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Speaker 3: They're as to realize loving the music here, writes sim
Speaker 3: and so, of course, uh, we've been talking about this
Speaker 3: all afternoon, as you all know, Fed Shair Jpal finally
Speaker 3: laying out what Wall Street has been expecting for a
Speaker 3: while here to cut interest rates that are coming soon
Speaker 3: to help support the economy. That marks and about face
Speaker 3: after the Fed, of course, began hiking rates back in
Speaker 3: March of twenty twenty two, after inflation, of course, viral
Speaker 3: to its worst levels in a generation. The economy and
Speaker 3: the US stock market, though, have both come a long
Speaker 3: way since then. So let's dive into the economic as
Speaker 3: well as the investor outlook. Following Pal's speech at Jackson
Speaker 3: Hole this morning, who better than to bring in then
Speaker 3: Bloomberg z oone Mike McKee, International Economics and Policy correspondent
Speaker 3: and Bloomberg News and he's actually at the Jackson Hole
Speaker 3: Economic Policy Symporium here. And then, of course Tracy Bell,
Speaker 3: chief investment officer at First Horizon Advisors, joining us on
Speaker 3: zoom from Birmingham, Alabama. Mike, I'll start off with you
Speaker 3: because you just in the last hour had that great
Speaker 3: interview with Austin Goolsby once again, and I thought it
Speaker 3: was really interesting when he laid out when people were
Speaker 3: debating about the twenty five basis points versus fifty basis
Speaker 3: points in September, but he said expect multiple cuts for
Speaker 3: this year and next. So what was kind of your
Speaker 3: big takeaways from your conversation with him?
Speaker 4: Well, we've turned to corner now, we're now out of
Speaker 4: the higher for longer regime and we are in the
Speaker 4: rate cutting cycle.
Speaker 5: The question will be how far do they cut.
Speaker 4: They don't have an answer for that because they don't
Speaker 4: exactly know what the neutral rate is going to be.
Speaker 4: The economy growing above potential in recent years, does it
Speaker 4: stay that way or does it fall back? Can they
Speaker 4: lower interest rates below or at least to where they
Speaker 4: were even before the Great Financial Crisis, what they.
Speaker 5: Might have considered normal.
Speaker 4: And they don't know whether they're going to cut twenty
Speaker 4: five or fifty basis points. Their preference is twenty five,
Speaker 4: but if we got some really bad economic data, they
Speaker 4: might do fifty. That's what Austin Gouldsby said as well,
Speaker 4: without taking a position on what they'll do in September.
Speaker 6: All right, well, maybe we can get Tracy Bell to
Speaker 6: take a position. She's chief investment officer at First Horizon Advisors. Tracy,
Speaker 6: come on in here and tell us how you're viewing
Speaker 6: the rate path at least through the end of the year.
Speaker 6: Given what we heard from Jay Powell and the various
Speaker 6: bad speakers we've heard from live from Jackson Hall.
Speaker 7: Yeah, I love your intro music there time. That's what
Speaker 7: is chirm Powell said today is.
Speaker 6: There's a method to the madness here.
Speaker 7: Exactly on a Friday afternoon. So, yeah, the time has come,
Speaker 7: and you know, I think the data support that, and
Speaker 7: what Mike is saying about a slow and deliberate pace
Speaker 7: is probably what investors should expect here. Investors have been
Speaker 7: trying to price in FED rate cuts since the beginning
Speaker 7: of the year, and we've really just now gotten to
Speaker 7: the point where the FED is comfortable doing that. Chairman
Speaker 7: Powell talked about gaining confidence in the data, continuing to
Speaker 7: move towards the fed's two percent inflation target, but at
Speaker 7: the same time acknowledging that the employment market has definitely
Speaker 7: cooled and we see that in the data. So to
Speaker 7: the extent that the data continues to support that, we
Speaker 7: should expect rate cuts to follow.
Speaker 3: So I want to follow up with you, Tracy on that,
Speaker 3: because how are you advising clients to position at this
Speaker 3: inflection point with the FED and a change in monetary policy.
Speaker 3: What are you telling them to buy? What are you
Speaker 3: telling them to sell?
Speaker 7: Well, one of the things that we talk about a
Speaker 7: lot with our individual clients is expectations around transitions. So
Speaker 7: when the FED was raising interest rates to begin this
Speaker 7: part of this cycle, we talked about transitions being difficult
Speaker 7: and understanding that transitions can lead to heightened volatility. And
Speaker 7: we saw that not that long ago, a couple of
Speaker 7: weeks ago, with the Japanese market selling off in the
Speaker 7: US market following, only for things to turn around and
Speaker 7: bounce right back. So we're in that same type transition
Speaker 7: environment where the data is beginning to transition to a
Speaker 7: lower pace with the economic growth and a little bit
Speaker 7: weaker on the employment market and inflation is coming down
Speaker 7: where it needs to be, and that implies that we're
Speaker 7: in another transitory environment. Skews the use of the word transitory,
Speaker 7: but transitory where we're shifting down a little bit in
Speaker 7: the growth rate, and that means that investors may have
Speaker 7: to endure a little more volatility as data continues to
Speaker 7: come out, and it's going to be lumpy. Things don't
Speaker 7: move in a straight line, and we're suggesting that investors
Speaker 7: be prepared for that. It's not time to change what
Speaker 7: you're doing. Your investment should be mirroring what your longer
Speaker 7: term financial goals are are for the average individual investor,
Speaker 7: and just understand that in the transitory environment, you may
Speaker 7: experience some volatility.
