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Markets, Broadcom, Crypto, And Freelance Work (Podcast) · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. You know, we've got
0:22
Speaker 1: the market again, as Greig was just reporting up a
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Speaker 1: one and a half percent, so pretty decent week here.
0:26
Speaker 1: The question is for a lot of folks, uh, dead
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Speaker 1: cat bounce or is maybe this market trying to find
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Speaker 1: inform some type of bottom here. Let's check in with
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Speaker 1: Scott Ladner, chief investment officer of Horizon Investments. Uh, Scott,
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Speaker 1: thanks so much for joining us. Despite you being from
0:41
Speaker 1: UNC Chapel Hill, we decided to have you on. Hopefully
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Speaker 1: it'll go well. What are you looking at, Scott as
0:46
Speaker 1: you take a look at these last few days here?
0:49
Speaker 1: Maybe the market you're trying to find a bottom here?
0:51
Speaker 1: How how do you guys think about it? Yeah? I
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Speaker 1: mean if you think that this trading kind of kind
0:55
Speaker 1: of reechs of like hope, um right, hoping this is
1:00
Speaker 1: over Um, it is very technical in nature. It is
1:03
Speaker 1: not happening on a lot of volume. Um, you know.
1:05
Speaker 1: And and look, markets don't go one direction forever, right,
1:08
Speaker 1: So it has been seven or eight weeks of this
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Speaker 1: sort of malaise and just kind of grinding lower. Um.
1:14
Speaker 1: This this doesn't look a little bit of a deal
1:15
Speaker 1: of a relief rally. But I mean, unfortunately, it's it's
1:19
Speaker 1: really tough to lose sight of the main points. And
1:21
Speaker 1: the main point is the Fed has told us they
1:23
Speaker 1: want tighter financial conditions and and uh you know that
1:26
Speaker 1: that is that is the way they're going to try
1:28
Speaker 1: to control inflation. They want tighter financial condissions to bring
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Speaker 1: the band down. Um and until dar unless that changes, uh,
1:33
Speaker 1: you know this this is probably we're probably in the
1:35
Speaker 1: cell rallies kind of mode. Alright. Interesting, Um, you know
1:39
Speaker 1: Matt Miller jumped out for some reason, left to do
1:42
Speaker 1: do something about doing a TV interview. But not to worry,
1:44
Speaker 1: because pretty good to saw the Anpty seat jump right in. Cretty.
1:47
Speaker 1: Thanks for so much for filling in here. Appreciate it.
1:49
Speaker 1: I'll take any opportunity to coinker Sweeney um and and
1:52
Speaker 1: Scott you should know Paul gives everyone who's not duke
1:56
Speaker 1: a hard time. And usually I'll come in and defend them.
1:58
Speaker 1: But for you, I'm a U V A M. So
2:01
Speaker 1: I'm going to draw on your own. Yeah, you're on
2:03
Speaker 1: your on this one. Um. I have to ask about
2:07
Speaker 1: these recession odds that everyone's talking about. It's it's it's
2:11
Speaker 1: it's kind of wild to see, at least for me,
2:14
Speaker 1: that the market or the economy. I should say, it's
2:17
Speaker 1: not the same thing. I should point out the economy
2:19
Speaker 1: is growing at a two percent clip, and here we
2:22
Speaker 1: are talking about an outright recession. So especially going from
2:25
Speaker 1: two to below zero in the span of a couple
2:29
Speaker 1: of quarters. Maybe are those fears realistic? I mean pretty
2:34
Speaker 1: it's you know, a year ago. We should probably say no. Um,
2:39
Speaker 1: But I think of how fast everything has been happening
2:41
Speaker 1: cycle wise. I mean that the last couple of three
2:44
Speaker 1: years I've really taught us anything is that economic cycles
2:47
Speaker 1: are just are ever more compressed. Things are happening like
2:50
Speaker 1: ever faster. Um. And and so you know, to think
2:52
Speaker 1: that we can't get like a recession and like measured
2:55
Speaker 1: in months rather than recesion matter measurement quarters or years
2:59
Speaker 1: probably is and totally crazy anymore. Just just because of
3:02
Speaker 1: how quickly everything is moving through the system and how
3:04
Speaker 1: quickly um, you know, like not only policymakers, but the
3:07
Speaker 1: market reacts, uh to you know, two changes and things.
