August 23, 2024 • 39 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg News International Economics & Policy Correspondent Michael McKee and Tracy Bell, Chief Investment Officer at First Horizon Advisors, discuss the economic and investor implications of Fed Chair Jay Powell saying the time has come for the Federal Reserve to cut its key policy rate, affirming expectations that officials will begin lowering borrowing costs next month. Bloomberg News Wealth Team Reporter Amanda Gordon provides the details of her Bloomberg Big Take story Harris’ Vibes-Heavy, Policy-Lite Run Leaves Businesses Guessing. Zach Bradford, CEO of CleanSpark, talks about the business of Bitcoin mining. And we Drive to the Close with Louis Navellier, Founder and CIO at Navellier & Associates
Hosts: Tim Stenovec and Jess Menton. Producer: Paul Brennan.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Wait inside from the reporters and editors who bring you
America's most trusted business magazine, plus gloom Wa Business finance
and tech news. The Bloomberg Business Week Podcast with Carol
Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:28):
All the times.
Speaker 3 (00:32):
They're as to realize loving the music here, writes sim
and so, of course, uh, we've been talking about this
all afternoon, as you all know, Fed Shair Jpal finally
laying out what Wall Street has been expecting for a
while here to cut interest rates that are coming soon
to help support the economy. That marks and about face
(00:54):
after the Fed, of course, began hiking rates back in
March of twenty twenty two, after inflation, of course, viral
to its worst levels in a generation. The economy and
the US stock market, though, have both come a long
way since then. So let's dive into the economic as
well as the investor outlook. Following Pal's speech at Jackson
Hole this morning, who better than to bring in then
(01:14):
Bloomberg z oone Mike McKee, International Economics and Policy correspondent
and Bloomberg News and he's actually at the Jackson Hole
Economic Policy Symporium here. And then, of course Tracy Bell,
chief investment officer at First Horizon Advisors, joining us on
zoom from Birmingham, Alabama. Mike, I'll start off with you
because you just in the last hour had that great
interview with Austin Goolsby once again, and I thought it
(01:36):
was really interesting when he laid out when people were
debating about the twenty five basis points versus fifty basis
points in September, but he said expect multiple cuts for
this year and next. So what was kind of your
big takeaways from your conversation with him?
Speaker 4 (01:52):
Well, we've turned to corner now, we're now out of
the higher for longer regime and we are in the
rate cutting cycle.
Speaker 5 (01:58):
The question will be how far do they cut.
Speaker 4 (02:00):
They don't have an answer for that because they don't
exactly know what the neutral rate is going to be.
The economy growing above potential in recent years, does it
stay that way or does it fall back? Can they
lower interest rates below or at least to where they
were even before the Great Financial Crisis, what they.
Speaker 5 (02:17):
Might have considered normal.
Speaker 4 (02:19):
And they don't know whether they're going to cut twenty
five or fifty basis points. Their preference is twenty five,
but if we got some really bad economic data, they
might do fifty. That's what Austin Gouldsby said as well,
without taking a position on what they'll do in September.
Speaker 6 (02:35):
All right, well, maybe we can get Tracy Bell to
take a position. She's chief investment officer at First Horizon Advisors. Tracy,
come on in here and tell us how you're viewing
the rate path at least through the end of the year.
Given what we heard from Jay Powell and the various
bad speakers we've heard from live from Jackson Hall.
Speaker 7 (02:50):
Yeah, I love your intro music there time. That's what
is chirm Powell said today is.
Speaker 6 (02:55):
There's a method to the madness here.
Speaker 7 (02:58):
Exactly on a Friday afternoon. So, yeah, the time has come,
and you know, I think the data support that, and
what Mike is saying about a slow and deliberate pace
is probably what investors should expect here. Investors have been
trying to price in FED rate cuts since the beginning
of the year, and we've really just now gotten to
the point where the FED is comfortable doing that. Chairman
(03:20):
Powell talked about gaining confidence in the data, continuing to
move towards the fed's two percent inflation target, but at
the same time acknowledging that the employment market has definitely
cooled and we see that in the data. So to
the extent that the data continues to support that, we
should expect rate cuts to follow.
Speaker 3 (03:39):
So I want to follow up with you, Tracy on that,
because how are you advising clients to position at this
inflection point with the FED and a change in monetary policy.
What are you telling them to buy? What are you
telling them to sell?
Speaker 7 (03:50):
Well, one of the things that we talk about a
lot with our individual clients is expectations around transitions. So
when the FED was raising interest rates to begin this
part of this cycle, we talked about transitions being difficult
and understanding that transitions can lead to heightened volatility. And
we saw that not that long ago, a couple of
(04:11):
weeks ago, with the Japanese market selling off in the
US market following, only for things to turn around and
bounce right back. So we're in that same type transition
environment where the data is beginning to transition to a
lower pace with the economic growth and a little bit
weaker on the employment market and inflation is coming down
where it needs to be, and that implies that we're
(04:32):
in another transitory environment. Skews the use of the word transitory,
but transitory where we're shifting down a little bit in
the growth rate, and that means that investors may have
to endure a little more volatility as data continues to
come out, and it's going to be lumpy. Things don't
move in a straight line, and we're suggesting that investors
be prepared for that. It's not time to change what
(04:54):
you're doing. Your investment should be mirroring what your longer
term financial goals are are for the average individual investor,
and just understand that in the transitory environment, you may
experience some volatility.
Speaker 6 (05:07):
Mike, come on in here because I want to talk
a little bit about this line that I mentioned in
our interview with Iron Stewart a little earlier, from Powell's
roughly sixteen minute speech a little earlier today.
Speaker 5 (05:19):
Here's what he.
Speaker 6 (05:19):
Said, quote, the upside risks to inflation have diminished and
the downside risks to employment have increased. In other words,
they're more concerned with the risk to arise in unemployment
than they are to arise in inflation, at least, that's
my takeaway. How did you view that those two lines?
Speaker 4 (05:39):
Well, you got it right, Tim. The FED has been
worried about inflation. It was their number one priority for
two three years now, but the balance of risks, as
they put it, has now tilted towards unemployment rising too much.
The FED chair said that they don't think at this
point that the labor market is going to produce wage
inflation that would worry them, but they are concerned that
(06:01):
unemployment could rise too much.
Speaker 5 (06:03):
Now. The question is unemployment.
Speaker 4 (06:05):
Having risen to four point three percent, is that because
companies are laying off workers.
Speaker 5 (06:09):
It doesn't appear to be that way.
Speaker 4 (06:10):
It appears to be a much larger labor force, more
people out looking for jobs. And if that's the case,
the FED isn't going to be worried, but they'll be
watching the data closely to make sure that we're not
seeing widespread layoffs, which would be a sign of an
impending recession.
Speaker 6 (06:25):
Is that, Mike, the piece of data that they're most
concerned about now.
Speaker 5 (06:29):
Moving forward, it does appear that way.
Speaker 4 (06:33):
They anticipate that they're going to see inflation continue to
come down towards two percent it might be bumping, could
be goes up a tenth in a month or something
like that. But they don't seem to think there's a
possibility of a breakout at this time. But they are
worried about a breakout of unemployment, and Pole did say
today that they'll do whatever it takes to keep that
from happening.
Speaker 3 (06:53):
Hey, Mike, you also, I'm sure heard about this since
you're out there, that Rafael Bostic as well as Patrick
Harker were both signaling that they see the longer term
neutral rate around three percent, which was pretty specific for
both of them to come out and say that, So,
does that mean we should expect over two hundred bases
points worth of cuts over the next potential a year
or so.
Speaker 4 (07:12):
Well, a single data point doesn't make a trend, nor
do two, but if we get some more we might
think of that. I think probably the best answer is
the one Austin Gouldsby gave me, which was we're going
to have to wait and see, because we're going to
have to wait and see exactly what the economy does.
If the economy starts to slow, then you would see
(07:34):
more rate cuts. They might be too tight, so they
will continue going down, but they don't know where that
neutral rate is. It was unusual that Bostic and Harker
told me three percent, but most other officials won't put
a number on it. But it's a reasonable assumption that
they could get down that low. What they won't do
(07:55):
is go back to zero unless there's a crisis.
Speaker 3 (07:57):
Hey, Tracy, come back in here, because what is Pizzi
is sitting telling us in the stock market as far
as when you're looking at the S and P five
hundred just a whisker away actually from its all time high.
But when you're looking at say derivatives markets, what does
that show us as far as what investors are betting
on the next couple of months or so?
