Latest / Bloomberg Intelligence / Separating Digital Duds From Valuable NFT Art

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Separating Digital Duds From Valuable NFT Art · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
• 0:15
  Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Let's get over though,
• 0:22
  Speaker 1: right now to Roger Dickerman. He's the founder and CEO
• 0:24
  Speaker 1: of artifacts UM. The website is artifacts a R T
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  Speaker 1: I f e X dot Art. They just held a
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  Speaker 1: show UM Digital Icons plus Miami or Digital Icons and
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  Speaker 1: Miami on June seven with a bunch of artwork, original artwork,
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  Speaker 1: three D sculpture and f t s. That should be
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  Speaker 1: your clue as to what we're gonna talk about, so
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  Speaker 1: non fungible tokens. Roger, thanks for joining us. What what
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  Speaker 1: did you actually show at the show? Are we talking
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  Speaker 1: about physical art that you hang on the wall, three
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  Speaker 1: D sculptures like three D in real life? Or was
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  Speaker 1: there the were these all sort of computer renders that
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  Speaker 1: It's a pleasure to be here. Thank you for having me.
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  Speaker 1: So what we showed was digital art and so the
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  Speaker 1: proxy is the real world. Imagine a painting on your
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  Speaker 1: wall that would be a two D and imagine a
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  Speaker 1: sculptor took that painting, a character in that painting, and
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  Speaker 1: made it a literal sculpture three D version of that.
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  Speaker 1: We're doing that in the digital sphere. So we have
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  Speaker 1: the two D version of an artist's artwork, and we
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  Speaker 1: have a digital sculpture that can be displayed all over
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  Speaker 1: the place in three D. Four Can you define, Roger,
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  Speaker 1: what is a non fungible token? Think digital ownership. So
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  Speaker 1: think a digital artist for the past several decades making
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  Speaker 1: fabulous art, doing it on behalf of a brand, a commission,
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  Speaker 1: a contract. They had no way to do that on
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  Speaker 1: their own. One one of my favorite stories an artist
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  Speaker 1: named Bill ellis part of the Artifacts project. He worked
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  Speaker 1: for an ad agency and he had Nike Lebron James
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  Speaker 1: come to him for his work, but he had to
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  Speaker 1: do it under the ad agency's brand. That was a
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  Speaker 1: sixty five dollar contract. He got paid less than five dollars.
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  Speaker 1: Non Flungible tokens allow a creator like that to go
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  Speaker 1: directly to consumer, to collector with valuable artwork and make
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  Speaker 1: a transaction. But what I don't understand is say, um,
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  Speaker 1: I made a three D digital render of a Ducati
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  Speaker 1: Panagali and I photo shot by dog Steve driving it.
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  Speaker 1: I could sell the n f T to Paul. That
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  Speaker 1: guarantees him the rights to own that digital file, and
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  Speaker 1: then I could just give it away copies of it
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  Speaker 1: to anyone else. Right, So does Paul really own it?
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  Speaker 1: This is a great question, right, he owns the spot
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  Speaker 1: on the blockchain. Now you can look at physical artwork.
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  Speaker 1: To look at museum famously or infamously housing forgeries for
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  Speaker 1: hundreds of years, right, unbeknownst to anybody, physical paintings can
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  Speaker 1: be forged to. Physical drawings can be forged to. An
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  Speaker 1: artist can overprints, right unknown to the collectors, you face
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  Speaker 1: these same issue whose ownership matters? It's faked in the
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  Speaker 1: human DNA. People want something and they want the true
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  Speaker 1: version of that thing. And if he's help with that,
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  Speaker 1: how does a consumer you know that they're getting I
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  Speaker 1: guess the real thing versus fake? I mean, do you
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  Speaker 1: kind of think this investment market is safe? I guess that.
