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The Future Of Fitness Beyond The Pandemic · 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: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Well. In a reopening economy,
0:23
Speaker 1: one of the businesses that are really looking to aggressively
0:26
Speaker 1: reopen is the physical fitness business. The gym's out there um.
0:31
Speaker 1: People get off their pelotons and get back into the
0:34
Speaker 1: gym's um. That is certainly happening across the United States
0:37
Speaker 1: is more and more folks get vaccinated, So perhaps it's
0:40
Speaker 1: a good time to consider investing in that business. Karl
0:43
Speaker 1: die Keller, he's the co founder, chairman, and chief executive
0:46
Speaker 1: officer of the Beach Body Company. Uh. He joins us
0:50
Speaker 1: here in the Beach Body Company today. Uh. They're gonna
0:53
Speaker 1: start trading as a public company on the n y
0:55
Speaker 1: s C under the Tickler sign Body b O d
0:58
Speaker 1: Y as its exp to the closest to street strategic
1:01
Speaker 1: transaction of the three Way merger among the beach Body Company,
1:05
Speaker 1: far Throwed Acquisition Corps, I E. S Back and my
1:09
Speaker 1: ex fitness Carl, thanks so much for joining us here.
1:12
Speaker 1: Talk to us about what I'm just gonna call this
1:15
Speaker 1: new code, this new company of putting these three entities together.
1:18
Speaker 1: What do I have at the end of the day. Well,
1:21
Speaker 1: what's really exciting about it is everything that you just said,
1:24
Speaker 1: um is what we're not seeing. Is what we're not
1:28
Speaker 1: seeing is people who discovered in home fitness during the
1:32
Speaker 1: pandemic are actually loving the convenience of working out at home.
1:37
Speaker 1: And that's what's such a great business opportunity for us
1:40
Speaker 1: to take this company out to the public markets with
1:43
Speaker 1: this merger with Mixed Fitness and their their commercial grade
1:47
Speaker 1: indoor bike. You know, beach Body has been around for
1:49
Speaker 1: two decades. We have three point two million subscriptions, the
1:53
Speaker 1: largest UH subscription business in the health and fitness space.
1:57
Speaker 1: But now we bring this indoor bike with this transaction,
2:01
Speaker 1: and we're going to serve literally tens of millions and
2:04
Speaker 1: more customers who are ready to get their work got
2:06
Speaker 1: done first thing in the morning, and then get on
2:09
Speaker 1: with their day. So, Carl, let's talk about how you
2:11
Speaker 1: came to the public markets. Doing this through through a
2:14
Speaker 1: merger with a spack why that instead of a traditional
2:17
Speaker 1: I P O. Yeah, I totally get it. Well. Obviously,
2:20
Speaker 1: the ability to do this as I'm merger, so bringing
2:24
Speaker 1: mix into the fold at the same time, at a
2:29
Speaker 1: point in time that we could really get to the
2:31
Speaker 1: market more quickly was just really fortuitous. Honestly, the I
2:36
Speaker 1: T O path is it's a great path, but it
2:40
Speaker 1: does take quite a bit of time. It would have
2:42
Speaker 1: been appropriate for a company like Beach Body because we've
2:45
Speaker 1: been around and profitable for twenty years. But um, we
2:49
Speaker 1: had the opportunity because of the f r X fact
2:51
Speaker 1: which brought Kevin Mayer, who is you know, the Disney
2:56
Speaker 1: superstar who really built Disney Plus and Hulu. He's joining
3:00
Speaker 1: our board because we did this deal with f r X,
3:03
Speaker 1: So it it really helps the company, which is a
3:06
Speaker 1: digital platform for content see around corners that I don't
3:09
Speaker 1: think we would have seen around if we didn't have
3:11
Speaker 1: an expert like that on our board to help us
3:14
Speaker 1: take this to the next level. So Carl talk to
3:16
Speaker 1: us about I mean people the way they have trained,
3:18
Speaker 1: as you'd be pointed out, has really changed during this
3:20
Speaker 1: pandemic and you know, obviously Peloton is probably the story
3:23
Speaker 1: that investors no most notably here and the growth numbers
3:27
Speaker 1: that they've been able to put up. Talk to us
3:29
Speaker 1: about how you think it's emerging on the other side
3:32
Speaker 1: of this, because again we've seen Jim's reopening, a lot
3:35
Speaker 1: of folks are just you know, they're tweeting out how
3:37
Speaker 1: they're getting back to the gym. But give us a
3:39
Speaker 1: sense of how you think this is going to develop
3:40
Speaker 1: over the next several years. Well, honestly, you know, beach body,
3:44
Speaker 1: that the very premise of this company has has come
3:48
Speaker 1: from my own problem. I do not like to work out,
3:51
Speaker 1: I do not like to eat healthy and uh and
3:54
Speaker 1: it's ironic, but it's like we have been trying to
3:57
Speaker 1: solve my problem for two decades, and like, if I
4:01
Speaker 1: have an extra half hour to get a workout done,
4:04
Speaker 1: I'm not gonna spend that half hour driving to the gym.
