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Enbridge, Fed, BMW, and SBF · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller.
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Speaker 2: Every business day we bring you interviews from CEOs, market pros,
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Speaker 2: and Bloomberg experts, along with essential market moving news.
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Speaker 3: Find the Bloomberg.
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Speaker 1: Markets Podcast on Apple Podcasts or wherever you listen to podcasts,
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Speaker 1: and at Bloomberg dot com slash podcast. Greg Ebel joins us.
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Speaker 1: He's the CEO of n Bridge Energy. It's in New
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Speaker 1: York Stock Exchange listed company the tickers e n BE.
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Speaker 1: The company reported some earnings today, So Greg, talk to
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Speaker 1: us about thanks so much for joining us here. Talk
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Speaker 1: to us about kind of what you guys reported with
0:37
Speaker 1: your latest earnings results and kind of what's the outlook
0:39
Speaker 1: you're telling the street these days.
0:41
Speaker 3: Yeah, for sure, Matt, Paul, great to be with you again.
0:44
Speaker 3: And yeah, a very solid quarter both operationally and financially
0:48
Speaker 3: for us, right across all of our business. You know,
0:51
Speaker 3: we saw record volumes and results on the liquid's business,
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Speaker 3: our mainline pipeline system saw record volumes, our export facility
1:00
Speaker 3: record volumes, and so we beat obviously the street estimates
1:06
Speaker 3: for the quarter, which is great, and we confirmed that
1:08
Speaker 3: we would meet our goals for the full year, and
1:12
Speaker 3: we announced a little bit of tucky in m and A.
1:15
Speaker 3: You know, we bought some renewable offshore wind facilities that
1:19
Speaker 3: we'd originally participated in in Germany, and then renewable natural
1:24
Speaker 3: gas facilities in the United States, all very long term contracts,
1:29
Speaker 3: you know, ten years or more, and all very consistent
1:32
Speaker 3: with that, you know, all of the above approach that
1:35
Speaker 3: I think the public wanted, investors want, and that actually
1:38
Speaker 3: creates a lot of value for us. We're pretty excited
1:40
Speaker 3: about the road ahead.
1:41
Speaker 2: Why is I mean, the stock's up today, but why
1:46
Speaker 2: is it down thirteen percent year today? What's is it
1:50
Speaker 2: the underlying commodity that's a problem. Is it concerned about demand?
1:56
Speaker 2: What's holding the stock down?
1:58
Speaker 3: You know what we have been in, very proudly so
2:01
Speaker 3: for decades, increase the dividend year after year, very utility
2:05
Speaker 3: like in that structure. And as you know, you guys
2:08
Speaker 3: pointed off just a few minutes ago, with interest rates
2:12
Speaker 3: that have been up, that impacts dividend paying stocks like ourselves.
2:16
Speaker 3: And as you've seen in the last call it four days,
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Speaker 3: what we've seen forty to fifty sixty basis points coming
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Speaker 3: in on the ten year You've seen the stocks that
2:27
Speaker 3: pay dividends react. So it's not the commodity it's not
2:30
Speaker 3: energy demand we see up those we don't have commodity exposure.
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Speaker 3: Really is that ten year interest rate side of things.
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Speaker 3: So that's a macro factor that frankly, I can't do
2:41
Speaker 3: anything about. What we can do is make sure the
2:43
Speaker 3: company runs well, meets its earnings targets, and continues to
2:47
Speaker 3: build up both organic growth and some of these acquisitions.
2:50
Speaker 1: Greg talk to us about again. You mentioned some of
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Speaker 1: these acquisitions and the investments you make in renewables. Realistically,
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Speaker 1: do you have a good handle on the types of
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Speaker 1: returns you can get on renewables. Feels like maybe some
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Speaker 1: of the shine is off that side of the energy business.
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Speaker 3: Well, it's a good point. I think investors are starting
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Speaker 3: to figure out that they are. You know, renewables are
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Speaker 3: all not built the same, right, So those that have
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Speaker 3: long term contracts in other words, you know, ten fifteen
3:17
Speaker 3: year contracts with great counterparties, So larger utilities or big industrials,
3:23
Speaker 3: those are the ones you want to participate in because
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Speaker 3: you know they've got a guarantee price set on that power.
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Speaker 3: They've got a great investment, great customer that's taking that
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Speaker 3: power and you're going to get paid. Those that are
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Speaker 3: kind of going in a merchant world and haven't got
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Speaker 3: these things contracted or in jurisdictions where it's extremely difficult
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Speaker 3: to build things, which is a lot of jurisdictions these days.
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Speaker 3: I think you're seeing those entities being you know, a
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Speaker 3: lot tougher to get the returns that the ones I
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Speaker 3: previously talked about, which is why our renewable business, which
3:57
Speaker 3: we've actually been in for twenty years, is all about
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Speaker 3: that contracted business. So our European stuff, you know, our
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Speaker 3: customers are folks like EDF Electricity de France or the
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Speaker 3: government in Germany, and then here in the US, most
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Speaker 3: of our customers would be utility like players. And even
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Speaker 3: on the renewable natural gas tuck in that we had today,
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Speaker 3: we have ten year contracts with the likes of BP
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Speaker 3: and Shell. So I think and I think this is
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Speaker 3: great for companies like Enbridge who have done it on
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Speaker 3: a low risk basis that you're going to see differentiation.
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Speaker 3: Those that have actually structured their businesses to create good returns,
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Speaker 3: double digit returns are going to be rewarded, while those
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Speaker 3: that have gone more merchanty. I think that's going to
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Speaker 3: be a tough slug for them.
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Speaker 2: Where do you see demand going for energy? I mean,
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Speaker 2: as we see the jobs numbers miss and as we
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Speaker 2: expect either a soft landing or a recession, I imagine
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Speaker 2: demand slows down. Is that the case?
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Speaker 3: Yeah? You know, typically energy is a about two thirds
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Speaker 3: of GDP, and another words, energy growth grows about two
5:04
Speaker 3: thirds of GDP. So if you thought GDP was going
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Speaker 3: to be three percent, you get energy at two. That's one. Two.
