January 10, 2025 • 47 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg News International Economics & Policy Correspondent Michael McKee and Bloomberg News Rates Reporter Michael Mackenzie on December jobs report and market reaction. Honorable Stuart Eizenstat, former US Ambassador and Senior Counsel member at Covington & Burling, on Jimmy Carter’s Legacy. Christoph Gorder, Airbnb.org’s Executive Director, on Airbnb's efforts to help those out of LA. John Haar, Managing Director at Swan Bitcoin, on crypto outlook for 2025. And we Drive to the Close with Dana D’Auria, Co-CIO of Envestnet
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan and Sebastian Escobar
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week, Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenoveek on Bloomberg Radio.
Speaker 3 (00:26):
Let's get two it. As we keep saying, Stock's initially
getting a bit hammered, bond yields jumping with traders slashing
their bets for FED rate cuts this year after data
showed a solid jobs market and an increase in consumer
inflation expectations. So let's dig into all of it a
round table Bloomberg News International Economics and Policy correspondent Michael
McKee to my left and to our right is Bloomberg
(00:48):
News Rates reporter Michael McKenzie. Michael McKay, Let's start with
you first. I want to ask you about today's jobs
and you mish sentiment numbers laid out for us and
what it says about the US economy.
Speaker 4 (00:59):
I always love Jobs Day because Carol bakes cookies and
you know, didn't get Tim decorates the tree.
Speaker 5 (01:07):
It's once a month.
Speaker 3 (01:08):
Now you must be thinking of a different holiday.
Speaker 4 (01:11):
Payrolls were obviously very strong. We have to take it
with a little bit of a grain of salt because
there's probably some still some hurricane and strike catchup in that.
And also we had the very late Black Friday, which
appears to have delayed the hiring of retail employees because
(01:31):
we saw twenty seven thousand decline in retail in November,
when normally you'd expect all those people to come on,
and we saw forty three thousand additional people hired for
retailers in December, and also forty seven thousand hired in
the category that includes basically the delivery drivers, the ups
(01:52):
and FedEx people who are bringing you all those packages.
Speaker 3 (01:55):
Dudes to deliver it before the porch bandit stealer from
my pirates.
Speaker 4 (02:01):
There was there, There was good news in there, but
it maybe there may be some payback next week or
next month orrather. But the good news for the FED
is that the unemployment rate went down, massive increase in
the household survey in terms of people hired after a
big decrease the month before, and everybody said, oh, labor
market is falling apart, and it's not. That's the bottom
(02:24):
line here. Which can keep the Fed on the sidelines,
which will bring Mike mackenzie in to explain all the
joy that was found in the market.
Speaker 3 (02:35):
I listened to I think you know, we're all listening
to surveillance this morning when the numbers passed, and it
was like, I mean, man, the market reaction was pretty swift, Michael.
Speaker 5 (02:43):
Indeed it was. This has been a really tough week
for the bond markets, right. Fact, what was interesting about
today was longer day to bondes have been signing off
the most. So much of this week today is all
about the front end because the market saying, oh, the Fed,
he's really going to go on extended pause. Now we've
pushed out the first rate cut for this year from
around June. Now we're flirting with a September October timeframe.
(03:05):
Bank of America come out today and say no, we
don't see any more rate cuts now for the cycle.
Goldman City pushing it back. So the real problem now
is that you've got a series of forces all combining
to really hurt bonds because there's no really place here
nowhere here to hide really, because a Frinda yd is
going to get whacked because if the economy keeps trundling
(03:25):
along at this kind of pace, and you've also got
that uncertainty coming from the Trump administration coming in who
they want to keep the economy going. The FED is
also going to have to look at inflation a lot
more closely now, and we've got a really important inflation
report coming out next Wednesday. So everything's pushing us towards
the world where the FED is basically done. The December
(03:46):
expectations for rates where the FED rate will be is
now above four percent, So four percent is now your flaw,
and that means the longer end is still going to
sell off. It hasn't sold off as much today, but
it's sold off a lot this week. And we did
test five percent on the thirty year. The twenty year
bond is already above five percent. Tens when above four
(04:07):
seventy five where everyone has been saying, oh, that's going
to be where the buyers turn up, we're not really
seeing it.
Speaker 3 (04:12):
Ten years right now.
Speaker 6 (04:13):
Yeah, So does that mean we get to five for
our folks talk that you talked to Michael McKenzie saying
we could see five percent on.
Speaker 5 (04:19):
Yes, I think you've got a pretty good chance of that.
We'll see. I mean, inflation next week is expected to
show the third consecutive monthly rise and the headline rate,
so we're not trending in the right way. And then
Scott Besson's going to sit down for the Senate confirmation
hearing on Thursday, and everyone in the bond market wants
to hear what he's going to say about what's happening
in terms of fiscal policy. How do you square this
(04:40):
incoming administration's efforts to keep on spending bring in tax
cuts with being fiscally disciplined. And that's what's got people
worried as well.
Speaker 3 (04:50):
But you guys keep reminding both of you do that. Listen,
there's a lot that happens, you know, from FED meeting
to FED meeting, whether it's more reads on inflation, more
reads on jobs. And then we'll see, Mike, in reality,
what we get out of this administration that ultimately might
impact things.
Speaker 4 (05:06):
Yeah, what Michael was talking, I was like, we're all dated.
I was thinking, you want to pat the bond traders
on the head and go, you guys are so cute,
I mean, changing their views like this, and we all
know in a couple of weeks it'll all change again,
because yes, CPI is very important next week, but after that,
(05:26):
the big one is Inauguration Day and the hundred executive
orders he's going to put out, and then whatever plans
they go through. I think the only safe bet is
that we don't know what the FED is going to
be doing this year, and the FED doesn't know either,
and they're very happy to go sit in the shade
and wait this out for a little bit because they
(05:49):
don't want to be on the wrong side, you know,
slow the economy or goose it too much, given what
we don't know about what's going to happen.
Speaker 6 (05:56):
So January twenty ninth is the consensus on the twenty
ninth than the idea is the consensus says maybe the
next move comes all the way in the fall summer.
Speaker 4 (06:07):
Well, the consensus for January. You look at the WRP
page and I think it's written down there.
Speaker 7 (06:12):
We'd be gobsmacked.
Speaker 6 (06:14):
If the let's see WRP moved greats oh it does
say that, yeah, twenty nine.
Speaker 7 (06:20):
But after that, who knows.
Speaker 4 (06:22):
I mean by March, first of all, we've got the
dead ceiling hanging over everybody's head. We're going to have
a government has to be funded in.
Speaker 7 (06:34):
March by March, right, And so you have that little thing.
Speaker 4 (06:37):
Just those two little things alone, let alone any new
policies to throw people out of the country or imposed
tariffs or things like that.
Speaker 3 (06:44):
I want to throw two things into it. First of all,
isn't it great that the job market's doing well and
this growth is happening, So where's that aspect of it?
The other thing is, and I heard this on surveillance
this morning, like what is really behind the growth and rates?
Is it inflation? Is it that the economies growing?
Speaker 2 (07:00):
Like?
Speaker 3 (07:00):
Do we really know what is truly behind the move
up in rates.
Speaker 5 (07:05):
It's a combination of factors. But clearly, if you look
at term premium measures from the New York Fed model,
it's risen a lot. I mean, it was barely above
zero a month ago. It's now above sixty basis points.
So it's moved a lot. And that tells you that
investors are going to demand a higher premium to own
longer day to debt rate. You've then got the front
(07:25):
end of the curve where everybody was really telling me
for the last month of just stay in the two year.
That's going to be fine because the Fed's still going
to cut this year. Well, now that's now kind of
in question, and in fact, we now have a situation
is quite rare. The two year yield is now above
the Fed Fund's effective rate of four thirty three. Now,
before everyone saying, oh that's got the Fed effective is
a really tough level to break for the two year,
(07:46):
well that's just been broken. So you're in an environment
right now where there's a lot of uncertainty.
Speaker 3 (07:52):
So is it uncertainty that's just moving rates up? Like
that's what I'm trying to get to do, Like we
do we really understand why we've seen it?
Speaker 5 (07:57):
Well, I think there's another element to this is and
if you talk to a lot of us, talking to
on Greg Peter's at PGA Meda this week, he says,
we're is going back to where we were before the
financial crisis, that's when real us were above two percent.
Inflation is running in a sort of two and a
half three percent zip code, which means bond yields are going.
Speaker 3 (08:14):
To be at five percent. So back to normal.
Speaker 5 (08:16):
That's kind of back to normal, back.
Speaker 7 (08:17):
To the old normal, the old normal of the new normal.
Speaker 4 (08:20):
But what's funny is you look at the actual cost
of borrowing, not the FED funds rate, because you're not
a bank. But if you look at mortgage rates, and
if you look at credit card rates, and you look
even look at the prime rate for the best business borrowers,
none of them have come down since the FED cut
(08:42):
rates one hundred basis points. And yet the economy is,
like I said, is just still roaring along, which tells
you a that the Fed's probably not restrictive enough and
b that the neutral rate has clearly moved up at
this point. Now the feds concern is how long does
it stay up? Do we revert or are we back
(09:04):
at the old normal? And it stays that.
Speaker 6 (09:06):
Way, Mike, When it comes to the estimate, economists, apart
from our own Ana Wong here at Bloomberg Economics, they
got this wrong in terms of the figure that we
got this morning. Why is that so hard to get.
Speaker 4 (09:20):
Well, there's a lot of moving parts in all of this,
and then there's some group thing too, and so people
are looking at what's happened in the past and extrapolating that.
Some people may have missed the change in the holiday
and the seasonal effect of that, and it's been for
(09:41):
months and months, really hard to get a handle on
what's happening with the labor market. Remember, it was only
a couple of months ago that the labor market was
so bad that we had to start cutting interest rates
to save it. And now you've got this reversal, And
does that last or is this just a quickie.
Speaker 3 (09:59):
Thing too, like just to kind of wrap up here though, So, Michael,
is that like we just have to think about folks.
We're just going back to the way it maybe used
to be it should be.
Speaker 5 (10:08):
I think you have to because let's face it, so
many people in this country have locked in very low
mortgage costs. So even though the thirtieth fixed today is
going to be above seven percent when we get the
new numbers next week, it doesn't really affect the majority
of people. And as long as the job market stays
tight and potentially could give you tight if you start
to see people being deported this year, if you don't
(10:29):
lose your job and you've locked in really low borrowing rates,
and look, a lot of companies did the same as well.
And we still have all the fiscal stimulus from the
Biden administration still flowing through the economy. So again, it's
very hard to see what's going to knock this economy
off course. The only silver lining for the bomb market
right now, The only reason you'd be buying ten year
yields at these levels and thirties at five percent, is
(10:50):
that if you think there's going to be enough. We're
moving into a sort of in a sort of an
environment where good economic news becomes bad news for the
equity market. You get a tumble in stock folk and
you get a back up and credit, then treasuries will
probably show some haven support. Right But again, it's going
to be interesting to see how that works, given again
at the US fiscal position.
