Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, A, market pros, and
Speaker 1: Bloomberg experts, along with essential market moving news. Find the
Speaker 1: Bloomberg Markets Podcast on Apple podcast or wherever you listen
Speaker 1: to podcasts, and on Bloomberg dot com. Let's bring in
Speaker 1: somebody else into this conversation. Now, legal analysts and a
Speaker 1: course host of Bloomberg Law, which airs weeknights at ten
Speaker 1: pm Eastern. It's a mustless and June gar also joins us. Now, June,
Speaker 1: we have the decision then from the Supreme Court on
Speaker 1: the subpoenas to take us through the May arguments because
Speaker 1: there was a lot of questioning from many of the
Speaker 1: judges on both sides. So some of the Democratic appointees
Speaker 1: were asking questions that didn't make it obvious which way
Speaker 1: they would vote, and equally the Trump appointees, Right, Vonnie,
Speaker 1: it was really difficult to tell from those oral arguments
Speaker 1: where the justices are going to go. You know, sometimes
Speaker 1: you think you know, sometimes you don't. But there it
Speaker 1: was just confusion. But what was clear was that the
Speaker 1: justices were more on the same page, were more amenable
Speaker 1: to the argument by Vance the District Attorney's office in
Speaker 1: Manhattan because of several things. One, because this is grand
Speaker 1: jury secrecy. So remember, I don't know what Kimberly has
Speaker 1: already said, but this is a grand jury. So these documents,
Speaker 1: even when Vance gets them, when the District Attorney gets them,
Speaker 1: are not going to be made public. The only time
Speaker 1: they might be made public if there's an actual criminal
Speaker 1: indictment in that case. So the justices are sure that
Speaker 1: this is going to be kept secret, and they asked
Speaker 1: a lot of questions about grand jury secrecy. I remember
Speaker 1: Justice Alito questioning whether or not you could really count
Speaker 1: on grand jury secrecy or whether the newspapers and the
Speaker 1: media atlets would be able to get hints or be
Speaker 1: able to see the documents. So I think that was
Speaker 1: very important to them. Also, it was very it was limited,
Speaker 1: and the the attorney arguing for the District Attorney's office
Speaker 1: agreed that it was a very limited document. He said,
Speaker 1: they were, you know, there were boundaries to it, whereas
Speaker 1: with the congressional subpoena, which I'm still hitting my refresh
Speaker 1: button to see if it has come out second, perhaps
Speaker 1: maybe we may get with the congressional subpoena. The lawyer
Speaker 1: who argued wouldn't give any kind of limits on what
Speaker 1: the subpoena could be, so I think that made a difference. Also,
Speaker 1: I just want to point out that if you remember,
Speaker 1: Justice Tavanagh, who concurred here, was part of the Whitewater investigation,
Speaker 1: so it would be he'd have to be explaining somehow
Speaker 1: how he could rule against this but still take part
Speaker 1: in that broad investigations the Clintons. So true, and that
Speaker 1: kind of goes to where I wanted to go, which was,
Speaker 1: can will this data really remain uh private as it
Speaker 1: relates to the New York Court? I mean, it just
Speaker 1: seems like it's just you know, rife for potential leaks.
Speaker 1: I think I actually think it will. I have a
Speaker 1: lot of faith in the grand jury system. This is
Speaker 1: this is such an important concept, the fact that when
Speaker 1: you go to a grand jury, it's secret, that everything
Speaker 1: that happens in a grand jury was secret. I can't
Speaker 1: imagine any prosecutor in that office breaking that rule. And
Speaker 1: I think that the grand jurors are you know, very
Speaker 1: very much follow their their secrecy oaths. So I'm just
Speaker 1: just see it would leak as well. June suggests that
Speaker 1: that would actually go to the main problem that the
Speaker 1: justices were having along electoral grounds. And actually we're getting
Speaker 1: another headline, High Court largely back in Trump and House
Speaker 1: financial record a bid. So this would actually back what
Speaker 1: I've just said as well, the idea that you know,
Speaker 1: the House was seeking a lot of information, some of
Speaker 1: that was pretty vague and the Supreme fourd seemed to
Speaker 1: be uncomfortable with that. Another headline, High Court orders tougher
Speaker 1: scrutiny of Houses Trump subpoenas. So maybe this isn't over yet.
