WEBVTT - Everyone’s an Energy Trader as Power Bills Hit the Sky 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovick. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week at iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:32.720 YouTube search Bloomberg Clobal News Katie. Something strange happening in 0:00:32.800 --> 0:00:35.320 homes across Texas, New York, Maine, and a handful of 0:00:35.320 --> 0:00:38.159 other states here in the US. In deregulated states such 0:00:38.200 --> 0:00:42.640 as these, customers are turned de facto natural gast forecasters 0:00:42.840 --> 0:00:46.519 gambling on the direction of highly volatile markets when it's 0:00:46.560 --> 0:00:50.560 time to renew their contracts. Michael Sasso is economy reporter 0:00:50.600 --> 0:00:53.199 for Bloomberg News. He and our colleague Noreen Malick right 0:00:53.240 --> 0:00:57.120 all about this phenomenon for Bloomberg News Today. Michael, good 0:00:57.120 --> 0:00:59.639 to have you with us. Joining us from our Atlanta 0:00:59.760 --> 0:01:03.360 be Euaro, Well, what exactly is happening here? What are 0:01:03.920 --> 0:01:06.760 what are Americans doing when they're trying to, I don't 0:01:06.760 --> 0:01:10.399 want to say, negotiate their energy bills, but figure out 0:01:10.560 --> 0:01:14.880 how they're going to actually pay less. Yeah, yeah, good, 0:01:15.040 --> 0:01:17.480 good to be here. Yeah. I I ran across this 0:01:17.840 --> 0:01:20.640 on a personal note when I was not happen to 0:01:20.640 --> 0:01:23.319 be in Atlanta area and I had got my natural 0:01:23.400 --> 0:01:27.440 gas renewal contract for my heating and it was up 0:01:27.520 --> 0:01:30.360 something like sixty or seventy percent, and I thought, what's 0:01:30.400 --> 0:01:33.920 going on here? And they they're wanting me to sign 0:01:33.959 --> 0:01:37.360 a contract for anywhere from a year two years. And 0:01:37.480 --> 0:01:40.839 I was thinking, how do I sign a contract when 0:01:41.080 --> 0:01:43.120 the it's sort of the top of the market, You 0:01:43.120 --> 0:01:44.880 know my rates? Have you want me to sign a 0:01:44.920 --> 0:01:48.440 contract for rates that are up sixty from a year ago? 0:01:48.560 --> 0:01:51.560 And the alternative was even better. If you don't want 0:01:51.600 --> 0:01:53.960 to sign a contract, you go for one of these 0:01:54.040 --> 0:01:57.520 floating or variable rates. And at that at this moment, 0:01:57.560 --> 0:02:00.760 those are up more than a hundred percent a d 0:02:01.680 --> 0:02:04.800 from where where I was a year ago. And that's 0:02:04.840 --> 0:02:10.240 just natural gas around the country. You mentioned Texas. Texas 0:02:10.320 --> 0:02:13.160 gets most of its power by burning natural gas. So 0:02:13.280 --> 0:02:16.480 it's it's electric rates are sort of closely aligned with 0:02:16.639 --> 0:02:22.919 natural gas and those people looking at increases and they're 0:02:22.960 --> 0:02:26.040 in the same scenario. They're in this no win situation. 0:02:26.160 --> 0:02:29.160 Do they that they're renew at these high rates? Do 0:02:29.280 --> 0:02:33.280 they keep going with variable rates with no promise that 0:02:33.320 --> 0:02:36.200 the prices are going to go down? It's a it's 0:02:36.200 --> 0:02:38.960 a tricky situation to be in. Right now, we'll tell 0:02:39.000 --> 0:02:41.000 us about some of the people who are in this 0:02:41.040 --> 0:02:44.040 situation that you spoke to for this story, because there's 0:02:44.040 --> 0:02:48.160 some great, great reporting in this piece about Floyd Stanley, 0:02:48.200 --> 0:02:51.480 for example. Yeah, that was something my colleague Marien and 0:02:51.520 --> 0:02:54.200 he talked. She talked to Floyd's she found him. He's 0:02:54.360 --> 0:02:57.480 in the Dallas area and he's kind of going at 0:02:57.480 --> 0:03:03.079 a full bore. He um actually has spreadsheets and he's 0:03:03.080 --> 0:03:08.880 evaluating electric contracts. There's a bewildering array of electric providers 0:03:08.919 --> 0:03:12.919 in Texas and he's spread charting each of them. And 0:03:12.960 --> 0:03:15.639 I believe, as I recalled, he locked in a two 0:03:15.720 --> 0:03:20.360 year rate because he was worried about rates going even higher. 