4:06
Speaker 1: So there are Jim goers, sixty two million of them
4:08
Speaker 1: in North America, but there's another hundred fifty million of
4:12
Speaker 1: us like me, who are not members of gyms, who
4:15
Speaker 1: are looking for really gratifying, an effective content that we
4:20
Speaker 1: can just access on our iPad on our phone. On
4:22
Speaker 1: our TV and that's what Beach Body has been doing.
4:24
Speaker 1: We have two platforms. We have beach Body on Demand
4:26
Speaker 1: and Open Fit. And then the most important thing that
4:30
Speaker 1: people are looking for, like me, are results. So the
4:34
Speaker 1: thing that they know Beach Body for like P ninety
4:37
Speaker 1: X or Insanity or twenty one Day Fix, is the
4:40
Speaker 1: fact that we don't just give you a workout, we
4:42
Speaker 1: also give you the nutrition plan to do with it.
4:45
Speaker 1: So people get results with this thing. And look, they're
4:48
Speaker 1: always gonna want to socialize in the gym, and I
4:50
Speaker 1: totally get that. Like the gym is a great component
4:53
Speaker 1: of it. But there's nothing nothing beats rolling out of bed.
4:56
Speaker 1: You don't have to put on fancy clothes, You take
4:58
Speaker 1: your pre workout, and you get your got done in
5:00
Speaker 1: twenty to thirty minutes. And that's the way I like
5:02
Speaker 1: to roll. See, Carl, I don't like it when people
5:04
Speaker 1: socialize with me in the gym. I want nobody to
5:06
Speaker 1: look at me. I'm just doing my thing, leave me alone. Um,
5:08
Speaker 1: but you were talking about, Yes, people have been looking
5:10
Speaker 1: for ways to work out at home and they have
5:12
Speaker 1: had ways to do that. Competition in theory to Beach Body,
5:16
Speaker 1: like Peloton, how do you position yourself against that kind
5:19
Speaker 1: of competitive landscape. First off, it's not a zero some game.
5:24
Speaker 1: The obesity problem is just enormous. And you know, frankly,
5:29
Speaker 1: even in the pandemic, the people who were hit the
5:31
Speaker 1: hardest for the people who are aren't making the kind
5:35
Speaker 1: of choices that help their body fight off whatever viruses
5:40
Speaker 1: or bacteria is in the world. So just just being
5:43
Speaker 1: healthier is something that that everybody in the world needs
5:49
Speaker 1: to be more proactive about. And that's just not common, right, Like,
5:53
Speaker 1: that's not the common thing. So our job, Frankly, you
5:57
Speaker 1: know you mentioned Peloton. You know, I consider myself in
6:00
Speaker 1: partnership with them in helping people achieve their goals lead
6:03
Speaker 1: to healthy, weplfilling lives. You know, it's we have a
6:06
Speaker 1: long way to go before we're fighting over the last
6:09
Speaker 1: customer who's thinking about choose making a fitness choice. But
6:12
Speaker 1: I will say what Beach Body has specialized in for
6:16
Speaker 1: years is creating content that lets somebody do it on
6:20
Speaker 1: a budget. We're the mass market company and that's what
6:23
Speaker 1: I'm proud of, and we're gonna help a lot more people.
6:25
Speaker 1: All right, Carl, thanks so much for joining us. We
6:27
Speaker 1: appreciate it. No, it's a big day for you guys
6:29
Speaker 1: with this listing here carled die Keller, co founder, chairman
6:32
Speaker 1: and chief executive officer of the Beach Body Company. We
6:36
Speaker 1: appreciate that this is Bloombert Well. The fviction moratorium. We
6:42
Speaker 1: got some news on that it was set to expire June,
6:46
Speaker 1: but was extended for another four weeks until the end
6:48
Speaker 1: of July. So that's good news. But there's still bankruptcy
6:50
Speaker 1: filings out there resulting from the economic disruptions of COVID,
6:54
Speaker 1: medical debt piling up, as well as a lot of
6:57
Speaker 1: hurt out there. Let's talk to Jonathan Carson, CEO and
7:00
Speaker 1: founder of stratt Oh. Jonathan, thanks for joining us here.
