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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com Slash podcast. Let's talk retail because

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Speaker 1: we had Bed Bathroom Beyond, which by the way, is

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Speaker 1: based in Union, New Jersey. In my backyard, we've got

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Speaker 1: Amazon laneoff people. So jobs right, yeah, I mean we

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Speaker 1: don't know. That's right, that's eight jobs. So let's roundtable

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Speaker 1: a little bit here on the retail space. We can

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Speaker 1: do that with Punum Boyle. She covers all the retail stuff.

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Speaker 1: Don't forget intelligence. Yeah, we'll talk about that. John Edwards,

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Speaker 1: the third team leader, covers the US consumer retail luxury space. Um, John,

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Speaker 1: thanks so much for coming here in our Bloomberg and

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Speaker 1: Actor Broker studio. You get a gold Star and my

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Speaker 1: friend Um talk to us about Bed Bathroom Beyond. This

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Speaker 1: is just there's They have news today about a going

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Speaker 1: concern issue. Um. Is this this poor management or is

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Speaker 1: this some symptom of just greater retail. Do you think, Yeah,

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Speaker 1: it's it's a combination of things. I mean, it's it's definitely. Um,

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Speaker 1: you know, they're they're affected by the things that are

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Speaker 1: affecting retail broadly, but they do have some company specific

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Speaker 1: problems that have been plaguing them for years and if

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Speaker 1: not really gotten any better. Uh. You know. One of

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Speaker 1: one of the main issues they had was that they

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Speaker 1: made this big push toward private label goods, you know,

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Speaker 1: which in theory, uh, you know, is a positive for

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Speaker 1: a retailer if they can get people buying you know,

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Speaker 1: private label products that they create themselves, that obviously boost

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Speaker 1: their margins by you know, um, reducing the things that

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Speaker 1: they have to buy from others. Are they quality? They

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Speaker 1: Kirkland well products? That's that is that's the issue. They

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Speaker 1: are not Kirkland levels. Uh. No, they they had just

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Speaker 1: a variety of problems with with introducing these products under

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Speaker 1: a you know, now three CEOs ago. Uh. They brought

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Speaker 1: in uh, guy Mark Tritton from from Target with who

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Speaker 1: had you know, extensive experience, successful experience there with private label,

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Speaker 1: but you know, he had execution problems at bed Bath

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Speaker 1: and Beyond as well. You know, he in some ways

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Speaker 1: tried to apply too much of the sort of identical

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Speaker 1: target playbook to uh, you know, to bed Bath, which

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Speaker 1: didn't have the internal infrastructure to support a lot of

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Speaker 1: his his goals. So so, Pum, I want to bring

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Speaker 1: you in here, you know, as we're talking about bed

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Speaker 1: Beth and beyond, I love to just pull it back

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Speaker 1: the lens a little bit and just talk about retail

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Speaker 1: in general. Give us your sense of just the consumers

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Speaker 1: seem strong. We got some good jobs data again today. Um,

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Speaker 1: it seemed like the hollid season was pretty good. I'd

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Speaker 1: love to get your assess. And because you see so

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Speaker 1: many retail companies to talk to so many of those investors,

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Speaker 1: what are you hearing about the environment out there? Yeah,

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Speaker 1: so the environment is still mixed. Really if you think

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Speaker 1: about what we saw were the holiday we did have

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Speaker 1: a good holiday season. Adobe just came out with their

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Speaker 1: e commerce UM numbers that holiday sales were up three

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Speaker 1: point five percent and that's better than they had estimated.

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Speaker 1: So overall good. But you know, I think when we

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Speaker 1: start to see earnings later this month and into February,

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Speaker 1: there will be mixed treats. Because remember there was a

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Speaker 1: snowstorm right in the Northeast right ahead of the Christmas season,

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Speaker 1: which probably truncated a lot of the sales that would

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Speaker 1: have been there and may have really prompted more gift

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Speaker 1: card sales well, because people couldn't get out and get

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Speaker 1: to the stores. They couldn't get out and whatever was

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Speaker 1: coming from online probably couldn't make it there because of

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Speaker 1: the snow storm. So really a double whammy there where

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Speaker 1: you couldn't shop online and you couldn't shop in stores.

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Speaker 1: Outside of that, the consumer, yeah, they're they're holding up,

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Speaker 1: but they're spending where they want to spend. So really

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Speaker 1: you have to be the brand that they're seeking for

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Speaker 1: you to get the bus this and do well. And

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Speaker 1: and there are brands out there that are that are

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Speaker 1: doing well. You know, we think at Sea is one

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Speaker 1: of them on the online space that continues to drive

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Speaker 1: shoppers to its website because it's unique in what it

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Speaker 1: offers and there's really no one else like them. Yeah,

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Speaker 1: it's you know, this is interesting. I've been looking lately.

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Speaker 1: I've been trying to focus on buying products that are

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Speaker 1: made in America or you know, made in Europe, like

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Speaker 1: a leather jacket. Well, for example, those are handmade in Scotland.

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Speaker 1: But if you look on Amazon, I've noticed nearly everything

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Speaker 1: on Amazon is made in China. I don't know why

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Speaker 1: I don't just drop the middleman and go straight to

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Speaker 1: Ali Baba because Jeff bezos factory is in China. Um.

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Speaker 1: Then I discovered Etsy, where you can find things that

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Speaker 1: are made by people who get a working wage or

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Speaker 1: at least run their own businesses, which made me happy.

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Speaker 1: But the user experience isn't quite nearly as good. Um

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Speaker 1: is there is there any uh sense that deglobalization is

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Speaker 1: coming to Amazon? Are they? Are they at all affected

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Speaker 1: by the US China the poor trade relationship? I mean,

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Speaker 1: I think all of retails is affected by that. It's

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Speaker 1: not just Amazon, right, we import. Most of what we

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Speaker 1: consume is imported, and China is a big area where

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Speaker 1: we are dependent on So that doesn't just impact Amazon

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Speaker 1: and impact all of retail. Really, I don't mind importing

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Speaker 1: stuff if if I'm importing it from h a producer

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Speaker 1: that pays a decent wage, maybe uses union labor, you

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Speaker 1: know where I'm not worried about sweatshops or kids making

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Speaker 1: this stuff. Hey, John, I know in your beat you

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Speaker 1: cover luxury I can't. I'm so surprised how luxury remains

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Speaker 1: so strong cycle in, cycle out. What are we hearing

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Speaker 1: from the luxury brands these days? Uh? Yeah, they continue

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Speaker 1: to hold up. I mean, I think what we're starting

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Speaker 1: to see is, you know, some of the entry level

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Speaker 1: luxury goods, you know, some of your sort of accessories,

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Speaker 1: your belts, your uh Gucci shower shoes, your things, all that,

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Speaker 1: are you know, starting to weaken a bit, because you know,

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Speaker 1: those are the luxury customers who are most exposed to

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Speaker 1: uh you know, feeling the pinch of inflation. But you know,

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Speaker 1: the rich are still rich and uh you know, still

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Speaker 1: want what they want. You know. A Astin was saying,

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Speaker 1: they're not going to bed bath and beyond, though, John,

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Speaker 1: they cover both luxury and bed bath and beyond. We

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Speaker 1: cover it all. I was thinking about in in the

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Speaker 1: bigger picture of the whole Wall Street bets phenomenon, the

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Speaker 1: meme stock thing that we covered a couple of years ago.

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Speaker 1: Are there companies out there that should have gone bust

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Speaker 1: but didn't because of buyers of stocks with their with

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Speaker 1: their stinnies. I mean, I you know, I certainly can't

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Speaker 1: call out any boy name, but yeah, you could probably

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Speaker 1: say that there are some companies who's uh, poor Wormans

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Speaker 1: was papered over for a while by the fact that, yeah,

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Speaker 1: they got, you know, caught in the meme wave the

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Speaker 1: road that as long as they could. It's funny. The

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Speaker 1: bed bath and beyond near me is right next to

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Speaker 1: the game stop in this little strip mall that you

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Speaker 1: want to kind of avoid it all calls right, you

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Speaker 1: know exactly, there's a harsh fluorescent lighting everywhere if they

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Speaker 1: leave the lights on at all. And alright, some news

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Speaker 1: just crossing the Bloomberg terminal. I want to get it

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Speaker 1: out there. Putin orders. January six, seventh, ceasefire in Ukraine.

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Speaker 1: The Kremlin says, well more reporting on that, but that's

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Speaker 1: gets your attention there. Put um um In terms of

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Speaker 1: the retail space here is now that we're kind of

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Speaker 1: through the holiday season, give us a sense of kind

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Speaker 1: of how the inventory levels are. I know that was

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Speaker 1: an issue for a lot of retailers, leading them to

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Speaker 1: maybe really be aggressive on some of the promotions. Here,

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Speaker 1: how are inventories looking. Inventories are still a little bloated.