Speaker 6: Mike, come on in here because I want to talk
Speaker 6: a little bit about this line that I mentioned in
Speaker 6: our interview with Iron Stewart a little earlier, from Powell's
Speaker 6: roughly sixteen minute speech a little earlier today.
Speaker 5: Here's what he.
Speaker 6: Said, quote, the upside risks to inflation have diminished and
Speaker 6: the downside risks to employment have increased. In other words,
Speaker 6: they're more concerned with the risk to arise in unemployment
Speaker 6: than they are to arise in inflation, at least, that's
Speaker 6: my takeaway. How did you view that those two lines?
Speaker 4: Well, you got it right, Tim. The FED has been
Speaker 4: worried about inflation. It was their number one priority for
Speaker 4: two three years now, but the balance of risks, as
Speaker 4: they put it, has now tilted towards unemployment rising too much.
Speaker 4: The FED chair said that they don't think at this
Speaker 4: point that the labor market is going to produce wage
Speaker 4: inflation that would worry them, but they are concerned that
Speaker 4: unemployment could rise too much.
Speaker 5: Now. The question is unemployment.
Speaker 4: Having risen to four point three percent, is that because
Speaker 4: companies are laying off workers.
Speaker 5: It doesn't appear to be that way.
Speaker 4: It appears to be a much larger labor force, more
Speaker 4: people out looking for jobs. And if that's the case,
Speaker 4: the FED isn't going to be worried, but they'll be
Speaker 4: watching the data closely to make sure that we're not
Speaker 4: seeing widespread layoffs, which would be a sign of an
Speaker 4: impending recession.
Speaker 6: Is that, Mike, the piece of data that they're most
Speaker 6: concerned about now.
Speaker 5: Moving forward, it does appear that way.
Speaker 4: They anticipate that they're going to see inflation continue to
Speaker 4: come down towards two percent it might be bumping, could
Speaker 4: be goes up a tenth in a month or something
Speaker 4: like that. But they don't seem to think there's a
Speaker 4: possibility of a breakout at this time. But they are
Speaker 4: worried about a breakout of unemployment, and Pole did say
Speaker 4: today that they'll do whatever it takes to keep that
Speaker 4: from happening.
Speaker 3: Hey, Mike, you also, I'm sure heard about this since
Speaker 3: you're out there, that Rafael Bostic as well as Patrick
Speaker 3: Harker were both signaling that they see the longer term
Speaker 3: neutral rate around three percent, which was pretty specific for
Speaker 3: both of them to come out and say that, So,
Speaker 3: does that mean we should expect over two hundred bases
Speaker 3: points worth of cuts over the next potential a year
Speaker 3: or so.
Speaker 4: Well, a single data point doesn't make a trend, nor
Speaker 4: do two, but if we get some more we might
Speaker 4: think of that. I think probably the best answer is
Speaker 4: the one Austin Gouldsby gave me, which was we're going
Speaker 4: to have to wait and see, because we're going to
Speaker 4: have to wait and see exactly what the economy does.
Speaker 4: If the economy starts to slow, then you would see
Speaker 4: more rate cuts. They might be too tight, so they
Speaker 4: will continue going down, but they don't know where that
Speaker 4: neutral rate is. It was unusual that Bostic and Harker
Speaker 4: told me three percent, but most other officials won't put
Speaker 4: a number on it. But it's a reasonable assumption that
Speaker 4: they could get down that low. What they won't do
Speaker 4: is go back to zero unless there's a crisis.
Speaker 3: Hey, Tracy, come back in here, because what is Pizzi
Speaker 3: is sitting telling us in the stock market as far
Speaker 3: as when you're looking at the S and P five
Speaker 3: hundred just a whisker away actually from its all time high.
Speaker 3: But when you're looking at say derivatives markets, what does
Speaker 3: that show us as far as what investors are betting
Speaker 3: on the next couple of months or so?
Speaker 7: You know, I think when you look at the performance
Speaker 7: of the S and P, there's a couple of things
Speaker 7: to notice, and you see this positioning more broadly. The
Speaker 7: market has been led this year up until recently by
Speaker 7: those big megacap concentrated names within the index, but really
Speaker 7: over the past months to six weeks or so, that's
Speaker 7: changed and you see a much more broad based lift
Speaker 7: in the index coming from names outside of just those
Speaker 7: few names. You also see participation in other market caps,
Speaker 7: and outside the US, so it's a much more broad
Speaker 7: based participation in financial market assets. Moving to the upside
Speaker 7: across the board, the expectation for next year is for
Speaker 7: much broader earnings growth within the S and P sector,
Speaker 7: so not concentrated again in just those few names, but
Speaker 7: spread out more broadly across market caps and sectors. That's
Speaker 7: great for investors that have diversified portfolios, and that's what
Speaker 7: we like to see, so that people aren't chasing just
Speaker 7: a few individual.
Speaker 6: Names, Terracy, What about outside the S and P five
Speaker 6: hundred geographically in terms of sectors, where are you looking
Speaker 6: for growth?