7:03
Speaker 1: How important is extending uh that eviction moratorium out there
7:08
Speaker 1: for a lot of folks. Thanks for having me. The
7:11
Speaker 1: extensions certainly will be helpful in terms of having more
7:14
Speaker 1: time for many people that are under this dynamic, but
7:17
Speaker 1: it really doesn't do much more than the can further
7:19
Speaker 1: down the road millions of Americans. So we'll be in
7:22
Speaker 1: limbo now at the end of July as opposed to
7:25
Speaker 1: the end of June. Unless there is a clear online
7:28
Speaker 1: process and play something. We're hoping to see over the
7:31
Speaker 1: course of the coming weeks. When we think about the
7:34
Speaker 1: eviction moratorium, at least for me, I think a lot
7:36
Speaker 1: about the tenants, the people who would in theory be
7:38
Speaker 1: losing their homes if this weren't in place. But there
7:41
Speaker 1: is also the other side of the equation, and that's
7:43
Speaker 1: the landlords. And in many cases these aren't you know,
7:46
Speaker 1: big mega landlords, They're just people who have income properties.
7:50
Speaker 1: What about that side of the equation, How are those
7:52
Speaker 1: people doing? It's a great question. The landlords as well
7:56
Speaker 1: as the tenants both find themselves in a situation of
7:59
Speaker 1: uncertain to right now, and some guidance would be helpful
8:02
Speaker 1: on both sides. Exactly as you mentioned, tenants have some
8:05
Speaker 1: uncertainty regarding what might happen when this moratorium comes to
8:09
Speaker 1: an end. Not only is the uncertainty regarding whether they
8:12
Speaker 1: can make the upcoming rent payment, but of far more significances.
8:16
Speaker 1: What about the last ten, eleven, twelve, whatever number of
8:19
Speaker 1: months of forgiveness this tenant has had. What happens to
8:23
Speaker 1: that back rent? And that back rent clearly is of
8:25
Speaker 1: primary focus to the landlords. We just don't quite know
8:29
Speaker 1: how we'll be managed yet. And hopefully we'll see some
8:32
Speaker 1: clear direction come out and some clear rules from the
8:34
Speaker 1: administration as we approach the end of the moratorium now
8:37
Speaker 1: set for the end of July. So as it relates
8:40
Speaker 1: to this eviction moratorium, Jonathan, do we have a sense
8:42
Speaker 1: of how many people were talking about how big of
8:44
Speaker 1: a problem is this? How widespread is it? Sure, it's
8:49
Speaker 1: a great question. And there's one recent data point I
8:52
Speaker 1: saw was more than six million renters behind on rent payments.
8:55
Speaker 1: Of course it is doesn't apply to all renters in
8:58
Speaker 1: the country and apply to renters that we're able to
9:00
Speaker 1: find their way into this program as long as they
9:03
Speaker 1: do so, um, they have this forbearance or this this
9:06
Speaker 1: forgiveness that the others have as well. So certainly lots
9:09
Speaker 1: of people out there. It's a large subset for sure.
9:13
Speaker 1: Let's talk about bankruptcies, because we when we talk about
9:16
Speaker 1: the pandemic, we often talk about the extraordinary fiscal and
9:19
Speaker 1: monetary policies that have come along with it to combat
9:22
Speaker 1: the crisis. And on the monetary side, you have really
9:24
Speaker 1: cheap borrowing costs. Companies can get their hands on money.