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Speaker 1: While sales were good, they entered inventories really high. So

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Speaker 1: we think January will be the key month for them

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Speaker 1: to really press on promotions and clear out all that

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Speaker 1: inventory to make room for a spring goods. But this

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Speaker 1: is the This is a clearance month for retail, and

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Speaker 1: we expect retailers to push as much inventory as they

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Speaker 1: can out of their system this month. Is it going

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Speaker 1: to be harder for our is someone like Target who

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Speaker 1: had a difficult time managing inventory, You're gonna be doing

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Speaker 1: more discounting. There will be more discounting across retail right now,

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Speaker 1: just because the inventories have to get out. And even

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Speaker 1: if you are Lena on inventory, if your neighbor is

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Speaker 1: discounting aggressively, in order for you to get wallet chair,

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Speaker 1: you also need to increase your promotional activity. That's just

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Speaker 1: how retail works. Hey, John. Lastly, are there still too

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Speaker 1: many stores in the US? Do you think because we've

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Speaker 1: seen so many store closures and Punam has been, you know,

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Speaker 1: writing a lot about that in her research, and we

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Speaker 1: probably had that accelerator in the pandemic. What do you

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Speaker 1: hear from some of the retailers you guys cover, Yeah, well,

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Speaker 1: it's um You know, for one thing, there are still

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Speaker 1: stores being open, but most of them are dollar stores. Okay,

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Speaker 1: that's that's an area where the physical retail is still

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Speaker 1: expanding rapidly. Um. But yeah, a lot of the you know,

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Speaker 1: sort of mid level and higher end um retailers are

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Speaker 1: becoming more selective about where they place there, uh, their

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Speaker 1: physical locations and uh you know, we also see companies

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Speaker 1: doing things like converting parts of their stores to online

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Speaker 1: fulfillment centers, you know, because there's too much online stuff.

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Speaker 1: I'm looking for pickleball rackets, find them in a physical store.

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Speaker 1: Follow from who follows fans better than you. You've got

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Speaker 1: to get them from Jeff Bezos, who to get some

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Speaker 1: sources them directly in China. All right, do you wear

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Speaker 1: the leather jacket when you're playing? Probably? John Edwards the

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Speaker 1: third he's a team leader US consumer Retail for Bloomberg

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Speaker 1: News and put them boil covers all things for Bloomberg Intelligence.

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Speaker 1: Out in Las Vegas, Math, there's a little technology conference

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Speaker 1: called the Consumer Electronics Show. Gets a couple hundred thousand

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Speaker 1: people out there to see all the new cool gadgets

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Speaker 1: and stuff like that. It's really become, i think an

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Speaker 1: automotive conference. They have such a huge presence there. The

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Speaker 1: automotive industry. At the cs UH convention, Martin Fisher board member,

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Speaker 1: z F Group and Bloomberg Technology host ed love. Though

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Speaker 1: he's out in Vegas, he joins us. They both join

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Speaker 1: us to discuss what's going on out there from the

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Speaker 1: auto perspective. Uh, Martin Fisher, thanks so much for joining

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Speaker 1: us here. ZF Group, the world's largest automotive supplier mobility company.

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Speaker 1: What do you guys doing at CES this year? Why

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Speaker 1: is that and why is this a convention important to

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Speaker 1: you guys? I mean, FS for us has always been

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Speaker 1: the plower place to present our large scale innovations and

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Speaker 1: also some smallest smart ideas, and that's what we're up

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Speaker 1: to this year as well. So we focus on the

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Speaker 1: key trends of automated driving and electrification and I have

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Speaker 1: good news to present in both areas. So what well?

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Speaker 1: First of all, I gotta say your resume looks awesome

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Speaker 1: from a car guy perspective. You were at vd Siemens Video,

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Speaker 1: you were the CEO at Hella. I was just searching

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Speaker 1: for some of their products online. General manager at Borg Warner,

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Speaker 1: famous for making the turbos. Z F Group makes the

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Speaker 1: best transmissions in the world. Um, what a sweet career,

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Speaker 1: you've had what I mean, what gets boring? Right? What?

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Speaker 1: What gets you excited? What do you what do you have?

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Speaker 1: What are you showing at CES? Yeah, the whole transformation

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Speaker 1: that we go through is really what keeps me exciting.

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Speaker 1: And we have a couple of highlight topics out here.

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Speaker 1: We are revealing later today our latest generation autonomous shuttle

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Speaker 1: and that's really for me as an engineer. And if

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Speaker 1: that strong automotive background, really a highlight autonomous shovel means

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Speaker 1: we bring up a vehicle that you know, it's about

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Speaker 1: twenty people, it's electrically driven, and it's fully autonomous, so

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Speaker 1: it's gonna blend nicely and safely into the traffic. And

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Speaker 1: that's how a highlight presentation for today. Who who? Who's

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Speaker 1: your customer? There? Is it like the Walt Disney Disney

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Speaker 1: World so they can shuttle people around? Or is it

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Speaker 1: a corporate campus a college campus? I mean, Vegas seems

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Speaker 1: like a good place you can ferry at Ludlow back

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Speaker 1: and forth from from the fair Grounds to his suite

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Speaker 1: at the Villaggio or yeah, absolutely no, those are already

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Speaker 1: very good use cases. Plus it is also in addition

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Speaker 1: to the public transportation systems. So when you go into

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Speaker 1: a metro pilotan areus and you have subway systems, conventional

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Speaker 1: bus systems, where we fall short of is typically the

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Speaker 1: last mild transportation solutions. So how do I get from

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Speaker 1: the subway station into my neighborhood? And that's where these

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Speaker 1: shuttles can help. All of the business cases are l

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Speaker 1: You the technology reporter for Bloomberg News, You've seen it all.

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Speaker 1: You you have to be at cees from start to finish.

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Speaker 1: What's your what's your sense of what's kind of some

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Speaker 1: of the highlights out there. It's it's interesting to have

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Speaker 1: Martin on the program. Good morning to Martin. You know

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Speaker 1: Matt's riot. He is a brilliant cv zs so important

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Speaker 1: in globals. Most White Chaine for me, like the famous

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Speaker 1: series Let's Get Real, guys, Let's get real. And the industry.

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Speaker 1: You know, when I was here in we were talking

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Speaker 1: about robotaxis and we were talking about autonomy, and the

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Speaker 1: bubbles burst a little bit in that time. But I

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Speaker 1: think what's interesting about theF is that they have a

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Speaker 1: track record with existing shuttles that working very narrowly defined settings,

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Speaker 1: specific lanes in g O fence locations like campuses and

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Speaker 1: Martin correct me if I'm wrong, but I think that

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Speaker 1: you know, this is kind of an extension of that. Right,

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Speaker 1: we're talking about thousands of shuttles with beef over a

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Speaker 1: number of years, although I'd be interested to know how soon,

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Speaker 1: how many years is this going to happen, because that

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Speaker 1: that's really the conversation here at the S like, let's

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Speaker 1: let's start announcing some things that are actually going to

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Speaker 1: materialize into the real one. Yeah, you're right on its

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Speaker 1: solid scaling, and that's how we approached the whole tubbles.

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Speaker 1: As you said, we have frost solutions in operations for

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Speaker 1: years now and they are inddicated lanes, controlled environment, but

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Speaker 1: for us to experience the through stuffs and now we

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Speaker 1: go into a traffic operations with the lately announced shuttle.

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Speaker 1: Your question, how is it going to hit the market?

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Speaker 1: Also out in Vegas yesterday we announced a new partnership

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Speaker 1: with Beep Beep as an operator for such autonomous shuttles,

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Speaker 1: and that agreement enables us to deliver a couple of

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Speaker 1: thousand shuttles into the US market. In terms of timing,

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Speaker 1: we will have first vehicles delivered in and then I'm

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Speaker 1: going to ramp up in Are you talking with any governments?

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Speaker 1: I mean, I know that I'm sitting right here. In Manhattan.

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Speaker 1: There's a bus that just every day goes back and

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Speaker 1: forth along Central Park, doesn't change the route, isn't going

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Speaker 1: very far, takes about twenty or thirty people. Uh why

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Speaker 1: don't you talk to the m T A. Yeah, no,

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Speaker 1: that's happening, and we do it here and we as

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Speaker 1: through partners through BEEP in this case, UM in Europe

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Speaker 1: where we are home based, we go also straight into

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Speaker 1: these public government discussions. So it's a new avenue for us.

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Speaker 1: And in Vegas, what's the fielder as a crowded is

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Speaker 1: our people back? Is a pre pandemic? Do you think? Yeah? Yeah,

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Speaker 1: I think it is. I think you know, I need

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Speaker 1: to talk to the organizers about the official number. And

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Speaker 1: actually I'll be honest with you, the c P A

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Speaker 1: a pretty kg about it and have been since. But

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Speaker 1: you know, my sense of being here is that we're

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Speaker 1: back to full sense c S. I think for like

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Speaker 1: r global audience, right, you have to appreciate what it is.

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Speaker 1: It is a lot of fun. You know, this is

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Speaker 1: Las Vegas, right, I won't tell you what I did

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Speaker 1: last night, but I did a lot of work late

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Speaker 1: into the evening. Yeah, but you know a lot of

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Speaker 1: bankers that there are bankers here, there are investors here,

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Speaker 1: there are there executives, and I bet you Martin won't

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Speaker 1: give us any names. But it's a great chance to

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Speaker 1: speed date everyone that you want to see. You can

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Speaker 1: see in the space of three days. And that's really

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Speaker 1: what it's about. It's about getting all your client meetings

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Speaker 1: in doing some deals. Maybe Martin's done some last night

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Speaker 1: over dinner. I don't know the question for him, but

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Speaker 1: that's kind of the vibe to alright, good stuff. Martin Fisher,

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Speaker 1: member of the board of Management at ZF Group and

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Speaker 1: at the Low at a Ballooon News in Vegas at

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Speaker 1: the ce S. Natalie Trevor Thick, head of investment grade

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Speaker 1: credit strategy at paid In in in Regal. So, Natalie, how's

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Speaker 1: my analysis? Hold up? It can't be any worse. Is

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Speaker 1: got to be better? What's your outlook? Yeah, you're absolutely right.