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  Speaker 1: I can't think of a different word, But do you
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  Speaker 1: think it's safe? It doesn't even have to be fake? Right,
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  Speaker 1: A copy could be exactly the same as the original,
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  Speaker 1: It could be the exact same code. But if you
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  Speaker 1: don't have the spot on the blockchain, does that make
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  Speaker 1: it less valuable? I believe it does. I believe it does,
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  Speaker 1: and I believe that you know, the platform or artist
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  Speaker 1: providence matter. So where are you acquiring this from. You're
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  Speaker 1: starting to see artists step forward with their own contracts,
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  Speaker 1: You're smart contracts, that is, you're starting to see, you know, platforms,
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  Speaker 1: established brands step forward as a trust in place to
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  Speaker 1: transact and both of those sources will help with that
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  Speaker 1: verification process. And in honestly, you know that verification process
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  Speaker 1: is easy year with an n f T than it
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  Speaker 1: is a physical painting. I think there are still issues
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  Speaker 1: around the the uh you know, whether the Mona Lisa right,
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  Speaker 1: whether it's really the Mona Lisa or not. So Roger
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  Speaker 1: around these halls here Bloomber, we talk a lot about investments,
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  Speaker 1: and I guess the question is do you consider n
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  Speaker 1: f t s to be a true slash real investment
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  Speaker 1: or is this maybe a fleeting sign of a very
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  Speaker 1: expensive and frothy market. There are many There are many
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  Speaker 1: aspects of n f t s that are just frouthy
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  Speaker 1: market will pass, you know, like ships sailing in the
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  Speaker 1: night will never hear from them again. However, here the
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  Speaker 1: tried and true value propositions of n f T s
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  Speaker 1: to break it down as art, utility and access art
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  Speaker 1: global art market over fifty billion dollars. That has been
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  Speaker 1: a thing for a long long time. Digital art is
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  Speaker 1: the most recent art form against several decades old. There's
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  Speaker 1: real value. Their auction houses like Christie's and Southeby's starting
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  Speaker 1: to step up to the plate and see that Christie's
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  Speaker 1: recently proof of sovereignty auctions tell the bees recently natively
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  Speaker 1: digital auctions. They are leaning into this. They understand there's
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  Speaker 1: value and digital art then utility. Now n ft s
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  Speaker 1: can do more than just art. Art lad the way.
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  Speaker 1: Digital artists lead the way. But we're talking about games,
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  Speaker 1: we're talking about our tickets will be n f t s.
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  Speaker 1: We're talking about our jerseys and future metaverses will be
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  Speaker 1: n fp They're gonna be around for a long time.
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  Speaker 1: The question there, with utility in mind, what can your
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  Speaker 1: n f T do? And then lastly access You see
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  Speaker 1: these fabulous cases of artists, creatives and beyond opening the
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  Speaker 1: doors with their n f T s. For example, another
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  Speaker 1: artist is part of our project, Robbie Trivino on his
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  Speaker 1: own he's UH Magic the Gathering Tool music. He did
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  Speaker 1: some covers for them. He's built a social profile to
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  Speaker 1: several hundred thousand people, and he was able to sell
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  Speaker 1: a key. It's an access key. It's an art piece,
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  Speaker 1: but also a key to future prints of his future,
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  Speaker 1: access points of his future meet and griefs of his
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  Speaker 1: future gatherings of his And I believe he he grossed
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  Speaker 1: over a hundred thousand dollars yesterday. Tool uses that guy's
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  Speaker 1: art a lot. Yeah, And and I love um tool
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  Speaker 1: so much, and I love the artwork as well, But
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  Speaker 1: I just to me, I don't get the value, like
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  Speaker 1: is it do you use it as a screen saver then?
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  Speaker 1: Or is it like on your iPhone? Um, it seems
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  Speaker 1: different from having what we consider to be the actual
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  Speaker 1: mona Lisa, you know what's interesting? You touch on that.
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  Speaker 1: And I make this point a lot. And I think
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  Speaker 1: as this market develops, we're gonna see two things spearhead
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  Speaker 1: this notion of how do you display digital art, which
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  Speaker 1: will help with that value connection. We're gonna see better
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  Speaker 1: frames flat out better frames, frames that you can put
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  Speaker 1: on your wall in your home that will blow any
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  Speaker 1: physical frame away. They will be thin, they will be sleek,
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  Speaker 1: they'll be able to look traditional if you want, to
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  Speaker 1: be able to build into the wall if you want,
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  Speaker 1: and they are going to blow your mind. The art
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  Speaker 1: will be able to move, it will change based on
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  Speaker 1: time of day, It will be programmed to do different things.
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  Speaker 1: N f T s are really going to shine when
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  Speaker 1: those frames improve. And then also in digital lands. You know,
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  Speaker 1: we talk about futuristic movies, right ready Player one, Steven Spielberg.