Speaker 3 (11:12):
Mike, twenty seconds left here, though, I mean, is there
enough growth out there in the US economy to keep
things going?
Speaker 4 (11:17):
Appears to be back right now, and it looks like
maybe only something that would come from the administration at
this point, or some exogenous event, some war we didn't anticipate,
or something would knock it off its pins at the moment.
Speaker 3 (11:29):
All right, Cookies and Christmas tree next time around. All right, guys,
thank you so much. Bloomberg News International Economics and Policy
correspondent Michael McKee, along with Bloomberg News Rates reporter Michael McKenzie. Guys, thanks,
have a great weekend.
Speaker 2 (11:39):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3 (11:52):
Our next guest has spent a decade and a half
of public service, serving three US administrations, including former Presidents
Jimmy Carter and Bill Clinton. Joining US right now is
Stuart Eisenstadt. He's former Deputy Secretary of the Treasury, Undersecretary
of State for Economic Affairs, former Undersecretary of Commerce for
International Trade, and former US Ambassador to the European Union.
He understands a lot of how the world works, certainly
(12:15):
from a US perspective when it comes to policy and
geopolitics and more. He was President Jimmy Carter's Chief White
House Domestic policy advisor and wrote a biography of him
entitled President Carter The White House Years, and gave a
eulogy at the state funeral yesterday for former President Carter. Today,
Ambassador Eisenstadt a senior council member at Covington and Burling,
(12:36):
and he joins US from Washington. D c Ambassador Eisenstadt,
thank you so much for being with us, and we
are very sorry for your loss.
Speaker 8 (12:44):
Thank you very much. As you've known Jimmy Carter for
fifty five years. I was his policy director when he
ran for governor of Georgia, then when he ran for president,
and then four years in the White House as his
chief domestic advisor. So it was a personal loss. But
he lived a long life and he in many ways
taught us how to live a life of purpose, a
(13:06):
life of faith, a life of determination, of honesty. And
one of the things that I really tried to stress
in my eulogy was that we shouldn't only look at
him as the greatest former president, which he was forty
three years, curing two African diseases, monitoring over one hundred elections,
(13:31):
building houses for habitat. Rather, we should later rest the
myth that his greatest achievements came only as former president.
And I believe that as we look back at what
was actually accomplished, that we will see that he was
one of the most consequential one term presidents in American history.
(13:53):
And I say that I wasn't nominating him for Mount Rushmore,
but he belonged in the foothills other presidents who have
really made the country stronger and the world safer. And
he did. And I tried to lay out in my
eulogy what major things he had accomplished.
Speaker 3 (14:11):
You know, maybe not Mount Rushmore, but you did call
him a renaissance man for all these different things that
he had done. You mentioned that in your eulogy. I
want to say that I'm glad you went there in
terms of his first term or his only term, in
terms of what he accomplished, because I do feel like
so much of the narrative and conversation since his passing
about is all that he achieved once he left. But
(14:33):
it's remarkable. And in listening to the eulogies yesterday, yours
and others about the issues that he worked on in
the White House, whether it was the Middle East, whether
it was inequalities, whether it was the environment, these are
things that are with us today and pressing and challenging issues.
And I think about the environment, and here we are
watching the fires out on the West Coast. I want
(14:55):
to kind of go there because obviously this was something
that President Carter thought about. What is wrong and why
hasn't our US policy maybe on the environment and climate
change specifically, why aren't we maybe better?
Speaker 8 (15:10):
And he was I think the greatest environmental president since
Theodore Roosevelt. He literally double the size of our national
park system with the Alaska Lands built. He had strong
amendments to the Clean Air and Clean Water ract But
interestingly he did the super fun to clean up chemical
(15:32):
waste and all of these our major accomplishments, and in fact,
we put out a report in nineteen eighty called the
Global two thousand Report, which forecast climate change on energy.
Really did everything together. He deregulated oil and gas, that is,
(15:54):
ended the price controls, which led to a huge upsurge
in production, so we're now the number one producer in
the world of both. But he also had the first
incentives for conservation like installation, and the first incentives for
renewable energy like solar and even put symbolically solar panels
(16:15):
on the White House. I mean this was done like
in the nineteen seventy eight seventy nine period, so he
already envisioned that is being a really critical thing for
the United States. He really inaugurated the whole clean.
Speaker 6 (16:32):
Energy euro Ambassador you talk about all these accomplishments, and look,
I think it's important for us to look at historical
context here. Why then do you think voters this didn't
resonate with voters, and he lost in the election of
nineteen eighty so badly to Ronald Berry.
Speaker 8 (16:48):
That's that's a good a good question. And all the
op eds that I've written on his life in the
Wall Street Journal and elsewhere, I mentioned that I hope
we don't end by the way before going to deregulation,
which even Senator Graham or Republican Senator said transformed the
whole US economy. Let me answer your direct question. I
(17:11):
call it the three eyes that were against them. First,
inter party warfare with the liberal wing of the Democratic Party,
hitted by Ted Kennedy. It divided the convention in nineteen eighty.
Kennedy never really reconciled and worked for him, and that
was a huge disability. Second, the second eye is inflation.
(17:35):
We had inherited high inflation. It was part of the
nineteen seventies with Nixon who had double digit inflation and
Ford and we had double digit inflation, but that was
largely powered as was Nixon's by the way, by the
oil shock. It was the Opeic embargo against the US
in nineteen seventy three. It was the Iranian Revolution and
(17:58):
shock in nineteen seventy nine nineteen eighty that just hugely
increased the pressures. But here is one of the most
courageous things he did, and it makes the point that
much of what he accomplished only blossomed after he left.
So let's put ourselves in July of nineteen seventy nine.
(18:20):
Inflation is roaring, gas prices are going up, gas lines
are occurring, and he decides over the objection, and I'm
not exaggerating of all of his advisers to appoint Paul
Voker to head the Federal Reserve, knowing in advance because
Paul told him in the Oval office that if I'm
(18:40):
appointed the head of the BED, I'm going to have
to take drastic actions on interest rates that are going
to make it very difficult for you in an election.
You're in nineteen eighty in terms of a potential recession,
our unemployment, And he said, Paul, I cannot make mon
legacy leaving this kind of inflation. You take care of
(19:05):
the economy, I'll take care of the politics. Well, the
fact is inflation dropped like a rock right for Paul's
but only in Reagan's first two years, after Carter had
already left. And third is Iran. The Iran hostage crisis
four hundred and forty four days was so unbelievably debilitating
(19:25):
and humiliating. Carter made a choice early on that he
was going to save the lives of the hostages rather
than take dramatic military action which would risk their lives.
All of them did come back, all of them came
back safe, but he paid a huge political price.
Speaker 3 (19:43):
Well, you know, Ambassador Eisenstadt, you know one of the
things I think someone said during one of the eulogesus
that he was far sighted. In other words, he thought
about longer term impact, not on only the current generation, but
generations to come. We only have about unfortunately, about three
and a half minutes or so left here. I do
think about policies today that he seemed to have some insights,
(20:05):
some foresight, some foresightedness, whether it was the Middle East,
whether it was China, whether it was equality in the environment.
When you look at the divisiveness today and the political
swings that we are saying and extremes, Americans are looking
for something else, and maybe they don't feel represented. How
(20:28):
do you think about the environment today. President Carter tried
to represent everybody.
Speaker 8 (20:33):
Yeah, let me give you three answers to that. First
of all, we had much more backpartisanship then much of
our legislation. We had almost seventy percent of our legislation passed.
We had regular meetings with Republican leadership, regular breakfasts as
well as Democratic. Second, he had a major role in
(20:56):
ending the Cold War. Reagan gets the credit for it,
and he deserves credit. But all the weapons systems which
Reagan implemented, the MX mobile missile, the cruise missile, the
stealth bomber, and intermediate nuclear forces in Europe, every single
one of them he started. And Brennan, the longtime Soviet
(21:18):
ambassador and his memoirs, said that Jimmy Carter's human rights
policy played a major role in undermining Soviet Union. And last,
he said, I'm going to do the right thing, regardless
of politics. And let's take deregulation, which would be an
important subject for Bloomberg. When we came into office, there
(21:40):
was tight regulation on roots and prices for all of
our surface and air transportation, no new entrance, rigid prices,
administered by government agencies. Jimmy Carter deregulated every single one
of those deregulated air lands, which made it possible for
(22:01):
competitors to come in. Right today, ninety percent of the
public flas only less than fifty percent did. Then, trucks
and rail deregulation made a more efficient supply chain. Deregulation
of telecommunications allowed the cable era to occur, and even
deregulated beer industry, which led to the growth of.
Speaker 3 (22:25):
He're here on a Friday beer industry. I'm in on that. Hey, listen,
we only do have about thirty five to forty seconds,
So forgive me for asking you to be brief if
you could, But I do think about those major initiatives
that you were laying out as you talk about the
former president's legacy thirty seconds. Do you think the country
is moving in the right direction when it comes to
(22:46):
laying out those long term plans? And again, I just
asked that you'd be very brief.
Speaker 5 (22:51):
I do not.
Speaker 8 (22:52):
I think we're very short term focused. I don't think
we're looking around the corner at the real challenges of
climate change, the real challenges that will come from China
and how to combat it. So I really think we're
looking at a very shortsighted, narrow political way of attacking
these problems, and we're doing it without the back parisanship
(23:14):
that Jimmy Carter was able to foster.
Speaker 3 (23:16):
I so appreciate that, and I so appreciate you reminding
us of all the things that happened during the Carter administration.
I think history always teaches us right, the things that
go right, the things that go wrong. But it's an
important way in terms of our way forward. Ambassador Eisenstadt,
thank you so much. Stewart Eisenstadt, former US ambassador, and
so much more in terms of his public service currently
at Covington and Berlin.
Speaker 2 (23:39):
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Speaker 3 (23:57):
Gave you an update on the wildfires out there in
the Los Angeles area, looking at it from a couple
of different perspectives on the ground and what we are seeing,
but also you know, we do think about the business
and financial impact. In the meantime, you continue to see
a lot of organizations that are rolling to help out
those affected by the LA wildfires, including some to help
(24:17):
find shelter. So let's get into what airbnb dot org
is doing. Their executive director, Christoph Gorder, is with us.
He joins us from Salt Lake City. Christoph, nice to
have you here with us. First of all, what can
you tell us about what you are hearing about operations there,
your teams in the area when it comes to the fires.
