Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all partnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one and twenty countries. You can
Speaker 1: download Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. So Tim totally bummed me
Speaker 1: out by talking about the latest variant. Thank you so much. Yeah,
Speaker 1: I'm sorry, Bush. Gotta brush up on your Greek alphabet,
Speaker 1: so you know, start practicing funny not funny whatever the
Speaker 1: next letter is. Lot's going on, so let's get to it.
Speaker 1: Um And just for those of you keeping track, as
Speaker 1: we are always at bloom byg Global Cases, when it
Speaker 1: comes to COVID top three hundred sixty six point nine
Speaker 1: million deaths past five point six million, and the vaccine
Speaker 1: more than ten billion shots and ministered Tim around the world, Well,
Speaker 1: let's go to Dr Ian lust Bader, clinical professor of
Speaker 1: Medicine at n y U Lane and the Medical Center.
Speaker 1: He joins us on the phone from New York City,
Speaker 1: as he does on most Fridays. Dr Let's bet I
Speaker 1: want to start with what Caroline I were talking about
Speaker 1: just a couple of minutes ago. This omicron sub variant
Speaker 1: be A dot two, appearing to be even more contagious
Speaker 1: than the original fast spreading strain. That's according to UK
Speaker 1: health authorities. We do know though, that vaccine booster shots
Speaker 1: remain an effective shield. How are you reading into this? Well,
Speaker 1: we talked about the possibility of more mutations and this
Speaker 1: O macron variant definitely Happy Friday. By the way, guys,
Speaker 1: thank you is a is yay we got here, we
Speaker 1: got here, we made It is definitely a split off
Speaker 1: of the original O macron or maybe sort of coevolved
Speaker 1: with it. The genetics are are slightly different than uh
Speaker 1: some of the other mutations that we've seen. The good
Speaker 1: news is it appears that people who have had O
Speaker 1: macron will be resistant to the b A two variant.
Speaker 1: Uh So that's good news. It also it does seem
Speaker 1: to be maybe slightly more contagious, and we can talk
Speaker 1: about what that means, but certainly not more lethal. So
Speaker 1: overall this does appear as viruses overall tend to mutate,
Speaker 1: tend to be a little more infectious, tend to be
Speaker 1: a little less lethal because viruses are more successful if
Speaker 1: they don't kill their host. So I don't think this
Speaker 1: is a meaningfully worrisome development in a way, not completely surprising.
Speaker 1: We're seeing some uh indications in California, Texas, Washington of
Speaker 1: the B two strain, more common in Europe, in Denmark
Speaker 1: and certainly in the United Kingdom. UH. And it may
Speaker 1: replace just as O macron replaced delta. The B A
Speaker 1: two strain may replace h O macron. But at this
Speaker 1: point it is not killing more people. And basically the
Speaker 1: same approach that we're using, whether it's a vaccines, you know,
Speaker 1: masks are very reasonable. We have a medication ever sheld
Speaker 1: for I mean to compromise patients, which is becoming somewhat
Speaker 1: more available. It's two shots their monoclonal antibodies. So for
Speaker 1: people who are really at risk, they should talk their
Speaker 1: to their doctor about this because that is available for prevention,
Speaker 1: not just treatment. How are you doing? You still sound
Speaker 1: still just a cold or I'm I'd say I'm n
Speaker 1: bettery voice still not a hundred percent. Uh, it's interesting.
Speaker 1: We were not really seeing sort of long COVID symptoms
Speaker 1: from omicron. But but who knows, you know, with UH
Speaker 1: will have to track these things further out. I'm feeling fine.
Speaker 1: What about you? How are you doing? I'm fine. I
Speaker 1: never had any symptoms. Um, I had a million negative tests,
Speaker 1: including my PCR test which I took on the same
Speaker 1: day that I took a rapid that that rapid came
Speaker 1: back positive. Maybe you had Who knows? Tim? And Dr
Speaker 1: Lester thinks I know. I don't think I had it,
Speaker 1: but I don't know, and I'm continue to get tests.
Speaker 1: You know, now, i'd just be careful, so um, hey,
Speaker 1: I wouldn't. I wouldn't worry at this point. I'm not right.
Speaker 1: I gotta just live life. We all do, but just carefully. Hey,
Speaker 1: do you think it's a given ian that we're going
Speaker 1: to get a fourth vaccine dose booster at some point?
Speaker 1: There aren't fering it into Israel And certainly for people
Speaker 1: who are really at risk, the elderly having significant problems,
Speaker 1: I mean, no compromised, it probably is not going to
Speaker 1: be harmful. It's very unclear. Four doses of alpha for
Speaker 1: really O macron or b A two very unclear how
Speaker 1: protective it will be and how long that protection will last.