Speaker 7 (08:15):
You know, I think when you look at the performance
of the S and P, there's a couple of things
to notice, and you see this positioning more broadly. The
market has been led this year up until recently by
those big megacap concentrated names within the index, but really
over the past months to six weeks or so, that's
changed and you see a much more broad based lift
(08:38):
in the index coming from names outside of just those
few names. You also see participation in other market caps,
and outside the US, so it's a much more broad
based participation in financial market assets. Moving to the upside
across the board, the expectation for next year is for
much broader earnings growth within the S and P sector,
(09:00):
so not concentrated again in just those few names, but
spread out more broadly across market caps and sectors. That's
great for investors that have diversified portfolios, and that's what
we like to see, so that people aren't chasing just
a few individual.
Speaker 6 (09:14):
Names, Terracy, What about outside the S and P five
hundred geographically in terms of sectors, where are you looking
for growth?
Speaker 7 (09:24):
You know, it's looking like international looks a little better
this year. It's looking like that broad based growth is
going to show up really more globally and things not
be as concentrated in the United States.
Speaker 3 (09:39):
Mike, I want to bring you back in just quickly
here because we still have a few data points on
the calendar next week. As you know, the consumer spending
obviously includes the Fed's preferred gauge when it comes to
inflation with the PC indicator. But what are you most
focused on in the short term in the weeks ahead,
and obviously the jobs reporter is at tever six.
Speaker 4 (09:57):
Yeah, the Jobs Report is going to be the chief
indicat for the FED and contribute the most to the
debate over twenty five or fifty basis points.
Speaker 5 (10:06):
But we'll also be watching.
Speaker 4 (10:07):
CPI on September twelfth, and we'll be watching the PCEE
numbers that you mentioned, because that's the official target. If
they all come in as anticipated, I think you see
twenty five basis points on the eighteenth, and if they don't,
it would take a lot to change their view and
not cut. You'd have to have a big increase in
(10:28):
jobs and a drop in unemployment. But if we see weakness,
then that'll put some weight on the fifty side.
Speaker 6 (10:35):
Michael McKee, international economics and policy correspondent for Bloomberg News.
He's live from the Jackson Hole Economic Symposium and of
course Jackson Hole. Also a big thank you to Tracy
belchief investment officer at First Riseing Advisors. Joining us from Birha, Birmingham, Alabama.
Speaker 1 (10:51):
You're listening to the Bloomberg Business Week Podcast. Catch us
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Speaker 8 (10:58):
Car Play and then brought out with.
Speaker 1 (11:00):
A Bloomberg Business act or watch us live on YouTube.
Speaker 6 (11:04):
Well, if you watch or attended the Democratic National Convention
in Chicago this week, here's what you saw. Vintage Bernie Sanders,
a street against big pharma, big tech, big everything, and
of course billionaires. Minutes later, Illinois Governor J. B. Pritzker,
who is heir to a vast hotel fortune, stood at
the same spot to brag that he's an actual billionaire
who's wealthier than Donald Trump. It's a moment of rapid
(11:27):
transition from President Joe Biden to Harris. There's a party
eager to woo a broad coalition. They're selling hope and joy,
wrapped in memes and served with a side of Beyonce's Freedom.
What it has avoided, though, is providing economic policy specifics
that could pit one faction against another. These words from
the team behind one of the most read stories on
the Bloomberg terminal today. It's a dispatch from Chicago from
(11:49):
the Democratic National Convention. It focuses on how corporate leaders
are contending with a policy light Harris campaign. Amanda Gordon
is part of that team. She's Wealth Team reporter for
Blue Burg News and she joins us from Chicago. Amanda
good to have you with us this afternoon. I hope
you've gotten a little bit of rest following a whirlwind
four days in Chicago. One thing that I found really
(12:10):
fascinating about the piece that you wrote with your team
is kind of what happens behind the scenes when it
comes to the corporate side. The United Airlines, the McDonald's,
the Blackstones, the executives from some of these companies that
find themselves in Chicago for an event such as this
take us behind the scenes a little bit.
Speaker 2 (12:30):
Well, in some ways you could say it's networking one
oh one. This is relationship building and relationship solidifying. So
some of the business people from Wall Street who made
time to come to Chicago have been coming to conventions
for years and operating in the space, and they have
relationships with lawmakers. Some of them worked with Kamala Harris
(12:55):
on her presidential run in twenty nineteen even earlier. So
what I would say for the business people who are
here and in the room that night last night when
she gave the speech, there's a comfort level with her,
and I would say, you know, they're feeling confident that
(13:16):
they're going to get to these issues. But it is
true we are not going to hear these issues in
prime time. I would just look at the optics of
her speech. Thursday night was not a sort of joyful
Oprah kind of night. She talked about Trump being unseerious
(13:38):
and in her power suit up there on listing out
topics from Ukraine to childcare. She really did run the gamut.
But what we are hearing is that she's focusing on issues.
She's naming issues that will be important to the most
number of people who might influence this, uh, this election
(14:03):
on November fifth, and so we are late on some
of the issues that corporate leaders and Wall Street you know,
really care about, and that's up to us to pin
her down H in the coming days and weeks.
Speaker 3 (14:20):
So when you were talking to people there, what were
the top issues Because there's a lot of ideas. Of course,
people are going to talk about tax policy and other
things like that, but what were the kind of the
ones things that people really were most focused on?
Speaker 2 (14:32):
Here, H, Crypto AI really in America competitive, making sure
that America can you know, is engaged in investing in
other countries.
Speaker 7 (14:48):
Uh.
Speaker 2 (14:49):
It's it's you know, not necessarily that new, but it
is definitely counter to some of the things that we've
you know that that the Trump administration, the Trump platform
rather has has been positioning themselves. I think that the
(15:09):
general attitude, just to be you know, vague myself, would
be that we're going, we're not going. The campaign is
not going to just shut down and not listen to business,
and that Kamala Harrison knows how to read the room,
and the room last night called for a different kind
(15:30):
of speech. And you know, of course taxation, corporate tax,
the idea that the wealthy will be taxed more to
pay to support some of the middle class initiatives that
she presented last night is I think definitely you know,
(15:51):
on the table and it's it. Whereas Biden sort of
leaned forward on that, she's she is being less specific
right now about talking about those policies because the goal
in the short amount of time is to get the
most number of votes, and that's the strategy. If she's
(16:12):
less specific, Trump doesn't have the bait to attack her.
So it's a political strategy. It's and these things are
being discussed, the people are in the room, but it's
not the number one priority right.
Speaker 6 (16:29):
Now, Abigail, I mean, Amanda, excuse me, do business leaders
know what they're getting with a potential Kamala Harris presidency
because of the Joe Biden administration or are they still uncertain?
Speaker 2 (16:48):
Well, of course I could point you to the piece
because we were able. One of the advantages of being
here is to have some rich sideline conversations with a
variety of figures. And I think and what the policy
advisors for Kamala Harris that we talked to said is that, yes,
there is a sense of somewhat of predictability, uh because
(17:13):
she has been a member of the Biden administration. Where
there's a break is that in some ways there was
an overreaction to the notion that Obama was maybe too
close to UH to to be too cozy to business leaders.
And you know, so there were appointments that were sort
(17:35):
of distinctly let's not take people from corporate America. I
think she's going to be more open and I think
you can see from the speeches there that you know,
the idea is that she's going to be a leader
that has a wide range. So there's there are going
to be billionaires in the room, as there were on
(17:57):
that stage. They're going to be presentatives of unions and
corporate America and activists, and it's her responsibility to to
listen and you know, make the good decisions. As she says,
to quote her speech for all Americans and that's her
(18:18):
Uh that that's her pitch right now.
Speaker 3 (18:22):
We only have about forty five seconds left. But what
specific economic policies do you think she needs to be
most specific with moving forward?
Speaker 2 (18:30):
Well, I think that she needs to address the questions
on people's mind. Is with the huge deficit, with the
need to develop revenue, where does the money come from
to put forward some of her initiatives to help the
middle class. And you know, her the theory that lifting
(18:55):
the middle class is going to help big business is
a bridge that she needs to build and define.
Speaker 6 (19:01):
Amanda, we're gonna have to leave it there. Thanks so
much for joining us from Chicago after a whirlwind few
days at the Democratic National Convention. Check out Amanda's story.
She's part of the team that wrote it, a great
group of reporters the Dispatch from Chicago. It's among the
most read on the Bloomberg terminal. Check it out at
Bloomberg dot com as well. Amanda Gordon, Wealth team reporter
for Bloomberg News.
Speaker 1 (19:25):
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Speaker 6 (19:43):
Okay, some news in the crypto world. It's been a
month since the much anticipated E three ETFs launched in
the US. Investors don't seem that interested, though. The nine
exchange traded funds that hold the second largest cryptocurrency directly
saw investor outflows Thursday, free sixth consecutive date. It's the
longest streak of withdrawals since their debut back on July
(20:04):
twenty third. During the same period, US ETF's holding Bigcoin
saw inflows daily. This is equating to data compiled by Bloomberg.