Speaker 1: Let me give those two headlines again, the High Court.
Speaker 1: That's the Supreme four largely blocking, largely backing Trump in
Speaker 1: the House financial record bid. It's telling the lower courts
Speaker 1: to reconsider the Trump subpoenas. So let me ask both
Speaker 1: of you, Kimberly and June. The Supreme Court is actually
Speaker 1: sending this back down to the lower courts. It wants
Speaker 1: the lower courts to reconsider the Trump subpoenas. What does
Speaker 1: that mean? They were they were, they were very divided
Speaker 1: on the various subpoenas. Who wants to take that? June, well,
Speaker 1: I think what this means is the first thing it
Speaker 1: means is you're not going to see these records before
Speaker 1: the election campaign, before that, not before November, because you
Speaker 1: think about how long it takes that would have to
Speaker 1: be sending it back, they'd have to rebrief everything, and
Speaker 1: then a decision would have to come. So there's no
Speaker 1: way you're going to see these before the November elections.
Speaker 1: Then we'll see what happens as far as the elections,
Speaker 1: but it's going to be a long process. And this
Speaker 1: is what people were predicting that this is a way
Speaker 1: sort of a way out for the court. It's a
Speaker 1: middle ground for the courts send back to the lower courts.
Speaker 1: It's a way to sort of kick the can down
Speaker 1: the road. The Court does this a lot. They issue
Speaker 1: opinions and then they say, okay, take it lower courts,
Speaker 1: you decide. Then sometimes it comes back up, but it's
Speaker 1: going to take quite a long time. So Kim, I
Speaker 1: want to bring you back in here, Kimberly robertson um,
Speaker 1: how do you perceive kind of what the court is
Speaker 1: trying to do here? Is this kind of a win
Speaker 1: for President Trump at this point, well, at least in
Speaker 1: the congressional cases. It seems like a temporary win and
Speaker 1: a win on the objective of not having those financial
Speaker 1: documents week before the election. But this is something that
Speaker 1: the Supreme Court does a lot. It kind of takes
Speaker 1: a middle of the approach, a road road that June
Speaker 1: was talking about, and kind of gives half of a
Speaker 1: win to one side and half of a win to another. So, um,
Speaker 1: this is not surprising from the Court. As you say,
Speaker 1: something that's interesting is that Chief Justice John Roberts wrote
Speaker 1: both majority opinions. And you know, as Kim and I
Speaker 1: have talked about, uh, chief Justice Roberts is in every
Speaker 1: five four decision this Court has come to this term,
Speaker 1: Chief Justice Roberts is the deciding vote, and here he vote.
Speaker 1: He wrote both of these opinions and anxious to read them. Yes,
Speaker 1: we're not gonna let you go read them just yet.
Speaker 1: Though even more questions. So Justice as Karence Thomas and
Speaker 1: Samuel Alito dissented in the Supreme Court grand jury ruling,
Speaker 1: So I guess they didn't want even the grand jury
Speaker 1: to get Tom's tax returns, assuming that that was sort
Speaker 1: of you know, an over right. There was a very
Speaker 1: during the the oral arguments. As I mentioned before, Justice
Speaker 1: Alito expressed, you know, concern that these would be leaked.
Speaker 1: But during the oral arguments, there was also you know,
Speaker 1: a very interesting uh questioning of the President's attorney, because
Speaker 1: the President's attorney, Jay Sekulo, went for this really broad immunity.