Speaker 1: So if you're at risk for ninety days, think about
Speaker 1: things like eversheld, which is astras eneca, think about early
Speaker 1: packs LVID. We do have that of available for people
Speaker 1: who are at risk who do who test positive and
Speaker 1: have mild to moderate symptoms. So there are various options available.
Speaker 1: The fourth vaccine um I think is less well proven,
Speaker 1: certainly than paxlovid, which lowers hospitalization and severe illness, you know,
Speaker 1: so that is certainly very reassuring. Hey, I'm wondering dr
Speaker 1: less better about masks because we did learn that in
Speaker 1: San Francisco. They have removed it into our mask mandate
Speaker 1: for offices and gems that still people have to prove
Speaker 1: that they're up to date on vaccinations and boosters. That
Speaker 1: starts February one. Uh, what do you think that's gonna
Speaker 1: the spell for New York City, New York State, and
Speaker 1: other areas of the country. So again, depending on the
Speaker 1: kind of mask, how you wear it. Uh, there are
Speaker 1: so many variables that it's very hard to really get
Speaker 1: hard data, you know on this. I think certainly for
Speaker 1: kids in school, we we do think maybe that's had
Speaker 1: a negative impact on socialization and other areas. I think
Speaker 1: if you're overall healthy and there's no mask mandate, if
Speaker 1: you're insecure, certainly where it. If you're someone at risk,
Speaker 1: if you're immuno compromised, if you're elderly, I would take
Speaker 1: every measure possible to reduce risk, which would include wearing
Speaker 1: a mask, even though we know they're not all right. Well,
Speaker 1: take care. Always nice to check in with you and
Speaker 1: stay well. Dr Ia las Beta, Clinical Professor of Medicine
Speaker 1: at n y U Lango Medical Center. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. So among the most read on
Speaker 1: the Bloomberg Today. It is a Bloomberg exclusive exclusive. It's
Speaker 1: about how Wall Street had a briefing from the Body
Speaker 1: Administration on possible sanctions against Russia. Tim Yeah. The story
Speaker 1: written by Jenny Stain, Catherine Dougherty, and Hannah Levitt. Hannah
Speaker 1: joins us now. She's Finance reporter at Bloomberg News. She's
Speaker 1: on the phone from New York City, Hannah, you and
Speaker 1: our colleagues right that city Bank of America JP Morgan.
Speaker 1: They're among the firms that are involved in discussions the
Speaker 1: US and allies are hoping to prevent a Russian invasion
Speaker 1: of Ukraine. What did you learn and and and really
Speaker 1: take us into it. Hey, you guys, thank you for
Speaker 1: having me today. Happy Friday. Um. So what we're what
Speaker 1: we heard and what we reported is that, um, the
Speaker 1: Biden administration held discussions were really consulting uh, these big
Speaker 1: banks to make sure that you know, any any sanctions
Speaker 1: wouldn't um disrupt the global financial system. And so what
Speaker 1: we're looking at here is Russia is really integrated into
Speaker 1: the global financial system. UM. So it's less you know,
Speaker 1: how will study group be impacted or how will there
Speaker 1: be more going to be impacted or something like that,
Speaker 1: and really more so, uh making sure that the government
Speaker 1: understands the full range of consequences for you know, any
Speaker 1: actions or set of actions that they may take. Well.
Speaker 1: And it's interesting too because I think you think about
Speaker 1: the global banks and I do wonder about the relationship
Speaker 1: they have with maybe some of the different markets. Uh,
Speaker 1: what is kind of the ties between Russia and the
Speaker 1: US Banking Committee industry. Yeah, that's a great question. I mean,
Speaker 1: so like, of the three biggest US banks, City Group
Speaker 1: is the only one that even breaks out it's exposure
Speaker 1: um to Russia. And you know, those those assets are
Speaker 1: really just I think it was point three percent of
Speaker 1: its total assets. So it's not you know, you're not
Speaker 1: talking some kind of like outsized exposure on behalf of
Speaker 1: the US banks here, um. But that's not really the issue.