9:27
Speaker 1: Therefore they don't necessarily have to file for bankruptcy and
9:30
Speaker 1: on the fiscal side, Americans had more cash in their
9:32
Speaker 1: pockets that they wouldn't necessarily have had. Has that overall
9:36
Speaker 1: led to fewer bankruptcies than you would have expected in
9:39
Speaker 1: a crisis like this. It certainly has led to fewer bankruptcies,
9:43
Speaker 1: and you're exactly having the right path in terms of
9:45
Speaker 1: the thought process. Bankruptcy filings have plummeted during the pandemic,
9:50
Speaker 1: thanks in large parts of the efforts of federal and
9:53
Speaker 1: state governments for putting in place programs like this eviction
9:57
Speaker 1: moratorium or like deferral programs first student loans or from mortgages,
10:02
Speaker 1: and as a result, as plus relief checks. As a
10:04
Speaker 1: result of these benefits, we've seen personal bankruptcies decrease quite
10:08
Speaker 1: a bit. Is from the second half of two thousand
10:12
Speaker 1: in the second half of two thousand twenty when you
10:14
Speaker 1: compare them. What that means, though, is we could very
10:17
Speaker 1: well see a wave of filings that come when we
10:19
Speaker 1: see some of these pandemic moratoriums dissipate. And that's why
10:23
Speaker 1: many of us involved in the system or hoping we
10:26
Speaker 1: see some clear rules come out for how the end
10:28
Speaker 1: of that will will be about so we can manage
10:31
Speaker 1: and prepare accordingly. Is there? So, what do you expect
10:34
Speaker 1: to get from the Biden administration in terms of maybe
10:36
Speaker 1: a longer term policy here. Will there be forgiveness of
10:40
Speaker 1: these issues or or will people at some point have
10:44
Speaker 1: to come to reckon with it. Yeah, I think it's
10:47
Speaker 1: a great question, and I think we'll probably see different
10:50
Speaker 1: results in different in each of these separate issues. Right.
10:53
Speaker 1: We are talking about, on the one hand, the eviction
10:56
Speaker 1: moratorium I mentioned earlier, student loans and mortgages. Those are
11:00
Speaker 1: different programs on the eviction side. Now that we have
11:03
Speaker 1: one more month to wait before it comes to an end,
11:06
Speaker 1: I think what we're hoping to see is some direction
11:09
Speaker 1: not only on here is the firm end date, but
11:12
Speaker 1: also what are the rules regarding back pay? How are
11:15
Speaker 1: we going to treat that. We need to give the
11:17
Speaker 1: landlords and the tenant some clarity so we don't see
11:20
Speaker 1: a rush to the bankruptcy court and lots of people
11:23
Speaker 1: who all of a sudden have to come up with
11:25
Speaker 1: back pay, large numbers have to file bankruptcy because they
11:28
Speaker 1: don't have a plan around that. That's what we're hoping
11:31
Speaker 1: to see, all right, Jonathan, thanks so much for joining us.
11:34
Speaker 1: Lots of issues out there to think about as this
11:37
Speaker 1: economy reopens and some of these federal programs start to sunset.
11:42
Speaker 1: Jonathan Carson, CEO and founder UH Stretto talking to us
11:45
Speaker 1: about again the eviction moratorium. The news there is it
11:48
Speaker 1: was set to expire June three. It's in just a
11:50
Speaker 1: couple of days, but it has been extended for another
11:54
Speaker 1: four weeks until the end of July. That's good news,
11:56
Speaker 1: UH for everyone involved. But Johnson Carson kind of turned it.
12:00
Speaker 1: It's just kind of kicking the can down the road.
12:02
Speaker 1: The the issues, the underlying economic issues remained both for
12:05
Speaker 1: the tenant UH and for the apartment owner as well,
12:09
Speaker 1: So we have to see how that plays out over
12:10
Speaker 1: the next coming weeks. Well. One of the more widely
12:16
Speaker 1: read stories on the Bloomberg today is one entitled ubs
12:19
Speaker 1: will allow two thirds of employees to adopt hybrid work,
12:23
Speaker 1: and that kind of brings to the for the discussion
12:25
Speaker 1: I think many corporations are having about how do we
12:28
Speaker 1: get people back to work? Who should come back to work?
12:30
Speaker 1: Should we do, you know, a hybrid approach? Uh? So
12:34
Speaker 1: a lot of decisions being made in the boardrooms across
12:38
Speaker 1: corporate America. Gil Borak, President and chief executive officer of
12:41
Speaker 1: Collier's US, joins us to talk real estate. Gil. Thanks
12:44
Speaker 1: ver much for taking the time here. I love to
12:46
Speaker 1: get your outlook on office space and in the vacancies
12:51
Speaker 1: and and kind of where we are now and how
12:54
Speaker 1: you think it's going to evolve. Yeah, Hi, good morning, Paul. Um.
12:59
Speaker 1: I would say that, you know, we've been on a
13:01
Speaker 1: roller coaster over the last year in terms of sentiment
13:04
Speaker 1: and in terms of various ideas that folks have had.