3:10
Speaker 1: So it's you know, it's it's it's not really out
3:13
Speaker 1: of the realm to think that read they might end
3:15
Speaker 1: up in the recession. We don't think it's will be
3:16
Speaker 1: a very bad one that we do. There's there's really
3:18
Speaker 1: no there's no accesses in the system to to speak
3:20
Speaker 1: where they've been there there there in the posting ring
3:23
Speaker 1: wrung out um and there's really not not very much
3:25
Speaker 1: leverage in the system. So there's not and that's sort
3:28
Speaker 1: of the ingredients for a like a really nasty type
3:30
Speaker 1: of recession but kind of a garden variety earnings recession,
3:33
Speaker 1: industrial slowdown type of thing in the back half of
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Speaker 1: the year. You know. But the market is starting to
3:37
Speaker 1: sniff that out and we think that that makes some sense.
3:40
Speaker 1: So Scott at at your shop, are you guys kind
3:44
Speaker 1: of trying to during this you know, the sell off
3:46
Speaker 1: we've had year today, trying to find safe havens or
3:50
Speaker 1: do you just say, hey, we're going to take opportunities
3:53
Speaker 1: to buy companies that we like and maybe add to
3:56
Speaker 1: positions of core holdings. How do you guys try to
3:58
Speaker 1: navigate through what has been a very tough start to
4:01
Speaker 1: the year. Yeah, I mean it has been tough start
4:03
Speaker 1: to the year, and so we've we've got a few
4:04
Speaker 1: different strategies we have. You know, one of them is
4:06
Speaker 1: is more of an algorithmic derisking and re risking strategy,
4:09
Speaker 1: and so that's that's sort of doing it something. But
4:11
Speaker 1: inside sort of the core allocation portfolios, um, you know,
4:13
Speaker 1: how how camera managing client money and those is really
4:17
Speaker 1: trying to trying to play some defense right now, trying
4:19
Speaker 1: to sort of sort of like let let the talk
4:21
Speaker 1: play out. You know, this is obviously it's tough to
4:23
Speaker 1: time anything perfectly. But but in terms of um, you know,
4:26
Speaker 1: in terms of like where we're putting money, like, we
4:28
Speaker 1: have been pretty defensive. We've been pretty US based, We've
4:30
Speaker 1: been pretty value based and like, and we don't know
4:32
Speaker 1: those are not overweights that we've had, you know, typically
4:35
Speaker 1: a lot over the last five or six years at least,
4:37
Speaker 1: especially on the value side. But we are we are
4:39
Speaker 1: just sort of trying to run out the clock a
4:40
Speaker 1: little bit. And you know, we think that time will
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Speaker 1: end up healing the inflation problem, and time will end
4:44
Speaker 1: up healing some of that, some of this, uh some demands.
4:47
Speaker 1: It's fly and balanced problem, but there's no like really
4:50
Speaker 1: quick fixed for it. And so as so long as
4:52
Speaker 1: there's no really quick fixed for it, we got gotta
4:54
Speaker 1: sort of like play along in places and place in
4:56
Speaker 1: defense and a sort of go in the boring staples
4:58
Speaker 1: types of the types of the world, um and and
5:01
Speaker 1: just you know, hang out until the until we have
5:03
Speaker 1: a chance for the Fed and Center banks to be
5:05
Speaker 1: able to pivot. Um and when that happened, and we
5:08
Speaker 1: think that there will be a chance of that to
5:09
Speaker 1: happen later later this year, um, you know, that'll be
5:12
Speaker 1: the time to really go for you know, go go
5:14
Speaker 1: gangbusters again. But you know, until then, uh, you know,
5:18
Speaker 1: until basically inflation is a secondary concern and growth is
5:21
Speaker 1: a primary concern. Until that, until that has an opportunity
5:25
Speaker 1: to happen, we discuss replay defense a little bit. It's
5:27
Speaker 1: kind of boring, but that's that's how we're that's how
5:29
Speaker 1: we're working. We have about thirty seconds here. Let's talk
5:31
Speaker 1: about the volatility. Here. We're looking at a twenty seven
5:33
Speaker 1: handle on the vix. Is it going to go back
5:36
Speaker 1: above thirty five? Let's say when we started to originally
5:40
Speaker 1: see the onset of the war in Ukraine. What's next
5:43
Speaker 1: when it comes to volatility. Yeah, I mean in terms
5:46
Speaker 1: of the ball market, is it is it that has
5:47
Speaker 1: been pretty interesting. I'm I'm an old vultility trader and
5:49
Speaker 1: it's it's um, yeah, that what we've the dynamics we've
5:54
Speaker 1: seen in the option markets over the last over the
5:56
Speaker 1: last couple of months have been somewhat striking because we
5:58
Speaker 1: have not seen any of that pan these types of
6:00
Speaker 1: things that I'm sure you guys are aware, um for
6:03
Speaker 1: for that capitulation that everybody's looking for, um. You know,
6:06
Speaker 1: we we probably do need to see the thick spike.