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Speaker 3: People don't shut off their lights and they don't turn
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Speaker 3: off the gas in their house, even when you've you're
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Speaker 3: in a recession. Where you see it is on some
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Speaker 3: of the industrial love but most of our stuff is
5:24
Speaker 3: for ultimately residential players. So I don't see that has
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Speaker 3: a big impact. But remember we're building assets for ten
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Speaker 3: twenty years. So virtually every report that you would see
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Speaker 3: globally in the United States, we will be using more
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Speaker 3: energy ten years from now than we use today, and
5:44
Speaker 3: particularly so in developing countries. You're going to see them
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Speaker 3: continue to move up the economic food chain and that
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Speaker 3: always requires more energy. So some of our assets on
5:54
Speaker 3: the export side of things, whether it's our liquefied natural
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Speaker 3: gas export facilities we're building on the West coast of Canada,
6:00
Speaker 3: or our oil export facility on the Gulf Coast of
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Speaker 3: the United States, which is the largest in the US.
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Speaker 3: You continue to see very good response there even through recession.
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Speaker 3: So yeah, I think the demand comes down a bit,
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Speaker 3: but it continues to grow.
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Speaker 1: So I saw you announced intentions of buy some utilities,
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Speaker 1: I guess in Ohio, North Carolina, in Utah. I mean
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Speaker 1: it's a big number, fourteen billion. What's the strategy and
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Speaker 1: get in the utility business.
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Speaker 3: So we're you know, it's interesting, maybe a little bit
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Speaker 3: of contrarian, but I think we're right on this. We've
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Speaker 3: been in the utility business for a long time. We've
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Speaker 3: got the largest gas utility in Canada. This will make
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Speaker 3: us the largest gas utility in North America by volume,
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Speaker 3: serving some seven million customers in jurisdictions that are really
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Speaker 3: gas friendly. So they actually have banned the banned legislation
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Speaker 3: if you will. They will not allow communities to ban
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Speaker 3: natural guests. They know how important it is for industrial growth.
6:57
Speaker 3: I think of what's going on in Ohio so much
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Speaker 3: from a steam automotive refining perspective, gas is critical and
7:04
Speaker 3: then growth areas like North Carolina and Utah very favorable environment.
7:08
Speaker 3: So we saw that and it fits right into our
7:11
Speaker 3: given in paying low risk environment and gas continues to grow.
7:16
Speaker 3: In fact, you contend des utilities, you will see their
7:19
Speaker 3: rate base or if you will, their customer setup and
7:23
Speaker 3: the assets that they use grow by a compound annual
7:26
Speaker 3: growth rate of eight percent through the end of the decade.
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Speaker 3: So that was our strategy. You know, we had a
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Speaker 3: selling a seller that was large and electric player that
7:36
Speaker 3: had to move out of that business for other reasons
7:39
Speaker 3: related to you know, its electricity business. That created an opportunity.
7:43
Speaker 3: We were able to buy that as historic lows one
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Speaker 3: point three times that base of the business, and so
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Speaker 3: we were a big enough player we could buy all three.
7:53
Speaker 3: And that's really exciting for us as we move and
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Speaker 3: close those in twenty twenty four and have them fully
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Speaker 3: in the barn and ready to produce in twenty twenty five.
8:03
Speaker 1: So I'm looking on the Bloomberg terminal, Greg and I
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Speaker 1: see a dividend yield for you guys of you know,
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Speaker 1: seven point six percent. I mean that is just huge.
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Speaker 1: What is what's a dividend policy, you you kind of
8:12
Speaker 1: communicate to your shareholders.
8:14
Speaker 3: Sure, so we pay out, and we've been paying a
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Speaker 3: dividend for forever, and it's an important part of our equation.
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Speaker 3: I think our compound annual title total shareholder return is
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Speaker 3: about eleven percent since two thousand and then you go
8:29
Speaker 3: back to the sixties and you'd find it about a
8:31
Speaker 3: similar number. And the philosophy there is, as we build
8:34
Speaker 3: these low risk projects and we bring them in, we
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Speaker 3: can pay out sixty to seventy percent of that cash
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Speaker 3: flow to investors through dividends. And so the higher yield
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Speaker 3: right now is really driven by as we talked about
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Speaker 3: the ten year, the ten year yield having an impact
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Speaker 3: on that people will put their money in US treasuries
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Speaker 3: versus some dividend paying stock. So I would expect that
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Speaker 3: to come down. I use the stock to go as
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Speaker 3: you see some softening on the yield side of things.
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Speaker 3: But that's sixty to seventy percent pay out, very comfortable
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Speaker 3: for us, very much in line with our cash flow
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Speaker 3: and allows us to retain enough cash to continue to
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Speaker 3: invest in the business.
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Speaker 1: All right, Greg, thanks so much for taking some time,
9:15
Speaker 1: and you guys are busy today with your earnings Gregor Ebel.
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Speaker 1: He is the CEO of n Bridge Energy e NB
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Speaker 1: is the ticker and look over the last five years,
9:23
Speaker 1: compound and annual return about eight point five percent better
9:27
Speaker 1: than its benchmark index. So some solid returns there and
9:31
Speaker 1: this stocks up slightly here Today.
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9:48
Speaker 1: Jay Hatfield joins us, one of those smart folks we
9:50
Speaker 1: like to chat with, CEO, founder and portfolio manager at
9:53
Speaker 1: Infrastructure Capital Advisors, and Jay, this has been a good
9:57
Speaker 1: week for risk assets here. I mean, I mean we've
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Speaker 1: got yields pull and fifty basis points on the tenure.
10:01
Speaker 1: We got the stocks up five days in a row.
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Speaker 1: What'd you make of the job sprint today? What are
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Speaker 1: you making of this market right here that we've seen recently?
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Speaker 5: Thanks Paul Matt for having me on again. We put
10:13
Speaker 5: out a note on Tuesday because things were looking a
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Speaker 5: little bit bleak last week. I'd have to say, because
10:18
Speaker 5: you'd have great earnings reports and terrible price reaction in
10:22
Speaker 5: the market as a whole, But we did some work
10:25
Speaker 5: on near term catalysts on bonds and we saw everything
10:30
Speaker 5: really lining up for rally. So so far we've been correct.