We've got with us the president and CEO of the
public health a bitcoin mining company, Clean Spark. Zach Bradford
is back with US. Cleans Bark has a three point
two billion dollar market cap, up around fifteen percent so
far this year. Zach joins US from Henderson, Nevada.
Speaker 5 (20:25):
Zach, good to.
Speaker 6 (20:26):
Have you back with us. Hey, I want to get
your thoughts on why we're seeing sort of less interest
in these ether ETFs than we saw in our seeing
with the bitcoin ETFs. Why do you see this?
Speaker 9 (20:39):
You know, I may be a little biased, of course
as a bitcoin minor, but you know, I think it's
because of you know, bitcoin, I believe is the currency
of the future, is decentralized, it has all the benefits
that come with that, you know, ethereum I see as
instead of a currency, I see as a platform. So
its value comes down to, you know, how people use
(21:01):
it as a platform and all the things that get
built on top of it, whereas bitcoin has a different
sort of intrinsic value with the energy that backs it,
and I think that's much more interesting to investors. Of course,
on a biased opinion.
Speaker 6 (21:13):
Yeah, I was going to say, you know, again, you know,
full disclosure, you run a bitcoin mining company, but it's
still interesting to get your thoughts on it. You follow
the entire industry. Hey, speaking of bitcoin miners, there was
a lot of concern with the having a few months
ago that it would really affect other business of miners.
Talk a little bit about how it has affected or
has not affected your business and how you're moving forward.
Speaker 9 (21:35):
Yeah, the halfing it occurs every four years where the
rewards that we earn as miners are cut in half,
and it did have a big impact on the entire industry.
And I think what it showed is it showed the
miners that prepared and were ready for the having to occur.
And you know, the best way to be ready for
the halfing was to have a highly any energy efficient
(21:58):
data centers and energy efficiency. So on our side, we
spent the prior two years leading up to it to
build the most efficient fleet amongst the public miners, and
it served us very well, and I think it's been
more painful for those that didn't have the same preparations.
And so, you know, as much as we saw revenues
go down because of our steps to move forward, we
(22:21):
actually only saw revenues decrease by seven percent, even though
the reward itself, when measured in bitcoin, was cut in hat.
Speaker 3 (22:29):
So you were just mentioning also the efficiency when it
comes to the fleet and how crucial that is supposed
to be. Walk us through what that would really mean
when it comes to more bitcoin and how it could
be mined with less energy.
Speaker 9 (22:44):
Yeah, our largest cost input is the energy that we
consume that goes into our servers that ultimately drives the rewards.
And so if you think of it, if you have
a more energy efficient washer or dryer, you're ultimately drying
your clothes with less energy. We think of it in
a very simple and similar way, whereas what is the
(23:04):
energy input that goes into that server that ultimately costs
us money? It leads to the outcome on the other side.
And so you know, Moore's law has served us well
in the sense that you know, we're seeing chip efficiencies
continually improved, and so we've adopted, you know, these new technologies.
So our servers run on the latest generation chips that
(23:25):
have been manufactured, and the energy inputs that it ultimately takes,
it means it's half the energy since that it took
to produce the same amount of bitcoin as four years ago.
So that's what we've always continued to focus on ourselves,
and that's what drives all the costs for all the miners.
Speaker 6 (23:42):
Hey, Zach, want to get your thoughts on the election.
We're you know, certainly the DNC front center for us
as it wrapped up last night speaking to a lot
of our team who was there over the last few days.
They were also at the RNC last month. Did you
hear anything or have you heard anything from Kamala Harris's
team that would make you think about her in a
(24:07):
different way than President Joe Biden when it comes to cryptoregulation.
Speaker 9 (24:12):
You know, I have not, and I will tell you
I would love to hear something. The industry I think
is ready to engage Bitcoin in particular is should be nonpartisan,
and you know that's what it's there for. That's what
a decentralized system is there to serve best. And the
(24:32):
fact that we're only seeing a lot of outreach and
really the commentary around it in a positive way is
only coming from one side of the aisle is making
this I think for a lot of people, you know,
a single voter issue for this corner of the map,
of course, and I think it has a big impact
for you know, especially for individuals under the age of
thirty five, is what we're finding. So I haven't heard
(24:54):
anything yet. We're waiting, and I would love to hear
something from that side of the aisle and also from
Harris Camp that would give us some confidence on their
view of the industry.
Speaker 3 (25:04):
Of course some context for listeners here. So former President
Donald Trump actually had shifted his stance when it comes
to cryptocurrency to win over this new block of voters
and mega donors here. So in particular, Zach, when you're
thinking about this, what would you need to hear from
a potential Harris administration here on the crypto side that
you think would be more favorable to peo people who
(25:25):
are obviously investing in that type of industry.
Speaker 9 (25:29):
Yeah, I think what we're looking for is basically the
call the war off is how it seemed. It seems
like one side of the aisle, and you know, Elizabeth
Warren in particular has spoken up to make it a
war on cryptocurrency or war even on bitcoin, and we'd
love to see instead an embrace of the innovation. But
(25:49):
I think we need to see more than just lip service,
but instead again embracing it bringing to the other side. Ultimately,
if you look at what the industry is asking, the
industry isn't asked for any special treatment. It's just not
asking to be targeted. What we're ultimately doing is we're
all running data centers, and our data centers just are
used for a specific purpose, and we want to be
(26:11):
treated the same way that you know, any other large
scale data center, whether you're you know, Meta or if
you're a Google get treated. And I think that that's
that neutrality, and I'm really a promise for that that
would be actionable. Is what the industry needs to see,
and it needs to be believable.
Speaker 6 (26:30):
Zach, what's the data that you're seeing that shows that
crypto is an important issue to voters? Our own Bloomberg
opinion team, the editorial has a a team as an
editorial out today that notes that just one percent of Americans,
according to research and analysis from the Federal Reserve from
May of twenty twenty four, say they used cryptocurrency for
payment or money transfer last year.
Speaker 9 (26:54):
You know, I think that that is an interesting thing
to point out as payment or money transfer. Know, I
think cryptocurrency is used for a lot more. Bitcoin in
particular being a store of value. You know, even myself,
as somebody that's been involved in the industry at quite
a lot of depth, I really don't use bitcoin or
anything more than a store of value. I look to
(27:15):
other things that are easier to actually use and transact.
I think that the data we're looking at on our
side is that there's fifty million Americans that have at
least some exposure to cryptocurrency as an investment rather than
as a transactable value. You know, you think about it,
it's our retail storefronts may not be ready to accept
and transact, but there's a lot of people that are
(27:38):
invested in this space.
Speaker 6 (27:39):
Do you think they'll ever be ready to transact and accept?
Speaker 9 (27:44):
I think they will. You know, one thing that we
track a statistic on is about eighty percent of transactions
right now on the bitcoin network that are used to
transact actually occur in Africa. So you think about what
our industry is built on versus what they're industries are
built on. They need it because they have a devalued
currency and they don't have access to traditional banking. So
(28:06):
I think it'll be much slower here in the US
because we have so many other options that are just
easier and already built into the systems. But there are
places in the world that are already using and transacting
in bitcoin at a much higher scale than we're seeing
in the US.
Speaker 3 (28:19):
People have talked about how there's that clearly defined maximum
when it comes to supply of twenty one million coins
here when it comes to bitcoin, how does that factor
into it? When if you're trying to have more people
invest in this, but then there's limited supply. Obviously there's
other types of coins. How do you rectify that?
Speaker 9 (28:36):
You know, that's actually one of the reasons I think
that bitcoin has its intrinsic value is it's you know,
anti inflation area. On a long term basis, you know
what it's going to be. There is no risk of
you know, another twenty million coins popping up, and you
compare that to how the Federal Reserve operates, and that's
where you know, people that believe in bitcoin, like myself,
(28:57):
see it as a long term store of value. The
more money we print and the more we devalue the
US dollar on a long term basis, it actually builds
on the thesis that bitcoin can, again on a long
term basis, will hold its value longer because it's not
being diluted in the same way.
Speaker 6 (29:13):
Hey, zach, as I mentioned clean Spark shares higher today
by six point four percent as we speak on a
daily today. I'll be honest with you, I was looking
as I was preparing for this, I couldn't find any
stories about why the stock was surging today, but it
actually puts you guys up around fifteen percent year to date,
quite a bit higher than yesterday. Why do you see
(29:36):
in your world the stock moving higher today?