Speaker 7: You know, it's looking like international looks a little better
Speaker 7: this year. It's looking like that broad based growth is
Speaker 7: going to show up really more globally and things not
Speaker 7: be as concentrated in the United States.
Speaker 3: Mike, I want to bring you back in just quickly
Speaker 3: here because we still have a few data points on
Speaker 3: the calendar next week. As you know, the consumer spending
Speaker 3: obviously includes the Fed's preferred gauge when it comes to
Speaker 3: inflation with the PC indicator. But what are you most
Speaker 3: focused on in the short term in the weeks ahead,
Speaker 3: and obviously the jobs reporter is at tever six.
Speaker 4: Yeah, the Jobs Report is going to be the chief
Speaker 4: indicat for the FED and contribute the most to the
Speaker 4: debate over twenty five or fifty basis points.
Speaker 5: But we'll also be watching.
Speaker 4: CPI on September twelfth, and we'll be watching the PCEE
Speaker 4: numbers that you mentioned, because that's the official target. If
Speaker 4: they all come in as anticipated, I think you see
Speaker 4: twenty five basis points on the eighteenth, and if they don't,
Speaker 4: it would take a lot to change their view and
Speaker 4: not cut. You'd have to have a big increase in
Speaker 4: jobs and a drop in unemployment. But if we see weakness,
Speaker 4: then that'll put some weight on the fifty side.
Speaker 6: Michael McKee, international economics and policy correspondent for Bloomberg News.
Speaker 6: He's live from the Jackson Hole Economic Symposium and of
Speaker 6: course Jackson Hole. Also a big thank you to Tracy
Speaker 6: belchief investment officer at First Riseing Advisors. Joining us from Birha, Birmingham, Alabama.
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Speaker 6: Well, if you watch or attended the Democratic National Convention
Speaker 6: in Chicago this week, here's what you saw. Vintage Bernie Sanders,
Speaker 6: a street against big pharma, big tech, big everything, and
Speaker 6: of course billionaires. Minutes later, Illinois Governor J. B. Pritzker,
Speaker 6: who is heir to a vast hotel fortune, stood at
Speaker 6: the same spot to brag that he's an actual billionaire
Speaker 6: who's wealthier than Donald Trump. It's a moment of rapid
Speaker 6: transition from President Joe Biden to Harris. There's a party
Speaker 6: eager to woo a broad coalition. They're selling hope and joy,
Speaker 6: wrapped in memes and served with a side of Beyonce's Freedom.
Speaker 6: What it has avoided, though, is providing economic policy specifics
Speaker 6: that could pit one faction against another. These words from
Speaker 6: the team behind one of the most read stories on
Speaker 6: the Bloomberg terminal today. It's a dispatch from Chicago from
Speaker 6: the Democratic National Convention. It focuses on how corporate leaders
Speaker 6: are contending with a policy light Harris campaign. Amanda Gordon
Speaker 6: is part of that team. She's Wealth Team reporter for
Speaker 6: Blue Burg News and she joins us from Chicago. Amanda
Speaker 6: good to have you with us this afternoon. I hope
Speaker 6: you've gotten a little bit of rest following a whirlwind
Speaker 6: four days in Chicago. One thing that I found really
Speaker 6: fascinating about the piece that you wrote with your team
Speaker 6: is kind of what happens behind the scenes when it
Speaker 6: comes to the corporate side. The United Airlines, the McDonald's,
Speaker 6: the Blackstones, the executives from some of these companies that
Speaker 6: find themselves in Chicago for an event such as this
Speaker 6: take us behind the scenes a little bit.
Speaker 2: Well, in some ways you could say it's networking one
Speaker 2: oh one. This is relationship building and relationship solidifying. So
Speaker 2: some of the business people from Wall Street who made
Speaker 2: time to come to Chicago have been coming to conventions
Speaker 2: for years and operating in the space, and they have
Speaker 2: relationships with lawmakers. Some of them worked with Kamala Harris
Speaker 2: on her presidential run in twenty nineteen even earlier. So
Speaker 2: what I would say for the business people who are
Speaker 2: here and in the room that night last night when
Speaker 2: she gave the speech, there's a comfort level with her,
Speaker 2: and I would say, you know, they're feeling confident that
Speaker 2: they're going to get to these issues. But it is
Speaker 2: true we are not going to hear these issues in
Speaker 2: prime time. I would just look at the optics of
Speaker 2: her speech. Thursday night was not a sort of joyful
Speaker 2: Oprah kind of night. She talked about Trump being unseerious
Speaker 2: and in her power suit up there on listing out
Speaker 2: topics from Ukraine to childcare. She really did run the gamut.
Speaker 2: But what we are hearing is that she's focusing on issues.
Speaker 2: She's naming issues that will be important to the most
Speaker 2: number of people who might influence this, uh, this election
Speaker 2: on November fifth, and so we are late on some
Speaker 2: of the issues that corporate leaders and Wall Street you know,
Speaker 2: really care about, and that's up to us to pin
Speaker 2: her down H in the coming days and weeks.
Speaker 3: So when you were talking to people there, what were
Speaker 3: the top issues Because there's a lot of ideas. Of course,
Speaker 3: people are going to talk about tax policy and other
Speaker 3: things like that, but what were the kind of the
Speaker 3: ones things that people really were most focused on?