13:08
Speaker 1: People a lot smaller than me that no real estate,
13:11
Speaker 1: very deeply owners, large users, and people that that really
13:16
Speaker 1: um are in it every day. And I think where
13:18
Speaker 1: we've landed, what we have come from is everybody's going
13:22
Speaker 1: to work remotely to what I thought would happen, which
13:25
Speaker 1: is sort of a reversion to the mean. There are
13:28
Speaker 1: things that you miss when you're not in the office,
13:30
Speaker 1: like collaboration and human interaction and spur of the moment
13:34
Speaker 1: conversations and decisions, creativity and so forth that are proving
13:38
Speaker 1: to be very strong factors as a draw back to
13:41
Speaker 1: the office. And balancing that with what we've learned during
13:44
Speaker 1: the pandemic, which is that people want more flexibility and
13:48
Speaker 1: hence the sort of compromise position seems to be some
13:52
Speaker 1: type of hybrid is what most companies are adopting, a
13:56
Speaker 1: mix of working remotely and working in the office. So
14:00
Speaker 1: what does that mean If companies are having more people
14:02
Speaker 1: work from home some of the time, some are saying
14:05
Speaker 1: we're not going to need as large of a footprint
14:07
Speaker 1: going forward. What are the implications for commercial real estate? Yeah,
14:13
Speaker 1: I think that's easier said than done. Look, there may
14:15
Speaker 1: be a slight diminution in the need for space, but
14:19
Speaker 1: in my mind, um, it's very hard if you're gonna
14:22
Speaker 1: let people work from home, let's say two days a week.
14:25
Speaker 1: I know we haven't quite figured this out for ourselves. Uh,
14:29
Speaker 1: to reduce space, you have to know which days people
14:32
Speaker 1: aren't going to be coming in. Otherwise you've got to
14:35
Speaker 1: be able to accommodate them in some fashion. And if
14:37
Speaker 1: you tell people which days they shouldn't come in, then
14:40
Speaker 1: you're sort of deceeeding the purpose of giving them flexibility.
14:43
Speaker 1: So I think it's not going to be a big
14:45
Speaker 1: decrease in office space, as there was certainly a large
14:49
Speaker 1: amount of subway space they came on during the pandemic.
14:52
Speaker 1: That's slowly receiving, and we may take a little while
14:55
Speaker 1: to work through that inventory. But I think when all
14:58
Speaker 1: is said and done, we're not going to see a
15:00
Speaker 1: significant reduction in the need for office space. Well, how
15:04
Speaker 1: about I guess distributing geographically your workforce as opposed to
15:08
Speaker 1: perhaps concentrating them in you know, big cities like a
15:11
Speaker 1: New York or San Francisco, Chicago. We did see, you know,
15:15
Speaker 1: this pandemic rolled on a lot of companies said, oh,
15:19
Speaker 1: we're going to relocate some are all of our people
15:22
Speaker 1: to Florida, for example, lower tax regions. Is that something
15:26
Speaker 1: that will remain a permanent part of kind of the workforce.
15:32
Speaker 1: It certainly seems that way, and and that's fact the
15:35
Speaker 1: correct whether it was you know, in particular, if you
15:37
Speaker 1: use New York as an example, you saw migration of
15:40
Speaker 1: some large financial institutions migrating some of their workers to Connecticut. Uh,
15:45
Speaker 1: you certainly saw a move down to Florida that those
15:48
Speaker 1: are real leases have been signed, and so I think
15:51
Speaker 1: that definitely was during the pandemic sort of a shift
15:54
Speaker 1: to this what they call a hub and spoke model,
15:57
Speaker 1: which I think then means, you know, to some degree,
16:00
Speaker 1: it means the reduction in use of space in New
16:02
Speaker 1: York City and the example I'm using, and an increase
16:05
Speaker 1: in space in other areas. And I definitely think that
16:07
Speaker 1: that we are seeing some of that. When we talk
16:10
Speaker 1: about the return to the office and commercial real estate,
16:13
Speaker 1: we largely do so through the lens of office buildings,
16:16
Speaker 1: but there's also everything that exists around those office buildings,
16:19
Speaker 1: the restaurants, the coffee shops, retail, and here in New
16:23
Speaker 1: York anecdotally, there's a lot of people returning back to
16:26
Speaker 1: the offices, but there's vacant spaces underneath. That's true right
16:29
Speaker 1: here at Bloomberg headquarters. What about that side of commercial
16:33
Speaker 1: real estate. Yes, so now we sort of moved into
16:36
Speaker 1: and I understand what you said, we sort of moved
16:38
Speaker 1: into more of the retail category, which you know, along
16:41
Speaker 1: with hospitality, was probably hardest hit in the pandemic because
16:45
Speaker 1: people stopped shopping, they had to stay home, they weren't
16:47
Speaker 1: traveling and so forth. And you're right, in the city
16:50
Speaker 1: like New York, when the office workers stopped coming in,
16:53
Speaker 1: there's no need for those restaurants, or less need for
16:55
Speaker 1: those restaurants, and they can't pay, they aren't and they
16:57
Speaker 1: can't afford to stay open and so they close. I
17:00
Speaker 1: do think that and some of that will be permanent.