Speaker 9 (24:42):
Great, thanks for having me on, and you know, our
hearts go out to the thousands of families that are
just going through the most traumatic events right now. Airbnb
dot org we're a nonprofit. We're founded by arenb a
few years ago, and we provide free housing in times
of crisis like this. So we've been working in LA
since the fire started on Tuesday. Housed our first guest yesterday,
(25:03):
and now I think we're probably the last numbers I have.
We've housed. We've provided housing support for about six five
hundred people in the last twenty four hours. But the
need is just enormous.
Speaker 6 (25:15):
How does that housing support manifest and what's the relationship
that you have currently with Airbnb. Are you taking airbnbs
that are available and then essentially fronting the cost covering
the cost for those affected exactly.
Speaker 5 (25:25):
So.
Speaker 9 (25:26):
The way we work is we partner with a local nonprofit.
In this case, it's a nonprofit called La two one one,
which covers all of La City in La County. They
are very connected into the community. They identify and vet
the families who are going to stay with us. Once
they've approved them, we issue them a credit to book
(25:47):
the airbnb that works best for them and their needs
where they want to be, if they need wheelchair accessibility
or it needs to be pet friendly, and so they're
able to just sort of pick the airbnb that's going
to be most communient for them, and then we work
with hosts to get a discount on that and the
balance is paid for by Arianbe dot org.
Speaker 3 (26:06):
You said about sixty sixty five hundred people you've already
helped out, but you said the demand is incredible. Can
you give us an idea of how many people are
reaching out and looking for your assistance, so.
Speaker 9 (26:16):
It's really fast moving. I mean the number the sixty
five hundred numbers from last night, and you know, I'm
just waiting for some updates today, but you know, will
be thousands more will have gotten help just this morning
in terms of the need, you know, immediately right after
we open the program on Wednesday, you know, we had
thousands and thousands of requests and so we've got a
backlog right now and you know, working our way through it.
(26:39):
But the situation is still evolving, and there are more
areas you know, opening up for evacuation, and so it's
still you know, I think unfortunately, very early days.
Speaker 7 (26:48):
So it's hard to.
Speaker 9 (26:49):
Get a you know, a number really nailed down because
it's moving so fast.
Speaker 6 (26:54):
One thing that I'm trying to understand is how long
some of these folks are going to be displaced. I mean,
think about it from the perspective of how long it
takes to rebuild something. Factor in not just the insurance issues,
but also the fact that getting building materials and folks
to actually do that work. Those people are going to
be in a very short supply because of the scale
of this devastation. How long do you plan to be
(27:14):
housing people in the wake of this disaster.
Speaker 9 (27:17):
Well, we've committed in this immediate emergency, We've committed and
aremb is there to support us to provide emergency housing
to twenty five thousand people, and so we're going to
do as much as we can. We sort of look
at this in a couple phases as this evolves. The
first phase is the evacuation phase, and they're the stays
that we're providing are very short, so it's about a
(27:38):
week now. Most of the people we're hoping are going
to be able to go back to their homes in
these evacuation areas, but of course they're going to be
thousands and thousands of people. We're going to need a
long term stay and so then we will move into
phase two, will extend to stay out to about a month,
and we're sort of an emergency stop gap while people
figure out their other options. So think of us sort
of like as the ambulance that gets you to the hospital.
(28:00):
And then there'll be other options FEMA, insurance, etc. That
people will need to do. But it's a long, long
road to recovery.
Speaker 3 (28:08):
Yeah, we can only imagine. Christoph. You guys have been
doing this, you know, in other either natural disasters. Tell
us about, you know, kind of what you guys have
learned about this process to where you are today.
Speaker 9 (28:19):
Well, you know, the idea has been around for a while.
It goes back to actually twenty twelve when Hurricane Sandy
hit in New York City and there was an EVERYB
and B host in Brooklyn who called in and said, Hey,
I see all these people displaced. Can I open up
my home for free? And that's where the idea started,
and very quickly they were over a thousand hosts in
New York City who opened up their homes for Hurricane
(28:39):
Sandy victims. And you know, that went along for a
few years. But by twenty twenty we realized it was
a really big idea and so everybb dot org was formalized.
It was created as a separate nonprofit and now we
respond around the world to disasters. So, you know, unfortunately
in southern California, we were just down in that same
area in December and Malibu working on a fire there.
(29:01):
And it's continuous for us around the world and throughout
the year.
Speaker 3 (29:05):
Before you go, just got about twenty seconds, thirty seconds.
How can people find out more information about this organization?
Speaker 9 (29:11):
Hop on our website Airbnb dot org. There's two ways
you can help. If you make a donation every penny
will go to pay for a family and need for
a stay because EVERYMB covers all of our operating expenses.
So if you want to help people in LA, it's
a great direct way to do that. You'll help us
help more people. If you're in the LA area and
you've got a place that you can host a family,
(29:32):
you can learn about how to sign up to a
host and we also need your help there.
Speaker 3 (29:37):
And if somebody needs a place to stay, how do
they do that real quickly?
Speaker 9 (29:41):
So you reach out to two one one LA two
one one, either on their website or call them. There's
a very easy intake form and they'll take you through
the process. There's a little bit of a delay right
now because we've got so many people in the system,
but be patient. Will help you.
Speaker 3 (29:52):
Good luck with your efforts, Christoph, Thank you so much.
Christeph Gorder joining us executive director of at Airbnb dot org.
Speaker 1 (29:59):
Listen litening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five these during Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (30:13):
Carol the fire affecting so many case in point We
were actually set to interview Corey Clipston, the CEO at
swan Bitcoin, about crypto, but he let us know a
little earlier today that he now has to evacuate due
to fires in southern California, so he's unable to make
the interview.
Speaker 4 (30:28):
Right.
Speaker 3 (30:28):
Joining us instead is John Harai, swan Bitcoin's managing director.
Swan Bitcoin, in case you don't remember, it's a platform
that offers a host of services, including allowing people to
buy bitcoin in personal, business and retirement accounts. John joining
us from New York City. John, first of all, thank
you for jumping in and talking with us. First up, Corey. Okay,
(30:49):
what do we know about any of your team that
maybe had exposure to the LA wildfires.
Speaker 10 (30:56):
Yeah, great to be here with you guys and standing
in for Corey. So far, Corey and his family and
his house appear to be okay, but he is quite
close to the danger zone and I believe he is
helping some people who may have lost their home or
at least had to evacuate. So it's pretty hectic over
there right now, and it's one of those things where
(31:18):
every day brings new updates. So yeah, definitely thinking about
Corey and all of my other colleagues and everyone who
is in that area right now.
Speaker 6 (31:26):
It's hard to transition to talking about something like crypto
when we spent so much time talking about the wildfires
and the devastation out in LA affecting so many people.
But nonetheless we are going to do that because it
is one area of green today in a market where
we're seeing a lot of selling. Bitcoin up by three
percent right now, though it's down about eleven percent from
(31:47):
that all time high last month, down this week by
a little more than four percent. John, what's the outlook
as we head into the new year, especially as we
get the new administration in office. What's priced in right now?
Speaker 7 (32:00):
Yeah, and today is an interesting day. I agree with you.
Speaker 10 (32:03):
To see bitcoin be up a few percent while stocks
are down, while bond yields are up. That's interesting. I
don't want to read too much into one day, but
it is noteworthy. Looking forward outlook wise, I typically highlight
three things that I think will support Bitcoin's price going forward.
One is continued relatively easy fiscal policy. Number two is
(32:26):
continued relatively easy monetary policy, and then third is continued adoption.
And if we double click on that adoption, I would
say it's going to come from many places, but there's
two big ones. One is potential nation state adoption. And here,
of course, i'm talking about a new administration, Trump administration
coming in. They're talking about what's being known as the
(32:49):
SBR Strategic Bitcoin Reserve. Some are calling it a stockpile,
but either way, it would be the US government proactively
and consciously adding and holding bitcoin, which would be a
a big deal. And then the other leg of that
adoption story is basically what micro Strategy is doing, and
it's corporate adoption. And they have bought just a ton
(33:11):
of bitcoin in the past several months here, and the
pace of their accumulation is really increasing. I don't believe
we're going to see micro strategy, you know, they're in
a class of their own, but I think it is
going to be a big story for twenty twenty five
what nation states do, primarily driven by the US in
terms of bitcoin accumulation, and what corporations do you know,
(33:33):
call it copycats of the micro Strategy playbook. We're actually
calling it lbe at SWAN or leveraged Bitcoin Equity. It's
a little bit of a nod to the old LBO
leveraged buyout. But that's what we're calling the micro strategy playbook,
the LBE playbook, and I think there's going to be
more companies that do that.
Speaker 3 (33:51):
Can I just say, John, I'm listening to you, and
so might say and I'm waiting for the emails to
come in that both of those, forgive me, are maybe
a little flimsy. First of all, well, I think the
strategic reserves, I don't know, it's a long ways to
get that. I think there are a lot of folks
that say that that makes absolutely no sense.
Speaker 6 (34:07):
Including some prominent bitcoin investors like Nick Carter of Castle Island,
who came on our show and got a lot of
flak for saying he doesn't think the US should.
Speaker 3 (34:13):
Do that right, And I mean as taxpayers, I think
a lot of us would be like, wait, what is
our money being used for? And the other hand is
the micro strategy. I get that supply demand equation and
why that is supportive of bitcoin, but again it doesn't
go to what is bitcoin, what is it really being
used for? What is that long term usage that to
me really then would help put in a floor that
(34:35):
lasts around for a long time.
Speaker 10 (34:36):
Yeah, it's great points you guys bring up and I
am familiar with Nick Carter's views.
Speaker 7 (34:41):
I think his views were nuanced.
Speaker 10 (34:43):
He was particularly against bitcoin being accumulated by a state government,
particularly the US, using the word reserve and the language
that some people were using, that it would be a
monetary asset, that it would somehow back the dollar provide
stability to the dollar. That is specifically what Nick was
(35:03):
against my and he in his article he said that
he's okay with a bitcoin stockpile, so he made that distinction.
My summary view is that regardless of what they call it,
it's going to act like a stockpile, even if they
call it a reserve. I don't think we are anywhere
close to a world where bitcoin held by the US
(35:24):
government is actually backing the dollar or providing stability to
the dollar. So I guess you could say I kind
of understand Nick's argument, but I think there is a
world where the US owns bitcoin as a stockpiled asset,
and I think there is a relatively easy way for
them to do that, and that's just them saying, Hey,
the roughly two hundred thousand bitcoin that we hold, we're
(35:45):
just going to hold onto it. And personally, I think
that would be massive if the wealthiest, most powerful country
in the world says, hey, we are accumulating a big
we're just holding a bit bitcoin as a strategic asset.
Speaker 3 (35:59):
Maybe we need to tell our deficit first before we
start doing that and spending money on it. I guess
my point is I just am trying to understand, Like,
if that doesn't happen, you pull the rugout. That doesn't happen.