Speaker 2: Here, H, Crypto AI really in America competitive, making sure
Speaker 2: that America can you know, is engaged in investing in
Speaker 2: other countries.
Speaker 7: Uh.
Speaker 2: It's it's you know, not necessarily that new, but it
Speaker 2: is definitely counter to some of the things that we've
Speaker 2: you know that that the Trump administration, the Trump platform
Speaker 2: rather has has been positioning themselves. I think that the
Speaker 2: general attitude, just to be you know, vague myself, would
Speaker 2: be that we're going, we're not going. The campaign is
Speaker 2: not going to just shut down and not listen to business,
Speaker 2: and that Kamala Harrison knows how to read the room,
Speaker 2: and the room last night called for a different kind
Speaker 2: of speech. And you know, of course taxation, corporate tax,
Speaker 2: the idea that the wealthy will be taxed more to
Speaker 2: pay to support some of the middle class initiatives that
Speaker 2: she presented last night is I think definitely you know,
Speaker 2: on the table and it's it. Whereas Biden sort of
Speaker 2: leaned forward on that, she's she is being less specific
Speaker 2: right now about talking about those policies because the goal
Speaker 2: in the short amount of time is to get the
Speaker 2: most number of votes, and that's the strategy. If she's
Speaker 2: less specific, Trump doesn't have the bait to attack her.
Speaker 2: So it's a political strategy. It's and these things are
Speaker 2: being discussed, the people are in the room, but it's
Speaker 2: not the number one priority right.
Speaker 6: Now, Abigail, I mean, Amanda, excuse me, do business leaders
Speaker 6: know what they're getting with a potential Kamala Harris presidency
Speaker 6: because of the Joe Biden administration or are they still uncertain?
Speaker 2: Well, of course I could point you to the piece
Speaker 2: because we were able. One of the advantages of being
Speaker 2: here is to have some rich sideline conversations with a
Speaker 2: variety of figures. And I think and what the policy
Speaker 2: advisors for Kamala Harris that we talked to said is that, yes,
Speaker 2: there is a sense of somewhat of predictability, uh because
Speaker 2: she has been a member of the Biden administration. Where
Speaker 2: there's a break is that in some ways there was
Speaker 2: an overreaction to the notion that Obama was maybe too
Speaker 2: close to UH to to be too cozy to business leaders.
Speaker 2: And you know, so there were appointments that were sort
Speaker 2: of distinctly let's not take people from corporate America. I
Speaker 2: think she's going to be more open and I think
Speaker 2: you can see from the speeches there that you know,
Speaker 2: the idea is that she's going to be a leader
Speaker 2: that has a wide range. So there's there are going
Speaker 2: to be billionaires in the room, as there were on
Speaker 2: that stage. They're going to be presentatives of unions and
Speaker 2: corporate America and activists, and it's her responsibility to to
Speaker 2: listen and you know, make the good decisions. As she says,
Speaker 2: to quote her speech for all Americans and that's her
Speaker 2: Uh that that's her pitch right now.
Speaker 3: We only have about forty five seconds left. But what
Speaker 3: specific economic policies do you think she needs to be
Speaker 3: most specific with moving forward?
Speaker 2: Well, I think that she needs to address the questions
Speaker 2: on people's mind. Is with the huge deficit, with the
Speaker 2: need to develop revenue, where does the money come from
Speaker 2: to put forward some of her initiatives to help the
Speaker 2: middle class. And you know, her the theory that lifting
Speaker 2: the middle class is going to help big business is
Speaker 2: a bridge that she needs to build and define.
Speaker 6: Amanda, we're gonna have to leave it there. Thanks so
Speaker 6: much for joining us from Chicago after a whirlwind few
Speaker 6: days at the Democratic National Convention. Check out Amanda's story.
Speaker 6: She's part of the team that wrote it, a great
Speaker 6: group of reporters the Dispatch from Chicago. It's among the
Speaker 6: most read on the Bloomberg terminal. Check it out at
Speaker 6: Bloomberg dot com as well. Amanda Gordon, Wealth team reporter
Speaker 6: for Bloomberg News.
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Speaker 6: Okay, some news in the crypto world. It's been a
Speaker 6: month since the much anticipated E three ETFs launched in
Speaker 6: the US. Investors don't seem that interested, though. The nine
Speaker 6: exchange traded funds that hold the second largest cryptocurrency directly
Speaker 6: saw investor outflows Thursday, free sixth consecutive date. It's the
Speaker 6: longest streak of withdrawals since their debut back on July
Speaker 6: twenty third. During the same period, US ETF's holding Bigcoin
Speaker 6: saw inflows daily. This is equating to data compiled by Bloomberg.
Speaker 6: We've got with us the president and CEO of the
Speaker 6: public health a bitcoin mining company, Clean Spark. Zach Bradford
Speaker 6: is back with US. Cleans Bark has a three point
Speaker 6: two billion dollar market cap, up around fifteen percent so
Speaker 6: far this year. Zach joins US from Henderson, Nevada.
Speaker 5: Zach, good to.
Speaker 6: Have you back with us. Hey, I want to get
Speaker 6: your thoughts on why we're seeing sort of less interest
Speaker 6: in these ether ETFs than we saw in our seeing
Speaker 6: with the bitcoin ETFs. Why do you see this?