6:08
Speaker 1: We do need to see some of that panic thing happening.
6:11
Speaker 1: But you know, unfortunately there is little bit of like
6:13
Speaker 1: like Heisenberg and certainty principal types of things when we
6:15
Speaker 1: when we look at altimlatey market, like if you look
6:17
Speaker 1: at it too closely, it's like it'll know you'll never
6:19
Speaker 1: see it. Um. And so when everybody's looking for that,
6:21
Speaker 1: for that thing, it's you know, it makes it harder
6:23
Speaker 1: and harder to get actually a rum. So that's that's
6:26
Speaker 1: what we're looking for. That's good stuff. Scott, Really appreciate
6:28
Speaker 1: you taking the time sharing your thoughts. Scott Latner, chief
6:31
Speaker 1: investment officer Horizon Investments for unc GRED, I think he
6:35
Speaker 1: did pretty well. Maybe we'll have him back. Big tech
6:42
Speaker 1: deal goes formal today. Broadcom agreed to buy cloud computing
6:46
Speaker 1: company vm Ware for about sixty one billion dollars in
6:49
Speaker 1: one of the largest tech deals of all time, turning
6:51
Speaker 1: the chip maker into a bigger force in software. Let's
6:54
Speaker 1: get the strategy behind it, Let's get the numbers behind
6:57
Speaker 1: it with Wujenhoe, senior hardware analysts for Bloomberg and Leigence. Uh,
7:01
Speaker 1: we'll talk to us about broadcast. Like, what I know
7:02
Speaker 1: about Broadcom is this is a company that grows pretty
7:05
Speaker 1: much or large part through acquisitions, and this is a
7:08
Speaker 1: big one vm Ware. Talk to us about the strategy
7:10
Speaker 1: behind the deal. Sure, hey, thanks for having me on.
7:13
Speaker 1: Paul so um No, the CEO of Broadcom has been
7:16
Speaker 1: laying out this, uh the birse of action strategy ever
7:20
Speaker 1: since it's made it the a acquisition in and um
7:23
Speaker 1: you know, it has essentially grown from a chip business
7:27
Speaker 1: back to about of of its sales coming from software
7:32
Speaker 1: through c A as well as a ManTech adding VM
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Speaker 1: whare just extends and grows its software exposure to about
7:39
Speaker 1: of total sales, so it actually extends to where wants
7:43
Speaker 1: to go directionally going over the long time, it kind
7:47
Speaker 1: of seems like this is coming into a broader trend
7:49
Speaker 1: of chip makers wanting to diversify and video is another
7:52
Speaker 1: example looking going into you know, graphics chips to diversify
7:56
Speaker 1: the different kinds of things they make. Is this something
7:58
Speaker 1: we can start to expect from the likes of Advanced
8:01
Speaker 1: micro Devices for example, or Qualcom. What's your take? Sure? So,
8:05
Speaker 1: so AMDs actually starts to make that transition away from
8:09
Speaker 1: the CPU chip and and UH. They've also made other
8:13
Speaker 1: other acquisitions like that the zy Links deal that they've
8:16
Speaker 1: made UH to to get away from just being a
8:18
Speaker 1: CPU but also be a data processor unit or a
8:22
Speaker 1: cloud computing UH and and storage processing unit. So we
8:27
Speaker 1: do expect to see these UM UH silo chip companies
8:31
Speaker 1: to potentially extend and and broaden out that footprint, especially
8:35
Speaker 1: given how much cash at the generator over the past
8:38
Speaker 1: couple of years, given the strong cycle that they've enjoyed. Um.
8:42
Speaker 1: You know, Broadcome is somewhat unique, uh in a sense,
8:46
Speaker 1: different from Video to some degree with creating and and
8:49
Speaker 1: the reason is it's because I do think that UM,
8:52
Speaker 1: the CEO is trying to look for ways to diversify
8:55
Speaker 1: its business away from a very cyclical chip business and
8:59
Speaker 1: and VM it does that. I want to call out
9:01
Speaker 1: Dina Bass and Leona Baker from Bloomberg Newsday reported on
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Speaker 1: this deal back on May one. Um, and you know
9:10
Speaker 1: the stock this is this offers a premium to that date,
9:14
Speaker 1: you know, kind of before the Bloomberg News story came out.
9:17
Speaker 1: Is thisn't a creative deal? Is this dilutive? What's it
9:19
Speaker 1: gonna do to Broadcom's earnings and all that kind of stuff? Yeah,
9:23
Speaker 1: that was my tastic reporting by by Bloomberg News on that.
