Bloomberg Businessweek Weekend - August 6th, 2021

Bloomberg Business Week. I'm Tim Stanovic and I'm Paul Sweeney in for Karrol Master this week, Paul, another week of earnings reports behind us, and well, the majority have been positive. There are some economic growth fears that have been emerging. Wee. We've also been hearing this week from most of companies with guidance UH that has been disappointing, and we've seen

as a result their stock falling. Exactly right. I think there's concerns about the next phase of the COVID nineteen pandemic, the delta variant, and I think it's all about the kids. Now more than seventy eligible US recipients have had at least one vaccine dose. That's a good news, but millions of children are preparing to return to classrooms across the country, and there's uncertainty over mask mandates and inoculation requirements for

younger students, particularly those kids under the age of twelve. Yeah, we're also starting to see a playout with returns to office, with companies this week delaying September returns to office and some saying Okay, we're gonna wait and see, and some companies saying okay, well we'll wait a month. So things are not really going according to plan. We're gonna get

into that, both on the education and medical perspective. We're also going to pull back the curtain on Beijing's ongoing tech crackdown to understand why that Chinese government is coming down so hard on its innovators. We're also going to talk to sim Bridge CEO Michael McGuire. This was a fun one. It's a digital asset exchange fund that's actually embracing cryptocurrency regulations and trying to get more of those institutional investors. Oh, that's to come. We begin with the

magazine's cover story. The new issue of Bloomberg Business Wig magazine. It is available on newsstands now and at Bloomberg dot com Slash Business Week. The cover story, it's all about vaccine mandates for kids? Is it the next big back to school fight. Children have to get vaccinated for surgeent threats and it works, So why not with COVID? That's the big question. Joining us now is Joel Weber, editor at Bloomberg Business Week, Riley Griffin, his healthcare reporter for

Bloomberg News. Joel, I want to start with you. I was really surprised to see the lack of vaccine uptake in kids who are ages twelve to seventeen only have received their first dose. What why is that? Yeah, there's definitely, um, a sense of of apathy and it has it's going to have some um, serious implications, I think, UM in the next weeks and months, especially as we're dealing with this delta surge. You know that apathy is it's sort of multifaceted and and some of that we go into

in the story. Um. The fact that kids haven't been quite as susceptible yet is to COVID is I think one of the driving reasons. UM. There's also I think a feeling that the vaccines currently have emergency youth authorization, So I think there's still some vaccine hesitancy or around it. UM. And we've seen you know, other countries even take slightly different approaches to how kids are supposed to be vaccinated.

So I think they're that all creates a little bit of a fog that has um led to a slow adoption. And I think where Riley and Susie King King story goes here is an important one because as we're just seeing now with New York mandating vaccines for for restaurants, for instance, in the not so distant future, we could

very easily see schools mandating vaccines. And one of the main questions that um, Riley, I'd like you to oppose to you is, you know, look like kids get vaccinated for all sorts of things that are far less urgent than COVID. So could we potentially see schools mandating COVID immunization. Absolutely, I mean, I think that's a great question, and it's one that we've seen play out, and there's precedent four.

I mean, educators are having a debate on their hands right now as to whether to implement mandates and COVID nineteen vaccines as they routinely do for measle, polio and other diseases, or to punt because of politics and let parents decide. This has really become so political, UM, in part because of that emergency use authorization that you described. But once there's a full approval in place, I have no doubt that schools um at the request of states,

are going to put similar requirements in place. UM. This is really just a part of the bedrock of our education system, and any parent listening knows that to be true. UM. And these mandates persist even though they've been so successful that the risk of contracting some of the illnesses they cover is almost non existent. You know, what I like to put in perspective is that the last US case of polio dates back to and yet all fifty states in the District of Columbia require kids to get vaccinated

with a polio shot before going to school. Riley, You know, I fear that this is going to get really, really ugly and really personal and really localized. Do we have any evidence or do we have any precedent here for a COVID nineteen requirement, because we've got a lot of states I'm thinking in the South and the West, they're going back to school. If they're they're not already back,

they're going back in the next week or two. Yeah, So what we have right now is a legal vacuum because we've never seen before a mandate put in place for an emergency use authorized vaccine. That's not to say states can't do it. They are just a little hesitant

to wade out into those tumultuous waters. But let me take you back into history for a moment, because in nineteen o five, the U. S. Supreme Court ruled to say that mandates are allowed, that states can require vaccination, and that individual liberties are not absolute, that the average person cannot say, hey, in the face of a public health pandemic, we are going to reject a vaccine mandate. And the first mandate actually for school kids goes back

even further to eighteen fifty five. So there's a great deal of precedent um schools themselves to know that this could likely be coming. I've spoken with many administrators who said they're just waiting to get more parents on board. They want to bolster trust and confidence, especially while we still have that EU A status that was US Health Reporter Riley Griffin, also the editor of Bloomberg business Week. Joe Weber coming up more on this important issue from