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  Speaker 1: You get into that future world in which people spend
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  Speaker 1: a little bit more time in these digital universes when
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  Speaker 1: the display used cases improved there, and you can take
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  Speaker 1: your n f T into those digital worlds where you
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  Speaker 1: spend a lot of time. That's also going to drive value. Alright,
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  Speaker 1: very cool to me. The most interesting thing is just
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  Speaker 1: talking about these concepts and trying to wrap my forty
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  Speaker 1: seven year old brain around them. I like it. I
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  Speaker 1: like it. Roger, thanks so much for joining us. Roger Dickerman,
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  Speaker 1: their founder and CEO of Artifacts, talking to us about
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  Speaker 1: non fungible tokens. It has you have to admit that
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  Speaker 1: It's definitely a fascinating topic. This is Bloomberg right now.
• 7:50
  Speaker 1: I want to bring in Darren Williams. He's the CEO
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  Speaker 1: of Southern Bank Corps. Southern Bank Corps is a for profit,
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  Speaker 1: mission driven community developed develop financial institution. They're based in
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  Speaker 1: the Mississippi Delta. UH. Darren, thanks so much for joining
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  Speaker 1: us here. UM. I love to start off with you
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  Speaker 1: just kind of giving us a thirty thousand foot view
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  Speaker 1: of Southern Bankcorps. Who are you guys, and just give
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  Speaker 1: us a sense of the type of business that you
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  Speaker 1: guys are pursuing. Sure, Paul, first of all, thanks for
• 8:19
  Speaker 1: having us on so Southern Bank Corp. We are, as
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  Speaker 1: you said, a community development financial institution or a c
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  Speaker 1: d f B I. We're about two billion in assets, Fidget.
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  Speaker 1: Two locations spread out through the Arkansas makes the Delta
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  Speaker 1: UH and one of the most persistently poor community of
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  Speaker 1: the United States. Our our our communities are largely rules
• 8:36
  Speaker 1: and financial, African American and low wealth communities. We are
• 8:39
  Speaker 1: in place where many banks have fled with bank consolidation. UM.
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  Speaker 1: Happened across the country for you know, you know, two
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  Speaker 1: dozen years now. The number of banks and rule and
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  Speaker 1: underserving low wealth communities continues to shrink, and we know
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  Speaker 1: when those communities don't have access to account of credit
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  Speaker 1: and traditional financial products and services, then they are often
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  Speaker 1: um inundated with predator are types of alternative financial services.
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  Speaker 1: So we've served those communities where others have chosen to play.
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  Speaker 1: So last week Square announced the allocation of million dollars
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  Speaker 1: as part of this hundred million dollar investment. You're making
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  Speaker 1: a minority and underserved communities. How are you doing that?
• 9:17
  Speaker 1: How are you getting them help? Well? We well, first
• 9:20
  Speaker 1: of all, let me say we're extremely um pleased and
• 9:24
  Speaker 1: excited to have Square as a shareholder. Square, of course
• 9:27
  Speaker 1: is a has a superior payments platform. They are a
• 9:31
  Speaker 1: final sal technology company, one of the best around, and
• 9:34
  Speaker 1: so they have their endorsements. To have their support in
• 9:36
  Speaker 1: their partnership means a great deal. They invested common equity
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  Speaker 1: mopen million dollar common equity investment in Southern which will
• 9:43
  Speaker 1: allow us to grow and expand, to go deeper UH
• 9:46
  Speaker 1: and to go further in the market we serve, and
• 9:48
  Speaker 1: and to expand traditional places and UH. In fact, one
• 9:51
  Speaker 1: of the things that we're very focused on is increasing
• 9:54
  Speaker 1: and expanding our financial technology ourselves. So we u over
• 9:58
  Speaker 1: the last four years of develop a cloud based corp
• 10:01
  Speaker 1: process of which is the back off the bank UM
• 10:03
  Speaker 1: and on that platform we build digital verticals or the
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  Speaker 1: fintech apps. So to have one of the world's leading
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  Speaker 1: fintech companies UH partner with us, we are excited about
• 10:13
  Speaker 1: what we might learn from them. UH. So their investments
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  Speaker 1: are going to really help us to go deeper and
• 10:18
  Speaker 1: further in helping to serve those who often left out
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  Speaker 1: and left behind, forgotten about by the financial services space. Darren,
• 10:25
  Speaker 1: you know when Matt and I speak to UM CEO
• 10:27
  Speaker 1: is like yourself. You'll always like to get a sense
• 10:29
  Speaker 1: of how the pandemic has impacted their business, their market.