10:34
Speaker 5: And what we're really focused on is global growth, mostly
10:37
Speaker 5: in Europe, and nobody really ever reports on it, but
10:41
Speaker 5: you can easily get it on the terminal. That's where
10:43
Speaker 5: we get it. The European data is just awful, yep.
10:47
Speaker 5: It's their inner recession, as we had predicted. Mild so far,
10:51
Speaker 5: but it's only going to get worse. The UCB raised
10:54
Speaker 5: rates twice during the quarter, so nothing better is happening yep.
10:58
Speaker 5: And if you look even today, the unemployment is rising
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Speaker 5: in Spain and Germany, they'd have the final manufacturing pmis
11:07
Speaker 5: forty three, so that's bad. But also we had a
11:10
Speaker 5: week PMI which lowered our Atlanta growth rate. And then
11:15
Speaker 5: the final point is that and we focus a lot
11:18
Speaker 5: on oil, is that it's not well discussed that gasoline
11:22
Speaker 5: prices came down ten percent in a month, so it's
11:26
Speaker 5: one hundred and twenty percent annualized. That's a little bit exaggeration,
11:29
Speaker 5: but still that's going to show up in not just
11:32
Speaker 5: headline CPI, but more importantly core. And this is what
11:35
Speaker 5: the fedinis is and this is why they have all
11:37
Speaker 5: the nonsense from the seventies because of the real problem
11:40
Speaker 5: the seventies we had twelve hundred percent increase in oil prices.
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Speaker 5: It bleeds through to core. So we're going to probably
11:47
Speaker 5: have cool CPI print in a couple of weeks and
11:51
Speaker 5: PPI definitely. And so this whole narrative that we're going
11:54
Speaker 5: to like six percent bond yield should attenuate. I think
11:58
Speaker 5: said that we think the rate or really rally when
12:01
Speaker 5: the ECP starts cutting rates in the first half or
12:03
Speaker 5: even the first quarter of next year, so you.
12:05
Speaker 2: Think they're gonna cut imminently. They do have a two
12:07
Speaker 2: handle on inflation, you know, I mean maybe because they're
12:11
Speaker 2: in a recession, or maybe because inflation was transitory ish.
12:16
Speaker 2: We were talking to Cam Harvey yesterday, you know that guy.
12:18
Speaker 2: He's a professor at Duke. Yeah, excellent, and he was
12:21
Speaker 2: making the point that you have been making for a while.
12:24
Speaker 2: He said, look, it's ridiculous that this FED thinks inflation
12:29
Speaker 2: is still you know, three to four when you take
12:32
Speaker 2: out the rent equivalent, which is backwards looking in the
12:35
Speaker 2: wrong way to do it. We're under two and I
12:39
Speaker 2: immediately looked at your CPI dash R on Infrastructure Capital
12:43
Speaker 2: Advisers on your website, and you guys have one point
12:46
Speaker 2: three percent right now. So explain to us how you
12:48
Speaker 2: calculate that you use core CPI and then you take
12:51
Speaker 2: out the rent equivalent part and you put it in
12:52
Speaker 2: case Shiller.
12:53
Speaker 5: Right, correct, You can even you can basically do it
12:55
Speaker 5: in your head, so.
12:57
Speaker 1: Because not mia, you live it in your head.
12:59
Speaker 5: But it's it's kind of nutty. But the CPI still
13:03
Speaker 5: is saying shelters seven point two percent when it's really
13:07
Speaker 5: it's actually going up a little bit to be fair,
13:09
Speaker 5: but it's not likely to skyrock. But but so just
13:12
Speaker 5: assumes zero case Schuller has been close to zero, so
13:14
Speaker 5: forty percent time seven is like three percent. So basically
13:19
Speaker 5: CPI is over Headline is overstated by three percent, and
13:23
Speaker 5: then it's only thirty three percent of core, so it's overstated.
13:27
Speaker 5: Core is overstated by about two point one percent.
13:30
Speaker 2: So but the the so inflation isn't as bad as
13:34
Speaker 2: we think it is, is what you're saying. Still cumulatively,
13:37
Speaker 2: it sucks right for consumers, especially since.
13:40
Speaker 1: We near extremes I don't still kill it.
13:42
Speaker 2: I don't feel like wages of kept up certainly mind
13:44
Speaker 2: heaven and then growth though looked incredible backward looking right,
13:50
Speaker 2: four point nine percent in Q three, How does it
13:53
Speaker 2: look to you going forward? Because I feel like the
13:55
Speaker 2: consumer is getting hurt here, you know, and charging everything
14:00
Speaker 2: and missing payments.
14:02
Speaker 5: Well, no doubt. We have a saying that the average
14:05
Speaker 5: consumer is not an economist. So what we mean by
14:08
Speaker 5: that is they don't really care about CPI, whether it's
14:11
Speaker 5: R or whatever, because that's for twelve months, but they
14:13
Speaker 5: do care about twenty four. So prices have still skyrocketed
14:17
Speaker 5: over twenty four And if your wages didn't go up,
14:19
Speaker 5: which is true for a lot of lower income consumers
14:21
Speaker 5: and you don't own a house, you're definitely under pressure.
14:24
Speaker 2: And by the way, CPIR was much higher than core
14:27
Speaker 2: CPI for a while, correct, because I look back on
14:29
Speaker 2: the table and you guys were up at eleven twelve percent.
14:32
Speaker 5: Yeah, this is why we say that FED is incompetent,
14:34
Speaker 5: because they just weren't even looking at any data, like
14:37
Speaker 5: you can go back and say, look at PPI is
14:39
Speaker 5: actually reported. It was at eleven when they said things
14:42
Speaker 5: were transitory. So they need to redo their entire framework,
14:47
Speaker 5: and you should. Everyone should go. Look at the way
14:50
Speaker 5: the CPI shelter is calculated. It's ridiculous. They only updated
14:54
Speaker 5: it one sixth every six months, so it's just designed
14:58
Speaker 5: to be lagged. So the FED should for that, in
15:00
Speaker 5: fact that San Frisco, San Francisco Fed does correct for.
15:04
Speaker 2: I just don't understand why they don't. I mean, for
15:06
Speaker 2: all the flack and Druckmiller gives Janney Yellen. She's a
15:09
Speaker 2: super genius, right, and she's an economist PhD.