someone on the front lines. Dr Elizabeth Mead of Swedish Health Services in Seattle on the progress being made toward getting young children safely vaccinated against COVID. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Bloomberg Quick Tags, Tim Stenovac and Paul Sweeney from Bloomberg Radio. Okay, it's all about when you think about the narrative of this pandemic, how it's evolved, how

it's had an arc since the beginning. I think now where we are in the narrative is the delta variant and vaccinations, getting people vaccinated, geting who vaccinated, how young, how old? Uh, it's now turning towards the very youngest. We think about getting back to school, and there's lots of discussions and arguments to be made on both sides. Dr Elizabeth Me joins us. She's medical director of Pediatric Quality and Safety at the Swedish Health Services, joining us

on the phone from Seattle. Uh. Dr Me, thanks so much for joining us here. I guess you know, lots of parts of the country are just about going back to school, and know California starts a week from monday. Uh. Here on the East coast, it's it's right after a labor day. But the discussion is who should get vaccinated as we think about back to school? Should we be should we be getting kids vaccinated? And how young? You know,

I think absolutely. What we recommend is that kids twelve and over who are eligible for the vaccine get the vaccine and get it. You know. The reality is that it takes several weeks between a couple of doses and man fual immunity two weeks after that second dose. And so for many kids who haven't gotten the vaccine yet, we're already sort of talking about post going back to

school dates for them to be fully fully protected. The cover of the new issue of Bloomberg Business Week, it's all about vaccine mandates for kids, and there's some pretty startling uh statistic in here. Uh the rollout of shots to millions of kids ages twelve to seventeen. Although they account for seven point five percent of the U S population, it's really lagged only of that group has received their

first dose. Uh. Why is that doctor made? Why are we seeing this reluctance from parents to inoculate their kids when uh, we think about vaccines in the early parts of our lives. That's when we get the most vaccines. Yeah, that's right, you know. I think there are a couple

of factors that play into that. And so one of those factors, I think is that we know that older adults tend to get sicker, right, and so we know that although kids can get very thick, can end up in the i C. You can die from COVID and have long COVID and all those other complications that we think about, the rates of that happening in children and

teens are significantly lower than an older adults. And so I think that for many people who are high risk, you know, they want to get the vaccine for themselves as soon as possible, and they may think differently about

it when it comes to their kids. I think the other factor here is that we know it's hard to make a health care decision for yourself, and it's even harder to make it for someone else, and so people I think are feeling like they want to make sure they have all of their questions before they proceed with vaccines for their children. Dr me, what do we know about how young we can we can give this vaccine to a person? How young can they be mentioned twelve

and older, how about some of the younger kids. Yeah, so at this point it's approved for twelve and over, we anticipate that it will be approved for younger children, probably down to age five, potentially down to age two, by kind of early to mid fall, And I know that a lot of parents are desperately waiting for those

dates to get their younger children vaccinated. And the reality of this pandemic is that I think even for families where everyone who's eligible we have had the vaccine, so everybody twelve and older and then the adults in the household, many of those families still have younger children who are not yet eligible. And so I think it's hard to sort of feel like we can get back to life as normal for our families when we still have one or more young children that aren't yet able to get

the vaccine who are living in our houses. Doctor. Back in May, Dr Fauci, the nation's top infectious disease doctor, he said that by the first quarter of two, we're going to have quote enough information regarding safety and immunogenicity to be able to vaccinate children at any age. Do you agree with that timeline that in the first part of next year, we're going to be able to vaccinate newborns. Yeah,

I think that rings true for the most part. I mean, we know that there are ongoing trials down to age six months for multiple of the vaccines, and so we anticipate having quite a bit of safety data even down to unions. And I would guess that it will be very similar to the flu shot, and so for the flu shot, we start giving that at six months and older.

So I'm not really convinced that we're going to be vaccine new borns against COVID anytime soon, but I think those young infants kind of six months and older will certainly be in the next way. What do we know

about dosage? I was surprised when when my son got his first flu shot that he got two of them separated a few months apart, whereas I only got one, and it was like he got double dosage basically, So for that first year, for any child who's seven or younger, for that first year, we recommend getting two doses a month apart to really kind of stimulate the immune system because for many vaccines, that first sort of primed you, and then that second doses really what confers the full

immunity and after that we consider that yearly dose sort of a booster, and so it may be the same with with COVID. You know, we're already talking about potentially having boosters for high risk groups that have already received the two vaccine series, so I think it will be probably fairly similar to that. Dr me just quickly, do

you think schools will mandate vaccinations. I don't see that happening personally until they help full FDA approval for the age groups that we're talking about, and so I think at that point we can really have that discussion. But in my mind, it is unlikely to happen until we reached that milestone, and hopefully that will be in the next few months. Dr mead, we like talking to people who are in hospitals, who are on the ground, who are talking to patients, who are working with patients, just