0:03:20.440 --> 0:03:24.160 He was trying to limit his damage. UM. But yeah, 0:03:24.280 --> 0:03:28.919 so there's there's Floyd kind of spreadsheeting things. Here in Atlanta, 0:03:28.960 --> 0:03:32.600 there was a woman named Ramona Sandro who was trying 0:03:32.639 --> 0:03:37.520 to make a natural gas calculation and nash To booked, 0:03:37.720 --> 0:03:41.400 you know, two year contract, worried that prices were going 0:03:41.440 --> 0:03:44.320 to go up even more. Uh. And then on the 0:03:44.320 --> 0:03:46.840 opposite end, there was a fella here in Atlanta who 0:03:46.880 --> 0:03:50.600 did the opposite. He couldn't stomach today's prices. He's kind 0:03:50.600 --> 0:03:53.800 of gambling the natural gas rates are going to go down, 0:03:54.240 --> 0:03:57.200 so he's going kind of naked. He's kind of the 0:03:57.280 --> 0:04:01.200 floating rate even if it's above two dollars a quote 0:04:01.240 --> 0:04:05.480 unquote firm, which is more than more than it was 0:04:05.640 --> 0:04:08.400 a year ago. Yeah, I mean so, so what about 0:04:08.440 --> 0:04:10.560 the millions of Americans who don't have a choice when 0:04:10.560 --> 0:04:13.760 it comes to this stuff? How are they stomaching it? Well, 0:04:14.280 --> 0:04:17.359 maybe we're all we're all kind of paying uh, paying 0:04:17.440 --> 0:04:19.520 higher rates, whether you have one of the you're in 0:04:19.560 --> 0:04:22.120 one of these choice states or not. In a lot 0:04:22.160 --> 0:04:25.040 of cases there are you are having to go with 0:04:25.080 --> 0:04:29.359 a regulated utility rather than a deregulated state. For people 0:04:29.400 --> 0:04:33.080 who absolutely can't pay um. There is something called it's 0:04:33.080 --> 0:04:36.600 an acronym, it's l I. The word heap a p 0:04:36.920 --> 0:04:39.640 SO l I HEAP, and that is sort of a 0:04:39.680 --> 0:04:45.960 federal a utility assistance program that's kind of routed through 0:04:46.000 --> 0:04:48.880 each of the states. But as I understand, and we 0:04:48.920 --> 0:04:50.840 didn't write a lot about this, I just but I 0:04:51.120 --> 0:04:54.360 did research a little, the this l I HEAP program 0:04:54.440 --> 0:04:59.240 is pretty much tapped out around the country. So unfortunately, 0:04:59.279 --> 0:05:02.040 I mean, they're I wouldn't want to discourage someone from trying, 0:05:02.080 --> 0:05:04.720 and it's certainly worth it, but as I understand, there's 0:05:04.760 --> 0:05:07.960 a tremendous demand and not enough supply of this these 0:05:07.960 --> 0:05:13.240 assistance dollars right now. Michael Sasso, economy reporter for Bloomberg News, 0:05:13.279 --> 0:05:16.400 joining us this afternoon on the Throne from Atlanta. A 0:05:16.480 --> 0:05:21.040 really great piece highlighting the challenges that Americans are going 0:05:21.080 --> 0:05:24.080 through when it comes to figuring out the best way 0:05:24.120 --> 0:05:27.880 to actually pay for those high heating bills and when 0:05:27.880 --> 0:05:30.080 it comes winter and then cooling bills as the a 0:05:30.200 --> 0:05:32.640 C has been jacked up for so much of the summer. 0:05:32.640 --> 0:05:34.400 We didn't even mention Europe, but they make a really 0:05:34.440 --> 0:05:37.000 good point in the story that prices are even higher 0:05:37.320 --> 0:05:39.920 any Europe, so important to keep that in mind you're 0:05:39.960 --> 0:05:43.960 listening to Bloomberg Business Week with Carol Messer and Bloomberg 0:05:44.000 --> 0:05:48.200 Quick Takes Tim Stinovic on Bloomberg Radio. Well, when it 0:05:48.240 --> 0:05:51.160 comes to crypto, one number that I like to use 0:05:51.200 --> 0:05:54.680 a lot, I'll admit it is three trillion. That's at 0:05:54.720 --> 0:05:58.640 least the market cap of all crypto that it was 0:05:58.720 --> 0:06:01.479 at its high point a little earlier this year. Now, 0:06:01.600 --> 0:06:03.280 to get to that number, all you gotta do is 0:06:03.320 --> 0:06:05.800 you gotta take the coins out there and multiply them 0:06:05.920 --> 0:06:09.320 by the price of each coin. But the question is 0:06:09.320 --> 0:06:11.839 is that the right way to value the crypto market. 