> 0:08:07.600 consumer retailer. Right. So, but it's very difficult to get 0:08:07.600 --> 0:08:08.080 that read through. 0:08:08.200 --> 0:08:11.960 But what about a company like meta platforms it's suppor 0:08:12.240 --> 0:08:14.520 or alphabet that are supported through advertising right now? 0:08:14.600 --> 0:08:16.640 Yes, if those companies that are. 0:08:16.520 --> 0:08:20.760 Paying to advertise are not seeing their customers show up, 0:08:20.920 --> 0:08:22.520 then they're going to pull back on advertising. 0:08:22.680 --> 0:08:25.920 Well, let's think about the companies that are paying for advertising. 0:08:26.880 --> 0:08:30.440 Are they car companies? Are they housing companies? What kind 0:08:30.440 --> 0:08:31.960 of companies pay for advertising? 0:08:32.000 --> 0:08:32.200 Now? 0:08:32.720 --> 0:08:34.360 And you need That's where I think we need to 0:08:34.360 --> 0:08:36.880 do the mental gymnastics, because we make the presumption that 0:08:36.920 --> 0:08:39.280 we live in this environment that existed ten or fifteen 0:08:39.360 --> 0:08:42.280 years ago. But what if Netflix is the primary buyer 0:08:42.320 --> 0:08:45.200 of ads? What if Disney is the primary buyer of 0:08:45.240 --> 0:08:50.280 ads and those expenditures are no longer discretionary expenditures for 0:08:50.320 --> 0:08:53.960 the consumer, They're staples, right, So I think you have 0:08:54.000 --> 0:08:56.880 to you have to do the work to think through 0:08:56.920 --> 0:09:00.440 the impacts of all of these economic indicators that and 0:09:00.480 --> 0:09:02.640 I completely agree with you. I spent my life prior 0:09:02.720 --> 0:09:06.560 to becoming a strategist as a consumer economist. The consumer 0:09:06.679 --> 0:09:08.680 was my life, my life blood. I thought that was 0:09:08.679 --> 0:09:11.800 the end all be all, And then I have spent 0:09:11.840 --> 0:09:15.320 the last fifteen years as an equity strategist understanding that 0:09:15.360 --> 0:09:18.000 my consumer forecast is only going to peripherally impact my 0:09:18.040 --> 0:09:19.079 equity market forecast. 0:09:19.160 --> 0:09:21.160 So just got about thirty seconds. The lifeblood of the 0:09:21.160 --> 0:09:22.920 equity market is what then? Now? Tech? 0:09:24.280 --> 0:09:24.560 That's it. 0:09:24.640 --> 0:09:26.320 I mean forty percent of the market cap of the 0:09:26.360 --> 0:09:31.120 index is tech plus Meta and Google and Amazon. 0:09:30.720 --> 0:09:33.160 And Tesla and justifiably. 0:09:32.679 --> 0:09:36.280 And that is what drives the US equity market from 0:09:36.440 --> 0:09:39.280 large cap perspective. Now small cups is a very different animal, 0:09:39.280 --> 0:09:41.040 and I think we should be watching this pretty carefully 0:09:41.040 --> 0:09:44.360 because small caps is more about healthcare and financials, a 0:09:44.360 --> 0:09:48.679 little bit of energy industrials. Small caps have been basically 0:09:48.760 --> 0:09:51.280 flatlining for three years running, we keep talking about and 0:09:51.280 --> 0:09:53.360 it may be more reflective of what's going on in 0:09:53.400 --> 0:09:55.160 the broader economy than the large cup index. 0:09:55.280 --> 0:09:57.199 Such good stuff. Thank you so much, so appreciate it. 0:09:57.240 --> 0:09:58.480 We know you've been traveling a lot, so good to 0:09:58.480 --> 0:10:01.240 get some time. Bloomberg Intelligence Global of Portfolio Strategy and 0:10:01.280 --> 0:10:03.199 Chief Equity Strategist Gina Martin Adams. 0:10:03.240 --> 0:10:07.000 Here at Bloomberg invest you're listening to the Bloomberg Business 0:10:07.000 --> 0:10:10.480 Week podcast. Catch us live weekday afternoons from two to 0:10:10.520 --> 0:10:13.199 five pm Eastern. Listen on Apple car Play and then 0:10:13.240 --> 0:10:15.920 brout Auto with a Bloomberg Business app, or watch us 0:10:15.960 --> 0:10:17.720 live on YouTube. 