to get an update from the front lines. Are you seeing younger and younger patients in your hospital than at other points during the pandemic? We really are, you know. I'm a I'm a hospital pedatrician, so I only work in a hospital. I see newborns up to eighteen who

are sick, who are hospitalized. And I will tell you that throughout the pandemic, although the rates are lower than in adults and especially older adults, we have seen young infants, kids and teens who are hospitalized who are very ill with COVID, who are in the ICU, kids who are

having long COVID symptoms. So although the rates are lower, I think it's really important to reinforce for people this is still a disease that can cause really critical illness in newborns all the way through those those children and teenage years. So Dr Me, what are when you do see these patients and you know, are most of them unvaccinated? And if so, what are some of the typical reasons

that you're finding uh in your hospital? You know, the majority of patients that are showing up to the hospital that are very sick, that are ending up in the ICU with the Delta variant in particular, are on vaccinated. So we know that the vast majority of those statients have not received the vaccine. And I think that's such an important point because we know that although people who are vaccinated can transmit the Delta variant, they are vastly less likely to end up with severe symptoms in the

hospital in the I CU or to die from COVID. Right, So, what we're seeing across the country is that it seems to be the skewing now to younger people who are not vaccinated, so teens and all wo young adults, to people in their twenties and thirties who have not received the vaccine who are ending up in the hospital and who are very, very very sick from the delta variant

in particular. Talk to me just in the last seconds that we have, what do you tell parents who come to you concerned that their kids under twelve can't yet be vaccinated and they're concerned about them actually getting COVID. I have so many parents who have that concern, who are just desperate for the vaccine to be approved for their younger children. We have a six year old in my house who's not yet eligible, who can't wait until

he's able to get the vaccine. And I think that's actually the majority of parents that I is who are really saying, you know, the older kids are vaccinated, or I'm vaccinated, I just can't wait until my younger kids can get this so that we can really feel like our whole bottle and our whole family is protected, and my great hope is that that will happen really within the next couple of months. That was Dr Elizabeth Mead. She's the medical director of Pediatric Quality and Safety at

Swedish Health Services. She joined us from the Emerald City. Still ahead on Bloomberg Business Week, we'll shift gears and take a look at the housing market and it is a great time to be a seller where the buyers are flocking and what it means for our major urban centers. Yeah, perhaps not a great time to be a buyer as prices just continue to go up. We're gonna be speaking

to Compass real Estate founding agent Stephanie Malius. This is Bloomberg Broadcasting from the financial capital of the World, Bloomberg Eleve in Rio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one O six one does San Francisco, Bloomberg nine sixty to the country Sirius xm CHEDO one nine team and a on the globe, the Bloomberg Business app in Bloomberg Radio dot com. This is Bloomberg Business Week with Bloomberg Quick Takes, Tim stinebec and Paul Sweeney

from Bloomberg Radio. So something that happened to me in my own world in the last year, Paul has been that several friends have left New York City and gone to the suburbs. One did it much sooner than the other. The other one they both bought in White Plains, had the toughest time you have finding a place. They were getting outbid every weekend by people going all cash, all young families who wanted to leave New York City and get more spaces. More and more people are working from home. Yeah,

it's just extraordinary. We you know, we just sold our our home in North Jersey and it sold very quickly, and it just confirmed the really really strong market out there for a residence for sellers. Yes, it's a right time to be a sellable. Well, let's get right to it with Stephanie Malio's realtor and founding agent at Compass Real Estate in Short Hills, New Jersey. Stephanie, was that a fair characterization of the way that you're seeing the

market right now in the suburbs. And absolutely that's exactly what we've been experiencing in this area. South Orange, Maplewood, Summit, Livingston, Chatham, all all the counties Essex Morris Union counties have all seen a tremendous amount of activity from people kind of accelerating their timeline on maybe they were going to move in three to five years and now they're moving right now. So, Stephanie, I want to get a sense of kind of some

of the drivers here. I guess it's it's some combination of boy historically low interest rates and in the mortgage market, plus the pandemic, and then the need for space and people rethinking working from home and all of that. So as you talk to your clients, what are you hearing

as the primary driver. Well, for a lot of them, they've been working from home, but if they have kids, they've also been schooling from home, and that is really sort of untenable in a one or two better apartment with two adult parents working from home and one or two kids schooling from home. So it's not possible. I mean, it's possible, but it's not fun. One of the challenges though, that comes with such a hot market is the people who are selling needs somewhere else to go. And I

wonder when prices just get so high. As they've continued to climb that people who do want to move somewhere else and already own, they are priced out of their own area because prices have gone up so much. That's absolutely happening here. But there's been a huge growth of luxury apartment rentals built in the region. Um, anywhere where you could sort of stick a hundred or two hundred units in a little funny area. UM, people are building

them and here they are, they're ready. So UM number of people in certain generations that would never have considered renting because it's just sort of against the law to rent and pay somebody else's mortgage. Um, that mindset has changed quite a bit, especially when the tax flaw has change and you could no longer write off more than ten tho dollars or you're property tax and in this area red please yeah no kidding me too. So they're like, you know, let's just take our money off the table.

