Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am
Speaker 1: Eastern on Apple car Play and Android Auto with the
Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: One other stuff we're watching today is Home Depot. It's
Speaker 2: off by about one and a half percent. The company
Speaker 2: said it's going to buy building products distributor SRS Distribution,
Speaker 2: a roofing company, for about eighteen point twenty five billion dollars.
Speaker 2: So I want to get more on that, and who do
Speaker 2: we go to? The best guy in the housing industry
Speaker 2: when it comes to analysts, Drew Redding is Boomberg Intelligence
Speaker 2: US home building analyst joining us. All right, what do
Speaker 2: you make of the acquisition? The fact that stock's down?
Speaker 3: Yeah, So this deal eighteen point two five billion, is
Speaker 3: Home Depot's largest ever acquisition. Prior to this one, it's
Speaker 3: largest was the eight billion dollar deal it did for
Speaker 3: HD Supply back in twenty twenty as I did about
Speaker 3: ten billion dollars of revenue. So for a company as
Speaker 3: big as Home Depot, this is actually a pretty big deal.
Speaker 3: And we think it fits with their strategic plan of
Speaker 3: going after that professional customer. It's a very highly fragmented market,
Speaker 3: you know. Our view has been that if they really
Speaker 3: want to accelerate their growth, particularly in this segment of
Speaker 3: the market, they would probably have to do a couple
Speaker 3: of deals. They did a deal the one I mentioned
Speaker 3: HD Supply back in twenty twenty. They recently did a
Speaker 3: deal for International Designs Group, and now they added on
Speaker 3: with this one. You mentioned the stock is down, you know,
Speaker 3: as I mentioned, it's a pretty big deal, and I
Speaker 3: think the fact that people are still kind of hoping
Speaker 3: and waiting for that the underlying housing market to kind
Speaker 3: of return to growth, and that's really the primary driver
Speaker 3: of Home Depot's business. I think the fact that you're
Speaker 3: layering this on top of you know, those market expectations
Speaker 3: may be weighing a little bit.
Speaker 4: I'm looking at the structure of the deal.
Speaker 5: First.
Speaker 4: I go to m Go, which is the first thing
Speaker 4: I do for an M and A story, and to
Speaker 4: see who the bankers and lawyers are and ma Go
Speaker 4: does not have that information. I'm very disappointed. I have
Speaker 4: to talk to the people and it hasn't been disclosed.
Speaker 4: They're gonna go to the debt markets.
Speaker 6: Here.
Speaker 4: They do have a little bit of cash on the
Speaker 4: balance sheet here, but they're going to finance it with
Speaker 4: some debt. Is that okay with you and the credit
Speaker 4: analysts out there.
Speaker 3: Yeah, so their leverage is going to tick up even
Speaker 3: are about two and a half times. The goal going
Speaker 3: forward is to de leverage over the next twenty four
Speaker 3: months to get back to a kind of two times target.
Speaker 3: So it's it's not that much of a concern at
Speaker 3: this point. You know. In order to do that, the
Speaker 3: goal is obviously to accelerate growth, but at the same time,
Speaker 3: they're going to put their sherry purchases on hold in
Speaker 3: order to get that leverage back down in a timely fashion.
Speaker 2: Okay, well, there you go. That's why the stocks down.
Speaker 2: This is why I love angering with Paul because it's
Speaker 2: like two different perspectives. I'm like, what's the macro read
Speaker 2: and You're like, let's talk about how they're paying for it.
Speaker 2: This is perfect. This is why Paul's mean you so awesome.
Speaker 2: But to the point of like the why this is
Speaker 2: not like John Tucker renovating a closet to a bathroom, right, Like,
Speaker 2: it's not that like these are the real people.
Speaker 3: Yeah, these are the professional remodelers, so srs caters to
Speaker 3: especialty trade contractors. So think building materials primarily roofing, as
Speaker 3: well as landscape and pools. So building materials are about
Speaker 3: two thirds of their business and the pool and landscape
Speaker 3: pieces are about a third. Those are actually newer markets
Speaker 3: that they entered in through M and A. So Home
Speaker 3: Depot's main strategy is going after an untapped two hundred
Speaker 3: billion dollar market for what they call complex projects. And
Speaker 3: you think about a professional contractor who is typically juggling,
Speaker 3: you know, a handful of supplier relationships. For a larger
Speaker 3: scale job, they might have to go to one distributor
Speaker 3: for windows, they might have to go somewhere else for flooring,
Speaker 3: somewhere else for doors. Yeah, and so on and so forth,
Speaker 3: and so home depots goal and their strategy is to
Speaker 3: kind of consolidate the need for contractors to go to
Speaker 3: all those different suppliers. You want to become a one
Speaker 3: stop shop.
Speaker 4: Talk to me about just kind of the economics of
Speaker 4: that business, Like what's the Is there a difference between
Speaker 4: selling piece applywood to the John Tucker's of the world
Speaker 4: versus selling a peace applywood to you know, a local contractor.
Speaker 3: Well, professional contractors are typically higher spending. I mean, you
Speaker 3: see that if you look at the store productivity of
Speaker 3: a Home Depot compared to Lows after the last several years,
Speaker 3: you see the sales per square foot sales for store
Speaker 3: highly much stronger for Home Deep, And a lot of
Speaker 3: that has to do with the spending nature of that
Speaker 3: professional contractor.
Speaker 2: I see. Okay, I mean just look at Duhn Tucker,
Speaker 2: like he's definitely not going to be spending that high.
Speaker 2: He's not going to the high end place, but he.
Speaker 4: Does high quality work though I'm sure, oh.
Speaker 2: No, no, totally into the high quality work one d PC.
Speaker 2: So it sounds like you think this deal makes sense.
Speaker 2: Where does it put it then, in relation to Lows,
Speaker 2: which I must assume has to be trying to carve
Speaker 2: out its own niche in that.
Speaker 1: Yeah.
Speaker 3: So it's a good question. And the strategy, you know,
Speaker 3: in attacking the pro segment between Home Depot and Lows
Speaker 3: is a little bit different. As I mentioned, home Depot
Speaker 3: is targeting kind of that larger pro whereas Low's is
Speaker 3: kind of focusing on that small and medium sized, medium
Speaker 3: sized contractor. And this is kind of an area they've
Speaker 3: been emphasizing over the last couple of years because prior
Speaker 3: to twenty eighteen, when the new CEO, Marvin Elison came in,
Speaker 3: Lows didn't really have a dedicated pro strategy. It was
Speaker 3: kind of all over the place. So they're they're, you know,
Speaker 3: philosophy has Let's get back to the fundamentals of the business.