Speaker 1: He said, the president is absolutely immune from criminal investigation
Speaker 1: even while in office. So that was this broad broad
Speaker 1: stance he took. So I'm I'm anxious to see exactly
Speaker 1: where uh Thomas and Alito thinks the line should be
Speaker 1: if they say, but it just it shows you. And
Speaker 1: also the seven to two um A lot depends on
Speaker 1: what Justice Roberts actually wrote in his opinion to see,
Speaker 1: you know, you don't have the history I don't see
Speaker 1: at the beginning that you do in the heat during
Speaker 1: the In the other case, the the Manhattan District Attorney's case,
Speaker 1: there was this long history he gave that presidents from
Speaker 1: Monroe to Clinton have accepted this ruling that the chief
Speaker 1: executive is subject to subpoena and have uniformly agreed to
Speaker 1: testify when called in criminal proceedings. So maybe that's the difference,
Speaker 1: but this is going to be this is a huge
Speaker 1: separation of powers issue here is as I'm sure Kim
Speaker 1: Kimberly said before, because the question now is how much
Speaker 1: has congress is oversight authority been stripped away? So, Kimberly,
Speaker 1: what do you think the response is going to be from?
Speaker 1: I guess guess what? What do you think that are
Speaker 1: the next steps here? Well, the next steps is that
Speaker 1: these cases will go back down to the courts from
Speaker 1: which they came, Um, and they'll be some closer look
Speaker 1: at them at the House's reasoning for why it needed
Speaker 1: these cases. Again, think they're just coming out, but it
Speaker 1: looks like the Supreme Court wants the lower courts to
Speaker 1: take a better account of the separation of powers problems
Speaker 1: that the Trump that Trump is asserting here and kind
Speaker 1: of do more work on that issue. It's a win
Speaker 1: for cs IR response for the New York District Attorney
Speaker 1: June on precedent, What can the District attorney do beyond
Speaker 1: just serving these subpoenas and serving these documents to the
Speaker 1: grand jury? Is there anything that he can use this
Speaker 1: as a precedent for Well, um would have to see
Speaker 1: what happens. I think what was going to happen. He's
Speaker 1: already served the subpoenas, and these subpoenas as you mentioned,
Speaker 1: after third parties there to his subpoena actually is is
Speaker 1: just to the accounting firm um and so he's so
Speaker 1: the question is, you know, they'll turn it over right away.
Speaker 1: They've said before that they're going to turn it over,
Speaker 1: so there'll be that turnover. They'll look at the information
Speaker 1: there and then they'll start investigating, and they have investigators.
Speaker 1: They'll start investigating what's behind if they find anything that
Speaker 1: and as you've mentioned, this is a huge amount of
Speaker 1: material that's going to come in. So they'll look at
Speaker 1: it and they'll see if there are any other questions
Speaker 1: what they might decide to do. I mean, grand jury
Speaker 1: has broad powers to look in directions that a normal
Speaker 1: jury wouldn't be doing. And so as you probably heard
Speaker 1: the expression that you know a prosecutor, you can get
Speaker 1: a grand jury to indict a ham sandwich. And so
Speaker 1: the a lot depends on how much you know and
Speaker 1: advance is politically motivated, So a lot depends on how
Speaker 1: much he wants to push this grand jury what they're
Speaker 1: going to do with those with that information. But you've
Speaker 1: gotta know it's it's going there's gonna be a lot
Speaker 1: of pressure on his office now since he is the
Speaker 1: only office in the country that's going to have those.
Speaker 1: Um uh, there's that information. A very interesting conversation coming
Speaker 1: up next now because it is time for Bloomberg opinion
Speaker 1: and a great opinion piece by the former chair of
Speaker 1: the f d i C during the Great Financial Crisis
Speaker 1: that should be noted. She La Bet. She is on
Speaker 1: everybody's lips. She's a household name. Really. She's also founding
Speaker 1: director of the Local Alliance, which aims to build trust
Speaker 1: in government, and she is the founding chair of the
Speaker 1: Systemic Risk Council now after her at the f d
Speaker 1: i C, the vice chairman was Tom Hunig, who is
Speaker 1: also of course of Kansas City Fed President. And they
Speaker 1: have a great opinion piece out on the Bloomberg today
Speaker 1: or in recent days. Banks risks during the pandemic aren't clear.