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Speaker 1: We're at a much better starting point here. On bonds,

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Speaker 1: you can buy one year tea bills for four and

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Speaker 1: a half percent, or corporate bonds for five and a

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Speaker 1: half percent. So we think fixed income can go back

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Speaker 1: to be being the safe haven asset class um as

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Speaker 1: people expect and deliver nice positive returns in two thousand

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Speaker 1: and twenty three. So, um, we're talking about treasuries, but

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Speaker 1: what about corporates. Um. Obviously, fixed income is a very

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Speaker 1: big universe. What do you like the best? Yeah, corporate

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Speaker 1: bonds are very attractive, particularly in the front end of

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Speaker 1: the curve. You can get yields five and a half

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Speaker 1: even six percent in investment grade credit. That's nearly double

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Speaker 1: what you can get in high yield the couple of

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Speaker 1: years ago, and high yield yielding you know, around nine.

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Speaker 1: So given a strong fundamental backdrop, corporations really aren't in trouble.

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Speaker 1: They may see some margin compression which is hurting their

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Speaker 1: equity performance, but from a bond perspective, they're still quite strong.

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Speaker 1: So we think investing in credit is a nice place

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Speaker 1: for investors to park their money if they're worried about

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Speaker 1: a recession or inflation and volatility and the equity markets well,

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Speaker 1: and as you go further out the risk spectrum, you've

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Speaker 1: got to start to worry about defaults. Apparently covenants have

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Speaker 1: gotten a lot weaker over the past few years investors

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Speaker 1: search for hunt for yield. Um, what are your concerns

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Speaker 1: in three are defaults? Yeah, we really don't see defaults

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Speaker 1: moving materially higher off of their current level. Maybe they

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Speaker 1: get up to four per cent, and there are some

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Speaker 1: concerns in the triple B a triple C sector, but

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Speaker 1: for the most part, high yield companies have extended their

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Speaker 1: maturities so they don't really have a hanging debt wall,

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Speaker 1: so it's pretty expensive for them to issue right now,

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Speaker 1: and most companies can hold off to issuing until two

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Speaker 1: thousand twenty four or later, so we don't think the

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Speaker 1: default story is a big story for two thousand twenty three,

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Speaker 1: and most of these companies can weather mild recession. Natalie,

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Speaker 1: In terms of you know an investment grade side, Um,

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Speaker 1: what are some of the sectors that you guys are

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Speaker 1: are favoring right now? We still favor some of the

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Speaker 1: defensive sectors, such as pharmaceuticals and healthcare utilities, But we

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Speaker 1: also think the banking sector has cheapened up materially and

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Speaker 1: these banks still have strong balance sheets, so we're comfortable

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Speaker 1: that they aren't going to see the kind of uh

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Speaker 1: financial crisis they saw on the Great recession. Even if

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Speaker 1: we were to go into another recession, and they offer

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Speaker 1: pretty Commumpelly meals in duration, how far are you willing

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Speaker 1: to go out here? Because, as you mentioned, on a

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Speaker 1: two year note, you can get four point four six

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Speaker 1: percent here and a four to your treasury. So on

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Speaker 1: the corporate credit side, how far are you guys willing

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Speaker 1: to go out? We are willing to buy thirty years

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Speaker 1: typically higher quality bonds. There there is quite an inverted

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Speaker 1: treasury curve, you know, as two years are yielding nearly

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Speaker 1: four and a half percent and thirty years are only

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Speaker 1: at three point eight percent. But investors want to lock

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Speaker 1: in these higher yields because if they think that the

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Speaker 1: Fed's going to pivot eventually, maybe not this year, but

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Speaker 1: and be cutting rates, they want to lock in these

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Speaker 1: longer yields further out the curve. So we are seeing

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Speaker 1: quite a lot of demand for corporates in ten and

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Speaker 1: thirty years. Yeah, we are hearing more and more people

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Speaker 1: talk about the possibility of a pivot not coming in

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Speaker 1: until what's your view? We agree with that view. But

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Speaker 1: despite how hard the FED tries to deliver a hawkish signal,

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Speaker 1: investors just aren't buying it. They seem to be in

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Speaker 1: the camp that inflation is coming down, the Fed's getting

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Speaker 1: it under control, and we are going to keep rates

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Speaker 1: higher for longer. So, you know, we had a little

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Speaker 1: bit of a rate reversal today, but what we've seen

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Speaker 1: consistently since, uh the beginning of November, is that rates

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Speaker 1: are moving lower. Not only when you go to talk

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Speaker 1: to your clients. What's kind of some of the big

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Speaker 1: issues that they're asking you? Again, two was such a

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Speaker 1: you know, really difficult year for fixed income investors. They've

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Speaker 1: never seen it before. What are they asking you these days?

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Speaker 1: Most investors understand what happened in two thousand twenty two

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Speaker 1: given the extreme raise and interest rates, and investors are

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Speaker 1: more looking for opportunities right now, asking where in credit

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Speaker 1: market should they get involved, just because we do expect

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Speaker 1: the volatility to continue, particularly in equity markets, and they

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Speaker 1: arguing it as a safe haven asset class once again.

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Speaker 1: I'm excited, you know, because for the past by some

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Speaker 1: bonds a couple of decades, I've been thinking my whole

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Speaker 1: future relies on the stock market, and now it seems

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Speaker 1: like I can lock in some real returns and then

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Speaker 1: sleep easier exactly two year treasuries. Four am I am

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Speaker 1: I off base here, Natalie mean, is this the case?

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Speaker 1: I'm you know, I'm forty nine years old, happen to

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Speaker 1: have a young kid, so I gotta I gotta work

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Speaker 1: for the next at least twenty years. But is that

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Speaker 1: the situation people my age are going to be in.

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Speaker 1: Are they gonna start investing in fixed income and and

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Speaker 1: not have to worry so much about the volatility of

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Speaker 1: the stock market? Exactly, it's sleep at night. You can

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Speaker 1: get five percent just and cupons alone. And if you

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Speaker 1: actually do believe that that's gonna pivot and start cutting

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Speaker 1: rates even next year, then you can have the positive

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Speaker 1: total returns from declining interest rates and price appreciation on

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Speaker 1: top of that five percent. So I think we're looking

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Speaker 1: at mid single digit returns and credit this year and

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Speaker 1: maybe high single digit to double digits in the years ahead.

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Speaker 1: Are your portfolio managers are they kind of running recession

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Speaker 1: scenarios here where they have to really start thinking about

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Speaker 1: covenants and interest coverage and you know that that kind

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Speaker 1: of thing. Are they running those recession models kind of

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Speaker 1: right now in case we do have some issues. Absolutely,

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Speaker 1: and we're always looking at those contingencies and evaluating evaluating

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Speaker 1: aiding it on a bond by bond basis. But we

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Speaker 1: really don't think that's going to be a major concern.

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Speaker 1: So we do like having a defensive mix in our portfolios,

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Speaker 1: but we're looking to extend out the respectrum and credits

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Speaker 1: where we feel pretty confident. You gotta want to push

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Speaker 1: on covenants a little bit more, um Am, I right,

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Speaker 1: that they've become a little bit too Uh well, I

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Speaker 1: guess advantageous to the borrower over the past couple of years. Yes,

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Speaker 1: boards have been getting away with a lot. So that's

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Speaker 1: something our analyst team really focuses on when we meet

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Speaker 1: with management teams, is pushing back from covenants and we're

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Speaker 1: more than happy to not participate in deals where we

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Speaker 1: don't think they're strong enough. Natalie mentioned how often do

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Speaker 1: your analysts meet with analyst teams these days? Posts, you know,

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Speaker 1: post pandemic management teams. Yeah, with Matt management teams, are

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Speaker 1: they are they traveling to come see you in Los Angeles?

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Speaker 1: Are you going to conferences? How do you interact with

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Speaker 1: management teams these days? Yeah, we're doing both tho. It's

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Speaker 1: picking up again with in person meetings, but They still

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Speaker 1: do a lot of virtual meetings via Zoom, but the

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Speaker 1: in person meetings conferences that management teams to travel into

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Speaker 1: our office is picked up a lot. Alright, good stuff.

428
00:22:59,680 --> 00:23:03,560
Speaker 1: Nat the treviorth Thick, head of Investment Grade UH Credit

429
00:23:03,680 --> 00:23:06,720
Speaker 1: Strategy at Payton and regal Um. They're based on Los

430
00:23:06,720 --> 00:23:09,359
Speaker 1: Angeles at one of the great office towers in Los Angeles,

431
00:23:09,440 --> 00:23:11,960
Speaker 1: three thirty three South Grand Avenue. You've got like all

432
00:23:12,000 --> 00:23:17,680
Speaker 1: the big firms there have been there at various times.

433
00:23:19,960 --> 00:23:22,000
Speaker 1: Do you know that Katie gray Feld spends her entire

434
00:23:22,040 --> 00:23:24,760
Speaker 1: weekend slaving away on her cats and Coins newsletter? Is

435
00:23:24,760 --> 00:23:27,480
Speaker 1: that right? Yeah? Okay, Katie Gryfeld, cross Asset reporter joins

436
00:23:27,520 --> 00:23:30,359
Speaker 1: us here in a Bloomberg Interactive Broker studio. First of all,

437
00:23:30,680 --> 00:23:33,000
Speaker 1: when you do your grsage riding thing on the horse,

438
00:23:33,160 --> 00:23:35,880
Speaker 1: you have a saddle, right, big time big. But it's

439
00:23:35,920 --> 00:23:39,960
Speaker 1: not a cowboy John Wayne saddle. No, it's a grsage saddle.