Speaker 9: You know, I may be a little biased, of course
Speaker 9: as a bitcoin minor, but you know, I think it's
Speaker 9: because of you know, bitcoin, I believe is the currency
Speaker 9: of the future, is decentralized, it has all the benefits
Speaker 9: that come with that, you know, ethereum I see as
Speaker 9: instead of a currency, I see as a platform. So
Speaker 9: its value comes down to, you know, how people use
Speaker 9: it as a platform and all the things that get
Speaker 9: built on top of it, whereas bitcoin has a different
Speaker 9: sort of intrinsic value with the energy that backs it,
Speaker 9: and I think that's much more interesting to investors. Of course,
Speaker 9: on a biased opinion.
Speaker 6: Yeah, I was going to say, you know, again, you know,
Speaker 6: full disclosure, you run a bitcoin mining company, but it's
Speaker 6: still interesting to get your thoughts on it. You follow
Speaker 6: the entire industry. Hey, speaking of bitcoin miners, there was
Speaker 6: a lot of concern with the having a few months
Speaker 6: ago that it would really affect other business of miners.
Speaker 6: Talk a little bit about how it has affected or
Speaker 6: has not affected your business and how you're moving forward.
Speaker 9: Yeah, the halfing it occurs every four years where the
Speaker 9: rewards that we earn as miners are cut in half,
Speaker 9: and it did have a big impact on the entire industry.
Speaker 9: And I think what it showed is it showed the
Speaker 9: miners that prepared and were ready for the having to occur.
Speaker 9: And you know, the best way to be ready for
Speaker 9: the halfing was to have a highly any energy efficient
Speaker 9: data centers and energy efficiency. So on our side, we
Speaker 9: spent the prior two years leading up to it to
Speaker 9: build the most efficient fleet amongst the public miners, and
Speaker 9: it served us very well, and I think it's been
Speaker 9: more painful for those that didn't have the same preparations.
Speaker 9: And so, you know, as much as we saw revenues
Speaker 9: go down because of our steps to move forward, we
Speaker 9: actually only saw revenues decrease by seven percent, even though
Speaker 9: the reward itself, when measured in bitcoin, was cut in hat.
Speaker 3: So you were just mentioning also the efficiency when it
Speaker 3: comes to the fleet and how crucial that is supposed
Speaker 3: to be. Walk us through what that would really mean
Speaker 3: when it comes to more bitcoin and how it could
Speaker 3: be mined with less energy.
Speaker 9: Yeah, our largest cost input is the energy that we
Speaker 9: consume that goes into our servers that ultimately drives the rewards.
Speaker 9: And so if you think of it, if you have
Speaker 9: a more energy efficient washer or dryer, you're ultimately drying
Speaker 9: your clothes with less energy. We think of it in
Speaker 9: a very simple and similar way, whereas what is the
Speaker 9: energy input that goes into that server that ultimately costs
Speaker 9: us money? It leads to the outcome on the other side.
Speaker 9: And so you know, Moore's law has served us well
Speaker 9: in the sense that you know, we're seeing chip efficiencies
Speaker 9: continually improved, and so we've adopted, you know, these new technologies.
Speaker 9: So our servers run on the latest generation chips that
Speaker 9: have been manufactured, and the energy inputs that it ultimately takes,
Speaker 9: it means it's half the energy since that it took
Speaker 9: to produce the same amount of bitcoin as four years ago.
Speaker 9: So that's what we've always continued to focus on ourselves,
Speaker 9: and that's what drives all the costs for all the miners.
Speaker 6: Hey, Zach, want to get your thoughts on the election.
Speaker 6: We're you know, certainly the DNC front center for us
Speaker 6: as it wrapped up last night speaking to a lot
Speaker 6: of our team who was there over the last few days.
Speaker 6: They were also at the RNC last month. Did you
Speaker 6: hear anything or have you heard anything from Kamala Harris's
Speaker 6: team that would make you think about her in a
Speaker 6: different way than President Joe Biden when it comes to cryptoregulation.
Speaker 9: You know, I have not, and I will tell you
Speaker 9: I would love to hear something. The industry I think
Speaker 9: is ready to engage Bitcoin in particular is should be nonpartisan,
Speaker 9: and you know that's what it's there for. That's what
Speaker 9: a decentralized system is there to serve best. And the
Speaker 9: fact that we're only seeing a lot of outreach and
Speaker 9: really the commentary around it in a positive way is
Speaker 9: only coming from one side of the aisle is making
Speaker 9: this I think for a lot of people, you know,
Speaker 9: a single voter issue for this corner of the map,
Speaker 9: of course, and I think it has a big impact
Speaker 9: for you know, especially for individuals under the age of
Speaker 9: thirty five, is what we're finding. So I haven't heard
Speaker 9: anything yet. We're waiting, and I would love to hear
Speaker 9: something from that side of the aisle and also from
Speaker 9: Harris Camp that would give us some confidence on their
Speaker 9: view of the industry.
Speaker 3: Of course some context for listeners here. So former President
Speaker 3: Donald Trump actually had shifted his stance when it comes
Speaker 3: to cryptocurrency to win over this new block of voters
Speaker 3: and mega donors here. So in particular, Zach, when you're
Speaker 3: thinking about this, what would you need to hear from
Speaker 3: a potential Harris administration here on the crypto side that
Speaker 3: you think would be more favorable to peo people who
Speaker 3: are obviously investing in that type of industry.