0:10:18.440 --> 0:10:20.760 You are listening and watching Bloomberg BusinessWeek. We're live at 0:10:20.760 --> 0:10:24.680 Bloomberg invest in downtown Manhattan. And what's interesting about Bloomberg 0:10:24.720 --> 0:10:27.640 invest is that you end up getting to hear from 0:10:27.880 --> 0:10:32.079 people from all of the investment world, really just different 0:10:32.120 --> 0:10:34.640 types of investing, different types of investing platforms. And that 0:10:34.679 --> 0:10:37.960 really brings us to our next guest, and she happens 0:10:37.960 --> 0:10:40.000 to be one of Bloomberg Business week's ones to watch. 0:10:40.040 --> 0:10:44.120 These are the investors, money managers, executives and strategists who 0:10:44.120 --> 0:10:45.600 are shaping the future of finance. 0:10:45.720 --> 0:10:48.560 We're talking about Elise Colleen, who founded the venture capital's 0:10:48.600 --> 0:10:52.079 firm still Mark five years ago, offering up both institutional 0:10:52.160 --> 0:10:55.440 venture capital and knowledge and expertise in Bitcoin. At Last 0:10:55.520 --> 0:10:58.480 joins us more for more on her journey in today's 0:10:58.640 --> 0:11:00.760 landscape here at bloom Burg invest Atleast. 0:11:00.800 --> 0:11:03.079 How are you, I'm well, thank you for having me. 0:11:03.080 --> 0:11:06.400 Well, thanks so much for joining us. Before we get 0:11:06.440 --> 0:11:08.199 into what you guys are doing, I just got to 0:11:08.200 --> 0:11:10.120 get your comments on what we heard from SEC chair 0:11:10.160 --> 0:11:12.360 Gary Gensler. I don't know if you were in there listening, 0:11:12.880 --> 0:11:17.280 of course, okay, because he spoke a little earlier and 0:11:17.280 --> 0:11:20.000 he declined to give a timeline for launching spot Ether ETF, 0:11:20.080 --> 0:11:23.000 but did say that it's going smoothly, and he said 0:11:23.000 --> 0:11:27.400 there's also significant non compliance when it comes to crypto. 0:11:27.600 --> 0:11:28.760 How do you take us comments? 0:11:28.960 --> 0:11:32.200 So Gensler has been very consistent in the guidance that 0:11:32.280 --> 0:11:36.160 he's provided to the crypto and bitcoin ecosystems, and I 0:11:36.160 --> 0:11:39.920 thought that his comments today we were consistent with comments 0:11:40.040 --> 0:11:42.880 of the past. We know that many operators in the 0:11:42.920 --> 0:11:47.520 crypto sphere are operating in a non compliant way. Still, Mark, 0:11:47.600 --> 0:11:49.920 of course, is focused on the Bitcoin landscape, so that 0:11:50.000 --> 0:11:53.679 falls outside of our mandate, though we're tracking it nonetheless. 0:11:54.120 --> 0:11:57.280 On the ETF side, of course, while we expect and 0:11:57.320 --> 0:12:01.400 it seems Gary Gensler also expects for an Ethereum spot 0:12:01.440 --> 0:12:05.240 ETF to be live this year. What we've seen in 0:12:05.280 --> 0:12:09.319 other markets, for example, in Hong Kong, where the Bitcoin 0:12:09.520 --> 0:12:13.720 and Ethereum ETF spot ETF's launched on the same day, 0:12:14.360 --> 0:12:18.520 we saw much more modest activity around the spot ETF 0:12:19.080 --> 0:12:22.040 relative to Bitcoin. In Hong Kong, we saw about fourteen 0:12:22.080 --> 0:12:27.120 percent of the activity and assets go to ethereum and 0:12:27.400 --> 0:12:29.160 the rest of that balance go to Bitcoin. 0:12:29.840 --> 0:12:33.679 You know, if you could talk to Share Gensler right now, 0:12:33.720 --> 0:12:35.240 what would you ask him or what would you want 0:12:35.240 --> 0:12:36.359 to discuss with him? 0:12:36.880 --> 0:12:41.319 I think where we're curious how he will move forward 0:12:41.480 --> 0:12:45.800 is around issues related to money transmission and how that 0:12:45.880 --> 0:12:50.400 relates to Bitcoin's payment network, the Lightning network. We are 0:12:50.800 --> 0:12:55.360 interested and hopeful that those at the SEC will take 0:12:55.360 --> 0:12:59.800 a researched and studied approach to how they will designate 0:13:00.120 --> 0:13:04.439 money transmitters in the field so that they are precise 0:13:04.720 --> 0:13:09.040 and discrete in those definitions, rather than taking a broad 0:13:09.160 --> 0:13:14.640 swipe at defining actors as money transmitters where they wouldn't 0:13:14.720 --> 0:13:16.040 properly otherwise. 