• 10:33
  Speaker 1: Love to get a sense. We know that some of
• 10:35
  Speaker 1: the underserved communities around this country were uh disproportionately impacted
• 10:39
  Speaker 1: by the pandemic, by the economic disruption. Tell us about
• 10:42
  Speaker 1: your markets and your business and your customers. So, Paul,
• 10:47
  Speaker 1: you know, one thing that that you have to think
• 10:49
  Speaker 1: about is even prior to the pandemic, the Delta region
• 10:52
  Speaker 1: is one of the most persistent poor community United States.
• 10:55
  Speaker 1: It suffered from a number of ill effects of just
• 10:58
  Speaker 1: uh you know, just poverty, lack of educational opportunities like
• 11:02
  Speaker 1: economic opportunities, and so that's why we do the work
• 11:04
  Speaker 1: that we do. That's why our work really focused on
• 11:06
  Speaker 1: things that are proven to build wealth and move people
• 11:09
  Speaker 1: from financial UH insecurity, financial security, and so the markets
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  Speaker 1: that we served that were suffering prior to the pandemics,
• 11:14
  Speaker 1: but like um many markets, the pandemic had had a
• 11:18
  Speaker 1: had a huge impact on on retail, on on our hotels,
• 11:22
  Speaker 1: on our restaurant customers. We were able to provide the
• 11:26
  Speaker 1: paycheck Protection Dollar program UH to almost twenty three hundred
• 11:31
  Speaker 1: businesses in our markets, about a hundred and fifty million
• 11:33
  Speaker 1: dollars and paycheck protection dollars that we provided, and many
• 11:36
  Speaker 1: of them, many of the customers that we talked, we
• 11:38
  Speaker 1: actually we actually did a survey and some fifty percent
• 11:41
  Speaker 1: of them said they had no other alternative UH and
• 11:43
  Speaker 1: would have probably closed down but for those paycheck protection dollars.
• 11:47
  Speaker 1: And so really we're proud to provide that SBA program
• 11:50
  Speaker 1: that support to them and they are slowly recovering UH
• 11:54
  Speaker 1: and it's it's it's hitting that some are doing better
• 11:56
  Speaker 1: than others, but they without that, the devastation would have
• 11:59
  Speaker 1: been much worse. You, um you were spearheading that ten
• 12:04
  Speaker 1: billion dollar push, and you also were working with Jamie
• 12:07
  Speaker 1: Diamond at JP Morgan David Solomon at Goldman Sachs on
• 12:11
  Speaker 1: President Trump's Great American Economic Revival initiative. How do you
• 12:16
  Speaker 1: see that we're continuing with this new administration, Well, I
• 12:20
  Speaker 1: can I can tell you that the first meeting, the
• 12:23
  Speaker 1: kind of the financial services team we had with President Trump.
• 12:26
  Speaker 1: Really proud that David Solomon, Brian Wannahan, UMU and others
• 12:32
  Speaker 1: really encouraged administration to um support and invest and make
• 12:36
  Speaker 1: it and and and and support the efforts. Had a
• 12:38
  Speaker 1: car about to make sure those paycheck protection dollars went
• 12:41
  Speaker 1: to minority depositor institutions and to see the bias because
• 12:44
  Speaker 1: we serve those who are often left out and left
• 12:46
  Speaker 1: behind and don't have access to larger banks. And so
• 12:50
  Speaker 1: really proud to have that partnership. And now that Wall
• 12:52
  Speaker 1: Street partnership UH is taking taken additional form. So Brian
• 12:56
  Speaker 1: mornahand in Bank America also made a multimillion dollar investment
• 12:59
  Speaker 1: of them just just some time they go. And so
• 13:01
  Speaker 1: really please at these partnerships with cit if I, NBIS
• 13:05
  Speaker 1: and and and Corporate America continues to flourish. Also proud
• 13:09
  Speaker 1: of the philanthrophic community, which has been a long time
• 13:11
  Speaker 1: support of mission focused banks are even redoubling their efforts.
• 13:16
  Speaker 1: And now the government you asked really about theerka's response.