Speaker 1: There is a lot to unpack here. So she Labert, welcome,
Speaker 1: thank you for having me talk to us about how
Speaker 1: risky banks are these days, because right now we're seeing
Speaker 1: headlines about you know, employees being laid off and so on,
Speaker 1: and we're not actually thinking too much. I think about how,
Speaker 1: you know, how strong fundamentally banks are didn't we fix
Speaker 1: that post Financial park crisis? Well, we did. I mean,
Speaker 1: there was certainly much better capitalized going into this crisis
Speaker 1: than they were during the Great Financial Crisis back in
Speaker 1: two two nine, But that's not saying much because they
Speaker 1: were really very highly leveraged back then. So we started
Speaker 1: from the low baseline. Yes, lots more capital, which was
Speaker 1: good because they were in a much better position going
Speaker 1: into this and and that's that's in in in large
Speaker 1: part due to the reforms we put in place after
Speaker 1: the Great Financial Crisis. So we shouldn't be overly confident,
Speaker 1: though this is a very severe crisis and h capital
Speaker 1: levels have been declining actually leading into this crisis. The
Speaker 1: FED over the last few years have been letting banks
Speaker 1: on average distribute more in capital than they were earning,
Speaker 1: a which depletes their capital levels and so on an
Speaker 1: anonymous weighted basis, we actually saw capital ratio's declining for
Speaker 1: the last two years, So we shouldn't We shouldn't be overconfident.
Speaker 1: There was a bad friend going into this, which is
Speaker 1: unfortunate because usually when you're in a good economic times
Speaker 1: for discycle, the smart thing to do is to raise
Speaker 1: capital not not to lower it. So she'll give us
Speaker 1: a sense of kind of what your your takeaways were
Speaker 1: from the recently released stress tests, right. So I think
Speaker 1: the problem is they just were So we had as
Speaker 1: sensitivity analysis this testament and then we had this to
Speaker 1: stress test, but the stress test really didn't tell us
Speaker 1: much of anything because they were based on economic stress
Speaker 1: scenarios pre pandemic and what we're what we're experiencing now
Speaker 1: is more severe than what even the most severe assumptions
Speaker 1: of the stress tests that we're announced very pre pandemic were.
Speaker 1: And also you were looking at bank balance sheets as
Speaker 1: at the end of the year last year, those have
Speaker 1: grown significantly because of the crisis. And ironically, the FED,
Speaker 1: this is something I supported back when I was chair
Speaker 1: of the f c I s T and later as
Speaker 1: an advocate at the s RC Systemic Risk Council, to
Speaker 1: require as part of the stress tests to show that
Speaker 1: banks can't expand their balance sheets and still have adequate
Speaker 1: levels of capital. Ironically, they fed a down away from
Speaker 1: that they'd weakened to stress test. That was one of
Speaker 1: the many ways they'd weaken going into this. So I
Speaker 1: don't the stress test results, which were firms specific. I
Speaker 1: don't have a lot of confidence in them. There were
Speaker 1: there were some numbers that were frightening, even though they
Speaker 1: were you know, uh were stressed under much more benign
Speaker 1: economic circumstances. As I said in my piece of Tom Hanig,
Speaker 1: the leverage ratios were still quite low, which is a
Speaker 1: non risquaited measure of financial strength of the bank. That
Speaker 1: one went down of Goldman Sacks actually dipped down a
Speaker 1: three point five perc. That was under pre pandemic conditions.
Speaker 1: And we had the sensitivity analysis that tried to incorporate
Speaker 1: pandemic conditions, but they didn't give us the leverage ratios.
Speaker 1: They didn't give this firm specific results. So that's a
Speaker 1: long way of answering your question. We really don't know
Speaker 1: how safe these banks are, and if anything, I think
Speaker 1: they Fed well intentioned but just created more confusion and
Speaker 1: angst about this and it was not reassuring exercise. Has
Speaker 1: the President been set now, Sheila that the FED will
Speaker 1: sort of back stop everything? I mean, the financial crisis
Speaker 1: back stops were supposed to be a one off thing,
Speaker 1: but it does seem like if the FED will back
Speaker 1: stop anything these days, well they are they kind of
Speaker 1: you know, I I supported intervention in the corporate debt markets.