Speaker 3: Let's have the right brands, Let's make sure we have
Speaker 3: things in stock, Let's make sure we have the proper
Speaker 3: quantities and the right staffing. So they're kind of coming
Speaker 3: from a different position where they're getting back to basics,
Speaker 3: where home Depot already has that dominant position and they're
Speaker 3: looking to expand into an untapped market.
Speaker 4: All right, let's step back, Drew, talk to us about
Speaker 4: what's going on in the housing market. What's the elevator
Speaker 4: pitch you're giving to clients these days. How are investors
Speaker 4: approaching the housing market, because I don't see a lot
Speaker 4: of houses for sale, dude.
Speaker 3: Yeah, So, I mean we've talked before in the way
Speaker 3: we describe housing as a tail of two markets. We
Speaker 3: still think that the new home market is in the
Speaker 3: driver's seat, both from a supply perspective, and from an
Speaker 3: affordability perspective, the most important thing to remember is that
Speaker 3: builders are growing their community counts, they're bringing new products
Speaker 3: to market, and unlike what you see in the resale market,
Speaker 3: they're making financing more attractive, so they're buying down rates.
Speaker 3: So right now, if you if you look out there
Speaker 3: in the market, you're seeing something you know, in the
Speaker 3: six point nine seven percent range on a thirty year fixed.
Speaker 3: You know, if you go to the new home market,
Speaker 3: you're seeing something much lower. You probably have a five handle,
Speaker 3: so the math looks a lot better in the new
Speaker 3: home market. Interestingly, more recently, we have started to see
Speaker 3: a little bit more inventory come to the market and
Speaker 3: the resale side, you know, which which you mentioned has
Speaker 3: been kind of the the major theme permeating throughout the industry,
Speaker 3: So we could see that start to help volumes. We
Speaker 3: think that the the resale market starts to rebound later
Speaker 3: in this year and maybe sees a little bit of
Speaker 3: modest growth.
Speaker 2: I have a really dumb question if if I want
Speaker 2: to sell my apartment and I have a two point
Speaker 2: seventy five thirty or fixed, can I sell that rate
Speaker 2: along with the apartment. No, it's a harder.
Speaker 3: It's hard the buyer in your market is going to
Speaker 3: be coming with something significantly higher. Now, there there are
Speaker 3: ways where, you know, through various concessions, a seller can
Speaker 3: help buyer kind of lower that rate. You know, if
Speaker 3: the buyer were to pay points, and then you know,
Speaker 3: the seller can contribute to closing costs. That's one way
Speaker 3: to do it. But you know, as you mentioned, that's
Speaker 3: one of the well, that's the primary reason why people
Speaker 3: aren't putting their homes on the market. It's also what's
Speaker 3: what's keeping people from making purchases.
Speaker 2: Yeah, okay, well that that's very clear. Also, why would
Speaker 2: I do that?
Speaker 4: Yeah, yeah, there forever.
Speaker 2: No, I'm there forever. I'm for sure. This is not
Speaker 2: like a promo, like unless I win the lottery.
Speaker 4: You just know, way right, yes, because that interviraces.
Speaker 2: Just makes it it's unreal. It's also a condo, so
Speaker 2: then it can always rent it out, like if I
Speaker 2: move somewhere else or whatever. Like it's from that perspective,
Speaker 2: even a co op, though I wouldn't in a million years.
Speaker 2: He drew. Thanks a lot, really appreciate your reading Bloomberg Intelligence,
Speaker 2: US home building analysts and just so you're all clear
Speaker 2: that it is a two point seventy five percent thirty
Speaker 2: year fix that I got in twenty twenty. Just putting
Speaker 2: that out of there, I feel like.
Speaker 4: It's on the other handing in twenty twenty three March
Speaker 4: of twenty twenty three even six percent.
Speaker 2: But that now feels cool.
Speaker 4: Yeah, Like I felt like a complete knucklehead at the time, like, oh,
Speaker 4: you're supposed to be a Wall Street cat and you're
Speaker 4: just paying through the nose here on the rates. But boy,
Speaker 4: then they went up to seven.
Speaker 2: Yeah, no, no, yeah. I have a friend who's trying
Speaker 2: to buy a house first home home buyer, like you know,
Speaker 2: ground up, like thirty years old kind of thing, and
Speaker 2: it's it's really hard, Like it's really tough, and it's
Speaker 2: like when do you do that? The prices haven't really
Speaker 2: matched up with those higher rates. So anyway, there we go.
Speaker 2: I'm glad we got that.
Speaker 3: On out of the way.
Speaker 1: You're listening to The Bloomberg Intelligence Podcast US live weekdays
Speaker 1: at ten am Eastern on applecar Play and Android Otto
Speaker 1: with the Bloomberg Business Act. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station. Just
Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: All right to the markets we go. We're seeing a
Speaker 2: little bit of a sell off in the front end,
Speaker 2: yields up just a touch, despite some pretty hawkish ish
Speaker 2: messaging coming out from Chris Waller yesterday evening, where it
Speaker 2: seemed like it was we're gonna be waiting. We're gonna
Speaker 2: be waiting and waiting and waiting. Ira Jersey as Bloomberg
Speaker 2: Intelligence Chief US interest rate strategist, joining us. Now, Ira,
Speaker 2: I'll reach you the quote. In my view, it is
Speaker 2: appropriate to reduce the overall number of rate cuts or
Speaker 2: push them further into the future in response to the
Speaker 2: recent data. There's still no rush. These were to remark
Speaker 2: to the Economic Club of New York as of yesterday.
Speaker 2: What does that tell us?
Speaker 7: Yeah, well, it's a continuation of what some of the
Speaker 7: more hawkish members of the Federal Reserve have been saying.
Speaker 7: You know, we think that Governor Waller probably is in
Speaker 7: the two cut this year camp. So you know, there's
Speaker 7: an when you look at the dot plot and we
Speaker 7: only received it, you know, last week, so so it's
Speaker 7: very fresh. We think that he's one of one of
Speaker 7: the people in the two cut camps. So but but
Speaker 7: so that means that he's maybe kind of the spokesperson
Speaker 7: for the more hawkish members of the committee, whereas you know,
Speaker 7: it's still a bulk of the committee is in the
Speaker 7: three cut camp.
