WEBVTT - Bitcoin Drops Below $63,000, Wiping Out Gain Since Trump’s Win 0:00:02.520 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business Week, 0:00:10.800 --> 0:00:14.680 Daily reporting from the magazine that helps global leaders stay 0:00:14.680 --> 0:00:18.759 ahead with insight on the people, companies, and trends shaping 0:00:18.800 --> 0:00:23.720 today's complex economy. Plus global business finance and tech news 0:00:23.760 --> 0:00:27.720 as it happens. The Bloomberg Business Week Daily Podcast with 0:00:27.920 --> 0:00:31.720 Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.520 --> 0:00:35.519 Well, let's bring in Paul Krugman, Nobel Laureate in Economics, 0:00:35.520 --> 0:00:39.160 Research professor at the City University of New York's Graduate Center, 0:00:39.200 --> 0:00:42.320 author of a popular substack. More than a half million subscribers. 0:00:42.360 --> 0:00:44.879 People are following him. His writings are a must, he 0:00:45.000 --> 0:00:48.480 joins us remotely, Professor, good to have you with us. 0:00:48.520 --> 0:00:52.240 You argue, or ask the question, rather, is this crypto's 0:00:52.440 --> 0:00:54.520 fimble winter? Do you think it is? 0:00:54.720 --> 0:00:58.160 Yeah? Uh, yeah, so I got a you know, we 0:00:58.360 --> 0:01:01.400 have talked about crypto winters a few times in the past, 0:01:01.440 --> 0:01:03.480 and I got carried away with the winter metaphor, and 0:01:03.800 --> 0:01:07.600 in Norse mythology, the fimble winter is the final disastrous 0:01:07.640 --> 0:01:09.520 winter before Ragnarok, the. 0:01:09.560 --> 0:01:10.399 End of all things. 0:01:11.840 --> 0:01:15.039 You know, Crypto, it's a it's a really weird space, right, 0:01:15.080 --> 0:01:19.679 the if you ask, how is bitcoin value compared to fundamentals? Well, 0:01:19.760 --> 0:01:23.120 what fundamentals? It's kind of all vibes, uh, And it 0:01:23.200 --> 0:01:28.160 has bounced back several times from big declines because people 0:01:28.200 --> 0:01:31.080 had faith in it and because it was you know, 0:01:31.160 --> 0:01:33.240 there was there was a lot of ideology behind it. 0:01:33.640 --> 0:01:35.760 But this is this time looks different. 0:01:36.200 --> 0:01:38.880 This time. A lot of the recent rise has been 0:01:38.959 --> 0:01:44.360 driven by Strategy Inc. And other you know, crypto hoarders. 0:01:45.200 --> 0:01:48.120 A lot of it has been political associated with Donald Trump. 0:01:48.160 --> 0:01:51.080 Everyone is comparing the price now to what happened when 0:01:51.160 --> 0:01:55.040 when he won the election, and those things are harder. 0:01:55.280 --> 0:01:59.520 You know, the kind of sentimental or almost mystical attachment 0:01:59.600 --> 0:02:02.960 that people have had to bitcoin itself probably doesn't apply 0:02:03.040 --> 0:02:08.720 to shares in Strategy probably doesn't. And the kind of 0:02:09.160 --> 0:02:13.400 libertarian ideology that supported bitcoin doesn't really apply now that 0:02:13.440 --> 0:02:16.720 it's largely a political creation, and it's sort of it's 0:02:17.160 --> 0:02:19.600 in some ways tied to what you think Trump's for 0:02:19.800 --> 0:02:20.839 future prospects are. 0:02:20.880 --> 0:02:22.640 So this is different, you know. 0:02:22.760 --> 0:02:24.840 I think about this a lot, Professor Krugman, and I 0:02:24.840 --> 0:02:27.680 think about supply demand, certainly when it comes to trades 0:02:27.800 --> 0:02:31.400 in assets. I'm not quite sure what you call cryptocurrencies. 0:02:31.440 --> 0:02:34.040 I think we still struggle with what it really is. 0:02:34.480 --> 0:02:37.400 Having said that, if President Trump wasn't in the White House, 0:02:37.400 --> 0:02:39.919 what's your view on whether or not crypto would be 0:02:40.560 --> 0:02:43.040 you know here around sixty four thousand dollars, would it 0:02:43.080 --> 0:02:44.720 be a very different trade? Potentially? 