• 13:19
  Speaker 1: So for the CD five space, there's some twelve billion
• 13:23
  Speaker 1: dollars that's coming to the C five space through the
• 13:26
  Speaker 1: government support. And in fact, today Vice President Harris is
• 13:30
  Speaker 1: going to make an announcement UH and she's gonna be
• 13:32
  Speaker 1: introduced by Lisa mensa Opportunity Financial Network, one of our
• 13:36
  Speaker 1: leading trade associations for cd if by loan funds UH
• 13:39
  Speaker 1: and they're going to talk about the this administrative support
• 13:42
  Speaker 1: of this industry and so really proud to have that
• 13:44
  Speaker 1: attention focused on right now. All right, Darren, thanks so
• 13:47
  Speaker 1: much for joining us. Darren was one of the Bloomberg
• 13:49
  Speaker 1: fifty and he continue to lead the push to help
• 13:53
  Speaker 1: those UH. Support those probably is a better way to
• 13:56
  Speaker 1: say it, that are under banked in the Mississippi Delta
• 13:59
  Speaker 1: area and throughout the u US. Let's bring in Ben
• 14:03
  Speaker 1: Emmons UH. He is a Managing director at Global Macro Strategy,
• 14:07
  Speaker 1: UM of Global macro Strategy at Medley Global Advisor has
• 14:10
  Speaker 1: been up been getting your notes and absolutely loving your research.
• 14:15
  Speaker 1: Let me get your take first on the inflation debate,
• 14:17
  Speaker 1: because this is obviously the focus of markets. On the
• 14:21
  Speaker 1: one hand, you've got fiscal stimulus of five trillion and
• 14:26
  Speaker 1: more coming, um, monetary easing of an extra well four
• 14:30
  Speaker 1: trillion on the balance sheet, and then some um pent
• 14:33
  Speaker 1: up demand by consumers with fient savings rates, um companies
• 14:38
  Speaker 1: that are investing capex and UH and spending money like
• 14:43
  Speaker 1: they haven't in many, many years. And what's holding us
• 14:47
  Speaker 1: back then from from real inflation that's gonna stick around
• 14:51
  Speaker 1: for a while. Man, thanks having us again. Um, yeah,
• 14:56
  Speaker 1: that's it's actually an interesting question. Maps to the extent
• 14:59
  Speaker 1: of that, how do you define transitory as we talk
• 15:03
  Speaker 1: about it? Right? Like, you know, if you look at
• 15:05
  Speaker 1: the PPI data today, you drill in that you see
• 15:08
  Speaker 1: the autose and sector example that was off the charts,
• 15:11
  Speaker 1: it's like twenty seven or thirty eight percent year and
• 15:14
  Speaker 1: your change in producer prices on those and that that
• 15:17
  Speaker 1: sounds a lot like a peak inflation, right, That's very extreme.
• 15:20
  Speaker 1: I think that's what markets are looking at. If you
• 15:22
  Speaker 1: get these kinds of jumps in these sort of categories
• 15:25
  Speaker 1: becomes almost untenable while you cannot really sustain that price level,
• 15:30
  Speaker 1: whereas the art factors that you mentioned, of all the
• 15:32
  Speaker 1: spent of demand and savings and cap acts, that's all
• 15:35
  Speaker 1: working itself through the economy could sustain at least a
• 15:38
  Speaker 1: higher level of inflation that we've had pre pandemic, when
• 15:41
  Speaker 1: we were really in a low inflation environment. So I
• 15:44
  Speaker 1: think if you square too, I think we have a
• 15:47
  Speaker 1: transitory narrative about, yes, you have excessive price increases in
• 15:51
  Speaker 1: some categories, that this happened to be a major demand
• 15:54
  Speaker 1: because as we unmine this pandemic slowly, at the same time,
• 15:58
  Speaker 1: there's an underlying current that is clearly pointing to that
• 16:01
  Speaker 1: at least the growth of the economy stays stronger, and
• 16:04
  Speaker 1: that should lead us at least closer to that long
• 16:07
  Speaker 1: term average of what the Fed wants. Two. Looking at
• 16:11
  Speaker 1: the high yield, they're not very high, Ben, I mean,
• 16:13
  Speaker 1: it's just extraordinary what's happened in that market. Just give
• 16:17
  Speaker 1: us a sense of what your call is there, what
• 16:19
  Speaker 1: your what, what what your take is. Yeah, I find
• 16:22
  Speaker 1: an interesting cold, Paul, because you know, if you look
• 16:25
  Speaker 1: at how yield has done really well, you know, if
• 16:28
  Speaker 1: you want to invest in fixed income, that's what that's
• 16:30
  Speaker 1: the place to be this year. Right, And and if
• 16:32
  Speaker 1: you drill in there too, what's really driving it again,
• 16:35
  Speaker 1: it's energy, materials and autos, right, those are the sectors
• 16:38
