Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanivk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
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Speaker 1: Eastern Time on Bloomberg Radio or watch us on YouTube
Speaker 1: search Bloomberg Clovel News. Let's set the Business week agenda
Speaker 1: in the house. Abigail Doolittle, she's markets reporter at Bloomberg News.
Speaker 1: She is in our interactor broker studio, Yolenna, she is
Speaker 1: our senior US economist, a Bloomberg Economics on the phone
Speaker 1: from Long Island. We're going to get to the jobs
Speaker 1: report in just a moment, but let's talk markets a
Speaker 1: little bit. Abigail, the trade. How did investors read that
Speaker 1: job's report, which was really a good one. Yeah, it
Speaker 1: was a solid report. It's funny. I think everybody's tired
Speaker 1: after the month. We just had reporter, We just ad
Speaker 1: stocks are really not doing all that much. The S
Speaker 1: and P five hundred down slightly, the Dow up slightly,
Speaker 1: you know, just fluctuating here, a little bit more weakness
Speaker 1: for tech. And that of course is because where there
Speaker 1: was a huge reaction to the Job's report. The bond market.
Speaker 1: We have yields absolutely spiking. The two year yield currently
Speaker 1: up ten basis points at two, the ten year yield
Speaker 1: up three basis points at two thirty seven. We know
Speaker 1: what that means, an inverted yield curve, and not just
Speaker 1: for a blip, but right now that to ten yield
Speaker 1: curve is at its flattest going back to two thousands six,
Speaker 1: two thousand seven. Okay, so what's the bond market telling us,
Speaker 1: abigail that the FED has gotten the go ahead, the
Speaker 1: green light to go ahead and raise away. I mean,
Speaker 1: there was one guest on the open this morning that
Speaker 1: I was talking not just fifty basis point uh yeah,
Speaker 1: two back to back full point raises in the next
Speaker 1: two meetings. That's get ahead. Yeah. Alright, So so you Laida,
Speaker 1: come on in on this. It was a very upbeat report.
Speaker 1: How did you see it and then in the context
Speaker 1: of the broader economic backdrop here in here in the
Speaker 1: United States. Absolutely, and one of the biggest things for
Speaker 1: me in this report was a significant increase in participation
Speaker 1: rate and apart from a very healty payrolls game, so
Speaker 1: we saw three tents of an increase in prime age participation,
Speaker 1: which is just telling me that finally in all these
Speaker 1: workers who are waiting on the sidelines deciding to come back,
Speaker 1: whether it is because you know, we don't get any
Speaker 1: more uh COVID there payments from the government, or just
Speaker 1: because the cases are subsiding, so whatever that is. We
Speaker 1: are seeing significant strong participation in the labor markets. So
Speaker 1: that is really a good point because that will help, um,
Speaker 1: you know, keep wage pressures a little bit more contained,
Speaker 1: even though we will see continue to see a strong
Speaker 1: wage growth this year, uh, particularly early among um you know,
Speaker 1: uh professions that have a little bit lower income so satisficion,
Speaker 1: hospitality and healthcare. Was there was there anything particularly concerning
Speaker 1: in there to you well, not not not in the report. Uh,
Speaker 1: there was a little bit of a disappointment in terms
Speaker 1: of ours work, but that is expected. You know, in
Speaker 1: the first quarter, we we are going to see slow
Speaker 1: down in economic growth and ours work just simply because
Speaker 1: of uh, you know, a micron in the beginning of
Speaker 1: the quarter. But other than that, I think the the
Speaker 1: employment report today was really really strong in the game. Uh,
Speaker 1: there are a lot of good signs that you know,
Speaker 1: the labor market continues to recover and and actually there
Speaker 1: is quite a lot of room to still recover because
Speaker 1: we had seven million jobs below where we would have
Speaker 1: been if jobs continue to grow at trends, so one
Speaker 1: point six millions below the February mark, fis. But if
Speaker 1: we have seven million below where we would have been
Speaker 1: had grown at the trend, Wow, that's some interesting perspective, right,
Speaker 1: you know, back out COVID and kind of where we
Speaker 1: would have been versus uh, you know where we are
Speaker 1: because of it, um so abigail those treasury yields, like
Speaker 1: you know, I keep saying, like, you know, have we
Speaker 1: reached a top with yields and stuff? What did today's
Speaker 1: moves perhaps maybe remind us about where we still might
Speaker 1: go when it comes to higher yields. That is an
Speaker 1: excellent question, Carol, and I would say that relative to
Speaker 1: the ten year yield, if you look at a long
Speaker 1: term chart, and you see in yield the forty or
Speaker 1: fifty at this point year bull market for bonds, which
Speaker 1: is represented by that down trend. We right now are
Speaker 1: hitting up against it. So the question is will that
Speaker 1: very strong resistance hold. And uh, it's funny, it has
Speaker 1: every time over the last forty or fifty years, so
Speaker 1: there's good reason to think that it will, which would
Speaker 1: suggest that you're going to see some money go back
Speaker 1: into bonds. And it's funny. I was hearing one um
Speaker 1: from Pigim, an expert bond expert from Pigim saying that
Speaker 1: right now bonds, the pricing is so attractive that it
Speaker 1: almost makes sense in the new quarter to rebalance portfolios
Speaker 1: a little bit, take advantage of the prices and the
Speaker 1: low bonds, which would suggest that that that trend may
Speaker 1: may hold. So maybe yields are going to come back in,
Speaker 1: and some of the near term technicals suggests that as well.