0:02:45.680 --> 0:02:46.400 Well, it might be. 0:02:46.560 --> 0:02:48.480 I don't think it would have gotten up to one 0:02:48.520 --> 0:02:51.399 hundred and twenty five thousand or you know thereabouts without 0:02:51.400 --> 0:02:55.760 his election. It's possible that the day of reckoning might 0:02:55.800 --> 0:02:59.680 have waited longer. I mean, there was a in some 0:02:59.720 --> 0:03:04.560 way is the very prominence of crypto, the huge attention 0:03:04.680 --> 0:03:07.680 given to it, the all of the hype about, uh, 0:03:07.840 --> 0:03:11.200 this is a crypto friendly White House has in some ways, 0:03:11.400 --> 0:03:12.840 you know, led to a big run up, but also 0:03:12.960 --> 0:03:15.079 focused people's minds. And I think there's a lot more 0:03:15.800 --> 0:03:19.680 so what is this actually for anyway? And there's also 0:03:20.160 --> 0:03:24.760 you know, the sell America trade, the the basement trade, which, 0:03:24.760 --> 0:03:27.560 among other things, first of all, should have benefited bitcoin 0:03:27.600 --> 0:03:30.600 if it was the kind of refuge asset that people 0:03:30.600 --> 0:03:34.560 had sold it as. But also the fact that a 0:03:34.600 --> 0:03:37.000 lot of people sold bitcoin as being the next gold. 0:03:37.400 --> 0:03:40.200 And it turns out that in the face of doubts 0:03:40.240 --> 0:03:44.000 about stability, doubts about politics. The next goal turns out 0:03:44.040 --> 0:03:47.160 to be gold, not bitcoin. I think it's a big 0:03:47.160 --> 0:03:49.400 wake up for people that, you know, maybe this isn't 0:03:49.480 --> 0:03:54.120 actually going to be an enduring asset, so I you know, no, 0:03:54.680 --> 0:03:57.240 it's again, it's really really hard. If you ask what 0:03:57.480 --> 0:04:00.520 when people make for price forecasts for bitcoin, always wonder 0:04:00.560 --> 0:04:02.680 on what basis. Yeah, it's not like you could do 0:04:02.720 --> 0:04:05.680 a price earnings rasue on this thing, because there's no earnings, 0:04:05.680 --> 0:04:10.000 no services. It's all just pure faith. But it does 0:04:10.040 --> 0:04:12.640 feel like we're seeing a real crisis of faith right now. 0:04:12.720 --> 0:04:15.960 What would stop this administration, in your view, from stopping 0:04:16.400 --> 0:04:19.080 from coming in and bailing out the industry. I mean, 0:04:19.160 --> 0:04:21.839 the industry spent a lot in twenty twenty four to 0:04:21.880 --> 0:04:26.120 get pro crypto politicians elected. It was successful in many 0:04:26.160 --> 0:04:28.719 different cases, particularly in the Senate race in Ohio and 0:04:28.800 --> 0:04:32.080 seating Shared Brown. Some Republicans want Scott best At, the 0:04:32.080 --> 0:04:35.120 Treasury Secretary, to buy bitcoin by selling some of the 0:04:35.200 --> 0:04:38.000 US's gold reserves. When asked whether the US Treasury has 0:04:38.040 --> 0:04:41.120 the ability to bail out bitcoin, the Treasury Secretary said 0:04:41.200 --> 0:04:43.719 this week he doesn't have the authority to buy bitcoin 0:04:44.080 --> 0:04:45.880 with tax dollars. Could the president do that? 0:04:46.920 --> 0:04:47.320 Well? 0:04:47.480 --> 0:04:51.200 Yeah, I mean in general, you know, Scott bestn't. His 0:04:51.320 --> 0:04:53.760 word is not good as goal, let's say, on these things. 0:04:53.800 --> 0:04:56.679 And they could, but I would say, look at the parallel. 0:04:57.160 --> 0:05:03.120 The US spend a really fairly limited sum in bailing 0:05:03.160 --> 0:05:07.839 out Malay in Argentina, Relatively, you know, it's a tiny 0:05:07.880 --> 0:05:10.159 sum compared with what it would take to bail out bitcoin, 0:05:10.560 --> 0:05:13.320 and there was a firestorm of outrage over it. Not 0:05:13.400 --> 0:05:15.599 enough to stop them from doing it, but enough to 0:05:15.720 --> 0:05:18.560 really get pause if they tried to step in and 0:05:18.600 --> 0:05:21.520 bail out this industry, especially given all the stories about 0:05:21.920 --> 0:05:25.640 crypto as a channel of corruption, all the stories about 0:05:25.800 --> 0:05:29.200 the Trump family being enriched through crypto, all of the 0:05:29.240 --> 0:05:35.480 buying of politicians, the pardons of crypto crypto criminals, I 0:05:35.520 --> 0:05:40.040 think the political backlash would be huge. Now, maybe they've 0:05:40.040 --> 0:05:42.719 spent enough, maybe the crypto industry has spent enough money 0:05:43.080 --> 0:05:46.440 to overrule all of that, but I think it's highly questionable. 