17:03
Speaker 1: The degree to which it's permanent, you know, is sort
17:05
Speaker 1: of a guess at this point, but I think some
17:09
Speaker 1: of those will come back, whether they come back or
17:11
Speaker 1: whether news stores or restaurants take over the space that
17:15
Speaker 1: has been shuttered. I do think some of that will
17:17
Speaker 1: come back, and we are seeing some of that. We
17:19
Speaker 1: are seeing an improvement in retail. It is slow and
17:23
Speaker 1: there's a long way to go, but it will reverse,
17:26
Speaker 1: I believe, as the fate of office reverses as well.
17:30
Speaker 1: Just real quickly here, Gil, Aside from the Floridas of
17:33
Speaker 1: the world, where are the strong markets, um, the secondary markets?
17:38
Speaker 1: So when you think of of markets that are not
17:41
Speaker 1: you know, and that's been the case the last twelve months.
17:43
Speaker 1: When you think of markets not San Francisco, not Chicago,
17:48
Speaker 1: not New York, anything secondary with lower rise buildings and
17:51
Speaker 1: more space, uh, those are all hot markets that have
17:55
Speaker 1: been in the demand for for space on the capital markets,
17:59
Speaker 1: on the on the on the sales side even has
18:01
Speaker 1: been quite strong in those secondary markets. All right, Gil,
18:05
Speaker 1: thank you so much for joining us. Fascinating discussion here,
18:08
Speaker 1: gil Borrock, President and chief executive officer of Collier's US.
18:11
Speaker 1: And Kaylee, you brought it up here on fifty eight Street.
18:14
Speaker 1: I'm sorry, Lection Town Avenue between fifty Other than the
18:17
Speaker 1: chocolate shop, they're all empty. No more Starbucks. And I
18:20
Speaker 1: was just broken the news by our very on John
18:22
Speaker 1: Tucker that home Depot is leaving our building. Yeah. So
18:25
Speaker 1: they had a big piece of commercial rules state on
18:27
Speaker 1: the ground level, which is common in Manhattan. And uh
18:30
Speaker 1: so a lot of those folks uh left during the pandemic.
18:33
Speaker 1: Question is will they come back? A lot more coming up?
18:36
Speaker 1: This is Bloomberg looking at bitcoin today. The volatility continues,
18:43
Speaker 1: is up about six point seven. Uh To's called thirty
18:47
Speaker 1: four thousand, eight hundred had another wild weekend too. I
18:49
Speaker 1: think on the weekends it trades a little bit more more.
18:53
Speaker 1: It never closes. And you come back in on Monday
18:55
Speaker 1: and you're like, wait a minute, where was on Friday?
18:57
Speaker 1: And then you know you have to remember, oh yeah,
18:59
Speaker 1: those trade on the weekends. Right, let's dive into crypto, bitcoin,
19:02
Speaker 1: all that good stuff. We do that with Milton Demers.
19:05
Speaker 1: We really appreciate her giving us her time. She's chief
19:07
Speaker 1: strategy officer four coin shares group. They've got three point
19:10
Speaker 1: nine billion dollars in assets under management here, So Malton,
19:14
Speaker 1: thanks so much for joining us. I know we're supposed
19:17
Speaker 1: to get used to this volatility um, but can we
19:21
Speaker 1: should we get used to this volatility? Look, it's great,
19:25
Speaker 1: great to need back, and it's it's no secret that
19:29
Speaker 1: it has been a volatile time in bitcoin. We started
19:32
Speaker 1: the year around thirty three thousand, ran all the way
19:34
Speaker 1: up to sixty five thousand. Now we're trading and around
19:37
Speaker 1: thirty four thirty five thousand. Volatility here is part of
19:41
Speaker 1: the price of opportunity in the digital assets space, and
19:44
Speaker 1: in particular with bitcoin UM. There are smaller, shorter term cycles,
19:50
Speaker 1: but the broader secular trend that we're focused on is
19:53
Speaker 1: really a five to ten year investment time horizon, and
19:56
Speaker 1: within that short term volatility if you zoom out, the
20:00
Speaker 1: context here is the trend has really been a much
20:03
Speaker 1: longer term secular trend that's up and into the right.