Speaker 1: It's more, you know, the the interconnectiveness of of the
Speaker 1: financial system as a whole, and when you're looking at
Speaker 1: things like you know, the Swift payment system, which is
Speaker 1: considered the nuclear option here, but if you cut off
Speaker 1: Russia from something like that, it's how does that impact,
Speaker 1: you know, the way business gets done in the way
Speaker 1: that thinks facilitate that globally. That's a really good point,
Speaker 1: especially when we you know, you think about how all
Speaker 1: the conversations we've had about the global supply chain, and
Speaker 1: there's a global financial supply chain in terms of how
Speaker 1: things work around the world. The other thing I think
Speaker 1: about is I wonder how the banks are thinking about
Speaker 1: Europe's relationship with Russia, whether it's an economic impact of
Speaker 1: things to to break down. You know that is Europe
Speaker 1: obviously more directly impacted in the United States in that form. Yeah,
Speaker 1: well definitely. And you know all of these big banks
Speaker 1: have global exposure, and when you're looking at I mean
Speaker 1: I think I was just reading that. I think when uh,
Speaker 1: when Western nations threatened Russia's access to swift back in,
Speaker 1: one of their finance ministers said it could produce Russia's
Speaker 1: GDP by like five percent in a year. So you know,
Speaker 1: when when you think about these consequences, um, you know,
Speaker 1: not just in Russia, but then still over effects to
Speaker 1: you know, those countries that are closer geographically like you
Speaker 1: just mentioned. Um, then you're looking at that question of
Speaker 1: you know, global growth and how that impacts the banks.
Speaker 1: And also you know when you think about your talking
Speaker 1: about volatility of the markets, which this week has been
Speaker 1: you know, crazy as it is, but then you think about,
Speaker 1: you know, if if there's all this uncertainty around that,
Speaker 1: will people be on the sidelines and all of those occasions. Well,
Speaker 1: and there's the traditional big banks, right, and then there's
Speaker 1: also like a master card. I know you guys cite
Speaker 1: the CEO in your story. I mean they talk about
Speaker 1: it being a substantial and strategically important market for them.
Speaker 1: Mm hmm, yeah. I mean that that really goes back
Speaker 1: to the whole the payments thing, in the payment system
Speaker 1: of the whole. So what do what do banks and
Speaker 1: financial institutions do now now that they've been briefed? How
Speaker 1: do they how do they prepare for such a situation.
Speaker 1: I mean, you know that it's it's a back and forth.
Speaker 1: It's not um. You know, I think that the the
Speaker 1: administration my senses, wants to learn from the banks as
Speaker 1: well and the people whose job it is at the
Speaker 1: banks to understand the potential outcomes. So you know, there's
Speaker 1: there's some back and forth there. But you know, at
Speaker 1: the end of the day, banks have had to deal
Speaker 1: with sanctions before UM and that's really the point of
Speaker 1: these conversations is for them too, you know, be able
Speaker 1: to determine they had forward as well as the administration.
Speaker 1: And real quickly just got about twenty five seconds. Who's
Speaker 1: more worried the bide administration about spillover or banks more
Speaker 1: worried about spillover. That's a good question, you know, I
Speaker 1: do that that's a great question to be continued. Hey,
Speaker 1: great reporting and it's a Bloomberg exclusive and it is
Speaker 1: among the most read on the Bloomberg and what's been
Speaker 1: a crazy cra cray week kind of love it. Thanks
Speaker 1: so much, Finance Report ut Bloomberg News on the phone
Speaker 1: in New York City. You know what I love about
Speaker 1: what she said to is just it's a reminder when
Speaker 1: we have spoken so much about the connect connectivity between
Speaker 1: supply chains, but the financial supply chain is so connected. Yeah,
Speaker 1: and it's not something that you can really visualize, but
Speaker 1: it absolutely is. I mean, think about the fact that
Speaker 1: all these companies and their earnings are talking about cross
Speaker 1: border transactions and we take it for granted, right that
Speaker 1: this stuff just works so seamlessly, and that's not always
Speaker 1: the case. You're listening to Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: In the new issue Bloomberg Business Week gets out and
Speaker 1: in it you'll find a story about one crypto company,
Speaker 1: it's founder and why regulators are keeping an eye on it.
Speaker 1: The story by Zeke Fox, financial investigations reporter at Bloomberg News.
Speaker 1: He joins us now to talk about his story. It's
Speaker 1: about Celsius also joining us as Joel Webber, editor at
Speaker 1: Bloomberg Business Week. He joins us on the access line
Speaker 1: from Brooklyn. Celsius is eighteen percent yields on crypto. They're
Speaker 1: tempting and they're drawing scrutiny, Joelso, is is Celsius a bank?
Speaker 1: It takes your crypto? It's not regulated as a bank.
Speaker 1: What is Celsius sounds great? And yields um definitely catch attention.
Speaker 1: And for for a long time it's been people who
Speaker 1: are willing to lend crypto to Celsius and get those
Speaker 1: returns um and increasingly it's making uh some regulators take
Speaker 1: notice too. Uh, Zeke, how do you get a team
Speaker 1: percent yields? So the pitch is really compelling. It's the
Speaker 1: celsius Is founder Alex Muschinsky. He says, Listen, it's not
Speaker 1: hard to get a team percent yields. It's actually the
Speaker 1: big banks are robbing you. They take your deposits, they
Speaker 1: go out and invest them. They make lots of money
Speaker 1: and they but they don't give you the profits. Meanwhile,
Speaker 1: if you send your crypto to celsie Is, it'll go
Speaker 1: out and invest it and it'll pay you five percent
Speaker 1: eight percent even depending on which crypto you send them.