0:05:47.000 --> 0:05:50.120 You know, one thing I think about, Professor Kruman is 0:05:50.200 --> 0:05:52.880 transparency to investors. It's something we talk about with everything. 0:05:52.920 --> 0:05:54.960 It's one of the things we're going through with private credit, 0:05:55.040 --> 0:05:59.800 right It's why although the US market financial markets may 0:05:59.839 --> 0:06:02.560 not perfect, it is why it's in many ways the 0:06:02.560 --> 0:06:05.880 gold standard for global investors. Having said that, on that 0:06:05.920 --> 0:06:09.840 transparency issue, does it make sense as we look at 0:06:09.880 --> 0:06:12.000 what's going on in crypto that we really have a 0:06:12.000 --> 0:06:16.240 full understanding of the White House's exposure the President and 0:06:16.279 --> 0:06:22.279 his family to cryptocurrencies, to understand what's at stake for 0:06:22.440 --> 0:06:29.159 them personally, politically, financially, especially as policies unwined, and to 0:06:29.320 --> 0:06:33.240 understand maybe how that might be from a supplied demand 0:06:33.320 --> 0:06:37.719 metric and all that that entails supporting this market at 0:06:37.760 --> 0:06:38.719 least up until late. 0:06:39.480 --> 0:06:41.839 Yeah, I mean that we can people are just making 0:06:41.880 --> 0:06:45.880 guesses at how much the Trump family is exposed and 0:06:45.960 --> 0:06:48.120 other government officials. By the way, let's not forget that 0:06:48.160 --> 0:06:53.400 the Commerce Secretary, Howard Lutnik, you know, his firm was 0:06:53.480 --> 0:06:55.640 very close to Tether, which is very much in the 0:06:56.040 --> 0:06:59.599 in the crypto business and particularly seems to be used 0:06:59.600 --> 0:07:03.320 for a lot of unsavory aspects of that business. But 0:07:03.960 --> 0:07:07.400 it's certainly a significant exposure, and there's a kind of 0:07:08.480 --> 0:07:11.280 shadow exposure in the sense that the crypto industry has 0:07:11.280 --> 0:07:15.360 been throwing a lot of money, not just at campaign contributions, 0:07:15.360 --> 0:07:22.280 but at the presidential family directly so, and a crypto 0:07:22.840 --> 0:07:27.840 another Crypto winter would would would be financially harmful to 0:07:28.720 --> 0:07:33.680 the first family. But again that's all sort of taken 0:07:33.720 --> 0:07:36.480 as a given that there's a stake there. I don't 0:07:36.480 --> 0:07:38.320 even know if it's a lack of transparency. We all 0:07:38.360 --> 0:07:42.720 know that there's a large personal financial stake in how 0:07:42.760 --> 0:07:47.000 Crypto does. The question is can they really get away 0:07:47.040 --> 0:07:48.800 with it. I mean, there's lots of things have been 0:07:48.800 --> 0:07:50.400 gotten away with, but this is the kind of thing 0:07:50.440 --> 0:07:53.880 that really does get voters enraged. This is the kind 0:07:53.920 --> 0:07:55.640 of thing that leads to a lot of yelling at 0:07:55.960 --> 0:07:58.880 at Republican members of Congress and town halls. So I'm 0:07:58.920 --> 0:08:00.520 not sure that this is something that they're going to 0:08:00.520 --> 0:08:02.760 be able to do pticularly because this is big, right, 0:08:02.800 --> 0:08:05.080 Crypto was still even with the recent foll it's still 0:08:05.080 --> 0:08:08.120 two and a half trillion dollar asset class. It takes 0:08:08.160 --> 0:08:09.520 a lot of money to build that out. 0:08:09.800 --> 0:08:12.080 We should put out on Howard Lutnik, his sons Brandon 0:08:12.120 --> 0:08:16.640 and Kyle, now serves chief executive and executive vice chairman of, respectively, 0:08:16.640 --> 0:08:21.640 of Canter Fitzgerald and that Howard Lutnik did divest to 0:08:21.680 --> 0:08:24.160 comply with ethics agreement he signed when he joined at 0:08:24.200 --> 0:08:26.560 President Trump's cabinet. So we just wanted to kind of 0:08:26.560 --> 0:08:27.160 put that out there. 