Speaker 1: As for what that means for stocks, you know, it's
Speaker 1: interesting were it's hard to you know, we're talking about
Speaker 1: this the other day. You know, So long as there's
Speaker 1: the lower highs, it suggests that the buyers aren't as
Speaker 1: enthusiastic as the sellers, meaning the sellers are willing to
Speaker 1: sell more than the buyers will buy at higher levels.
Speaker 1: But if that breaks, you know, who knows, it could
Speaker 1: be a very different story. And also I would say
Speaker 1: the meme stocks as a measure of risk on you know, yeah,
Speaker 1: game stop today on the idea. Let's see if it's
Speaker 1: still it was earlier. It's actually it's were first now change.
Speaker 1: It's really the retail traders. But in any case, if
Speaker 1: they you know, the stock is up so much since
Speaker 1: it's low last year, right, yeah, alright, so it's another
Speaker 1: thing to be looking at. Abigail, Thank you so much,
Speaker 1: Abigail do Little Markets reporter on the phone is Elena
Speaker 1: are saying thanks to her as well. Member of our
Speaker 1: Bloomberg Economics team. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: We'll talk about firing on all cylinders. As Charlie was
Speaker 1: talking about the jobs report today, Uh, that US labor
Speaker 1: market report really just coming in strong, adding close to
Speaker 1: half a million jobs in the month of Marxi, unemployment
Speaker 1: rate falling by more than expected, highlighting a robust labor market.
Speaker 1: I know you've heard it a lot here on Bloomberg,
Speaker 1: but it is our top story and it's really strong, Hey,
Speaker 1: throwing you know, revisions of close to a hundred thousand
Speaker 1: also the last couple of months also pretty good. Yeah,
Speaker 1: So let's see what our next guest has to say.
Speaker 1: Peter Quigley is the president and CEO of Kelly It's
Speaker 1: safe point five billion dollar revenue global staffing solutions company. Peter,
Speaker 1: good to have you back with us. Hey, you have
Speaker 1: some really interesting insight given what you do at Kelly,
Speaker 1: and I'm wondering what sticks out to you about today's report. Well,
Speaker 1: thanks to Tim, it's going to be back with you. UM.
Speaker 1: Clearly another round of good news. His job growth continued
Speaker 1: at a solid pace in March. UM labor markets are
Speaker 1: steadily recovering to pre pandemic level. It's the eleventh straight
Speaker 1: month of four thousand plus, longest strets since started tracking
Speaker 1: that UM, so clearly good news. I think there's some
Speaker 1: other encouraging signs UM. Carol mentioned the unemployment rate coming down,
Speaker 1: but every demographic group saw unemployment drop, with the biggest
Speaker 1: drop among black workers, which is very encouraging. And I
Speaker 1: took away from the job to report some signs that maybe, uh,
Speaker 1: the COVID, the worst of COVID is behind us. You
Speaker 1: take into account that the number of people prevented from
Speaker 1: looking for work declined significantly, the number of people who
Speaker 1: missed work because of COVID declined significantly, UM, the number
Speaker 1: of people who didn't work because their employer closed or
Speaker 1: because of business closed declined significantly, and the number of
Speaker 1: employees that tell worked declined, suggesting that maybe offices are
Speaker 1: reopening and people are going back UM to brick and mortar. Alright,
Speaker 1: So yeah, I mean it just feels so positive. So
Speaker 1: in terms of particular areas, where are you seeing kind
Speaker 1: of overwhelming strength and where are you not? Well, today's
Speaker 1: jobs report revealed that the recovery is broad based. I mean,
Speaker 1: every almost every vertical UM saw decent job growth. So
Speaker 1: that's that's positive, and that's reflected in the demand that
Speaker 1: we're seeing from our customers. Across all of five of
Speaker 1: our business units are seeing strong demand UM and in
Speaker 1: particularly you wouldn't be surprised technology, life sciences, UM, warehousing,
Speaker 1: manufacturing are all very very strong. Uh. And so you
Speaker 1: know it's it's broad based. UM. What about when it
Speaker 1: comes to demographics on your own platform, and I'm glad
Speaker 1: you pointed out that every demographic groups unemployment drop in
Speaker 1: the most recent month. Is that something that you're also
Speaker 1: seeing when it comes to Kelly, Yeah, wee information, Well,
Speaker 1: we don't to the extent we can UM when employees
Speaker 1: volunteer the information. But the thing is with this great
Speaker 1: jobs report, I recalled that when I came home with
Speaker 1: a report card that was pretty decent, my mom would
Speaker 1: always tell me, this is good, but you can do better,
Speaker 1: And I think of us. But the I think in
Speaker 1: the labor market, we can do better by removing barriers
Speaker 1: that prevent more people from accessing meaningful work UM because
Speaker 1: despite the record number of job openings, too many barriers
Speaker 1: exist for hidden workers, including job seekers with non violent
Speaker 1: UH criminal records. And and just to quantify that for you,
Speaker 1: more than seventy eight million Americans, so thirty three percent
Speaker 1: of our working age population have a criminal record. That's
Speaker 1: nearly of those are non violent offenders. That's amazing. Well
Speaker 1: that and the unemployment rate among those workers is it's
Speaker 1: the highest it's ever been UM. And it's it's just
Speaker 1: good business to consider opening the funnel in this time
Speaker 1: of a dire labor shortage, and Americans frankly supported two
Speaker 1: other three. Americans believed that non violent mistakes in the
Speaker 1: past should not be an automatic disqualifier for a person
Speaker 1: from work. More agree companies should do more to eliminate
Speaker 1: discriminatory hiring practices, and um more than say they prefer
Speaker 1: to work for a company that UM doesn't have discriminatory
Speaker 1: hiring practices. So um it's a good business. Yeah, No, absolutely, Peter.