If micro strategy starts to back off, you know what
fundamentally is there to support bitcoin?
Speaker 10 (36:17):
Yeah, so the micro strategy piece, I would say bitcoin
is the primary use case for Bitcoin is a store
of value monetary asset that is distinct from bitcoin being
used as payments or medium of exchange. I think all
of that will come, but that's many years down the road.
So I think corporations, individuals, Nation States, financial advisors, family
(36:42):
offices will continue to use bitcoin as a store of
value monetary asset in twenty twenty five and beyond. I
think that is ultimately what provides some sort of stability
or a floor for bitcoin. But I actually think it
will be pretty significant appreciation in the coming twelve months.
Speaker 6 (36:59):
Appreciation is certainly helpful when folks are long bitcoin, or
they're making leverage bets on bitcoin, such as Michael Sailor
at micro Strategy. But if we see a significant decline,
then it starts to really hurt and be painful.
Speaker 7 (37:12):
What happens, then, yeah, that's for sure true.
Speaker 10 (37:15):
If you're going to execute this micro Strategy playbook or
the LBE playbook as we're calling it, it does require
that Bitcoin goes up on a longer term time horizon.
I would point people to twenty twenty when Sailor and
micro Strategy made their first buys. Bitcoin did not go
upright after that. It actually went down very quickly in
the weeks after his purchases. But the way you execute
(37:38):
that strategy is you do it prudently.
Speaker 7 (37:41):
You do it.
Speaker 10 (37:41):
If you're going to do it with debt, you do
it with debt that doesn't have a maturity for four
to five years. If you're going to do it with equity,
you tap the equity markets when your stock is trading
at a hefty multiple to your bitcoin holdings. Those are
just some of the ways, And you think about the
ratio of the outstanding debt you have to your bit
coin market value. So I think as long as people
(38:02):
are getting that those companies will be okay.
Speaker 3 (38:04):
Got it run John, Thank you so much for jumping in.
Really appreciate this. John Harry Swanpitcoin's managing director.
Speaker 1 (38:12):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay 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 3 (38:29):
Mcle I'll bet you let me drive.
Speaker 7 (38:33):
Oh no, no, no no, this is not a toy's.
Speaker 2 (38:37):
Honey.
Speaker 3 (38:38):
Please, how do the gravels? Let's wat I want to
try it.
Speaker 11 (38:44):
It's a good question. Good try.
Speaker 2 (38:48):
This is the Drive to the Clothes.
Speaker 8 (38:50):
Dot songs for me thic Well driver Ja.
Speaker 2 (38:53):
Don on Bloomberg Radio.
Speaker 3 (38:55):
All right, everybody, just about eighteen nineteen minutes to go
until we wrap up the trading day. Charlie Bill Maloney
there breaking down the trade on this Friday, and we
were definitely off our best levels of the session, but
we've seen some definite reaction to the day's economic news,
expectations about the FED and maybe pushing out at least
based on what we see in the trade. The first
(39:15):
rate cut out until maybe October, so but a lot
can happen.
Speaker 6 (39:21):
Hey, what a parlor game we play?
Speaker 3 (39:24):
We do, indeed don't we. I mean it's like day
to day, week to week, day to day week.
Speaker 6 (39:28):
Everything's different when it comes to what investors think the
Fed's going to do.
Speaker 3 (39:32):
Yeah, I know, it's kind of like why do we
even bother because the Fed's going to do what it's
gonna do, what it means.
Speaker 6 (39:36):
Pretty much laughed at me when I asked if January
it was in play.
Speaker 3 (39:40):
It's like Tim steadeveek, No, I know, but you know
you never know, Like I mean, month things happen, right,
I mean, if anything we found in our look are
year ahead pieces, I think about talking with Tim O'Brien
from our opinion team who oversees that Sam Potter on
the Markets and Stocks team, is that there's just so
so many things in last year that we just weren't
(40:02):
kind of expecting and that happened. So things come out
of anywhere, so that will change the market environment.
Speaker 6 (40:08):
Well, let's see what Dana Duoria has to say about that.
Dana is the co chief investment officer over at invest Net.
It's the tech provider to banks and registered investment advisors.
The investment platform has more than six point eight trillion
dollars in assets on it, managed by many different folks
out there. Dana, good to have you with us.
Speaker 7 (40:26):
How are you good to be here?
Speaker 11 (40:29):
I'm great, thank you.
Speaker 6 (40:30):
So, so, what do you make of the way that
this Job's report changes the outlook for the FED this year?
Speaker 11 (40:37):
Well, certainly predictable. How the reaction to it, I mean,
really wants a blowout report?
Speaker 12 (40:42):
This was not you know, just a little bit more
in terms of the non farm payrolls.
Speaker 11 (40:46):
This was pretty much one hundred thousand more than what
was expected.
Speaker 12 (40:49):
So not surprising that the reaction that the market had interesting.
I guess from the standpoint that the market had already,
of course, from the last foe C meeting, been pricing
you know, lower expectations for rate cuts, and you know,
those lower expectations, I think, to a certain extent, we're
all you could argue, we're already sort of taking account
(41:11):
of the fact that unemployment was still low, you know,
jobs market was still strong, and that the Fed certainly
didn't have to move anytime soon.
Speaker 11 (41:19):
So I could argue this is a bit of an overshoot.
Speaker 12 (41:22):
You know that you had what the information you had before,
we were down to fifty basis points, and now you know,
the market reacts again, whereas this report blowout as it is,
I think is you know, kind of confirmation of what
maybe we knew.
Speaker 11 (41:36):
Was a possibility, which is that the FED really isn't
going to want to move. I think we all know
the FED at this point.
Speaker 12 (41:42):
You know, the failure here is letting inflation take hold again, and.
Speaker 11 (41:46):
So they're probably going to air. I think we all
kind of recognize.
Speaker 12 (41:48):
Right to a certain extent, they're gonna err on the
side of staying higher for longer.
Speaker 11 (41:53):
This just kind of you know, confirms it.
Speaker 3 (41:55):
Hey, what does it mean though for valuations currently on
the equity side of things. I mean, if I just
do I look at the price to earning, so just
doing really basic on like something like the NASTAQ one hundred,
it's about thirty two. If I look at the S
and P five hundred, it's just about twenty four. So
if we are indeed going to live in this higher
rate environment, valuations they've got to come down.
Speaker 12 (42:19):
Yeah, look one hundred percent, right, multiples are not multiples.
Speaker 11 (42:24):
Uh, you know, work inversely. So if you have higher rates,
you would expect multiples to come down.
Speaker 12 (42:29):
And we're already, as you you know, just quoted, we're
pretty high on multiples, right. I mean, if there's you know,
a flying the ointment around the expectation that equities do
well this year, it's where we sit from a multiple's perspective.
Speaker 11 (42:41):
We have a very concentrated market.
Speaker 12 (42:43):
We have, you know, a series of very large stocks
that are you know, you just read it, rate very high.
The S and P five hundred is very high, and
that's driven even more by you know, kind of bigger names.
So valuations do matter.
Speaker 11 (42:58):
I mean, I'm certainly of the school that you can't
you can't keep ignoring that forever.
Speaker 12 (43:03):
And you know, higher rates does work against price multiples
being a continued driver of expansion in the market. So
that's one hundred percent of fly in the ointment.
Speaker 6 (43:12):
If US stocks are expensive by some measures, many measures,
I think it's fair to say, is it time to
look to emerging markets?
Speaker 9 (43:19):
To Europe?
Speaker 12 (43:21):
Yeah, I mean from a tactical perspective, if I was
going to look right now at you know, what what
we see in the market in terms of a strong
dollar expectation you know, a FED that's not going to
cut rates as fast as maybe overseas economies will will
more likely cut rates more quickly. That strong dollar is
a headwind to the emerging market story for sure. So
(43:42):
if you're thinking about it in terms of, hey, tactically,
what do I think is the case? I mean, I
think you have to include that, and you have to,
you know, think about within emerging markets maybe where you.
Speaker 8 (43:52):
Want to be.
Speaker 12 (43:53):
But if you're looking at it, where I think your
question is, and it's a very valid one, which is, Hey, look,
at the end of the day, the market is valuing
all those things that they've priced in everything that I
just said, and having some diversification in that portfolio, particularly
when the US market is so concentrated, probably makes sense,
particularly for long term investors.
Speaker 3 (44:12):
How do you define diversification then.
Speaker 12 (44:16):
So it's interesting you say that, right, if you look
at the academic research, theoretically, the most diverse byed portfolio
is the total market.
Speaker 11 (44:24):
Right, It's the market clearing portfolio. It's everything you can own.
But in the if you look at.
Speaker 12 (44:31):
The total market, that's pricing everything at the value in
the market, and you're getting back to that place where okay,
but I've got some by other measures, I've got some
concentration risk there because I've got a lot of money
if I'm sitting in market or anything that's low tracking
error to market, I've got a lot of money in
those big stocks. And so I think, you know, if
you're thinking about it from that perspective, think about diversifying
(44:53):
into smaller parts of the market. Think about diversifying, as
you said, into international economies.
Speaker 6 (44:59):
Okay, international economies one where one area we could look
private markets though, for retail investors, something that's on your radar.
I know that the I know that the private equity
folks would like more people to be investing in the
private markets. But what yeah, you know, more money out there,
(45:19):
they want to wear more one K two. Is this
something that you could see moving away from the ultra
high net worth folks and actually going to regular people.
Speaker 11 (45:29):
Yeah, yeah, for sure. It's it's very much a trend.
We expect the trend to get a good trend.
Speaker 3 (45:36):
I think it can be.
Speaker 12 (45:37):
You know, yes, I think it absolutely can be, because
you're seeing a lot of the innovation that maybe was
available in public markets now take place in private markets.
And you know, if you're a believer in democratizing those
types of those.
Speaker 11 (45:51):
Return streams, then yes, the devil in the details of courses.
What is the vehicle?
Speaker 12 (45:56):
Am I really getting access to these returns and cannot
live with the ill equis that comes with it? But
I think the alternatives managers are seeing that, you know,
they're looking at Hey, dB plans are just not going
to be the source anymore.
Speaker 11 (46:08):
It's called d C.
Speaker 3 (46:09):
How do we come down.
Speaker 11 (46:10):
Market to more of a retail audience.
Speaker 12 (46:13):
And they're innovating in their structures, interval funds in particular, right,
so semi liquid structures that are maybe more palatable to
the audience in that high net worth and even you know,
getting into the mass.
Speaker 11 (46:24):
Apple one area.
Speaker 3 (46:25):
Hey we get to run. Happy New Year. Good to
check in with you, Danna Dioria. She's Chief investment Officer
of Investment. It's the tech provider to banks and rias.