9:26
Speaker 1: So so we we did the deal in math Um.
9:30
Speaker 1: It seems to be earnings neutral if you add the
9:33
Speaker 1: two companies together. Uh, there may be some uh some
9:38
Speaker 1: some cost imagies that they can yield immediately. And UM,
9:41
Speaker 1: you know, we think that it could be an EPs
9:43
Speaker 1: secretive deal, especially given that it's a cashion stock deal.
9:46
Speaker 1: A longer term, Broadcom expects to have eight point five
9:51
Speaker 1: billion dollars in um iba DA out of vm Ware.
9:57
Speaker 1: That's an additional four billion dollars in ibadalla over the
10:00
Speaker 1: next three or five years. And it all fits within
10:02
Speaker 1: um broadcom strategy now now in terms of the share
10:07
Speaker 1: and in terms of valuation, and I think this is
10:09
Speaker 1: where you're going out, Paul. You know, we rounded the
10:12
Speaker 1: valuation math and it's quite frankly, given how much UH
10:15
Speaker 1: the software sector and technology evaluations dropped over the past
10:19
Speaker 1: month or so, the deal valuation isn't UM stretched. I
10:24
Speaker 1: mean we calculated to be five times easy to sales
10:27
Speaker 1: twenty times UM twenty times on a four P basis,
10:31
Speaker 1: and that's consistent with larger broad tech names. Yeah, that's
10:35
Speaker 1: kind of where I wanted to go would because it
10:37
Speaker 1: seems like, you know, a lot of folks are not well,
10:39
Speaker 1: not a lot of folks, but a couple of tech
10:40
Speaker 1: folks that I chatted, which is in the last month
10:42
Speaker 1: or so kind of you mentioned. Kind of what you're
10:44
Speaker 1: saying is there could be some some bargains out there,
10:47
Speaker 1: given how much some of these tech names have sold off.
10:50
Speaker 1: Do you anticipate seeing some more m and a going forward? Well,
10:54
Speaker 1: give me where the valuations are UM I. I think
10:58
Speaker 1: that the larger companies who are talking with smaller companies
11:01
Speaker 1: in the past UH may start becoming a bit more
11:06
Speaker 1: active right now. Now. The question is is that are
11:09
Speaker 1: are they willing sellers now? And given how much ware
11:12
Speaker 1: the valuation has has come down, and if there's a
11:15
Speaker 1: concern that this is going to be UH in an
11:18
Speaker 1: extended period of lower valuations, some of these CEOs who
11:22
Speaker 1: have held out for higher valuations, they have to rethink
11:25
Speaker 1: that the strategy of either going alone or being under
11:28
Speaker 1: the umbrella of a large company. So there might be
11:30
Speaker 1: a mix of both going forward, and there might be
11:32
Speaker 1: some increased deal activity, especially given how much valuations of
11:37
Speaker 1: pull pack. I'd really like talking about supply chains here
11:40
Speaker 1: because something bringing it back to end video. I know
11:42
Speaker 1: we're talking about Broadcom. It don't worry. I'll connect the
11:44
Speaker 1: dots and video here. In their earnings said that we
11:48
Speaker 1: see the demand, we know that we can grow. What's
11:51
Speaker 1: getting in our way is these UH COVID lockdowns, the
11:54
Speaker 1: supply chain issues. We're not able to meet our capacity.
11:58
Speaker 1: Will Broadcom have the same issue, um Well, Broadcom said
12:02
Speaker 1: on the call that they haven't seen those issues. UM
12:06
Speaker 1: as a matter of fact, they reported darning this UH
12:09
Speaker 1: this morning and essentially UH they beat expectations, and a
12:14
Speaker 1: lot of it has to do with UM on the
12:17
Speaker 1: networking side. Part of it has to do with it
12:19
Speaker 1: they're not directly manufacturing the chips, and they're relying a
12:22
Speaker 1: lot more on t SMC too to manufacture the chips
12:26
Speaker 1: for them, and they don't have the graphics. They don't
12:29
Speaker 1: need the PCB boards or broader supply chain to help
12:33
Speaker 1: UM to have a built out kit for for instance. Now, ironically,
12:37
Speaker 1: vm Ware mis consensus expectations by about three percent when
12:41
Speaker 1: they reported this morning, and they didn't give much detail
12:44
Speaker 1: on the call, but I suspect that it has had
12:46
Speaker 1: to do with supply chain because their hardware providers could
12:49
Speaker 1: not provide the the equipment needed to load VM or software.