15:14
Speaker 3: Like she's not.
15:16
Speaker 2: Now she's like a government you know, political uh, kind
15:19
Speaker 2: of a hack, but she was like a serious economist.
15:23
Speaker 5: It's inexplicable. And I'm shocked that not on this program
15:28
Speaker 5: but other media outlets that everyone comes on and says,
15:33
Speaker 5: not the FED but other people that inflation's sticky, when
15:36
Speaker 5: it's just flat out not sticky. It's actually contained has
15:39
Speaker 5: been since July of last year.
15:42
Speaker 1: Have we seen then peak rates?
15:45
Speaker 5: We definitely there's not going to be another increase. And
15:47
Speaker 5: now for the first time we've been saying, I think for.
15:50
Speaker 3: The federal fund rate, right, Yeah.
15:52
Speaker 5: We've been saying for four or five months to Fed
15:54
Speaker 5: one increase rates, but they don't know it yet. Now
15:57
Speaker 5: they know it. Now they know it after this employment
16:00
Speaker 5: very cool, wages rising unemployment. So that's what they look at,
16:04
Speaker 5: even though that's a flawed leading indicator. So the Fed
16:07
Speaker 5: is clearly not going to raise. ECB's not going to raise,
16:09
Speaker 5: they're going to cut. But you know, all this really
16:12
Speaker 5: is going to start to impact because we're worried about
16:14
Speaker 5: the liquidity, you know, trillion. That's the other data we
16:17
Speaker 5: look at that most people don't global monetary base or
16:21
Speaker 5: supply global liquidity really from central banks down a trillion
16:25
Speaker 5: over the last two quarters. So it's terrible. That's probably
16:29
Speaker 5: not going to turn around until next year when the
16:31
Speaker 5: ECB is forced to cut. Because you know, that's a
16:34
Speaker 5: simple way to trade the market, right, It's like if
16:36
Speaker 5: the FED intervenes during the pandemic and says we're going
16:38
Speaker 5: to increase the monetary base by a gigantic amount, you
16:40
Speaker 5: get long. If they're sucking money. It's like taking five
16:44
Speaker 5: hundred dollars off free parking. You know, if you're playing Monopoly,
16:48
Speaker 5: all of a sudden, you know, if you put it on,
16:50
Speaker 5: then all of a sudden, everything's overinflated. And everything's go go.
16:53
Speaker 5: You take it off and it's bad. So we're in
16:55
Speaker 5: the takeoff phase. But I think we overshot to five percent.
17:00
Speaker 5: We'll see if we keep rallying from here at four
17:01
Speaker 5: and a half. But next year we're confident we'll get
17:04
Speaker 5: below four. So we'll meet our five thousand target next
17:07
Speaker 5: year at least.
17:08
Speaker 2: So you don't think like the bond vigilantes will come
17:11
Speaker 2: back and say, we're not going to finance this kind
17:13
Speaker 2: of deficit spending much long.
17:14
Speaker 5: We think there's was this rate. That's a great question
17:17
Speaker 5: because we think there's way way too much focused on
17:20
Speaker 5: the US budget deficit because like I mean, I don't know.
17:26
Speaker 1: Matt is concerned about it, so you can try to
17:29
Speaker 1: relay his concerns.
17:30
Speaker 5: Well, I think it's terrible from the economic growth perspective
17:33
Speaker 5: because there's something called crowding out, So if the government
17:35
Speaker 5: spends money, it can't be invested in.
17:37
Speaker 2: Well, if they spend nine hundred billion dollars next year
17:40
Speaker 2: servicing the debt, we're not going to have enough money
17:43
Speaker 2: to spend for the next pandemic.
17:45
Speaker 5: No, it's a horrible it's a horrible, horrible thing, and
17:47
Speaker 5: it's a waste of capital. And it's terrible for economic growth,
17:50
Speaker 5: terrible for everyone. But it's not enough to drive global
17:53
Speaker 5: interest rates up one hundred basis points. That's my only point.
17:56
Speaker 5: At the margin, it's bad. Yeah, but keep in mind
17:59
Speaker 5: that our d strangely, if you look at the balance,
18:02
Speaker 5: he's actually still monetizing part of the debt because they're
18:05
Speaker 5: unwinding their short term borrowing. So it can't be true
18:10
Speaker 5: that that's the key driver of global interest rates. It's bad,
18:13
Speaker 5: it's bad for it. It's a terrible economic policy. Obviously,
18:17
Speaker 5: the budget process is horrendous.
18:19
Speaker 2: And for taxes, dude, because now every time someone wants
18:22
Speaker 2: to cut taxes, they're going to say, we can't afford to.
18:23
Speaker 2: We got to do entitlements, we got to pay for
18:25
Speaker 2: the military, we got to pay nine hundred billion dollars
18:27
Speaker 2: a service debt, so Miller and the rest of the
18:30
Speaker 2: middle class is going to have to pay half half.
18:33
Speaker 5: No, it's horrendous policy. And in fact, you know, we're
18:36
Speaker 5: actually pretty bullish about China because they save forty five
18:39
Speaker 5: percent of their GDP. So savings and investment drives economic growth.
18:43
Speaker 5: That's all the only thing that does it. And that's
18:45
Speaker 5: just intuitively Obviously, if the government is reducing savings, we're
18:49
Speaker 5: going to have lower growth in the long run. So
18:50
Speaker 5: it is terrible, but just not enough to drive global
18:53
Speaker 5: rates to six seven eight percent. That's our main point.
18:57
Speaker 1: We learned something again today, Yeah, we do every time
19:00
Speaker 1: comes in here. Jay Hatfell, thanks so much for joining us.
19:02
Speaker 1: Jays the CEO and founder and portfolio manager at Infrastructure
19:05
Speaker 1: Capital Advisors. He was a banker, he was I don't know,
19:10
Speaker 1: hedge year, a hedge fund due. He's a skier up
19:13
Speaker 1: at my favorite place, Squaw Valley, which I think they've
19:15
Speaker 1: renamed it something, but still Lake Tahoe. That whole area
19:19
Speaker 1: there is just awesome.
