WEBVTT - Big Banks Kickoff Earnings Season 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.880 --> 0:00:13.640 clus technology, politics, economics, all partnising the power of Business 0:00:13.680 --> 0:00:17.160 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.200 --> 0:00:27.880 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.920 --> 0:00:32.320 YouTube search Bloomberg Global News. Financials. The big banks really 0:00:32.400 --> 0:00:36.559 under pressure today following earnings this morning, City Group, Wells reporting, 0:00:36.640 --> 0:00:39.680 and of course JP Morgan Creaty mentioning at the top. Overall, 0:00:40.200 --> 0:00:42.360 those bank earnings not so great. So let's get to 0:00:42.400 --> 0:00:46.120 it with Bloomberg Intelligence Senior Global Banks analyst Alison Williams. 0:00:46.120 --> 0:00:49.000 She joins us on the phone in Summit, New Jersey. Allison, 0:00:49.360 --> 0:00:51.440 nice to have you here with Katie and myself. So 0:00:51.920 --> 0:00:53.519 let's get to it. I guess we should start with 0:00:53.600 --> 0:00:56.600 JPM right, because everybody wants to know what they do. 0:00:56.640 --> 0:00:59.480 What Jamie Diamonds says, what do we need to be 0:00:59.520 --> 0:01:05.520 aware of us? Big news today, if you will, UM 0:01:05.800 --> 0:01:10.160 was the guidance for UM costs for this year, and 0:01:10.200 --> 0:01:14.760 that was much bigger than consensus had expected. UM costs 0:01:14.800 --> 0:01:17.319 are increasing. We know that across the industry. We know 0:01:17.480 --> 0:01:22.640 that volumes are very good. UM. With that becomes higher compensation, 0:01:22.720 --> 0:01:25.920 so that's a big driver. UM. Back to work normalization 0:01:25.959 --> 0:01:29.560 of TNE that's also a driver. And then investment spending. 0:01:30.160 --> 0:01:33.720 Obviously it's a very competitive environment. There's lots of emerging 0:01:33.800 --> 0:01:38.920 fintech competitors and and competition broadly. And UH costs are 0:01:38.920 --> 0:01:42.479 going up UM perhaps eight to nine percent this year, 0:01:42.560 --> 0:01:46.440 So I think, well, there's a lot of revenue indicators 0:01:46.440 --> 0:01:48.680 that people have been excited about coming into the quarter. 0:01:49.000 --> 0:01:51.200 UM rates are going higher, that's a great thing. But 0:01:51.240 --> 0:01:54.960 the expense and guidance was the new variable that we 0:01:55.000 --> 0:01:58.240 got today. Take Alison, was it all about just compensation 0:01:58.400 --> 0:02:02.480 or was it all also about cat bex? What was it? 0:02:02.480 --> 0:02:06.960 It's compensation, it's normalization of T and E spending as 0:02:07.720 --> 0:02:11.119 the world begins to go back to work live, and 0:02:11.240 --> 0:02:16.400 it's investing UM investing UM referring to you know, spending 0:02:16.400 --> 0:02:20.399 on technology and keeping competitive on that front. UM JP 0:02:20.520 --> 0:02:23.800 Morgan is obviously a sizeable firm, and they're spending across 0:02:23.880 --> 0:02:28.440 the firm, and I think what's important for investors is that, yes, 0:02:28.520 --> 0:02:30.600 the class are going to be higher, but they're investing 0:02:31.200 --> 0:02:33.640 for the long term and they're still going to be 0:02:33.720 --> 0:02:36.640 earning a return on tangible common equity, which is the 0:02:36.720 --> 0:02:39.320 key metric we look at UM. They're still going to 0:02:39.400 --> 0:02:42.480 be earning one of the highest ratios in the business. 0:02:42.520 --> 0:02:47.519 So UM perhaps a bit below their sevent medium term target, 0:02:48.000 --> 0:02:51.280 but I think that's you know why JP Morgan, you know, 0:02:51.560 --> 0:02:54.000 is the company that is today because it has been 0:02:54.480 --> 0:02:57.880 willing to invest in its franchise. Also, I'm curious to 0:02:57.880 --> 0:03:00.720 hear your perspective on trading revenue because we did see 0:03:00.720 --> 0:03:03.760 a big drop off there jeffries earlier this week than 0:03:04.200 --> 0:03:07.760 JP Morgan's city today, just to name a few. How 0:03:07.840 --> 0:03:10.880 much of that is, you know, just tough year over 0:03:10.960 --> 0:03:14.480 your comparisons versus actually there was a real slow down here. 0:03:15.400 --> 0:03:18.080 So it's it's more the former there that the tough 0:03:18.160 --> 0:03:24.400 year of your comparisons. UM last four q was exceptionally 0:03:24.520 --> 0:03:28.040 strong for the industry, and so UM you know the 0:03:28.040 --> 0:03:32.079 fact that we're only seeing UM, you know, relatively modest 0:03:32.080 --> 0:03:35.880 declines against that for companies like JP Morgan and City Group. 