Speaker 8: I think the.
Speaker 7: Important thing about Governor Willer's comments is, you know, you
Speaker 7: can't you can't be assured of a June cut at
Speaker 7: the moment. Like, in order to get a June cut,
Speaker 7: you need to probably have a continuation of slowing economic
Speaker 7: activity and certainly a decline in inflation. And and you know,
Speaker 7: we put out a piece just this morning saying, look,
Speaker 7: if we keep getting you know, point two inflation prints
Speaker 7: for the next couple of months, that's not going to
Speaker 7: lower the year on year inflation number at all. So yeah,
Speaker 7: you know, so it's it's unclear to us whether or not,
Speaker 7: you know, June or July, or even maybe that the
Speaker 7: Fed might have to wait till November.
Speaker 5: And that's where you can.
Speaker 7: Get a lot of a lot of market pricing shifts
Speaker 7: if if we don't price in for a junior July
Speaker 7: cut anymore, and we wind up pushing things out even further.
Speaker 4: So Ira tomorrow, I'm not going to be here. Markets
Speaker 4: are going to be equity market's going to be closed here.
Speaker 7: Yeah, we get US bond markets closed too, there, Paul,
Speaker 7: what's that bond market is closed too?
Speaker 4: Okay, I don't want I don't want to speak for
Speaker 4: the bond market people. You guys have your own little
Speaker 4: club over there. PC deflator, we're gonna get some meaningful
Speaker 4: information tomorrow. Odd timing aside, how do you think the
Speaker 4: Fed's thinking about the data tomorrow? The PC deflator? The
Speaker 4: core deflator expected coming to zero point three percent?
Speaker 7: Yeah, so zero point three is a continuation of the trend.
Speaker 7: And yeah, you know, given that we have CPI, I
Speaker 7: think that PC will kind of take a little bit
Speaker 7: of a backseat to some of the other details that
Speaker 7: that we're going to parse through, particularly since the market's closed,
Speaker 7: so there won't be the same kind of knee jerk
Speaker 7: reaction you might get in in the US markets. Anyway,
Speaker 7: Europe will still be opened, so that'll or parts of
Speaker 7: europeill still be open, So that'll be interesting to see
Speaker 7: how they react, and that'll give you a clue as
Speaker 7: to how we'll open up at seven pm on Sunday
Speaker 7: night in the treasury market. The you know what, I'll
Speaker 7: be looking for in this in these numbers is a
Speaker 7: continuation of the actual consumption trends. Because remember, even though
Speaker 7: we get that very important PC deflator, so the inflation
Speaker 7: component of the PC report, you also get personal consumption numbers.
Speaker 7: So actually what people are spending their money on, how
Speaker 7: how things are growing, And what I like to look
Speaker 7: at is what's called the quantity the quantity indices, So
Speaker 7: these are basically real spending and how those are developing.
Speaker 7: And what you've seen of late is that even though
Speaker 7: you've had a little bit of a leveling off in
Speaker 7: people spending on durable goods, the number, the amount of
Speaker 7: money that people are spending on services continues to go up.
Speaker 7: And you even saw that today in the GDP report.
Speaker 7: All of the revisions of the fourth quarter GDP came
Speaker 7: because of higher consumption of services and that was revised higher.
Speaker 7: And as long as services continue to be a big
Speaker 7: focus and people are content to continue to spend on services,
Speaker 7: there's a feedback loop because that's where most of the
Speaker 7: people in the United States are employed. So as long
Speaker 7: as people are spending on services, that means that services
Speaker 7: are going to be making money and that people can
Speaker 7: request wage increases those wage increases, they go back and
Speaker 7: be spent again on services.
Speaker 8: Right.
Speaker 7: So I think that that those are the kinds of
Speaker 7: numbers and some of the detail that I think will
Speaker 7: be important as to whether or not, you know, the
Speaker 7: economy is really going to be starting to slow and
Speaker 7: if that will feed into then lower inflation, because even
Speaker 7: in the inflation components, what we'll be looking for is
Speaker 7: how much is services inflation versus goods inflation. Goods inflation
Speaker 7: has been zero basically for the last six months, and
Speaker 7: it's all everything. All of the inflation has really been
Speaker 7: coming from the services sector, so that that has to
Speaker 7: be everyone's focus right now.
Speaker 2: Oh sorry, it's that pesky button where I press off,
Speaker 2: but I mean on, And anyway, I wish my cousin
Speaker 2: Probed wishes he had that button. But anyway, what I
Speaker 2: was saying is that goods inflation too. The disinflation narrative
Speaker 2: around that is also coming into question. Potentially, when you
Speaker 2: have the Baltimore Bridge collapse, et cetera, you're still at two.
Speaker 2: Is the risk that you actually pair that down to
Speaker 2: one or zero or is the risk that it's actually three?
Speaker 7: Yeah, Well, I think that the well, the market's still
Speaker 7: priced for three cuts this year. Now you know what
Speaker 7: we were pricing just two months ago, six cuts, right,
Speaker 7: six one hundred and fifty basis points of interest rate cuts. Yeah,
Speaker 7: I think the risk is that the FED starts a
Speaker 7: little bit later, but the path looks very similar to
Speaker 7: what's being priced right now. So it's more that things
Speaker 7: get pushed forward and forward and forward. And keep in mind,
Speaker 7: you know, the market will often price for outcomes that
Speaker 7: aren't going to be realized, and that's where you know,
Speaker 7: we try, that's where strategists and portfolio managers can kind
Speaker 7: of you know, make their living in trying to determine
Speaker 7: what's kind of mispriced and what are the highest probability outcomes. Yeah,
Speaker 7: you know, interestingly, you know, to your point, you know,
Speaker 7: there is a risk that there's actually no cuts this year,
Speaker 7: and the market is actually pricing for upwards of a
Speaker 7: twenty percent chance of that if you look at options
Speaker 7: on short term interest rate futures like the futures on sofa,
Speaker 7: So our options model suggests that that you know, there's
Speaker 7: a pretty high prob possibility being priced that you know
Speaker 7: the Fed's on hold, and you even saw some activity
Speaker 7: this morning, you know ed Bollenbrook, who does a really
Speaker 7: good job with looking at flows in the short term
Speaker 7: interest rate markets for Bloomberg News. He even noted this
Speaker 7: morning that there were people buying buying puts on on
Speaker 7: these futures that suggest that the that the FED might
Speaker 7: not actually cut at all this year. So so I
Speaker 7: think that there is a there is a growing kind
Speaker 7: of community out there that's that's fearful that the economy
Speaker 7: won't slow down enough for the FED to actually cut.