The platform has more than six point eight trillion dollars
in assets.
Speaker 2 (46:38):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com.
The iHeartRadio app tune In and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
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Speaker 3 (47:08):
M
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week, Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Masser and Tim Stenoveek on Bloomberg Radio.
Speaker 3 (00:26):
Let's get two it. As we keep saying, Stock's initially
getting a bit hammered, bond yields jumping with traders slashing
their bets for FED rate cuts this year after data
showed a solid jobs market and an increase in consumer
inflation expectations. So let's dig into all of it a
round table Bloomberg News International Economics and Policy correspondent Michael
McKee to my left and to our right is Bloomberg
(00:48):
News Rates reporter Michael McKenzie. Michael McKay, Let's start with
you first. I want to ask you about today's jobs
and you mish sentiment numbers laid out for us and
what it says about the US economy.
Speaker 4 (00:59):
I always love Jobs Day because Carol bakes cookies and
you know, didn't get Tim decorates the tree.
Speaker 5 (01:07):
It's once a month.
Speaker 3 (01:08):
Now you must be thinking of a different holiday.
Speaker 4 (01:11):
Payrolls were obviously very strong. We have to take it
with a little bit of a grain of salt because
there's probably some still some hurricane and strike catchup in that.
And also we had the very late Black Friday, which
appears to have delayed the hiring of retail employees because
(01:31):
we saw twenty seven thousand decline in retail in November,
when normally you'd expect all those people to come on,
and we saw forty three thousand additional people hired for
retailers in December, and also forty seven thousand hired in
the category that includes basically the delivery drivers, the ups
(01:52):
and FedEx people who are bringing you all those packages.
Speaker 3 (01:55):
Dudes to deliver it before the porch bandit stealer from
my pirates.
Speaker 4 (02:01):
There was there, There was good news in there, but
it maybe there may be some payback next week or
next month orrather. But the good news for the FED
is that the unemployment rate went down, massive increase in
the household survey in terms of people hired after a
big decrease the month before, and everybody said, oh, labor
market is falling apart, and it's not. That's the bottom
(02:24):
line here. Which can keep the Fed on the sidelines,
which will bring Mike mackenzie in to explain all the
joy that was found in the market.
Speaker 3 (02:35):
I listened to I think you know, we're all listening
to surveillance this morning when the numbers passed, and it
was like, I mean, man, the market reaction was pretty swift, Michael.
Speaker 5 (02:43):
Indeed it was. This has been a really tough week
for the bond markets, right. Fact, what was interesting about
today was longer day to bondes have been signing off
the most. So much of this week today is all
about the front end because the market saying, oh, the Fed,
he's really going to go on extended pause. Now we've
pushed out the first rate cut for this year from
around June. Now we're flirting with a September October timeframe.
(03:05):
Bank of America come out today and say no, we
don't see any more rate cuts now for the cycle.
Goldman City pushing it back. So the real problem now
is that you've got a series of forces all combining
to really hurt bonds because there's no really place here
nowhere here to hide really, because a Frinda yd is
going to get whacked because if the economy keeps trundling
(03:25):
along at this kind of pace, and you've also got
that uncertainty coming from the Trump administration coming in who
they want to keep the economy going. The FED is
also going to have to look at inflation a lot
more closely now, and we've got a really important inflation
report coming out next Wednesday. So everything's pushing us towards
the world where the FED is basically done. The December
(03:46):
expectations for rates where the FED rate will be is
now above four percent, So four percent is now your flaw,
and that means the longer end is still going to
sell off. It hasn't sold off as much today, but
it's sold off a lot this week. And we did
test five percent on the thirty year. The twenty year
bond is already above five percent. Tens when above four
(04:07):
seventy five where everyone has been saying, oh, that's going
to be where the buyers turn up, we're not really
seeing it.
Speaker 3 (04:12):
Ten years right now.
Speaker 6 (04:13):
Yeah, So does that mean we get to five for
our folks talk that you talked to Michael McKenzie saying
we could see five percent on.
Speaker 5 (04:19):
Yes, I think you've got a pretty good chance of that.
We'll see. I mean, inflation next week is expected to
show the third consecutive monthly rise and the headline rate,
so we're not trending in the right way. And then
Scott Besson's going to sit down for the Senate confirmation
hearing on Thursday, and everyone in the bond market wants
to hear what he's going to say about what's happening
in terms of fiscal policy. How do you square this
(04:40):
incoming administration's efforts to keep on spending bring in tax
cuts with being fiscally disciplined. And that's what's got people
worried as well.
Speaker 3 (04:50):
But you guys keep reminding both of you do that. Listen,
there's a lot that happens, you know, from FED meeting
to FED meeting, whether it's more reads on inflation, more
reads on jobs. And then we'll see, Mike, in reality,
what we get out of this administration that ultimately might
impact things.
Speaker 4 (05:06):
Yeah, what Michael was talking, I was like, we're all dated.
I was thinking, you want to pat the bond traders
on the head and go, you guys are so cute,
I mean, changing their views like this, and we all
know in a couple of weeks it'll all change again,
because yes, CPI is very important next week, but after that,
(05:26):
the big one is Inauguration Day and the hundred executive
orders he's going to put out, and then whatever plans
they go through. I think the only safe bet is
that we don't know what the FED is going to
be doing this year, and the FED doesn't know either,
and they're very happy to go sit in the shade
and wait this out for a little bit because they
(05:49):
don't want to be on the wrong side, you know,
slow the economy or goose it too much, given what
we don't know about what's going to happen.
Speaker 6 (05:56):
So January twenty ninth is the consensus on the twenty
ninth than the idea is the consensus says maybe the
next move comes all the way in the fall summer.
Speaker 4 (06:07):
Well, the consensus for January. You look at the WRP
page and I think it's written down there.
Speaker 7 (06:12):
We'd be gobsmacked.
Speaker 6 (06:14):
If the let's see WRP moved greats oh it does
say that, yeah, twenty nine.
Speaker 7 (06:20):
But after that, who knows.
Speaker 4 (06:22):
I mean by March, first of all, we've got the
dead ceiling hanging over everybody's head. We're going to have
a government has to be funded in.
Speaker 7 (06:34):
March by March, right, And so you have that little thing.
Speaker 4 (06:37):
Just those two little things alone, let alone any new
policies to throw people out of the country or imposed
tariffs or things like that.
Speaker 3 (06:44):
I want to throw two things into it. First of all,
isn't it great that the job market's doing well and
this growth is happening, So where's that aspect of it?
The other thing is, and I heard this on surveillance
this morning, like what is really behind the growth and rates?
Is it inflation? Is it that the economies growing?
Speaker 2 (07:00):
Like?
Speaker 3 (07:00):
Do we really know what is truly behind the move
up in rates.
Speaker 5 (07:05):
It's a combination of factors. But clearly, if you look
at term premium measures from the New York Fed model,
it's risen a lot. I mean, it was barely above
zero a month ago. It's now above sixty basis points.
So it's moved a lot. And that tells you that
investors are going to demand a higher premium to own
longer day to debt rate. You've then got the front
(07:25):
end of the curve where everybody was really telling me
for the last month of just stay in the two year.
That's going to be fine because the Fed's still going
to cut this year. Well, now that's now kind of
in question, and in fact, we now have a situation
is quite rare. The two year yield is now above
the Fed Fund's effective rate of four thirty three. Now,
before everyone saying, oh that's got the Fed effective is
a really tough level to break for the two year,
(07:46):
well that's just been broken. So you're in an environment
right now where there's a lot of uncertainty.
Speaker 3 (07:52):
So is it uncertainty that's just moving rates up? Like
that's what I'm trying to get to do, Like we
do we really understand why we've seen it?
Speaker 5 (07:57):
Well, I think there's another element to this is and
if you talk to a lot of us, talking to
on Greg Peter's at PGA Meda this week, he says,
we're is going back to where we were before the
financial crisis, that's when real us were above two percent.
Inflation is running in a sort of two and a
half three percent zip code, which means bond yields are going.
Speaker 3 (08:14):
To be at five percent. So back to normal.
Speaker 5 (08:16):
That's kind of back to normal, back.
Speaker 7 (08:17):
To the old normal, the old normal of the new normal.
Speaker 4 (08:20):
But what's funny is you look at the actual cost
of borrowing, not the FED funds rate, because you're not
a bank. But if you look at mortgage rates, and
if you look at credit card rates, and you look
even look at the prime rate for the best business borrowers,
none of them have come down since the FED cut
(08:42):
rates one hundred basis points. And yet the economy is,
like I said, is just still roaring along, which tells
you a that the Fed's probably not restrictive enough and
b that the neutral rate has clearly moved up at
this point. Now the feds concern is how long does
it stay up? Do we revert or are we back
(09:04):
at the old normal? And it stays that.
Speaker 6 (09:06):
Way, Mike, When it comes to the estimate, economists, apart
from our own Ana Wong here at Bloomberg Economics, they
got this wrong in terms of the figure that we
got this morning. Why is that so hard to get.
Speaker 4 (09:20):
Well, there's a lot of moving parts in all of this,
and then there's some group thing too, and so people
are looking at what's happened in the past and extrapolating that.
Some people may have missed the change in the holiday
and the seasonal effect of that, and it's been for
(09:41):
months and months, really hard to get a handle on
what's happening with the labor market. Remember, it was only
a couple of months ago that the labor market was
so bad that we had to start cutting interest rates
to save it. And now you've got this reversal, And
does that last or is this just a quickie.
Speaker 3 (09:59):
Thing too, like just to kind of wrap up here though, So, Michael,
is that like we just have to think about folks.
We're just going back to the way it maybe used
to be it should be.
Speaker 5 (10:08):
I think you have to because let's face it, so
many people in this country have locked in very low
mortgage costs. So even though the thirtieth fixed today is
going to be above seven percent when we get the
new numbers next week, it doesn't really affect the majority
of people. And as long as the job market stays
tight and potentially could give you tight if you start
to see people being deported this year, if you don't
(10:29):
lose your job and you've locked in really low borrowing rates,
and look, a lot of companies did the same as well.
And we still have all the fiscal stimulus from the
Biden administration still flowing through the economy. So again, it's
very hard to see what's going to knock this economy
off course. The only silver lining for the bomb market
right now, The only reason you'd be buying ten year
yields at these levels and thirties at five percent, is
(10:50):
that if you think there's going to be enough. We're
moving into a sort of in a sort of an
environment where good economic news becomes bad news for the
equity market. You get a tumble in stock folk and
you get a back up and credit, then treasuries will
probably show some haven support. Right But again, it's going
to be interesting to see how that works, given again
at the US fiscal position.
Speaker 3 (11:12):
Mike, twenty seconds left here, though, I mean, is there
enough growth out there in the US economy to keep
things going?