Speaker 1: We had so many companies that were just barely investment grade.
Speaker 1: I was worried if they dropped in a junk territory,
Speaker 1: they wouldn't be able to access credit markets anymore, debt
Speaker 1: markets anymore, and so you would have that would exacerbate
Speaker 1: the layoffs. So I thought, you know, there's a lot
Speaker 1: of problems with how we got to all those overlabored
Speaker 1: corporations to begin with, and some of them were took
Speaker 1: on far too much debt. But be dead as it may,
Speaker 1: I think it was the wise thing to do to intervene,
Speaker 1: but I was guess I was thinking more that they
Speaker 1: would do primary market interventions to help the companies as employers.
Speaker 1: The line's share of the intervention has been in the
Speaker 1: secondary market, which which also helps them issue new debt,
Speaker 1: but it really is more beneficial to investors. So it
Speaker 1: is concerning. And then they're not. I guess they just
Speaker 1: recently said maybe they're gonna taper off a bit now.
Speaker 1: But yeah, I just the last thing we wanted for
Speaker 1: everybody in the country to make too big to fail
Speaker 1: because Jpal pretty much said we're going to backstop these markets,
Speaker 1: and that had a tremendously a beneficial impact for opening
Speaker 1: up corporate debt markets. But again, some of these some
Speaker 1: of these companies probably do need to be restructured. They
Speaker 1: should be having a higher cost of capital, and to
Speaker 1: let this be, we should be trying to figure out
Speaker 1: a way to access this. Now, that was a temporary
Speaker 1: um jolt that we needed to provide to the corporate
Speaker 1: debt markets, but really they should be thinking about the
Speaker 1: excess strategy now case. She also bottom line, how concerned
Speaker 1: are you or how concerned should we be about our
Speaker 1: nation's banks right here? Well, I think we should be
Speaker 1: very worry. I think I think the leadership in Congress,
Speaker 1: instead of trying to you know, have election your deregulatory
Speaker 1: giveaways and pressure the FED to do that, I think
Speaker 1: the pressure should be on the regulators to hold firm
Speaker 1: suspend dividends. That's one good way to bolster bank balance sheets.
Speaker 1: Thirty billion dollars left after I insured banks in the
Speaker 1: first quarter that thirty billion dollars to take on their
Speaker 1: balance sheets. That would have supported about a half a
Speaker 1: three in dollars of expanding capacity and resiliency. So we
Speaker 1: should suspend dividends. We should be bolstering bank balance sheets,
Speaker 1: requiring new equity issue and if necessary, I mean, why
Speaker 1: take a chance. Nobody's going to criticize you for having
Speaker 1: ho much capital in the banking system, but there's going
Speaker 1: to be a lot of adverse fallout for politically and
Speaker 1: more importantly for the real economy if this pandemic crisis
Speaker 1: turned into a financial crisis because banks start failing. So
Speaker 1: suspend those dividends, look at maybe requiring that the issue
Speaker 1: equity um the weaker ones. And that's that's the direction
Speaker 1: I think that the FED should be going. And hopefully
Speaker 1: Congress and the Trump administration will stand down and let
Speaker 1: them do those hard decisions, or or even better, support
Speaker 1: them and encourage them to do so. Sheila, thanks so
Speaker 1: much for joining us. We really appreciate your perspective. Sheilla Bear,
Speaker 1: former chairman of the Federal Deposit Insurance Corporation, giving us
Speaker 1: her thoughts on the banks. All right, So COVID nineteen
Speaker 1: bankrupting American companies at a relentless pace. On boy is
Speaker 1: a hundred and eleven companies right now and expect to
Speaker 1: see more on and I b c Y today a
Speaker 1: great story with fantastic graphics. Let's bring in the author
Speaker 1: David Chilioso, who joins us now to talk about these retailers, airlines, restaurants,
Speaker 1: but also sports leagues and even an arch diocese or more.
Speaker 1: David just first of all gives rundown of the sort
Speaker 1: of variety of companies and entities that are declaring good morning,
Speaker 1: UM funny. It's it's really a cross section of corporate America.