Speaker 4: All right, we'll see Ira Jersey, thank you so much.
Speaker 4: We appreciate that. As always, Ira Jersey, easy you have
Speaker 4: his interest rate strategists for Bloomberg Intelligence. Joining us from Princeton,
Speaker 4: New Jersey via that zoom thing.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Affle, car Play and
Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand
Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
Speaker 2: So let's get back to what Governor Waller talked about,
Speaker 2: and that was basically like we're just not there yet.
Speaker 2: Let's wait, let's wait, let's wait, and then it's raising
Speaker 2: the risk of maybe no cuts this year, which leads
Speaker 2: me to the market reaction. The overwhelming idea in the
Speaker 2: first quarter was that you're gonna have bonds outperformed stocks
Speaker 2: because we were gonna get cuts. That obviously didn't work
Speaker 2: out for you. So what do you do for the
Speaker 2: second quarter? Joining us now is David Kudla. He's founder,
Speaker 2: CEO and chief investment strategist over at Mainstay Capital Management,
Speaker 2: and he joins US now. David, is this going to
Speaker 2: be another quarter of stocks outperforming bonds?
Speaker 5: I think it will be. I think the stock in
Speaker 5: rally mode.
Speaker 6: We're almost in a melt up situation that the increase
Speaker 6: we've had in twenty twenty four a loan, the increase
Speaker 6: we've had now over the past five months has just
Speaker 6: been incredible.
Speaker 5: And the problem.
Speaker 6: The problem for bonds is that we keep you know,
Speaker 6: we've talked about six or seven FED rate cuts just
Speaker 6: a few months ago. We're down to two or three
Speaker 6: maybe one. They're getting moved out. They were March, got
Speaker 6: moved out to June, moving out as far as September.
Speaker 6: We may not see a rate cut this year. So
Speaker 6: that's problematic for bonds obviously, and we've seen what the
Speaker 6: ten year and the rest of bond's done because of
Speaker 6: that what we've done, where you do have opportunity in
Speaker 6: bonds though for your portfolio, for someone in a sixty
Speaker 6: to forty portfolio, they need that bond allocation. Stay ultra
Speaker 6: short on ultra short term bonds, so you have very
Speaker 6: little duration, very little indust rate sensitivity. But we have
Speaker 6: these high yield we're still getting with rates being this high,
Speaker 6: so that is an attractive part of the yield curve
Speaker 6: for a bond allocation. But you know, stocks I think
Speaker 6: continue to be en rolled. We we are due for
Speaker 6: a pullback at any time here of four or five percent.
Speaker 6: We've gone so long without as much as a two
Speaker 6: percent pullback in a day and any meaningful pullback. But
Speaker 6: you know, we're still very constructive on stocks and constructive
Speaker 6: relative to bonds.
Speaker 4: So, David, where are we in terms of valuation here?
Speaker 4: How do you think about the evaluations any equity markets?
Speaker 4: If you know, maybe we're in this melted up kind
Speaker 4: of mode.
Speaker 5: Yeah, so we're getting a little rich.
Speaker 6: We're at twenty point nine as let's call it twenty
Speaker 6: one forward price startings on the.
Speaker 5: S and P five hundred.
Speaker 6: The five year average is around nineteen, so we're you know,
Speaker 6: we're a little bit rich, not as not as rich
Speaker 6: as we've seen in the past. And you know, there's
Speaker 6: a lot of people referring to this as a bubble,
Speaker 6: and I think that people that think we're in a
Speaker 6: bubble for stocks haven't studied a lot of bubbles to know,
Speaker 6: you know what that really means when we look at
Speaker 6: the fundamentals. You know, we have some of these gross
Speaker 6: stocks and the megatech stocks trading at higher pees than
Speaker 6: twenties and thirties, but they deserve it, right, and so
Speaker 6: you know, we think that we can still and you
Speaker 6: never want to make a market call based on valuation, right,
Speaker 6: stocks can stay undervalued or overvalued for a very very
Speaker 6: long time. So while they're starting to get a little
Speaker 6: bit stretched, that's not a big concern for us because
Speaker 6: I think the fundamentals are still there to support it.
Speaker 2: So based on that though, I guess because you're right, like,
Speaker 2: you can always still go higher even if it's overvalued,
Speaker 2: right if the equity market, for example, but do you
Speaker 2: need to also rotate so maybe not going to sell
Speaker 2: them mag seven for example, or sell them video, but
Speaker 2: do you need to rotate into more cyclicals and like
Speaker 2: what do ork quality, what does that wind up looking like?
Speaker 5: Right, so you know what we favor right now?
Speaker 6: Our our overall investment strategy can be summed up very easy,
Speaker 6: large over small, growth, over value, the US over foreign
Speaker 6: Outside of the US. We also like Japan.
Speaker 5: But the key here.
Speaker 6: In diversification is, you know, we're seeing industrial as financial,
Speaker 6: some of the other areas starting to perform better. We're
Speaker 6: seeing more breadth in the market. But we would stay
Speaker 6: with that. With megacap tech, the power of generative AI.
Speaker 6: They just announced healthcare assistance basically that do the work
Speaker 6: of a nurse. You know, there's just it's entering, so
Speaker 6: it's going to enter so much of our lives in
Speaker 6: the professional workplace be transformational. So we've narrowed our magnificent
Speaker 6: seven down to our own fab four. We took out Apple,
Speaker 6: Google and Tesla, and and that fabulous four is that
Speaker 6: fabulous four is up thirty eight percent this year, and
Speaker 6: you know, really it's become you know, surprisingly enough somewhat
Speaker 6: of a safety trade to go to these stocks when
Speaker 6: rates are going higher.
Speaker 5: They don't care about registrates.
Speaker 6: They have plenty of free cash flow to fund operations
Speaker 6: in the research and development. So it just it remains
Speaker 6: to be a good core of the portfolio. But there's
Speaker 6: some other places you can look out. We'd avoid small
Speaker 6: caps until we know rates are coming down. Also with cyclicals.
Speaker 6: Mid caps, though we've increased our.
Speaker 5: Exposure to.
Speaker 6: Is an area, you know, the the in between ers
Speaker 6: that they've grown out of the small cap camp, not
Speaker 6: the large cap yet, but mid caps have also started
Speaker 6: to shine as well other sectors.