0:06:12.200 --> 0:06:14.480 It's something that Bill Donna hi Rich spent a lot 0:06:14.480 --> 0:06:18.080 of time thinking about and talking to analysts and economists about. 0:06:18.120 --> 0:06:21.279 She's cross asset reporter for Bloomberg News. Her story is 0:06:21.279 --> 0:06:24.440 in the current issue of Bloomberg Business Week magazine. It's 0:06:24.440 --> 0:06:28.680 available on newsstands, on the Bloomberg and at Bloomberg dot Com. 0:06:28.720 --> 0:06:31.480 Also with us this afternoon from the Interactive Broker Studio 0:06:31.600 --> 0:06:35.680 is Joel Webber, the editor of Bloomberg Business Week. Joel am, 0:06:35.680 --> 0:06:38.360 I am I doing it wrong? Three trillion dollars? Should 0:06:38.360 --> 0:06:40.640 I not be saying three trillion dollars? We're gonna after 0:06:40.680 --> 0:06:44.560 this little segment you you probably won't be saying that anymore. 0:06:44.640 --> 0:06:47.760 But the question just came from look like, as we 0:06:48.080 --> 0:06:53.960 sort of all plunged into crypto winter in in summer, uh, 0:06:54.200 --> 0:06:56.760 we just started asking bigger and bigger questions and then 0:06:56.760 --> 0:06:58.800 turning to our friends in the newsroom to help us 0:06:58.920 --> 0:07:02.599 try and answer some of them. And so the question 0:07:02.640 --> 0:07:04.960 that um we kind of came to Vildano was with 0:07:05.400 --> 0:07:08.279 was look like, people say this is three trillion, like 0:07:08.839 --> 0:07:11.400 is it really? And boy, did she ever go down 0:07:11.440 --> 0:07:14.480 a wormhole? It was a fun wormhole? How far down? 0:07:14.680 --> 0:07:18.880 I mean you went to the bottom of the rabbit hole? 0:07:20.440 --> 0:07:23.440 Well maybe in okay, well, okay, whatever kind of hole 0:07:23.480 --> 0:07:25.880 it was, we went down it, and Vildana, what did 0:07:25.880 --> 0:07:27.800 you learn? Well? I do want to give a shout 0:07:27.800 --> 0:07:30.680 at first to our brilliant editor Pat Regner a Business 0:07:30.680 --> 0:07:34.000 Week who who loves to think of these big meta questions, 0:07:34.080 --> 0:07:37.200 and this was definitely one of them where it's like, okay, 0:07:37.240 --> 0:07:40.120 how big actually was crypto? Because as you guys were 0:07:40.160 --> 0:07:43.280 just saying market cap, it's just you take the number 0:07:43.320 --> 0:07:45.560 of coins out there you multiplied by the price, So 0:07:45.960 --> 0:07:48.440 is that really an accurate reading of the value of 0:07:48.480 --> 0:07:51.360 the crypto market, and if you really think about it, 0:07:51.480 --> 0:07:53.360 there's a bunch of coins out there that are so 0:07:53.440 --> 0:07:57.000 called so called dormant coins, meaning that they really haven't 0:07:57.040 --> 0:08:01.040 been moving, they haven't been used for anything in something 0:08:01.080 --> 0:08:04.240 like five or more years, meaning that potentially that they're lost. 0:08:05.000 --> 0:08:07.280 And then you also have all of these different projects 0:08:07.320 --> 0:08:10.000 that had been coming out where you have a founder 0:08:10.040 --> 0:08:15.040 throwing out like a random supply number. For instance, they'll say, okay, 0:08:15.080 --> 0:08:18.480 we're gonna have twenty million tokens of x y z project, 0:08:18.920 --> 0:08:21.120 and really it's the founder who owns the majority of 0:08:21.120 --> 0:08:22.800 the project. So there they were just a bunch of 0:08:22.840 --> 0:08:26.680 issues and we really wanted to get down to this idea. Well, actually, 0:08:26.720 --> 0:08:29.880 how much were things worth if they weren't three trillion? 