Speaker 1: Well okay, so so what do they then do with
Speaker 1: your crypto? Yeah, I mean that is the question. Celsius
Speaker 1: says that they have these profitable ways of using the crypto,
Speaker 1: the main one being that they can take the coins
Speaker 1: that you sent to Celsius and lend them to big
Speaker 1: traders like hedge funds, who will use them to make
Speaker 1: really profitable bets. And these traders they have trouble borrowing
Speaker 1: money elsewhere, so they're willing to pay a lot to
Speaker 1: celsie it and Celsius can keep like a little sliver
Speaker 1: for itself and pay out the rest to the depositors.
Speaker 1: So it sounds like so it sounds like a win
Speaker 1: win pretty much. I mean, the when I heard the
Speaker 1: pitch the it, I mean, that was my question, Like
Speaker 1: what's the catch? Because in general, if someone is paying
Speaker 1: you a high interest rate, it's because you know they're
Speaker 1: taking some sort of risk with your with your money.
Speaker 1: And that's what I set out to investigate, because while
Speaker 1: Celsius says it's really transparent, it doesn't give out any
Speaker 1: sort of financial statement that shows exactly what it's doing
Speaker 1: with all the money that it's collecting, and it's not
Speaker 1: regulated like a bank. Even though the basic proposition is
Speaker 1: pretty similar to a bank, it's not really regulated at all.
Speaker 1: Um But in recent months a bunch of state securities
Speaker 1: regulators have started looking into Celsius, and so has the
Speaker 1: Securities and Exchange Commission, which is saying that maybe by
Speaker 1: doing what it does, it's breaking the law and offering
Speaker 1: people what are essentially investment products that the SEC should
Speaker 1: be overseeing. So if if that were to happen, if
Speaker 1: the SEC then does have to oversee these products, does
Speaker 1: that somehow ruin Celsius's business model or could they change
Speaker 1: their business models so they adhere to regulatory Uh well,
Speaker 1: I guess it here to regulations. You know, it's a
Speaker 1: good question. I mean, they've been growing so fast. They
Speaker 1: got up to billion in assets last year, more than quadrupled.
Speaker 1: I don't see why it couldn't go on with regulation.
Speaker 1: But the regulators would want to know exactly what they're
Speaker 1: doing with all the money, and they might have to
Speaker 1: disclose it to users. Um So, I spoke with a
Speaker 1: lot of former employees of Celsius, and what I found
Speaker 1: was that the company is definitely taking some risks with
Speaker 1: this with this money. So if there was more transparency,
Speaker 1: it's unclear how the users would react. So so as
Speaker 1: he talked to us more about Mashinsky because he's got
Speaker 1: u sort of an online you know, you mentioned those assets.
Speaker 1: How many people are watching him and tuning into his
Speaker 1: programming where he where he's you know, basically pitches his services. Yeah,
Speaker 1: I mean he's the founder and he's like the number
Speaker 1: one pitchman for the company. He's at every cryptoconference, he
Speaker 1: live streams every week. And I mean, just one example
Speaker 1: of something he said is the beauty of Celsius. Of
Speaker 1: what Celsius managed to do is that we deliver yield.
Speaker 1: We pay it to the people who would never be
Speaker 1: able to do it themselves. We take it from the rich,
Speaker 1: and we beat the index. That's like going to the
Speaker 1: Olympics and getting fifteen medals in fifteen different fields. After
Speaker 1: he said it, he dabbed and brushed off his shoulders. Um,
Speaker 1: and he's, uh, he talks like this. It sounds like
Speaker 1: he he makes Celsius sound like kind of like a
Speaker 1: multi level marketing type business opportunity more than like a
Speaker 1: bank account. But he has all these fans like Celsius users.
Speaker 1: He calls them selsie ms. He says, there's more than
Speaker 1: a million of them. These users will right in and
Speaker 1: be like I put my life savings in Celsius, like
Speaker 1: I quit my job. I'm making so much money off Celsia. UM.
Speaker 1: And it seems like Maschinsky really feeds off this energy.