We'll just rent for a year or two. I was just with somebody who's scaling down from a four million dollar house in Shorthills, thinking they'll rent for a year and see what happens, and maybe they'll buy something smaller and renovated, or maybe they'll relocate. They don't know, but they like the fact that they can be liquid and act quick when they're ready. Stephanie, what do you think

would or will derail this hot market? Well, interest rates going up doesn't help, but often that stimulates people to act because funny enough is interest rates stay very low, or when they're declining, everyone thinks they have all the time in the world to find something, and when they go back up, that's when they realized they missed the bottom and oh they better scramble and get in. So

sometimes having low interest rates doesn't spur activity. But in this time period with school about to start, anyone with children going into school this year, they want to make sure that because are going to be in a seat, and that's not necessarily guaranteed in the suburbs, but I think a lot of people think there's a better likelihood that they'll be in a seat in a classroom with a live teacher in these kind of areas where schools

have always been very highly prized and focused on. You mentioned a lot of areas that have been of interest

to a lot of people for years. I'm wondering, are there areas now that people should be paying attention to if they get priced out of the Summits and the short Hills is well, a lot of those people are actually moving to Harding Township, which is also known as New Vernon, which is very low taxes and very big properties and large homes because they realized that the need to be close to the community is no longer as important to them, so they're more willing to go sort

of a country route as opposed to the suburbs. Whereas someone coming out of Brooklyn or Jersey City, they might not be quite prepared for a fifteen minute drive to civilization a like a supermarket, but for someone who's already lives here, they kind of get it. So if they really don't think they need that, they're willing to make

that kind of a trade. And especially you're seeing a lot of people who normally would be thinking about scaling down at this point or downsizing we call it right sizing, but they're thinking, you know, let's go to a bigger place where if our kids right out of college have to move back in with us again, there's room for them. That was Stephanie Maleos, she's a founding agent at Compass

Real Estate. You're listening to Bloomberg Business Week. Coming up next, we're gonna talk to have an e commerce retailer that's pioneering art curation for the Instagram generation. A conversation with art Sugar CEO Alex Greenberg. This is Bloomberg. This is Bloomberg Business Week with Bloomberg Quick takes, Tim's Dnebeck and Paul Sweeney from Bloomberg Radio. Online art sales. I didn't really know it was a thing, but it really is.

Only art sales doubled in value from to reach a high a twelve point four billion dollars and Americans planned to redecorate in so the whole home art home decor is a big marketing and his growing and I want to bring on Alex Greenberg. Alex is chief executive officer of art Sugar. Joins us on the phone from Nantucket, which I understand is very It's not the Jersey Shore, of course, but it's very nice. I understand. Alex. Thanks

so much for taking the time to join us. Love for you to just start and say, what is art Sugar? What do you guys do? Suren, Thanks so much for having me. Um, it's great to chat. Art Sugar is the curated e commerce platform for exclusive, eye catching artwork and home decore objects, and with each purchase, we donate a portion of the proceeds to one of our vet

A charitable partners. UM. I come from the fine art world where it's a little untimidating, so I wanted to do something different and this site is basically saying, like art for everyone, and we want to meet um all our customers need affordably and accessibly. Who's your target market here? Who's your like, your typical buyer female? UM, the age

twenty four to thirty eight. That's really our free spot that we run the gamut that I say our market is predominantly female, and what are some of the okay, so is this for the folks who maybe you know, they don't want to buy stuff that you know they could get in a big box retailer, but maybe they're also not going to walk into a south apiece, right exactly.

It's sort of like bridges that from the big box sort of not unique approach, sort of like the Live Last Love that may not be trendier on the pole, UM, and you know it's at an affordable price point, you know, way more affordable than something you know on the fine art end where um, you know, our our buyers aren't buying at that price point yet or don't want to, or maybe we'll graduate to that eventually. But this is really if you want to decorate your home in a

really cool way without breaking the bank. What is the average price point for you know, a piece of art on on that that you would curate right now? Our average order value is people generally buy a few things when they shop. I'd say the average though price the piece. Maybe it's one fifty um on the site. Now, you know, it's amazing. When I was just I saw that the data point about online art sales twelve point. It's just extraordinary, you know, just brought stepping back, not necessarily for the

your business. But are people paying on big price points for fine art? Are they actually doing that online? I believe they are. We're not in our trigger isn't catering to that market where people are spending you know, fifteen dollars on a piece of art. It's really for you know, um, a new art collector, young art collector, or someone who just wants to elevate their home, you know, and um affordably. I saw our sales during covid Um grow eighty percent.