19:20
Speaker 2: So have they that Squaw Valley was not cool squad?
19:23
Speaker 1: Oh no, it's something different now, So I don't know.
19:25
Speaker 4: You're listening to the tape cans are live program Bloomberg
19:28
Speaker 4: Markets weekdays at ten am Eastern on Bloomberg Radio, the
19:32
Speaker 4: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
19:35
Speaker 4: You can also listen live on Amazon Alexa from our
19:38
Speaker 4: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
19:44
Speaker 1: So Sam Bankman free found guilty. Shocker, It took the
19:50
Speaker 1: jury like fifteen minutes a cup of coffee to convict
19:52
Speaker 1: this guy did. I'm not even sure they got their pizza.
19:54
Speaker 2: Even the trial was felt like the trial was only
19:57
Speaker 2: like two weeks, but.
19:58
Speaker 1: There's so much evidence. Many people turned against him, and
20:01
Speaker 1: he was like an open and shutcase.
20:02
Speaker 4: No train.
20:03
Speaker 1: But we have somebody here who's really into this business
20:06
Speaker 1: and has really read in as the kids say, Zeke Fox.
20:08
Speaker 1: He's an investigative reporter and it's also our author of
20:12
Speaker 1: the new book on crypto entitled Number Go Up. It
20:15
Speaker 1: was released in September twenty twenty three. He writes for
20:18
Speaker 1: Bloomberg BusinessWeek.
20:19
Speaker 2: And it was used in the trial.
20:20
Speaker 1: It was used in a trial. Explain that to me, Zeke,
20:23
Speaker 1: So how was your book used in this trial?
20:25
Speaker 6: Here?
20:27
Speaker 7: Hey, this was unbelievable. So, as you point out, they
20:31
Speaker 7: had so much evidence. All the top lieutenants were testifying
20:34
Speaker 7: against Sam, but then Sam decided to take the stand
20:37
Speaker 7: and tell his version of the story. Real unusual decision
20:41
Speaker 7: for Krimmel defendant, because then the prosecutor gets to cross
20:46
Speaker 7: examine you about anything you've ever said. And this prosecutor
20:51
Speaker 7: had no mercy. I felt like she was going for
20:53
Speaker 7: both she was going for bonus points. I think I
20:56
Speaker 7: felt like she wanted to convict Sam. She's like, forget
20:58
Speaker 7: the witnesses, I'm going to convict you again right now.
21:02
Speaker 7: And so she was like, Sam, have you ever said
21:06
Speaker 7: anything about the relationship between Alameda Research, your hedge fund
21:11
Speaker 7: and your exchange FTX? Have you ever said maybe that
21:15
Speaker 7: Alameda Research didn't play by the rules on FTX? And
21:19
Speaker 7: Sam was like, I don't recall. And then the prosecutor,
21:23
Speaker 7: Danielle se Soon, was like, your honor, let me introduce,
21:28
Speaker 7: and then she pulled out a hard copy of number
21:31
Speaker 7: go up, walked it over to the witness stand. The
21:36
Speaker 7: defense was like objection, objection that a little conference it was,
21:40
Speaker 7: it was admitted, and then for like honestly, for quite
21:43
Speaker 7: some time, she had Sam read different pages of the
21:46
Speaker 7: book and was like do you remember saying that now?
21:49
Speaker 7: And he had to just say, I don't recall, because
21:54
Speaker 7: what's described in the book is this interview I had
21:56
Speaker 7: with him in November twenty twenty two, just before he
21:59
Speaker 7: got arrested, and he basically did not quite have his
22:02
Speaker 7: story straight, and he said a lot of stuff to
22:04
Speaker 7: me that I think he regretted. So he couldn't really
22:07
Speaker 7: admit to saying those things now, and I think it
22:09
Speaker 7: looked terrible for him in the trial in front of
22:12
Speaker 7: the jury because when his lawyer was asking, you know, questions,
22:16
Speaker 7: he had a lot to say, but when the prosecutor
22:18
Speaker 7: brought up his other statements, he just had to stick
22:21
Speaker 7: with I don't recall that's rough.
22:25
Speaker 2: Part of me feels sorry for the guy, because you know,
22:27
Speaker 2: I've done things wrong, and I know that feeling of regret.
22:31
Speaker 6: But.
22:33
Speaker 2: The size of the fraud and the crimes I would
22:38
Speaker 2: say alleged, but now I guess I can say committed,
22:40
Speaker 2: right since he's been proven guilty is just massive. What
22:46
Speaker 2: do you expect, Zeke at the sentencing. I was having
22:50
Speaker 2: a little debate over at the news desk a little
22:53
Speaker 2: bit earlier, and some of the people on the desk
22:56
Speaker 2: were like, well, Elizabeth Holmes only got eleven years, so
22:58
Speaker 2: maybe he gets fifteen. And then somebody else said, yeah,
23:00
Speaker 2: but Bernie Madeoff got like one hundred and fifty years.
23:02
Speaker 2: So you know, where do you think Sam Bankman Freed
23:06
Speaker 2: falls in the pantheon of giant conmen?
23:11
Speaker 7: So I mean, I think these sentences are determined by
23:15
Speaker 7: how much money you stole and maybe he'll be able
23:19
Speaker 7: to try his arguments again, which is that so he
23:24
Speaker 7: took this customer money and he went and gambled it.
23:27
Speaker 7: And he wanted to say in his defense that some
23:29
Speaker 7: of those bets worked out, And the judge at his
23:33
Speaker 7: at his trial said, that doesn't matter. You stole this money.
23:36
Speaker 7: If you stole the money, we don't care what you
23:38
Speaker 7: did with it after the crime is just a stealing
23:40
Speaker 7: the money. But maybe when it comes to sentencing, he'll
23:43
Speaker 7: be able to say, hey, there's not actually eight billion
23:47
Speaker 7: dollars missing. You know, we've been able to find that,
23:49
Speaker 7: a bankruptcy court has been able to find, you know,
23:52
Speaker 7: four billion. Just sentenced me on the four billion, but
23:55
Speaker 7: even still four billions a lot. So he's looking at
23:57
Speaker 7: a at a bad sentence. I'd say maybe like twenty years.