  Speaker 1: have done exceptionally well. So there's a lot about I think,
• 16:41
  Speaker 1: you know, global demands reopening. That is, you know, have
• 16:45
  Speaker 1: investors in the in particularly those bonds, and I guess
• 16:48
  Speaker 1: if you add in the cruise lines and the leash hospitality,
• 16:52
  Speaker 1: they've been issuing bonds during the pandemic, and they they've
• 16:54
  Speaker 1: been scooped up, right, So I yield is strong really
• 16:58
  Speaker 1: because the economy is strong. It is there's very little
• 17:00
  Speaker 1: the fault risk at this moment. But we also have
• 17:03
  Speaker 1: to take note of the fundamental factors. You know, one
• 17:06
  Speaker 1: key factor I think that is driving inflation is his
• 17:09
  Speaker 1: used car component in CPI and in p p I
• 17:12
  Speaker 1: that's not going to sustain that way. So I do
• 17:14
  Speaker 1: think that that high yield, if it is traditionally seen
• 17:17
  Speaker 1: in autos and related type of sectors. You know what
• 17:21
  Speaker 1: we had back in two We've got to get an
• 17:24
  Speaker 1: oil price change right at drove the energy sector high
• 17:27
  Speaker 1: yield much wider somewhat could happened in this case too,
• 17:30
  Speaker 1: once these auto prices start to correct. If you have
• 17:33
  Speaker 1: this really like the situation where auto prices are just
• 17:36
  Speaker 1: too high and demanded supply works itself out right, I
• 17:39
  Speaker 1: think that's where maybe somewhat of a of a down
• 17:42
  Speaker 1: draft could happen in high yield. What it means for
• 17:44
  Speaker 1: broader markets will see why it It tends to be
• 17:47
  Speaker 1: pretty slow bleed initially, but it is to be watched
• 17:49
  Speaker 1: because it's definitely a levels that is yeah, I would say,
• 17:52
  Speaker 1: brings us back to the two thousand seven complacency levels.
• 17:57
  Speaker 1: What what do you think about the meme stocks that
• 18:00
  Speaker 1: we're seeing. I spend a little time on Wall Street
• 18:02
  Speaker 1: bets today and it just blew my mind. And it's
• 18:05
  Speaker 1: not my first time there, right, it's but every time
• 18:08
  Speaker 1: I go there, I'm like, holy cow. Um, there's some
• 18:11
  Speaker 1: big dogs here and and they're doing some crazy stuff,
• 18:15
  Speaker 1: but they've managed to push like game Stop into the
• 18:17
  Speaker 1: Russell one thousand. Now. Um, a lot of the stocks
• 18:20
  Speaker 1: that they're a lot of these meme stocks are big palatiners,
• 18:24
  Speaker 1: a forty six billion dollar company, you know. Um, what's
• 18:28
  Speaker 1: your take on on what's going on? And do you
• 18:30
  Speaker 1: spend a lot of time now on Reddit. I don't
• 18:34
  Speaker 1: spend much stim on Reddit, and that's but there's an
• 18:36
  Speaker 1: interesting platform to keep keep an eye on that there
• 18:39
  Speaker 1: is in there's a lot of sentiments and hype there
• 18:41
  Speaker 1: about these stocks and seems to be communicated there quite
• 18:45
  Speaker 1: a bit. But if you really look at that sector
• 18:47
  Speaker 1: and just again look at the fundamental way, but I
• 18:50
  Speaker 1: find really interesting exactly what you're telling. You have the
• 18:52
  Speaker 1: market capitalization of some of these companies ballooning at the moment,
• 18:56
  Speaker 1: and it's all driven by equity value increasing. And there's
• 18:59
  Speaker 1: some companies Game Stuff is one of them a MC
• 19:02
  Speaker 1: two and I believe it's good or actually go go
• 19:04
  Speaker 1: one of those others two. They actually pretty levered, right,
• 19:07
  Speaker 1: they have a lot of short term that And what's
• 19:09
  Speaker 1: now occurring is like if you're seen with SMP last
• 19:12
  Speaker 1: week upgrading AMC's rating to triple C plus but still
• 19:16
  Speaker 1: the stars rating, but it's upgrading. That's exactly the effect
• 19:20
  Speaker 1: from this this hype around that stock to start prices
• 19:22
  Speaker 1: off a lot, keeps going up. The equity value that
• 19:25
  Speaker 1: these to improve, the market capitalization increases, and that brings
• 19:28
  Speaker 1: the leverage of that bounce sheet by itself down and
• 19:30
  Speaker 1: I think this is what draws in the fundamental investors whom,
• 19:34
  Speaker 1: as you mentioned now have to take it more seriously
• 19:37
  Speaker 1: because those stocks have a bigger weight and say you
• 19:40
  Speaker 1: russell one thousand index, right, so fund managers have to
• 19:43
  Speaker 1: pay attention to these stocks, whether they like it or not.