Speaker 9: Yeah, I think what we're looking for is basically the
Speaker 9: call the war off is how it seemed. It seems
Speaker 9: like one side of the aisle, and you know, Elizabeth
Speaker 9: Warren in particular has spoken up to make it a
Speaker 9: war on cryptocurrency or war even on bitcoin, and we'd
Speaker 9: love to see instead an embrace of the innovation. But
Speaker 9: I think we need to see more than just lip service,
Speaker 9: but instead again embracing it bringing to the other side. Ultimately,
Speaker 9: if you look at what the industry is asking, the
Speaker 9: industry isn't asked for any special treatment. It's just not
Speaker 9: asking to be targeted. What we're ultimately doing is we're
Speaker 9: all running data centers, and our data centers just are
Speaker 9: used for a specific purpose, and we want to be
Speaker 9: treated the same way that you know, any other large
Speaker 9: scale data center, whether you're you know, Meta or if
Speaker 9: you're a Google get treated. And I think that that's
Speaker 9: that neutrality, and I'm really a promise for that that
Speaker 9: would be actionable. Is what the industry needs to see,
Speaker 9: and it needs to be believable.
Speaker 6: Zach, what's the data that you're seeing that shows that
Speaker 6: crypto is an important issue to voters? Our own Bloomberg
Speaker 6: opinion team, the editorial has a a team as an
Speaker 6: editorial out today that notes that just one percent of Americans,
Speaker 6: according to research and analysis from the Federal Reserve from
Speaker 6: May of twenty twenty four, say they used cryptocurrency for
Speaker 6: payment or money transfer last year.
Speaker 9: You know, I think that that is an interesting thing
Speaker 9: to point out as payment or money transfer. Know, I
Speaker 9: think cryptocurrency is used for a lot more. Bitcoin in
Speaker 9: particular being a store of value. You know, even myself,
Speaker 9: as somebody that's been involved in the industry at quite
Speaker 9: a lot of depth, I really don't use bitcoin or
Speaker 9: anything more than a store of value. I look to
Speaker 9: other things that are easier to actually use and transact.
Speaker 9: I think that the data we're looking at on our
Speaker 9: side is that there's fifty million Americans that have at
Speaker 9: least some exposure to cryptocurrency as an investment rather than
Speaker 9: as a transactable value. You know, you think about it,
Speaker 9: it's our retail storefronts may not be ready to accept
Speaker 9: and transact, but there's a lot of people that are
Speaker 9: invested in this space.
Speaker 6: Do you think they'll ever be ready to transact and accept?
Speaker 9: I think they will. You know, one thing that we
Speaker 9: track a statistic on is about eighty percent of transactions
Speaker 9: right now on the bitcoin network that are used to
Speaker 9: transact actually occur in Africa. So you think about what
Speaker 9: our industry is built on versus what they're industries are
Speaker 9: built on. They need it because they have a devalued
Speaker 9: currency and they don't have access to traditional banking. So
Speaker 9: I think it'll be much slower here in the US
Speaker 9: because we have so many other options that are just
Speaker 9: easier and already built into the systems. But there are
Speaker 9: places in the world that are already using and transacting
Speaker 9: in bitcoin at a much higher scale than we're seeing
Speaker 9: in the US.
Speaker 3: People have talked about how there's that clearly defined maximum
Speaker 3: when it comes to supply of twenty one million coins
Speaker 3: here when it comes to bitcoin, how does that factor
Speaker 3: into it? When if you're trying to have more people
Speaker 3: invest in this, but then there's limited supply. Obviously there's
Speaker 3: other types of coins. How do you rectify that?
Speaker 9: You know, that's actually one of the reasons I think
Speaker 9: that bitcoin has its intrinsic value is it's you know,
Speaker 9: anti inflation area. On a long term basis, you know
Speaker 9: what it's going to be. There is no risk of
Speaker 9: you know, another twenty million coins popping up, and you
Speaker 9: compare that to how the Federal Reserve operates, and that's
Speaker 9: where you know, people that believe in bitcoin, like myself,
Speaker 9: see it as a long term store of value. The
Speaker 9: more money we print and the more we devalue the
Speaker 9: US dollar on a long term basis, it actually builds
Speaker 9: on the thesis that bitcoin can, again on a long
Speaker 9: term basis, will hold its value longer because it's not
Speaker 9: being diluted in the same way.
Speaker 6: Hey, zach, as I mentioned clean Spark shares higher today
Speaker 6: by six point four percent as we speak on a
Speaker 6: daily today. I'll be honest with you, I was looking
Speaker 6: as I was preparing for this, I couldn't find any
Speaker 6: stories about why the stock was surging today, but it
Speaker 6: actually puts you guys up around fifteen percent year to date,
Speaker 6: quite a bit higher than yesterday. Why do you see
Speaker 6: in your world the stock moving higher today?
Speaker 9: You know, I think it's been the foundation we've laid.
Speaker 9: We've been the fastest growing bitcoin minor year to date.
Speaker 9: We've actually doubled our production since January of this year,
Speaker 9: and we're on track to you know, double it again.