Speaker 1: You know, but as this is a do as I say,
Speaker 1: not as I do, because I feel like most of
Speaker 1: most people would say absolutely they should be included, and
Speaker 1: that you know, when it comes down to it, you
Speaker 1: don't see it put into practice. We certainly have talked
Speaker 1: to CEOs in various heads of institutions who who have
Speaker 1: put that into action and are hiring people, you know,
Speaker 1: with as you said, UM, you know, maybe questionable backgrounds
Speaker 1: or non violent offenders. Um. When you have conversations with
Speaker 1: heads of companies and CEOs who are all dealing with
Speaker 1: these tight labor markets, how many of them are actually
Speaker 1: taking steps to to hire those individuals. I would say
Speaker 1: there's a lot more conversations happening, and and the best
Speaker 1: way to promote it is to show them the proof.
Speaker 1: So we had UM PROGRAMM in Toyota with Toyota in Lexington, Kentucky.
Speaker 1: We screened more than a thousand applicants of them are
Speaker 1: clear to apply for jobs. UM in Toyota increased its
Speaker 1: talent flow by increased its diversity by almost ten percent,
Speaker 1: and it reduced turnover by SEU. And it's in just
Speaker 1: one example, but more companies need to do. Uh to
Speaker 1: do that. In April is National Second Chances Month, so
Speaker 1: it's a perfect time to start. Yeah. No, it's something
Speaker 1: for certainly people to think about in generally tight labor
Speaker 1: market or not. Peter quickly, thank you so much, President
Speaker 1: and chief executive officer over at Kelly joining us on
Speaker 1: the phone from Michigan. You know this is where others
Speaker 1: would argue in terms of immigration, right, UM, Because I
Speaker 1: do wonder one of the big macro things that I'm
Speaker 1: thinking about, Tim is that if indeed you don't get
Speaker 1: the labor participation that we saw pre pandemic, that not
Speaker 1: everybody comes back. You know, where are companies going to
Speaker 1: line workers? And if they can't find workers, how does
Speaker 1: that then slow down profit growth? Revenue growth? And how
Speaker 1: does that slow down the economy. Look how many jobs
Speaker 1: are open versus how many people are available to work
Speaker 1: exactly exactly, so something will continue to cover. All right,
Speaker 1: So getting started on this Friday. It is Friday, and
Speaker 1: this is Bloomberg. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: There's a story in the new issue of Bloomberg Business
Speaker 1: Week that's just out on the Bloomberg at Bloomberg dot com,
Speaker 1: business Week dot com and of course on newsstands. Is
Speaker 1: what about cash less a t m s that have
Speaker 1: grown into a seven billion dollar marijuana loophole? Cash less
Speaker 1: a t m s? Do you get that? No, that's
Speaker 1: why we gotta talk to Tiffany carry All about it.
Speaker 1: She's consumer reporter for Bloomberg News. She's with us on
Speaker 1: the phone from Westchester, New York. Also joining us is
Speaker 1: Joel Webber, editor at Bloomberg Business Week. He joins us
Speaker 1: on the access line from Brooklyn. Joel, this is really interesting. UM.
Speaker 1: I want to hear though, before we get into the story,
Speaker 1: how it came together and and you know, in terms
Speaker 1: of UM, really what Tiffany had to do in order
Speaker 1: to understand of the cash less ATMs. Did it involve
Speaker 1: getting people to buy marijuana? Uh? No comment, Yes, UM
Speaker 1: the story. I honestly found out about this one late. UM.
Speaker 1: But if you make a legal transaction for cannabis and
Speaker 1: most of the country but um our reporting was in Massachusetts. UM.
Speaker 1: If you go to pay cash is not encouraged because
Speaker 1: they don't want to have a whole lot of cash
Speaker 1: on hand. UM. And you will find that you can
Speaker 1: make a payment with plastic, except that it doesn't know
Speaker 1: at the point of sale, they'll basically say, by the way,
Speaker 1: you're not gonna this isn't gonna show up as a
Speaker 1: credit card transaction. We're gonna have an a t M fee.