Speaker 4 (11:17):
Appears to be back right now, and it looks like
maybe only something that would come from the administration at
this point, or some exogenous event, some war we didn't anticipate,
or something would knock it off its pins at the moment.
Speaker 3 (11:29):
All right, Cookies and Christmas tree next time around. All right, guys,
thank you so much. Bloomberg News International Economics and Policy
correspondent Michael McKee, along with Bloomberg News Rates reporter Michael McKenzie. Guys, thanks,
have a great weekend.
Speaker 2 (11:39):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (11:52):
Our next guest has spent a decade and a half
of public service, serving three US administrations, including former Presidents
Jimmy Carter and Bill Clinton. Joining US right now is
Stuart Eisenstadt. He's former Deputy Secretary of the Treasury, Undersecretary
of State for Economic Affairs, former Undersecretary of Commerce for
International Trade, and former US Ambassador to the European Union.
He understands a lot of how the world works, certainly
(12:15):
from a US perspective when it comes to policy and
geopolitics and more. He was President Jimmy Carter's Chief White
House Domestic policy advisor and wrote a biography of him
entitled President Carter The White House Years, and gave a
eulogy at the state funeral yesterday for former President Carter. Today,
Ambassador Eisenstadt a senior council member at Covington and Burling,
(12:36):
and he joins US from Washington. D c Ambassador Eisenstadt,
thank you so much for being with us, and we
are very sorry for your loss.
Speaker 8 (12:44):
Thank you very much. As you've known Jimmy Carter for
fifty five years. I was his policy director when he
ran for governor of Georgia, then when he ran for president,
and then four years in the White House as his
chief domestic advisor. So it was a personal loss. But
he lived a long life and he in many ways
taught us how to live a life of purpose, a
(13:06):
life of faith, a life of determination, of honesty. And
one of the things that I really tried to stress
in my eulogy was that we shouldn't only look at
him as the greatest former president, which he was forty
three years, curing two African diseases, monitoring over one hundred elections,
(13:31):
building houses for habitat. Rather, we should later rest the
myth that his greatest achievements came only as former president.
And I believe that as we look back at what
was actually accomplished, that we will see that he was
one of the most consequential one term presidents in American history.
(13:53):
And I say that I wasn't nominating him for Mount Rushmore,
but he belonged in the foothills other presidents who have
really made the country stronger and the world safer. And
he did. And I tried to lay out in my
eulogy what major things he had accomplished.
Speaker 3 (14:11):
You know, maybe not Mount Rushmore, but you did call
him a renaissance man for all these different things that
he had done. You mentioned that in your eulogy. I
want to say that I'm glad you went there in
terms of his first term or his only term, in
terms of what he accomplished, because I do feel like
so much of the narrative and conversation since his passing
about is all that he achieved once he left. But
(14:33):
it's remarkable. And in listening to the eulogies yesterday, yours
and others about the issues that he worked on in
the White House, whether it was the Middle East, whether
it was inequalities, whether it was the environment, these are
things that are with us today and pressing and challenging issues.
And I think about the environment, and here we are
watching the fires out on the West Coast. I want
(14:55):
to kind of go there because obviously this was something
that President Carter thought about. What is wrong and why
hasn't our US policy maybe on the environment and climate
change specifically, why aren't we maybe better?
Speaker 8 (15:10):
And he was I think the greatest environmental president since
Theodore Roosevelt. He literally double the size of our national
park system with the Alaska Lands built. He had strong
amendments to the Clean Air and Clean Water ract But
interestingly he did the super fun to clean up chemical
(15:32):
waste and all of these our major accomplishments, and in fact,
we put out a report in nineteen eighty called the
Global two thousand Report, which forecast climate change on energy.
Really did everything together. He deregulated oil and gas, that is,
(15:54):
ended the price controls, which led to a huge upsurge
in production, so we're now the number one producer in
the world of both. But he also had the first
incentives for conservation like installation, and the first incentives for
renewable energy like solar and even put symbolically solar panels
(16:15):
on the White House. I mean this was done like
in the nineteen seventy eight seventy nine period, so he
already envisioned that is being a really critical thing for
the United States. He really inaugurated the whole clean.
Speaker 6 (16:32):
Energy euro Ambassador you talk about all these accomplishments, and look,
I think it's important for us to look at historical
context here. Why then do you think voters this didn't
resonate with voters, and he lost in the election of
nineteen eighty so badly to Ronald Berry.
Speaker 8 (16:48):
That's that's a good a good question. And all the
op eds that I've written on his life in the
Wall Street Journal and elsewhere, I mentioned that I hope
we don't end by the way before going to deregulation,
which even Senator Graham or Republican Senator said transformed the
whole US economy. Let me answer your direct question. I
(17:11):
call it the three eyes that were against them. First,
inter party warfare with the liberal wing of the Democratic Party,
hitted by Ted Kennedy. It divided the convention in nineteen eighty.
Kennedy never really reconciled and worked for him, and that
was a huge disability. Second, the second eye is inflation.
(17:35):
We had inherited high inflation. It was part of the
nineteen seventies with Nixon who had double digit inflation and
Ford and we had double digit inflation, but that was
largely powered as was Nixon's by the way, by the
oil shock. It was the Opeic embargo against the US
in nineteen seventy three. It was the Iranian Revolution and
(17:58):
shock in nineteen seventy nine nineteen eighty that just hugely
increased the pressures. But here is one of the most
courageous things he did, and it makes the point that
much of what he accomplished only blossomed after he left.
So let's put ourselves in July of nineteen seventy nine.
(18:20):
Inflation is roaring, gas prices are going up, gas lines
are occurring, and he decides over the objection, and I'm
not exaggerating of all of his advisers to appoint Paul
Voker to head the Federal Reserve, knowing in advance because
Paul told him in the Oval office that if I'm
(18:40):
appointed the head of the BED, I'm going to have
to take drastic actions on interest rates that are going
to make it very difficult for you in an election.
You're in nineteen eighty in terms of a potential recession,
our unemployment, And he said, Paul, I cannot make mon
legacy leaving this kind of inflation. You take care of
(19:05):
the economy, I'll take care of the politics. Well, the
fact is inflation dropped like a rock right for Paul's
but only in Reagan's first two years, after Carter had
already left. And third is Iran. The Iran hostage crisis
four hundred and forty four days was so unbelievably debilitating
(19:25):
and humiliating. Carter made a choice early on that he
was going to save the lives of the hostages rather
than take dramatic military action which would risk their lives.
All of them did come back, all of them came
back safe, but he paid a huge political price.
Speaker 3 (19:43):
Well, you know, Ambassador Eisenstadt, you know one of the
things I think someone said during one of the eulogesus
that he was far sighted. In other words, he thought
about longer term impact, not on only the current generation, but
generations to come. We only have about unfortunately, about three
and a half minutes or so left here. I do
think about policies today that he seemed to have some insights,
(20:05):
some foresight, some foresightedness, whether it was the Middle East,
whether it was China, whether it was equality in the environment.
When you look at the divisiveness today and the political
swings that we are saying and extremes, Americans are looking
for something else, and maybe they don't feel represented. How
(20:28):
do you think about the environment today. President Carter tried
to represent everybody.
Speaker 8 (20:33):
Yeah, let me give you three answers to that. First
of all, we had much more backpartisanship then much of
our legislation. We had almost seventy percent of our legislation passed.
We had regular meetings with Republican leadership, regular breakfasts as
well as Democratic. Second, he had a major role in
(20:56):
ending the Cold War. Reagan gets the credit for it,
and he deserves credit. But all the weapons systems which
Reagan implemented, the MX mobile missile, the cruise missile, the
stealth bomber, and intermediate nuclear forces in Europe, every single
one of them he started. And Brennan, the longtime Soviet
(21:18):
ambassador and his memoirs, said that Jimmy Carter's human rights
policy played a major role in undermining Soviet Union. And last,
he said, I'm going to do the right thing, regardless
of politics. And let's take deregulation, which would be an
important subject for Bloomberg. When we came into office, there
(21:40):
was tight regulation on roots and prices for all of
our surface and air transportation, no new entrance, rigid prices,
administered by government agencies. Jimmy Carter deregulated every single one
of those deregulated air lands, which made it possible for
(22:01):
competitors to come in. Right today, ninety percent of the
public flas only less than fifty percent did. Then, trucks
and rail deregulation made a more efficient supply chain. Deregulation
of telecommunications allowed the cable era to occur, and even
deregulated beer industry, which led to the growth of.
Speaker 3 (22:25):
He're here on a Friday beer industry. I'm in on that. Hey, listen,
we only do have about thirty five to forty seconds,
So forgive me for asking you to be brief if
you could, But I do think about those major initiatives
that you were laying out as you talk about the
former president's legacy thirty seconds. Do you think the country
is moving in the right direction when it comes to
(22:46):
laying out those long term plans? And again, I just
asked that you'd be very brief.
Speaker 5 (22:51):
I do not.
Speaker 8 (22:52):
I think we're very short term focused. I don't think
we're looking around the corner at the real challenges of
climate change, the real challenges that will come from China
and how to combat it. So I really think we're
looking at a very shortsighted, narrow political way of attacking
these problems, and we're doing it without the back parisanship
(23:14):
that Jimmy Carter was able to foster.
Speaker 3 (23:16):
I so appreciate that, and I so appreciate you reminding
us of all the things that happened during the Carter administration.
I think history always teaches us right, the things that
go right, the things that go wrong. But it's an
important way in terms of our way forward. Ambassador Eisenstadt,
thank you so much. Stewart Eisenstadt, former US ambassador, and
so much more in terms of his public service currently
at Covington and Berlin.
Speaker 2 (23:39):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern on Apple car Play
and the Android Auto with the Bloomberg Business app. You
can also listen live on Amazon Alexa from our flagship
New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (23:57):
Gave you an update on the wildfires out there in
the Los Angeles area, looking at it from a couple
of different perspectives on the ground and what we are seeing,
but also you know, we do think about the business
and financial impact. In the meantime, you continue to see
a lot of organizations that are rolling to help out
those affected by the LA wildfires, including some to help
(24:17):
find shelter. So let's get into what airbnb dot org
is doing. Their executive director, Christoph Gorder, is with us.
He joins us from Salt Lake City. Christoph, nice to
have you here with us. First of all, what can
you tell us about what you are hearing about operations there,
your teams in the area when it comes to the fires.
Speaker 9 (24:42):
Great, thanks for having me on, and you know, our
hearts go out to the thousands of families that are
just going through the most traumatic events right now. Airbnb
dot org we're a nonprofit. We're founded by arenb a
few years ago, and we provide free housing in times
of crisis like this. So we've been working in LA
since the fire started on Tuesday. Housed our first guest yesterday,
(25:03):
and now I think we're probably the last numbers I have.