Speaker 4: David, Besides some of those technology names, we've heard some
Speaker 4: folks talk about healthcare, some folks talk about financials. Either
Speaker 4: of those get your attention.
Speaker 6: Yeah, financials, healthcare, industrials especially, think it makes sense to
Speaker 6: you know, we want to have a diversified portfolio. We
Speaker 6: are overweight tech, it's our highest weighting by far, or
Speaker 6: I t UH and communications. But we we we do
Speaker 6: think that as rates start to come down, you know,
Speaker 6: when the when the yield curve finally gets back to
Speaker 6: looking like something normal, that will be very helpful for financials.
Speaker 6: And you know what, we'll we'll see industrials can do well.
Speaker 6: We when we look towards this year, we're not looking
Speaker 6: for recession, you know, and and we think we could
Speaker 6: have a soft landing but our we think it's more
Speaker 6: about a no landing. It's it's more that we'll have
Speaker 6: a slow down and re accelerate. We've got GDP was
Speaker 6: just revised for the fourth quarter to three point four percent.
Speaker 6: Economy strong, labor remains strong.
Speaker 3: Uh.
Speaker 6: There's some indicators out there with you know, the level
Speaker 6: of bankruptcy, these credit card debt, credit card interist rates,
Speaker 6: what's happening in housing. There's a worriesome air is but
Speaker 6: economy just keeps chugging a little bit.
Speaker 2: Wouldn't that scenario they'll be good for industrials, materials, energy
Speaker 2: like those sectors.
Speaker 5: Yeah.
Speaker 6: Yeah, And we're saying there's some other reasons and energy
Speaker 6: there always are, uh you know, political risk, premium and
Speaker 6: so forth. We've seen what oil has been doing. Uh,
Speaker 6: We've seen what cocoa has been doing. I just it's
Speaker 6: very high, it's very expensive. Having a lot of fun
Speaker 6: with that one. Maybe needing to avoid as much. Maybe
Speaker 6: not the chocolate Easter egg this year, but uh, you
Speaker 6: know there are commodities doing better. Uh and and actually
Speaker 6: you know, the cocoa story is just incredible. But uh, yeah,
Speaker 6: we think that Yeah, materials with more normal you occur financials, healthcare.
Speaker 6: Certainly that's a large sector for us as well.
Speaker 4: All Right, David, thank you so much for joining us.
Speaker 4: David Kudla, He's a founder, chief executive officer, and chief
Speaker 4: investment officer for Mainstake Capital Management. Troy, Michigan is where
Speaker 4: he hails from, so we got him via zoom.
Speaker 1: There, you're listening to the Bloomberg Intelligence Podcast. Catch us
Speaker 1: live weekdays at ten am Eastern on applecar Play and
Speaker 1: Android Auto with the Bloomberg Business app. You can also
Speaker 1: listen live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
Speaker 4: Heb Meles, a good little m and a trade more
Speaker 4: than me. And that's what Amazon's up to. They invested
Speaker 4: two point seventy five billion in AI startup and Thropic.
Speaker 4: So when we talk about Amazon, one of the voices
Speaker 4: we have to get on board is anurag Ran, a
Speaker 4: senior technology analyst for Bloomberg Intelligence. Anurrog tell us about Anthropic.
Speaker 4: What is anthropic and as why is Amazon investing another
Speaker 4: two point seventy five billion dollars into this company?
Speaker 8: Yeah, Paul, so think of Anthropic as very similar to
Speaker 8: opening it's a company that develops as large language models
Speaker 8: that people can use to do you know whatever AI
Speaker 8: related chat pots and other kind of analysis that they
Speaker 8: want to do. Now, the thing is, as you know
Speaker 8: open Ai, when Microsoft invested in them, open Ai runs
Speaker 8: on Microsoft's cloud. And this is what Amazon wants. It
Speaker 8: wants anthropics, you know, code business to run on their cloud.
Speaker 8: People go out and experiment with them. You know, that's
Speaker 8: kind of feeds into their cloud business.
Speaker 2: How much have they now spent on AI cloud stuff
Speaker 2: on Amazon?
Speaker 8: One of the things is this is just you know,
Speaker 8: a few billion dollars over here. But I would I
Speaker 8: would argue that the base that they are doing, or
Speaker 8: the base architecture, or the base infrastructure that they have
Speaker 8: on cloud. You know, they've spent over one hundred billion
Speaker 8: dollars over it, you know, the last ten fifteen years.
Speaker 8: So this is a big enough number because you can't
Speaker 8: run a lot of these models without being on cloud.
Speaker 8: Now that's not truly true. There are you can run
Speaker 8: it on premise, on on the device also, but a
Speaker 8: large portion of the processing will be done on the cloud.
Speaker 2: Just to follow on that has that compared to its
Speaker 2: other competitors in the biz.
Speaker 8: It's one of the things I would say is, you know, Microsoft,
Speaker 8: you know, I don't think they got lucky. They really
Speaker 8: knew what they've been investing in. When it went to
Speaker 8: open Ai. Open Ai came up with its product far,
Speaker 8: far sooner than anybody else, and that's why all of
Speaker 8: us talk about it. But companies like Anthropic, I think
Speaker 8: it's you know, I won't call them behind, but I'm
Speaker 8: sure that their models are going to be used by
Speaker 8: other people.
Speaker 4: Also, yeah, that's I'm seeing just in fern of the
Speaker 4: reporting here Anthropic. So this isn't exclusive to Amazon. I
Speaker 4: mean it seems like Anthropic has you know, tie ups
Speaker 4: with Google as well, Spartan some others. So what's really
Speaker 4: a strategic value for Amazon here?
Speaker 8: I think they call themselves their preferred cloud vendor. And
Speaker 8: again for Amazon's point of view, what they're doing is
Speaker 8: they're giving people a laundry list of multiple models they
Speaker 8: can use. They can use Amazon's own model, they can
Speaker 8: actually use Meta's model called Lama, or they can use
Speaker 8: Anthropic and in a couple others. So you know, if
Speaker 8: I'm if I'm an enterprise, if I'm a big large
Speaker 8: bank and I want to experiment with them. It's my
Speaker 8: choice what I want to use over there, and that's
Speaker 8: really what Amazon's selling.
Speaker 2: See, this is where an imang and I in our
Speaker 2: world can collide. Power.