Speaker 9 (29:39):
You know, I think it's been the foundation we've laid.
We've been the fastest growing bitcoin minor year to date.
We've actually doubled our production since January of this year,
and we're on track to you know, double it again.
But really, if you point it on a daily basis,
you know, bitcoin is up because of the comments from
the FED today, and you know, being a I generally
(30:01):
seen as a risk on asset. I think that the
confidence that came in from those statements about how they're
going to view rate cuts and things like that added
a little bit of life into bitcoin today where we
saw it go up, you know, a few thousand, and
I think that's largely what's behind the bitcoin miners today.
But as it relates to us, you know, we've had
a great year and have a great year ahead of us.
Speaker 6 (30:22):
All right, Zach, we're gonna have to leave it there.
Thanks so much for joining us. Always great when you
come on our program. That's Zach Bradford. He is the
president and CEO of the publicly held bitcoin mining company
clean Spark, joining us from Nevada, Marco.
Speaker 5 (30:41):
A journal.
Speaker 2 (30:43):
How about you let me drive? Oh no, no, no, no,
who's going honey?
Speaker 1 (30:48):
Please?
Speaker 5 (30:51):
I want to drive.
Speaker 2 (30:54):
It's good question.
Speaker 1 (30:58):
This is good drive to the clothes Trimar thing well,
builda don On.
Speaker 3 (31:04):
Bloomberg Radio, Jessman and Tim Steneviek here the Bloomberg Interactive
Broker's studio. I'm filling in for the great Carol Master
this afternoon. With just under twenty minutes left to go
though before the closing bell, Tim, we have the S
and P five hundred actually up more than one percent
on the week, the NAZEC one hundred up about one percent,
obviously boosted by these gains that we saw on the
(31:26):
back of FED chair Jerome Palell and his speech earlier
this morning, obviously him stating that this was the time
to come for the Central Bank to cut it's key
policy rate and affirming those expectations that officials will begin
lowering those ballpreing costs soon and clearly trader's betting on
as soon as next month though. But who better to
come in and it's time for that drive to the
(31:46):
close here and back with this is Louis Navalier, founder
and chairman and CIO of Navalier Associates, joining us from Florida.
It's always great to pick your brains, especially on the
day like this, Louis, when we finally had this clear indication.
But it seems like when you're thinking about the debate
of twenty five basis points versus fifty and September I
mean with the clear takeaway here, because I don't think traders,
(32:08):
at least when I was speaking them ahead of this,
they thought that power would be just as a specific
and clear in the indications here. But what's your kind
of big takeaways from this and obviously the reaction overall
in the US equity markets.
Speaker 8 (32:20):
Well, we're definitely going to get more than one cut,
that's for sure. I would definitely do fifty, but that
signals a sign that the FED got behind the curve.
But it's obvious they're behind the curve based on market rates.
So I think the most important thing that will happen
on September eighteenth, other than the FMC statement, is the
dot plot. We'll get an updated dot plot and we'll
(32:41):
know exactly what the FED is intending but you know
they're going to cut on the eighteenth, two days after
the election. In November and December meeting, I expect at
least three twenty five based point cuts and hopefully it
works and similates economy. You know that Canadian rail strike
is going to script our.
Speaker 5 (32:59):
Economy about that.
Speaker 8 (33:01):
Yeah, it's a big deal and it's going to disrupt
commerce immensely because obviously because a NAFTA, we got a
free flowing border between US and Canada. And right now
lant of Feds at two percent GDP growth, So we're
not hitting on all cylinders. And one of the things
you heard from Jackson hollt least I heard on Bloomberg
was like the Boston Fed president very worried about unemployment,
(33:26):
and of course we had the big downward revision this week,
and so unemployment is now starting to take more priority
than inflation. So that means the Fed's got to pick
it up and ketch up with market.
Speaker 5 (33:36):
Well, we did hear j.
Speaker 6 (33:37):
Powe will say that you know, he is more concerned
about downside to employment than he is than he is
concerned with upside to inflation. Why do you point to
the downward revision that was announced by the Labor Department
on Wednesday.
Speaker 8 (33:52):
Well, because it's big. I mean, it means we created
two million jobs at a two point nine million, and
I realized they were trying to reconcile with the tax wrecker,
and maybe some people weren't on the records, maybe some
people had two jobs. But it's big, It doesn't Louis.
Speaker 6 (34:06):
It seems like markets ignored that.
Speaker 8 (34:08):
They did ignore it because they expected it. But we
have three point four percent employment fifteen months ago. We
have four point three now, and we might be headed
closer to five if they don't hurt it and do something.
So let's start cutting how quickly?
Speaker 6 (34:23):
If and when the Fed cuts do you think it
will transmit to financial markets immediately?
Speaker 8 (34:30):
I mean it's a turbo boost for the market. I
mean there's all kinds of sectors of our economy they're suffering.
I mean, the problem with setting our consumer is the
consumers over sixty or fine, they have homes, they have
money in the stock market, the wife's wonderful, But everybody
under thirty is struggling. So that's the problem. We have
this two tier economy. And you know, you've got a
(34:52):
lot of problems with credit card debt and you know,
the car Loans and things like that, and so the
FED might want to address that.
Speaker 3 (35:01):
Hey, Louis, when some people in the markets were arguing about, well,
if they went fifty basis points in September, that could
signal that the economy might be slowing more than they
had initially thought, and they were expecting stocks to potentially
be pressured by that. But obviously we had a boost
today on it. How do you sort of rectify that?
Is it more just the fact that they're willing to
step in and be more aggressive to help support the
(35:22):
economy in any way, I think the.
Speaker 8 (35:25):
FED successfully engineered a soft landing, but if they don't
hurt him cut, that success is going to be a failure.
As you know, most of the time, they can't engineer
soft landing. So I just think that if they got
too far behind the curve, they should do fifty. Now
that will weaken the dollar, and that they may not
want to do that, but you know it's right now.
(35:47):
We've got to still a very firm dollar because we're
behind all the other central banks. I mean, we learned
from Jackson Hole that Canada, Britain and the ECB is
going to cut again before we do, so they're going
to cut twice before we cut.
Speaker 3 (36:00):
So how are you advising clients to position?
Speaker 2 (36:04):
Then?
Speaker 3 (36:04):
What should they buy? What should they sell?
Speaker 8 (36:06):
Well, I'm advising clients to chill out just a bit
because we're overbought right now, okay, okay, and you might
get more overbought next week when the video's earnings.
Speaker 3 (36:17):
So would that indicate to you as we head into September, which,
as you know, historically the weakest month of year, that
could maybe if if stocks are overbought at that point,
they could be more vulnerable to any sort of sell off.
Speaker 8 (36:29):
Well, let maybe Crystal Clear, So then the video will
even if they miss, they're gonna have good guidance because
the Blackbell chip. Then on the thirtieth we have the PCE.
It's gonna be one tenth of percent or less. So
we should rally go into Labor Day weekend. But after
Labor Day weekend we're going to consolidate. A lot of
it is tax related because people have to pay their
(36:51):
estimated taxes on September fifteenth, so that kind of drains
some capital out of the market, and then of course
we have the debate. We'll have some clarity after the
September tenth debate, and then we'll rally from the eighteenth
to one quarter and window dressing quarter. And window dressing
is where the professional managers buy better stocks and get
and weed them out. But the market is the breath
and power is getting better. You know, I'm still the
(37:14):
opinion that's the market's led by Navidia. We went from
the Magnificent seven the Magnificent one and for one hundred
and ninety nine other stocks. But you know, you know
Lily novnor Disk, I've got a lot of other stocks
that are acting well. Costco's acting well. So it's the market's
broadening out. And I have a lot of small cap stocks.
But for my small cap investors, I tell them to
(37:36):
be patient. Let's let's wait till after the presidential debate.
Speaker 6 (37:39):
Cool guy, Hey, we only have about forty five seconds
left presidential debate. You mentioned, so you have me thinking politics.
How could the presidential race affect markets?
Speaker 8 (37:53):
Well, I'll be selling a lot of my energy stocks
if Trump's going to get elected, because you know, we're
going to have a surplus of crude oil.
Speaker 3 (38:00):
Uh.
Speaker 8 (38:01):
But I might buy some natural gas stocks because that's
severely depressed right now. So LNG companies, natural gasola companies
a lot that's weather related, you know. I also the phone.
I'm not in Florida. I'm in the Sierra Nevada. We're
having snow in a couple of days, so that's a
good sign. But you know, the you know, that's the
(38:21):
big one I'm worried about is just how to do
the energy policy? Uh, you know, and and energy is
going to control this election outcome because Pennsylvania is the
big state. And obviously Biden ban llerg in January and
the courts overturned him. And now Kamala's got to mop
up that mess. But western Pennsylvania is Trump.