We've housed. We've provided housing support for about six five
hundred people in the last twenty four hours. But the
need is just enormous.
Speaker 6 (25:15):
How does that housing support manifest and what's the relationship
that you have currently with Airbnb. Are you taking airbnbs
that are available and then essentially fronting the cost covering
the cost for those affected exactly.
Speaker 5 (25:25):
So.
Speaker 9 (25:26):
The way we work is we partner with a local nonprofit.
In this case, it's a nonprofit called La two one one,
which covers all of La City in La County. They
are very connected into the community. They identify and vet
the families who are going to stay with us. Once
they've approved them, we issue them a credit to book
(25:47):
the airbnb that works best for them and their needs
where they want to be, if they need wheelchair accessibility
or it needs to be pet friendly, and so they're
able to just sort of pick the airbnb that's going
to be most communient for them, and then we work
with hosts to get a discount on that and the
balance is paid for by Arianbe dot org.
Speaker 3 (26:06):
You said about sixty sixty five hundred people you've already
helped out, but you said the demand is incredible. Can
you give us an idea of how many people are
reaching out and looking for your assistance, so.
Speaker 9 (26:16):
It's really fast moving. I mean the number the sixty
five hundred numbers from last night, and you know, I'm
just waiting for some updates today, but you know, will
be thousands more will have gotten help just this morning
in terms of the need, you know, immediately right after
we open the program on Wednesday, you know, we had
thousands and thousands of requests and so we've got a
backlog right now and you know, working our way through it.
(26:39):
But the situation is still evolving, and there are more
areas you know, opening up for evacuation, and so it's
still you know, I think unfortunately, very early days.
Speaker 7 (26:48):
So it's hard to.
Speaker 9 (26:49):
Get a you know, a number really nailed down because
it's moving so fast.
Speaker 6 (26:54):
One thing that I'm trying to understand is how long
some of these folks are going to be displaced. I mean,
think about it from the perspective of how long it
takes to rebuild something. Factor in not just the insurance issues,
but also the fact that getting building materials and folks
to actually do that work. Those people are going to
be in a very short supply because of the scale
of this devastation. How long do you plan to be
(27:14):
housing people in the wake of this disaster.
Speaker 9 (27:17):
Well, we've committed in this immediate emergency, We've committed and
aremb is there to support us to provide emergency housing
to twenty five thousand people, and so we're going to
do as much as we can. We sort of look
at this in a couple phases as this evolves. The
first phase is the evacuation phase, and they're the stays
that we're providing are very short, so it's about a
(27:38):
week now. Most of the people we're hoping are going
to be able to go back to their homes in
these evacuation areas, but of course they're going to be
thousands and thousands of people. We're going to need a
long term stay and so then we will move into
phase two, will extend to stay out to about a month,
and we're sort of an emergency stop gap while people
figure out their other options. So think of us sort
of like as the ambulance that gets you to the hospital.
(28:00):
And then there'll be other options FEMA, insurance, etc. That
people will need to do. But it's a long, long
road to recovery.
Speaker 3 (28:08):
Yeah, we can only imagine. Christoph. You guys have been
doing this, you know, in other either natural disasters. Tell
us about, you know, kind of what you guys have
learned about this process to where you are today.
Speaker 9 (28:19):
Well, you know, the idea has been around for a while.
It goes back to actually twenty twelve when Hurricane Sandy
hit in New York City and there was an EVERYB
and B host in Brooklyn who called in and said, Hey,
I see all these people displaced. Can I open up
my home for free? And that's where the idea started,
and very quickly they were over a thousand hosts in
New York City who opened up their homes for Hurricane
(28:39):
Sandy victims. And you know, that went along for a
few years. But by twenty twenty we realized it was
a really big idea and so everybb dot org was formalized.
It was created as a separate nonprofit and now we
respond around the world to disasters. So, you know, unfortunately
in southern California, we were just down in that same
area in December and Malibu working on a fire there.
(29:01):
And it's continuous for us around the world and throughout
the year.
Speaker 3 (29:05):
Before you go, just got about twenty seconds, thirty seconds.
How can people find out more information about this organization?
Speaker 9 (29:11):
Hop on our website Airbnb dot org. There's two ways
you can help. If you make a donation every penny
will go to pay for a family and need for
a stay because EVERYMB covers all of our operating expenses.
So if you want to help people in LA, it's
a great direct way to do that. You'll help us
help more people. If you're in the LA area and
you've got a place that you can host a family,
(29:32):
you can learn about how to sign up to a
host and we also need your help there.
Speaker 3 (29:37):
And if somebody needs a place to stay, how do
they do that real quickly?
Speaker 9 (29:41):
So you reach out to two one one LA two
one one, either on their website or call them. There's
a very easy intake form and they'll take you through
the process. There's a little bit of a delay right
now because we've got so many people in the system,
but be patient. Will help you.
Speaker 3 (29:52):
Good luck with your efforts, Christoph, Thank you so much.
Christeph Gorder joining us executive director of at Airbnb dot org.
Speaker 1 (29:59):
Listen litening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five these during Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 6 (30:13):
Carol the fire affecting so many case in point We
were actually set to interview Corey Clipston, the CEO at
swan Bitcoin, about crypto, but he let us know a
little earlier today that he now has to evacuate due
to fires in southern California, so he's unable to make
the interview.
Speaker 4 (30:28):
Right.
Speaker 3 (30:28):
Joining us instead is John Harai, swan Bitcoin's managing director.
Swan Bitcoin, in case you don't remember, it's a platform
that offers a host of services, including allowing people to
buy bitcoin in personal, business and retirement accounts. John joining
us from New York City. John, first of all, thank
you for jumping in and talking with us. First up, Corey. Okay,
(30:49):
what do we know about any of your team that
maybe had exposure to the LA wildfires.
Speaker 10 (30:56):
Yeah, great to be here with you guys and standing
in for Corey. So far, Corey and his family and
his house appear to be okay, but he is quite
close to the danger zone and I believe he is
helping some people who may have lost their home or
at least had to evacuate. So it's pretty hectic over
there right now, and it's one of those things where
(31:18):
every day brings new updates. So yeah, definitely thinking about
Corey and all of my other colleagues and everyone who
is in that area right now.
Speaker 6 (31:26):
It's hard to transition to talking about something like crypto
when we spent so much time talking about the wildfires
and the devastation out in LA affecting so many people.
But nonetheless we are going to do that because it
is one area of green today in a market where
we're seeing a lot of selling. Bitcoin up by three
percent right now, though it's down about eleven percent from
(31:47):
that all time high last month, down this week by
a little more than four percent. John, what's the outlook
as we head into the new year, especially as we
get the new administration in office. What's priced in right now?
Speaker 7 (32:00):
Yeah, and today is an interesting day. I agree with you.
Speaker 10 (32:03):
To see bitcoin be up a few percent while stocks
are down, while bond yields are up. That's interesting. I
don't want to read too much into one day, but
it is noteworthy. Looking forward outlook wise, I typically highlight
three things that I think will support Bitcoin's price going forward.
One is continued relatively easy fiscal policy. Number two is
(32:26):
continued relatively easy monetary policy, and then third is continued adoption.
And if we double click on that adoption, I would
say it's going to come from many places, but there's
two big ones. One is potential nation state adoption. And here,
of course, i'm talking about a new administration, Trump administration
coming in. They're talking about what's being known as the
(32:49):
SBR Strategic Bitcoin Reserve. Some are calling it a stockpile,
but either way, it would be the US government proactively
and consciously adding and holding bitcoin, which would be a
a big deal. And then the other leg of that
adoption story is basically what micro Strategy is doing, and
it's corporate adoption. And they have bought just a ton
(33:11):
of bitcoin in the past several months here, and the
pace of their accumulation is really increasing. I don't believe
we're going to see micro strategy, you know, they're in
a class of their own, but I think it is
going to be a big story for twenty twenty five
what nation states do, primarily driven by the US in
terms of bitcoin accumulation, and what corporations do you know,
(33:33):
call it copycats of the micro Strategy playbook. We're actually
calling it lbe at SWAN or leveraged Bitcoin Equity. It's
a little bit of a nod to the old LBO
leveraged buyout. But that's what we're calling the micro strategy playbook,
the LBE playbook, and I think there's going to be
more companies that do that.
Speaker 3 (33:51):
Can I just say, John, I'm listening to you, and
so might say and I'm waiting for the emails to
come in that both of those, forgive me, are maybe
a little flimsy. First of all, well, I think the
strategic reserves, I don't know, it's a long ways to
get that. I think there are a lot of folks
that say that that makes absolutely no sense.
Speaker 6 (34:07):
Including some prominent bitcoin investors like Nick Carter of Castle Island,
who came on our show and got a lot of
flak for saying he doesn't think the US should.
Speaker 3 (34:13):
Do that right, And I mean as taxpayers, I think
a lot of us would be like, wait, what is
our money being used for? And the other hand is
the micro strategy. I get that supply demand equation and
why that is supportive of bitcoin, but again it doesn't
go to what is bitcoin, what is it really being
used for? What is that long term usage that to
me really then would help put in a floor that
(34:35):
lasts around for a long time.
Speaker 10 (34:36):
Yeah, it's great points you guys bring up and I
am familiar with Nick Carter's views.
Speaker 7 (34:41):
I think his views were nuanced.
Speaker 10 (34:43):
He was particularly against bitcoin being accumulated by a state government,
particularly the US, using the word reserve and the language
that some people were using, that it would be a
monetary asset, that it would somehow back the dollar provide
stability to the dollar. That is specifically what Nick was
(35:03):
against my and he in his article he said that
he's okay with a bitcoin stockpile, so he made that distinction.
My summary view is that regardless of what they call it,
it's going to act like a stockpile, even if they
call it a reserve. I don't think we are anywhere
close to a world where bitcoin held by the US
(35:24):
government is actually backing the dollar or providing stability to
the dollar. So I guess you could say I kind
of understand Nick's argument, but I think there is a
world where the US owns bitcoin as a stockpiled asset,
and I think there is a relatively easy way for
them to do that, and that's just them saying, Hey,
the roughly two hundred thousand bitcoin that we hold, we're
(35:45):
just going to hold onto it. And personally, I think
that would be massive if the wealthiest, most powerful country
in the world says, hey, we are accumulating a big
we're just holding a bit bitcoin as a strategic asset.
Speaker 3 (35:59):
Maybe we need to tell our deficit first before we
start doing that and spending money on it. I guess
my point is I just am trying to understand, Like,
if that doesn't happen, you pull the rugout. That doesn't happen.
If micro strategy starts to back off, you know what
fundamentally is there to support bitcoin?
Speaker 10 (36:17):
Yeah, so the micro strategy piece, I would say bitcoin
is the primary use case for Bitcoin is a store
of value monetary asset that is distinct from bitcoin being
used as payments or medium of exchange. I think all
of that will come, but that's many years down the road.