Speaker 4: Oh here, we got that coming.
Speaker 3: Yeah.
Speaker 4: I was like, we waited the proper amountage. I should
Speaker 4: wait for.
Speaker 2: Like a couple more minutes, but I just had to
Speaker 2: go there. We can always go back, It's cool. So
Speaker 2: an wrong. Well, I was just down in Texas for
Speaker 2: Sarah Week, which is like energy's big super Bowl, and
Speaker 2: the only conversation everyone was having was about power h
Speaker 2: and power demand skyrocketing due to data centers and AI,
Speaker 2: et cetera, and that Amazon had bought nuclear power reactor
Speaker 2: center in order to power one of their data centers.
Speaker 2: Can you just talk me through the more they invest
Speaker 2: in AI and stuff, does that just mean they have
Speaker 2: to just go buy more power plants.
Speaker 8: Yeah. If you look at capital expenditures for Microsoft and Amazon,
Speaker 8: it's really ballooning up right now. I mean once trying
Speaker 8: to spend I think forty plus billion dollars a year
Speaker 8: into expanding a lot of their data center capacity. Now
Speaker 8: you could say that, oh, that's going to take out
Speaker 8: a lot of you know, operational cash flow or help
Speaker 8: you know, bend margins. Maybe in the near term, but
Speaker 8: I would argue that their business is becoming stronger by
Speaker 8: the day because nobody else can replicate this stuff. I mean,
Speaker 8: it's not easy to come up with these many billions
Speaker 8: of dollars to come up with their data centers. And
Speaker 8: in fact, I would say that companies that have their
Speaker 8: own data centers may be forced to close out and
Speaker 8: move a lot more stuff to the cloud because these
Speaker 8: guys have so much firepower with them.
Speaker 4: Oh interesting, Hey on rag. I know the company here,
Speaker 4: Anthropic offers a chatbot name Claude, but the companies are.
Speaker 2: I totally want a chat butt name Claude.
Speaker 4: Yeah exactly. But they're kind of emphasizing developing AI safely
Speaker 4: and responsibly. Where are we on that whole concept of
Speaker 4: safety responsibility for technology that most of us really don't
Speaker 4: fully grasp it?
Speaker 2: Like one a company is like I want to be profitable.
Speaker 2: It's like, well, I hope so exactly.
Speaker 8: You know, Paul and Alex, I'm still waiting for that
Speaker 8: in the social media applications, you know, So I do
Speaker 8: not know how that's going to shape up. But one
Speaker 8: of the things that we've seen with Claude is they
Speaker 8: are marketing themselves as being better than open AI in
Speaker 8: certain aspects. I think that's you know, again, that's the
Speaker 8: company saying, so please, you know, take that into account
Speaker 8: that a lot of their experiments have said that Claud's
Speaker 8: better at certain things than open ai is.
Speaker 4: So I mean, what's the next thing for Amazon? Like,
Speaker 4: I'm just wondering if there's not much to go out
Speaker 4: there and buy to automatically give you AI pil a
Speaker 4: commands scale. Even if you're Amazon, you can't just write
Speaker 4: a check like you can in Hollywood for example, if
Speaker 4: you want to get into to that business. Is this
Speaker 4: just the tech industry just I guess putting their R
Speaker 4: and D, putting their capex, putting their funding to all
Speaker 4: things AI going forward?
Speaker 8: Yeah, I absolutely say that. Now think about it this way. Currently,
Speaker 8: what's happening is Microsoft is reaping the benefits of you
Speaker 8: and I using chack GPT mode. So if we do
Speaker 8: more processing, Microsoft get the benefits of it. Now what
Speaker 8: Amazon is saying, then listen, that's one way to make
Speaker 8: money in AI. How about I do this. I'll give
Speaker 8: you all the raw materials for you to go out
Speaker 8: and build your own chat bought internally, let's say for
Speaker 8: a bank or for a beverage company. If you want
Speaker 8: to do that, then come to my cloud. I have
Speaker 8: all the raw material for you, I have all the models,
Speaker 8: and I will do it safely for you. And that's
Speaker 8: Amazon's pitch, which means that the revenue fall through maybe
Speaker 8: a little bit longer than what we are seeing at Microsoft.
Speaker 2: And then do we know how sticky those customers are?
Speaker 2: Like if Amazon's like, hey, I'll do all this stuff
Speaker 2: for you, and I'm like cool and I stay there
Speaker 2: or is it I guess I'm getting as their first
Speaker 2: mover advantage to that.
Speaker 8: Yeah, from a alex From a logical point of view,
Speaker 8: once you choose a cloud vendor to do any kind
Speaker 8: of process, it could be just your back office work,
Speaker 8: and it's very difficult for you to get rid of that.
Speaker 8: And that's the whole point of cloud. So what essentially
Speaker 8: both of them are selling not so much an AI,
Speaker 8: but they're basically selling just come to micloud and start
Speaker 8: using it because once you start using it, you're not
Speaker 8: going to go anywhere else.
Speaker 4: Does Apple have an AI strategy?
Speaker 8: Well, we'll find out on WWDC. I believe in June
Speaker 8: that they're going to go out and basically, you know,
Speaker 8: put the AI into Apple. But that's going to be
Speaker 8: fun to see what happens over there. The initial response,
Speaker 8: or at least discussions that we are seeing, is that
Speaker 8: they're going to try to outsource that a little bit
Speaker 8: to Google. And if they do, I think that good
Speaker 8: reception is going to be very strong. If they basically
Speaker 8: say we're going to just do it in house, then
Speaker 8: we don't know how long it's going to take for
Speaker 8: those products to really evolve. So I think this is
Speaker 8: that is one of the pivotal moments for Apple it
Speaker 8: as relates to their sales and profit growth over the
Speaker 8: next twelve to twenty four months.
Speaker 4: Can I go to this conference s or you have
Speaker 4: to be like invite only?
Speaker 8: I think it's invite only. I've been absolutely I'm not
Speaker 8: going to make it.
Speaker 2: I think you could make it. You know everybody, she knows,
Speaker 2: all the people. I'm looking at Amazon, Stock, at ononanyone
Speaker 2: dot twenty one. Do you feel like all I know
Speaker 2: that their cloud business might be different, but the AI
Speaker 2: part of all of this, do you feel like it's
Speaker 2: accurately prior how do you model it.