0:03:36.520 --> 0:03:38.840 You know, I think is still a pretty solid result. 0:03:38.920 --> 0:03:42.360 Jeffreyes UM is a bit more Vottle their quarter UM 0:03:42.480 --> 0:03:45.600 ends in November and not December. UM. They were also 0:03:46.440 --> 0:03:49.400 way outperformed the bigger peers UM sort of in the 0:03:49.400 --> 0:03:51.320 good times. And so we're seeing just a little bit 0:03:51.320 --> 0:03:56.760 of normalization there and that on the so trading, both 0:03:56.760 --> 0:03:59.520 equities and FICK trading, we're a little bit light equities 0:03:59.520 --> 0:04:02.800 trading at performing. But fees were really the big story 0:04:02.880 --> 0:04:05.520 for the global investment banking business. UM. That's a lot 0:04:05.600 --> 0:04:08.640 of what's feeding into the higher compensation. It's a talent 0:04:08.720 --> 0:04:11.360 driven business. There is a war for talent going on 0:04:11.480 --> 0:04:14.800 out there, and fees were better than expected for both 0:04:15.000 --> 0:04:18.680 JP Morgan and City Group. UM. We expect that's a 0:04:18.760 --> 0:04:22.280 great indicator ahead of Goldman and Morgan Stanley UM that 0:04:22.320 --> 0:04:27.400 we're getting next week there. Goldman Morgan Stanley, JP Morgan 0:04:27.440 --> 0:04:29.040 are leaders in M and A and I p o 0:04:29.160 --> 0:04:32.479 S record year last year, three end of the year 0:04:32.600 --> 0:04:36.920 and momentum um coming into this year. And I mean 0:04:37.560 --> 0:04:39.720 We're only halfway through, right, So if you look at 0:04:39.839 --> 0:04:43.120 today's tea leaves what we saw today from you know, 0:04:43.200 --> 0:04:46.720 some of the big reporters today, JP, Morgan City, Jefferies earlier. 0:04:47.400 --> 0:04:49.480 What is that portend for what we're going to come 0:04:49.480 --> 0:04:51.560 back to next week? Because I think we were looking 0:04:51.600 --> 0:04:54.880 forward to Goldman, Morgan Stanley, Bank of America. The list 0:04:54.880 --> 0:04:59.200 goes on. The figures that we have so far UM 0:04:59.360 --> 0:05:03.960 bode very well for the revenue side of Morgan Stanley 0:05:04.040 --> 0:05:07.200 and Goldman Sachs, especially with regard to the strength and 0:05:07.240 --> 0:05:11.840 investment banking fees UM trading as I said, might might 0:05:11.880 --> 0:05:14.960 be a little bit weaker UM, but also the asset 0:05:15.040 --> 0:05:19.760 and wealth businesses, especially UM for Morgan Stanley also going 0:05:19.800 --> 0:05:23.040 to come in and benefit from very strong markets. Costs 0:05:23.080 --> 0:05:24.880 are going to be the thing that we're watching for 0:05:24.960 --> 0:05:28.440 both of those companies, as well as for Bank of America. UM. 0:05:28.520 --> 0:05:31.000 You know, on Bank of America, we're looking for loan 0:05:31.080 --> 0:05:34.240 growth as well as a key indicator. I would say 0:05:34.279 --> 0:05:38.760 that UM, you know, investors were relatively bullish, especially with 0:05:38.800 --> 0:05:41.760 regard to some of the industry data. Bank of America 0:05:42.000 --> 0:05:45.120 is even more bullish, I think than the industry a 0:05:45.160 --> 0:05:48.560 lot of that relates to commercial industrial UM. I think 0:05:48.600 --> 0:05:51.880 the numbers generally support that the card is a little 0:05:51.920 --> 0:05:55.200 bit weaker for for the big um players. UM, but 0:05:55.640 --> 0:05:58.760 the costs are going to be UM. The key if 0:05:58.839 --> 0:06:01.960 if you have JP Moore in who's sort of um, 0:06:02.000 --> 0:06:05.600 you know, the biggest out