Speaker 1: And he's, uh, he's fifty six, which is old by
Speaker 1: crypto standards, and he's he likes to say that he
Speaker 1: calls Celsius money over i P, as if it was like, uh,
Speaker 1: the revolutionary technology voiceover i P that, like you said,
Speaker 1: phone calls over the Internet. And he likes to say
Speaker 1: that he invented voiceover i P, which would make him
Speaker 1: like a really important inventor in the history of the internet. Um. However,
Speaker 1: I looked into this. I talked with a bunch of
Speaker 1: people who worked on voiceover i P and they say
Speaker 1: Maschinsky did not invent it. That he he did have
Speaker 1: an early voiceover i P company, but he didn't invent
Speaker 1: the technology. Um as. And it makes you wonder write
Speaker 1: with someone else to kind of put that out there. Hey,
Speaker 1: you did talk to, um those that were formally employed
Speaker 1: at that company. I mean, I guess it's a great
Speaker 1: profile and a deep dive into maybe a company people
Speaker 1: don't know about. What was your takeaway after your reporting
Speaker 1: and writing about this? To me, I think that, as
Speaker 1: a do professor told my co writer Joel Light, there's
Speaker 1: no free lunch. If if Celsius is paying you a
Speaker 1: lot of money, they have to be taking some risk
Speaker 1: with it to earn those returns. And maybe you trust
Speaker 1: Celsius to take your crypto and invest it, but maybe
Speaker 1: you want some more information about exactly what they're doing
Speaker 1: with with the money before you decide whether they're to
Speaker 1: invest with them. I mean, I found that they had
Speaker 1: given at least hundreds of millions of dollars to a
Speaker 1: guy to invest in Defy, So they were like taking
Speaker 1: the user's deposits and sticking them on these de five platforms.
Speaker 1: And the top money manager for DeFi left in a
Speaker 1: dispute that wasn't disclosed, and they lost a bunch of
Speaker 1: money in a hack. Right, So it seems like you know,
Speaker 1: you're definitely there's some risk involved. Just let the depositor
Speaker 1: or I guess not depositor be aware as wide open. Hey,
Speaker 1: we gotta run Seek, Thank you so much. Seek Fox.
Speaker 1: He's financial investigations reporter at Bloomberg News. Check out his story.
Speaker 1: It's in the finance section of the new issue of
Speaker 1: Bloomberg Business Week magazine, on newsstands, on the Bloomberg and
Speaker 1: online at Bloomberg dot com slash business Week. Joe Weber,
Speaker 1: have a great weekend, editor of Bloomberg Business Week. Catch Joeb,
Speaker 1: Me and Tim. We're on the weekend show up Bloomberg
Speaker 1: Business Week and catch out on Bloomberg Radio at eight
Speaker 1: am come Saturday. This is Bloomberg Radio. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. We just talked about Goldman saying
Speaker 1: that investors should be skeptical of the narrative that rising
Speaker 1: adoption of cryptocurrencies must translate into higher prices to we
Speaker 1: have that going on, and it's kind of good to
Speaker 1: keep that in mind when we heard what was it
Speaker 1: about a week ago the Fed taking a key step
Speaker 1: in weighing the creation of its own digital currency UH,
Speaker 1: a move that the FETE said could help ensure the
Speaker 1: U S dollars dominance as the central Bank rapples really
Speaker 1: with the fast growing fast growing private crypto markets and
Speaker 1: coins issued by other nations. Right, there's this whole thing
Speaker 1: going on globally. Yeah, let's talk about it with Dorothy G.
Speaker 1: O b. She's of council at Jones Day. She joins
Speaker 1: us on the phone from New York City. Dorothy, how
Speaker 1: are you hi, Carol? Tim, thanks very much for having
Speaker 1: me on. Great to have you, Yeah, really great to
Speaker 1: have you here. Let's talk about the FED considering a
Speaker 1: central bank digital currency. UM, what are some I want
Speaker 1: to start with the pros here, because this is something
Speaker 1: that you look at closely. You have a good understanding
Speaker 1: of this. Why would the central bank want to do this? Yeah, Tim,
Speaker 1: it's a great question. And UM, so as you as
Speaker 1: you mentioned, the FED has come out with this report,
Speaker 1: uh last week, and it's going to be examining specific
Speaker 1: use cases and UM, you know, both the benefits and
Speaker 1: the challenges of issuing a central bank digital currency. I
Speaker 1: think that, um, the pros or the potential pros of
Speaker 1: CBDC central bank digital currency really depend on, uh, the
Speaker 1: particular use case, UM, the way in which the CBDC
Speaker 1: could be used in a given set of circumstances. So, UM,
Speaker 1: some potential benefits could be uh the the greater efficiency
Speaker 1: and in payment systems, more efficiencies and cross border payments, UM,
Speaker 1: better tools to fight financial crime UM, and and also
Speaker 1: the potential again for greater financial inclusion. Those are some
Speaker 1: of the benefits or the potential pros of a CBDC.