440
00:23:39,960 --> 00:23:42,040
Speaker 1: It's you can tell it's a gossage shaddle because it

441
00:23:42,080 --> 00:23:44,520
Speaker 1: has a really high back. It's kind of like sitting

442
00:23:44,520 --> 00:23:46,320
Speaker 1: in a bucket because you really want to have a

443
00:23:46,440 --> 00:23:49,600
Speaker 1: firm base ride. Alright, good stuff. We were Matt. Matt

444
00:23:49,600 --> 00:23:51,320
Speaker 1: and I were just talking about that. We weren't sure

445
00:23:51,320 --> 00:23:54,119
Speaker 1: how that out. But when you when you say you

446
00:23:54,200 --> 00:23:56,840
Speaker 1: rope a calf and you've got to tie tie into

447
00:23:56,920 --> 00:23:59,200
Speaker 1: your saddle, what do you do if there's a calf

448
00:23:59,240 --> 00:24:02,639
Speaker 1: in the the grsage? Right, something went wrong. But I

449
00:24:02,640 --> 00:24:05,639
Speaker 1: would say a Western saddle is like a couch, Like

450
00:24:05,680 --> 00:24:09,240
Speaker 1: that's a comfortable saddle. But a Grsage saddle took a bucket.

451
00:24:09,280 --> 00:24:11,639
Speaker 1: You know you're really sitting in there, you're strapped in

452
00:24:11,800 --> 00:24:15,080
Speaker 1: You guys have fallen off. All right? I want to

453
00:24:15,080 --> 00:24:18,720
Speaker 1: talk crypto here. Who is Barry Silver? And do I

454
00:24:18,800 --> 00:24:22,080
Speaker 1: care who this guy is? Definitely care who Barry Silver?

455
00:24:22,119 --> 00:24:26,040
Speaker 1: It is. He is the founder of Digital Currency Group.

456
00:24:26,280 --> 00:24:29,240
Speaker 1: It is. It was once valued at ten billion dollars.

457
00:24:29,280 --> 00:24:32,479
Speaker 1: It's this huge crypto conglomerate. The reason you're hearing so

458
00:24:32,560 --> 00:24:37,080
Speaker 1: much about Barry Silver right now is because the companies

459
00:24:37,119 --> 00:24:40,760
Speaker 1: that dcg owns it has Gray Scale, which has the

460
00:24:40,800 --> 00:24:44,320
Speaker 1: gray scale Bitcoin Trust exactly, which is in a lot

461
00:24:44,320 --> 00:24:47,800
Speaker 1: of well you know how much bitcoin does the gray

462
00:24:47,880 --> 00:24:51,200
Speaker 1: gray scale Bitcoin Trust own. At one point it held

463
00:24:51,280 --> 00:24:54,080
Speaker 1: like three percent of all outstanding supply of bitcoin. So

464
00:24:54,119 --> 00:24:56,040
Speaker 1: it's a. It's a massive amount of money, but the

465
00:24:56,119 --> 00:24:59,800
Speaker 1: thing about it is it's trading at a massive discount,

466
00:25:00,080 --> 00:25:03,800
Speaker 1: massive to net asset value. Like if they own out,

467
00:25:03,880 --> 00:25:07,520
Speaker 1: let's say a billion dollars worth of bitcoin um, the

468
00:25:07,600 --> 00:25:12,359
Speaker 1: whole thing is only worth okay okay. So and shareholders

469
00:25:12,359 --> 00:25:15,160
Speaker 1: are upset because they can't get their their bitcoin out

470
00:25:15,160 --> 00:25:18,600
Speaker 1: because it doesn't have redemptions. There are Gray Skills actually

471
00:25:18,600 --> 00:25:20,359
Speaker 1: getting sued by a hedge fund right now, for a

472
00:25:20,359 --> 00:25:24,640
Speaker 1: Tree Capital is suing Gray Scale over the discount. They're

473
00:25:24,680 --> 00:25:27,960
Speaker 1: saying that they mismanaged the trust, etcetera, etcetera. So we'll

474
00:25:27,960 --> 00:25:30,040
Speaker 1: see if that goes anywhere. But there's starting to be

475
00:25:30,119 --> 00:25:33,280
Speaker 1: some like really long shot activist campaigns to try to

476
00:25:33,320 --> 00:25:36,760
Speaker 1: oust Gray Scale as the manager of this trust. Again,

477
00:25:36,800 --> 00:25:40,280
Speaker 1: these are long shots, but we'll see. It just speaks

478
00:25:40,320 --> 00:25:42,840
Speaker 1: to the fact that there's this bubbling discontent over what's

479
00:25:42,880 --> 00:25:45,520
Speaker 1: happening at Gray Scale. One of the DCG companies, the

480
00:25:45,600 --> 00:25:48,880
Speaker 1: other one that you're hearing a lot about is Genesis.

481
00:25:49,040 --> 00:25:53,800
Speaker 1: So that's a lending crypto lending company owned by DCG. Actually,

482
00:25:53,880 --> 00:25:56,360
Speaker 1: I don't know if you guys like we're following over

483
00:25:56,400 --> 00:26:01,000
Speaker 1: the weekend, but Gemini the winkle vibes, wins. It was

484
00:26:01,040 --> 00:26:04,080
Speaker 1: just one winkel By. It was Cameron, Yeah, Cameron Winklevoss.

485
00:26:04,400 --> 00:26:07,399
Speaker 1: He wrote a really heated letter in open letter to

486
00:26:07,440 --> 00:26:11,080
Speaker 1: Barry Silbert because Gemini they say that their own nine

487
00:26:11,520 --> 00:26:16,120
Speaker 1: million dollars in customer assets, uh, basically in limbo at

488
00:26:16,400 --> 00:26:19,760
Speaker 1: at Genesis and they haven't been able to make satisfying

489
00:26:19,880 --> 00:26:22,960
Speaker 1: contact with Barry Silbert's So there's a lot you can

490
00:26:23,040 --> 00:26:27,040
Speaker 1: understand why Cameron's angry, right, because that's not just his money.

491
00:26:27,119 --> 00:26:31,080
Speaker 1: He's got clients who are probably angry with him. Oh yeah,

492
00:26:31,600 --> 00:26:34,040
Speaker 1: and actually they have their own lawsuit on their him.

493
00:26:34,040 --> 00:26:36,000
Speaker 1: They're being sued by their customs. So the way that

494
00:26:36,119 --> 00:26:41,359
Speaker 1: Cameron sees it, what he alleges is that Barry Silbert

495
00:26:41,440 --> 00:26:45,080
Speaker 1: has done some serious co mingling of fun. I've that

496
00:26:45,160 --> 00:26:47,800
Speaker 1: term before, and we know that co mingling is no way. No,

497
00:26:48,119 --> 00:26:51,720
Speaker 1: that is a big accusation. That's definitely what I mean.

498
00:26:51,720 --> 00:26:53,440
Speaker 1: It was a long letter. I read every word well.

499
00:26:53,480 --> 00:26:57,440
Speaker 1: Cameron says that Silbert's DCG borrowed one point six seven

500
00:26:57,560 --> 00:27:04,000
Speaker 1: five billion dollars from Genesis is and uh, Silbert responded, no,

501
00:27:04,200 --> 00:27:07,080
Speaker 1: we have not borrowed one point six seven five billion

502
00:27:07,119 --> 00:27:11,280
Speaker 1: dollars from Genesis and we make every interest payment on time,

503
00:27:11,600 --> 00:27:13,800
Speaker 1: so kind of implying we have borrowed money, but not

504
00:27:13,960 --> 00:27:16,760
Speaker 1: that much money, or at least not that exact amount. Yeah,

505
00:27:16,800 --> 00:27:19,080
Speaker 1: that was a little uh like, how much then have

506
00:27:19,200 --> 00:27:22,439
Speaker 1: you borrowed? Is it one point seven five billion? Is

507
00:27:22,440 --> 00:27:25,080
Speaker 1: it only one billion? I would love to know. There's

508
00:27:25,119 --> 00:27:27,440
Speaker 1: plenty who would love to know, not just reporters, really

509
00:27:27,440 --> 00:27:29,719
Speaker 1: everyone in the crypto industry would love to know. But

510
00:27:29,880 --> 00:27:34,119
Speaker 1: they actually gave Silbert a deadline here, Cameron Winklevoss, he

511
00:27:34,200 --> 00:27:39,160
Speaker 1: said that he wants some sort of public commitment that, uh,

512
00:27:39,160 --> 00:27:42,040
Speaker 1: Silbird and DCG is going to work together to solve

513
00:27:42,040 --> 00:27:45,520
Speaker 1: this problem by January eighth, that is three days from now.

514
00:27:45,560 --> 00:27:48,320
Speaker 1: What happens on January eighth? I don't know, I don't know.