• 19:46
  Speaker 1: So I think if you if you look at that
• 19:48
  Speaker 1: whole space, you want to particularly look at the companies
• 19:50
  Speaker 1: that are that have actually short termed death and as
• 19:53
  Speaker 1: a result can be able to deliver that that sort
• 19:55
  Speaker 1: of speak good either indeed equity sales and use the
• 19:58
  Speaker 1: proceeds to bring down to that and world actually value
• 20:00
  Speaker 1: those up and the dead leverage goes in. Hey Ben,
• 20:03
  Speaker 1: thanks so much for joining us. As always, always appreciate
• 20:05
  Speaker 1: getting your perspective and your views across asset classes. Ben Emmons.
• 20:09
  Speaker 1: He's a managing director Global macro Strategy at the firm
• 20:13
  Speaker 1: medley A Global Advisors. We love talking to Ben. Again.
• 20:16
  Speaker 1: He puts out some fascinating research notes with great regularity,
• 20:20
  Speaker 1: I might add, and there's always a good read giving
• 20:22
  Speaker 1: you some good thoughts for these markets. This is Bloomberg. Well,
• 20:29
  Speaker 1: a bunch of economic data came out this morning. Retail
• 20:33
  Speaker 1: sales a little bit weaker than expected in the month
• 20:35
  Speaker 1: of May, although the April data will was revised higher,
• 20:38
  Speaker 1: but the market scenes to be looking at that pp
• 20:40
  Speaker 1: I data Producer Price index came in higher than expected,
• 20:44
  Speaker 1: so that factors into the inflation discussion. Let's break some
• 20:46
  Speaker 1: of these numbers down and preview what we will likely
• 20:49
  Speaker 1: here here from FED Chairman j Pal tomorrow. We do
• 20:52
  Speaker 1: that with Elena Shulietteva, senior US economists for Bloomberg Economics. Elena,
• 20:57
  Speaker 1: thanks so much for joining us. Any takeaways here one
• 21:00
  Speaker 1: way or the other out of the economic data that
• 21:02
  Speaker 1: we saw this morning that jumped out to you. So
• 21:05
  Speaker 1: the retail sales report, yes, at the headline it showed
• 21:09
  Speaker 1: a decline, but you need to remember where it's coming from.
• 21:13
  Speaker 1: So the previous two months of data were revised higher,
• 21:17
  Speaker 1: basically showing even a bigger boost from the stimulus checks
• 21:22
  Speaker 1: that consumers received earlier this year. So this is just
• 21:26
  Speaker 1: normalizing from significantly elevated levels of retail sales. If you
• 21:32
  Speaker 1: look at the retail sales in level terms, there are
• 21:36
  Speaker 1: still way above the trend that persisted before the crisis.
• 21:41
  Speaker 1: So the data still supports our expectations for a very
• 21:45
  Speaker 1: robust reading on consumers spending in the second quarter of
• 21:49
  Speaker 1: this year when GDP numbers are released. And one more
• 21:53
  Speaker 1: thing to highlight is that the report actually shows ongoing
• 21:57
  Speaker 1: rotation uh in terms of conser what preferences consumers are
• 22:02
  Speaker 1: dying to get back into, you know, experiences, things like
• 22:07
  Speaker 1: dining out, vacationing and things like that. And the report
• 22:11
  Speaker 1: actually shows that there is a pickup in the services
• 22:14
  Speaker 1: sector of the economy if you look at the restaurants
• 22:17
  Speaker 1: sales components of the reports. So that is all a
• 22:21
  Speaker 1: pretty good news. Actually, I think I wonder about the
• 22:26
  Speaker 1: savings UM thesis Lena every time I read about especially
• 22:31
  Speaker 1: UM an inflation hawk. But anyone who's talking about big
• 22:35
  Speaker 1: growth coming up says it's going to be powered by savings,
• 22:38
  Speaker 1: and I, you know that data I can't see through.
• 22:42
  Speaker 1: You know, does that count money I put away in
• 22:44
  Speaker 1: my I ra A? Does that count the meme stocks
• 22:46
  Speaker 1: I'm buying? How is it measured? And how broad is
• 22:50
  Speaker 1: that savings? Does everybody have a ton of savings or
• 22:54
  Speaker 1: is it just you know, rich people on the coasts.