20:07
Speaker 1: So volatility is just part of the ride. And I
20:10
Speaker 1: wonder how regulation plays into that as well, Malta, because
20:14
Speaker 1: for a while there was this narrative that more regulation
20:17
Speaker 1: was a good thing, the market needed, that to kind
20:19
Speaker 1: of organize itself. It showed that you know that you
20:22
Speaker 1: could have institutional adoption and it was mature. Then regulation
20:26
Speaker 1: became really scary, and then we saw what happened over
20:29
Speaker 1: the weekend with the UK banning binance markets in the market,
20:32
Speaker 1: totally taking that in stride. So as regulation now a
20:35
Speaker 1: good thing again, I don't think it's ever been regulation
20:39
Speaker 1: good or bad. I think a lot of it's really
20:41
Speaker 1: around sentiments and how sentiment translates into demand. On the
20:45
Speaker 1: sentiment side, we've had really mixed sentiment over the last
20:49
Speaker 1: two months. Obviously, we've had a number of more negative sentiments,
20:54
Speaker 1: especially around China. So China has cracked down on mine
20:59
Speaker 1: bitcoin mining activity in the country. There's also been a
21:02
Speaker 1: reduced ability for commercial banks to interact with crypto platforms
21:07
Speaker 1: and reduce leverage available on some of the popular retail
21:10
Speaker 1: trading platforms in China. On top of that, over the
21:13
Speaker 1: weekend on Friday, Japan issued a warning around finances operations
21:18
Speaker 1: in Japan. The FDA issued a warning around Finance Markets Limited,
21:22
Speaker 1: but interestingly that entity does not engage with retail buyers
21:27
Speaker 1: buying and selling bitcoin. That's actually not regulated by the FDA.
21:31
Speaker 1: But at the same time we have folks like Stanley Dreckon,
21:33
Speaker 1: Miller Gott, the nerd at Guggenheim and others coming out
21:37
Speaker 1: in support of bitcoin and articulating a long term investment thesis.
21:41
Speaker 1: So sentiment has really been mixed. But we need to
21:43
Speaker 1: look at demand. So if we look at demand, we've
21:46
Speaker 1: seen our fourth consecutive week of outflows and digital asset
21:49
Speaker 1: investment products, and this outflow has been underway since mid May.
21:54
Speaker 1: We've seen about one percent of global assets under management,
21:57
Speaker 1: around three hundred million dollars loan out of crypto e tps.
22:02
Speaker 1: So we're waiting to see you turn around and to
22:03
Speaker 1: see a week of net inflows, which I think will
22:06
Speaker 1: be signal that demand is back. So meltem in terms
22:09
Speaker 1: of the use cases and the validation of bitcoin in
22:13
Speaker 1: particular by crypto in general. Yeah, I guess we've seen
22:16
Speaker 1: a corporate validation where you had Tesla by the company
22:21
Speaker 1: actually buy and put on their balance sheets some bitcoin
22:23
Speaker 1: and then it can be used. I guess now was on,
22:26
Speaker 1: then off, and then ow it's on again. You can
22:28
Speaker 1: actually you know, use it as a currency to buy it,
22:30
Speaker 1: you know, a Tesla vehicle. What's the next step along
22:34
Speaker 1: the validation path. Uh do you think for crypto? And
22:39
Speaker 1: we have the biggest validation which happened two weeks ago.
22:42
Speaker 1: Al Salvador um As a country has chosen to that
22:46
Speaker 1: bitcoin as it's legal tender. Paraguay is now contemplating that.