Speaker 8: It's it's see, it's very difficult to price any of
Speaker 8: the AI related revenue because at the end of the day,
Speaker 8: it all is, it all goes to the cloud. So
Speaker 8: I mean, that's how what we want to see. Having
Speaker 8: said that, as I said, it's going to take a
Speaker 8: little bit longer for Amazon to monetize a lot of
Speaker 8: these things. So we are not building in any kind
Speaker 8: of our projections looking into you know, when the report
Speaker 8: earnings next month, we think it's going to be still
Speaker 8: about you know, six to twelve months out. But for Microsoft,
Speaker 8: because it's a direct you know, usage of CHAGGPT, I
Speaker 8: think they're going to get you know, a bigger boost
Speaker 8: than anybody else at this point.
Speaker 4: At an around RNA, thank you so much. We appreciate it.
Speaker 4: On a Rod Rana Senior Technology Anels Bloomberg Intelligence, uh
Speaker 4: phoning it in, zooming in from somewhere looking at Amazon
Speaker 4: dot Com stocks up nineteen percent today, I'm sorry, nineteen
Speaker 4: percent year to date, all time high for this name.
Speaker 4: I love putting up the long term chart like from
Speaker 4: beginning of time because remember this this stock was nowhere
Speaker 4: for a lot because they were losing money hand every
Speaker 4: fist and then at some point, Jeff Besis got the
Speaker 4: street to just switch it on a dime and say,
Speaker 4: don't worry about profits. We're investing in the future, and
Speaker 4: our future is great. You do you want us investing
Speaker 4: in the future. You don't want us delivering EPs to you.
Speaker 4: For years and years and years, that didn't work, and
Speaker 4: then we hit an inflection and boom, because I think
Speaker 4: people realize, oh this scene, you can sell more than
Speaker 4: just books on this thing, right right, right, right.
Speaker 2: Oh, now I understand you're just not a Barnes and
Speaker 2: Normal competitor, You're something else. But you know, that's such
Speaker 2: a great point because I feel like when when we
Speaker 2: talk to any company about look at our new AI offering,
Speaker 2: Look at this cool partnership we have with Microsoft, Look
Speaker 2: what we're doing with Amazon, it's really hard for lay
Speaker 2: people like me to understand what that means, Like is
Speaker 2: it a tangible thing? Is it just you know, a
Speaker 2: sexy bell and whistle that's not going to actually do
Speaker 2: anything materially for you. And it's hard to kind of
Speaker 2: weed through all the stuff, to be honest, which is
Speaker 2: why I guess it's good to.
Speaker 4: Have on it and stuff exactly. I mean, for me,
Speaker 4: AI to me, what's incremental on the CAPEC spend that
Speaker 4: everybody talks about it in the next five years, and
Speaker 4: what is just more just re position some other keepec spinning.
Speaker 4: That's kind of for me.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple card Play and
Speaker 1: Android Otto with the Bloomberg Business app. You can also
Speaker 1: listen live on Amazon Alexa from our flagship New York
Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 4: Max Chak which Ken joins us. He's a Bloomberg BusinessWeek
Speaker 4: senior reporter. He's got his piece entitled Bankman Fried's Original
Speaker 4: sin at FTX is trouble for all of crypto. Max
Speaker 4: ex much for joining us here. I really appreciate you
Speaker 4: taking the time here. I think at the crypto industry,
Speaker 4: if you speak, if you think about it as a
Speaker 4: broad entity, they'd like to put all this behind it.
Speaker 8: Yeah.
Speaker 9: Absolutely. And when you look at who has been most
Speaker 9: sort of most vociferous in uh calling out Sam Bankman Freed,
Speaker 9: you sort of have two groups, one or some crypto critics,
Speaker 9: but actually a lot of the crypto companies themselves. Because
Speaker 9: the idea here is this guy is a bad apple.
Speaker 9: We got to get him out, We got to excise
Speaker 9: him for from the industry, which is understandable. But as
Speaker 9: we as we write in the story, you know, there's
Speaker 9: some problems with that, And the main problem is that
Speaker 9: a lot of the conditions that made FTX possible continue,
Speaker 9: and the crypto industry is essentially trying to deregulate the
Speaker 9: industry for further So sort of responding to this crisis
Speaker 9: by saying we need fewer rules.
Speaker 2: Not more, is that gonna Would that have made a difference.
Speaker 4: If there were more rules?
Speaker 8: Yeah?
Speaker 2: I mean, but how because he was actively lobbying sort
Speaker 2: of Congress to do stuff like he wanted that, So
Speaker 2: doesn't that fly in the face of if more rules,
Speaker 2: he wouldn't have been able to do what.
Speaker 9: He did he So this is like a sort of
Speaker 9: common misunderstanding I think. I mean, just because he's lobbying
Speaker 9: for Congress doesn't mean that he's he's wanting to be regulated.
Speaker 9: He was lobbying for rules that would have been, you know,
Speaker 9: conducive to what he wanted to do. I mean, the
Speaker 9: central thing is FTX was operating offshore quote unquote operating
Speaker 9: in the Bahamas officially not selling products to Americans, although
Speaker 9: we know from what's happened since that Americans were finding
Speaker 9: their way into some of these banned products. A lot
Speaker 9: of these crypto companies have been wanting to bring that
Speaker 9: model to the United States, Like that's the big thing.
Speaker 9: That is what Sam Bankmin Freed was trying to do
Speaker 9: and what many in crypto essentially still want to do.
Speaker 4: Are there people, is it a fair criticism of the
Speaker 4: industry or maybe some of the leading people in the
Speaker 4: crypto industry that the industry itself and some of the
Speaker 4: leaders enabled Sam Bankmin Freed along the way, and that's
Speaker 4: simply trying to wash your hands of it at this point,
Speaker 4: is you know, disingenuous?
Speaker 8: Yeah?
Speaker 9: Absolutely, I mean FTX was entirely enmeshed in the industry,
Speaker 9: investing in many of the companies. You know, during the
Speaker 9: sort of collapse the crypto markets in twenty twenty two,
Speaker 9: bailed out many of the companies. You know, remember all
Speaker 9: these headlines around describing Sam Bankton Freed as the you know,
Speaker 9: as the savior of the crypto industry, as as the
Speaker 9: Warren Buffet of crypto is the next Warren Buffett and
Speaker 9: those all came because because this was a company that
Speaker 9: was putting huge sums of money into all these other companies,
Speaker 9: and it's the reason why the markets crashed further in
Speaker 9: the weeks and months after the FTX bankruptcy. So yes, absolutely,
Speaker 9: although of course that's like a somewhat awkward question, and
Speaker 9: also there have been differences in approach. It's not like
Speaker 9: it's not like all the companies are operating in the
Speaker 9: exact same way. I think Coinbase has legitimately made more
Speaker 9: of an effort on the regulatory front than say FTX,
Speaker 9: but Coinbase is also trying to deregulate in various ways.