Speaker 1: And it's all very confusing, it's all very legal, but
Speaker 1: it turns out that it it basically is masking the
Speaker 1: transactions that so that the banking system, which is all
Speaker 1: trying to be in compliance with federal law, UH, is
Speaker 1: basically this massive workaround. UM. And it also turns out
Speaker 1: that there's a number of providers who are making a
Speaker 1: lot of money on this how much money diviny. You
Speaker 1: look at the fact that you know we've got eight
Speaker 1: billion in marijuana sales expected this year, and a lot
Speaker 1: of folks I spoke with estimated you know that these
Speaker 1: cash of a t m s are a quarter probably
Speaker 1: of those. You know, this is bringing seven billion dollars
Speaker 1: into the banking system disguised as something else. And then
Speaker 1: you know what people are profiting from in this industry
Speaker 1: really is the fees every time you use one of
Speaker 1: these technologies, you're paying you know, anywhere from to to
Speaker 1: three fifty for the privilege of using your debit card
Speaker 1: in this, you know, potentially illegal form of transaction. And then, um,
Speaker 1: you know, someone is making the profits off those. And
Speaker 1: what I found in this story is this whole high
Speaker 1: risk payment processing industry which exists side of cannabis. Um.
Speaker 1: You know, it's pretty hard to to figure out who's
Speaker 1: who's doing it, but there are a lot of players
Speaker 1: that are becoming more well known in the space. Tiffany How,
Speaker 1: how is this Okay? It's it jold, you know, use
Speaker 1: some terminology, use some terminology, but the fact is is
Speaker 1: that it's the marijuana industry. It's billions of dollars a year.
Speaker 1: It just seems like it's kind of existing in this
Speaker 1: really strange space between something that is being hidden but
Speaker 1: at the same time allowed. That's right, And I think
Speaker 1: a lot of people think that, you know, safe banking
Speaker 1: legislation or other legislation might pass this year, and maybe
Speaker 1: this problem is going to go away. But the problem
Speaker 1: has been around for quite a few years, and as
Speaker 1: the cannabis industry grows, these transactions continue to grow, which
Speaker 1: I think is why they're getting more on visa and
Speaker 1: master cards radar. So, you know, a lot of the
Speaker 1: folks I spoke with who are not lawyers to the
Speaker 1: company's involve said, you know, trying to look at it objectively.
Speaker 1: I mean, if you're lying to a bank, how is
Speaker 1: that not fraught on the bank, or how is this
Speaker 1: not a form of transaction laundering because you're essentially disguising
Speaker 1: the nature of the transaction. So this is very legal
Speaker 1: interesting legal issues here. It'll be interesting to see, you know,
Speaker 1: if this problem sort of quietly goes away, or if
Speaker 1: it gets considered as as the Senate decides what to
Speaker 1: do about legislation, and as the industry evaluates the alternative,
Speaker 1: if it's not going to be a while until we
Speaker 1: get safe banking and no clues as to who's setting
Speaker 1: this up and kind of putting this in place. You know,
Speaker 1: this is part of the fascination of the story is that, um,
Speaker 1: you know, there's so many different companies in this space,
Speaker 1: and they all operate through something called an ISO, which
Speaker 1: is like a reseller. So in essence, I was finding
Speaker 1: a lot of the names of the companies who seem
Speaker 1: to offer the payment processing are actually repelling it for
Speaker 1: someone else who's maybe even reselling it from someone else
Speaker 1: who licensed it from someone else. So that's what you
Speaker 1: have to maybe read the story as it goes into
Speaker 1: it and see what how that whole industry works. It's
Speaker 1: so hazy, hazy, hazy ha um. But but Tiffically, I mean,
Speaker 1: I just come out and there's like so many jokes
Speaker 1: that we made here, but um, Tiffany. And I'm also
Speaker 1: curious because a number of companies have really um shown
Speaker 1: that they can thrive in this hazy little space, right,
Speaker 1: Who are some of the providers and and how are
Speaker 1: they competing with one another? Well, you know, ultimately, when
Speaker 1: I spoke to people in the industry, they talked a
Speaker 1: lot about companies UM Transact first and Michael Schwartzman UM,
Speaker 1: who founded the company is not clear what his role
Speaker 1: is now uh and pabotic. But then what happens is
Speaker 1: there's been this whole rise in the pop fintech world
Speaker 1: of these companies like Duchy and slow Hub. They have
Speaker 1: some very famous investors like Jay Z and Snoop Dogg,
Speaker 1: and they end up doing what they integrating with these
Speaker 1: payments processors because they want to offer the marijuana dispensaries
Speaker 1: like holistic software to manage everything from tax accounting to
Speaker 1: how they run the cash registers. So, you know, some
Speaker 1: folks said, look, you know, they're basically promoting the payment
Speaker 1: processes by integrating with them, and in some cases, I'm
Speaker 1: not sure if they know all the details about how
Speaker 1: the industry works. So it'll be interesting to see. I
Speaker 1: think a lot of companies have new technologies that they're
Speaker 1: planning on launching, and I'll actually be writing more about
Speaker 1: that next week. Hey, tiffany um, can you explain a
Speaker 1: little bit about how these transactions are misidentified in some
Speaker 1: cases as businesses that are adjacent to the actual weed shop.