0:08:27.240 --> 0:08:31.640 Yeah, that's right. I mean he's not personally, but you know, yeah, 0:08:32.000 --> 0:08:35.240 if my relatives were very involved in the business, people 0:08:35.240 --> 0:08:38.280 would kind of would not say that I had fully 0:08:38.640 --> 0:08:39.880 disconnected myself from it. 0:08:39.960 --> 0:08:42.240 Hey, professor, before we let you go, the promise of 0:08:42.760 --> 0:08:46.640 bitcoin was this decentralized currency that would flow easily across borders, 0:08:46.679 --> 0:08:50.880 allow people to exchange value, and it would be you know, 0:08:50.960 --> 0:08:54.520 not tied to a single government entity. In your view, 0:08:54.760 --> 0:08:57.679 does bitcoin have any value? 0:08:58.840 --> 0:08:59.040 No? 0:08:59.559 --> 0:09:02.199 Or let let me give a slight qualification the places 0:09:02.200 --> 0:09:05.920 where bitcoin has actually been useful to people. I mean 0:09:05.960 --> 0:09:11.920 it's it's it's VARs. They used for essentially criminal enterprise 0:09:12.000 --> 0:09:13.800 of some kind, but not all crimes are the same. 0:09:13.840 --> 0:09:16.280 And I will say that if you're trying to smuggle 0:09:16.320 --> 0:09:19.400 money out of Iran or something like that, then bitcoin 0:09:19.520 --> 0:09:22.880 is a way around capital controls. But it's also a way, 0:09:23.120 --> 0:09:26.920 you know when it's also a way that criminals who 0:09:27.600 --> 0:09:30.320 install malware on your computer and then demand the ransom 0:09:30.360 --> 0:09:33.560 collect the money. In terms of the original idea that 0:09:33.600 --> 0:09:36.440 this was actually a superior form of money. It's a 0:09:36.480 --> 0:09:39.679 total bust, and it's a seventeen year old bust. That's 0:09:39.720 --> 0:09:41.280 the thing that gets to me. It's this is not 0:09:41.360 --> 0:09:43.640 an idea of the future. This is not a cutting 0:09:43.720 --> 0:09:48.040 edge technology. This is something that is only slightly younger 0:09:48.080 --> 0:09:52.080 than the first iPhone, right, and if it hasn't made 0:09:52.120 --> 0:09:54.920 any inroads as an actual legitimate means of payment in 0:09:54.960 --> 0:09:57.520 seventeen years, then clearly it wasn't a great idea to 0:09:57.520 --> 0:09:57.920 start with. 0:09:59.040 --> 0:10:01.800 Stay with us more from Bloomberg Business Week Daily coming 0:10:01.880 --> 0:10:02.760 up after this. 0:10:06.760 --> 0:10:10.600 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:10:10.679 --> 0:10:13.360 us live weekday afternoons from two to five e's during 0:10:13.559 --> 0:10:16.800 Listen on Apple Karplay and Android Auto with the Bloomberg 0:10:16.840 --> 0:10:20.240 Business app, or watch us live on YouTube. 0:10:20.720 --> 0:10:22.640 I want to bring in Urian tim Or, director of 0:10:22.640 --> 0:10:25.760 Global Macro Fidelity Investments, seventeen and a half trillion in 0:10:25.800 --> 0:10:29.319 assets under management, six point eight trillion in discretionary assets. 0:10:29.320 --> 0:10:32.120 He joins us from Boston. Urian, I want to start 0:10:32.120 --> 0:10:35.640 where we left off with Professor Krugman, and that's all 0:10:35.679 --> 0:10:40.040 about the effect of cryptocurrency, the decline and bitcoin that 0:10:40.080 --> 0:10:42.959 we're seeing, and whether or not that has a wider effect. 0:10:43.000 --> 0:10:46.000 Michael Burry certainly warned of that earlier this week. Are 0:10:46.000 --> 0:10:46.800 you worried about it? 0:10:48.960 --> 0:10:51.640 No, I think it is. There's a few things going on. 0:10:51.720 --> 0:10:55.800 And by the way, I do disagree with Professor Krugman 0:10:56.200 --> 0:10:59.920 about the inability to value bitcoin, because you can make 0:11:00.040 --> 0:11:03.600 that same argument for gold, and even though neither of 0:11:03.640 --> 0:11:07.520 those assets generate a cash flow, you can value them, right. 0:11:07.559 --> 0:11:10.680 You can value bitcoin on the size of its network. 