there upping they're spending by 0:06:05.640 --> 0:06:08.840 the this degree, I would think it's it's hard. It's 0:06:08.839 --> 0:06:11.280 going to be hard for other companies not to also 0:06:11.400 --> 0:06:14.200 up their game. All Right, Gonna leave it on that note. Hey, Allison, 0:06:14.279 --> 0:06:18.120 as always appreciate your insight. She is Bloomberg Intelligence Senior 0:06:18.160 --> 0:06:21.640 Global Banks analyst, Allen Allison Williams joining us on the 0:06:21.680 --> 0:06:24.440 phone from some New Jersey and Uh, Katie, were seeing 0:06:24.440 --> 0:06:26.200 a little pressure on those bank names today, but they've 0:06:26.200 --> 0:06:28.839 been running up higher this year so far. Yeah, absolutely 0:06:28.839 --> 0:06:31.640 having a fantastic year. But JP Morgan shares down six 0:06:31.720 --> 0:06:34.599 percent today, Carol, Yeah, that's quite a haircut. All Right, 0:06:34.640 --> 0:06:40.200 you're listening to Bloomberg Radio. This is Bloomberg Business Week 0:06:40.400 --> 0:06:44.360 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:06:44.520 --> 0:06:48.960 Bloomberg Radio. We are continuing, as Katie mentioned earlier, tracking 0:06:48.960 --> 0:06:50.800 those headlines when it comes to COVID. We have b 0:06:50.880 --> 0:06:54.480 of A pushing back its return to office for staff 0:06:54.520 --> 0:06:56.360 in the US again until at least the fourth week 0:06:56.400 --> 0:07:00.000 of January. Katie BP telling its employees at its large 0:07:00.120 --> 0:07:02.440 US office in Houston to work from home until next 0:07:02.520 --> 0:07:06.039 month due to those rising almicron cases in Texas. Yeah, 0:07:06.080 --> 0:07:08.239 I mean those headlines coming hot and heavy. He almost 0:07:08.240 --> 0:07:10.880 expects the question, I mean, who hasn't pushed back the 0:07:10.960 --> 0:07:13.240 return to office date at this point? I'd love to know. 0:07:13.520 --> 0:07:15.880 It's a really good point. Let's see what Dr Ian 0:07:15.960 --> 0:07:18.400 Lsbader has to say, his clinical professor of medicine over 0:07:18.400 --> 0:07:20.000 at n y U Land and we check in with 0:07:20.080 --> 0:07:23.280 him every week. Uh. And he joins us on the 0:07:23.320 --> 0:07:26.520 phone in New York City. Uh. Dr Lsbader, nice to 0:07:26.520 --> 0:07:28.200 have you here with Katie and myself. How are you? 0:07:28.240 --> 0:07:32.200 How are you feeling much better? Thanks Carol and Katie, 0:07:32.240 --> 0:07:35.440 your pleasure. Last week, YEP, I was sick. I had 0:07:35.520 --> 0:07:39.480 thought perhaps I had COVID. I tested negative, but there 0:07:39.480 --> 0:07:43.960 are many other viruses going around RSV respiratory. Sincecial virus flew, 0:07:44.400 --> 0:07:46.320 we don't really test for all of them, and we're 0:07:46.360 --> 0:07:49.800 seeing a ton of people call in either COVID positive 0:07:50.240 --> 0:07:52.760 um or with symptoms that turn out to be negative. 0:07:52.840 --> 0:07:55.240 So people are in a bit of a panic, and 0:07:55.400 --> 0:07:57.720 many patients are saying, oh my gosh, what do I do? 0:07:57.960 --> 0:08:01.640 Is there some treatment for me um And unfortunately there's 0:08:01.680 --> 0:08:03.560 a lot of limited treatment. A lot of what we 0:08:03.640 --> 0:08:07.440 have is really regulated by the state and limited to 0:08:08.000 --> 0:08:11.720 either elderly people or people with a significant underlying medical problems. 0:08:11.760 --> 0:08:15.400 So people feel very frustrated, and Dr I am curious 0:08:15.440 --> 0:08:18.560 to hear your perspective on what the path forward looks like, 0:08:18.600 --> 0:08:21.040 because you know, like I mentioned a minute ago, we 0:08:21.120 --> 0:08:23.520 did hear from maderna co founder today saying in a 0:08:23.520 --> 0:08:27.920 Bloomberg television interview that two is going to be the 0:08:28.000 --> 0:08:32.040 year that this pandemic turns into an endemic. Would love 0:08:32.080 --> 0:08:34.200 to hear your thoughts on that. First of all, would 0:08:34.200 --> 0:08:38.320 that change our day to day life? And also do 0:08:38.360 --> 0:08:42.120 you