Speaker 6 (38:45):
We're gonna have to leave it there. Louis Novalier, Founder,
chairman and CIO at Novalier and Associates. This is Bloomberg.
Speaker 1 (38:52):
This is the Bloomberg Business Week podcastle Spotify and anywhere
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Speaker 2 (00:28):
All the times.
Speaker 3 (00:32):
They're as to realize loving the music here, writes sim
and so, of course, uh, we've been talking about this
all afternoon, as you all know, Fed Shair Jpal finally
laying out what Wall Street has been expecting for a
while here to cut interest rates that are coming soon
to help support the economy. That marks and about face
(00:54):
after the Fed, of course, began hiking rates back in
March of twenty twenty two, after inflation, of course, viral
to its worst levels in a generation. The economy and
the US stock market, though, have both come a long
way since then. So let's dive into the economic as
well as the investor outlook. Following Pal's speech at Jackson
Hole this morning, who better than to bring in then
(01:14):
Bloomberg z oone Mike McKee, International Economics and Policy correspondent
and Bloomberg News and he's actually at the Jackson Hole
Economic Policy Symporium here. And then, of course Tracy Bell,
chief investment officer at First Horizon Advisors, joining us on
zoom from Birmingham, Alabama. Mike, I'll start off with you
because you just in the last hour had that great
interview with Austin Goolsby once again, and I thought it
(01:36):
was really interesting when he laid out when people were
debating about the twenty five basis points versus fifty basis
points in September, but he said expect multiple cuts for
this year and next. So what was kind of your
big takeaways from your conversation with him?
Speaker 4 (01:52):
Well, we've turned to corner now, we're now out of
the higher for longer regime and we are in the
rate cutting cycle.
Speaker 5 (01:58):
The question will be how far do they cut.
Speaker 4 (02:00):
They don't have an answer for that because they don't
exactly know what the neutral rate is going to be.
The economy growing above potential in recent years, does it
stay that way or does it fall back? Can they
lower interest rates below or at least to where they
were even before the Great Financial Crisis, what they.
Speaker 5 (02:17):
Might have considered normal.
Speaker 4 (02:19):
And they don't know whether they're going to cut twenty
five or fifty basis points. Their preference is twenty five,
but if we got some really bad economic data, they
might do fifty. That's what Austin Gouldsby said as well,
without taking a position on what they'll do in September.
Speaker 6 (02:35):
All right, well, maybe we can get Tracy Bell to
take a position. She's chief investment officer at First Horizon Advisors. Tracy,
come on in here and tell us how you're viewing
the rate path at least through the end of the year.
Given what we heard from Jay Powell and the various
bad speakers we've heard from live from Jackson Hall.
Speaker 7 (02:50):
Yeah, I love your intro music there time. That's what
is chirm Powell said today is.
Speaker 6 (02:55):
There's a method to the madness here.
Speaker 7 (02:58):
Exactly on a Friday afternoon. So, yeah, the time has come,
and you know, I think the data support that, and
what Mike is saying about a slow and deliberate pace
is probably what investors should expect here. Investors have been
trying to price in FED rate cuts since the beginning
of the year, and we've really just now gotten to
the point where the FED is comfortable doing that. Chairman
(03:20):
Powell talked about gaining confidence in the data, continuing to
move towards the fed's two percent inflation target, but at
the same time acknowledging that the employment market has definitely
cooled and we see that in the data. So to
the extent that the data continues to support that, we
should expect rate cuts to follow.
Speaker 3 (03:39):
So I want to follow up with you, Tracy on that,
because how are you advising clients to position at this
inflection point with the FED and a change in monetary policy.
What are you telling them to buy? What are you
telling them to sell?
Speaker 7 (03:50):
Well, one of the things that we talk about a
lot with our individual clients is expectations around transitions. So
when the FED was raising interest rates to begin this
part of this cycle, we talked about transitions being difficult
and understanding that transitions can lead to heightened volatility. And
we saw that not that long ago, a couple of
(04:11):
weeks ago, with the Japanese market selling off in the
US market following, only for things to turn around and
bounce right back. So we're in that same type transition
environment where the data is beginning to transition to a
lower pace with the economic growth and a little bit
weaker on the employment market and inflation is coming down
where it needs to be, and that implies that we're
(04:32):
in another transitory environment. Skews the use of the word transitory,
but transitory where we're shifting down a little bit in
the growth rate, and that means that investors may have
to endure a little more volatility as data continues to
come out, and it's going to be lumpy. Things don't
move in a straight line, and we're suggesting that investors
be prepared for that. It's not time to change what
(04:54):
you're doing. Your investment should be mirroring what your longer
term financial goals are are for the average individual investor,
and just understand that in the transitory environment, you may
experience some volatility.
Speaker 6 (05:07):
Mike, come on in here because I want to talk
a little bit about this line that I mentioned in
our interview with Iron Stewart a little earlier, from Powell's
roughly sixteen minute speech a little earlier today.
Speaker 5 (05:19):
Here's what he.
Speaker 6 (05:19):
Said, quote, the upside risks to inflation have diminished and
the downside risks to employment have increased. In other words,
they're more concerned with the risk to arise in unemployment
than they are to arise in inflation, at least, that's
my takeaway. How did you view that those two lines?
Speaker 4 (05:39):
Well, you got it right, Tim. The FED has been
worried about inflation. It was their number one priority for
two three years now, but the balance of risks, as
they put it, has now tilted towards unemployment rising too much.
The FED chair said that they don't think at this
point that the labor market is going to produce wage
inflation that would worry them, but they are concerned that
(06:01):
unemployment could rise too much.
Speaker 5 (06:03):
Now. The question is unemployment.
Speaker 4 (06:05):
Having risen to four point three percent, is that because
companies are laying off workers.
Speaker 5 (06:09):
It doesn't appear to be that way.
Speaker 4 (06:10):
It appears to be a much larger labor force, more
people out looking for jobs. And if that's the case,
the FED isn't going to be worried, but they'll be
watching the data closely to make sure that we're not
seeing widespread layoffs, which would be a sign of an
impending recession.
Speaker 6 (06:25):
Is that, Mike, the piece of data that they're most
concerned about now.
Speaker 5 (06:29):
Moving forward, it does appear that way.
Speaker 4 (06:33):
They anticipate that they're going to see inflation continue to
come down towards two percent it might be bumping, could
be goes up a tenth in a month or something
like that. But they don't seem to think there's a
possibility of a breakout at this time. But they are
worried about a breakout of unemployment, and Pole did say
today that they'll do whatever it takes to keep that
from happening.
Speaker 3 (06:53):
Hey, Mike, you also, I'm sure heard about this since
you're out there, that Rafael Bostic as well as Patrick
Harker were both signaling that they see the longer term
neutral rate around three percent, which was pretty specific for
both of them to come out and say that, So,
does that mean we should expect over two hundred bases
points worth of cuts over the next potential a year
or so.
Speaker 4 (07:12):
Well, a single data point doesn't make a trend, nor
do two, but if we get some more we might
think of that. I think probably the best answer is
the one Austin Gouldsby gave me, which was we're going
to have to wait and see, because we're going to
have to wait and see exactly what the economy does.
If the economy starts to slow, then you would see
(07:34):
more rate cuts. They might be too tight, so they
will continue going down, but they don't know where that
neutral rate is. It was unusual that Bostic and Harker
told me three percent, but most other officials won't put
a number on it. But it's a reasonable assumption that
they could get down that low. What they won't do
(07:55):
is go back to zero unless there's a crisis.
Speaker 3 (07:57):
Hey, Tracy, come back in here, because what is Pizzi
is sitting telling us in the stock market as far
as when you're looking at the S and P five
hundred just a whisker away actually from its all time high.
But when you're looking at say derivatives markets, what does
that show us as far as what investors are betting
on the next couple of months or so?
Speaker 7 (08:15):
You know, I think when you look at the performance
of the S and P, there's a couple of things
to notice, and you see this positioning more broadly. The
market has been led this year up until recently by
those big megacap concentrated names within the index, but really
over the past months to six weeks or so, that's
changed and you see a much more broad based lift
(08:38):
in the index coming from names outside of just those
few names. You also see participation in other market caps,
and outside the US, so it's a much more broad
based participation in financial market assets. Moving to the upside
across the board, the expectation for next year is for
much broader earnings growth within the S and P sector,
(09:00):
so not concentrated again in just those few names, but
spread out more broadly across market caps and sectors. That's
great for investors that have diversified portfolios, and that's what
we like to see, so that people aren't chasing just
a few individual.