So I think that just see people being home more, you know, willing to sort of. I don't think it's really a risk to buy online because these teachers are definitely pre approved, pre added, but they want to you know, uplift the space they're kind of stuck in. But also, you know what makes you think like, oh, I really should be you know, decorating my home. I haven't gotten to it yet, and now I'm finally ken UM. So I think that there's a lot of things that work here.

And Alex, do you and end or your team are you the ones that are picking out the pieces and curating the on your site? So it's it's me, I'm the founder and it's actually just in me on my team since I actually made my first offer day after

getting UM some investors last month. UM. But we have we work with celebrities and influencers to curate collections on the site so that they're you know, the collections are sort of pre approved, and it makes for a really easy UM buying experience for our customer to you know, maybe it's their first art or purchase ever, and you know, they you know, they don't know where to start and

it's sort of like helps the process move along. So, Alex, your e commerce platform for home decorps, every Day Art, I guess you would call it UM needs capital. You just had a seed round? Tell us about that? Yes, yes,

so UM. As I mentioned, my business grew eight percent from March two thousand and twenty and it was just me and all of a sudden, I mean not overnight, but almost overnight, the business grew a ton and I had always thought I would go for capital, but I didn't know when I would be ready, And finally I knew what it was ready. So I spoke to UM a few vcs. I met the one that ended up investing through Instagram, which was really on brand way for both of us, because sixty six percent of my revenue

comes from my Instagram account. Um art sugar dot co is the handle. And uh, this person who's an influencer was liking my photos and I noticed her because she has like ninety thousand followers, and then I said she was an investor and she loves art and color, and we directed message through Instagram and I ended up pitching to her and she was like in and spoke for like nine months on the phone and resume, and we

close our deal at the beginning of July. And what are you going to use what are you going to use this capital for? I am going to use UM the capital for hiring someone. I actually just put my first offer out. It's really excited about that and she accepted it. UM and Marketing a bit of a rebrand for the business and customers more. UM focus on customer service platform and customer service touchpoints, just like a better communication.

It's really important to me that the customers are happy, so I am I'm investing in that too, and UM more collaborations with other businesses and artists and then also focus on on on in house designs and UM and products interesting. So the you know, this online kind of e commerce driven home to core art businesses. It's a niche that I don't you know that. I think you've identified where folks maybe don't want to go to a big box retailer find home decor, but then then and

and artwork for it to hang on the walls. But talk to us about how the you'd take your business grew. I'm sure a lot of that was driven by the fact that a lot of folks are saying, well, I'm gonna spend spending a lot more time in my home, whether it's an apartment or house, right exactly, and I better s sprice you know, Spruce's place up. Talk to us about how the pandemic impacted your business. Yeah, the

pandemic obviously unfortunately forced everyone inside their homes. And I think that sometimes decorating it is put on the back burner because people are really busy in their lives and it's not necessarily you know, a focus our priority, And all of a sudden it became one because you're kind of sitting in that space and um, you want to elevate your walls. But also maybe with uplifting product and design,

which is what art Sugar cells. You know, you have a very uplifting, happy aesthetic, and um, it sort of was the right time to kind of shop on chop on our sugar. And also during the pandemic. I think it was last March. Actually I just launched home decor. Before I hadn't done that, it was only wal Art, So the decor also, you know, gave us a bit of an edge during pandemic. That's our trigger CEO Alex Greenberg. That wraps up the first hour of the weekend edition

of Bloomberg Business Week from Bloomberg Radio. I'm Paul Sweeney in for Carol Masser and Tim Steadivak. Coming up in our next hour, Takeaways from SEC Chairman Gary Gensler's first extensive interview about the digital money craze. Our financial investigations team goes inside the federal government's plans for cryptocurrency regulation.

When you look across the crypto universe right now, and taking Bitcoin out of that, there's all these tokens that exist in the world, and a majority of those are securities. And because their securities, that means that they fall under the SEC is REMIT, and that means that if they're out there and not registering and not trading with the SEC's rules, then they're potentially in violation of those rules. Meanwhile, one company that's betting big on crypto is actually hoping

for more oversight. Michael McGuire, the CEO of Simbridge, a digital asset exchange for institutional investors. He explains why, I mean, we're all all for regulation and transparency. We want to

improve on the way things are done. Um So I think that's you know, that is needed, and that's why we've decided or you know, we decided to set up in the US and one of the strictest regulatory environments in the world and focus on accredited investors and institutional investors that demand that transparency and want regulation to support the markets. Now, I wouldn't want to see all the volatility to go out of the market, right because that's

what people want to trade. And speaking of regulation, China, why it's clamping down on tech giants and what the future is for innovators in the world's second largest economy. Plus a behind the scenes look at Tesla's most challenging times and elon must pursuit of efficiency at any cost. This is Bloomberg. This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted

business magazine. Plus global business, finance and tech news as it happened, Sloomberg Business Week with Carol Messier and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hey there, I'm Paul Sweeney in for Carol Masser, Man I'm Tim Stanovick. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including a crypto asset manager that's embracing regulation. Simbridge CEO Michael McGuire says he's targeting a