think that's a realistic timeline? I do for both. 0:08:42.160 --> 0:08:45.520 I do think that this will turn into an endemic problem, 0:08:45.559 --> 0:08:48.440 which basically means covid will be omron will be like 0:08:48.520 --> 0:08:53.040 a seasonal flu. You know, we get um hundreds of 0:08:53.080 --> 0:08:56.400 thousands of cases of flu every year. Uh and unfortunately 0:08:56.440 --> 0:08:59.160 thousands of deaths from flu every year. You know, the 0:08:59.160 --> 0:09:02.120 flu vaccine helps, it's somewhat limited. It doesn't work a 0:09:02.320 --> 0:09:05.800 d I do think we're seeing really a plateau, and 0:09:05.800 --> 0:09:07.800 and soon we will see a drop in the number 0:09:07.840 --> 0:09:10.800 of cases. Certainly in some areas. We're seeing that already 0:09:10.840 --> 0:09:13.160 in the Northeast. So I think the number of O. 0:09:13.280 --> 0:09:16.880 Macron cases and COVID cases will be dropping in the 0:09:16.920 --> 0:09:20.880 next few weeks. We still are seeing some hospitalizations and 0:09:20.880 --> 0:09:23.280 and some deaths, but overall this does appear to be 0:09:23.440 --> 0:09:27.680 much more mild, and I think until we really are 0:09:27.760 --> 0:09:30.120 able to eliminate it, and we may not be able 0:09:30.160 --> 0:09:32.760 to do it, we will just have to live with it. 0:09:32.840 --> 0:09:38.680 And oh Macron or covid, maybe another seasonal UH coronavirus. 0:09:38.720 --> 0:09:41.880 And we have many coronaviruses that we test for in 0:09:41.960 --> 0:09:45.120 a nasal swab, a PCR nasal swab. It's called a 0:09:45.200 --> 0:09:49.800 respiratory panel. When people come in they're sick UH, either 0:09:49.880 --> 0:09:53.000 in the emergency room sometimes in local offices, we do 0:09:53.080 --> 0:09:55.440 that swab and a test for you know, ten or 0:09:55.440 --> 0:09:59.240 fifteen different viral pathogens. And I think, oh Macron, and 0:09:59.320 --> 0:10:02.000 this will be enough. They're coronavirus that will be testing 0:10:02.080 --> 0:10:06.680 for and hopefully we will have some anti virals like tamiflu. 0:10:07.240 --> 0:10:10.040 Right now, a lot of the medications like the IVY 0:10:10.080 --> 0:10:15.920 monoclon antibodies Strova MEB very limited in amount packs. Leavitt 0:10:15.960 --> 0:10:19.040 has a lot of drug interactions, so we really just 0:10:19.160 --> 0:10:22.480 offer people supportive care and fortunately most people do well, 0:10:22.960 --> 0:10:28.480 you know, hydration and mucus centers and cough suppressants. So um. 0:10:28.600 --> 0:10:31.680 Sadly we don't really offer people a lot of magic bullets. 0:10:31.960 --> 0:10:34.400 Hopefully over the next year or so we will get 0:10:34.440 --> 0:10:38.040 more effective therapies. What is it, though, Ian about you know, 0:10:38.080 --> 0:10:41.240 We've been talking with you throughout the pandemic. I'm going 0:10:41.280 --> 0:10:44.480 to be fully transparent. I tested positive for rapid test 0:10:44.559 --> 0:10:46.840 and I'm at home, no symptoms so far. But I 0:10:46.880 --> 0:10:49.880 have to say I had felt so lucky navigating up 0:10:49.920 --> 0:10:53.320 to this point, um, and it was real shocking to me. 0:10:53.360 --> 0:10:55.920 And I'm like, you know, what is it that you know? 0:10:56.000 --> 0:10:57.760 I know you have said to us, everybody's going to 0:10:57.800 --> 0:10:59.360 get this. It's just the way it is. It's getting 0:10:59.400 --> 0:11:02.000 much more contain ages, but it is still scary because 0:11:02.040 --> 0:11:04.000 you do talk to people who said it was nothing, 0:11:04.040 --> 0:11:06.680 and then there's other folks, younger folks, older folks, you 0:11:06.760 --> 0:11:09.240 name it, who say, yeah, I was knocked off my 0:11:09.320 --> 0:11:11.360 feet for a couple of weeks. You know, what is 0:11:11.360 --> 0:11:15.320 it about this virus that is still so tricky. Well, 0:11:15.400 --> 0:11:19.040 many viral infections knocked people off their feet. They do 0:11:19.160 --> 0:11:22.160 cause fatigue, you know this. We don't really know all 0:11:22.200 --> 0:11:26.480 the details about this um coronavirus. We certainly know the mutations. 