Speaker 1: You still you share a story of a McDonald's that
Speaker 1: is looks like it's getting credit for at M transactions,
Speaker 1: but they're actually being bought at a weed store next door.
Speaker 1: That's right. Yeah, So that was sort of the foundation
Speaker 1: of the story, was actually trying to trade a single
Speaker 1: transaction or in this case, we looked at eight transactions
Speaker 1: um and finding that when they show up on the
Speaker 1: customer's bank statements, they show up under an address. But
Speaker 1: if you google the address, it's not the address of
Speaker 1: the dispensary, it's the address of the McDonald's next door,
Speaker 1: or the piece of shop next door, or in one case,
Speaker 1: the business called New Dude Food clearly not a marijuana
Speaker 1: um shops. And then you know, when you look at
Speaker 1: at those you can see clearly there's some mis labeling
Speaker 1: or miss cooding going on. But in general they do
Speaker 1: show up as a t M withdrawals on customers bank statements,
Speaker 1: and in fact, that's so effective at disguising them that
Speaker 1: in some of the instances we saw City Bank and
Speaker 1: Bank of America, we're reimbursing the people the three dollars
Speaker 1: and fifty cents or the two dollars and cents or
Speaker 1: their purchase. So here you have this crazy technology that is,
Speaker 1: you know, existing in this weird legal intersown and then
Speaker 1: you have these big banks actually reimbursing customers for using it,
Speaker 1: which just seemed like the ultimate irony here. But McDonald's
Speaker 1: glad to have them nearby the dispensary because you're right.
Speaker 1: Great story, Tiffany Carry, Thank you so much, Consumer reporter
Speaker 1: of Bloomberg News, Jill Weber, Editor Business Week, or thanks
Speaker 1: to you as well. Check out the new issue of
Speaker 1: Bloomberg Business Week on newsstands, online and on the Bloomberg
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Among today's crypto headlines,
Speaker 1: one is on the U s SEC leaning on crypto
Speaker 1: firms to report assets that they are holding on behalf
Speaker 1: of customers on their balance sheets. And then to myself
Speaker 1: one about India basically saying it's going to frame cryptocurrency
Speaker 1: law only after a global consensus emerges on regulating such
Speaker 1: assess According to a person familiar, I mean that is
Speaker 1: the world we are in. It absolutely is, and we've
Speaker 1: got a great voice. Bill Hind, the co founder of
Speaker 1: Soma Finance, joining us on the phone from Connecticut. We
Speaker 1: should note Soma Finance it's a FINNRA registered multi asset
Speaker 1: token issuance platform also a deck decentralized exchange for digital assets,
Speaker 1: not just for retail investors, but for institutional investors as well. Bill,
Speaker 1: good to have you with us. Great to be here,
Speaker 1: Thanks for having me on. I think a lot of
Speaker 1: people would have just you know, he heard me read
Speaker 1: that and said, wow, that was quite a mouthful. Uh. So,
Speaker 1: explain what some of Finance does in lay persons terms. Yeah, so, um,
Speaker 1: Some of Finance is a joint venture with Tritorian Capital
Speaker 1: and another firm called Montre Dao. Tritorian Capital as a
Speaker 1: registered broker dealer, as you mentioned, UM, and through the
Speaker 1: joint venture, we're able to offer UM or. We're going
Speaker 1: to offer a decentralized platform like crypto traders like, but
Speaker 1: in a regulated and compliant fashion. Okay, So give us
Speaker 1: an idea I'm always curious about We're all still trying
Speaker 1: to figure a way through anything to do with crypto
Speaker 1: and f t s and so on. But give us
Speaker 1: an idea of the growth that you're seeing on your platform,
Speaker 1: where the most activity is uh and so on. So
Speaker 1: we the platform has yet to launch to the launch
Speaker 1: in a couple of months, but where we're seeing a
Speaker 1: ton of interest is in UM gaming UM n f
Speaker 1: t s obviously, and one of the things we're hoping
Speaker 1: to offer very soon would be token ized versions of
Speaker 1: public equities UM, and that's drawn a lot of interest.
Speaker 1: What does that mean? A tokenized version of like equity? So,
Speaker 1: in effect, if you wanted to be able to trade
Speaker 1: UM a public shafer site tesla UM, you could bring
Speaker 1: the share itself onto our platform, into our broken dealer accounts,
Speaker 1: and be issued a corresponding cryptographic token that you could
Speaker 1: then trade the same way you would UM in an
Speaker 1: automatiumatic market maker UM as if we're a token, so
Speaker 1: you could do all the fun things people like to
Speaker 1: do with crypto, you know, yield farming, staking in those things,
Speaker 1: but still own the underlying UH stock asset. We'll go
Speaker 1: through some of those reasons why someone would want to
Speaker 1: do that, because I think for a lot of our
Speaker 1: audience that's still getting up to speed on crypto, they're
Speaker 1: staying to themselves. Wait a second, if I can just
Speaker 1: trade a stock on a platform, you know, a retail
Speaker 1: trading platform, why do I want to token eze it?