22:49
Speaker 1: Zimbabwe and a number of other countries are now also
22:53
Speaker 1: looking at that. Again, what bitcoin represents, Yes, it's an asset,
22:57
Speaker 1: but more than anything, Bitcoin is a mon atarry movement
23:01
Speaker 1: um and there are no number of countries around the
23:04
Speaker 1: world we are looking at the dollar and saying bitcoin. Sorry,
23:08
Speaker 1: just to jump in here. Then you think the use
23:10
Speaker 1: case for crypto is to replace fiat currencies to be
23:14
Speaker 1: used as currency, not just you know, a store of
23:17
Speaker 1: value or an inflation hedge. I think the word replaces
23:21
Speaker 1: probably a strong word choice. I would say more about
23:25
Speaker 1: being a compliment to fiat currencies. For the last three
23:28
Speaker 1: thousand millennia, humans have not had um the separation of
23:32
Speaker 1: state and money. Bitcoin is an experiment in the separation
23:35
Speaker 1: of state and money. And as we live our lives
23:38
Speaker 1: increasingly online and in the digital domain, and where physical
23:41
Speaker 1: jurisdiction is less and less relevant, Bitcoin represents a new
23:45
Speaker 1: type of monetary reality, and I think that's extremely attractive
23:49
Speaker 1: to a number of different audiences, starting with people in
23:53
Speaker 1: tech and people interested in the growth of the digital
23:55
Speaker 1: finance sector, but also people in parts of the world
23:58
Speaker 1: who have historically been looted from the financial system or
24:02
Speaker 1: a space persistent inflation or monetary basement. Do you think
24:07
Speaker 1: that in the near to intermediate term, over the number
24:10
Speaker 1: of years, we'll see a kind of a G seven
24:13
Speaker 1: or even you know, like a G twenty type. Um,
24:16
Speaker 1: government embrace bitcoin. That is certainly my aspiration, and that
24:22
Speaker 1: coin shares. We're working very hard to make that happen.
24:25
Speaker 1: But I think again, um, it's a compliment to the
24:28
Speaker 1: existing SIAT ecosystem, and I do think the growth of
24:32
Speaker 1: central bank digital currencies are putting FIAT on blockchain rails
24:37
Speaker 1: is a trend that's not going anywhere and over time. Again,
24:40
Speaker 1: I think, you know, as you alluded to the start
24:42
Speaker 1: of the segment, markets in the crypto space are open
24:46
Speaker 1: seven three, six, five, and they're global in nature. There's
24:49
Speaker 1: no reason in our view that markets around the world
24:52
Speaker 1: of all types can operate in that manner that global
24:55
Speaker 1: commerce should be bound. By nine thirty two, four pm
24:58
Speaker 1: Eastern time, and so I think again, we're entering into
25:02
Speaker 1: a new world. Everyone's increasingly online transactions, UM exchange. Everything
25:07
Speaker 1: is happening online, so we need money for the internet,
25:11
Speaker 1: and that is the coin effectively melt them just quickly.
25:14
Speaker 1: Because you were talking about the outflows and some of
25:16
Speaker 1: the e t p s out there, When do you
25:18
Speaker 1: think the US will actually approve a bitcoin ETF. That's
25:23
Speaker 1: such a great question, Kaylee Um, that is the question
25:25
Speaker 1: on everyone's mind. The Valkyrie et F decision, which was
25:29
Speaker 1: the first in the docket of the thirteen open et
25:32
Speaker 1: F filings that are pending with the SEC, was just
25:34
Speaker 1: postponed again to October. Given the tone coming from Gary
25:38
Speaker 1: Gensler in the SEC, I am a I am not
25:42
Speaker 1: very optimistic on the prospects of an ets being approved.
25:45
Speaker 1: And again I think some of the volatility over the
25:48
Speaker 1: last few months certainly hasn't bolstered confidence when it comes
25:52
Speaker 1: to US regulators and and their temperament towards the U
25:55
Speaker 1: s C t F. But let's not forget we have
25:57
Speaker 1: micro strategy which has effectively become a defect so bitcoin HF.
26:01
Speaker 1: Hey Melton, thank you so much for joining us. Once again.
26:03
Speaker 1: We always love getting your perspective on bitcoin and all
26:06
Speaker 1: things crypto. Melton Demier's Chief Strategy Officer UH strategy officer
26:11
Speaker 1: for coin Shares Group. They about three point nine billion
26:13
Speaker 1: dollars in assets under management. Again, UH continue to see
26:17
Speaker 1: volatility in the bitcoin space. It is up today about
26:20
Speaker 1: six and a half percent. It did test that thirty
26:23
Speaker 1: level again and bounced back, so very interesting to see.
26:26
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
26:29
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
26:33
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
26:37
Speaker 1: at Matt Miller. Pen On fal Sweeney I'm on Twitter
26:41
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
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