Speaker 9: But really, if you point it on a daily basis,
Speaker 9: you know, bitcoin is up because of the comments from
Speaker 9: the FED today, and you know, being a I generally
Speaker 9: seen as a risk on asset. I think that the
Speaker 9: confidence that came in from those statements about how they're
Speaker 9: going to view rate cuts and things like that added
Speaker 9: a little bit of life into bitcoin today where we
Speaker 9: saw it go up, you know, a few thousand, and
Speaker 9: I think that's largely what's behind the bitcoin miners today.
Speaker 9: But as it relates to us, you know, we've had
Speaker 9: a great year and have a great year ahead of us.
Speaker 6: All right, Zach, we're gonna have to leave it there.
Speaker 6: Thanks so much for joining us. Always great when you
Speaker 6: come on our program. That's Zach Bradford. He is the
Speaker 6: president and CEO of the publicly held bitcoin mining company
Speaker 6: clean Spark, joining us from Nevada, Marco.
Speaker 5: A journal.
Speaker 2: How about you let me drive? Oh no, no, no, no,
Speaker 2: who's going honey?
Speaker 1: Please?
Speaker 5: I want to drive.
Speaker 2: It's good question.
Speaker 1: This is good drive to the clothes Trimar thing well,
Speaker 1: builda don On.
Speaker 3: Bloomberg Radio, Jessman and Tim Steneviek here the Bloomberg Interactive
Speaker 3: Broker's studio. I'm filling in for the great Carol Master
Speaker 3: this afternoon. With just under twenty minutes left to go
Speaker 3: though before the closing bell, Tim, we have the S
Speaker 3: and P five hundred actually up more than one percent
Speaker 3: on the week, the NAZEC one hundred up about one percent,
Speaker 3: obviously boosted by these gains that we saw on the
Speaker 3: back of FED chair Jerome Palell and his speech earlier
Speaker 3: this morning, obviously him stating that this was the time
Speaker 3: to come for the Central Bank to cut it's key
Speaker 3: policy rate and affirming those expectations that officials will begin
Speaker 3: lowering those ballpreing costs soon and clearly trader's betting on
Speaker 3: as soon as next month though. But who better to
Speaker 3: come in and it's time for that drive to the
Speaker 3: close here and back with this is Louis Navalier, founder
Speaker 3: and chairman and CIO of Navalier Associates, joining us from Florida.
Speaker 3: It's always great to pick your brains, especially on the
Speaker 3: day like this, Louis, when we finally had this clear indication.
Speaker 3: But it seems like when you're thinking about the debate
Speaker 3: of twenty five basis points versus fifty and September I
Speaker 3: mean with the clear takeaway here, because I don't think traders,
Speaker 3: at least when I was speaking them ahead of this,
Speaker 3: they thought that power would be just as a specific
Speaker 3: and clear in the indications here. But what's your kind
Speaker 3: of big takeaways from this and obviously the reaction overall
Speaker 3: in the US equity markets.
Speaker 8: Well, we're definitely going to get more than one cut,
Speaker 8: that's for sure. I would definitely do fifty, but that
Speaker 8: signals a sign that the FED got behind the curve.
Speaker 8: But it's obvious they're behind the curve based on market rates.
Speaker 8: So I think the most important thing that will happen
Speaker 8: on September eighteenth, other than the FMC statement, is the
Speaker 8: dot plot. We'll get an updated dot plot and we'll
Speaker 8: know exactly what the FED is intending but you know
Speaker 8: they're going to cut on the eighteenth, two days after
Speaker 8: the election. In November and December meeting, I expect at
Speaker 8: least three twenty five based point cuts and hopefully it
Speaker 8: works and similates economy. You know that Canadian rail strike
Speaker 8: is going to script our.
Speaker 5: Economy about that.
Speaker 8: Yeah, it's a big deal and it's going to disrupt
Speaker 8: commerce immensely because obviously because a NAFTA, we got a
Speaker 8: free flowing border between US and Canada. And right now
Speaker 8: lant of Feds at two percent GDP growth, So we're
Speaker 8: not hitting on all cylinders. And one of the things
Speaker 8: you heard from Jackson hollt least I heard on Bloomberg
Speaker 8: was like the Boston Fed president very worried about unemployment,
Speaker 8: and of course we had the big downward revision this week,
Speaker 8: and so unemployment is now starting to take more priority
Speaker 8: than inflation. So that means the Fed's got to pick
Speaker 8: it up and ketch up with market.
Speaker 5: Well, we did hear j.
Speaker 6: Powe will say that you know, he is more concerned
Speaker 6: about downside to employment than he is than he is
Speaker 6: concerned with upside to inflation. Why do you point to
Speaker 6: the downward revision that was announced by the Labor Department
Speaker 6: on Wednesday.
Speaker 8: Well, because it's big. I mean, it means we created
Speaker 8: two million jobs at a two point nine million, and
Speaker 8: I realized they were trying to reconcile with the tax wrecker,
Speaker 8: and maybe some people weren't on the records, maybe some
Speaker 8: people had two jobs. But it's big, It doesn't Louis.
Speaker 6: It seems like markets ignored that.
Speaker 8: They did ignore it because they expected it. But we
Speaker 8: have three point four percent employment fifteen months ago. We
Speaker 8: have four point three now, and we might be headed
Speaker 8: closer to five if they don't hurt it and do something.
Speaker 8: So let's start cutting how quickly?
Speaker 6: If and when the Fed cuts do you think it
Speaker 6: will transmit to financial markets immediately?