0:13:16.040 --> 0:13:18.679 Be you're making investments in that air, of course, said 0:13:18.720 --> 0:13:21.520 where you know when you look at the VC landscape 0:13:21.559 --> 0:13:23.400 or what you guys are involved in, is that where 0:13:23.400 --> 0:13:26.880 a lot of the money's going in the opportunistic aspect 0:13:26.960 --> 0:13:29.920 of the crypto world or Bitcoin specifically. 0:13:29.520 --> 0:13:33.319 So in Bitcoin, about half of our current investments is 0:13:33.360 --> 0:13:37.679 in the payment space. Right We've invested heavily in Lightning 0:13:37.720 --> 0:13:41.640 network infrastructure, so both at the core protocol level, in 0:13:41.760 --> 0:13:45.480 companies that are developing sort of the AWS model to 0:13:45.760 --> 0:13:49.720 the payments network, and then in data companies that provide 0:13:49.920 --> 0:13:55.520 compliance so KYCML services for payments on Lightning as well 0:13:55.600 --> 0:13:59.080 as routing across this payment channel network. 0:14:00.200 --> 0:14:00.960 While that's an. 0:14:00.840 --> 0:14:04.480 Opportunity, there's a breadth of opportunities in the Bitcoin private 0:14:04.520 --> 0:14:07.760 market space. We invest in payments, of course, but we've 0:14:07.800 --> 0:14:11.800 also invested in opportunities around Bitcoin as an asset and 0:14:11.920 --> 0:14:16.120 have been really excited to see that ecosystem so quickly mature, 0:14:16.800 --> 0:14:21.320 including upon the tailwinds of the robustness of activity for 0:14:21.360 --> 0:14:22.280 the Bitcoin ETF. 0:14:22.560 --> 0:14:24.400 Talk a little bit about the opportunity you see when 0:14:24.440 --> 0:14:26.920 it comes to the payments network and Lightning specifically here, 0:14:26.960 --> 0:14:30.920 because I'm curious about the way that people buy bitcoin 0:14:31.040 --> 0:14:33.360 right now and sort of how you think about somebody 0:14:33.360 --> 0:14:37.160 who is quote unquote investing in bitcoin. Sure, because it 0:14:37.200 --> 0:14:40.640 seems like still it's looked at as something that will 0:14:40.640 --> 0:14:42.480 increase in value, and it's the type of thing that 0:14:43.120 --> 0:14:44.560 will go up in value to a lot of the 0:14:45.000 --> 0:14:47.680 bowls out there. I don't think it's widely seen yet 0:14:47.720 --> 0:14:49.760 as something to be used to transact. 0:14:50.720 --> 0:14:53.800 Yes, that's changing. So we know that over the twenty 0:14:53.800 --> 0:14:57.760 more twenty four month period between twenty twenty one and 0:14:57.800 --> 0:15:00.960 twenty twenty three, ending August twenty twenty three, there was 0:15:00.960 --> 0:15:04.840 a twelve hundred percent growth in Bitcoin's payment network. We 0:15:04.960 --> 0:15:09.280 know that about seven hundred thousand monthly active users are 0:15:09.440 --> 0:15:13.920 leveraging the network and they're using it to make payments 0:15:13.960 --> 0:15:17.960 that average twelve dollars per transaction. So payments that are 0:15:17.960 --> 0:15:22.320 most efficient cost effective on the Lightning network versus traditional 0:15:22.360 --> 0:15:25.800 financial networks. Now something relevant. 0:15:25.360 --> 0:15:26.960 To chase small payments. 0:15:27.000 --> 0:15:30.160 Exactly fifty percent of payments on the Lightning network are 0:15:30.200 --> 0:15:34.320 micro payments in fact, so they're transacting at pennies, quarters, 0:15:35.200 --> 0:15:35.880 fifty cents. 