12:53
Speaker 1: So you are seeing the supply side affect other areas
12:58
Speaker 1: UM UH in the tech chain. You know, it's interesting,
13:02
Speaker 1: you know, with the zero COVID policy coming out of China,
13:05
Speaker 1: I guess you could pay in a bear case that
13:08
Speaker 1: this supply chain issue, particularly reach the chips and other
13:10
Speaker 1: things coming out of China any going away anytime soon?
13:13
Speaker 1: Is it? Well, Cisco addressed it on their call UM
13:17
Speaker 1: a couple of weeks back, and essentially what they're saying
13:20
Speaker 1: is that, look, uh, the shutdowns of lockdowns may be
13:24
Speaker 1: lifted in June, but you have this whole backlog of
13:29
Speaker 1: suppliers who really want to get the products out the door,
13:32
Speaker 1: and you have this, uh, this huge logistics problem going
13:36
Speaker 1: on going past you. And even if it is UM
13:39
Speaker 1: the shutdown being being lifted. So I agree with you, Paul,
13:43
Speaker 1: this isn't going to end in the in the second quarter,
13:46
Speaker 1: nor are we going to see an easing of the
13:48
Speaker 1: pressure going into the third quarter. Um. Some of the
13:51
Speaker 1: chipmakers are always pushing back. The supply chain isn't going
13:55
Speaker 1: into the middle of three now, uh, And I was
13:57
Speaker 1: calling for the middle of two. So yeah, it's it's
14:01
Speaker 1: it's gonna be tough times for the hard hardware vendors,
14:04
Speaker 1: chip makers as well as the companies who are looking
14:07
Speaker 1: to buy UM buy hardware as well. Ye. Absolutely, it's
14:11
Speaker 1: the supply chain issue that is not going away anytime
14:13
Speaker 1: soon for large parts of the economy. And I'm thinking
14:15
Speaker 1: about the auto industry, you know, you think about all
14:17
Speaker 1: the chips to go in the auto industry, and if
14:19
Speaker 1: this is going to be an issue. Um, I have
14:21
Speaker 1: to see what those folks are saying. Lugin Hoe, he's
14:24
Speaker 1: a senior hardware analyst for Bloomberg Intelligence, one of the
14:26
Speaker 1: best on the street. We appreciate having access uh to
14:29
Speaker 1: him and his analysis. Again, you can read all of
14:31
Speaker 1: his analysis and that of Bloomberg Intelligence. Be I go
14:35
Speaker 1: on the terminal. All right, let's talk crypto here, but
14:40
Speaker 1: I want to talk about it. You know, when we
14:41
Speaker 1: talk crypto often we just kind of fall back and say,
14:43
Speaker 1: you know, bitcoin, where is it trading? Well, it's trading
14:45
Speaker 1: off about one point three percent today, nine thousand, four hundred.
14:48
Speaker 1: It's kind of been a fairly stable range down in
14:51
Speaker 1: that area. But I'm gonna talk about just the broader
14:53
Speaker 1: topics of crypto. Was actually a fairly big topic of
14:56
Speaker 1: conversation in Davos, Switzerland, which is wrapped up today. Danielle Dixon,
15:00
Speaker 1: CEO and executive Director of the Stellar Development Foundation, joins us.
15:05
Speaker 1: Daniel First, I love for you just to quickly tell
15:07
Speaker 1: us what the Stellar Development Foundation is. Great, Yes, thank
15:12
Speaker 1: you for having me. The Stellar Development Foundation is a
15:14
Speaker 1: non stock and entity and nonprofit entity that's focused on
15:17
Speaker 1: the growth and development of the Stellar foundation of Stellar Network.
15:21
Speaker 1: Really we're focused on creating equitable access to the global
15:24
Speaker 1: financial system using Stellar's blockchain technology. So what was the
15:30
Speaker 1: topic or how are people in Davos, how are they
15:32
Speaker 1: thinking about crypto as you had your conversations throughout the week. Yeah,
15:36
Speaker 1: it's really kind of fascinating. This year in DAVOSK there
15:39
Speaker 1: were crypto companies and blockchain companies that filled the whole promenade,
15:43
Speaker 1: which is the areas outside of Congress. In Congress, I
15:46
Speaker 1: was on one panel UM and they didn't have very
15:48
Speaker 1: many actually crypto focused panels, but we I think they
15:51
Speaker 1: only had one crypto focused panel and the rest of
15:53
Speaker 1: them they sort of layered crypto into remittances and whatnot.