Speaker 1: That's was the interesting part of this exercises their names
Speaker 1: like Hurts and J. C. Penney, even Brooks Brothers recently
Speaker 1: that you know, nearly everyone is familiar with. But in
Speaker 1: the research that we did for this story, we also
Speaker 1: found a lot of smaller companies whose stories have gone
Speaker 1: largely unnoticed. And as you said, there is a lot
Speaker 1: of retail restaurants um in there a lot of energy
Speaker 1: companies with the fall in order prices and entertainment spectors
Speaker 1: that are directly impacted by COVID. But then you find
Speaker 1: also a lot of companies that had financial issues from
Speaker 1: before UM and for for whom COVID was just like
Speaker 1: you know, the last the last drop UM. The archdiocese
Speaker 1: case that you that you brought about, you know, it's
Speaker 1: the New Orleans archdioceses. It's one of over twenty that
Speaker 1: you know, over the past several years of used bankruptcy
Speaker 1: as a way to settle sexual abuse allegations. UM. So
Speaker 1: they obviously had issues before, but COVID is just one
Speaker 1: more challenge that they faced. And in their core papers
Speaker 1: they said, you know, a drop in collections and offerings
Speaker 1: added to an already strained budget. So, David, you know,
Speaker 1: it's interesting. I think what we've heard just anecdotally about
Speaker 1: some of these bankruptcies in certain industries is that the
Speaker 1: ones that went in to this pandemic, the companies that
Speaker 1: went into this pandemic with a over LEVELALERGYT obviously the
Speaker 1: most at risk here. Are you finding that's still the
Speaker 1: case or are we finding companies that are relatively healthy
Speaker 1: in terms of capitalization they're also being pushed to the brink.
Speaker 1: I think we've found both. UM. There are definitely companies
Speaker 1: that were struggling with like heavy debt loads from before UM,
Speaker 1: and in some cases those were the results of leverage
Speaker 1: buyout UM. But in other cases, and especially with some
Speaker 1: of the smaller companies UM, the companies were doing fine.
Speaker 1: They weren't over levered. Uh and they just happened to
Speaker 1: be inspectors that are directly impacted by COVID. So, for example,
Speaker 1: UM and interviewed the owner of Bounce for Fund, which
Speaker 1: is a small company outside of Dallas that rents out
Speaker 1: water slides and and bounce houses. UM the company was
Speaker 1: on track for the record year um and business was
Speaker 1: was going exceptionally well. The problem is they had cancelations
Speaker 1: as soon as shutdown orders came in. UH and the owner,
Speaker 1: you know, he said he got a p P P
Speaker 1: loan that lasted for a couple of months, but he
Speaker 1: just didn't see a way for the business to continue. Uh,
Speaker 1: not over the next few months, but probably not even
Speaker 1: the next season. So the one I found particularly sad
Speaker 1: is the XFL. I mean, whether or not you're a
Speaker 1: fan of Vince Mygmahan and all that he's done, this
Speaker 1: was a way for football players who maybe weren't fully
Speaker 1: able to continue at the highest levels or didn't make
Speaker 1: it the highest levels to play right. It was a
Speaker 1: pro football league. It declared bankruptcy and fired about five
Speaker 1: football players. Alpha Entertainment was the company. There is there
Speaker 1: any chance that companies like this will come out of
Speaker 1: this maybe small or more streamlined, but still an entity absolutely.
Speaker 1: I mean, I guess it depends on the sector and
Speaker 1: whether there are you know, willing buyers for the company
Speaker 1: or it slim down version of the company or its assets. UM.
Speaker 1: But you know, filing for bankruptcy doesn't necessarily mean you're
Speaker 1: going out of business for good, So some of these
Speaker 1: companies may re emerge in a different forms. They may
Speaker 1: be bought by a competitor or an organization UM that
Speaker 1: is active in that in that space. UM. We have
Speaker 1: come across a few cases where the company is actually liquidating,
Speaker 1: so they're selling off all of their assets and shutting
Speaker 1: down for good. But I would say that's not the
Speaker 1: majority of cases that we have come across the farm.