So I think corporations, individuals, Nation States, financial advisors, family
(36:42):
offices will continue to use bitcoin as a store of
value monetary asset in twenty twenty five and beyond. I
think that is ultimately what provides some sort of stability
or a floor for bitcoin. But I actually think it
will be pretty significant appreciation in the coming twelve months.
Speaker 6 (36:59):
Appreciation is certainly helpful when folks are long bitcoin, or
they're making leverage bets on bitcoin, such as Michael Sailor
at micro Strategy. But if we see a significant decline,
then it starts to really hurt and be painful.
Speaker 7 (37:12):
What happens, then, yeah, that's for sure true.
Speaker 10 (37:15):
If you're going to execute this micro Strategy playbook or
the LBE playbook as we're calling it, it does require
that Bitcoin goes up on a longer term time horizon.
I would point people to twenty twenty when Sailor and
micro Strategy made their first buys. Bitcoin did not go
upright after that. It actually went down very quickly in
the weeks after his purchases. But the way you execute
(37:38):
that strategy is you do it prudently.
Speaker 7 (37:41):
You do it.
Speaker 10 (37:41):
If you're going to do it with debt, you do
it with debt that doesn't have a maturity for four
to five years. If you're going to do it with equity,
you tap the equity markets when your stock is trading
at a hefty multiple to your bitcoin holdings. Those are
just some of the ways, And you think about the
ratio of the outstanding debt you have to your bit
coin market value. So I think as long as people
(38:02):
are getting that those companies will be okay.
Speaker 3 (38:04):
Got it run John, Thank you so much for jumping in.
Really appreciate this. John Harry Swanpitcoin's managing director.
Speaker 1 (38:12):
This is the Bloomberg Business Week Podcast. Listen live each
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Just say Alexa Play Bloomberg eleven thirty.
Speaker 3 (38:29):
Mcle I'll bet you let me drive.
Speaker 7 (38:33):
Oh no, no, no no, this is not a toy's.
Speaker 2 (38:37):
Honey.
Speaker 3 (38:38):
Please, how do the gravels? Let's wat I want to
try it.
Speaker 11 (38:44):
It's a good question. Good try.
Speaker 2 (38:48):
This is the Drive to the Clothes.
Speaker 8 (38:50):
Dot songs for me thic Well driver Ja.
Speaker 2 (38:53):
Don on Bloomberg Radio.
Speaker 3 (38:55):
All right, everybody, just about eighteen nineteen minutes to go
until we wrap up the trading day. Charlie Bill Maloney
there breaking down the trade on this Friday, and we
were definitely off our best levels of the session, but
we've seen some definite reaction to the day's economic news,
expectations about the FED and maybe pushing out at least
based on what we see in the trade. The first
(39:15):
rate cut out until maybe October, so but a lot
can happen.
Speaker 6 (39:21):
Hey, what a parlor game we play?
Speaker 3 (39:24):
We do, indeed don't we. I mean it's like day
to day, week to week, day to day week.
Speaker 6 (39:28):
Everything's different when it comes to what investors think the
Fed's going to do.
Speaker 3 (39:32):
Yeah, I know, it's kind of like why do we
even bother because the Fed's going to do what it's
gonna do, what it means.
Speaker 6 (39:36):
Pretty much laughed at me when I asked if January
it was in play.
Speaker 3 (39:40):
It's like Tim steadeveek, No, I know, but you know
you never know, Like I mean, month things happen, right,
I mean, if anything we found in our look are
year ahead pieces, I think about talking with Tim O'Brien
from our opinion team who oversees that Sam Potter on
the Markets and Stocks team, is that there's just so
so many things in last year that we just weren't
(40:02):
kind of expecting and that happened. So things come out
of anywhere, so that will change the market environment.
Speaker 6 (40:08):
Well, let's see what Dana Duoria has to say about that.
Dana is the co chief investment officer over at invest Net.
It's the tech provider to banks and registered investment advisors.
The investment platform has more than six point eight trillion
dollars in assets on it, managed by many different folks
out there. Dana, good to have you with us.
Speaker 7 (40:26):
How are you good to be here?
Speaker 11 (40:29):
I'm great, thank you.
Speaker 6 (40:30):
So, so, what do you make of the way that
this Job's report changes the outlook for the FED this year?
Speaker 11 (40:37):
Well, certainly predictable. How the reaction to it, I mean,
really wants a blowout report?
Speaker 12 (40:42):
This was not you know, just a little bit more
in terms of the non farm payrolls.
Speaker 11 (40:46):
This was pretty much one hundred thousand more than what
was expected.
Speaker 12 (40:49):
So not surprising that the reaction that the market had interesting.
I guess from the standpoint that the market had already,
of course, from the last foe C meeting, been pricing
you know, lower expectations for rate cuts, and you know,
those lower expectations, I think, to a certain extent, we're
all you could argue, we're already sort of taking account
(41:11):
of the fact that unemployment was still low, you know,
jobs market was still strong, and that the Fed certainly
didn't have to move anytime soon.
Speaker 11 (41:19):
So I could argue this is a bit of an overshoot.
Speaker 12 (41:22):
You know that you had what the information you had before,
we were down to fifty basis points, and now you know,
the market reacts again, whereas this report blowout as it is,
I think is you know, kind of confirmation of what
maybe we knew.
Speaker 11 (41:36):
Was a possibility, which is that the FED really isn't
going to want to move. I think we all know
the FED at this point.
Speaker 12 (41:42):
You know, the failure here is letting inflation take hold again, and.
Speaker 11 (41:46):
So they're probably going to air. I think we all
kind of recognize.
Speaker 12 (41:48):
Right to a certain extent, they're gonna err on the
side of staying higher for longer.
Speaker 11 (41:53):
This just kind of you know, confirms it.
Speaker 3 (41:55):
Hey, what does it mean though for valuations currently on
the equity side of things. I mean, if I just
do I look at the price to earning, so just
doing really basic on like something like the NASTAQ one hundred,
it's about thirty two. If I look at the S
and P five hundred, it's just about twenty four. So
if we are indeed going to live in this higher
rate environment, valuations they've got to come down.
Speaker 12 (42:19):
Yeah, look one hundred percent, right, multiples are not multiples.
Speaker 11 (42:24):
Uh, you know, work inversely. So if you have higher rates,
you would expect multiples to come down.
Speaker 12 (42:29):
And we're already, as you you know, just quoted, we're
pretty high on multiples, right. I mean, if there's you know,
a flying the ointment around the expectation that equities do
well this year, it's where we sit from a multiple's perspective.
Speaker 11 (42:41):
We have a very concentrated market.
Speaker 12 (42:43):
We have, you know, a series of very large stocks
that are you know, you just read it, rate very high.
The S and P five hundred is very high, and
that's driven even more by you know, kind of bigger names.
So valuations do matter.
Speaker 11 (42:58):
I mean, I'm certainly of the school that you can't
you can't keep ignoring that forever.
Speaker 12 (43:03):
And you know, higher rates does work against price multiples
being a continued driver of expansion in the market. So
that's one hundred percent of fly in the ointment.
Speaker 6 (43:12):
If US stocks are expensive by some measures, many measures,
I think it's fair to say, is it time to
look to emerging markets?
Speaker 9 (43:19):
To Europe?
Speaker 12 (43:21):
Yeah, I mean from a tactical perspective, if I was
going to look right now at you know, what what
we see in the market in terms of a strong
dollar expectation you know, a FED that's not going to
cut rates as fast as maybe overseas economies will will
more likely cut rates more quickly. That strong dollar is
a headwind to the emerging market story for sure. So
(43:42):
if you're thinking about it in terms of, hey, tactically,
what do I think is the case? I mean, I
think you have to include that, and you have to,
you know, think about within emerging markets maybe where you.
Speaker 8 (43:52):
Want to be.
Speaker 12 (43:53):
But if you're looking at it, where I think your
question is, and it's a very valid one, which is, Hey, look,
at the end of the day, the market is valuing
all those things that they've priced in everything that I
just said, and having some diversification in that portfolio, particularly
when the US market is so concentrated, probably makes sense,
particularly for long term investors.
Speaker 3 (44:12):
How do you define diversification then.
Speaker 12 (44:16):
So it's interesting you say that, right, if you look
at the academic research, theoretically, the most diverse byed portfolio
is the total market.
Speaker 11 (44:24):
Right, It's the market clearing portfolio. It's everything you can own.
But in the if you look at.
Speaker 12 (44:31):
The total market, that's pricing everything at the value in
the market, and you're getting back to that place where okay,
but I've got some by other measures, I've got some
concentration risk there because I've got a lot of money
if I'm sitting in market or anything that's low tracking
error to market, I've got a lot of money in
those big stocks. And so I think, you know, if
you're thinking about it from that perspective, think about diversifying
(44:53):
into smaller parts of the market. Think about diversifying, as
you said, into international economies.
Speaker 6 (44:59):
Okay, international economies one where one area we could look
private markets though, for retail investors, something that's on your radar.
I know that the I know that the private equity
folks would like more people to be investing in the
private markets. But what yeah, you know, more money out there,
(45:19):
they want to wear more one K two. Is this
something that you could see moving away from the ultra
high net worth folks and actually going to regular people.
Speaker 11 (45:29):
Yeah, yeah, for sure. It's it's very much a trend.
We expect the trend to get a good trend.
Speaker 3 (45:36):
I think it can be.
Speaker 12 (45:37):
You know, yes, I think it absolutely can be, because
you're seeing a lot of the innovation that maybe was
available in public markets now take place in private markets.
And you know, if you're a believer in democratizing those
types of those.
Speaker 11 (45:51):
Return streams, then yes, the devil in the details of courses.
What is the vehicle?
Speaker 12 (45:56):
Am I really getting access to these returns and cannot
live with the ill equis that comes with it? But
I think the alternatives managers are seeing that, you know,
they're looking at Hey, dB plans are just not going
to be the source anymore.
Speaker 11 (46:08):
It's called d C.
Speaker 3 (46:09):
How do we come down.
Speaker 11 (46:10):
Market to more of a retail audience.
Speaker 12 (46:13):
And they're innovating in their structures, interval funds in particular, right,
so semi liquid structures that are maybe more palatable to
the audience in that high net worth and even you know,
getting into the mass.
Speaker 11 (46:24):
Apple one area.
Speaker 3 (46:25):
Hey we get to run. Happy New Year. Good to
check in with you, Danna Dioria. She's Chief investment Officer
of Investment. It's the tech provider to banks and rias.
The platform has more than six point eight trillion dollars
in assets.
Speaker 2 (46:38):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot Com.
The iHeartRadio app tune In and the Bloomberg Business app.
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Speaker 3 (47:08):
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