Speaker 8: I mean it's a turbo boost for the market. I
Speaker 8: mean there's all kinds of sectors of our economy they're suffering.
Speaker 8: I mean, the problem with setting our consumer is the
Speaker 8: consumers over sixty or fine, they have homes, they have
Speaker 8: money in the stock market, the wife's wonderful, But everybody
Speaker 8: under thirty is struggling. So that's the problem. We have
Speaker 8: this two tier economy. And you know, you've got a
Speaker 8: lot of problems with credit card debt and you know,
Speaker 8: the car Loans and things like that, and so the
Speaker 8: FED might want to address that.
Speaker 3: Hey, Louis, when some people in the markets were arguing about, well,
Speaker 3: if they went fifty basis points in September, that could
Speaker 3: signal that the economy might be slowing more than they
Speaker 3: had initially thought, and they were expecting stocks to potentially
Speaker 3: be pressured by that. But obviously we had a boost
Speaker 3: today on it. How do you sort of rectify that?
Speaker 3: Is it more just the fact that they're willing to
Speaker 3: step in and be more aggressive to help support the
Speaker 3: economy in any way, I think the.
Speaker 8: FED successfully engineered a soft landing, but if they don't
Speaker 8: hurt him cut, that success is going to be a failure.
Speaker 8: As you know, most of the time, they can't engineer
Speaker 8: soft landing. So I just think that if they got
Speaker 8: too far behind the curve, they should do fifty. Now
Speaker 8: that will weaken the dollar, and that they may not
Speaker 8: want to do that, but you know it's right now.
Speaker 8: We've got to still a very firm dollar because we're
Speaker 8: behind all the other central banks. I mean, we learned
Speaker 8: from Jackson Hole that Canada, Britain and the ECB is
Speaker 8: going to cut again before we do, so they're going
Speaker 8: to cut twice before we cut.
Speaker 3: So how are you advising clients to position?
Speaker 2: Then?
Speaker 3: What should they buy? What should they sell?
Speaker 8: Well, I'm advising clients to chill out just a bit
Speaker 8: because we're overbought right now, okay, okay, and you might
Speaker 8: get more overbought next week when the video's earnings.
Speaker 3: So would that indicate to you as we head into September, which,
Speaker 3: as you know, historically the weakest month of year, that
Speaker 3: could maybe if if stocks are overbought at that point,
Speaker 3: they could be more vulnerable to any sort of sell off.
Speaker 8: Well, let maybe Crystal Clear, So then the video will
Speaker 8: even if they miss, they're gonna have good guidance because
Speaker 8: the Blackbell chip. Then on the thirtieth we have the PCE.
Speaker 8: It's gonna be one tenth of percent or less. So
Speaker 8: we should rally go into Labor Day weekend. But after
Speaker 8: Labor Day weekend we're going to consolidate. A lot of
Speaker 8: it is tax related because people have to pay their
Speaker 8: estimated taxes on September fifteenth, so that kind of drains
Speaker 8: some capital out of the market, and then of course
Speaker 8: we have the debate. We'll have some clarity after the
Speaker 8: September tenth debate, and then we'll rally from the eighteenth
Speaker 8: to one quarter and window dressing quarter. And window dressing
Speaker 8: is where the professional managers buy better stocks and get
Speaker 8: and weed them out. But the market is the breath
Speaker 8: and power is getting better. You know, I'm still the
Speaker 8: opinion that's the market's led by Navidia. We went from
Speaker 8: the Magnificent seven the Magnificent one and for one hundred
Speaker 8: and ninety nine other stocks. But you know, you know
Speaker 8: Lily novnor Disk, I've got a lot of other stocks
Speaker 8: that are acting well. Costco's acting well. So it's the market's
Speaker 8: broadening out. And I have a lot of small cap stocks.
Speaker 8: But for my small cap investors, I tell them to
Speaker 8: be patient. Let's let's wait till after the presidential debate.
Speaker 6: Cool guy, Hey, we only have about forty five seconds
Speaker 6: left presidential debate. You mentioned, so you have me thinking politics.
Speaker 6: How could the presidential race affect markets?
Speaker 8: Well, I'll be selling a lot of my energy stocks
Speaker 8: if Trump's going to get elected, because you know, we're
Speaker 8: going to have a surplus of crude oil.
Speaker 3: Uh.
Speaker 8: But I might buy some natural gas stocks because that's
Speaker 8: severely depressed right now. So LNG companies, natural gasola companies
Speaker 8: a lot that's weather related, you know. I also the phone.
Speaker 8: I'm not in Florida. I'm in the Sierra Nevada. We're
Speaker 8: having snow in a couple of days, so that's a
Speaker 8: good sign. But you know, the you know, that's the
Speaker 8: big one I'm worried about is just how to do
Speaker 8: the energy policy? Uh, you know, and and energy is
Speaker 8: going to control this election outcome because Pennsylvania is the
Speaker 8: big state. And obviously Biden ban llerg in January and
Speaker 8: the courts overturned him. And now Kamala's got to mop
Speaker 8: up that mess. But western Pennsylvania is Trump.
Speaker 6: We're gonna have to leave it there. Louis Novalier, Founder,
Speaker 6: chairman and CIO at Novalier and Associates. This is Bloomberg.
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