Speaker 1: So that how bad is this going to get? Or
Speaker 1: how it could this get? Uh? Do you expect to see,
Speaker 1: you know, an acceleration of these bankruptcies over the next
Speaker 1: several months. It remains to be seen. And you if
Speaker 1: you look at the timeline, we definitely see a few
Speaker 1: cases in May. Then we had a big increase during
Speaker 1: April May, uh, in June, and you know, we started
Speaker 1: seeing quite a few cases in July as well. UM,
Speaker 1: I think much will depend on how much access to financing. Uh,
Speaker 1: these companies have both in terms of you know, capital
Speaker 1: markets if they're large enough, or you know, loan from
Speaker 1: banks or government programs if they are smaller. Obviously, some
Speaker 1: of the stimulus that was put in place as running out,
Speaker 1: like in the case of p P p UM, so
Speaker 1: you can rule out the possibility that as the effects
Speaker 1: of that simulus kind of fade away, you may see
Speaker 1: more cases for sure. Thanks so much for joining us.
Speaker 1: David Uzo certainly the name of the day, corporate financier
Speaker 1: reporter for Bloomberg News, bring us a fascinating story about
Speaker 1: unfortunately this relentless path of bankruptcies that we're starting to
Speaker 1: see as a result of the pandemic. March sixth low
Speaker 1: up almost nine still down or year today, but up
Speaker 1: from that March low. Just extraordinary continued volatility. But crypto
Speaker 1: is here to stay. To get some latest, we welcome
Speaker 1: Rich Rosen bloom He's co founder and co had of
Speaker 1: trading at g S are based in New York City. Rich,
Speaker 1: thanks so much for joining us here. Give us a
Speaker 1: sense of kind of maybe just how crypto and blockchain
Speaker 1: and bitcoin and all those things have kind of performed
Speaker 1: over the last several months of this new world that
Speaker 1: we find ourselves in. That's a great question. If you
Speaker 1: look at bitcoin it's itself over the last two months,
Speaker 1: it's been mired in a rather thin range between the
Speaker 1: eight thousands to ten thousands. But I think what's what's
Speaker 1: more interesting is that you have a whole parallel ecosystem that,
Speaker 1: even though it was fueled by bitcoin, it's rather independent.
Speaker 1: And I'd say that and since the traditional financial market
Speaker 1: is focused on bitcoin as proverbial digital gold, but there's
Speaker 1: this entire ecosystem that serves a variety of other functions
Speaker 1: and um even though on a broad scale the market
Speaker 1: gets said I believe more in bitcoin, I'm not as
Speaker 1: focused on alf coins. If you take a smaller snapshop
Speaker 1: such as as this week, bitcoin's rally a few percent
Speaker 1: from nine thousands to adding roughly ten billion of market value.
Speaker 1: But if you take two other cryptos that are in
Speaker 1: the top fifteen, they've added over twenty billion of market
Speaker 1: value and rallied in these three days alone between fifteen
Speaker 1: and so I think there's there's a lot of action
Speaker 1: in the space that doesn't get it quite enough focus
Speaker 1: as it should, because I think that the broad market
Speaker 1: is just focused on the big belt bell leather, which
Speaker 1: is Bitcoin. But in terms of the activity in the
Speaker 1: space for groups are are more looking for the activity
Speaker 1: in the crypto natives G s R. We we trade
Speaker 1: with exchanges, we still take business with the miners, with
Speaker 1: the issuers. Uh. We're doing more business in the alt
Speaker 1: coin space uh than in bitcoin. And I think that's
Speaker 1: really the story of this week, since we're seeing a
Speaker 1: bit of a mini all coin boom. So if you're
Speaker 1: looking at bitcoin prices and seeing them up down a
Speaker 1: percent per day, uh, you're missing that there's some other
Speaker 1: assets that are up in a single day. And I
Speaker 1: think that some of these groups, it might be that
Speaker 1: appears more speculation and it's based on Chinese economy operating
Speaker 1: back at full cylinders and there's some trading elements that
Speaker 1: there's a momentum trade people want to buy um the
Speaker 1: groups that are are meeting new highs. But I think
Speaker 1: from speaking to these projects directly, there's a lot of
Speaker 1: building um onto these ecosystems, and we're going to see
Speaker 1: the benefits of these products being built as we move
Speaker 1: out of that prototype phase and more of the stage
Speaker 1: where you see the emerging crypto economy as one where
Speaker 1: it's more of its own tech ecosphere of its own. Yeah.