0:08:30.120 --> 0:08:32.439 So where did you even start? Who did you reach 0:08:32.520 --> 0:08:34.640 out to with the project like this? I just I 0:08:34.640 --> 0:08:36.880 feel like I would be chasing my tail for a 0:08:36.880 --> 0:08:38.760 few months, which I think I wanted and ask me 0:08:39.200 --> 0:08:43.719 I was chasing my rabbit tail. So who helped you? Well, 0:08:43.960 --> 0:08:45.520 the first thing I did was I wanted to look 0:08:45.520 --> 0:08:49.280 at the number of participants, so in the US at least, 0:08:49.440 --> 0:08:51.520 to try to get a read on how many people 0:08:51.840 --> 0:08:55.960 own or use or trade cryptocurrencies, and there actually is 0:08:56.040 --> 0:08:58.360 some data out on this. So we had a survey 0:08:58.440 --> 0:09:01.280 from the Federal Reserve. They had found that something like 0:09:01.320 --> 0:09:04.480 twelve of US adults had held crypto last year. And 0:09:04.480 --> 0:09:06.760 then there was a survey from Pew that showed about 0:09:07.720 --> 0:09:10.560 health crypto. So that's more than fifty million people in 0:09:10.600 --> 0:09:13.440 the US and it's not an insignificant number. So it 0:09:13.520 --> 0:09:16.000 was a good starting point. And then I ended up 0:09:16.040 --> 0:09:19.160 calling a crypto skeptic. That was my very first phone 0:09:19.200 --> 0:09:22.560 call that I made, and he basically said, this is 0:09:22.600 --> 0:09:28.880 all bs of Of course, Donna, I'm not gonna say so. 0:09:29.640 --> 0:09:32.439 In addition, you got the skeptic, but you also got 0:09:32.480 --> 0:09:37.560 some proponents and economists and everyone everyone else. I'm actually 0:09:37.559 --> 0:09:39.680 really curious, like how many people did you speak to? 0:09:39.880 --> 0:09:43.120 And of all of that universal characters, who is the 0:09:43.160 --> 0:09:47.360 most colorful. Well, probably the crypto skeptic was the most colorful, 0:09:47.800 --> 0:09:50.520 throwing out the curse words and whatnot. I spoke with 0:09:50.600 --> 0:09:52.440 a lot of people there. There were a lot of 0:09:52.440 --> 0:09:54.920 people who didn't end up making it into the story 0:09:55.000 --> 0:09:57.760 because there's so many different ways to try to to 0:09:57.760 --> 0:10:01.360 to measure even just engagements. So trying to measure so 0:10:01.440 --> 0:10:04.960 called entities for instance, which is also just like the 0:10:05.040 --> 0:10:07.920 people who are participating on different blockchains, and then there's 0:10:08.440 --> 0:10:12.440 yeah or if they're people of course, but that's actually 0:10:12.480 --> 0:10:14.360 one of the issues. So you have so many issues 0:10:14.360 --> 0:10:18.160 behind a lot of these measurements where um, maybe you 0:10:18.240 --> 0:10:21.200 are counting one person as ten different people because they 0:10:21.200 --> 0:10:24.000 have ten different accounts or you know. So it was 0:10:24.040 --> 0:10:26.920 really trying to figure out what is the best representation 0:10:27.040 --> 0:10:30.319 for for some of these numbers. So Vildanna, after speaking 0:10:30.360 --> 0:10:34.000 to the skeptic and Noel Atchison, who you refer to 0:10:34.080 --> 0:10:37.840 as the researcher, she of course is of Genesis Global Trading, 0:10:38.559 --> 0:10:41.840 the data crunchers as well, how do you think about 0:10:41.880 --> 0:10:44.960 crypto differently after reporting this piece. Well, one of the 0:10:45.040 --> 0:10:48.640 things that I ended up coming to a conclusion too 0:10:48.720 --> 0:10:51.440 was that there just had been so much leverage in 0:10:51.440 --> 0:10:54.560 in the crypto market, where at the height that three 0:10:54.640 --> 0:10:58.800 chillion number really encompassed a lot of different I don't 0:10:59.160 --> 0:11:01.200 I suppose lever just the best word to use. There 0:11:01.280 --> 0:11:04.200 was just so much froth, So removing taking that froth 0:11:04.320 --> 0:11:07.480 out of the three trillion number and then coming up 0:11:07.520 --> 0:11:09.960 with something, um, you know, for the story. We came 0:11:10.040 --> 0:11:14.240 up with somewhere on eight hundred billions, somewhere around where 0:11:14.360 --> 0:11:18.000 the crypto market actually is