0:11:26.840 --> 0:11:29.800 The real origins we've talked about, you know, are still 0:11:29.840 --> 0:11:32.880 a little muddy and murky, and so it's unclear if 0:11:33.200 --> 0:11:36.160 whether or not, you know, this was engineered in some way, 0:11:36.200 --> 0:11:40.400 but it's certainly a very effective virus. It's highly contagious. 0:11:40.440 --> 0:11:44.439 It's obviously mutated to be much more easily spread by 0:11:44.480 --> 0:11:47.680 people who have no symptoms. Hopefully you're young and healthy. 0:11:47.720 --> 0:11:50.560 Hopefully you'll have a pretty simple course. But you may 0:11:50.600 --> 0:11:55.920 have cloth sneezing, sore throat, laryngitis, bad for an anchor 0:11:55.920 --> 0:12:00.200 to have larynchitis, but usually within ten to fourteen days 0:12:00.320 --> 0:12:02.520 people will get over it. You should speak to your 0:12:02.600 --> 0:12:04.679 doctor some you know, there are some people if they 0:12:04.679 --> 0:12:06.600 have bad costs, will give them a short course of 0:12:06.640 --> 0:12:10.840 steroids to decrease some inflammation. But most healthy people will 0:12:10.880 --> 0:12:14.480 get over it. If you're people have underlying problems that 0:12:14.679 --> 0:12:17.160 really puts them in a different risk group. And there 0:12:17.200 --> 0:12:19.920 are some therapists like monoclone at Lanta Buddy, although it 0:12:20.040 --> 0:12:23.000 is very limited. It's regulated by the state. You can 0:12:23.040 --> 0:12:25.440 prescribe it, it has to go through a committee that 0:12:25.480 --> 0:12:28.360 has to screen people. But I think most people, you're 0:12:28.400 --> 0:12:32.480 a perfect example. You've done everything right. And if you 0:12:32.559 --> 0:12:36.600 look back over really a century, there are very few 0:12:36.640 --> 0:12:41.120 pandemics we've successfully dealt with small to box took years, 0:12:41.240 --> 0:12:45.520 decades and decades of slowly getting everyone vaccinated, So I 0:12:45.559 --> 0:12:49.400 think it was unrealistic to think we could sort of 0:12:49.520 --> 0:12:52.640 jam everyone in with a vaccine that honestly is not 0:12:52.760 --> 0:12:55.920 totally effective. Right, people have three shots, they still get 0:12:55.960 --> 0:13:01.559 O macron, So I think it was unrealistic without tremendous preparation, 0:13:01.760 --> 0:13:05.040 lots of maths, lots of tests, lots of treatment to 0:13:05.120 --> 0:13:07.760 think we could have really succeeded. Well, We're glad to 0:13:07.800 --> 0:13:10.640 hear that you're doing okay and um and I love 0:13:10.679 --> 0:13:12.880 you forever that you were calling me young and healthy, 0:13:13.000 --> 0:13:16.560 So I'm all in. Hey Bewell. Dr Ian LUs Better, 0:13:16.640 --> 0:13:18.880 Clinical Professor of Medicine at n y U Land. Going 0:13:18.920 --> 0:13:21.160 on the phone in New York City. You're listening to 0:13:21.240 --> 0:13:25.200 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:13:25.320 --> 0:13:28.960 Tim Stinovic on Bloomberg Radio. We've talked a lot about 0:13:28.960 --> 0:13:33.360 the increasing legitimization of cryptocurrencies. We've seen that, Katie, safe 0:13:33.400 --> 0:13:35.480 to say, in a big way this past year, whether 0:13:35.520 --> 0:13:40.200 it's government's officials, companies, you name it. Our next guest 0:13:40.280 --> 0:13:42.480 lived in Africa and Latin America for over a decade, 0:13:42.480 --> 0:13:45.240 worked on building up mobile payment platforms. She is former 0:13:45.240 --> 0:13:48.560 CIO of Emerging Tech over at GE Digital. Today she's 0:13:48.559 --> 0:13:51.480 the founder and CEO of O Group. We're delighted to 0:13:51.480 --> 0:13:55.480 bring in with us. Maya vo Unovitch, she joins us 0:13:55.480 --> 0:13:57.840 on the phone in Miami. Maya. Nice to have you 0:13:57.920 --> 0:13:59.840 here with Katie and myself and I hope I got 0:13:59.880 --> 0:14:03.920 your name right. Oh, absolutely, such a pleasure to be 0:14:04.000 --> 0:14:06.120 on and happy New Year to both of you. Well, 0:14:06.120 --> 0:14:08.240 happy New year as