Speaker 2: What about the recovery, So I feel like a lot
Speaker 2: of this has been on. You know, Bernie Madoff's victims,
Speaker 2: for example, didn't get anything back, and therefore if Sam
Speaker 2: Bagman Freed's victims got some back, then that should reduce
Speaker 2: his jail time. Talk us through that.
Speaker 9: So in fact, Bernie madeoff victims have gotten money back.
Speaker 9: So this is so this Initially, of course, they lost.
Speaker 4: All their money.
Speaker 9: But in the years since, and it's you know, many
Speaker 9: years now, ninety percent of the initial investment from the
Speaker 9: madeoff victims has been recovered. Now that doesn't like the
Speaker 9: Madoff victims are still very unhappy, and even if they
Speaker 9: get to one hundred percent, still going to be very
Speaker 9: unhappy because not having access to your money for years
Speaker 9: or even decades. Yeah, and they're huge and as many
Speaker 9: of the victims have pointed out in this case, getting
Speaker 9: one hundred percent of your assets back at the time
Speaker 9: of bankruptcy years later is still difficult. People have suffered
Speaker 9: extreme emotional distress, like you know, their lives have essentially
Speaker 9: been ruined. So there's that point. But then there's the
Speaker 9: legal matter, which is it doesn't matter. And the judge
Speaker 9: brought this up in the proceeding today. You know, if
Speaker 9: you squander, if you steal customer money or or and
Speaker 9: take it to your put in your pocket, walk into
Speaker 9: a Vegas casino and then later pay them, you know,
Speaker 9: somebody else comes along and pays them off, that doesn't
Speaker 9: change the legal situation. So so there's a moral question
Speaker 9: of like, well, what does it mean if they've been
Speaker 9: able to recover their money, and then there's the legal one.
Speaker 9: For the legal one, it just it doesn't matter.
Speaker 4: And I'm just you know, reading your story here. Unfortunately,
Speaker 4: the conditions that allowed people to fall for schemes such
Speaker 4: as bankuan freeds. Tho's a lot of those conditions still
Speaker 4: remain here. And is there where are we in just
Speaker 4: terms of the regulatory framework? Is there any agreement maybe
Speaker 4: how this should evolve over time?
Speaker 9: No, I mean we have seen certain I don't know
Speaker 9: if you wanna call it progress. I mean, of course
Speaker 9: there are like the SEC approved certain spot bitcoin ETFs.
Speaker 9: There's now a big debate, you know, within the industry
Speaker 9: should should they allow for other spot etfsa ethereum or
Speaker 9: or other assets that are maybe not as well established
Speaker 9: as bitcoin. The SEC Gary Gensler has been pretty cool
Speaker 9: to that possibility. You know, the industry, you know, backing up,
Speaker 9: there's a ton of money coming in here. Crypto prices
Speaker 9: are soaring, a lot of the same kind of frothy
Speaker 9: enthusiasm that we saw in the pre FTX collapse. It's there,
Speaker 9: you know, and in certain ways it's worse, right, But
Speaker 9: during the FTX build up, we were talking about all
Speaker 9: the wonderful use cases for crypto. Blockchain was going to
Speaker 9: change everything, And when you actually listen to what people
Speaker 9: in the crypto industry are talking about lately, they're just
Speaker 9: more talking about the numbers going up and the fact that, yeah,
Speaker 9: you have new money coming in through these ETFs, and
Speaker 9: we're seeing all of these tokens, some tokens where really
Speaker 9: there's nothing going on besides vibes. You know, these quote
Speaker 9: unquote mean coins that are also soaring. And in fact,
Speaker 9: many of the tokens that have gone up the most
Speaker 9: are the same tokens that were going up during the
Speaker 9: FTX run up. So I think there is certainly when
Speaker 9: you're talking about huge amounts of speculation, there is going
Speaker 9: to be pain ahead for some of the speculators. Of course,
Speaker 9: there's also the potential for ever more wealth. So that's
Speaker 9: the tension.
Speaker 2: Before I let you go, we have like a minute left.
Speaker 2: We have later on on TV William Quigley, who's the
Speaker 2: co founder of Tether, what's my question for him?
Speaker 9: I mean, I think, like the Tether situation. One of
Speaker 9: the things that's craziest about this if you went back
Speaker 9: ten years ago or five years ago and asked, you know,
Speaker 9: which company is most likely to run into issues regulatory
Speaker 9: issues and so on, people, you know, Tether was one
Speaker 9: that cryptoskeptics have brought up over and over again over
Speaker 9: the years. And they have managed to stick it out
Speaker 9: and are still here at a time when you know
Speaker 9: the CEO of finance is headed for prison.
Speaker 8: Uh.
Speaker 9: You know the former CEO of ft X, former CEO
Speaker 9: of Binance, former CEO of FTX also appears to be
Speaker 9: headed to prison. So that's impressive. I do wonder how
Speaker 9: tether UH tries to adjust further or if they have
Speaker 9: plans to adjust further. Right, For for years people have
Speaker 9: wanted to see more information about what's on their balance sheets,
Speaker 9: and they've essentially resisted. So I'm curious what their plans
Speaker 9: are going forward.
Speaker 4: Max great stuff, Zeke Fox, Max Chafkin, They've got this
Speaker 4: really good story. I just keep scrolling down and there's
Speaker 4: more and more and more good stuff here. Bankman Freed's
Speaker 4: original senate FTX is trouble for all of crypto. For
Speaker 4: all our listeners and viewers out there that are, you know,
Speaker 4: interested in this space, go to Bloomberg dot com uh
Speaker 4: and find this story because it is really good reporting,
Speaker 4: some really cool stuff in there. So check it out there.
Speaker 4: Max chaffickin he does all that stuff for Bloomberg BusinessWeek.
Speaker 1: This is the Bloomberg Intelligence podcast, available on apples Spotify,
Speaker 1: and anywhere else you will get your podcasts. US and
Speaker 1: live each weekday ten am tonoon Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app.
Speaker 1: You can also watch US live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal