Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
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Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Clovel News. The US taking another step
Speaker 1: against Russia, you know that, following it's now five day
Speaker 1: old invasion of Ukraine. We heard President Bines administration earlier
Speaker 1: today banning US people and companies from doing business with
Speaker 1: the Bank of Russia, the Russian National Wealth Fund, and
Speaker 1: the Ministry of Finance. But then we just heard also
Speaker 1: from Jamie Diamond, and I've been talking with him about
Speaker 1: uh Swift specifically, which is that system messaging system used
Speaker 1: among the global financial community. Billions of messages sent each
Speaker 1: year using the Swift system. Jordan Fabian is Bloomberg News
Speaker 1: White House reporter. He joins us on the phone from Washington.
Speaker 1: D C. Jordan's where are we with the United States
Speaker 1: in the in the world where I shouldn't say the
Speaker 1: entire world, because not every country has done this, but
Speaker 1: the U S banning transactions with the Russian Central Bank,
Speaker 1: with the Wealth Fund, and to what extent can can
Speaker 1: businesses actually do business with Russia right now? The Bondo
Speaker 1: administration's goal is certainly to make it difficult. It's not
Speaker 1: impossible for that to happen. I think by targeting the
Speaker 1: central Bank in the way that they have, I mean,
Speaker 1: that's really uh something that you know, even the administration themselves,
Speaker 1: so they weren't even considering doing as early as last week.
Speaker 1: So um, you know, they're clearly frustrated. I think by
Speaker 1: the fact of the initial sanctions didn't convince Putting to
Speaker 1: pull out of Ukraine's and now they're unleashing some of
Speaker 1: the harshest measures they can to try and get him
Speaker 1: to reconsider that position. But now, as you pointed out,
Speaker 1: it's going to take the cooperation of allies and countries
Speaker 1: around the world to take similar steps to try and
Speaker 1: cut off Rusher's economy. But what did you make of
Speaker 1: I think both Tim and myself Jordan's kind of sat
Speaker 1: up straighter a little bit when JP Morgan's CEO and
Speaker 1: chairman Jamie Diamond just speaking with our Ed Hammond saying
Speaker 1: that there are a lot of workarounds for SWIFT, and
Speaker 1: we know the financial system and how you do business
Speaker 1: has complicated. There are lots of avenues. So how should
Speaker 1: we read a comment like that or how would you
Speaker 1: read it as you continue to report on this situation. Well,
Speaker 1: first of all, I mean, I think he's right, there
Speaker 1: are alternatives, like you mean, you can use telephone or
Speaker 1: fax machine even um there's also been talking about a
Speaker 1: possible alternative to SWIFT cropping up that you know, possibly
Speaker 1: China would be involved in that with Russia, and so
Speaker 1: he's right that they can get around it. But I
Speaker 1: and I think that's why U S officials have stressed
Speaker 1: that these Central Bank sanctions are perhaps even more beautiful
Speaker 1: and swift, even though the SWIFT has captured a lot
Speaker 1: of the public's attention over the past week or so,
Speaker 1: because that would mean essentially what they're trying to do
Speaker 1: is take all of these farm reserves that Russia has
Speaker 1: and and prevent the Kremlin from using it to skirt
Speaker 1: around the sanctions. So the view of the by administration
Speaker 1: right now is that that's that's the most important stuff
Speaker 1: they can say. UH. Credy Gupta, who's the markets correspondent
Speaker 1: here at Bloomberg, our our colleague Jordans, wrote this email
Speaker 1: this morning to us all that was really helpful and
Speaker 1: talked about some American companies that have exposure to Russia
Speaker 1: and McDonald's for example, Coca Cola, Mondli's International. Uh. Are
Speaker 1: these companies able to continue to do business in those
Speaker 1: countries right now? What is the status of of of
Speaker 1: that uh? And what would the buy An administration like
Speaker 1: to see? Well, it's a really good question him and
Speaker 1: I think, you know, it's hard to tell a company
Speaker 1: by company what they can and can't do. But what
Speaker 1: you're seeing, I think our company is deciding to be
Speaker 1: uncertainty is too great and they want to pull back
Speaker 1: and look at what VP did by exiting at Steak
Speaker 1: and Rosneft. I think Shell Oil anounced today that it's
Speaker 1: getting out of its partnership with gas from and so
Speaker 1: these companies, even if they're not specifically banned by sanctions
Speaker 1: from doing certain things, especially in the energy sector, they
Speaker 1: just might determine the risk is too great because the
Speaker 1: US might ratch it up even more, and so we
Speaker 1: just want to get out of doing business in Russia,
Speaker 1: and that would obviously be put a lot of pressure
Speaker 1: on on the Kremlin to uh, you know, try and
Speaker 1: keep the Russian economy afloat Jordan. International business, global business
Speaker 1: is a funny thing. I mean, how much of this
Speaker 1: is because of where we are right now, and how
Speaker 1: much of this could change in another week, in other words,
Speaker 1: the sanctions come off. I mean, how do you do
Speaker 1: you have any foresight or thought about how this play
Speaker 1: is longer term? Longer term? Excuse me, I mean it's
Speaker 1: a really good question. There's fod administration officials have been
Speaker 1: getting any indication they planned to put off the gas
Speaker 1: when it comes to the sanctions, that they would only
Speaker 1: be looked to increasing penalties. And you know, to your point,
Speaker 1: uh it is, I think for businesses that what they
Speaker 1: wanted certainty right that they're going to be able to
Speaker 1: operate in certain markets. And so when there's so much uncertainty,
Speaker 1: you know, we saw the SMP go down today. We
Speaker 1: saw obviously there's the rule really hitting record lows, and
Speaker 1: so it's just gonna cause chaos. And I think again
Speaker 1: a lot of these internation some companies are just going
Speaker 1: to decide it's not worth it to do business there
Speaker 1: right now, and it takes time for them to move.
Speaker 1: So you know, we might not see if the US
Speaker 1: snaps back sanction is necessarily going to open up their
Speaker 1: doors again next week, because who knows what's going to
Speaker 1: happen next with regard to Ukraine and the sanction situation.
Speaker 1: That's that's I'm I'm so glad you brought that up, Jordan,
Speaker 1: because that's exactly what I was wondering. Is this the
Speaker 1: type of thing that while the actual public outcry from
Speaker 1: Americans would be too much for some companies to actually
Speaker 1: be doing business or being connected with Russia right now
Speaker 1: or even in the near future. I mean, there is
Speaker 1: certainly something to that. A good example of that is
Speaker 1: state governors and state officials in the United States trying
Speaker 1: to pull Russian or Russian teamed vodka off the shelves
Speaker 1: of their stores. And that just shows the depth of
Speaker 1: the anti Russian sentiment right now among the public, at
Speaker 1: least the American public, and I know the public in
Speaker 1: many European countries as well, So it does become possibly
Speaker 1: a brand issue when uh, you know, these certain companies
Speaker 1: were operating in Russia. Mean, I think a lot of
Speaker 1: the reason VP pulled out of the Rosnest steak because
Speaker 1: they were receiving a ton of pressure from the UK
Speaker 1: government do so. So public at pressure only seems to
Speaker 1: be increasing and hardening against the Kremlin, at least in
Speaker 1: the West, and we'll certainly have to see how long
Speaker 1: that public pressure continues. Carol, Well, right, Like I think
Speaker 1: about different pressure points that we've seen over the last
Speaker 1: couple of years. What is it that stuck? Think about
Speaker 1: January six and donations that companies make too politicians who supported,
Speaker 1: you know, overthrowing the results of the election Middle East. Yeah,
Speaker 1: companies went back, yeah, actually making those donations. Jordan Fabian,
Speaker 1: Bloomberg News White House reporter on the phone from Washington,
Speaker 1: d C. You are listening to Bloomberg Business We Carroll Master,
Speaker 1: Tim Stanovic, We are Bloomberg. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic
Speaker 1: on Bloomberg Radio and joining us on the phone in
Speaker 1: New York, city is catching Glinsky, who, Man, there's a
Speaker 1: lot going on over the weekend. She works a lot
Speaker 1: of weekends she does courtesy of Warren Buffett and Berkshire
Speaker 1: away because Mr buff putting out his annual letter to
Speaker 1: shareholders this past weekend. Cat, we are grateful to have
Speaker 1: you with us, and we're grateful that you worked on Saturday,
Speaker 1: uh and probably throughout the weekend dissecting. You get a
Speaker 1: comp day for this. Now, we'll talk about that later.
Speaker 1: I do want to talk about big takeaways though, infrastructure.
Speaker 1: Might the growth plan potentially a little succession uh discussion
Speaker 1: or maybe not. Let's dive into it though with Catchy Klinsky. Cat. So,
Speaker 1: so what do we mean when you say, uh, infrastructure assets?
Speaker 1: What are we talking about here? Well, I think one
Speaker 1: of the interesting parts that Buffett has increasingly started to
Speaker 1: put in these letters is how much Berkshire really owns
Speaker 1: of infrastructure like property and plants. And he gave us
Speaker 1: an updated figure. It was a hundred fifty eight billion
Speaker 1: dollars at the end of last year. And I think
Speaker 1: it really is interesting because it really speaks to how
Speaker 1: bersher has changed. You know, people really think of Berkshire
Speaker 1: and Buffet set this himself as a collection sometimes of
Speaker 1: financial assets, and yet it's actually really become this industrial behemoth.
Speaker 1: And that's really underscored by the hundred fifty eight billion
Speaker 1: dollars infrastructure assets. I think that speaks to the fact too,
Speaker 1: that Berkshire can actually really earn some pretty good returns
Speaker 1: by reinvesting its own money and its businesses such as
Speaker 1: the railroad and the energy business, which are always going
Speaker 1: to be kind of steady operations for Berkshire. And so, yeah,
Speaker 1: you might not have you know, the crazy new retailers
Speaker 1: that Berkshire snapping up all the time, but you will
Speaker 1: have sort of these um steady and and and giant
Speaker 1: um companies. Hey, tat, so, is this a Warren Buffett
Speaker 1: play or is this a play um by Todd and Ted.
Speaker 1: So I would say the infrastructure play is definitely, you know,
Speaker 1: pieced together by Warren and and and partially because you know,
Speaker 1: really harkens back to the purchase of the energy business
Speaker 1: and the purchase of the railroad, both of which was
Speaker 1: kind of a Buffet play. And I think it really
Speaker 1: speaks to the fact that you know, um that yeah,
Speaker 1: he's reshaped the company over many years and you know
Speaker 1: he even joked a little bit sometimes not intentionally, but
Speaker 1: it's kind of built out into a company that is, yes,
Speaker 1: more industrial focus than it ever has been, and the
Speaker 1: way it becomes, you know, kind of a steady operation
Speaker 1: for even during bumps in the economy. Okay, I want
Speaker 1: to get to succession stuff, because there was kind of
Speaker 1: a rare mention of succession in this letter his likely successor,
Speaker 1: Greg Abele. Um, what do we learn about succession in
Speaker 1: the letter? And why was it kind of rare to
Speaker 1: hear from more in Buffett about that? Well, So Warren
Speaker 1: disclosed last year after a slip up from Charlie Munger,
Speaker 1: that greg Abel was the top pick and he's never
Speaker 1: actually named who was going to be the top pic
Speaker 1: when he stepped down. So that was huge news last year.
Speaker 1: And while we didn't get any sense of the timing
Speaker 1: of when it might occur, what we did get is
Speaker 1: we got a whole little letter from Greg Abele and
Speaker 1: it was focused on sustainability, so kind of, you know,
Speaker 1: a one topic letter, but I think it was really
Speaker 1: important because not only was Buffett willing to seed some
Speaker 1: page space to greg Abel, which is kind of key
Speaker 1: because investors increasingly need to be familiar with him and
Speaker 1: his ways of thinking. But it was addressing a topic
Speaker 1: that's really going to be important for Gregg going forward.
Speaker 1: I mean, obviously climate change has gathered, you know, a
Speaker 1: lot of the tension in more recent years. But if
Speaker 1: you're taking over as a CEO of a really big company,
Speaker 1: one that includes the railroad and an energy business and insurance,
Speaker 1: a came many businesses that are going to be affected
Speaker 1: by climate change and sustainability issues, You're gonna have to
Speaker 1: have a good argument for how company is handling it.
Speaker 1: And I think that was kind of key for investors
Speaker 1: that they got a sense of greg able and they
Speaker 1: got to hear from an an annual letter, which is
Speaker 1: rare cat I think it's so cool that he actually
Speaker 1: highlighted that. Considering this weekend, we're seeing alternative energy stocks
Speaker 1: kind of on a tear as a result of the
Speaker 1: Russian invasion into Ukraine, and it sounds like Europe is
Speaker 1: kind of rethinking and it's it's exposure and maybe this
Speaker 1: is a push more quickly to alternative energy as a result.
Speaker 1: Is everybody kind of rethinks where they're getting their energy
Speaker 1: is energy from from excuse me, and their exposure. Um.
Speaker 1: The other thing I think was interesting was Buffett conceding
Speaker 1: that there was little that excites him. That's not what
Speaker 1: you want to hear, especially when he's got a war
Speaker 1: chest like he does. Yeah, it's hit. It's so great,
Speaker 1: and it's been kind of a similar thing for many
Speaker 1: years now. Is that he's just he's not finding publicly
Speaker 1: traded stocks he wants to buy. He's not finding great acquisition.
Speaker 1: But I do think if you are bullish about him,
Speaker 1: you're bullish on the sense that he was willing to
Speaker 1: open up a completely different avenue that he had never
Speaker 1: pursued before, which was stuffed by back. He opened that
Speaker 1: up more more deeply in and last year he bought
Speaker 1: back a record amount of stock twenty seven point one
Speaker 1: billion dollars. Even a minuted in the letter that it's
Speaker 1: a mildly attractive option. AK, it's definitely not his favorite.
Speaker 1: I'm sure he'd love to strike a big deal, but
Speaker 1: I think it's really important to note that, yeah, he
Speaker 1: has opened it up, and he does have another way
Speaker 1: to put some of the cash to work. And to
Speaker 1: your point, Yeah, that's what I wanted to just finish
Speaker 1: on cat is he's essentially by doing that essentially saying, well,
Speaker 1: that's the most attractive use for our cash, right Yeah. Yeah,
Speaker 1: it's definitely the most attractive use for his cash right now.
Speaker 1: And I think not only that, but he made a
Speaker 1: hint at like sometimes just reinvesting in their own businesses
Speaker 1: right now their internal opportunities do that repurchases or yeah,
Speaker 1: deploying it back into the businesses is better than buying
Speaker 1: other businesses. And for some shareholders who really support that path,
Speaker 1: I think that's largely because they think he's being careful
Speaker 1: at a time when valuation are still relatively high given
Speaker 1: um despite the tact that recently we've had a little
Speaker 1: more market turmoil given the Russian Ukraine complex. Yeah, more
Speaker 1: of a value play, a little bit more than we've
Speaker 1: seen in a while. Um Cat, thank you as always,
Speaker 1: catch a Glenscape financial portter at Bloomberg News, our go
Speaker 1: to on all things. We're in Buffett in Berkshire. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio, and we want to
Speaker 1: get to a story that's going to be in the
Speaker 1: upcoming issue of Bloomberg Business Week. Magazine. In fact, it's
Speaker 1: among the most read. It's also the Bloomberg Big Take today,
Speaker 1: and it's about Wall Streets, risky razor blade trade making
Speaker 1: a comeback. We're talking leveraged et F s. The story
Speaker 1: is by Danitzakova, also joining us as Joel Webber, editor
Speaker 1: at Bloomberg business Week, Danitza's cross asset reporter for Bloomberg News.
Speaker 1: She joins us on the phone from our London bureau.
Speaker 1: Joel is here with us in the flesh in our
Speaker 1: Bloomberg Interactive Broker studio Leverage et F Joel, maybe allow
Speaker 1: somebody to get to three x the gains or losses
Speaker 1: in a single day of one of these indicas. UM
Speaker 1: more fun when it's the gains, but the other side
Speaker 1: can also happen. Well, what could go wrong? Well, that's
Speaker 1: that's the problem, is that a lot can go wrong.
Speaker 1: And uh, many retail investors don't really know what they're
Speaker 1: getting it just so it sounds like something that maybe
Speaker 1: they want some exposure to. Um, maybe maybe it promises
Speaker 1: a quick buck uh and and oftentimes that can happen
Speaker 1: and successfully. But the downside is also um always at
Speaker 1: a risk coup. So Deniza walk us through why we
Speaker 1: should be caring about this and and and reasonably a
Speaker 1: trade right now? Yeah, of course. So, first, I've seen
Speaker 1: a really historic bloom in those products. We're talking in
Speaker 1: terms of total assets, in terms of volumes UM just
Speaker 1: as an example for total assets, we've seen a fifty
Speaker 1: five percent growth just over a year UM in the US.
Speaker 1: This of course comes as retail traders UM have been
Speaker 1: entering market more and more, as votility has been rising.
Speaker 1: And some people actually say that Volmageddon, which happened in
Speaker 1: two thousand eighteen with one volatility product, was kind of
Speaker 1: an infliction point, and a lot of people heard about
Speaker 1: those products and instead of being concious about it, they're like,
Speaker 1: maybe we should give it a try. UM. So, definitely
Speaker 1: retail traders love them. They offer big returns quickly, but UM,
Speaker 1: as we talk in article, they may be offering big
Speaker 1: losses as well if you don't use them carefully. But
Speaker 1: in terms of regulation um uh and experts, a lot
Speaker 1: of people worn about the risk of those products first
Speaker 1: because they're very complex. A second, they're like very sophisticated
Speaker 1: vehicles that rely on day trading and timing the market,
Speaker 1: which is such a difficult thing, so obviously a lot
Speaker 1: of people are failing at that and in the carry costs,
Speaker 1: which can obviously just eat a way at everything. So
Speaker 1: there's some interesting tickers and e t f s in
Speaker 1: this space. What what are some of the biggest and
Speaker 1: especially in the era of the meme trader, which one
Speaker 1: is kind of grew in popularity the most. Yeah, the
Speaker 1: biggest one for sure are those who bet against the
Speaker 1: navdack or the performance of the navack so sqq and
Speaker 1: q q q uh. These are for sure the biggest
Speaker 1: one in terms of trade, trade volume and assets. But
Speaker 1: for example, interesting one is uv x y UM that's
Speaker 1: a very popular one. That's also a votility product, so
Speaker 1: these are kind of the most popular one. For example,
Speaker 1: um our interviewee she bets on small caps. She uses
Speaker 1: the t c A which is against three times the
Speaker 1: inverse performance of the Russell two thousands. So pretty much
Speaker 1: you can bet against any index um and you can
Speaker 1: have a lot of leverage. In the US it's only
Speaker 1: two or three times, but in other places of the
Speaker 1: world you can get up to five and even twenty
Speaker 1: in case yeah, well uh look good when it goes
Speaker 1: up or or you know your way on the right
Speaker 1: side of the bat, right exactly, uh Danitza. Who who
Speaker 1: are using these products and who should be using these products?
Speaker 1: What do experts say? Yeah, well, retail traders are definitely
Speaker 1: using them a lot, Like we have JP Morgan data
Speaker 1: showing that among gts this is um their most popular choice.
Speaker 1: As as I said, um big returns really fast, so
Speaker 1: that's kind of very tempting. But in terms of who
Speaker 1: should be using them, when we go to those big providers,
Speaker 1: whether pro shars or others, they all say they're very,
Speaker 1: very sophisticated investors. They've been on the market for a
Speaker 1: very long time and they should know how to use them, um, etcetera, etcetera.
Speaker 1: But even the sec when they look at their products,
Speaker 1: they say they pose risks even for those investors because
Speaker 1: it's just such a big bet on the market that
Speaker 1: even if you're aphisticated investor, you can get it wrong.
Speaker 1: All right, So how likely is it that we get
Speaker 1: it wrong and this kind leader is a kind of
Speaker 1: financial crisis? Well, what do people think? It really depends
Speaker 1: on on the product. Like with votility, obviously, this this
Speaker 1: is cost system wide risk with betting on an index. UM.
Speaker 1: I guess the chances of kind of UH causing a
Speaker 1: system wide risk UM is very small. But if you
Speaker 1: can imagine just the basic number of how many active
Speaker 1: majors UM do better than UH passive index and I
Speaker 1: don't know what's the number, Maybe just imagine that type
Speaker 1: of leverage three times and getting it right. So the
Speaker 1: chances of being wrong, at least from my reporting, seems
Speaker 1: to be maybe higher than the chances of getting it right. Well.
Speaker 1: The other thing to keep in mind here is like
Speaker 1: there are E t F s and then there are
Speaker 1: you know, non E t f There's the E t
Speaker 1: n s and the E t p s which can
Speaker 1: often be where the where the more of the dangerous
Speaker 1: stuff live. You know, maybe you've heard about it, and
Speaker 1: maybe I can talk about it some more sometimes, but
Speaker 1: when when investors, you know, forever the distinction between the
Speaker 1: two has been sort of a concern. And how how
Speaker 1: risky of that from a regulatory standpoint, UM are are
Speaker 1: is the industry? Yes for sure, So most of the
Speaker 1: meltdowns have actually been happening, not necessarily in a TS
Speaker 1: but other products. UM. In terms of regulation, we haven't
Speaker 1: seen too many changes. In two thousand and eighteen, there
Speaker 1: was a derivative RUSE that kept that leverage at two
Speaker 1: times for e TFU. But they're often um, they're often addressed. Uh.
Speaker 1: They say they're enhanced protection, but currently anyone can access those.
Speaker 1: For example, guestly says that they pose risks to sophisticated
Speaker 1: investors to the system, but still there there there aren't
Speaker 1: too many restrictions for them. All right, we gotta run. Hey, listen,
Speaker 1: great story and it's going to be in the upcoming
Speaker 1: issue of Bloomberg Business Week magazine, Big Nakedive Denitza Sakova
Speaker 1: and Joel Webber of Bloomberg Business Week. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. We're getting a little lost
Speaker 1: with our next guest, Andy Brown, Yeah, because we just
Speaker 1: have so much He's fresh back from the Olympics. Yeah,
Speaker 1: we want to talk to him about that. We also
Speaker 1: want to talk to him about UM China and Russia
Speaker 1: and that relationship because Andy wrote about it in his
Speaker 1: Saturday column China has a big Ukraine problem, Bloomberg New
Speaker 1: Economy Editorial Director Andy Brown. He is here in our
Speaker 1: interactive Broker's studio. Good to have you here. Let's start
Speaker 1: with Ukraine and Russia first of all, because I feel
Speaker 1: like every discussion we have andy about the Russian invasion
Speaker 1: into Ukraine, we bring up China and what the relationship is?
Speaker 1: How do you see it? So the way I see
Speaker 1: it from China's perspective is that right from the start,
Speaker 1: China has miscalculated and blundered. And it begins with this
Speaker 1: extraordinary meeting between Sejimping and Vladimir Putin, literally hours ahead
Speaker 1: of the Olympic opening ceremony, and Putin gets c to
Speaker 1: sign up to this radical world changing agenda, which essentially
Speaker 1: declares that that China and Russia have no limits to
Speaker 1: their relationship. We've gone back to the sort of Sino
Speaker 1: Soviet Pact of the early fifties, and Putin hasn't mentioned,
Speaker 1: apparently to see that he's about to invade Ukraine, and
Speaker 1: so of course when he does, it looks for all
Speaker 1: the world as though China is complicit, or at the
Speaker 1: very least China has given Russia cover for this, and
Speaker 1: in the interim, China is arguing to the world and
Speaker 1: convincing itself apparently that there's no way that Russia could
Speaker 1: possibly invade Ukraine, even though the US is feeding China
Speaker 1: all kinds of high level UH intelligence, which suggests that
Speaker 1: that is precisely what was about to happen. So either way,
Speaker 1: if they knew, shame on China. If they didn't know, Like,
Speaker 1: don't you understand the relationship with Russia, right, they kind
Speaker 1: of couldn't win. They've been gained. They gained the China,
Speaker 1: China has been game and then they got everything else wrong.
Speaker 1: They the embassy of the Chinese embassy in Kiev told
Speaker 1: Chinese citizens in the country to waive the Chinese flag
Speaker 1: out the window, which would keep them safe, not understanding
Speaker 1: of course that the Ukrainians um took a pretty dim
Speaker 1: view of the fact that China wasn't prepared to condemn
Speaker 1: the invasion and in fact wasn't even prepared to call
Speaker 1: it an invasion. So where does this leave China and
Speaker 1: Russia in relation to the war in Ukraine and the
Speaker 1: support that China has for Russia as well an ally
Speaker 1: well for its thought, it blows apart all of China's
Speaker 1: most cherished foreign policy principles, starting with the fact that
Speaker 1: the idea that state sovereignty is Sacre saying, um, and
Speaker 1: it may actually be that the only way that China
Speaker 1: can extricate itself from this predicament that it's got itself
Speaker 1: into is to try to act now as some kind
Speaker 1: of a peacemaker. And indeed, with starting to see China
Speaker 1: making more constructive statements, how much does China need Russian
Speaker 1: oil and Russian energy access, Well, it certainly wants, it
Speaker 1: certainly needs Russian oil and and and it needs it
Speaker 1: even more on these terms because you know, we just
Speaker 1: saw today that um, Russia and China signed a big
Speaker 1: gas deal which will involve the construction of a of
Speaker 1: a of a gas pipeline through through Mongolia. And of
Speaker 1: course Russia is now so needy that any energy deal
Speaker 1: that the two sign a sign are going to be
Speaker 1: very much on on on China's terms. China may also
Speaker 1: get some good military technology out of this as well,
Speaker 1: but at what cost, At the cost potentially of blowing
Speaker 1: up relations with with the United States and up where
Speaker 1: does this leave Russia, as a country that was looking
Speaker 1: to have an ally in this well, very dependent, far
Speaker 1: more dependent than ever on China. China comes out of
Speaker 1: this looking very much like the senior partner and Russia
Speaker 1: is the junior associate, even though it has to be
Speaker 1: said that that you know Russian, that Chinese influence on
Speaker 1: on Russia when it comes through Ukraine is pretty limited,
Speaker 1: and it's so tricky. Like so, I do wonder Fressia
Speaker 1: continues to we don't know how this is going to
Speaker 1: play out, but let's say it goes on a little
Speaker 1: bit longer. It's just odd. Does China, though, risk cutting
Speaker 1: itself off from the rest of the world or is
Speaker 1: the rest of the world man enough to cut itself
Speaker 1: off from China if China continues to have some kind
Speaker 1: of relationship with a very very tricky Russia to the
Speaker 1: miscalculation in the blundering. I think China was very surprised
Speaker 1: at the solidarity that the West showed in the face
Speaker 1: of naked Russian aggression. I think it was shocked by
Speaker 1: the scope of this actions, and now it's very worried
Speaker 1: that it's going to get caught up in secondary sanctions
Speaker 1: if it if it tries to throw Russia or a lifeline.
Speaker 1: Part of the discussion last week included the status of
Speaker 1: Taiwan and what happens in the wake of Russia's invasion
Speaker 1: in Ukraine. Bring us up to what's your read on that.
Speaker 1: You know, people will say that, you hear people say
Speaker 1: things like that the Russian invasion of Ukraine is a
Speaker 1: warm up for China's invasion of Taiwan. The situation is very,
Speaker 1: very different. China is not going to be um pursuing
Speaker 1: a Taiwan strategy based on a Russian timeline. Militarily, the
Speaker 1: situation is quite different. Putin can roll his tanks across
Speaker 1: a land border she jumping if he wants. Taiwan is
Speaker 1: going to move armies across ninety miles of ocean um
Speaker 1: and it's going to take over an island the size
Speaker 1: of the Netherlands that's been digging in for the last
Speaker 1: seventy years. It's economic suicide as well. All right, we'd
Speaker 1: be remiss. Sorry. Olympics, your takeaway, You were over there
Speaker 1: reporting within BC coverage just quickly. Technically, China pulled off
Speaker 1: a great games. It was a very very weird atmosphere,
Speaker 1: particularly including for me. I lived in China for twenty
Speaker 1: years and I went to China. I didn't really go
Speaker 1: to China because from cage to cage looked at the
Speaker 1: country through wire mesh fences, you talked about landing in
Speaker 1: the Chinese airport. Nobody was there leaving leaving forgive me.
Speaker 1: We were the only six people in the airport. It
Speaker 1: had a one hundred million passenger through two thousand nineteen.
Speaker 1: It's hard to get your head around. Andy Brown, Thank
Speaker 1: you so much, Editorial director of a Bloomberg New Economy.
Speaker 1: This is Bloomberg. Yeah, but you let me drive. Oh no,
Speaker 1: no, no no, no, please, I'll do the ride gravels. I
Speaker 1: want to drive. It's a good question. This is the
Speaker 1: drive to the globe down on Bloomberg Radio to make
Speaker 1: dinner plans in the break. Let's get to it. Let's
Speaker 1: get to the drive to the clothes on this Monday.
Speaker 1: It's been another volatile session. We've certainly seen that play
Speaker 1: out as we continue to watch, as we are in
Speaker 1: day number five of the Russian invasion of Ukraine. Well,
Speaker 1: I want to bring in Dan Pipitone, the co founder
Speaker 1: and CEO of Trade zero America. He joins us on
Speaker 1: the phone from Brooklyn. Dan's favorite of quick take stock.
Speaker 1: We have him come on frequently to talk about what's
Speaker 1: going on in the Trade zero pavorite of ours. Oh well,
Speaker 1: he's also a favorite. He's a favorite of our Okay,
Speaker 1: well we're fighting over let's dead. I want to I
Speaker 1: want to hear your thoughts on on what you're seeing
Speaker 1: on the trade zero platform and the activity that you're seeing. Um,
Speaker 1: how investors are thinking about the volatility, because we've got
Speaker 1: a really interesting comment from JP Morgan Chase CEO and
Speaker 1: share Jamie Diamond which in the day oh well, the
Speaker 1: one about the volatility not being indicative to the economy.
Speaker 1: He said, it's still a strong economy. Well, there is.
Speaker 1: And and for us, you know, we we we out
Speaker 1: traders and our customers really look for that InTru day
Speaker 1: volatility and you know, we've seen some extreme examples of
Speaker 1: that in January, sort of mid to end of January,
Speaker 1: beginning of February, cooling off, you know, waiting for some
Speaker 1: geopolitical events to either happen not happen. And as we've
Speaker 1: seen in day five of this Russian invasion, Uh, that
Speaker 1: has definitely created an impetus for you know, for more volatility.
Speaker 1: We've seen some some historic swings over the last few days. Uh,
Speaker 1: you know, right on was it Wednesday or Thursday when
Speaker 1: they first announced the invasion or they first started Uh,
Speaker 1: you know, it's it's it's seventeen or eighteen hundred points
Speaker 1: swing intra day. Uh. And so volatility is definitely back.
Speaker 1: We're seeing more of it today. Uh, you know, down
Speaker 1: five hundred points. The mark was actually positive for a minute. Um.
Speaker 1: So yeah, I mean this is this is this is
Speaker 1: the trader's market for sure. Yeah. We had a couple
Speaker 1: of days where the NAZAC one hundred. I think there's
Speaker 1: two days where we had like a thousand points swing.
Speaker 1: I mean it has been tremendous al right, So investors
Speaker 1: are nervous and we're reacting, you know, like the FED,
Speaker 1: we're you know, day to day tracking information right, data driven. Uh.
Speaker 1: And that's what it feels like the markets about what
Speaker 1: do you see on your on your platform, Dan, about
Speaker 1: where people were investors specifically want to be Well, we're
Speaker 1: seeing them you know, piling a lot more on the
Speaker 1: short side, especially less week and a half or so. Um.
Speaker 1: You know. We that's one of our our ms is
Speaker 1: facilitating you know, equal access on the long and short side,
Speaker 1: and so having that extra tool in their belt, folks
Speaker 1: have been better able to navigate sort of some of
Speaker 1: these wild swings and not just hoping that you know,
Speaker 1: you pick the right stock and it goes up. So
Speaker 1: for us, uh, you know, the names that you would expect, uh,
Speaker 1: the names that have been in the headlines lately. We've
Speaker 1: seen a shift really in January, folks moving away from
Speaker 1: some of these you know, low price securities and more
Speaker 1: into some of the larger tech names. A lot of
Speaker 1: those have really come down a lot in the in
Speaker 1: January and February. So we're seeing a lot more opportunity
Speaker 1: on some of these higher priced tech stocks that have
Speaker 1: come down a bunch, and people are really flocking to
Speaker 1: those over the last few weeks. We're saying, like who
Speaker 1: the usual suspects are? Can you can you? Can you
Speaker 1: dig a little um meta apple um? Uh to name
Speaker 1: a few um. Today we're looking at this large cap
Speaker 1: stock e P a M. There's really been been crushed
Speaker 1: over the last few worst performing, the worst day ever
Speaker 1: for the company and shout about half its value. Yep.
Speaker 1: So you know, in the tide to Russia, get trying
Speaker 1: to get folks out of Russia and the Ukraine has
Speaker 1: relates to their development teams. So this has been a
Speaker 1: hot one for US today. Folks really participating on the downside.
Speaker 1: Dan when you say Meta Apple, Are you saying investors
Speaker 1: piling in on shorts on those names or no. I
Speaker 1: think they've come and focus more to trade them and short.
Speaker 1: The volatility on these have been sort of you know,
Speaker 1: small cap esque if you will. Yeah, Hey, Dan, today's
Speaker 1: big take here at Bloomberg is all about leverage dtfs.
Speaker 1: And I'm wondering if you see and you've seen an
Speaker 1: uptick on an activity on the platform of leverage gtfs,
Speaker 1: you not, And you have something that we offer, but
Speaker 1: and again depending on the depending on the e t F,
Speaker 1: we may or may not have margin on it, depending
Speaker 1: if it's two or three x. But this has not
Speaker 1: been one of the ones that with the lebritytf haven't
Speaker 1: been in play with us. So last week or so interesting.
Speaker 1: So okay, I feel like the next couple of weeks
Speaker 1: are going to be interesting. We've got J. Powell up
Speaker 1: on Capitol Hill, Humphrey Hawkins testimony, We've got some big
Speaker 1: economic reports we're gonna get I think another print, a
Speaker 1: CPI print coming up, um, and then you've got the
Speaker 1: Fed meeting. So could we see Dan essentially kind of
Speaker 1: a trade here and then a trade posts that March
Speaker 1: meeting that maybe settles things down, and I guess all
Speaker 1: bets off in terms of it depends also what happens
Speaker 1: with Russia and Ukraine. Yeah, it's really gonna depend on
Speaker 1: what we what we see happened, and how this really
Speaker 1: shakes out. I think, you know, without Russia, we're looking
Speaker 1: at we're looking at potentially seven rate hikes this year,
Speaker 1: which obviously creates some headwinds in the markets generally speaking,
Speaker 1: but these extra geopolitical events, I think it's more of
Speaker 1: a wait and see at this point. Um, you know,
Speaker 1: with with with with the inflation, with inflation that you know,
Speaker 1: sort of historic hizes in the last over the last
Speaker 1: three of over the last month and a half, levels
Speaker 1: we haven't seen over the last three or four decades.
Speaker 1: I think that interest rates, you know, rising interest rates
Speaker 1: is needed, but it's gonna be interesting to see how
Speaker 1: inflation potentially settles off and what other actions that the
Speaker 1: Fed will take UH to to help mitigate that. Well,
Speaker 1: I'm I'm wondering. I want to end Dan just by
Speaker 1: talking a little bit about retail investors, because you have
Speaker 1: a unique you have an unique window into retail investors
Speaker 1: and what they're doing on the platform and you know,
Speaker 1: we talked to you a lot last year about meme stocks,
Speaker 1: and I'm wondering if you're still seeing trading around those names,
Speaker 1: around the historical memes like the AMC and game stops.
Speaker 1: You know, there have been flare ups over the last
Speaker 1: you know, year and a half. I would say those
Speaker 1: stocks are still in focus. They're still in play. I
Speaker 1: think whenever there is any news that gives uh, you know,
Speaker 1: any one of those meme meme names, uh, you know,
Speaker 1: any sort of pop, the short sellers are piling in uh.
Speaker 1: And and likewise, when you have you know, a big drop,
Speaker 1: you know, folks are betting in on the longside and
Speaker 1: kind of bringing them back up. Um. So they're still there.
Speaker 1: But in terms of the the earthquake, if you will,
Speaker 1: that we saw last year about a year ago right now,
Speaker 1: we haven't really seen that happen again. But those stocks
Speaker 1: have remained sort of in play as as as ideas
Speaker 1: and trading prospects. All right, I'll leave it there, Hey, Dan,
Speaker 1: thank you so much. As always. Dan Pippotone he's co
Speaker 1: founder and CEO at Trade zero America on the phone
Speaker 1: from Brooklyn and certainly a favorite favorite of ours, And
Speaker 1: I know for you over in Crickta, we can share,
Speaker 1: we can show there's enough Dan Pippotone to go around.
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