Speaker 1: Of course, And that's all that's been a bit of
Speaker 1: the rub to date is why right with crypto y
Speaker 1: um And here's this and this is a situation where
Speaker 1: you would remain the owner of that share, so you
Speaker 1: would get all the benefits of owning the underlying share, dividends,
Speaker 1: voting rights, all of those things that people want and
Speaker 1: need from their their equity ownership. But you could then
Speaker 1: also stake it into yield pools like people do on
Speaker 1: sushi swap or unit swap, which are unfortunately not compliant,
Speaker 1: but we can do it in a compliant manner. So
Speaker 1: in effect, you're not only getting the benefit of the
Speaker 1: underlying investment, but you're getting an additional investment additional return
Speaker 1: on top of it. Wait, so you're basically able to
Speaker 1: leverage it then, is that what you're saying? Correct? Yes? Um,
Speaker 1: so you know um stoke token staking is is actually
Speaker 1: very similar to fully paid stock lending, which Wall Street
Speaker 1: has been doing for decades. Obviously, how did you there's
Speaker 1: demand for that? Although I say that kind of naively
Speaker 1: because we know when it comes to the financial markets, Uh, anyway,
Speaker 1: we can kind of dice and slice and come up
Speaker 1: with some new things. There's a way to play it,
Speaker 1: like people are ready for it, but anyway, what do
Speaker 1: you know about the demand to be able to play
Speaker 1: the market this way. So we're hearing a lot from
Speaker 1: the communities that were involved in that this is something
Speaker 1: that would be of interest. And then you look at
Speaker 1: things like the meme stock phenomenon that's come on, and
Speaker 1: retail investors obviously are very interested in getting involved in
Speaker 1: the market in a broader way, and we think this
Speaker 1: is a great way for them to do it. The
Speaker 1: system will be built so it's easy and comfortable to use,
Speaker 1: it will be completely safe and compliant and UM and
Speaker 1: in this respect you'll effectively be able to I don't
Speaker 1: want to say double dip, but in a certain way
Speaker 1: you are because you're getting the benefit of the underlying
Speaker 1: security but also the additional yield on the crypto platform.
Speaker 1: UM would this be for all investors, approvative investors or
Speaker 1: what so the goal is to have as many investors
Speaker 1: as possible. So UM we're going to go globally and
Speaker 1: each investor as they come onto the platform and our
Speaker 1: k y C M L then checked will be effectively
Speaker 1: tiered so that if you con is investor, you'll be
Speaker 1: able to see certain offerings but not other offerings. But
Speaker 1: if you came, want to say, an accredited investor, you
Speaker 1: might have access to different different offerings. We had some
Speaker 1: a little bit of jargon in there, KYC know your
Speaker 1: customer m l Anti money launderings. For those people who
Speaker 1: heard that and we're maybe scratching their heads. Um, Bill,
Speaker 1: how I know that you're set to begin offering free
Speaker 1: transfer of assets from some retail brokerages, including robin Hood
Speaker 1: and each Trade. Um, how do you break into that
Speaker 1: competitive space? Well, we're just gonna get the word out there.
Speaker 1: We're gonna go market and explain to people. Um, we've
Speaker 1: got to It's gonna be a tough heild to climb,
Speaker 1: no doubt, but we want to get the word out
Speaker 1: that this is for anybody who wants to enhance the
Speaker 1: experience of being an investor in these these stocks in
Speaker 1: the compliant regulated way can do so on our platform
Speaker 1: and in terms of tokenization, especially in the any side
Speaker 1: of things. Is this just in terms of giving ease
Speaker 1: and access to being able to kind of trade at
Speaker 1: any time? Is that also part of it? The goal
Speaker 1: is absolutely to offer trade. Um, there are obviously a
Speaker 1: lot of issues to deal with their you know, obviously
Speaker 1: during the day when nastac is open, it's not a
Speaker 1: problem at all. But at night when they're closed, Um,
Speaker 1: there are some challenges there and that's part of what
Speaker 1: we're working through to make sure we can do that
Speaker 1: in a safe and complying fashion. Bill, very briefly, when
Speaker 1: do you think you can do that? We're looking towards
Speaker 1: the end of the summer is sort of the goal.