Speaker 1: I think, UM, you know what the FED is doing
Speaker 1: now is um examining these potential use cases and trying
Speaker 1: to think through whether a CBDC is the right tool
Speaker 1: um to realize some of those uh some of those issues.
Speaker 1: So what would a cbd C do you to the
Speaker 1: average Joe and Jane on main street? Well, UM, again
Speaker 1: you know there there are a couple of different models
Speaker 1: of a CBDC. So one is could be institutional only
Speaker 1: and so that would be for use um between you know,
Speaker 1: payments between financial institutions. So um, not much impact to
Speaker 1: the average consumer on the street there UM any efficiencies
Speaker 1: there would be realized really between the institutions. Now, if
Speaker 1: there were a retail CBDC or one um uh in
Speaker 1: which the public could participate, UM, you know that could
Speaker 1: that could again have the potential for greater financial inclusions.
Speaker 1: So for example, UM, people might be less uh likely
Speaker 1: UM to go and cash their check with UM, you know,
Speaker 1: and pay high fees uh um uh for paid a
Speaker 1: lenders or other you know payment services UM. And the
Speaker 1: potential for those kinds of um of benefits to the
Speaker 1: consumer uh population, I think is one of the things
Speaker 1: that the FED is looking at in thinking about CBDCs.
Speaker 1: I will say it's a very important time because as
Speaker 1: the FED has put out this report, they have put
Speaker 1: out a call for input from the public, from UM,
Speaker 1: elected officials, from other stakeholders UM. And so to the
Speaker 1: extent that people have a view or an interest or
Speaker 1: a you know, a voice in this discussion, now is
Speaker 1: the time to get involved. Now is the time to
Speaker 1: make your views known to the Federal Reserve. They've opened
Speaker 1: this period for comment uh and so people with an
Speaker 1: interest here should take advantage of that the comments or UM.
Speaker 1: You know, the FED is going to be asking for
Speaker 1: comments by may. Hey, Dorothy, I'm wondering because you you know,
Speaker 1: spend so much time in this space. Well, what do
Speaker 1: you think the right move is from the FED? If
Speaker 1: you were advising the fat Yeah, I think the Fed
Speaker 1: is doing exactly what it should do. It is um
Speaker 1: taking its time, you know, the FED is is certainly
Speaker 1: not the first in this process. There are other countries
Speaker 1: and other central banks around the world who have been
Speaker 1: looking at this, uh, the issue of central bank digital currency,
Speaker 1: and are further along the road, uh, you know, than
Speaker 1: than the US is. But I think the FED is
Speaker 1: acting appropriately. They are being very deliberative, They're being very careful, um,
Speaker 1: and trying to gain a broad consensus. Um. And you know,
Speaker 1: the intent is not for the FED to sort of
Speaker 1: act unilaterally here. And in fact, they've said that they
Speaker 1: will not move forward without broad consensus and broad by
Speaker 1: in from the public, elected officials and other stakeholders. And
Speaker 1: so that's the right move I think. Um, you know,
Speaker 1: they they as others have said, and I agree with,
Speaker 1: they don't have to be the first, but they just
Speaker 1: don't want to be the last. Well. And that's the point, right,
Speaker 1: I mean, there's no kind of ignoring or looking back.
Speaker 1: You have to look forward at this point because other
Speaker 1: nations are moving forward, and I think about something like China, right,
Speaker 1: the US has to keep up. Well, that's right. China
Speaker 1: is a very interesting example. Um. They are well down
Speaker 1: the road to the digital lawn. Um. And you know,
Speaker 1: have a pilot and um uh and have been made
Speaker 1: a lot of progress there. Another interesting example is Sweden.
Speaker 1: UM and Sweden is interesting because the you know, the
Speaker 1: percentage of transactions that actually use cash physical cash UM
Speaker 1: is much lower than it has been in the past.
Speaker 1: That's not UM. You know, there are the same parallels
Speaker 1: with the decline and the use of cash. It doesn't
Speaker 1: translate exactly here to the US. So different countries have
Speaker 1: different motivations for looking at this, looking at the issue
Speaker 1: of CBDCs and and what the potential benefits might be.
Speaker 1: But but I do think the FED is UM is
Speaker 1: taking the right course here in in being very deliberative
Speaker 1: UM and UM and really looking at all of the
Speaker 1: issues for what could be a very significant impact and
Speaker 1: change to our financial system and our financial infrastructure. All right, well,
Speaker 1: great to get your inputting added to the narrative that
Speaker 1: we've been having in the conversation. UM, Dorothy, thank you
Speaker 1: so much. Dorothy go Ob, she's of counsel at Jones
Speaker 1: Day on the phone in New York City. Interesting, really
Speaker 1: interesting stuff. Don't want to be the first, don't need
Speaker 1: to be the first, but don't want to be the last,
Speaker 1: right exactly, all right, you're listening to Bloomberg Business. We
Speaker 1: kids Friday and this is Bloomberg. Yeah, but you let
Speaker 1: me drive? No, no, no, who's right? Please, I'll do gravels.