0:11:10.679 --> 0:11:14.440 It is a network asset. And you can value gold 0:11:14.520 --> 0:11:17.160 on the basis of you know, it being hard money, 0:11:17.520 --> 0:11:20.000 so you can compare it to soft money. So if 0:11:20.040 --> 0:11:23.120 you do a ratio of the gold above ground value 0:11:23.360 --> 0:11:28.480 to the m to money supply, it goes in a 0:11:29.120 --> 0:11:32.120 band in a ratio if you will, And you can 0:11:32.160 --> 0:11:35.120 apply the same logic to bitcoin. So I do think 0:11:35.160 --> 0:11:37.880 you can value them, and I do that. I compare 0:11:38.160 --> 0:11:41.240 the value of both gold and bitcoin to the money supply, 0:11:41.920 --> 0:11:44.320 and they've both run a lot. You know, a few 0:11:44.400 --> 0:11:47.440 years ago they were half the size of the money supply, 0:11:47.880 --> 0:11:51.200 but even gold on its own is now thirty five trillion. 0:11:51.520 --> 0:11:55.040 The money supply is twenty three trillion. Bitcoin is about 0:11:55.120 --> 0:11:58.679 one point seven trillion in market value, so they've come 0:11:58.760 --> 0:12:02.200 a long way and it's not that surprising that they're 0:12:02.200 --> 0:12:05.360 taking a rest. You know, Bitcoin did form kind of 0:12:05.440 --> 0:12:08.280 its fifth wave, if you will, two one hundred and 0:12:08.280 --> 0:12:10.559 twenty six thousand, it was one hundred and five percent 0:12:10.720 --> 0:12:14.640 keeger over one hundred and forty five weeks at sixty 0:12:14.679 --> 0:12:18.440 five thousand. I actually think it has some value again, 0:12:18.720 --> 0:12:21.559 but they're different players on the same team. They take turns, 0:12:21.559 --> 0:12:24.920 and that's exactly what we've seen. So but coming back 0:12:24.960 --> 0:12:28.120 to your question, I don't think bitcoin, it's the client itself, 0:12:28.720 --> 0:12:31.440 will be a systemic event. You know, the last time 0:12:31.480 --> 0:12:35.040 it happened, it wasn't. It is getting caught up in 0:12:35.440 --> 0:12:39.400 the speculative you know, first frenzy and then unfrenzy in 0:12:40.080 --> 0:12:42.800 in you know, kind of the mean stocks and the 0:12:42.840 --> 0:12:46.520 nonprofitable gross stocks, the other speculative names. And of course 0:12:46.559 --> 0:12:50.640 we have the treasury uh, you know those treasury companies 0:12:50.679 --> 0:12:53.960 that are that are really hurting right now. So it 0:12:54.040 --> 0:12:57.160 is part of a bigger picture. But I don't think 0:12:57.160 --> 0:13:00.360 it's going to lead to a systemic you know, sell 0:13:00.360 --> 0:13:02.400 off in assets in general. 0:13:02.520 --> 0:13:05.880 Okay, cool, and with today's decline down nine percent. Right now, 0:13:05.920 --> 0:13:09.720 the market cap of all of bitcoin is falling pretty quickly. 0:13:09.720 --> 0:13:12.559 It's at about one point three trillion as we speak. 0:13:13.080 --> 0:13:16.520 So you're in what would you rather own? Bitcoin, gold 0:13:16.880 --> 0:13:17.520 or stocks? 0:13:19.720 --> 0:13:22.600 I actually like them all. I mean, the stock market 0:13:23.040 --> 0:13:26.239 is the stock market, and that is the best compounder 0:13:26.800 --> 0:13:30.719 over time. You know, they do generate cash flows and earnings, 0:13:31.200 --> 0:13:34.400 you can value them. Most of the stocks around the 0:13:34.440 --> 0:13:37.760 world are not expensive, the S and P is, but 0:13:37.840 --> 0:13:41.800 that's because of basically seven names that are trading, you know, 0:13:41.880 --> 0:13:45.560 in the mid thirties. But the equity market is a 0:13:45.840 --> 0:13:49.560 undisputed compounder over time. I think, in my view it 0:13:49.559 --> 0:13:54.120 should always be the anchor asset in any portfolio. And 0:13:54.160 --> 0:13:57.520 then beyond that, you know, I see gold and bitcoin 0:13:57.640 --> 0:14:03.520 and commodities in general, as well as alternatives as basically diversifiers, 0:14:03.760 --> 0:14:08.600 assets that generally are uncorrelated to both equities and bonds, 0:14:08.640 --> 0:14:12.960 and certainly gold fits that bill even more so than bitcoin. 