Speaker 6 (09:14):
Names, Terracy, What about outside the S and P five
hundred geographically in terms of sectors, where are you looking
for growth?
Speaker 7 (09:24):
You know, it's looking like international looks a little better
this year. It's looking like that broad based growth is
going to show up really more globally and things not
be as concentrated in the United States.
Speaker 3 (09:39):
Mike, I want to bring you back in just quickly
here because we still have a few data points on
the calendar next week. As you know, the consumer spending
obviously includes the Fed's preferred gauge when it comes to
inflation with the PC indicator. But what are you most
focused on in the short term in the weeks ahead,
and obviously the jobs reporter is at tever six.
Speaker 4 (09:57):
Yeah, the Jobs Report is going to be the chief
indicat for the FED and contribute the most to the
debate over twenty five or fifty basis points.
Speaker 5 (10:06):
But we'll also be watching.
Speaker 4 (10:07):
CPI on September twelfth, and we'll be watching the PCEE
numbers that you mentioned, because that's the official target. If
they all come in as anticipated, I think you see
twenty five basis points on the eighteenth, and if they don't,
it would take a lot to change their view and
not cut. You'd have to have a big increase in
(10:28):
jobs and a drop in unemployment. But if we see weakness,
then that'll put some weight on the fifty side.
Speaker 6 (10:35):
Michael McKee, international economics and policy correspondent for Bloomberg News.
He's live from the Jackson Hole Economic Symposium and of
course Jackson Hole. Also a big thank you to Tracy
belchief investment officer at First Riseing Advisors. Joining us from Birha, Birmingham, Alabama.
Speaker 1 (10:51):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple.
Speaker 8 (10:58):
Car Play and then brought out with.
Speaker 1 (11:00):
A Bloomberg Business act or watch us live on YouTube.
Speaker 6 (11:04):
Well, if you watch or attended the Democratic National Convention
in Chicago this week, here's what you saw. Vintage Bernie Sanders,
a street against big pharma, big tech, big everything, and
of course billionaires. Minutes later, Illinois Governor J. B. Pritzker,
who is heir to a vast hotel fortune, stood at
the same spot to brag that he's an actual billionaire
who's wealthier than Donald Trump. It's a moment of rapid
(11:27):
transition from President Joe Biden to Harris. There's a party
eager to woo a broad coalition. They're selling hope and joy,
wrapped in memes and served with a side of Beyonce's Freedom.
What it has avoided, though, is providing economic policy specifics
that could pit one faction against another. These words from
the team behind one of the most read stories on
the Bloomberg terminal today. It's a dispatch from Chicago from
(11:49):
the Democratic National Convention. It focuses on how corporate leaders
are contending with a policy light Harris campaign. Amanda Gordon
is part of that team. She's Wealth Team reporter for
Blue Burg News and she joins us from Chicago. Amanda
good to have you with us this afternoon. I hope
you've gotten a little bit of rest following a whirlwind
four days in Chicago. One thing that I found really
(12:10):
fascinating about the piece that you wrote with your team
is kind of what happens behind the scenes when it
comes to the corporate side. The United Airlines, the McDonald's,
the Blackstones, the executives from some of these companies that
find themselves in Chicago for an event such as this
take us behind the scenes a little bit.
Speaker 2 (12:30):
Well, in some ways you could say it's networking one
oh one. This is relationship building and relationship solidifying. So
some of the business people from Wall Street who made
time to come to Chicago have been coming to conventions
for years and operating in the space, and they have
relationships with lawmakers. Some of them worked with Kamala Harris
(12:55):
on her presidential run in twenty nineteen even earlier. So
what I would say for the business people who are
here and in the room that night last night when
she gave the speech, there's a comfort level with her,
and I would say, you know, they're feeling confident that
(13:16):
they're going to get to these issues. But it is
true we are not going to hear these issues in
prime time. I would just look at the optics of
her speech. Thursday night was not a sort of joyful
Oprah kind of night. She talked about Trump being unseerious
(13:38):
and in her power suit up there on listing out
topics from Ukraine to childcare. She really did run the gamut.
But what we are hearing is that she's focusing on issues.
She's naming issues that will be important to the most
number of people who might influence this, uh, this election
(14:03):
on November fifth, and so we are late on some
of the issues that corporate leaders and Wall Street you know,
really care about, and that's up to us to pin
her down H in the coming days and weeks.
Speaker 3 (14:20):
So when you were talking to people there, what were
the top issues Because there's a lot of ideas. Of course,
people are going to talk about tax policy and other
things like that, but what were the kind of the
ones things that people really were most focused on?
Speaker 2 (14:32):
Here, H, Crypto AI really in America competitive, making sure
that America can you know, is engaged in investing in
other countries.
Speaker 7 (14:48):
Uh.
Speaker 2 (14:49):
It's it's you know, not necessarily that new, but it
is definitely counter to some of the things that we've
you know that that the Trump administration, the Trump platform
rather has has been positioning themselves. I think that the
(15:09):
general attitude, just to be you know, vague myself, would
be that we're going, we're not going. The campaign is
not going to just shut down and not listen to business,
and that Kamala Harrison knows how to read the room,
and the room last night called for a different kind
(15:30):
of speech. And you know, of course taxation, corporate tax,
the idea that the wealthy will be taxed more to
pay to support some of the middle class initiatives that
she presented last night is I think definitely you know,
(15:51):
on the table and it's it. Whereas Biden sort of
leaned forward on that, she's she is being less specific
right now about talking about those policies because the goal
in the short amount of time is to get the
most number of votes, and that's the strategy. If she's
(16:12):
less specific, Trump doesn't have the bait to attack her.
So it's a political strategy. It's and these things are
being discussed, the people are in the room, but it's
not the number one priority right.
Speaker 6 (16:29):
Now, Abigail, I mean, Amanda, excuse me, do business leaders
know what they're getting with a potential Kamala Harris presidency
because of the Joe Biden administration or are they still uncertain?
Speaker 2 (16:48):
Well, of course I could point you to the piece
because we were able. One of the advantages of being
here is to have some rich sideline conversations with a
variety of figures. And I think and what the policy
advisors for Kamala Harris that we talked to said is that, yes,
there is a sense of somewhat of predictability, uh because
(17:13):
she has been a member of the Biden administration. Where
there's a break is that in some ways there was
an overreaction to the notion that Obama was maybe too
close to UH to to be too cozy to business leaders.
And you know, so there were appointments that were sort
(17:35):
of distinctly let's not take people from corporate America. I
think she's going to be more open and I think
you can see from the speeches there that you know,
the idea is that she's going to be a leader
that has a wide range. So there's there are going
to be billionaires in the room, as there were on
(17:57):
that stage. They're going to be presentatives of unions and
corporate America and activists, and it's her responsibility to to
listen and you know, make the good decisions. As she says,
to quote her speech for all Americans and that's her
(18:18):
Uh that that's her pitch right now.
Speaker 3 (18:22):
We only have about forty five seconds left. But what
specific economic policies do you think she needs to be
most specific with moving forward?
Speaker 2 (18:30):
Well, I think that she needs to address the questions
on people's mind. Is with the huge deficit, with the
need to develop revenue, where does the money come from
to put forward some of her initiatives to help the
middle class. And you know, her the theory that lifting
(18:55):
the middle class is going to help big business is
a bridge that she needs to build and define.
Speaker 6 (19:01):
Amanda, we're gonna have to leave it there. Thanks so
much for joining us from Chicago after a whirlwind few
days at the Democratic National Convention. Check out Amanda's story.
She's part of the team that wrote it, a great
group of reporters the Dispatch from Chicago. It's among the
most read on the Bloomberg terminal. Check it out at
Bloomberg dot com as well. Amanda Gordon, Wealth team reporter
for Bloomberg News.
Speaker 1 (19:25):
You're listening to the Bloomberg Business Week podcast. Listen live
each weekday starting at two pm Eastern on Applecar Play
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station, Just say Alexa Play Bloomberg eleven thirty.
Speaker 6 (19:43):
Okay, some news in the crypto world. It's been a
month since the much anticipated E three ETFs launched in
the US. Investors don't seem that interested, though. The nine
exchange traded funds that hold the second largest cryptocurrency directly
saw investor outflows Thursday, free sixth consecutive date. It's the
longest streak of withdrawals since their debut back on July
(20:04):
twenty third. During the same period, US ETF's holding Bigcoin
saw inflows daily. This is equating to data compiled by Bloomberg.
We've got with us the president and CEO of the
public health a bitcoin mining company, Clean Spark. Zach Bradford
is back with US. Cleans Bark has a three point
two billion dollar market cap, up around fifteen percent so
far this year. Zach joins US from Henderson, Nevada.