Speaker 1: I want to drive. It's good question drive. This is
Speaker 1: the Drive to the Clobell on Bloomberg Radio. Just got
Speaker 1: about ten minutes left in today's trading session, getting ready
Speaker 1: to wrap up the trading day. We are seeing buying
Speaker 1: into the clothes. We are at our best levels of
Speaker 1: the session, more than two percent gain on the SMPS
Speaker 1: Charlie mentioned two seven percent higher on the NASDAC. Thank
Speaker 1: you Apple, but also a lot of other names. And
Speaker 1: the dad right now up about one and a half
Speaker 1: percent him. So we're definitely seeing um bullishness into the
Speaker 1: closing bell. He certainly think you Apple, and you're right
Speaker 1: to say a lot of other names because of the
Speaker 1: more than five stocks, because there are more than six
Speaker 1: or high or only seventy seven lower right now. Quite
Speaker 1: a change from what we saw earlier in the day.
Speaker 1: That's an interesting tone, uh and sentiment going into the weekend.
Speaker 1: So let's see what our next guest has to say.
Speaker 1: Dave Donna Beatie, and he's chief investment Officer of CIBC
Speaker 1: Private Wealth Management. They've got about ninety six billion in
Speaker 1: assets under management. He joins us once again on the
Speaker 1: phone from Baltimore. So, David, has been quite a week
Speaker 1: in a year where we have kind of had quite
Speaker 1: a week after week after week. To see potentially a
Speaker 1: positive close on this Friday, in a week where we
Speaker 1: had the FED meeting and a lot of volatility in
Speaker 1: the markets and also some big earnings. How do you
Speaker 1: read it? Well, I think it's it's certainly good to
Speaker 1: see up a strong bid to close the week here
Speaker 1: as the the SMP kind of struggles to a draw
Speaker 1: for the week. Uh yeah, I think certainly the uh
Speaker 1: you know, Apple earnings reports, sort of the bellwall, whether
Speaker 1: of bell Weather is reporting so strong helps and uh
Speaker 1: you know, perhaps some some short covernment going on. So
Speaker 1: but but still a tough start to the year. Okay. So,
Speaker 1: so you're not saying necessarily that it's a bullish sign
Speaker 1: that the sentiment is changing, No, I don't think yet.
Speaker 1: I think we're at a back and forth market here.
Speaker 1: We've had a uh you know, a pretty meaningful pullback,
Speaker 1: which you know, I think makes some sense if if
Speaker 1: you look at the drivers of the great bull market
Speaker 1: rather than we had in one when the market more
Speaker 1: than doubled. We had these, you know, three incredibly strong
Speaker 1: tail winds monetary policy, fiscal policy, and a huge earnings recovery.
Speaker 1: And you know those tail winds are evaporating right that
Speaker 1: the FETE is marching toward rate hikes. There's not gonna
Speaker 1: be any more fiscal relief pack of just coming. And
Speaker 1: earnings are coming in fine here on the fourth quote
Speaker 1: of reports, but we know they've been slow this year.
Speaker 1: So those tail ones just on the strong, and we
Speaker 1: started from a level of fairly high evaluation, so a
Speaker 1: bit of a pullback is not terribly surprising. You sell
Speaker 1: like somebody who's seen a fair amount of market cycles,
Speaker 1: and understand, the market goes up in the moody and right,
Speaker 1: and the market goes down. And we all love to
Speaker 1: who have seen a fair amount of market cycles like
Speaker 1: to make comparisons to other moments of either volatility or
Speaker 1: instability or big selling or big buying. Um, how, I
Speaker 1: don't know, how do you kind of put this market
Speaker 1: cycle in perspective to some of the other past market
Speaker 1: cycles that we've seen. Are we still in this market cycle?
Speaker 1: I know we've had technically corrections. But how do you
Speaker 1: see it? I think I think what you look for
Speaker 1: in terms of cycle comparisons is because it's very relevant
Speaker 1: to where we're headed. How do markets behave when the
Speaker 1: FED pivots from very easy to less easy? Right when
Speaker 1: when I go from a period of very low interest
Speaker 1: rates to saying we actually need to start to tighten.
Speaker 1: And um, we learned a couple of things from from history. First,
Speaker 1: markets are more volatile in general, both stock and bond markets,
Speaker 1: and we certainly are seeing that already. Um. You know,
Speaker 1: the record for the equity market, though, is that it
Speaker 1: does reasonably well during the early phase of FED rap tightening.