new class of investors in a volatile digital asset space. Plus, we're talking to Tim Higgins. He's going to discuss his book Power Play Tesla Elon Musk in the Bet of the Century. It just came out and it's a rare peak behind the curtain at the world's foremost electric vehicle maker. It's hard to imagine how or think back to now, but Paul, just a few years ago this company was on the brink of running out of money. It is and what it turnaround it's been, And we'll explore what

is going on in China. After fourty years of allowing the market to play an expanding role in driving prosperity, Si Jing Ping is leading a SmackDown on capitalism and sparking a one trillion dollar reckoning. First up this hour, we're gonna take you inside the pages of Bloomberg Business Week, the magazine. There is a new sheriff on Wall Street

and his name is Gary Ginser. He's a Chairman of Securities and Exchange Commission, and he's taking a hard look and turning his aim towards the crypto space, and in a video posted on Twitter, SEC Chair Gary Ginser, he does tell investors in cryptocurrencies to be careful what they invest in. Let's take a lesson to those currently are considering investing in crypto. Please remember not only are they highly spent with avasset class, but there are also significant

gaps in the investor protection afforded to those. SEC Chair Gary Gensler, And we have a Bloomberg story on Mr Gensler looking at crypto. Let's bring in Pat Regner, he's Markets and finance edator for Bloomberg business Week, and Ben bayin financial regulations reporter for Bloomberg News. Pat, fascinating story here. What are you and Ben taking away from some initial remarks by Mr Gensler about how he's going to take

a look in potentially regulating crypto. I mean, it looks to us like he's welighing down sort of a blueprint of what is actually going to be regulated. Uh. You know, Ben and Rob Schmidt in reporting this, one of the things that was a big theme of their conversation is just exactly what does uh the SEC regulate what's in its perview, what's an others regulators perview, and what uh sort of so far hasn't been established is regulated at all? And and um Ben, I think you can speak to this.

It looks like he's really trying to expand the reach of his his agency. Yeah, that's right. I mean, I think the big takeaway is that he thinks that there's a clear test out there already for whether something is a security, and it it works for a cryptocurrency the same way it works for whether something as a stock or an investment contract. But he thinks that this new technology, the blockchain and everything that goes along with it, does raise some new issues, and he pointed to some specific

gaps he mentioned, specifically trading platforms he has. He says he's asked Congress to maybe grant some new authorities to the SEC or some other federal agency that would allow them to really focus on these crypto exchanges, because they're not like anything that's really ever been around before, um in the sense that you have some of them, which are basically people lending crypto back and forth to each other, and others of them, which which look a lot more

like a classic exchange. So he's definitely got As Pat said, he's kind of laid the blueprint for what's a pretty comprehensive framework. I think, Ben, what exactly does Gensler think about cryptocurrencies? Because as even Robert Schmidt right, this is a guy who actually had twenty nine hours of a blockchain and money course that he developed that that m I t. I mean, what exactly does he think of crypto I think what we took away from the conversation was that he's of two minds. One is that when

it comes to the technology, he's fascinated by it. He's interested in it. He says it's something to the effective. He leaned into it when he was teaching a course, isn't it for three years, which, by the way, I've gotten millions of views online these courses he gave on the subject. That's one area. On the other hand, he really kept coming back to the idea that now as chair of the SEC, he's focused on protecting investors, and

he referred to this space as the wild West. He doesn't think that there really is the sufficient level of protection that people need, and he said he's gonna level everything that the SEC SEC has to get it there.

So um, He's already got at least seven different areas or initiatives kind of underway, looking at everything from some of these initial coin offerings to how to handle custody to a bitcoin ETF potentially eventually, the SEC is kind of already churning and trying to kind of put something together that he thinks it is going to fill the

gaps that are existed. You know, one thing that was really striking to me in this story is that a lot of people have been very in the crypto industry have been very excited about him being at the SEC because he knows so much about it. And I think the presumption from some people has been, oh, you know, because we understand, uh they're thinking, is that because we understand that being unregulated is core to this, if someone else understands what we're doing, he's going to have light

touch regulation. And I think, you know, bless your heart for thinking that if somebody understands your industry very well, they're not going to want to regulate it. Yeah, and Ben, you know, one of the issues that you point out, and it's just an a vexing one, is kind of you know, who does regulate what it feels like I might be kind of a regulatory kind of land abb here between the SEC, the CFTC, and whatever new groups Congress may create. Does Gainster feel like the SEC is

the proper and primary regulatory body. He didn't go that far to say that the SEC should have say over at all, But what he did say is that when you look across the crypto universe right now, and taking Bitcoin out of that, there's all of these tokens that exist in the world, and a majority of those, in

his eyes, are securities. And because their securities, that means that they fall under the SEC's remit and that means that if they're out there and not registering and not trading with the SEC's rules, then they're potentially in violation um of those rules. And what's really gonna we're gonna see now is how he's going to deal with that. That was Bloomberg Business Week Markets and Finance editor pat Rickneer with Bloomberg News Financial Regulations reporter Ben Bain. You're

listening to the Bloomberg Business Week coming up. You've just heard about the SEC's plants take a tougher look at crypto assets, and we found a company all for the increased scrutiny sim Bridge CEO Michael McGuire. On the other side, this is Bloomberg. This is Bloomberg Business this Week with Bloomberg Quick tags, Tim Stenovac and Paul Sweeney from Bloomberg Radio.