well. Tell us a little bit 0:14:08.240 --> 0:14:11.360 about your background, because I think you know, Katie and 0:14:11.360 --> 0:14:13.880 I we watched the established financial guys kind of playing 0:14:13.920 --> 0:14:16.120 catch up now with the crypto world, and for a 0:14:16.120 --> 0:14:19.000 long time they shunned it. It does feel like, you know, 0:14:19.160 --> 0:14:24.360 the emerging markets and disruption innovators, those folks were really 0:14:24.400 --> 0:14:28.360 ahead of the curve. Your experience in the emerging market world, 0:14:28.720 --> 0:14:30.960 how does that give you maybe a different perspective when 0:14:30.960 --> 0:14:34.560 it comes to the world of cryptocurrencies. That's an on 0:14:34.760 --> 0:14:38.600 point question and a very relevant relevant one to what 0:14:38.640 --> 0:14:41.680 we are seeing today. When I started oft in early 0:14:41.800 --> 0:14:44.600 two thousands, I went on to do payments in Africa 0:14:44.960 --> 0:14:47.280 and then Latin America followed. That was at the same 0:14:47.320 --> 0:14:51.080 time when Impressive was starting, and now you're seeing this 0:14:51.640 --> 0:14:56.160 incredible reversal where actually Africa is leading in adoption of 0:14:56.280 --> 0:15:02.400 cryptocurrencies even comparison to to North America. So the perspective 0:15:02.520 --> 0:15:06.320 is absolutely different in a sense that I've lived there, 0:15:06.480 --> 0:15:09.840 I have paid employees, I've received my own salary and 0:15:09.920 --> 0:15:13.400 these things. And when you realize that the amount of 0:15:13.480 --> 0:15:16.840 money that it takes to actually pay the banking fees 0:15:16.880 --> 0:15:20.080 and cross board of payments and the difficulty of doing 0:15:20.120 --> 0:15:22.840 all of that. This is where I had my lightbulb 0:15:22.920 --> 0:15:26.240 moment about bitcoin. And when I received the Bitcoin white paper, 0:15:26.600 --> 0:15:29.400 I thought, if this happens, this would be unbelievable and 0:15:29.400 --> 0:15:32.840 that was in two thousand nine and ten, so I 0:15:32.920 --> 0:15:35.400 have lived it. We've built some of these platforms in 0:15:35.400 --> 0:15:39.880 emerging markets and when you actually see, um, the amount 0:15:40.000 --> 0:15:43.160 of money that it takes in a difficulty for people 0:15:43.200 --> 0:15:45.840 to launch businesses, for people to get paid, for people 0:15:45.840 --> 0:15:49.120 to transfer money to their dear ones. It is absolutely 0:15:49.360 --> 0:15:52.560 an incredible solution and no surprise that it's gaining such 0:15:52.720 --> 0:15:55.600 traction and emerging markets and maya, when we talk about 0:15:55.640 --> 0:15:59.200 emerging markets, Uh, where do you see the most potential 0:15:59.320 --> 0:16:01.960 two in a great crypto when we talk about the 0:16:02.000 --> 0:16:07.520 different countries. Yeah, sure, Um, I think that's also an 0:16:07.520 --> 0:16:10.400 excellent question in the sense that there is a uh, 0:16:11.000 --> 0:16:13.760 there is a bit of a divergence. And what I 0:16:13.800 --> 0:16:16.120 mean by that is you will see regulation in some 0:16:16.240 --> 0:16:19.080 of these emerging markets really clamped down in crypto. We've 0:16:19.120 --> 0:16:21.800 seen it in Nigeria, We've seen in Zimbabwe. We have 0:16:21.840 --> 0:16:24.400 seen it in some of the Latin American countries as well. 0:16:24.720 --> 0:16:28.000 But if you look at Brazil, if you look at Argentina, 0:16:28.120 --> 0:16:32.480 if you look at Venezuela, these are old countries where 0:16:32.760 --> 0:16:36.760 the currency, the local currency, fluctuates tremendously and if you 0:16:36.760 --> 0:16:39.320 look at apps like, for example, Reserve that is a 0:16:39.360 --> 0:16:42.760 stable point in that is mainly in Venezuela, but across 0:16:42.840 --> 0:16:47.520 Latin America. It's currently being used I think about sixty 0:16:47.560 --> 0:16:52.640 million dollars of transactions monthly volume is being used currently 0:16:52.800 --> 0:16:57.840 to keep the stability of boliviar while the currency fluctuates 0:16:57.960 --> 0:17:00.200 or