currently, the market capital is 0:11:18.000 --> 0:11:21.080 showing us it's worth, which is not nothing. It's definitely 0:11:21.160 --> 0:11:23.199 not not nothing. Which is I think, you know, back 0:11:23.240 --> 0:11:26.160 to the skeptic idea there. It's just like, okay, well 0:11:26.160 --> 0:11:29.319 there's there's real money here a little bit right, And 0:11:29.679 --> 0:11:32.360 definitely one thing that's significant there though, is, as one 0:11:32.400 --> 0:11:34.080 of our colleagues was sort of challenging us in the 0:11:34.120 --> 0:11:37.120 news room, was Okay, wait, isn't this as much as 0:11:37.200 --> 0:11:40.240 it started with? So what what just happened? Right? So 0:11:40.320 --> 0:11:41.960 I think the best way and one of the things 0:11:41.960 --> 0:11:44.160 that came up over and over again, so somebody I 0:11:44.200 --> 0:11:46.680 spoke with at UBS came up with this number. And 0:11:46.720 --> 0:11:50.400 then the two the two economist researchers from these big 0:11:50.480 --> 0:11:54.120 data crunching crypto firms, Chain Analysis and glass Node, which 0:11:54.160 --> 0:11:56.960 are both well known for looking at charts and trying 0:11:56.960 --> 0:11:58.679 to figure some of these things out, is they were 0:11:58.679 --> 0:12:01.840 all looking at something called realized value. And I hope 0:12:01.880 --> 0:12:04.079 I get this right. I don't want to upset any 0:12:04.160 --> 0:12:06.560 any of the crypto fans out there, but that's basically 0:12:06.600 --> 0:12:09.720 just the prices that coins actually fetch in their most 0:12:09.920 --> 0:12:13.040 recent transaction. And if you look at that number, so 0:12:13.160 --> 0:12:15.920 glass note, for instance, can actually give you a ratio 0:12:16.000 --> 0:12:19.559 of the market value versus realized value. The ratio at 0:12:19.559 --> 0:12:22.360 the height was something like three point two, and you 0:12:22.440 --> 0:12:25.000 take the three trillion divided by three point two and 0:12:25.040 --> 0:12:28.640 you get the sort of eight hundred undred billion dollar 0:12:28.760 --> 0:12:31.360 number that removes out all of that fraud. I can 0:12:31.400 --> 0:12:33.800 loosely follow that math. I would say, I'm a little 0:12:33.840 --> 0:12:36.040 bit challenging that you start with three trillion and you 0:12:36.160 --> 0:12:38.680 end up with a smaller amount, but it's still billions. 0:12:38.720 --> 0:12:42.880 I got it, I got it. I'm there many billions, billions, 0:12:42.920 --> 0:12:45.520 several hundred billions, but vildna, we don't have much time left. 0:12:45.520 --> 0:12:49.080 But I am curious what the reception has been like, 0:12:49.240 --> 0:12:51.200 because I don't know a lot of people were really 0:12:51.200 --> 0:12:56.240 carried go on, go on. Well, the one thing so 0:12:56.320 --> 0:12:59.320 in crypto, if you end up writing about the crypto 0:12:59.360 --> 0:13:01.440 space some times, it doesn't matter if it's a positive 0:13:01.520 --> 0:13:03.720 or negative story, you'll still get a lot of hatred 0:13:03.960 --> 0:13:06.920 on Twitter. So one of my things was, Okay, don't 0:13:06.960 --> 0:13:09.440 at me on Twitter, no matter what. I come up with, 0:13:10.160 --> 0:13:13.920 and actually all the atmes were very positive. Even all 0:13:14.200 --> 0:13:16.840 people within the crypto space were very receptive to this 0:13:16.880 --> 0:13:18.839 idea that Okay, market cap is just not a good 0:13:18.880 --> 0:13:21.680 way to be measuring the space. This is a really 0:13:21.720 --> 0:13:26.640 good insightful look at that what the crypto market is 0:13:26.720 --> 0:13:30.480 actually valued at. And it's just interesting to take a 0:13:30.520 --> 0:13:33.040 look at some of these readings and technical measures like 0:13:33.080 --> 0:13:36.440 the realized value one. The Internet is good, cryday, It's 0:13:36.480 --> 0:13:39.120 good today. Okay, we'll just give it, give it a 0:13:39.160 --> 0:13:41.720 few hours gold on and I'm sure, you know, we'll 0:13:41.720 --> 0:13:43.720 see how maybe