Speaker 1: You heard the old adage it's not the first FED
Speaker 1: hike to worry about it, it's the last one. A
Speaker 1: lot of truths to that, and the numbers bear it out.
Speaker 1: So the FED doing an interest rate hike or even
Speaker 1: a few this year does not mean that we're headed
Speaker 1: for a bear market in the short term. We actually
Speaker 1: think the bull market U gets knocked around a lot
Speaker 1: this year, but but but survives mainly because we're going
Speaker 1: to continue to have economic growth and decennings growth. But um,
Speaker 1: you know, corrections are just going to be a part
Speaker 1: of the landscape, which they of course, who are not
Speaker 1: last year Dave, How do we know when we hit
Speaker 1: the bottom in one of these corrections, if the sell
Speaker 1: off can and use after this week you be honestly,
Speaker 1: I mean, the truth is, you never know when they
Speaker 1: when the absolute bottom is. I think what you have
Speaker 1: to do is, as a stock picker, um is, have
Speaker 1: you have your candidate lists companies you'd love to own
Speaker 1: for the next the next three to five years, uh
Speaker 1: and and the price at which it makes sense to
Speaker 1: own them. And you know, one of the things that
Speaker 1: happens when you get these market pullbacks is stocks you
Speaker 1: didn't think you'd able to be able to buy at
Speaker 1: the right price suddenly you can. So I think it
Speaker 1: makes sense for investors to be to be opportunistic. M
Speaker 1: And I guess I would say if if sentiment gets
Speaker 1: too barish literally where people are starting to price in
Speaker 1: a bear market, that isn't a buying opporgin because I
Speaker 1: don't think that's how things are going to transpire. Yeah,
Speaker 1: it does feel like to some extent market cycles, I
Speaker 1: don't know, especially when they dip back, that we we
Speaker 1: recover much more quickly. I don't know. Maybe I'm maybe
Speaker 1: I'm just reading wrongly into some thing. But how do
Speaker 1: you see it if we do ultimately to a recession.
Speaker 1: We're watching Germany right Europe watching it, uh, in terms
Speaker 1: of kind of getting very close to that point. Um,
Speaker 1: do you think it is something that is protracted or
Speaker 1: who knows? One of the reasons why it seems like
Speaker 1: we recover more quickly off of rough periods or bear
Speaker 1: markets is that um. While the FED may not admit it,
Speaker 1: they are more responsive to market conditions and market behavior um.
Speaker 1: And and so we've tended to see the FED come
Speaker 1: in more, more quickly and more dramatically to try and
Speaker 1: provide liquidity to markets, and which begins the healing process.
Speaker 1: And we're sort of headed towards the the other end
Speaker 1: of the telescope there. Now the FED feels there's too
Speaker 1: much liquidity in the system, and inflation numbers bear that out.
Speaker 1: This year, you know, the way in which they withdraw
Speaker 1: that liquidity UM is going to be key to the
Speaker 1: market being able to continue to to put through. Like
Speaker 1: I said, it's going to lead to volatility. Inflation is
Speaker 1: not going away, UM. But we're starting this FED tightening
Speaker 1: cycle from deeply negative real interest rate. So there's a
Speaker 1: way to go before policy is actually restrictive on credit.
Speaker 1: And well when do you know when that is? And
Speaker 1: again that's another timing question. But you know, you did
Speaker 1: tell our producers that the first FED hike is not
Speaker 1: a problem for equities. It's the last one that's that's
Speaker 1: the trouble. So just in thirty seconds when what do
Speaker 1: you mean by that? Well, just that at some point,
Speaker 1: as the Fed continues to tighten um, they reach a
Speaker 1: tipping point where they begin to uh, you know, lead
Speaker 1: to money being costly, that the price of money goes
Speaker 1: up UM and begins to restrict the flow of credit.
Speaker 1: And that's you know, the old saying that the um
Speaker 1: you know, bull markets aren't killed by time they're they're
Speaker 1: murdered by the Fed. Um. Again, we're a long way
Speaker 1: away from that, but we have to watch the pace
Speaker 1: of FED activity. It's not an exact science. The FED
Speaker 1: will tell you that as well. Their do it, and
Speaker 1: it takes a while for to kick in and and
Speaker 1: it's very easy to uh potentially overdo it. Hey, Dave,
Speaker 1: thank you so much. Nice to get your thoughts Dave.
Speaker 1: Donna Beady and he's chief investment officer at CIBC Private
Speaker 1: Wealth Management on the phone from Baltimore. Thanks for listening
Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
Speaker 1: our radio show at two pm Eastern on Bloomberg Radio
Speaker 1: or watch us on YouTube search Bloomberg Global News.