15:56
Speaker 1: But there was a lot of discussion around sustainability, not
15:59
Speaker 1: surprisingly but because they focus a lot on proof of
16:01
Speaker 1: work and proof of steak UH consensus mechanisms. Stellars is
16:04
Speaker 1: a different mechanism, it's proof of agreement, so there's a
16:07
Speaker 1: different sustainability. We're actually very sustainable from the standpoint of
16:10
Speaker 1: the network. So there was a lot of focus there
16:13
Speaker 1: outside of the Congress. In the in the area, there's
16:16
Speaker 1: discussions just around regulation, global sort of focusing on the
16:21
Speaker 1: global pieces of regulation and also in the US UH
16:24
Speaker 1: and the need for us to be able to create
16:27
Speaker 1: some really strong stability because we've taken so many steps
16:30
Speaker 1: forward as an industry and we need to focus on sustainability,
16:34
Speaker 1: but as well, we need to focus on just continuing
16:36
Speaker 1: to really highlight the use cases, the really good use cases,
16:40
Speaker 1: so that we can demonstrate to governments and regulators all
16:43
Speaker 1: over the world the value that blockchain brings to their region.
16:46
Speaker 1: I have to ask here, when we're talking about cryptocurrencies,
16:48
Speaker 1: let's put this in the perspective of it's not just
16:51
Speaker 1: the crypto players in kind of competing in the space
16:54
Speaker 1: right now, you're actually looking at the e c B,
16:56
Speaker 1: the p BOC looking at creating a digital you want
17:00
Speaker 1: a digital euro, I think a digital doll or maybe
17:03
Speaker 1: a little bit far away. But I have to ask,
17:06
Speaker 1: when you think about that from a regulatory standpoint, and
17:09
Speaker 1: those actually backed by these major central banks, what is
17:14
Speaker 1: the value or what is the appeal of cryptocurrencies. Well,
17:18
Speaker 1: so the fact of the matter is, once stellar, we
17:20
Speaker 1: focus a lot on stable coins, and CBDCs are an
17:23
Speaker 1: asset that we would love to have because we focus
17:25
Speaker 1: on payments and payments. Really you want to use a
17:29
Speaker 1: stable coin or a CBDC because it's going to create
17:33
Speaker 1: trust and going to create credibility. When you're sending a payment,
17:35
Speaker 1: you want to know that what you send is also
17:37
Speaker 1: what you're going to receive on the other side or
17:39
Speaker 1: the person is going to receive on the other side.
17:40
Speaker 1: So I actually think it's a really strong uh, it's
17:44
Speaker 1: a strong message that government see the value of this technology.
17:46
Speaker 1: If you issue a CBDC and it's available on lots
17:49
Speaker 1: of different chains, it creates this opportunity to be able
17:52
Speaker 1: to leverage these assets in a really positive way. It
17:55
Speaker 1: creates this sort of borderless economy of scale for for
17:59
Speaker 1: folks to be able to send and receive value all
18:02
Speaker 1: over the world. Then give us, if you could just
18:05
Speaker 1: kind of an overview of kind of where we are
18:07
Speaker 1: in the regulatory environment for the crypto space. What are
18:11
Speaker 1: some of the things that you're looking at investors should
18:13
Speaker 1: be looking at. You think, Yeah, so in the US,
18:16
Speaker 1: a lot of the focus right now, I think it's
18:18
Speaker 1: going to be on stable coins. Not surprisingly, what happened
18:21
Speaker 1: with Terra and Luna a couple of weeks ago really
18:24
Speaker 1: created more and more focused on this particular issue. We've
18:26
Speaker 1: been advocating for stable coin legislation for a while now,
18:30
Speaker 1: and again this is important to us because we like
18:33
Speaker 1: to be able to have stable coins, which are just
18:35
Speaker 1: to get clarity. From our standpoint, we see stable coins
18:38
Speaker 1: as those assets that are one to went backed with
18:41
Speaker 1: fiat so currency like stable currency, and that you can
18:44
Speaker 1: hold those assets, that those assets are held in an account,
18:48
Speaker 1: that is, they're reserved and they're held in an insured account,
18:51
Speaker 1: so that you know that you're going to be able
18:53
Speaker 1: to trust and have credibility with respect to the asset
18:55
Speaker 1: that you're sending. So I think we're going to see
18:57
Speaker 1: at least in the US some regulation around on stable coins,
19:00
Speaker 1: so that basically in what I just said in terms
19:03
Speaker 1: of having audits and reserves and making sure that they're
19:07
Speaker 1: the back one to one and that there's a lot
19:09
Speaker 1: of transparency for the the companies and the end users
19:12
Speaker 1: that are leveraging those assets so that they can feel
19:14
Speaker 1: good about them. So we've see a lot of movement
19:16
Speaker 1: towards this. I think that we'll see something like this,
19:18
Speaker 1: if not by the end of this year early next year,
19:21
Speaker 1: and then there's obviously going to be focused around the
19:24
Speaker 1: trading pieces and what's happening in that market. All right,
19:27
Speaker 1: daniel thank you very much for that overview. Danielle Dixon,
19:30
Speaker 1: CEO and executive director the Stellar Development Foundation, kind of
19:34
Speaker 1: getting an overview kind of where we are on some
19:36
Speaker 1: of the big big macro issues on the crypto space.