So new push by Congress could require crypto brokers report transactions to the i r S. You could create some unwelcome tax bills, but could also clarify rules for traders and users of bitcoin and other digital tokens, potentially strengthening the system in the long run. That's according to people

in the industry. The idea is in a last minute addition to the five fifty billion dollar bipartisan Infrastructure package, and the hope is that it's going to raise more than raise uh some twenty billion dollars to help pay for the bill. Join us now is Michael McGuire, founder and CEO of Bridge. It's the first US based regulated digital asset exchange designs specifically with an institutional focus using blockchain native technology. It is certainly a mouthful. Michael, thanks

so much for joining us. It's good to have you on the show. Yeah, thanks for having me, and yeah, that was definitely a mouthful. So this is an industry that I think is still so unfamiliar to so many people. So in late person's terms, explain what simbridge does. Sure, Simbridge is a digital exchange that uses blockchain to create transparency for transactions on the exchange. And what that does is it makes it easier for regulators to understand if

there's been market manipulation going on. And as you know, in the securities industry, there's a lot of rules about market manipulation um and in the crypto world, those rules haven't really matured yet. So some of your better exchanges adopt, you know, sort of a self policing approach, and other exchanges don't. Yeah, Michael, I think that's it's a great topic here because I think a lot of investors view crypto trading just broadly defined. It's kind of the wild West,

if you will, very early days. And how do you think this is going to evolve? Is this something that the security is an exchange commission for example, UH might take a look at how do you think this might evolve? Sure, there is a lot of volatility in the marketplace in the sec and CFTC had come out and said bitcoins a commodity, right, So it should be regulated. A commodity sec founded in ninety nine to regulate securities. I don't

think that's their jurisdiction. And unless you're trading on margin or trading a future or an option, the CFTC doesn't regulate spot transactions, which many of the exchange transactions are. So, you know, I would put out there that maybe there's a need for an agency that's going to focus solely on crypto. The other side of that coin would be you need some regulatory structure here to attract capital make this quote unquote a real asset class. How do you

think about that? Yeah, I mean we're all all for regulation and transparency. We want to improve on the way things are done. Um, So I think that's you know, that is needed, and that's why we've decided or you know, we decided to set up in the US and one of the strictest regulatory environments in the world and focus on accredited investors and institutional investors that demand that transparency

and want regulation to support the markets. Now, I wouldn't want to see all the volatility to go out of the market, right because that's what people want to trade. Give us an idea for the way that demand has has shifted or demand has changed for for sin bridge in recent months. Um, if you think back to where uh bitcoin was trading, you know in March, right, just a few thousand dollars for a bitcoin. As the price has gone up, talk to me about the way that

demand for services like yours have shifted. Sure, I think you know, if you think about one year ago, we wouldn't be having this call, right. We're having this call because large players in the industry, Fidelity Goldman JP market are offering um, you know, crypto assets to their high net worth clients, and so you know that's why you know, that's why it's popular, and that's why we're having this conversation.

I think, Michael, you know, one of the things as we talked to investors, I think they're looking for a more validation of the crypto space. And you know, yes, Elon musk and and putting crypto on the balance sheet of Tesla was a validating event. Arguably, accepting bitcoin is payment for it at Tesla. What do you think or you know, do you think there need to be more validation events to to really make this a widespread, widely held asset class. If so, what do you think needs

to happen. Yeah, that's a very good question. Thanks. So if you look at the recent Fidelity report that came out of a survey of a bunch of institutional investors, seven out of ten of them are are looking to add crypto to their portfolio. So when you see like a constant drumbeat of big institutions coming out with information like that or JPR, JPM UH offering UH crypto assets or bit poing type of investments to their high net worth individuals, I think that in itself is validating. Right.