24:00
Speaker 7: That's just my guess.
24:01
Speaker 1: So wow, Hey see, I guess folks within the crypto space,
24:06
Speaker 1: I guess they're wondering at this point to what extent
24:09
Speaker 1: does the whole Sam Bankman freed scam, the you know,
24:12
Speaker 1: the FTX debaccle, how much does that negatively impact just
24:17
Speaker 1: the crypto space in general? Do you have any thoughts
24:19
Speaker 1: on that so.
24:22
Speaker 7: I I'm hearing a lot of wishful thinking from the
24:24
Speaker 7: crypto people that this does not impact them, it doesn't
24:27
Speaker 7: reflect on their project. And I think it doesn't matter
24:30
Speaker 7: if your project had nothing to do with Sam Banks
24:32
Speaker 7: and Freed. If you start some new coin now and
24:35
Speaker 7: you go pitch it to regular people, they're gonna say, oh, crypto,
24:40
Speaker 7: isn't that how the guy with the curly hair stole
24:42
Speaker 7: everybody's money, and like they're not gonna want to invest,
24:45
Speaker 7: you know. So I think it is all the publicity
24:49
Speaker 7: around this trial. It's horrible for crypto, and the crypto
24:52
Speaker 7: people would love to move on. But coming up next
24:56
Speaker 7: we've got Alex Mashinski of Celsius, who's also so another
25:00
Speaker 7: crypto guy accused of a massive fraud. And if it
25:03
Speaker 7: wasn't for Sam bankman Fried, I mean this one was
25:06
Speaker 7: really big too, he'd be like the big crypto villain.
25:08
Speaker 7: So maybe the bad publicity is they're not out of
25:11
Speaker 7: the woods yet. They're be getting morel even though the
25:15
Speaker 7: other day you've got another one. Every day is another one.
25:18
Speaker 2: Gemini and Genesis, also the the winkle Vy and Barry,
25:24
Speaker 2: they're in deep trouble and you know, I wonder though,
25:28
Speaker 2: and you've been reporting on crypto for for so long, Zeke,
25:32
Speaker 2: that I feel like you know just as much about
25:33
Speaker 2: crypto as the biggest experts in it. Is it fair
25:37
Speaker 2: to lump it all into one ball? Can you put
25:42
Speaker 2: it all crypt on the same drawer? Because I've always
25:44
Speaker 2: felt that bitcoin is one thing and all of the
25:47
Speaker 2: other coins are another.
25:51
Speaker 7: Yeah, so I've heard I've heard this argument. I do
25:56
Speaker 7: think bitcoin's a little different. I mean, we may have
25:59
Speaker 7: different opinions on this. I think the reason bitcoin is
26:01
Speaker 7: different is because this whole cult has developed around it,
26:05
Speaker 7: and people treat bitcoin almost as like a religion, and
26:08
Speaker 7: so it's gonna be tougher to we do that with
26:10
Speaker 7: the dollar change these people's minds.
26:12
Speaker 2: That's how it goes with these things. You know, if
26:14
Speaker 2: we all believe, then it's valuable, and if we all
26:17
Speaker 2: don't believe, then it isn't.
26:19
Speaker 3: Right.
26:22
Speaker 7: Yeah, I mean, I would say the dollar is based
26:24
Speaker 7: on like more than belief. You know, it's like the
26:27
Speaker 7: official currency of our country. You know that we can
26:30
Speaker 7: use it to pay taxes. Everybody's always used it, all right.
26:34
Speaker 2: So gold, so gold, right, gold is probably a better
26:36
Speaker 2: because why is this you know, yellow metal that we
26:40
Speaker 2: dig out of the earth valuable. I guess we use
26:44
Speaker 2: it for wedding rings and maybe like some of the
26:47
Speaker 2: foil that goes around the Moonlanders when NASA was doing that.
26:50
Speaker 2: But supply and demand, yeah, Bitcoin too, supply and demand.
26:55
Speaker 2: I know, yeah, I don't know. I just feel like,
26:58
Speaker 2: you know, there's all of the these scams seem to
27:01
Speaker 2: happen with all of the other coins, and I just
27:05
Speaker 2: look at bitcoin and it's worth thirty five thousand dollars.
27:07
Speaker 1: Hey, Zeke, thanks so much for joining us here. We
27:09
Speaker 1: gotta let you it up on the time, but thanks
27:12
Speaker 1: so much for joining us. Zeke Fox investigative reporter, and
27:14
Speaker 1: he say the author of the new book on crypto
27:17
Speaker 1: entitled Number Go Up, Check It Out, is released just
27:20
Speaker 1: in September of this year. Perfect timing for our friend
27:23
Speaker 1: Zeke on all things crypto. This is Bloomberg.
27:27
Speaker 4: You're listening to the tape catch are live program Bloomberg
27:31
Speaker 4: Markets weekdays at ten am Eastern on Bloomberg Radio, the
27:34
Speaker 4: tune in app, Bloomberg dot com, and.
27:36
Speaker 3: The Bloomberg Business App.
27:38
Speaker 4: You can also listen live on Amazon Alexa from our
27:40
Speaker 4: flagship New York station Just say, Alexa play Bloomberg eleven thirty.
27:47
Speaker 1: It is Friday is twelve twenty three pm on the
27:49
Speaker 1: Wall Street time. That means it's time for what is
27:52
Speaker 1: Matt Miller driving? Kinda Ella joins this actually does every
27:56
Speaker 1: time this week Bloomberg Business Week. Calm this, We're going
27:58
Speaker 1: to talk about the BMWA, Matt's love for superchargers, who
28:02
Speaker 1: doesn't and met, and Hannah's new podcast.
28:05
Speaker 2: When somebody wrote this, So listen. Every week I do
28:08
Speaker 2: this segment to talk about the car I'm test driving
28:10
Speaker 2: this week, and every week I record a podcast with
28:14
Speaker 2: Hannah Elliott, who writes for Bloomberg Pursuits. So I figured,
28:17
Speaker 2: like chocolate and peanut butter, let's bring these two things together.
28:21
Speaker 1: So podcast.