0:15:35.960 --> 0:15:38.040 Mostly we don't know where they are or do we 0:15:38.040 --> 0:15:38.800 know where they're happening. 0:15:38.880 --> 0:15:40.600 We do know where they're happening. So there's a lot 0:15:40.600 --> 0:15:43.840 of Lightning Network adoption in emerging markets, as you've begun 0:15:43.920 --> 0:15:47.480 to say, but we're also seeing payments in gaming, and 0:15:47.520 --> 0:15:50.400 we will see payments in the AI and LLM space. 0:15:50.800 --> 0:15:57.000 That's been relevant to today's conversations across money managers on stage. 0:15:57.040 --> 0:16:00.000 We've heard a lot about the most important investment opportun 0:16:00.120 --> 0:16:03.840 news of the next ten years being the energy transition 0:16:04.480 --> 0:16:10.920 and LLM and AI infrastructure. In AI and LLLM and infrastructure, 0:16:10.960 --> 0:16:15.040 you have to be thinking about the proper the proper 0:16:15.080 --> 0:16:19.600 payment partner to the new capabilities introduced by this emerging field. 0:16:19.720 --> 0:16:22.280 It's such a volatile currency though, in the sense that 0:16:22.480 --> 0:16:25.760 you know, up four percent today but could be down 0:16:25.960 --> 0:16:29.560 you know, twenty percent from just recent highs as of yesterday. 0:16:31.040 --> 0:16:33.760 Does that hold it back as something to be used 0:16:33.760 --> 0:16:34.320 for payments? 0:16:35.080 --> 0:16:37.560 Well, so for payments, and especially if we're talking about 0:16:37.640 --> 0:16:42.000 micro transactions, we're talking about short duration hold we're really 0:16:42.040 --> 0:16:45.560 talking about using bitcoin as an infrastructure rather than as 0:16:45.600 --> 0:16:46.880 an asset, so you're. 0:16:46.760 --> 0:16:49.160 Not holding it for long. You can exactly to fiat 0:16:49.160 --> 0:16:50.680 currency very quickly. 0:16:50.840 --> 0:16:53.720 That's exactly right. But there's something else happening in Lightning 0:16:53.760 --> 0:16:57.920 beyond its match to AI and LM activity, and that 0:16:58.120 --> 0:17:02.120 is that stable coins are coming to Lightning network, so soon, 0:17:02.760 --> 0:17:04.639 as soon as the end of this year, you'll be 0:17:04.680 --> 0:17:08.280 able not just to transact bitcoin, but to transact digital 0:17:08.359 --> 0:17:12.280 dollars on Lightning, and that solves the pain point that 0:17:12.480 --> 0:17:16.159 you addressed of bitcoin's volatility, which is relevant to certain 0:17:16.359 --> 0:17:17.480 populations for sure. 0:17:17.680 --> 0:17:19.320 At least just got about a minute left. What does 0:17:19.320 --> 0:17:24.800 a mature bitcoin payment world look like? In your view, a. 0:17:24.920 --> 0:17:29.439 Mature bitcoin payment world looks like reliable payments, payments that 0:17:29.480 --> 0:17:32.800 can meet Visa's threshold of ninety nine point ninety nine 0:17:32.840 --> 0:17:36.800 percent payment reliability. It looks like businesses and enterprise being 0:17:36.840 --> 0:17:39.960 able to operate payments in a compliant way that's consistent 0:17:40.040 --> 0:17:44.000 with their existing payment operations. And we're seeing the ecosystem 0:17:44.040 --> 0:17:47.880 developed to introduce enterprise tools that allow that, including through 0:17:48.000 --> 0:17:51.680 portfolio companies of ours such as Ambus Technologies. 0:17:52.080 --> 0:17:52.960 When does it happen. 0:17:53.800 --> 0:17:55.080 It's happening now. 0:17:54.920 --> 0:17:58.200 But in a real wide mass adoption. 0:17:58.400 --> 0:18:03.600 I see so first first movers have adopted lightning for payments. 0:18:04.000 --> 0:18:06.600 Those with the most acute pain points, like those sending 0:18:06.600 --> 0:18:10.119 cross border payments, have begun to adopt. And from the 0:18:10.200 --> 0:18:14.320 learnings of those pilots and early movements, we will see 0:18:14.359 --> 0:18:18.360 other businesses follow that are seeking more efficient and cheaper payments. 