Speaker 1: But with something that's technologically complex, obviously that's a that's
Speaker 1: not not a hard date. Just quickly ten seconds. You
Speaker 1: having conversations with regulators about all of this. Absolutely, we
Speaker 1: love the regulators, the SEC and finer are. They're they're
Speaker 1: doing great work out there. Um, they're what makes this
Speaker 1: place safe. So we talked them all the time. All right,
Speaker 1: Bill Ham, we gotta go keep in touch. Bill Hid,
Speaker 1: co founder of Soma Finance, joining us on the phone
Speaker 1: in connect. Get you're listening to Bloomberg Radio. I'm road Yeah,
Speaker 1: how bebout you let me drive? Oh no, no, no,
Speaker 1: home honey, please, I'll I don't want to drive. It's
Speaker 1: a good question, he's good. Drive to the clothes on
Speaker 1: Bloomberg Radio. All right, what a week and we've just
Speaker 1: got about ten minutes left to wrap up the Friday
Speaker 1: trading day, the first trading day of the second quarter,
Speaker 1: and as you know, as we broke down yesterday, it
Speaker 1: was quite a first quarter. Bouncing around again today on
Speaker 1: a big jobs report. Yeah, I was going to make
Speaker 1: a joke about the quarter, but it's not that funny
Speaker 1: that we're you know, on pace for a winning quarter
Speaker 1: at this point. Higher by just let's get into it
Speaker 1: with Cole Smeade, President and portfolio manager at Smead Capital Management.
Speaker 1: He joins us on the phone from Phoenix, Arizona. Cole,
Speaker 1: how are you doing well? How about you guys? We're
Speaker 1: doing all thanks? Hey, um, how is the quarter for you? Guys?
Speaker 1: It was a great quarter. It was quite a bit
Speaker 1: of fun because when when everyone thought that energy is
Speaker 1: the problem of the world and they wake up finding
Speaker 1: out that it's it's what creates h order and security.
Speaker 1: You can make a lot of money when those changes
Speaker 1: take place. So what did you see in your in
Speaker 1: the quarter? In your portfolio? What can you talk about about?
Speaker 1: How how you did at the quarter? Yeah, so, I mean,
Speaker 1: we we're the largest energy owner you practically could find
Speaker 1: out there in the mutual fund space, both in our
Speaker 1: US fund and our international fund um and you know
Speaker 1: that that means in a prior time you had to
Speaker 1: look stupid or feel stupid as you wanted to be
Speaker 1: a buyer those things, and you finally started to see
Speaker 1: some of the reward. But I think what investors are
Speaker 1: still completely missing is, you know they just use use
Speaker 1: what Warren's doing right now. You know, buffets up buying
Speaker 1: Accidental and he controls close to twenty pcent the business,
Speaker 1: and he's just looking at what the capital structure looks
Speaker 1: like versus you know, what it looked at a prior time.
Speaker 1: And he's looking at the free cash creation versus what
Speaker 1: it looks like at the prior time, and the return
Speaker 1: of equity and things like that, and it's like a
Speaker 1: Bend Graham exercise occidentals producing return in equity like Coca
Speaker 1: Cola did an eight eight when he bought Coca Cola
Speaker 1: at much higher prices than you could have boughttom in
Speaker 1: the ten prior years. And investors are unwilling to follow
Speaker 1: Warrant into that. And it just goes to show you
Speaker 1: how despise the energy spaces today. But as people raising
Speaker 1: capital and you know, seeking out new capital from investors
Speaker 1: and our funds. It's great because we got great companies,
Speaker 1: great prices and money coming in. So do you think
Speaker 1: there's still room to move higher on these commodities, on
Speaker 1: these energy stocks or is the turbulence and disruption that
Speaker 1: we anticipate lasting for you know, X number of months
Speaker 1: into the future. Is that pricedn already? Yeah? From a
Speaker 1: from a historical framework, this looks a lot like the
Speaker 1: price shocks of the nineteen seventies. And what those did
Speaker 1: is they became the new The prices you moved to
Speaker 1: became the new floor. Okay, so nineties the new floor.
Speaker 1: That's how I think about it. And Um, in the
Speaker 1: inn room, you're you're we could see squeezes that continue
Speaker 1: to take us high because there's just not there's not
Speaker 1: supply out there. So if you're Vicky Hall of running
Speaker 1: Occidental Petroleum, who I consider maybe the best in the business,
Speaker 1: or you're like Derek Evans who runs Meg Energy up
Speaker 1: in Canada, you have the greatest oil salesman in the
Speaker 1: history of presidents right now. Where he comes in, he
Speaker 1: does what he wants to do, and that just drives
Speaker 1: the price oil high. Um. And it's a great environment
Speaker 1: for these producers so it's it's it's wonderful. Now that
Speaker 1: being said, you know, people are using what's going on
Speaker 1: in that world to say, oh, you know, share of
Speaker 1: wallet and the consumers to be really hurting them. Um,
Speaker 1: we're nowhere near the share of wallet that we had
Speaker 1: back in O eight because cars are more cost you know,
Speaker 1: fuel effective. Um. And then secondly we're just not back
Speaker 1: at a hundred forty seven dollars a barrel. Yeah, I
Speaker 1: thought I just saw something that the president was doing too.