515
00:27:48,320 --> 00:27:50,120
Speaker 1: All right, let's bring in Barry Ridholtz. He's a host

516
00:27:50,119 --> 00:27:53,760
Speaker 1: of Masters in business on Bloomberg Radio, Chairman and chief

517
00:27:53,760 --> 00:27:56,560
Speaker 1: investment Officervert Hults Wealth Management. Barry, you know we've been

518
00:27:56,560 --> 00:28:01,520
Speaker 1: talking about crypto. It was certainly am pelling story, broadly

519
00:28:01,560 --> 00:28:05,359
Speaker 1: defined uh in two Well, you know what, I let's

520
00:28:05,440 --> 00:28:08,040
Speaker 1: ask Barry about com England. So Barry, how much money

521
00:28:08,080 --> 00:28:10,960
Speaker 1: do you borrow from the clients that Rittoltz Wealth Management

522
00:28:10,960 --> 00:28:12,800
Speaker 1: without telling them about it? You know, it's It's one

523
00:28:12,840 --> 00:28:15,720
Speaker 1: of the first rules you learn when you get into

524
00:28:15,760 --> 00:28:19,639
Speaker 1: either a Series seven or sixth Series sixty five. Don't

525
00:28:19,640 --> 00:28:23,879
Speaker 1: co mingle funds. Never borrow money from clients. That's verboten.

526
00:28:24,480 --> 00:28:26,720
Speaker 1: You know, you were here to provide a service to

527
00:28:26,760 --> 00:28:29,120
Speaker 1: the clients. They are not here to provide a line

528
00:28:29,119 --> 00:28:32,760
Speaker 1: of credit to you. And it's astonishing that we continue

529
00:28:32,760 --> 00:28:35,920
Speaker 1: to see these same sort of things pop up all

530
00:28:35,960 --> 00:28:39,560
Speaker 1: over the place. Although to be fair, you know, crypto

531
00:28:39,720 --> 00:28:42,840
Speaker 1: is unregulated, it's not arguably a security. A lot of

532
00:28:42,840 --> 00:28:46,360
Speaker 1: these companies are headquartered outside of the United States. So

533
00:28:47,080 --> 00:28:49,960
Speaker 1: you know, as much as people want to blame Gary Ginsler,

534
00:28:50,280 --> 00:28:53,960
Speaker 1: this is out of his jurisdiction. H agree. I mean, um,

535
00:28:54,000 --> 00:28:57,440
Speaker 1: everyone complains that the SEC hasn't done enough in terms

536
00:28:57,440 --> 00:29:00,000
Speaker 1: of f t X, but f t x dot Com

537
00:29:00,080 --> 00:29:02,840
Speaker 1: was located in the Bahamas. The SEC doesn't have jurisdiction

538
00:29:02,920 --> 00:29:06,760
Speaker 1: over it. And by the way, even if Gensler did,

539
00:29:07,720 --> 00:29:10,760
Speaker 1: assuming that there was some kind of fraud, committed that

540
00:29:10,800 --> 00:29:14,360
Speaker 1: there was money taken from clients, when that that's already illegal.

541
00:29:14,480 --> 00:29:18,360
Speaker 1: It's not like there's no regulation against that. Um. By

542
00:29:18,360 --> 00:29:22,760
Speaker 1: the way, in terms of Sam Bankman freed to me,

543
00:29:22,920 --> 00:29:24,960
Speaker 1: I kind of get it. I mean, he's a little kid.

544
00:29:25,320 --> 00:29:29,720
Speaker 1: He's clearly different. He's a young person, and he's a

545
00:29:29,800 --> 00:29:31,920
Speaker 1: very different kind of person. So if you tell me

546
00:29:32,000 --> 00:29:35,360
Speaker 1: like he didn't know the rules or whatever, I feel

547
00:29:35,360 --> 00:29:38,960
Speaker 1: like it's possible someone like John Corzine he knew the

548
00:29:39,080 --> 00:29:43,240
Speaker 1: rules right. And I still get pulled over in my

549
00:29:43,360 --> 00:29:46,360
Speaker 1: twenties going seventy over the speed limit. I used to

550
00:29:46,400 --> 00:29:48,440
Speaker 1: say to the police, Look, I'm a young kid, I

551
00:29:48,520 --> 00:29:52,080
Speaker 1: don't know the rules. Let me go, And that worked beautifully. Well, look,

552
00:29:52,400 --> 00:29:54,160
Speaker 1: my dad's a lawyer. He says, if you don't know

553
00:29:54,240 --> 00:29:56,600
Speaker 1: the law, you're allowed to break it. That doesn't really,

554
00:29:56,920 --> 00:30:00,840
Speaker 1: that doesn't really work. Ignorance is no excuse. And the way,

555
00:30:01,280 --> 00:30:04,400
Speaker 1: thirty one is not a child, he's out of college

556
00:30:04,440 --> 00:30:09,200
Speaker 1: for a decade, he has attorneys and accountants and CFOs.

557
00:30:09,720 --> 00:30:13,440
Speaker 1: The fact that he said it'll be okay to you know,

558
00:30:13,520 --> 00:30:17,200
Speaker 1: borrow some money from from clients, you know, that's just

559
00:30:17,360 --> 00:30:19,840
Speaker 1: holly an excuse. If that's what happened, right, we don't

560
00:30:19,920 --> 00:30:22,280
Speaker 1: we still were still that's what appears to have happened,

561
00:30:22,320 --> 00:30:25,360
Speaker 1: but we don't know for sure yet. Kenny carries a

562
00:30:25,440 --> 00:30:28,240
Speaker 1: lawyer two by the way, I know, yep, he's jd

563
00:30:28,320 --> 00:30:31,239
Speaker 1: Eton That a card Dozo school of Walachu University, one

564
00:30:31,280 --> 00:30:34,400
Speaker 1: of the goodwins. Um Katie, what's the feeling when you

565
00:30:34,440 --> 00:30:37,920
Speaker 1: talk to folks in the crypto space. Is this a

566
00:30:38,000 --> 00:30:40,880
Speaker 1: bump along the road of the evolution of an asset

567
00:30:40,920 --> 00:30:43,360
Speaker 1: class or is this something more fundamental? When you see

568
00:30:43,720 --> 00:30:46,320
Speaker 1: sam Bank MN freed a major exchange and maybe even

569
00:30:46,400 --> 00:30:50,520
Speaker 1: some more issues within this sector. Well, I mean, it

570
00:30:50,560 --> 00:30:53,720
Speaker 1: feels like this is almost like a fork in the road.

571
00:30:53,800 --> 00:30:57,120
Speaker 1: You have all these crypto companies. This is definitely a

572
00:30:57,160 --> 00:30:59,960
Speaker 1: reckoning for the crypto companies. Then you have the hardcore

573
00:31:00,120 --> 00:31:05,240
Speaker 1: believers you know, own your keys were all about no duh, right,

574
00:31:05,280 --> 00:31:07,920
Speaker 1: that's the whole point. Yeah, yeah, so I mean, and

575
00:31:07,920 --> 00:31:10,040
Speaker 1: that's why you mean for you have to hold your

576
00:31:10,040 --> 00:31:12,120
Speaker 1: own private key. You don't leave a whole bunch of

577
00:31:12,160 --> 00:31:16,960
Speaker 1: crypto on centralized centralized exchange, but which by the way,

578
00:31:17,040 --> 00:31:20,120
Speaker 1: is located offshore, right so that you don't have jurist

579
00:31:20,200 --> 00:31:22,560
Speaker 1: your own regulations on jurisdiction over it. So where do

580
00:31:22,600 --> 00:31:25,880
Speaker 1: you keep so obvious. You keep it in a cold wallet, Yeah,

581
00:31:25,960 --> 00:31:28,120
Speaker 1: you keep it on a hard drive. On a hard drive,

582
00:31:28,280 --> 00:31:31,800
Speaker 1: you keep it under your bed or safe for at

583
00:31:31,800 --> 00:31:34,000
Speaker 1: your sister's house. I don't know, but you clearly don't

584
00:31:34,080 --> 00:31:38,360
Speaker 1: keep it on an offshore exchange. That is I just

585
00:31:38,560 --> 00:31:40,840
Speaker 1: I can't get over that. And that's why you're seeing

586
00:31:40,880 --> 00:31:44,400
Speaker 1: I mean, coin Base, what a story downgraded again today

587
00:31:44,440 --> 00:31:49,280
Speaker 1: now at Collen And that's just I mean, I remember

588
00:31:49,400 --> 00:31:51,800
Speaker 1: if we turned back to early November when all this

589
00:31:51,840 --> 00:31:54,959
Speaker 1: FTX news was breaking, there was a question out there,

590
00:31:55,080 --> 00:31:56,840
Speaker 1: wasn't this good for coin base. You have one of

591
00:31:56,880 --> 00:32:00,680
Speaker 1: their top competitors now out of the market. It there's

592
00:32:00,760 --> 00:32:05,360
Speaker 1: this sort of migration away from these centralized exchanges by

593
00:32:05,400 --> 00:32:07,840
Speaker 1: these true believers who maybe weren't even there in the

594
00:32:07,880 --> 00:32:10,320
Speaker 1: first place. Now they're definitely not going to be going

595
00:32:10,360 --> 00:32:13,040
Speaker 1: to a coin base to store up their money. And

596
00:32:13,080 --> 00:32:18,000
Speaker 1: the normal retail, average sort of crypto trader, they're not

597
00:32:18,040 --> 00:32:21,040
Speaker 1: in the market anymore. There are decentralized exchanges. But in

598
00:32:21,160 --> 00:32:25,320
Speaker 1: terms of you know what this says about crypto, Fortunately

599
00:32:25,400 --> 00:32:29,240
Speaker 1: for us, there's a market and an asset that's priced,