I shouldn't have done this interview over 0:13:44.160 --> 0:13:47.720 crypto summer warmer than crypto, win that love that Buildona 0:13:47.760 --> 0:13:51.000 Hira Cross as reporter for Bloomberg News, joining us from 0:13:51.000 --> 0:13:53.760 the Bloomberg Interactive Broker's studio. Check out her story. It's 0:13:53.760 --> 0:13:56.600 featuring the current issue of Business Week magazine, available on newsstands, 0:13:56.600 --> 0:13:58.959 on the Bloomberg terminal and at Bloomberg dot com. A 0:13:59.000 --> 0:14:04.880 big negative. The editor the magazine, Joe Webber. This is 0:14:04.880 --> 0:14:08.839 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. 0:14:08.920 --> 0:14:13.760 Tim Stinovic on Bloomberg Radio. Well Memes Dock Mania. It's 0:14:13.800 --> 0:14:17.360 set to live on despite wild swings thatt least at 0:14:17.440 --> 0:14:20.880 least according to our latest M Live Pulse survey. This 0:14:20.880 --> 0:14:25.240 story written by Bailey Lip Scholtz. Bailey is Bloomberg News 0:14:25.280 --> 0:14:28.960 Equities reporter. He joins US live from Hoboken, New Jersey 0:14:29.000 --> 0:14:33.320 this afternoon. Bailey, UM, how are you? I'm doing well, Tim, 0:14:33.320 --> 0:14:35.680 Are you doing all right with COVID? Yeah, and thank 0:14:35.680 --> 0:14:37.720 you for asking. I feel I feel great. The reason 0:14:37.760 --> 0:14:39.160 I ask how you are is because I saw on 0:14:39.240 --> 0:14:43.400 Instagram that you got engaged this weekend. So congratulations, Thank 0:14:43.440 --> 0:14:46.520 you very much, guys, I appreciate it. Yeah, pop the 0:14:46.640 --> 0:14:49.920 question on Saturday night, she said yes after many of 0:14:50.000 --> 0:14:53.080 cheers were shed. So I'm officially engaged in now with fiance, 0:14:53.200 --> 0:14:55.200 which is weird to say. We would have definitely not 0:14:55.360 --> 0:14:57.640 brought it off if she said no, just no. I 0:14:57.720 --> 0:15:02.320 need you to know that, Bailey, and she knows she's 0:15:02.320 --> 0:15:06.280 marrying the Meme stock master, Bailey Lips, which is which 0:15:06.320 --> 0:15:09.440 is fantastic. Bailey. It's really exciting. So we're sending you 0:15:09.480 --> 0:15:12.360 our best here from Bloomberg Business Week. We do want 0:15:12.360 --> 0:15:14.800 to talk about meme stocks, though, because the M Live 0:15:14.880 --> 0:15:18.560 Pulse survey is out and it says that investors think 0:15:18.640 --> 0:15:20.760 that MEME stocks are here to stay. So talk about 0:15:20.800 --> 0:15:23.480 the methodology here because this is something that our m 0:15:23.520 --> 0:15:26.120 Live team does and it's uh it gets a great 0:15:26.240 --> 0:15:29.800 idea of what investors are thinking about. Yeah, so every 0:15:29.840 --> 0:15:32.200 week we run a survey kind of try to be 0:15:32.360 --> 0:15:35.040 as topical as possible. So this was crafted really after 0:15:35.600 --> 0:15:39.640 the madness around the Botom Beyond about ten days ago, 0:15:39.680 --> 0:15:42.200 around that Ryan Cohen kind of boom and bust after 0:15:42.240 --> 0:15:45.120 he dumped the stock. But yeah, so nearly two thirds 0:15:45.120 --> 0:15:49.720 of the two respondents, so we are pulling both strategists 0:15:49.800 --> 0:15:52.120 and UH portfolio manager on the wall street as well 0:15:52.160 --> 0:15:55.400 as retail traders who have the terminal and are responding 0:15:55.480 --> 0:15:58.520 through the terminal link. And really the consensus for the 0:15:58.520 --> 0:16:01.160 most part was that even though you have kind of 0:16:01.200 --> 0:16:04.280 these boom and bus whether it's AMC, game Stop at 0:16:04.320 --> 0:16:06.400 Bath and Beyond, or even kind of the one offs 0:16:06.480 --> 0:16:09.360 like BlackBerry and cost Corps, there is an expectation that 0:16:09.440 --> 0:16:12.000 it will continue to live on in one way or another. 