0:14:13.880 --> 0:14:16.280 So I think they all have a place, And especially 0:14:16.360 --> 0:14:20.600 in a world of fiscal dominance, where maybe debt gets 0:14:20.640 --> 0:14:25.120 debased over time, we get maybe a closer cooperation with 0:14:25.360 --> 0:14:29.560 between the Fed under presumably soon to be Kevin Walsh 0:14:29.720 --> 0:14:33.160 and the Treasury under Scott bessened if there's going to 0:14:33.160 --> 0:14:36.680 be greater coordination in terms of managing the debt load. 0:14:37.440 --> 0:14:40.880 I can see the argument for harder assets, and I 0:14:40.920 --> 0:14:43.520 think gold and bitcoin again, I see them as different 0:14:43.600 --> 0:14:46.720 players on the same team. But again I don't think 0:14:46.760 --> 0:14:49.960 either one of them compares to equities over the long term. 0:14:50.680 --> 0:14:52.960 Just got thirty seconds forgive, and you've got to come 0:14:52.960 --> 0:14:55.320 back soon. But the AI trade, it does feel like 0:14:55.360 --> 0:14:57.560 we're having a little bit of a reckoning, certainly when 0:14:57.600 --> 0:15:01.680 it comes to software. Thirty seconds on your view there. 0:15:02.840 --> 0:15:07.080 Well, so AI of course is perhaps the greatest technological 0:15:07.120 --> 0:15:10.400 innovation we've seen in a long time. And I think 0:15:10.520 --> 0:15:14.600 you know because that market has ramped up so high 0:15:14.640 --> 0:15:17.920 that whenever anything goes wrong, you can see you can 0:15:17.960 --> 0:15:21.080 see the rationale for everyone sort of exiting first and 0:15:21.160 --> 0:15:24.520 asking questions later. But we've seen this before, We saw 0:15:24.560 --> 0:15:27.480 this even last November. We've seen it before. 0:15:27.160 --> 0:15:31.200 That you're listening to the Bloomberg Business Week Daily podcast. 0:15:31.440 --> 0:15:34.400 Catch us live weekday afternoons from two to five Eastern 0:15:34.640 --> 0:15:37.880 Listen on Apple, Karplay and Android Otto with the Bloomberg 0:15:37.920 --> 0:15:40.640 Business app, or watch us live on YouTube. 0:15:41.640 --> 0:15:43.640 Well, cindyd does. Ken Griffin made some comments at a 0:15:43.640 --> 0:15:45.320 Wall Street Journal event this week. They're getting a lot 0:15:45.320 --> 0:15:48.200 of traction. He said, the Trump administration's tendency to reward 0:15:48.280 --> 0:15:51.960 loyalists doesn't play well with business executives. He also criticized 0:15:51.960 --> 0:15:55.520 the president's willingness to enrich his family while in office. 0:15:55.600 --> 0:15:57.600 Here's what he said. He said, President Trump has made 0:15:57.680 --> 0:16:01.360 quote missteps in making decisions that benefit his family while 0:16:01.360 --> 0:16:04.040 in office. It raises the question of whether the public 0:16:04.120 --> 0:16:06.160 is being served, he said at the Journal event. 0:16:06.320 --> 0:16:08.520 Yeah, he did so. This brings us to Tim O'Brien 0:16:08.560 --> 0:16:11.040 and his latest colum from Bloomberg opinion, how the President's 0:16:11.160 --> 0:16:14.560 UAE deal is a security risk. Tim joins us now 0:16:14.560 --> 0:16:18.920 here in our Bloomberg Interactive Brokers studio. Tim, It's interesting, 0:16:19.000 --> 0:16:21.720 I feel like since the Journal did this dive into 0:16:21.760 --> 0:16:25.760 this deal, or what seems to be a transactional deal 0:16:26.320 --> 0:16:29.560 could appear that way in a presidency that many agreed, 0:16:29.600 --> 0:16:31.880 there are so many transactions that go on. It is 0:16:31.920 --> 0:16:34.360 a transactional White House. Why are we talking so much 0:16:34.680 --> 0:16:37.000 or why should we about this particular deal. 0:16:37.880 --> 0:16:39.960 Well, the context of it is that during during the 0:16:39.960 --> 0:16:46.240 Biden administration, the export of high end computer processing chips 0:16:47.120 --> 0:16:50.720 were banned to the UAE, and they were banned because 0:16:51.320 --> 0:16:53.680 the ua is a transit port for the same chips 0:16:53.960 --> 0:16:57.320 to China, and the US isn't a foot race for 0:16:57.680 --> 0:17:01.360 on the technological side on aie these chips. AI that 0:17:01.440 --> 0:17:04.520 these chips due will and then obviously militarily they have 0:17:04.720 --> 0:17:09.400 all sorts of military applications, and the Biden administration and 0:17:09.640 --> 0:17:12.720 a number of national security experts didn't feel it was 0:17:12.760 --> 0:17:13.960 a safe transit point. 