0:18:18.800 --> 0:18:21.439 Very cool stuff, really fascinating. Thank you so much. We 0:18:21.880 --> 0:18:24.439 totally get why you are one of the ones to 0:18:24.480 --> 0:18:27.199 watch by Bloomberg Business Week. At least Colleen, thank you 0:18:27.200 --> 0:18:29.359 so much. Thank you so much, really appreciate. She's founding 0:18:29.359 --> 0:18:31.960 partner at still Mark. Here at Bloomberg in Bath. 0:18:34.119 --> 0:18:37.960 You're listening to the Bloomberg Business Week Podcast. Listen live 0:18:38.080 --> 0:18:41.280 each weekday starting at two pm Eastern on applecar Play 0:18:41.280 --> 0:18:44.160 and Android Auto with the Bloomberg Business app. You can 0:18:44.160 --> 0:18:47.439 also listen live on Amazon Alexa from our flagship New 0:18:47.480 --> 0:18:51.080 York station Just Say Alexa playing Bloomberg eleven thirty. 0:18:52.320 --> 0:18:55.200 Larrah alligans with them. She's Steve, investment officer at Neuveen. 0:18:55.880 --> 0:18:59.280 Talk about man, They've got so much under management, see 0:18:59.320 --> 0:19:01.560 so much when it comes to investor, think if you will. 0:19:01.960 --> 0:19:04.600 Sarah is chief investment officer and she also manages more 0:19:04.600 --> 0:19:07.640 than one hundred billion dollars in equity strategies. She joins 0:19:07.720 --> 0:19:10.159 us here from Bloomberg invest Hello, Helo, Hi. 0:19:10.080 --> 0:19:10.600 Good to see you. 0:19:10.680 --> 0:19:14.800 It's been that kind of weekday year, you know, the momentum. 0:19:15.320 --> 0:19:17.240 How do you see the environment right now? When there 0:19:17.280 --> 0:19:19.840 is it feels like Sarah like some conflicting signals out there. 0:19:20.280 --> 0:19:22.159 Well, first of all, just looking at the markets with 0:19:22.200 --> 0:19:24.760 the consolidation that we're seeing in stocks like in Vidio. 0:19:24.800 --> 0:19:26.520 I mean, markets were up something like eight out of 0:19:26.600 --> 0:19:28.920 nine days just recently. In Nvidia has been just flag 0:19:28.960 --> 0:19:31.000 bearer stock for the rally we've seen year to date. 0:19:31.240 --> 0:19:33.399 Nvidia is just back at early June level. So this 0:19:33.480 --> 0:19:36.119 consolidation in the market cap loss for that stock is 0:19:36.160 --> 0:19:37.120 not a huge deal. 0:19:37.119 --> 0:19:38.280 It's just raising a couple. 0:19:38.119 --> 0:19:39.600 Of weeks cosses in your view. 0:19:39.640 --> 0:19:40.960 And I think what we need to focus on on 0:19:41.000 --> 0:19:43.600 the second half is three things that see economy, election, 0:19:43.720 --> 0:19:46.400 and earnings. So first looking at the economy, the news 0:19:46.440 --> 0:19:49.000 is not all great. Both the consumer and employment markets 0:19:49.040 --> 0:19:51.679 are starting to show signs of a slowdown. Consumers, we're 0:19:51.720 --> 0:19:54.800 seeing higher delinquencies. We're seeing discounting at fast food restaurants, 0:19:54.840 --> 0:19:57.720 lower foot traffic. Consumer is starting to feel the pain 0:19:58.280 --> 0:20:02.680 the elections of employment markets. Payrolls have been strong, but 0:20:02.760 --> 0:20:05.560 you look at unemployment claims, they're almost at cycle highs. 0:20:05.920 --> 0:20:08.560 Second elections in the second half, we've already seen non 0:20:08.640 --> 0:20:12.840 US volatility in areas like India, South Africa, France, and 0:20:12.880 --> 0:20:16.000 we're approaching the US election. Good news is US markets 0:20:16.000 --> 0:20:17.920 tend to be up in an election year. Mad news 0:20:17.920 --> 0:20:19.800 is we see a lot more volatility. That's probably what 0:20:19.880 --> 0:20:22.200 we'll be looking at in the second half. But it's 0:20:22.200 --> 0:20:24.960