0:16:12.000 --> 0:16:14.600 In the real reasoning that I got from talking to 0:16:14.640 --> 0:16:17.520 some people about the idea um is just that commission 0:16:17.560 --> 0:16:19.840 free trading so whether you now have the ability to 0:16:20.400 --> 0:16:23.680 trade out of the money call options or just buy 0:16:23.760 --> 0:16:26.520 the underlying stock at a fractional share, I was going 0:16:26.560 --> 0:16:28.880 to continue to be a kind of thesis that Wall 0:16:28.880 --> 0:16:31.400 Street has to think about, and that's really being driven 0:16:31.400 --> 0:16:33.840 by things like Reddit, things like Twitter and other chat 0:16:33.920 --> 0:16:37.240 rooms like stock lists. Okay, so I get the sort 0:16:37.240 --> 0:16:42.480 of market structure, why you do have basically free trading, etcetera, etcetera. 0:16:42.720 --> 0:16:46.240 Talk to us about the psychology though, because we're in 0:16:46.240 --> 0:16:49.440 a very different place from when the mania first started, 0:16:49.440 --> 0:16:51.600 when people were locked at home. Now you're able to 0:16:51.640 --> 0:16:54.320 go out and do things. You might get COVID like 0:16:54.640 --> 0:17:00.280 our friend tended. But why is this still happening? There's 0:17:00.280 --> 0:17:02.760 still just an ability and kind of a mentality that 0:17:02.800 --> 0:17:05.960 you're bonding and connecting. So whether you're in a Reddit 0:17:06.000 --> 0:17:09.040 thread or a discord chat talking about how you just 0:17:09.119 --> 0:17:12.199 bought more eight preferred shares and you're excited about it, 0:17:12.240 --> 0:17:13.919 you feel like you're part of the movement. Is the 0:17:14.000 --> 0:17:16.280 understanding And really, if you kind of take that and 0:17:16.520 --> 0:17:18.480 add on the fact that in a market that for 0:17:18.520 --> 0:17:20.840 the most part still is beaten down, we still have 0:17:20.920 --> 0:17:23.760 pretty light volumes professional traders are more than happy to 0:17:23.840 --> 0:17:25.840 jump into some of these trends because it is an 0:17:26.160 --> 0:17:29.600 easy way to generate some alpha. And we are seeing 0:17:29.600 --> 0:17:32.720 like even with Beth and Beyond today at about people 0:17:32.720 --> 0:17:35.720 are trading the call options for forty five dollar strike 0:17:35.800 --> 0:17:38.600 price to stop right now is at So there still 0:17:38.640 --> 0:17:42.119 is very much that gambling aspect where investors and whether 0:17:42.119 --> 0:17:44.560 it's retail traders professional traders are more than happy to 0:17:44.600 --> 0:17:48.240 speculate with a small portion of their portfolio just given 0:17:48.240 --> 0:17:51.359 the potential returns. Bailey, does it tell us anything about 0:17:51.400 --> 0:17:55.879 capitulation or about big picture how investors should look at 0:17:55.920 --> 0:18:00.520 a bear market when we have retail traders and getting 0:18:00.520 --> 0:18:04.639 involved in companies like this, Yeah, I mean the real 0:18:04.720 --> 0:18:07.560 debate and kind of got a mixed reaction from both 0:18:07.680 --> 0:18:10.960 pros and retail traders on the idea that net that 0:18:11.040 --> 0:18:13.879 investors need to become that sellers but um for the 0:18:13.920 --> 0:18:16.640 market to really bottom. But it feels more like it's 0:18:16.720 --> 0:18:19.199 kind of just an offshoot and it's another area for 0:18:19.240 --> 0:18:21.760 investors to trade. You look at the memorabilia space, it 0:18:21.880 --> 0:18:24.879 still is booming even with the market really struggling to 0:18:24.920 --> 0:18:27.440 find its footing. So I don't as much as people 0:18:27.480 --> 0:18:29.720 like to connect it off and say the FED is 0:18:29.720 --> 0:18:32.200 going to have to continue to hike as long as bed, 0:18:32.200 --> 0:18:35.320 bathroom beyond on any given day. It does feel like 0:18:35.359 --> 0:18:37.120 in the consensus from some of the people I talked 0:18:37.119 --> 0:18:39.800 to is that that's very much misplaced and an easy 0:18:39.840 --> 0:18:42.480 thing to say, but doesn't actually at the end of 0:18:42.480 --> 0:18:45.080 the day drive a core fundamentals for the market, just 0:18:45.119 --> 0:18:47.399 because in the broad team of things they are, these 0:18:47.440 --> 0:18:50.760 are very much small companies. While the percentage jump is massive, 0:18:51.160 --> 0:18:55.879 it's just a drop in the bucket broadly speaking. Alright, well, Bailey, 0:18:55.960 --> 0:18:59.080 before we let you go, um, meme stocks, crypto versus spects, 0:18:59.080 --> 0:19:02.160 what did you get from professional investors freed versus retail investors? 