600
00:32:30,280 --> 00:32:33,200
Speaker 1: so we can tell what people think about crypto and

601
00:32:33,200 --> 00:32:36,640
Speaker 1: guess what, Barry, the price of bitcoin hasn't moved since

602
00:32:36,680 --> 00:32:40,240
Speaker 1: November seven, since the explosion of f t X. What

603
00:32:40,320 --> 00:32:43,960
Speaker 1: does that tell you that it's still worth sixteen thousand

604
00:32:44,040 --> 00:32:47,880
Speaker 1: dollars and change. I'll tell you what has moved since then,

605
00:32:47,960 --> 00:32:51,120
Speaker 1: and that's been gold. And one of the things that's

606
00:32:51,200 --> 00:32:54,800
Speaker 1: kind of fascinating. You call the phrase early in in

607
00:32:55,240 --> 00:33:00,400
Speaker 1: crypto's history millennial gold, that a lot of the anti

608
00:33:00,440 --> 00:33:05,320
Speaker 1: central bank, anti fea currency, Hey we need hard assets

609
00:33:05,440 --> 00:33:09,840
Speaker 1: kind of abandoned precious metals and moved into crypto. Well,

610
00:33:09,920 --> 00:33:12,600
Speaker 1: it looks like over the past you know, three to

611
00:33:12,680 --> 00:33:17,800
Speaker 1: six months, some frustration with crypto. First the price decrease,

612
00:33:17,880 --> 00:33:21,000
Speaker 1: which seems to be a regular occurrence with crypto. But

613
00:33:21,120 --> 00:33:25,360
Speaker 1: then everything that's been going on with with issues of

614
00:33:25,360 --> 00:33:30,040
Speaker 1: of you know, criminality and illegality and and potentially theft,

615
00:33:30,480 --> 00:33:35,200
Speaker 1: seems to have given gold an opportunity to catch a bid.

616
00:33:35,400 --> 00:33:38,240
Speaker 1: And I just can't help but wonder if if crypto

617
00:33:38,560 --> 00:33:41,920
Speaker 1: is now stagnant because some of the true believers are

618
00:33:41,920 --> 00:33:45,160
Speaker 1: going back to the yellow metal. It is wild. I mean,

619
00:33:45,160 --> 00:33:48,480
Speaker 1: I'm looking at gold's move It's up twelve percent over

620
00:33:48,520 --> 00:33:55,680
Speaker 1: twelve since November three. What a coincidence. I think, on

621
00:33:55,720 --> 00:33:59,520
Speaker 1: the other hand, you could say, uh, well no, I

622
00:33:59,560 --> 00:34:03,440
Speaker 1: think it's totally fascinating also in regards to bitcoin. But

623
00:34:03,720 --> 00:34:05,840
Speaker 1: a lot of people do think we're headed into a recession.

624
00:34:06,040 --> 00:34:09,840
Speaker 1: I love Michael Burry's recent post on Twitter. He said

625
00:34:09,880 --> 00:34:13,680
Speaker 1: that we're going to see disinflation or deflation in the

626
00:34:13,760 --> 00:34:16,400
Speaker 1: second half of We're going to be in a recession

627
00:34:16,440 --> 00:34:19,719
Speaker 1: by any way you measure it, and that not only

628
00:34:19,800 --> 00:34:22,080
Speaker 1: is the FED going to have to cut but um,

629
00:34:22,120 --> 00:34:25,480
Speaker 1: the government's going to have to deploy more fiscal stimulus. Now.

630
00:34:25,480 --> 00:34:29,719
Speaker 1: To be fair, that's a very uh that seems like

631
00:34:29,719 --> 00:34:34,600
Speaker 1: an outlier. That's a very outlier and alarmist sensationalist view.

632
00:34:34,680 --> 00:34:39,439
Speaker 1: But I love alarmist sensationalism. You know it's Twitter. Yeah,

633
00:34:39,440 --> 00:34:43,000
Speaker 1: that really plays on Twitter. So deflation, I mean, what

634
00:34:43,160 --> 00:34:46,000
Speaker 1: does well in inflation? Do we have any sort of blueprint?

635
00:34:46,080 --> 00:34:48,200
Speaker 1: I don't know, Barry, what's the deal with gold as

636
00:34:48,200 --> 00:34:51,799
Speaker 1: an inflation hedge? And because it didn't seem to do

637
00:34:51,960 --> 00:34:55,040
Speaker 1: that well and as we ramped up to ten percent

638
00:34:55,160 --> 00:34:58,040
Speaker 1: and change on the CPI and do you want to

639
00:34:58,080 --> 00:35:00,479
Speaker 1: own it? If we're headed into a recession? And where

640
00:35:00,480 --> 00:35:02,560
Speaker 1: the fed is going to have to cut. So to me,

641
00:35:02,760 --> 00:35:08,279
Speaker 1: gold seems to trade most correlated or really inversely correlated

642
00:35:08,360 --> 00:35:10,480
Speaker 1: to the dollar. You know, we had a huge run

643
00:35:10,560 --> 00:35:12,759
Speaker 1: up in the US dollar last year that peaked and

644
00:35:12,760 --> 00:35:15,560
Speaker 1: started to fall. That peaked sometime I don't know, around

645
00:35:15,600 --> 00:35:18,640
Speaker 1: the beginning of November. And remember the dollar is a

646
00:35:18,680 --> 00:35:23,960
Speaker 1: measuring stick for commodities, including gold, So as the dollar softens,

647
00:35:24,200 --> 00:35:26,600
Speaker 1: price of gold goes up. When the measuring stick gets

648
00:35:26,600 --> 00:35:29,800
Speaker 1: a little smaller, it makes the measured a little a

649
00:35:29,880 --> 00:35:33,960
Speaker 1: little larger. So uh, to me, golds has always been

650
00:35:33,960 --> 00:35:37,880
Speaker 1: a trading vehicle. It has never been a investment vehicle

651
00:35:37,960 --> 00:35:40,680
Speaker 1: because it doesn't produce any sort of cash flow, It

652
00:35:40,719 --> 00:35:44,600
Speaker 1: doesn't produce any sort of dividend. Arguably, you say the

653
00:35:44,640 --> 00:35:47,080
Speaker 1: same thing about crypto. But at your mountain house where

654
00:35:47,080 --> 00:35:50,480
Speaker 1: you keep like, you know, dozens of gallons of water

655
00:35:50,600 --> 00:35:54,880
Speaker 1: and some shotguns, you have gold bars there too. Right, Listen,

656
00:35:54,920 --> 00:35:59,719
Speaker 1: If if you're planning on existing in the post of

657
00:36:00,000 --> 00:36:04,320
Speaker 1: acalyptic landscape and you're gonna be treating bars of gold

658
00:36:04,400 --> 00:36:06,799
Speaker 1: for food and water, I think we have lots of

659
00:36:06,800 --> 00:36:10,000
Speaker 1: other problems that If you're that person, though, I think

660
00:36:10,040 --> 00:36:12,879
Speaker 1: you probably also have some bitcoin. Doesn't it just fit

661
00:36:12,920 --> 00:36:15,680
Speaker 1: with that sort of I would think so, although it

662
00:36:15,719 --> 00:36:22,319
Speaker 1: doesn't because bitcoin is specifically tied to technology. And so

663
00:36:22,360 --> 00:36:29,239
Speaker 1: if you have a technology that um only works on

664
00:36:29,320 --> 00:36:32,920
Speaker 1: the internet, what happens? And when there's no network, no

665
00:36:33,960 --> 00:36:38,360
Speaker 1: no infrastructure, no electricity, no internet, Bitcoin ain't gonna be

666
00:36:38,400 --> 00:36:41,080
Speaker 1: a whole lot of anything then So so Barry, at

667
00:36:41,120 --> 00:36:44,080
Speaker 1: the cocktail party this weekend, somebody comes up to you

668
00:36:44,120 --> 00:36:47,680
Speaker 1: and says, it's crypto real, it's bitcoin real. Should I

669
00:36:47,680 --> 00:36:49,239
Speaker 1: invest in this? What do you? What do you tell them?

670
00:36:50,360 --> 00:36:53,120
Speaker 1: The same thing I've been saying for for years and years,

671
00:36:53,200 --> 00:36:58,680
Speaker 1: which is, think of crypto like a large megacap tech stock,

672
00:36:58,800 --> 00:37:02,480
Speaker 1: like an Amazon or an Apple. It's not quite its

673
00:37:02,480 --> 00:37:06,120
Speaker 1: own asset class yet, it's not quite um something that

674
00:37:06,280 --> 00:37:09,360
Speaker 1: has shown a whole lot of ability to diversify. It

675
00:37:09,400 --> 00:37:14,160
Speaker 1: really seems to be highly correlated to UH two equity prices.

676
00:37:14,200 --> 00:37:16,799
Speaker 1: And you know, we always tell people if you want

677
00:37:16,840 --> 00:37:19,239
Speaker 1: to have a fun account, you want to have a

678
00:37:19,280 --> 00:37:23,160
Speaker 1: five percent mad money account to just do really dumb

679
00:37:23,200 --> 00:37:27,080
Speaker 1: things that will not affect your long term quote unquote

680
00:37:27,120 --> 00:37:29,880
Speaker 1: real money. Well, have at it. But by out of

681
00:37:29,880 --> 00:37:34,160
Speaker 1: the money call options by bitcoin play around with short tesla,

682
00:37:34,200 --> 00:37:37,000
Speaker 1: whatever you want to do, but you know that five

683
00:37:37,040 --> 00:37:39,360
Speaker 1: percent is going to scratch your itch, and if it

684
00:37:39,400 --> 00:37:42,239
Speaker 1: goes to zero, you're done, You're tapped out, and you

685
00:37:42,440 --> 00:37:45,880
Speaker 1: let you leave your real money alone. And that seems

686
00:37:45,880 --> 00:37:49,640
Speaker 1: to have been a pretty good approach, especially for people

687
00:37:49,640 --> 00:37:54,719
Speaker 1: who were chasing meme stocks. In thank goodness, it was

688
00:37:54,800 --> 00:37:57,480
Speaker 1: only five percent of their accounts and not their real money.