0:17:14.119 --> 0:17:17.160 Cause for concern in terms of US national security, yeah, and. 0:17:17.119 --> 0:17:19.679 Our economic competitiveness both, right, both, you know, I mean 0:17:19.680 --> 0:17:22.919 one of our edges in the world is technological innovation 0:17:22.960 --> 0:17:25.520 and it's represented by chips. And I think that's an 0:17:25.680 --> 0:17:29.919 entirely non ideological, non partisan viewpoint. It's about American security 0:17:30.080 --> 0:17:34.480 and American economic growth. Within two months of Donald Trump 0:17:34.520 --> 0:17:39.240 getting inaugurated, those bands were being renegotiated and various things, 0:17:39.280 --> 0:17:43.280 and then by May an agreement was in place, and 0:17:43.320 --> 0:17:46.720 by last November it was finalized and the UAA now. 0:17:46.560 --> 0:17:47.399 Gets those chips. 0:17:47.960 --> 0:17:51.639 And there had been various, you know, reasons positive for 0:17:51.680 --> 0:17:56.080 this change in that position. The amoradis promised about a 0:17:56.119 --> 0:17:58.920 one point four trillion dollar investment in the United States 0:17:58.960 --> 0:18:01.600 over ten years. I believe that was given as one reason. 0:18:02.560 --> 0:18:07.320 A little further along, Bloomberg News reported that the Amoradis 0:18:07.359 --> 0:18:10.439 took a stake in World Liberty Financial, the crypto platform 0:18:10.440 --> 0:18:11.440 of the Trump's control. 0:18:12.920 --> 0:18:13.880 And then The New. 0:18:13.840 --> 0:18:16.440 York Times did a big deep dive in the fall 0:18:16.520 --> 0:18:20.800 last year about the apprehension within Trump's own administration about 0:18:20.800 --> 0:18:24.159 loosening these controls member of his own White House. The 0:18:24.240 --> 0:18:26.960 new element of this that then surfaced was this recent 0:18:27.040 --> 0:18:30.000 Wall Street Journal story in which we learned that actually 0:18:30.040 --> 0:18:36.000 four days before he was inaugurated, Before Donald Trump was inaugurated, 0:18:36.280 --> 0:18:39.080 Sheik tach Nun, who is one of the most powerful 0:18:39.119 --> 0:18:43.000 people in the UAE, is the brother brother of the 0:18:43.000 --> 0:18:46.159 country's president. He oversees one of the world's biggest sovereign 0:18:46.200 --> 0:18:50.880 wealth funds, he controls two AI companies, and he oversees 0:18:50.920 --> 0:18:55.520 the nation's national security and intelligence apparatus. Made a big 0:18:55.600 --> 0:19:00.000 investment in the Trump's families company and it was about 0:19:00.160 --> 0:19:03.000 half a billion dollars, and of that, about one hundred 0:19:03.000 --> 0:19:06.240 and eighty seven million went to the Trump family, raising 0:19:06.520 --> 0:19:09.640 the obvious question of was Donald Trump bribed to loosen 0:19:10.560 --> 0:19:14.120 Chip exports to the UAE. And I think anyone who 0:19:14.520 --> 0:19:17.240 you know sort of looks at this dispassionately, see, yes, 0:19:17.280 --> 0:19:18.640 that's certainly a possibility. 0:19:19.359 --> 0:19:23.680 So we should note that the White House, in that 0:19:23.800 --> 0:19:27.080 Wall Street Journal story said that quote, President Trump only 0:19:27.119 --> 0:19:30.360 acts in the best interests of the American public. There 0:19:30.400 --> 0:19:34.280 are no conflicts of interest. The White House spokeswoman added 0:19:34.280 --> 0:19:37.480 that Witcoff is working to advance President Trump's goals of 0:19:37.560 --> 0:19:41.800 piece around the world. I bring that up because you know, 0:19:41.880 --> 0:19:45.920 that's that's what the White House says. Congress though, where 0:19:45.960 --> 0:19:46.919 can I just comment with us? 0:19:47.000 --> 0:19:47.160 Yeah? 0:19:47.480 --> 0:19:50.880 So, first off, the Whitcoff family also benefited from Shake 0:19:50.920 --> 0:19:54.760 Tanune's investment. Steve Whitcoff, who's the ENVOYD of the Middle East. 0:19:55.000 --> 0:19:57.880 His son is a co founder of World Liberty Financial. 