Speaker 1: Whatever happened to all of the companies that were trying
Speaker 1: to build out the blockchain and the ecosphere and then
Speaker 1: sort of run into a little bit of difficulty right
Speaker 1: when everyone thought that they were taking over the world. Yeah.
Speaker 1: I think that there's always cycles of hype and bust
Speaker 1: for for any new products, especially if it's tech focus
Speaker 1: UM and might have gotten too much attention to certain projects.
Speaker 1: But if you look at early stage investing, angel investing,
Speaker 1: most of the projects are are not going to succeed
Speaker 1: in the end, and as long as there's gonna be
Speaker 1: still a handful of very successful projects, then they can
Speaker 1: remain leaders in this in this space and be a
Speaker 1: good place to invest for the future. So I think
Speaker 1: that the hype in two thousand seventeen, um, you know,
Speaker 1: it was early for bitcoin itself, and at that point,
Speaker 1: I think he needs more a structure to be in place,
Speaker 1: and we're we're in a world different place as far
Speaker 1: as custody, UM, clearing, execution, UM. But I think there
Speaker 1: are some other parts of the ecosystem that they just
Speaker 1: need some more time to play out. And if you
Speaker 1: look at the three thousand different I C O s UM,
Speaker 1: I'm sure that the bulk of them uh aren't going
Speaker 1: to succeed, just like any three thousand groups of tech
Speaker 1: companies that are are brand new. But you know, if
Speaker 1: there's a hundreds that end up powerhouses and changing um,
Speaker 1: you know, the global ecosystem, then you know, I think
Speaker 1: it's still gonna be a good sign for things to
Speaker 1: come in uh decades UH that we are to see
Speaker 1: since UM, you know, looking at the baseball framework, were
Speaker 1: certainly very much in the second, if not the first inning.
Speaker 1: So rich kind of where are we in terms of
Speaker 1: adoption of crypto as an investment asset class by institutional investors?
Speaker 1: I know you trade with a lot of folks out there,
Speaker 1: and where do you do you think we are there?
Speaker 1: So in terms of the saturation, the all the data
Speaker 1: would point to UM decently high saturation as much as
Speaker 1: but I think that that might be reaching that UM
Speaker 1: an institution tangentally has some type of access to some
Speaker 1: investment related to crypto. But I think there's some demographic
Speaker 1: issues in which UM age wise, you know, people that
Speaker 1: are part of the older generation, they still feel that
Speaker 1: even if the point goes up, they don't know if
Speaker 1: that's a real gain. It seems like it's some type
Speaker 1: of you know, interestring currency that can't be translated into
Speaker 1: real dollars versus UH. Millennials or younger generations below thirty
Speaker 1: years old, they tend to believe more in crypto than
Speaker 1: they do in the normal stock market. UM, and so
Speaker 1: I think that, you know, give it five ten years,
Speaker 1: these demographics are certainly going to be in favor of
Speaker 1: crypto investing. But as far as today, UM, while bitcoin
Speaker 1: is a powerhouse and gets a lot of attention from
Speaker 1: both the media and investors, it's still wouldn't be one
Speaker 1: of the top twenty stocks in SMP. So I think
Speaker 1: that if that saturation in terms of people going buying
Speaker 1: and putting in their portfolio is more at I think
Speaker 1: that's pretty pretty good and there's room to build. Rich.
Speaker 1: Thank you the fascinating discussion. Rich Rosen was co founder
Speaker 1: and cohead of trading at g s R, which trades
Speaker 1: in digital assets and provides derivatives and volatility hitting products
Speaker 1: as well. Thanks for listening to Bloomberg Markets podcast. You
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