689
00:37:57,560 --> 00:38:00,400
Speaker 1: All right, very great stuff as always, very Ridholtz Narvard

690
00:38:00,440 --> 00:38:03,439
Speaker 1: Holts Wealth Management, host of Masters in Business and Katie

691
00:38:03,520 --> 00:38:07,319
Speaker 1: Raifel Bloomberg News cross asset reporter joining US year. We're

692
00:38:07,360 --> 00:38:10,279
Speaker 1: talking a little bit of crypto and you know, Sam

693
00:38:10,320 --> 00:38:13,640
Speaker 1: Bankman freed, he's pled not guilty, So it looks like

694
00:38:13,760 --> 00:38:17,319
Speaker 1: we're going to trial sometime in October. I believe is

695
00:38:17,360 --> 00:38:19,759
Speaker 1: that they they've said to start that travel. We'll see

696
00:38:19,800 --> 00:38:23,200
Speaker 1: if that happens, but that will be compelling theater if

697
00:38:23,200 --> 00:38:25,560
Speaker 1: none they nonetheless, I mean, if nothing else would be

698
00:38:25,560 --> 00:38:28,480
Speaker 1: compelling drama, compelling theater as people try to get a

699
00:38:28,480 --> 00:38:31,320
Speaker 1: sense of what happened at ft x UH and Sam

700
00:38:31,480 --> 00:38:38,840
Speaker 1: Bankman freed, the total economic output of US latinos was

701
00:38:38,920 --> 00:38:42,880
Speaker 1: two point eight trillion dollars in Yet, despite being a

702
00:38:42,960 --> 00:38:46,360
Speaker 1: key driving force of the US economy, experts say the

703
00:38:46,400 --> 00:38:50,840
Speaker 1: capital isn't flowing toward the growth. According to the Latino

704
00:38:50,920 --> 00:38:55,120
Speaker 1: Business Action Network, Hispanic downed businesses have grown forty four

705
00:38:55,200 --> 00:38:58,080
Speaker 1: per cent in the last ten years, compared to just

706
00:38:58,200 --> 00:39:01,359
Speaker 1: a four percent for non Latino but less than two

707
00:39:01,400 --> 00:39:04,360
Speaker 1: percent of the available venture capital funding in the US

708
00:39:04,600 --> 00:39:07,400
Speaker 1: goes into this cohort. This is the best economy in

709
00:39:07,440 --> 00:39:11,080
Speaker 1: the world, the free enterprise system, but it largely excludes

710
00:39:11,520 --> 00:39:15,520
Speaker 1: small businesses and minority owned businesses even today. Rameiro Cavaso,

711
00:39:15,600 --> 00:39:18,920
Speaker 1: says the president and CEO of the United States Hispanic

712
00:39:19,040 --> 00:39:21,319
Speaker 1: Chamber of Commerce. Then, a big part of it, I

713
00:39:21,360 --> 00:39:25,480
Speaker 1: think it's just relationships. It's networks, you know, I hate

714
00:39:25,520 --> 00:39:28,359
Speaker 1: to say it, we're largely invisible. In order to make

715
00:39:28,360 --> 00:39:32,320
Speaker 1: those connections, Anna Veldez, president and CEO of the Latino

716
00:39:32,440 --> 00:39:35,960
Speaker 1: Donor Collaborative, says more vcs need to get out of

717
00:39:35,960 --> 00:39:38,960
Speaker 1: their comfort zone. You need to start reaching out to

718
00:39:39,080 --> 00:39:42,000
Speaker 1: places where you actually never reached. People that may not

719
00:39:42,320 --> 00:39:45,160
Speaker 1: be as well versed, that may not come from your environment,

720
00:39:45,360 --> 00:39:47,320
Speaker 1: that may not look like you, that may not talk

721
00:39:47,400 --> 00:39:49,640
Speaker 1: like you. But there are that are making a lot

722
00:39:49,680 --> 00:39:54,400
Speaker 1: of money. Anthony Alcasar is finding himself in the middle

723
00:39:54,400 --> 00:39:57,799
Speaker 1: of the struggle. His company, Mr. Tortilla is number one

724
00:39:57,840 --> 00:40:01,360
Speaker 1: on Amazon. They've expanded their product line and just opened

725
00:40:01,400 --> 00:40:06,040
Speaker 1: a second factory. My projections are thirty millions between three

726
00:40:06,360 --> 00:40:13,160
Speaker 1: sixty million for hundred million, and I can't get a

727
00:40:13,239 --> 00:40:16,600
Speaker 1: fair shake, he says. The offers he has received include

728
00:40:16,600 --> 00:40:19,200
Speaker 1: a majority stake in his business. We worked a whole

729
00:40:19,239 --> 00:40:22,120
Speaker 1: life for this, and so if I lose control ownership now,

730
00:40:22,280 --> 00:40:24,960
Speaker 1: I can't guarantee that they're going to focusing philosophies and

731
00:40:25,200 --> 00:40:27,799
Speaker 1: run our business the way we want to run it.

732
00:40:29,200 --> 00:40:34,440
Speaker 1: That's why Latino venture capitalists and banking and community lenders

733
00:40:34,480 --> 00:40:38,279
Speaker 1: and c DFIs community development finance institutions, we've got to

734
00:40:38,280 --> 00:40:41,560
Speaker 1: get them to step up. Latitude Ventures is doing just that.

735
00:40:42,040 --> 00:40:45,320
Speaker 1: The company recently launched a one hundred million dollar fund

736
00:40:45,600 --> 00:40:49,760
Speaker 1: focused on Latino founded early stage businesses. We're looking hard,

737
00:40:49,960 --> 00:40:53,320
Speaker 1: We're creating the pipeline. We're creating the visibility so that

738
00:40:53,440 --> 00:40:56,200
Speaker 1: any Latino and Latino that has been shut out that

739
00:40:56,280 --> 00:40:58,720
Speaker 1: they can come here and they're gonna get a fair look.

740
00:40:58,880 --> 00:41:01,960
Speaker 1: Company president, so all through he has his own prediction.

741
00:41:02,320 --> 00:41:04,800
Speaker 1: My bed is between now and the end of the decade,

742
00:41:05,120 --> 00:41:08,200
Speaker 1: a trillion dollars a capital should be flowing here so

743
00:41:08,239 --> 00:41:12,359
Speaker 1: that we can grow GDP at a highly competitive rate

744
00:41:12,680 --> 00:41:16,280
Speaker 1: versus doing it the same way. Valdez puts that growth

745
00:41:16,360 --> 00:41:21,400
Speaker 1: into perspective. If Latino's got the same proportion of credit

746
00:41:21,560 --> 00:41:24,920
Speaker 1: as whites are given, it would translate into adding three

747
00:41:25,000 --> 00:41:29,520
Speaker 1: point three trillion of revenue of companies in this country.

748
00:41:30,640 --> 00:41:33,480
Speaker 1: But it's not only venture capital funding. L B a

749
00:41:33,680 --> 00:41:36,880
Speaker 1: N reports the odds of loan approval from national banks

750
00:41:37,160 --> 00:41:41,600
Speaker 1: are sixty percent lower for Latino owned businesses. Industry leaders

751
00:41:41,600 --> 00:41:45,239
Speaker 1: say it comes down to diversification. It's a proportionate representation

752
00:41:45,280 --> 00:41:47,520
Speaker 1: at all levels in the bank, from the board all

753
00:41:47,560 --> 00:41:49,120
Speaker 1: the way to the C suite, all the way to

754
00:41:49,160 --> 00:41:52,240
Speaker 1: the executive branch, and then to the branches. Actress, singer

755
00:41:52,280 --> 00:41:56,120
Speaker 1: and entrepreneur Jennifer Lopez is looking to change the playing

756
00:41:56,200 --> 00:42:04,920
Speaker 1: field journey from the one. Lopez launched Limitless Labs to

757
00:42:05,000 --> 00:42:10,160
Speaker 1: raise funds for Latina entrepreneurs, including a partnership with Goldman Sachs,

758
00:42:10,160 --> 00:42:13,520
Speaker 1: and this past June, Lopez partnered with Gramina America to

759
00:42:13,600 --> 00:42:17,200
Speaker 1: help distribute fourteen billion dollars in loans to six hundred

760
00:42:17,239 --> 00:42:21,480
Speaker 1: thousand Latina business owners by the future of this economy

761
00:42:21,520 --> 00:42:25,960
Speaker 1: will depend on small businesses and Latino owned businesses because

762
00:42:26,560 --> 00:42:30,399
Speaker 1: of share demographics. According to the US Census Bureau, more

763
00:42:30,440 --> 00:42:35,520
Speaker 1: than half of the total US population growth between came

764
00:42:35,560 --> 00:42:39,960
Speaker 1: from Hispanics, and with Latino entrepreneurs starting small businesses faster

765
00:42:40,040 --> 00:42:42,880
Speaker 1: than the rest of the startup population, the rising tide

766
00:42:43,080 --> 00:42:46,480
Speaker 1: will lift all boats in New York. I'm Lisa Matteo,

767
00:42:46,719 --> 00:42:54,240
Speaker 1: Bloomberg Radio. All right, that's Bloomberge Business, corresponded Lisa Matteo.