depending on what happens with the US dollar. Right 0:17:00.680 --> 0:17:06.760 in Africa, you're seeing a huge potential because obviously, um once, 0:17:06.880 --> 0:17:08.960 if you look at Nigeria for example, right, which is 0:17:09.000 --> 0:17:12.560 the most populous country in Africa, it is full of 0:17:12.840 --> 0:17:18.200 extremely impatient youth, youth that is hungry for innovation. And 0:17:18.320 --> 0:17:23.800 when the oil supply goes down, right and the dollar 0:17:24.000 --> 0:17:27.520 is actually the dollar supply squeeze out, many of the 0:17:27.560 --> 0:17:31.520 businesses are simply unable to pay foreign suppliers and lenders, right, 0:17:31.680 --> 0:17:35.040 And so this becomes a really big use case for 0:17:35.119 --> 0:17:38.439 countries like that as well. Yeah, let's dig into some 0:17:38.600 --> 0:17:41.520 of those use cases because I mean, crypto it's such 0:17:41.600 --> 0:17:45.320 a broad umbrella. People usually think just bitcoin, but I 0:17:45.320 --> 0:17:49.200 mean we start thinking about cross border payments, stable coins, 0:17:49.240 --> 0:17:50.720 I mean, what are what are some of the big 0:17:50.720 --> 0:17:54.200 ease here? Yeah, absolutely so one of them that I'm 0:17:54.480 --> 0:17:59.440 so one. One simply can just be accessed to earning 0:17:59.560 --> 0:18:02.920 money right in a different way and access to some 0:18:03.080 --> 0:18:05.639 kind of a financial freedom. Yes, it comes with risk 0:18:06.080 --> 0:18:09.199 because it is not regulated, it have huge fluctuations. So 0:18:09.240 --> 0:18:13.720 one could be just a massive umbrella access to ability 0:18:13.760 --> 0:18:16.520 to earn money besides what your government is offering you. 0:18:16.680 --> 0:18:19.639 So you could for example, there's another platform that is 0:18:19.680 --> 0:18:23.359 being launched very soon. It's called Toucan. It is a 0:18:23.600 --> 0:18:27.199 mature based carbon token right that is linked to a 0:18:27.320 --> 0:18:31.520 verified carbon credit market and it connects crypto capital um 0:18:31.560 --> 0:18:34.720 to kind of a planet positive projects around the world. 0:18:35.080 --> 0:18:38.360 What does this mean for emerging markets suddenly, Katie, means 0:18:38.400 --> 0:18:41.679 that folks can access a fractionalized version of a carbon 0:18:41.720 --> 0:18:44.920 market that is usually very tainted that is only available 0:18:44.960 --> 0:18:47.159 to those that actually have a lot of money. It's 0:18:47.160 --> 0:18:51.280 a democratization of assets, right, and so you can now 0:18:51.440 --> 0:18:54.560 buy into something that you believe in um, not just 0:18:54.760 --> 0:18:57.000 what your government or what the local news might be 0:18:57.080 --> 0:19:00.280 offering to you. So so that's another example. You would 0:19:00.400 --> 0:19:03.320 end up using some of the crypto and lending against 0:19:03.400 --> 0:19:06.840 your cryptos for a local currency to go and then 0:19:06.880 --> 0:19:10.359 take money for your local business, right. It offers a 0:19:10.440 --> 0:19:13.680 pleathora of opportunity for people to do that. Maya, you 0:19:13.720 --> 0:19:15.480 are full of information. You've got to come back and 0:19:15.640 --> 0:19:17.919 and share some more with us because your perspective is 0:19:17.960 --> 0:19:21.320 obviously unique, especially when it comes to all your time 0:19:21.320 --> 0:19:23.119 you've spent an emerging market. So we hope you do 0:19:23.359 --> 0:19:27.919 come back. Maya Vuyanovitch, she is the founder and CEO 0:19:28.160 --> 0:19:31.240 of O Grip, joining us on the phone in Miami. 0:19:31.600 --> 0:19:35.639 This is Bloomberg Business Week with Carol Masser and Bloomberg 0:19:35.680 --> 0:19:39.840 Quick Takes Tim Stinovic on Bloomberg Radio. Folks, let's get 0:19:39.840 --> 0:19:42.080 to it. We've got just about ten minutes left in 0:19:42.080 --> 0:19:45.320 today's trading session, getting ready to wrap up another wild 0:19:45.400 --> 0:19:50.000 week here uh in two weeks in but we are 0:19:50.280 --> 0:19:53.240 near our best levels for the most part on our 0:19:53.280 --> 0:19:56.200 major equity averages. Carol Masser alow with Katie Gryfield. Let's 0:19:56.200 --> 0:19:59.320 bring in our guests. Darryl Great, chairman and managing principle 0:19:59.359 --> 0:20:02.200 at Easterly Investment Partners. He joins us on the phone 0:20:02.200 --> 0:20:06.760 from Massachusetts. Darryl, how are you oh well today? Thanks? 