Speaker 5 (20:25):
Zach, good to.
Speaker 6 (20:26):
Have you back with us. Hey, I want to get
your thoughts on why we're seeing sort of less interest
in these ether ETFs than we saw in our seeing
with the bitcoin ETFs. Why do you see this?
Speaker 9 (20:39):
You know, I may be a little biased, of course
as a bitcoin minor, but you know, I think it's
because of you know, bitcoin, I believe is the currency
of the future, is decentralized, it has all the benefits
that come with that, you know, ethereum I see as
instead of a currency, I see as a platform. So
its value comes down to, you know, how people use
(21:01):
it as a platform and all the things that get
built on top of it, whereas bitcoin has a different
sort of intrinsic value with the energy that backs it,
and I think that's much more interesting to investors. Of course,
on a biased opinion.
Speaker 6 (21:13):
Yeah, I was going to say, you know, again, you know,
full disclosure, you run a bitcoin mining company, but it's
still interesting to get your thoughts on it. You follow
the entire industry. Hey, speaking of bitcoin miners, there was
a lot of concern with the having a few months
ago that it would really affect other business of miners.
Talk a little bit about how it has affected or
has not affected your business and how you're moving forward.
Speaker 9 (21:35):
Yeah, the halfing it occurs every four years where the
rewards that we earn as miners are cut in half,
and it did have a big impact on the entire industry.
And I think what it showed is it showed the
miners that prepared and were ready for the having to occur.
And you know, the best way to be ready for
the halfing was to have a highly any energy efficient
(21:58):
data centers and energy efficiency. So on our side, we
spent the prior two years leading up to it to
build the most efficient fleet amongst the public miners, and
it served us very well, and I think it's been
more painful for those that didn't have the same preparations.
And so, you know, as much as we saw revenues
go down because of our steps to move forward, we
(22:21):
actually only saw revenues decrease by seven percent, even though
the reward itself, when measured in bitcoin, was cut in hat.
Speaker 3 (22:29):
So you were just mentioning also the efficiency when it
comes to the fleet and how crucial that is supposed
to be. Walk us through what that would really mean
when it comes to more bitcoin and how it could
be mined with less energy.
Speaker 9 (22:44):
Yeah, our largest cost input is the energy that we
consume that goes into our servers that ultimately drives the rewards.
And so if you think of it, if you have
a more energy efficient washer or dryer, you're ultimately drying
your clothes with less energy. We think of it in
a very simple and similar way, whereas what is the
(23:04):
energy input that goes into that server that ultimately costs
us money? It leads to the outcome on the other side.
And so you know, Moore's law has served us well
in the sense that you know, we're seeing chip efficiencies
continually improved, and so we've adopted, you know, these new technologies.
So our servers run on the latest generation chips that
(23:25):
have been manufactured, and the energy inputs that it ultimately takes,
it means it's half the energy since that it took
to produce the same amount of bitcoin as four years ago.
So that's what we've always continued to focus on ourselves,
and that's what drives all the costs for all the miners.
Speaker 6 (23:42):
Hey, Zach, want to get your thoughts on the election.
We're you know, certainly the DNC front center for us
as it wrapped up last night speaking to a lot
of our team who was there over the last few days.
They were also at the RNC last month. Did you
hear anything or have you heard anything from Kamala Harris's
team that would make you think about her in a
(24:07):
different way than President Joe Biden when it comes to cryptoregulation.
Speaker 9 (24:12):
You know, I have not, and I will tell you
I would love to hear something. The industry I think
is ready to engage Bitcoin in particular is should be nonpartisan,
and you know that's what it's there for. That's what
a decentralized system is there to serve best. And the
(24:32):
fact that we're only seeing a lot of outreach and
really the commentary around it in a positive way is
only coming from one side of the aisle is making
this I think for a lot of people, you know,
a single voter issue for this corner of the map,
of course, and I think it has a big impact
for you know, especially for individuals under the age of
thirty five, is what we're finding. So I haven't heard
(24:54):
anything yet. We're waiting, and I would love to hear
something from that side of the aisle and also from
Harris Camp that would give us some confidence on their
view of the industry.
Speaker 3 (25:04):
Of course some context for listeners here. So former President
Donald Trump actually had shifted his stance when it comes
to cryptocurrency to win over this new block of voters
and mega donors here. So in particular, Zach, when you're
thinking about this, what would you need to hear from
a potential Harris administration here on the crypto side that
you think would be more favorable to peo people who
(25:25):
are obviously investing in that type of industry.
Speaker 9 (25:29):
Yeah, I think what we're looking for is basically the
call the war off is how it seemed. It seems
like one side of the aisle, and you know, Elizabeth
Warren in particular has spoken up to make it a
war on cryptocurrency or war even on bitcoin, and we'd
love to see instead an embrace of the innovation. But
(25:49):
I think we need to see more than just lip service,
but instead again embracing it bringing to the other side. Ultimately,
if you look at what the industry is asking, the
industry isn't asked for any special treatment. It's just not
asking to be targeted. What we're ultimately doing is we're
all running data centers, and our data centers just are
used for a specific purpose, and we want to be
(26:11):
treated the same way that you know, any other large
scale data center, whether you're you know, Meta or if
you're a Google get treated. And I think that that's
that neutrality, and I'm really a promise for that that
would be actionable. Is what the industry needs to see,
and it needs to be believable.
Speaker 6 (26:30):
Zach, what's the data that you're seeing that shows that
crypto is an important issue to voters? Our own Bloomberg
opinion team, the editorial has a a team as an
editorial out today that notes that just one percent of Americans,
according to research and analysis from the Federal Reserve from
May of twenty twenty four, say they used cryptocurrency for
payment or money transfer last year.
Speaker 9 (26:54):
You know, I think that that is an interesting thing
to point out as payment or money transfer. Know, I
think cryptocurrency is used for a lot more. Bitcoin in
particular being a store of value. You know, even myself,
as somebody that's been involved in the industry at quite
a lot of depth, I really don't use bitcoin or
anything more than a store of value. I look to
(27:15):
other things that are easier to actually use and transact.
I think that the data we're looking at on our
side is that there's fifty million Americans that have at
least some exposure to cryptocurrency as an investment rather than
as a transactable value. You know, you think about it,
it's our retail storefronts may not be ready to accept
and transact, but there's a lot of people that are
(27:38):
invested in this space.
Speaker 6 (27:39):
Do you think they'll ever be ready to transact and accept?
Speaker 9 (27:44):
I think they will. You know, one thing that we
track a statistic on is about eighty percent of transactions
right now on the bitcoin network that are used to
transact actually occur in Africa. So you think about what
our industry is built on versus what they're industries are
built on. They need it because they have a devalued
currency and they don't have access to traditional banking. So
(28:06):
I think it'll be much slower here in the US
because we have so many other options that are just
easier and already built into the systems. But there are
places in the world that are already using and transacting
in bitcoin at a much higher scale than we're seeing
in the US.
Speaker 3 (28:19):
People have talked about how there's that clearly defined maximum
when it comes to supply of twenty one million coins
here when it comes to bitcoin, how does that factor
into it? When if you're trying to have more people
invest in this, but then there's limited supply. Obviously there's
other types of coins. How do you rectify that?
Speaker 9 (28:36):
You know, that's actually one of the reasons I think
that bitcoin has its intrinsic value is it's you know,
anti inflation area. On a long term basis, you know
what it's going to be. There is no risk of
you know, another twenty million coins popping up, and you
compare that to how the Federal Reserve operates, and that's
where you know, people that believe in bitcoin, like myself,
(28:57):
see it as a long term store of value. The
more money we print and the more we devalue the
US dollar on a long term basis, it actually builds
on the thesis that bitcoin can, again on a long
term basis, will hold its value longer because it's not
being diluted in the same way.
Speaker 6 (29:13):
Hey, zach, as I mentioned clean Spark shares higher today
by six point four percent as we speak on a
daily today. I'll be honest with you, I was looking
as I was preparing for this, I couldn't find any
stories about why the stock was surging today, but it
actually puts you guys up around fifteen percent year to date,
quite a bit higher than yesterday. Why do you see
(29:36):
in your world the stock moving higher today?
Speaker 9 (29:39):
You know, I think it's been the foundation we've laid.
We've been the fastest growing bitcoin minor year to date.
We've actually doubled our production since January of this year,
and we're on track to you know, double it again.
But really, if you point it on a daily basis,
you know, bitcoin is up because of the comments from
the FED today, and you know, being a I generally
(30:01):
seen as a risk on asset. I think that the
confidence that came in from those statements about how they're
going to view rate cuts and things like that added
a little bit of life into bitcoin today where we
saw it go up, you know, a few thousand, and
I think that's largely what's behind the bitcoin miners today.