Speaker 1: Even force companies are push them in that direction to
Speaker 1: be even more fuel efficient. So there's there's a lot
Speaker 1: of inesting dynamics. But you're right in terms of right
Speaker 1: the transition to a non fossil fuel world, it is
Speaker 1: going to take time. And so as as we move,
Speaker 1: as we recalibrate, as we readjust to maybe embracing more
Speaker 1: to alternative energy that fossil fuel world, maybe there won't
Speaker 1: be as much investment into it. And those you do
Speaker 1: feel like there's going to be a floor, a higher
Speaker 1: floor under certainly the price of various energy commodities. The
Speaker 1: more alternative energy we want to do or green energy
Speaker 1: that we want to do, the higher it takes oil
Speaker 1: prices because those things, unsubsidized, compete at higher price levels.
Speaker 1: So at sixty dollars a barrel, your wind and solar
Speaker 1: look really stupid economically speaking. At a hundred dollars or
Speaker 1: a hundred fifty dollars a barrel, those compete more in
Speaker 1: the open market. So if you want to transition sooner,
Speaker 1: you want actually higher oil prices. So when the president says, hey,
Speaker 1: I want to bring the price down, well, that actually
Speaker 1: does not go well with a green future, because you
Speaker 1: want high oil prices for a green future. Hey, let's
Speaker 1: go from energy to home elders. Because Carol and I've
Speaker 1: been talking about them all week. With rising interest rates
Speaker 1: for mortgages, they've been getting beat up a little bit,
Speaker 1: but you're still bullish on them. Why because it's a
Speaker 1: secular growth story. I mean, we have millennials who have
Speaker 1: you know, really decided post pandemic in a meaningful way
Speaker 1: that they want own homes. And what Yeah, what the
Speaker 1: traders are doing is really and saying, oh, if the
Speaker 1: tenure goes up, you know, mortgage has increased, no one's
Speaker 1: gonna want to buy a house. But what they're under
Speaker 1: assuming is the confidence that group now has in housing
Speaker 1: and the net worth that they've built up looking back
Speaker 1: anywhere from two years ago, if they bought early on
Speaker 1: in that process, or I'm thirty eight, I had kids younger,
Speaker 1: I've been a homeowner for quite a long time. Now.
Speaker 1: Is that net worth they've built up. Um. When you
Speaker 1: build up that net worth, you look and say, well,
Speaker 1: I want to go get a bigger house, in a
Speaker 1: nicer house, and that is a huge multiplier in the economy. Um.
Speaker 1: But like I said, most people are looking saying if
Speaker 1: rates go higher, that's not gonna work. The problem is
Speaker 1: the seventies were a boom era for housing, and they
Speaker 1: were terribly unaffordable. And that's where we think the markets wrong.
Speaker 1: We see it also in our international We own lumber companies, right,
Speaker 1: so watch lumber paying around right now. We saw four
Speaker 1: dollars in the quarter and at those prices you can
Speaker 1: get fabulously wealthy in the lumber of business. You know.
Speaker 1: It's interesting too, is even an older population. You know,
Speaker 1: I think everybody thought they'd all go to retirement communities
Speaker 1: or wouldn't want to own it, and they didn't. And
Speaker 1: and actually I just know from anecdotally even members of
Speaker 1: my families and my older siblings who are still either
Speaker 1: working or something, but they're not going into retirement communities.
Speaker 1: They're buying homes and they're just going to places where
Speaker 1: there's lower taxes or nicer weather basically, or warmer weather.
Speaker 1: So it's interesting Boomers like their houses. And I think
Speaker 1: the other dynamic that brings up to Caroline, he is
Speaker 1: really important. The person in control right now of the
Speaker 1: economy in so many respects is a working mother with
Speaker 1: two kids. I say that because if she doesn't want
Speaker 1: to go back into you know, downtown to go work, congratulations,
Speaker 1: office has got a shift. If if her parents, um
Speaker 1: don't aren't going to be as far away as they
Speaker 1: used to, They're going to move closer to her, you know, otherwards.
Speaker 1: I think the economics are moving to that type of
Speaker 1: consumer and household and that decision maker. And so I
Speaker 1: look and say, hey, we got these malls. They've got
Speaker 1: great property. But you know, to your point, there's boomers
Speaker 1: the health character growing malls. Office could grow on malls
Speaker 1: because there's suburban locations close to her all right, really
Speaker 1: quickly twenty seconds. If you have new money to commit,
Speaker 1: where do you put it? Very quickly? Uh? Absolutely love
Speaker 1: the energy business. It's the most underallocated space. It's the
Speaker 1: easiest game in town. Go buy Oxy, Go buy some
Speaker 1: oil fans business in Canada, Go buy Continental. It's just
Speaker 1: too much fun. Well, and it's been such an help
Speaker 1: performer in the last year. It's a help performer this year.
Speaker 1: We certainly saw it in the quarter as well. Hey Cole,
Speaker 1: great to have you back with us. Cost Meat. He's
Speaker 1: present portfolio manager. It's Meat Capital Management. Their value fund,
Speaker 1: the Speed Value Fund, by the way, beating beating just
Speaker 1: about all of its peers of the past five years,
Speaker 1: returning on average nearly annually. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
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