• 22:57
  Speaker 1: So it's very difficult to assess. But yeah, a lot
• 23:02
  Speaker 1: of it is held in um UH in the hands
• 23:05
  Speaker 1: of more high income people, so a part of it
• 23:10
  Speaker 1: will go into the stock market, I think, but it
• 23:13
  Speaker 1: doesn't mean that the rest will just stay in the
• 23:17
  Speaker 1: savings and checking accounts. So there are a lot of
• 23:20
  Speaker 1: different ways to look at this data. So one is
• 23:24
  Speaker 1: just simply to look at at how savings and checking
• 23:28
  Speaker 1: accounts UH compared to prependemic trends, and there's a huge
• 23:33
  Speaker 1: discrepancy there, so there's a lot more money held in
• 23:37
  Speaker 1: checking and savings accounts. You can also look at saving
• 23:41
  Speaker 1: strength UH based on personal income and spending data, which
• 23:46
  Speaker 1: usually is released at the end of the months each month,
• 23:49
  Speaker 1: so that shows two point three trillion extra savings in
• 23:53
  Speaker 1: the hands of the US consumer. While not all of
• 23:57
  Speaker 1: it will be spent consumer servings to just that about
• 24:00
  Speaker 1: a quarter of this money will be spent on goods
• 24:03
  Speaker 1: and services, and I think that's going to be an
• 24:06
  Speaker 1: important driver, along with other things such as a powerful
• 24:10
  Speaker 1: wealth effect that we will see this year. So some
• 24:15
  Speaker 1: still know his money basically helped h to boost a
• 24:19
  Speaker 1: consumer spending in the beginning of the year, and UH
• 24:22
  Speaker 1: those more powerful trends like savings and the wealth effect
• 24:27
  Speaker 1: will continue to put consumer spending higher as the year progresses.
• 24:31
  Speaker 1: All right, Elena, let's fast forward to tomorrow preview of
• 24:34
  Speaker 1: what we may hear? Bet Chairman Pow, what are you
• 24:37
  Speaker 1: looking for? So the market will be looking at whether
• 24:42
  Speaker 1: Mr Powell flips in terms of UH his message, and
• 24:47
  Speaker 1: I don't think it's gonna happen. Can you afford to
• 24:49
  Speaker 1: do that without losing his credibility? I mean that would
• 24:52
  Speaker 1: really be giving up. He would be a huge loser
• 24:54
  Speaker 1: if he did that now, and to use some trump
• 24:58
  Speaker 1: like that, but doesn't have any reason to do so.
• 25:02
  Speaker 1: So uh. Basically, back in equal he said that the
• 25:06
  Speaker 1: recovery is far from complete and the FED will continue
• 25:10
  Speaker 1: to provide accommodation until the recovery is complete. So it
• 25:14
  Speaker 1: was not complete back then, it's not complete now. If
• 25:18
  Speaker 1: you look at the payrolls report, write the latest two
• 25:22
  Speaker 1: of them, so that actually reinforces that is message from
• 25:27
  Speaker 1: the Fed. So despite an inflation pick up, I think
• 25:31
  Speaker 1: the Fed will stick to the same exact message. They
• 25:34
  Speaker 1: will upgrade UH their projections for inflation in the tamary
• 25:38
  Speaker 1: economic projections, but will quickly discount it as temporary. Our
• 25:44
  Speaker 1: favorite words, you know, temporary trendient factor um in the
• 25:49
  Speaker 1: press conference. One thing to which will be the dot
• 25:53
  Speaker 1: plot and whether the median dot for twenty twenty three
• 25:57
  Speaker 1: moves showing a lift of Oh yeah, that is also
• 26:02
  Speaker 1: quite far away, and I think we will speak to
• 26:05
  Speaker 1: our old book for dots go also on the terminal,
• 26:10
  Speaker 1: but of course, uh always great to get your take
• 26:14
  Speaker 1: as well. Elena juliet Jeva, thank you so much for
• 26:17
  Speaker 1: joining us senior US economists at Bloomberg Economics. Thanks for
• 26:20
  Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
• 26:24
  Speaker 1: listen to interviews of Apple Podcasts or whatever podcast platform
• 26:28
  Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
• 26:31
  Speaker 1: Miller three. Pet On fall Sweeney I'm on Twitter at
• 26:35
  Speaker 1: pt Sweeney. Before the podcast, you can always catch us
• 26:38
  Speaker 1: worldwide at Bloomberg Radio