19:43
Speaker 1: Mika Kaufman, CEO and founder of Fiber joins us simple
19:47
Speaker 1: on the New York Stock Exchange. You can punch into
19:50
Speaker 1: your Bloomber terminal f v r R you can. Thanks
19:52
Speaker 1: so much for joining us here for our audience. I'd
19:55
Speaker 1: love free to just give us kind of the thirty
19:56
Speaker 1: second overview of what fib is, what you guys are
19:59
Speaker 1: up to these days. Thanks for having me so. Essentially,
20:03
Speaker 1: Fiber is a two sound market place that connects any
20:06
Speaker 1: type of business with tremendous amount of freelancers in almost
20:10
Speaker 1: six hundred different categories of digital services. So anything you
20:14
Speaker 1: can think from business formations, finding a name for your business,
20:18
Speaker 1: to developing software for your business, or editing video, writing
20:23
Speaker 1: content or helping you run marketing campaign, any type of
20:27
Speaker 1: talent could be found on the on the platform. And
20:30
Speaker 1: the average time that it takes anyone who visits the
20:33
Speaker 1: site to actually place in order is fifteen minutes. This
20:36
Speaker 1: is compared to the average time that takes to find
20:39
Speaker 1: a freelancers elsewhere, this is about thirty days. UM. So
20:43
Speaker 1: that's the efficiency compression that Fiber is presenting. The company
20:48
Speaker 1: has been around in two thousand and ten, went public
20:52
Speaker 1: three years ago, and continues to grow very very fast.
20:55
Speaker 1: So I'm just wondering how how these freelancers compared to other,
21:02
Speaker 1: you know, gig economy workers UM for example, compared to
21:06
Speaker 1: like an Uber driver UM. Do they have issues with fees?
21:12
Speaker 1: Do they have problems organizing? Is unionization a concern? Uh?
21:18
Speaker 1: Not really, because we're talking about skilled labor. And the
21:22
Speaker 1: difference between UM fiber and other gig economy platforms is
21:26
Speaker 1: that on Fiber, the freeancers actually get to name their
21:30
Speaker 1: own term. They decide when they work, how much they work,
21:35
Speaker 1: how much they charge for their work. So from that perspective,
21:39
Speaker 1: they have total freedom of deciding or or setting up
21:42
Speaker 1: their destiny. But and then you take your cut from
21:44
Speaker 1: the business or from the freelancer. We actually take both, UM.
21:50
Speaker 1: We take some of it from the freelancer and some
21:52
Speaker 1: of it from the customer. So because that the pandemic
21:57
Speaker 1: must have altered your business or had a huge impact
21:59
Speaker 1: on your business as people were working from home. Maybe
22:02
Speaker 1: they lost their day job and now they're trying to
22:04
Speaker 1: find some gig type of thing. Talk to us about
22:06
Speaker 1: how your business kind of was impacted and maybe today
22:09
Speaker 1: continues to be impacted by kind of the change in
22:11
Speaker 1: the labor force. Sure, I think that what was interesting
22:15
Speaker 1: when we started the business in two thousand and aintended
22:17
Speaker 1: it was it was a decade when freelancing went from
22:21
Speaker 1: being something people did in between jobs, being a full
22:25
Speaker 1: time career decision and a life side decision. So freelancing
22:30
Speaker 1: is very different right now by twenty thirty, by the
22:32
Speaker 1: end of this decade, are going to be fifty percent
22:36
Speaker 1: of the workforce, which is which is a huge cohort. Now.