768
00:42:54,360 --> 00:42:57,280
Speaker 1: She joins us now on our Bloomberg Interactive Broker studio. Lisa,

769
00:42:57,320 --> 00:43:01,520
Speaker 1: fascinating story here. I mean, you know, they're the Hispanic population.

770
00:43:01,560 --> 00:43:03,920
Speaker 1: I know a lot about it from an economic perspective.

771
00:43:03,960 --> 00:43:05,759
Speaker 1: Haven't done a lot of work with Univision over the years.

772
00:43:05,800 --> 00:43:09,640
Speaker 1: I know it's a fast growing, uh demographic um. But

773
00:43:09,800 --> 00:43:13,840
Speaker 1: access to capital has really been a challenge here. So historically,

774
00:43:13,880 --> 00:43:18,279
Speaker 1: how of Hispanic businesses kind of finance their businesses? Just bootstraps?

775
00:43:18,280 --> 00:43:21,320
Speaker 1: I guess yeah, bootstraps. They they relied on family and friends,

776
00:43:21,360 --> 00:43:23,759
Speaker 1: They've maxed out their credit cards, They've done things like

777
00:43:23,800 --> 00:43:27,720
Speaker 1: that home equity UM and they've tried those small community banks.

778
00:43:27,840 --> 00:43:30,640
Speaker 1: The problems that community banks are closing down and being

779
00:43:30,640 --> 00:43:33,839
Speaker 1: replaced by the national banks. And so Stanford University they

780
00:43:33,880 --> 00:43:37,440
Speaker 1: you know, they put out this annual report on Latin entrepreneurship.

781
00:43:37,640 --> 00:43:39,960
Speaker 1: They have one coming out actually next month, UM, and

782
00:43:39,960 --> 00:43:43,560
Speaker 1: they just show that latinos typically the trend is is

783
00:43:43,600 --> 00:43:46,520
Speaker 1: that their income is lower, so so their credit score

784
00:43:46,560 --> 00:43:48,840
Speaker 1: is lower. So what happens that they're paying higher interest

785
00:43:48,920 --> 00:43:51,400
Speaker 1: rates for these loans, are at being asked for collateral

786
00:43:51,840 --> 00:43:54,399
Speaker 1: UM and sometimes not being approved at all for them.

787
00:43:54,440 --> 00:43:56,520
Speaker 1: So it's kind of this struggle back and forth about

788
00:43:56,560 --> 00:43:58,960
Speaker 1: how they're going to get their business off the ground.

789
00:43:58,960 --> 00:44:01,200
Speaker 1: A lot of it is culture role to UM in

790
00:44:01,200 --> 00:44:04,520
Speaker 1: this spanic culture. Sometimes you know, you money is something

791
00:44:04,520 --> 00:44:06,359
Speaker 1: you don't talk about, you know, it's kind of under

792
00:44:06,400 --> 00:44:09,080
Speaker 1: the table, you know. And it's this it's this common

793
00:44:09,120 --> 00:44:12,280
Speaker 1: misconception that they say, you know, buddho cash pure cash,

794
00:44:12,320 --> 00:44:14,640
Speaker 1: like everything is cash. So it's now starting to come

795
00:44:14,640 --> 00:44:16,680
Speaker 1: around that they need more, which is why I mean

796
00:44:16,719 --> 00:44:19,239
Speaker 1: the credit scores can be lower just if you're not

797
00:44:19,320 --> 00:44:21,040
Speaker 1: involved in the system. So if you don't have a

798
00:44:21,080 --> 00:44:24,719
Speaker 1: bunch of credit cards, car loans. If you're not borrowing,

799
00:44:24,800 --> 00:44:26,440
Speaker 1: then you won't have a high grad I think it's

800
00:44:26,480 --> 00:44:31,480
Speaker 1: interesting because I think of the Latino community as and

801
00:44:31,520 --> 00:44:34,880
Speaker 1: I don't want to stereotype here as being honest, hard working,

802
00:44:35,120 --> 00:44:39,839
Speaker 1: and reliable. And I feel like that's the common perceptions

803
00:44:40,000 --> 00:44:44,759
Speaker 1: across maybe just my uh, you know, social circle. But um,

804
00:44:44,920 --> 00:44:48,480
Speaker 1: why wouldn't banks extend more credit to them knowing that

805
00:44:48,520 --> 00:44:52,080
Speaker 1: they're more likely to pay loans back than say, your

806
00:44:52,120 --> 00:44:54,719
Speaker 1: typical American white person in the middle of the country,

807
00:44:54,920 --> 00:44:58,040
Speaker 1: right right, And that's the thing that's the misconception is that, well,

808
00:44:58,080 --> 00:45:01,239
Speaker 1: they're not going to pay back. Um. And and apparently

809
00:45:01,320 --> 00:45:03,719
Speaker 1: that is that is incorrect. You know, there are a

810
00:45:03,719 --> 00:45:05,600
Speaker 1: lot of studies out there, but talking with different people

811
00:45:05,600 --> 00:45:08,120
Speaker 1: in the industry that Latinos are the number one people

812
00:45:08,120 --> 00:45:11,319
Speaker 1: who will pay that back because we're more appreciative to

813
00:45:11,320 --> 00:45:13,719
Speaker 1: be here. And I say, were my family from Puerto Rico.

814
00:45:13,800 --> 00:45:16,719
Speaker 1: So so it's a bit. So that's the credit side,

815
00:45:16,800 --> 00:45:19,120
Speaker 1: the death side. Um. But a lot of business obviously

816
00:45:19,120 --> 00:45:22,880
Speaker 1: need growth capital, equity capital, I know, I know, noticing

817
00:45:22,920 --> 00:45:24,759
Speaker 1: your report, you know there are some people trying to

818
00:45:24,800 --> 00:45:28,759
Speaker 1: really pull up some venture capital from private equity for latinos.

819
00:45:28,840 --> 00:45:32,080
Speaker 1: Is that something that's having some traction. It is starting

820
00:45:32,080 --> 00:45:33,920
Speaker 1: to get some traction. I mean you see more people

821
00:45:33,960 --> 00:45:36,680
Speaker 1: getting involved UM when you say we talk to Latitude

822
00:45:36,680 --> 00:45:39,080
Speaker 1: Adventures in the piece and they're getting backing from people

823
00:45:39,120 --> 00:45:41,879
Speaker 1: like JP Morgan Chase from Bank of America. Like they're

824
00:45:41,880 --> 00:45:46,399
Speaker 1: starting to get other people and corporations involved um in this.

825
00:45:46,760 --> 00:45:48,200
Speaker 1: And you see that a lot now with a lot

826
00:45:48,200 --> 00:45:51,120
Speaker 1: of foundations. Foundations are starting to come out. There's Hispanics

827
00:45:51,120 --> 00:45:54,400
Speaker 1: and philanthropies and they're starting to go to these corporations

828
00:45:54,440 --> 00:45:56,440
Speaker 1: get the money they need and give them out to

829
00:45:56,480 --> 00:45:58,960
Speaker 1: these communities. And you see it's starting to pick up.

830
00:45:59,000 --> 00:46:01,000
Speaker 1: I mean with the pandemic, you saw a lot of

831
00:46:01,080 --> 00:46:03,799
Speaker 1: P P P loans Uh that started to pick up.

832
00:46:03,840 --> 00:46:08,640
Speaker 1: You know in the s AB changed the rules there

833
00:46:08,840 --> 00:46:11,040
Speaker 1: um and they said they're more they want more minority

834
00:46:11,080 --> 00:46:12,960
Speaker 1: on businesses to be a part of it, and that

835
00:46:13,040 --> 00:46:16,120
Speaker 1: really helped out UM as well. Alright, great stuff, great report.

836
00:46:16,160 --> 00:46:19,120
Speaker 1: Lisa Matteo, business correspondent for Bloomberg Radio. Were so fortunate

837
00:46:19,480 --> 00:46:21,600
Speaker 1: that she's joined at Bloomberg. She has had a heck

838
00:46:21,640 --> 00:46:23,919
Speaker 1: of a career in New York City media I first

839
00:46:24,000 --> 00:46:26,600
Speaker 1: came to know where former reporter and anchored Picks eleven,

840
00:46:26,600 --> 00:46:29,879
Speaker 1: which is a great independent TV station in New York City.

841
00:46:29,920 --> 00:46:31,439
Speaker 1: She was there for for many years, so we're glad

842
00:46:31,440 --> 00:46:37,920
Speaker 1: she's at Bloomberg. Thanks for listening to the Bloomberg Markets podcast.

843
00:46:38,280 --> 00:46:41,520
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts

844
00:46:41,640 --> 00:46:45,560
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

845
00:46:45,560 --> 00:46:49,600
Speaker 1: on Twitter at Matt Miller three. Put on fall Sweeney

846
00:46:49,640 --> 00:46:52,279
Speaker 1: I'm on Twitter at pt Sweeney before the podcast. You

847
00:46:52,280 --> 00:46:54,800
Speaker 1: can always catch us worldwide at Bloomberg Radio