28:23
Speaker 2: Our podcast is called Hot Pursuit Night, which is a
28:26
Speaker 2: play on you know, Hannah's unit, play on words. Hannah's
28:30
Speaker 2: unit is called Pursuits And the podcast comes out every
28:34
Speaker 2: Saturday morning and you can listen to it live on
28:36
Speaker 2: Bloomberg Radio, taped to live to tape on Bloomberg Radio.
28:40
Speaker 2: But I thought it would be cool to talk about
28:42
Speaker 2: these two big trucks together and they're very different. Obviously,
28:45
Speaker 2: I'm driving a Dodge Durango hell Casts. It's like a
28:49
Speaker 2: family truckster, right, it's a grocery getter. And you know
28:53
Speaker 2: they start at forty thousand dollars in the base model,
28:56
Speaker 2: so very affordable. But if you put the hell Cat
29:00
Speaker 2: engine in, oh boy, and that's the only thing that
29:02
Speaker 2: matters to me. It's a supercharge six point two liters
29:05
Speaker 2: V eight, then it costs ninety four thousand dollars and
29:09
Speaker 2: actually can you can get the price up to one
29:11
Speaker 2: hundred and ten pretty fast. So I absolutely love the car.
29:15
Speaker 2: I love superchargers, I love V eights. Yeah, but it's
29:19
Speaker 2: really all about the motor. It's not a terribly luxurious interior.
29:24
Speaker 2: The seats aren't super comfortable. I don't love the layout
29:27
Speaker 2: of the infotainment. It doesn't handle very well. I don't
29:30
Speaker 2: think the build quality is super high. It's just the
29:34
Speaker 2: supercharged motor that I care about, and I think for
29:38
Speaker 2: that it's it's pretty expensive, maybe too expensive. So but
29:42
Speaker 2: Hannah is driving like an ultra luxury truck, a BMWXM. Hannah,
29:46
Speaker 2: tell us about that.
29:47
Speaker 8: So I've got a few points to your supercharger motor.
29:52
Speaker 8: This the BMWXM does have a V eight two. This
29:55
Speaker 8: is a twin turbov eight and it's also paired with
29:58
Speaker 8: an electric motor.
29:59
Speaker 6: This is act a hybrid. It gets six or and
30:02
Speaker 6: forty four horse power.
30:04
Speaker 8: So a little bit less than that Hellcat, but sort
30:07
Speaker 8: of comparable the Hellcat. Yeah, yeah, so close close, But
30:12
Speaker 8: I have to say the XIM costs a lot more more.
30:15
Speaker 8: It starts at about one hundred and sixty thousand dollars
30:17
Speaker 8: starting and.
30:19
Speaker 6: It goes up from there.
30:21
Speaker 8: I should mention they're going to come out with an
30:23
Speaker 8: even more powerful edition next month. So it's really it's fast,
30:28
Speaker 8: it's powerful, it's very expensive. Personally, I do not think
30:32
Speaker 8: it drives in the sophisticated way that we have come
30:37
Speaker 8: to expect from BMW's. It's a little bit inelegant, jerky.
30:42
Speaker 8: I found it extremely powerful, but not the greatest handling,
30:46
Speaker 8: not the greatest driving apparatus. And Matt, I think you've
30:49
Speaker 8: driven this one too, haven't you?
30:50
Speaker 3: I haven't.
30:51
Speaker 1: This is where I think is like the soup diversion
30:54
Speaker 1: of what I've got.
30:55
Speaker 2: No, No, I've an X.
30:57
Speaker 6: You X.
30:58
Speaker 2: True, you have an X and this is the M
31:00
Speaker 2: version of the X. So actually it's kind of it's
31:01
Speaker 2: supposed to be the top of the line. But frankly,
31:04
Speaker 2: your car is probably drives much more, much smoother, much
31:09
Speaker 2: more sophisticated, much more elegant. And I know what Hannah
31:13
Speaker 2: talking about because I've driven this XM before. When I
31:15
Speaker 2: first took it out of the garage and Chelsea, I
31:18
Speaker 2: noticed that the the switch from electric to gas was
31:22
Speaker 2: pretty jerky. And the thing is, I think the XM
31:27
Speaker 2: and the Durango Hellcat, both of them need to be
31:30
Speaker 2: driven in anger for them to work right. And I
31:33
Speaker 2: don't know if you've been able to really ring it out, Hannah,
31:35
Speaker 2: but when I finally took the XM up to Bear
31:38
Speaker 2: Mountain and ripped it around turns at much higher speeds
31:42
Speaker 2: than are recommended, then it started to shine. I liked
31:46
Speaker 2: the anti roll bar. I like the suspension, but otherwise
31:49
Speaker 2: when you're being just like a rich person driving around, uh,
31:53
Speaker 2: there's no air suspension in that BMW, it just isn't nice,
31:58
Speaker 2: you know.
31:58
Speaker 8: I have to say, I lived in New York for
32:00
Speaker 8: almost twenty years. I'm now in LA I'm trying to
32:03
Speaker 8: not drive in anger. I'm trying to move past that.
32:07
Speaker 8: And I love anger. Anger is my favorite emotion. But
32:10
Speaker 8: I'm trying to really, you know, these are my la
32:12
Speaker 8: years and I don't want to have to drive my
32:15
Speaker 8: BMW in anger to have fun with it. I should
32:19
Speaker 8: also say the XIM is huge. It's the same size
32:23
Speaker 8: as the X seven, but it only seats six people.
32:26
Speaker 8: The X seven is a seven passenger. The XM, I'm sorry,
32:29
Speaker 8: it only seats five people. The X seven seats seven.
32:32
Speaker 8: Of course, this seats five, so it's big. It's matt
32:37
Speaker 8: I think you use the word brutalist for how it looks.
32:39
Speaker 8: I think it just looks a bit heavy handed.
32:41
Speaker 2: So I like that. So when you tell me this
32:45
Speaker 2: is a seven passenger car that only seats five, my
32:48
Speaker 2: eyes light up, you know, because I'm six four ten pounds.
32:53
Speaker 2: I like that. That means there's more space. It's business class,
32:56
Speaker 2: that's what this car.
32:57
Speaker 6: Yes, yeah, well there's a lot of space.
32:59
Speaker 3: Yeah.