0:19:02.160 --> 0:19:05.879 Just in fifteen seconds? Yeah, professional investors like crypto the 0:19:05.960 --> 0:19:08.520 most as do retail. Retail was a little bit more 0:19:08.560 --> 0:19:11.280 optimistic on Meme stocks about said that would be the 0:19:11.320 --> 0:19:14.480 best asset class. Professionals only said about fift so very 0:19:14.560 --> 0:19:17.920 much Crypto between the three was the favored asset in 0:19:17.960 --> 0:19:21.320 the next year. Bailey Lipsholtz, equities reporter for Bloomberg News, 0:19:21.359 --> 0:19:24.320 joining us this afternoon on the phone from Hoboken, New Jersey. 0:19:24.640 --> 0:19:28.520 Big thank you to Bailey and congratulations once again. I'm 0:19:31.960 --> 0:19:35.440 a colonel. Yeah, but you let me drive? Oh no, 0:19:35.440 --> 0:19:40.400 no, no no, no home, honey, please, I'll do the driving revels. 0:19:41.480 --> 0:19:49.879 I want to drive. It's good question. This is the 0:19:50.080 --> 0:19:57.080 drive to the globe effect up down on Bluebird Radio. Well, 0:19:57.160 --> 0:19:59.280 here we are, less than ten minutes to go to 0:19:59.440 --> 0:20:03.000 the those of trading on this Monday afternoon. The SP 0:20:03.080 --> 0:20:05.880 five is lower by four tenths of one percent, as 0:20:05.960 --> 0:20:08.840 is the Dow, the NASDAC, the lagger today down by 0:20:08.880 --> 0:20:10.640 close to eight tenths a little more than eight tenths 0:20:10.680 --> 0:20:12.560 of one percent. Let's get into it with Aaron Kennon, 0:20:12.840 --> 0:20:16.480 co founder and CEO of Clear Harbor Asset Management. They've 0:20:16.480 --> 0:20:19.040 got over a billion dollars in assets under management. Aaron 0:20:19.119 --> 0:20:21.600 joining us this afternoon on the phone from Stanford, Connecticut. Aaron, 0:20:21.640 --> 0:20:24.040 how are you the We're just fine. Thanks for having 0:20:24.080 --> 0:20:26.199 me back. Yeah, it's always good to have you with us. 0:20:26.240 --> 0:20:28.800 I gotta tell you I was so I'm I'm working 0:20:28.800 --> 0:20:31.639 from home because I'm recovering from COVID and I couldn't 0:20:31.680 --> 0:20:33.879 turn away last week in Jackson Hole even though I was, 0:20:34.240 --> 0:20:38.800 you know, on sick leave essentially, and I texted Katie afterward, 0:20:39.440 --> 0:20:41.680 and I was as we saw the sell off happen, 0:20:41.760 --> 0:20:43.920 and I said, Katie, this is what we've been talking 0:20:43.960 --> 0:20:47.320 about for weeks here, Like this shouldn't be surprising to people. 0:20:47.480 --> 0:20:49.840 We knew Powell was going to be hawkish. We know 0:20:50.480 --> 0:20:53.160 that inflation is the number one concern for the central Bank. 0:20:53.760 --> 0:20:56.520 Why is everyone so surprised by this? So I ask you, 0:20:56.640 --> 0:20:59.800 why is everyone so surprised? Right? So, I mean, I 0:20:59.800 --> 0:21:03.600 think the rhetoric has been consistent, but there has been 0:21:03.640 --> 0:21:07.160 a belief since perhaps mid June, that the FED at 0:21:07.240 --> 0:21:09.120 some point, perhaps even by the end of the year, 0:21:09.920 --> 0:21:12.400 would be in a position where they're looking at data 0:21:12.400 --> 0:21:15.720 and decelerating inflation, and that they may in fact be 0:21:15.840 --> 0:21:17.800 in a position to pivot. And I think what we 0:21:17.840 --> 0:21:21.960 heard on Friday was that's not that's not accurate. Do 0:21:22.119 --> 0:21:24.919 not fight the Fed. You know, if you're predicting a 0:21:24.920 --> 0:21:28.199 pivot soon, please do not bet on it. And so, 0:21:28.240 --> 0:21:30.240 in some sense, I think the Fed was probably pleased 0:21:30.280 --> 0:21:33.639