0:20:06.760 --> 0:20:10.160 How about you guys? Do it okay? Trying to you know, uh, 0:20:10.440 --> 0:20:13.360 just watch the economic news. The FED speakers a lot 0:20:13.440 --> 0:20:16.640 going on. It does feel like markets are a lot 0:20:16.640 --> 0:20:19.360 more nervous than they were perhaps even at the end 0:20:19.480 --> 0:20:25.640 of Fundamentally, how do the markets look to you? Yeah, 0:20:25.680 --> 0:20:29.280 I think what we're seeing is this fundamental transition from 0:20:29.280 --> 0:20:32.720 from growth stocks to value stocks as people fear the Fed. 0:20:33.280 --> 0:20:35.280 You know, Um, you know, this is beginning a theme 0:20:35.320 --> 0:20:37.199 that we're going to see probably for the next year 0:20:37.280 --> 0:20:41.440 or two. The forty year bull party for for bonds 0:20:41.560 --> 0:20:44.080 is over. Jerome Powell has turned the lights up and 0:20:44.080 --> 0:20:47.639 he's asking everybody to leave, you know, with very low rates, 0:20:47.680 --> 0:20:50.640 Investors are discounting ear things that are twenty years out 0:20:50.680 --> 0:20:53.800 in today's growth valuations. And we're seeing a shift to value. 0:20:54.800 --> 0:20:57.800 And why why should we believe that this shift of value? 0:20:57.840 --> 0:21:00.760 Because you know, we've seen some runs at this rotation 0:21:00.880 --> 0:21:03.320 a few times in the past two years or so. 0:21:03.720 --> 0:21:06.960 What makes this time different? Why would value stick around 0:21:07.000 --> 0:21:10.679 this time? Oh, it's a great question, you know. And um, 0:21:10.840 --> 0:21:12.919 what what is different this time is that we're going 0:21:12.960 --> 0:21:16.200 to see three, four or five six rate hikes over 0:21:16.240 --> 0:21:19.159 this over this next year. And what you saw in 0:21:19.160 --> 0:21:23.080 two thousand, seventeen, eighteen nineteen as the FED took interest 0:21:23.160 --> 0:21:28.000 rates to zero. Earnings for growth stocks, Um, we're discounting 0:21:28.000 --> 0:21:31.240 earnings that were again fifteen or twenty years out that 0:21:31.280 --> 0:21:35.320 were significant. And as that as those rate hikes hikes 0:21:35.320 --> 0:21:37.680 go up, what you're going to see is those growth 0:21:37.720 --> 0:21:41.480 stock valuations declining and m and that and that is 0:21:41.600 --> 0:21:43.959 uh that that's that's going to have a permanent effect 0:21:43.960 --> 0:21:46.639 on the market. So at this point, what would you 0:21:46.680 --> 0:21:49.560 recommend to investors that they do at this point, because 0:21:49.560 --> 0:21:51.680 there's still a lot of questions out there right safe 0:21:51.720 --> 0:21:54.680 to say, we don't have the playbook for exactly how 0:21:54.720 --> 0:21:58.000 we come out of this easily. Our Eric Shatzker gets 0:21:58.040 --> 0:22:01.239 catching up with Dr Kaufman and really nervous about that. 0:22:01.280 --> 0:22:04.760 We don't necessarily have a FED out there right now 0:22:04.920 --> 0:22:07.720 led by J. Powell that's going to maybe make the 0:22:07.840 --> 0:22:12.200 uncomfortable aggressive moves that we need to really reign in inflation. Yeah, 0:22:12.240 --> 0:22:14.239 I think you're right on it, which is, you know, 0:22:14.280 --> 0:22:17.040 our fear is that they don't move fast enough, and 0:22:17.080 --> 0:22:19.680 there's also a fear that they're going to overreact. So 0:22:20.119 --> 0:22:22.320 you know, today, coming out of the pandemic, supply and 0:22:22.359 --> 0:22:24.960 demand and balances or the source of the greatest risk. 0:22:25.440 --> 0:22:27.560 You know, they're the driver of both this real and 0:22:27.680 --> 0:22:31.440 transitory inflation and UM and how the FED reacts is 0:22:32.600 --> 0:22:35.360