22:40
Speaker 1: Obviously throughout the years we've been growing very fast in
22:44
Speaker 1: the pandemic. The pandemic in many ways have made the
22:48
Speaker 1: case for what we've been preaching for the past ten years,
22:51
Speaker 1: which is there's a tremendous amount of value in working
22:54
Speaker 1: with freelancers, even if it's remote, because you don't need
22:57
Speaker 1: control over people's time. All that companies care is output
23:02
Speaker 1: and only not. They're super efficient beyond us. It's the
23:06
Speaker 1: fact that UM, I think throughout the pandemic and now
23:09
Speaker 1: if we're thinking about potential recession coming in, UM I
23:13
Speaker 1: think more companies are thinking about deficiency and are thinking
23:16
Speaker 1: about the varial book expenses versus stick expenses. And this
23:19
Speaker 1: is what greenancing talent is giving you. It's giving you
23:22
Speaker 1: the option to scale up or down is needed. And
23:25
Speaker 1: I think that this is super powerful when when companies
23:28
Speaker 1: are thinking about deficiencies. So I'm an old stock analyst.
23:31
Speaker 1: I'm looking at your chart here. Ipoed in mid nineteen
23:34
Speaker 1: at twenty one dollars a share, peaked in February one
23:38
Speaker 1: and over three dollars. You share now today trades just
23:40
Speaker 1: below forty dollars to share. That looks like a Peloton chart,
23:43
Speaker 1: that looks like a zoom chart. Was your stock one
23:47
Speaker 1: of those names that was just thrown on the list
23:49
Speaker 1: of this is a pandemic stock to own. And then conversely,
23:54
Speaker 1: coming out of the pandemic, like much of the world,
23:57
Speaker 1: is that perhaps that's not the trade. Is that kind
23:58
Speaker 1: of what's impacted your that price? Yeah, I think that
24:02
Speaker 1: the market is a little bit is behaving a little
24:04
Speaker 1: bit like a pendulum it's either overreacting or underreacting. UM.
24:09
Speaker 1: I think that what we're seeing now is a little
24:11
Speaker 1: bit of a spear. That's maybe the pandemic was a
24:14
Speaker 1: one time boost to the business and that would not last.
24:18
Speaker 1: Everything that we see from the fundamentals of the business.
24:21
Speaker 1: So otherwise, which is fundamentals are extremely strong. Our core
24:26
Speaker 1: behavior of the customers is stronger than pre pandemic. The
24:30
Speaker 1: available market is just growing. The online portion of financing
24:35
Speaker 1: it's about five percent. Listen, it's like e commerce twenty
24:39
Speaker 1: years ago. We haven't even started. So there's so much
24:42
Speaker 1: room to grow into it. If you take that example,
24:45
Speaker 1: in the past twelve months, we've had four point two
24:48
Speaker 1: million active businesses on the platform. Half of them are
24:52
Speaker 1: in the U S which is two point one million,
24:55
Speaker 1: but that is two point one million out of more
24:57
Speaker 1: than thirty millions and be deveilable in the US alone,
25:00
Speaker 1: So there's so much room to grow into that. We
25:04
Speaker 1: don't have any concern about the ability to grow. I
25:06
Speaker 1: think the marketing is going to correct itself. It's just
25:09
Speaker 1: just patient. We can't optimize for the for the shore
25:12
Speaker 1: of the price. We we optimized for the performance of
25:14
Speaker 1: the business by the way you have now. I think
25:17
Speaker 1: about eight verticals right, including graphic design, including digital marketing.
25:21
Speaker 1: Obviously writing code is a big deal. Um. Do you
25:24
Speaker 1: do you see yourself growing into more traditional sectors or
25:29
Speaker 1: is it all about digital services? We focus on digital
25:34
Speaker 1: services because physical services face tremendous amount of friction, um
25:40
Speaker 1: and and and challenges right now. I mean when we
25:43
Speaker 1: took it to Combody Publics three years ago, we've had
25:45
Speaker 1: about three hundred categories. We now have about six hundred,
25:49
Speaker 1: so we're adding about thirty new categories every quarters. There's
25:53
Speaker 1: so much categories to grow into. If you look at it,
25:56
Speaker 1: it's classical e commerce. Amazon has about thirty thousand different categories.
26:00
Speaker 1: We have a we have room to grow into, all right, Mika,
26:03
Speaker 1: really really fascinating stuff, Maka Kaufman, CEO and founder of
26:07
Speaker 1: the firm Fiber, New York stockygage symbol for your Bloomberg
26:10
Speaker 1: terminal f v r R, publicly traded company. They're really
26:14
Speaker 1: fascinating story, fascinating part of the market. Uh. Catering to
26:19
Speaker 1: the folks that are working from home, I guess thanks
26:23
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
26:27
Speaker 1: and listen to interviews of Apple Podcasts, or whatever podcast
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Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
26:34
Speaker 1: Matt Miller three. Pet On Ball Sweeney I'm on Twitter
26:38
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
26:41
Speaker 1: us worldwide at Bloomberg Radio