But as it relates to us, you know, we've had
a great year and have a great year ahead of us.
Speaker 6 (30:22):
All right, Zach, we're gonna have to leave it there.
Thanks so much for joining us. Always great when you
come on our program. That's Zach Bradford. He is the
president and CEO of the publicly held bitcoin mining company
clean Spark, joining us from Nevada, Marco.
Speaker 5 (30:41):
A journal.
Speaker 2 (30:43):
How about you let me drive? Oh no, no, no, no,
who's going honey?
Speaker 1 (30:48):
Please?
Speaker 5 (30:51):
I want to drive.
Speaker 2 (30:54):
It's good question.
Speaker 1 (30:58):
This is good drive to the clothes Trimar thing well,
builda don On.
Speaker 3 (31:04):
Bloomberg Radio, Jessman and Tim Steneviek here the Bloomberg Interactive
Broker's studio. I'm filling in for the great Carol Master
this afternoon. With just under twenty minutes left to go
though before the closing bell, Tim, we have the S
and P five hundred actually up more than one percent
on the week, the NAZEC one hundred up about one percent,
obviously boosted by these gains that we saw on the
(31:26):
back of FED chair Jerome Palell and his speech earlier
this morning, obviously him stating that this was the time
to come for the Central Bank to cut it's key
policy rate and affirming those expectations that officials will begin
lowering those ballpreing costs soon and clearly trader's betting on
as soon as next month though. But who better to
come in and it's time for that drive to the
(31:46):
close here and back with this is Louis Navalier, founder
and chairman and CIO of Navalier Associates, joining us from Florida.
It's always great to pick your brains, especially on the
day like this, Louis, when we finally had this clear indication.
But it seems like when you're thinking about the debate
of twenty five basis points versus fifty and September I
mean with the clear takeaway here, because I don't think traders,
(32:08):
at least when I was speaking them ahead of this,
they thought that power would be just as a specific
and clear in the indications here. But what's your kind
of big takeaways from this and obviously the reaction overall
in the US equity markets.
Speaker 8 (32:20):
Well, we're definitely going to get more than one cut,
that's for sure. I would definitely do fifty, but that
signals a sign that the FED got behind the curve.
But it's obvious they're behind the curve based on market rates.
So I think the most important thing that will happen
on September eighteenth, other than the FMC statement, is the
dot plot. We'll get an updated dot plot and we'll
(32:41):
know exactly what the FED is intending but you know
they're going to cut on the eighteenth, two days after
the election. In November and December meeting, I expect at
least three twenty five based point cuts and hopefully it
works and similates economy. You know that Canadian rail strike
is going to script our.
Speaker 5 (32:59):
Economy about that.
Speaker 8 (33:01):
Yeah, it's a big deal and it's going to disrupt
commerce immensely because obviously because a NAFTA, we got a
free flowing border between US and Canada. And right now
lant of Feds at two percent GDP growth, So we're
not hitting on all cylinders. And one of the things
you heard from Jackson hollt least I heard on Bloomberg
was like the Boston Fed president very worried about unemployment,
(33:26):
and of course we had the big downward revision this week,
and so unemployment is now starting to take more priority
than inflation. So that means the Fed's got to pick
it up and ketch up with market.
Speaker 5 (33:36):
Well, we did hear j.
Speaker 6 (33:37):
Powe will say that you know, he is more concerned
about downside to employment than he is than he is
concerned with upside to inflation. Why do you point to
the downward revision that was announced by the Labor Department
on Wednesday.
Speaker 8 (33:52):
Well, because it's big. I mean, it means we created
two million jobs at a two point nine million, and
I realized they were trying to reconcile with the tax wrecker,
and maybe some people weren't on the records, maybe some
people had two jobs. But it's big, It doesn't Louis.
Speaker 6 (34:06):
It seems like markets ignored that.
Speaker 8 (34:08):
They did ignore it because they expected it. But we
have three point four percent employment fifteen months ago. We
have four point three now, and we might be headed
closer to five if they don't hurt it and do something.
So let's start cutting how quickly?
Speaker 6 (34:23):
If and when the Fed cuts do you think it
will transmit to financial markets immediately?
Speaker 8 (34:30):
I mean it's a turbo boost for the market. I
mean there's all kinds of sectors of our economy they're suffering.
I mean, the problem with setting our consumer is the
consumers over sixty or fine, they have homes, they have
money in the stock market, the wife's wonderful, But everybody
under thirty is struggling. So that's the problem. We have
this two tier economy. And you know, you've got a
(34:52):
lot of problems with credit card debt and you know,
the car Loans and things like that, and so the
FED might want to address that.
Speaker 3 (35:01):
Hey, Louis, when some people in the markets were arguing about, well,
if they went fifty basis points in September, that could
signal that the economy might be slowing more than they
had initially thought, and they were expecting stocks to potentially
be pressured by that. But obviously we had a boost
today on it. How do you sort of rectify that?
Is it more just the fact that they're willing to
step in and be more aggressive to help support the
(35:22):
economy in any way, I think the.
Speaker 8 (35:25):
FED successfully engineered a soft landing, but if they don't
hurt him cut, that success is going to be a failure.
As you know, most of the time, they can't engineer
soft landing. So I just think that if they got
too far behind the curve, they should do fifty. Now
that will weaken the dollar, and that they may not
want to do that, but you know it's right now.
(35:47):
We've got to still a very firm dollar because we're
behind all the other central banks. I mean, we learned
from Jackson Hole that Canada, Britain and the ECB is
going to cut again before we do, so they're going
to cut twice before we cut.
Speaker 3 (36:00):
So how are you advising clients to position?
Speaker 2 (36:04):
Then?
Speaker 3 (36:04):
What should they buy? What should they sell?
Speaker 8 (36:06):
Well, I'm advising clients to chill out just a bit
because we're overbought right now, okay, okay, and you might
get more overbought next week when the video's earnings.
Speaker 3 (36:17):
So would that indicate to you as we head into September, which,
as you know, historically the weakest month of year, that
could maybe if if stocks are overbought at that point,
they could be more vulnerable to any sort of sell off.
Speaker 8 (36:29):
Well, let maybe Crystal Clear, So then the video will
even if they miss, they're gonna have good guidance because
the Blackbell chip. Then on the thirtieth we have the PCE.
It's gonna be one tenth of percent or less. So
we should rally go into Labor Day weekend. But after
Labor Day weekend we're going to consolidate. A lot of
it is tax related because people have to pay their
(36:51):
estimated taxes on September fifteenth, so that kind of drains
some capital out of the market, and then of course
we have the debate. We'll have some clarity after the
September tenth debate, and then we'll rally from the eighteenth
to one quarter and window dressing quarter. And window dressing
is where the professional managers buy better stocks and get
and weed them out. But the market is the breath
and power is getting better. You know, I'm still the
(37:14):
opinion that's the market's led by Navidia. We went from
the Magnificent seven the Magnificent one and for one hundred
and ninety nine other stocks. But you know, you know
Lily novnor Disk, I've got a lot of other stocks
that are acting well. Costco's acting well. So it's the market's
broadening out. And I have a lot of small cap stocks.
But for my small cap investors, I tell them to
(37:36):
be patient. Let's let's wait till after the presidential debate.
Speaker 6 (37:39):
Cool guy, Hey, we only have about forty five seconds
left presidential debate. You mentioned, so you have me thinking politics.
How could the presidential race affect markets?
Speaker 8 (37:53):
Well, I'll be selling a lot of my energy stocks
if Trump's going to get elected, because you know, we're
going to have a surplus of crude oil.
Speaker 3 (38:00):
Uh.
Speaker 8 (38:01):
But I might buy some natural gas stocks because that's
severely depressed right now. So LNG companies, natural gasola companies
a lot that's weather related, you know. I also the phone.
I'm not in Florida. I'm in the Sierra Nevada. We're
having snow in a couple of days, so that's a
good sign. But you know, the you know, that's the
(38:21):
big one I'm worried about is just how to do
the energy policy? Uh, you know, and and energy is
going to control this election outcome because Pennsylvania is the
big state. And obviously Biden ban llerg in January and
the courts overturned him. And now Kamala's got to mop
up that mess. But western Pennsylvania is Trump.
Speaker 6 (38:45):
We're gonna have to leave it there. Louis Novalier, Founder,
chairman and CIO at Novalier and Associates. This is Bloomberg.
Speaker 1 (38:52):
This is the Bloomberg Business Week podcastle Spotify and anywhere
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