32:59
Speaker 2: I think that's great. And I love the big grill.
33:03
Speaker 2: A lot of people would say it's ugly. On the XM,
33:06
Speaker 2: I would say it's book dish, which is a German word.
33:10
Speaker 2: It's powerful, you know, its presences can't be ignored. The
33:14
Speaker 2: Dodge Durango Hellcat, on the other hand, you can easily
33:19
Speaker 2: overlook that vehicle In fact, it feels much smaller in
33:24
Speaker 2: a lot of ways than my Challenger, which is only
33:26
Speaker 2: a two door. It's definitely thinner. The seats are not
33:31
Speaker 2: big enough for my but you know, so, yeah, I
33:36
Speaker 2: think it's fairly small for an SUV, even though it's
33:39
Speaker 2: a three row vehicle. I don't know who's going to
33:42
Speaker 2: buy that thing, but the prices having come down dramatically,
33:46
Speaker 2: I feel like in the long run, the both the
33:48
Speaker 2: BMW XM and the Durango Hellcat they're gonna depreciate like crazy,
33:53
Speaker 2: but the XM, certainly because you know, Hannah, the BMW
33:57
Speaker 2: I really want to buy and hopefully will at the
33:59
Speaker 2: begining of next year is a twenty twenty M seven
34:04
Speaker 2: sixty and they started at one sixty five MSRP, but
34:08
Speaker 2: now I'm finding them three years old with thirty thousand
34:11
Speaker 2: miles for sixty five. So they've appreciated like mad and
34:15
Speaker 2: I feel like the XM would two except for they're
34:17
Speaker 2: not going to make very many.
34:19
Speaker 8: No they're not, and I have to say even even
34:23
Speaker 8: fewer of this this XM label version coming and I
34:26
Speaker 8: know I mentioned that before, but they're really kind of
34:28
Speaker 8: pushing it, I think because they realized if this is
34:31
Speaker 8: supposed to be the most powerful bmwsuv ever made, and
34:35
Speaker 8: it is, they really need to like push a power
34:37
Speaker 8: even more because if you're getting beat by Dodge, that's
34:40
Speaker 8: not a good look, isn't No No.
34:42
Speaker 2: And by the way, that brings up another point something
34:44
Speaker 2: that we spoke about on the podcast, and you said
34:47
Speaker 2: something where I was like, oh, now I get it.
34:51
Speaker 2: I've always wondered why Americans go to the supercharger, and
34:55
Speaker 2: I love a super childreacher. I think it's the best
34:58
Speaker 2: kind of forced induction. You get the power right at
35:01
Speaker 2: the very bottom of the rev range. And Europeans and
35:04
Speaker 2: Japanese have always gone to the turbochargers. I didn't know why,
35:08
Speaker 2: but you pointed out a pretty important reason. Hannah.
35:12
Speaker 8: Yeah, I have a theory, and I think it's actually
35:15
Speaker 8: back to buy science. That really European roads and for instance,
35:19
Speaker 8: Japanese roads tend to be smaller, more curby. Obviously these
35:23
Speaker 8: are smaller spaces, while American roads are big, open highways
35:27
Speaker 8: great for driving drag races, you know, going fast and
35:31
Speaker 8: a straight line.
35:33
Speaker 6: The turbo charger is best used on curby, windy roads.
35:37
Speaker 8: I mean, it's amazing when you can feel the thrust
35:40
Speaker 8: of the boost kick in. That's when you really feel
35:43
Speaker 8: the value of it. You don't necessarily feel the value
35:46
Speaker 8: of a turbocharger when you're just on an open highway supercharger,
35:50
Speaker 8: maybe you do.
35:51
Speaker 6: That's my theory.
35:52
Speaker 2: I think she's right, she's on. A turbocharger is more sophisticated,
35:56
Speaker 2: you know, a supercharger. No, supercharger is just like a sledgehammer.
36:01
Speaker 1: That's as American.
36:02
Speaker 3: That's why I like it.
36:03
Speaker 2: Yeah, it's right, it's pretty American, all right. The other
36:06
Speaker 2: thing that I wanted to just briefly touch on is
36:11
Speaker 2: F one. It's coming up. It's I know we still
36:13
Speaker 2: have another week, but tell us about you're going to
36:15
Speaker 2: go to Las Vegas.
36:17
Speaker 6: Yes, I will be there.
36:18
Speaker 8: I'm excited and slightly terrified at the same time. It's
36:22
Speaker 8: going to be a circus, which, of course, this is
36:25
Speaker 8: what we want from Los Angeles or from Las Vegas.
36:27
Speaker 6: But it's going to be wild.
36:31
Speaker 8: November eighteenth is the night of the Grand Prix race. Yesterday,
36:36
Speaker 8: it's a night race. I had It's a night race.
36:39
Speaker 8: It starts at ten pm local time. I think it
36:43
Speaker 8: might actually be a little bit cold. But yesterday I
36:45
Speaker 8: was talking to the head of Perelli Motorsport, who just
36:47
Speaker 8: of course won the contract to get to provide tires
36:51
Speaker 8: until twenty twenty seven. They're actually considering it to be
36:55
Speaker 8: a bit of a cold track. They're preparing the tires
36:58
Speaker 8: to be expecting a cold track. But all that to say,
37:01
Speaker 8: you know, it's fifteen thousand dollars dinners Wild Parties. Of course,
37:05
Speaker 8: the sphere, this huge event space that you two has
37:09
Speaker 8: been performing at, is not It's going to be hosting
37:14
Speaker 8: some new musical guests during the Grand Prix, which is
37:16
Speaker 8: a big deal.
37:17
Speaker 1: That's gonna be good stuff. And and thanks so much
37:19
Speaker 1: for joining us, Hanna Elliet Bloomberg Business weeklu is joining
37:21
Speaker 1: us to talk about cars.
37:23
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
37:26
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
37:30
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
37:34
Speaker 2: at Matt Miller nineteen seventy three.
37:36
Speaker 1: Then on Fall Sweeney I'm on Twitter at pt Sweeney.
37:39
Speaker 1: Before the podcast, you can always catch us worldwide at
37:41
Speaker 1: Bloomberg Radio