0:19:59.280 --> 0:20:01.680 Todd blanche Is that at the Attorney General, was on 0:20:02.160 --> 0:20:04.840 the news shows last weekend. He was asked the same question. 0:20:04.960 --> 0:20:09.360 He said, what Trump is doing is neither untoward or unprecedented, 0:20:09.359 --> 0:20:13.240 but actually is untoward. And the volume of these transactions 0:20:13.359 --> 0:20:16.040 and the frequency of them is certainly unprecedented. 0:20:16.320 --> 0:20:18.240 So I want to go to the We're going to 0:20:18.280 --> 0:20:20.239 jump around your piece a little bit, but you end 0:20:20.240 --> 0:20:22.440 this piece in a way that I think is important 0:20:22.480 --> 0:20:25.440 because it's kind of crickets right now coming from Congress. 0:20:25.800 --> 0:20:28.320 You write that it's absolutely true that Trump has hung 0:20:28.359 --> 0:20:30.119 a four cell sign on the Oval Office at a 0:20:30.160 --> 0:20:33.440 scale and frequency that is untoward and unprecedented. It's also 0:20:33.520 --> 0:20:36.240 true that a Republican controlled Congress and the courts are 0:20:36.320 --> 0:20:39.040 unlikely to do a thing about it. You know, there's 0:20:39.080 --> 0:20:41.600 the four hundred million dollar jet from Qatar that in 0:20:41.680 --> 0:20:46.600 any other world would be like, you know, outrage from Congress. Perhaps, 0:20:47.240 --> 0:20:49.920 why are lawmakers so unwilling to push back? 0:20:50.320 --> 0:20:52.040 Well, I mean, I think I think this was also 0:20:52.080 --> 0:20:53.800 true of his first term. And the reality is I 0:20:53.840 --> 0:20:57.760 think the Republican Party has been recast in President Trump's image, 0:20:57.840 --> 0:21:01.320 and I think that members of his party are disinclined 0:21:01.600 --> 0:21:06.800 to take him on publicly about, you know, abusing the 0:21:06.800 --> 0:21:09.960 privileges and powers of an office that's always, by design, 0:21:10.080 --> 0:21:14.200 by constitutional design, had a meaningful amount of latitude compared 0:21:14.200 --> 0:21:17.480 to all of the other federal offices. So I think 0:21:17.520 --> 0:21:20.320 that's one factor. The other factor is that the federal 0:21:20.359 --> 0:21:23.120 agencies that would look into things like this are also 0:21:23.280 --> 0:21:26.840 beholden to trup President Trump, whether it's the Justice Department 0:21:27.359 --> 0:21:31.720 or the FBI, or the Securities and Exchange Commission, State Department, 0:21:31.800 --> 0:21:32.760 et cetera, et cetera. 0:21:33.240 --> 0:21:35.240 You know, it's funny. We talked with Paul Krugman at 0:21:35.240 --> 0:21:37.159 the top of the hour and our top of the 0:21:37.200 --> 0:21:39.800 two pm hour, and he talked about he's looking at 0:21:39.840 --> 0:21:42.159 what's going on with crypto and he says, if we're 0:21:42.200 --> 0:21:44.000 going to have a crypto crash, best to get it 0:21:44.040 --> 0:21:46.440 over with now before the industry becomes too big or 0:21:46.480 --> 0:21:51.320 too politically powerful to fail. It's just this interconnectedness, if 0:21:51.359 --> 0:21:53.439 you will, with so many things it feels like with 0:21:54.160 --> 0:21:56.080 what appears to be in terms of the White House, 0:21:56.680 --> 0:22:01.920 family moves and so on. That's what I'm blown away by, Tim. 0:22:02.000 --> 0:22:05.080 And maybe this sounds so naive that there are absolutely 0:22:05.119 --> 0:22:08.000 it feels like no checks and balances. And I would 0:22:08.000 --> 0:22:10.800 say the same thing if this was a democratic white House. 0:22:11.320 --> 0:22:16.439 So is our system broken or like what? I don't know. 0:22:16.480 --> 0:22:18.280 I'm thinking about what do we do on the other 0:22:18.359 --> 0:22:21.200 side of this, because I'm just wondering, could there be 0:22:21.280 --> 0:22:24.199 then whoever next comes into the White House, whatever party 0:22:24.200 --> 0:22:28.200 they might be, that are now emboldened to see the power. 0:22:28.000 --> 0:22:28.640