These are incumbent players on Wall Street, the sort of name brands of the industry that are saying, you know, you should really be looking at having some type of allocation to this type of asset, but in in a measurable way. Right. What does that allocation do though? Is it? Is it indeed a replacement for gold as some bulls have said, is it something that it doesn't seem like it? It diversifies in a in a way that as we saw on the sell off last year, I mean, you

were you weren't safe anywhere. Bitcoin tumbled there in March. But what is the purpose that it that it gives investors in a portfolio. Yeah, I think it is diversification, and it is. You know, some people argue that it's um, you know, non inflationary, and people are worried about inflation

or investing in in bitcoin or gold. Um. Simbridge is going to be launching token that are backed by different physical commodities, specifically metals, so you'll be able to take a directional view on for instance, E S G or electric batteries. Right you could buy tokens that are backed by the individual metal components like cobalt, nickel, um in the in the e V space, or or platium and

platinum in the combustion engine catalytic converter space. So it gives you a way to express a view that doesn't already exist for a lot of investors, right, your your hedge funds can already do that, but for you know, an accredited investor, it's a little more difficult. Michael, do you have a sensor. I'm sure you do. Kind of where institutional investors, professional investors, mutual funds, hedge funds. How are they trading in the crypto space or what are

they trading? Is it just ethereum? Is it just bitcoin. How how are they trading? What are they treading? Yeah, I think se bitcoin ether um. There's not a whole lot more dive down into you know, the capitalist of crypto and and they're not trading so much. I mean, uh, most of them are by holds. People are putting stuff on their balance sheet. They're holding it. But you do have some prop tests who are trading it. Is it the type of thing that it belongs in a four

oh one k um? There are services, there are small providers now four oh one k is that are that are offering this. Yeah, good question. I would say, you know, if you're an a credit and investor above, you probably should have some of this in your four oh one meaning you have a liquid net worth of a million dollars network and you know make over two hundred thousand dollars a year in salary or three hundred combined or

a million dollars net worth without your house. Then yeah, you definitely should have some of this in for oh one k but you need to understand that it is volatile um. But it would be a good exposure in my opinion that it's Michael McGuire, the CEO of Simbridge it's a digital asset exchange that's designed specifically for institutional

investors and traders. Still to come, on Bloomberg Business Week, the Chinese government is reigning in it's kind whose biggest text firms and sacrificing billions of dollars in profits for the sake of control. Our resident China expert and Bloomberg New Economy editorial director Andy Brown tries to help us make sense of the crackdown. Plus how Tesla managed to

escape its most challenging crisis to date. This is Bloomberg Broadcasting from the financial capital of the World, Bloomberg Eleve in Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nine team, and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week with Bloomberg Quick Takes, Tim Stenovac and Paul Sweeney from

Bloomberg Radio. Well, you know, you think about some of these big Chinese companies that have raised capital in the US over the last several years and I think about Ali Baba. That's a company I know very well, followed it since its beginning. But this course is a whole slew of of these big Chinese companies and it's been a play on the growth of China. And they've been so successful over here. But in the back of everyone's mind,

there's this thing called China risk. At any given time, the government of China could put the kai bosh on the whole thing, and I think we're starting to see a little bit of that. Andy Brown, he's editorial director for the Bloomberg New Economy that folkuses exclusively on China and Asia. Talk to us about what you're seeing in China. The government's cracking down and it's not just Ali bob but it's not just d D, it's educational sectors. I just don't know what's next. What do you think the

government's up to? You know, you you you talk about risk um and it's true, this is now political risk, and invest isn't going to have to get their heads around that. Look, we've seen it in before. We've seen this before with the government trying to put the kai bosh on particular abuses within industry. So they did this with the gaming industry a couple of years ago when they figured out the kids in China were spending way

too much time playing online games. Um. But this is something very different in terms of scale, its scope, intensity, severity. We have never seen anything like this before. This isn't just the government correcting abuses. This is the government saying we have a new system of economic management here, and it's driven by a political process. And this political process

is reflective of our shifting priorities. We are concerned about social welfare, we're concerned about workers, we're concerned about inequality, and you guys the private sector need to work with us on all these issues. Get with the program or get out of the way. What is the ultimate outcome of this, though, Andy, I mean, is it is are those something? Are those things that the Chinese government can

actually accomplish? Yes, So they have a legitimate they have a legitimate point that in almost every case where they've taken action against China these tech companies, there's some kind of abuse going on. So you know, who can deny that China's data platforms are abusing their monopoly positions and squeezing out smaller competitors, And you know, regulators in the United States wish that they might have powers more akin to Chinese regulators, UM, so that they could put an

end to all these abuses. Um. You know. The the the issue though, is is how you go about doing this and closing down an entire industry as they just did with online education. UM. You know is telling is telling investors you've got to it now you have to now assume with a whole new level of risk. And the question that bases the big question now is are

Chinese stocks investival or not? Clearly in the education space, the answer is no, and and the jury is out on you know, on many other Chinese into streets which face similar so called rectification. Yeah, it's andy, you know. We We've heard from a lot of emerging market of fund managers who are saying, basically, yeah, the game has changed. But the reality is, I can't not invest in China is such a big part of the various indices that my vench that I'm benchmarked against, and it is historically

been such a big part of the market. I have to be there. But I'm thinking that, Okay, but I'm not gonna pay anywhere near the multiples I've paid before. This is the Chinese government that they run the risk of kind of overstepping. Yeah, they do. And so you know, if if you're going to go into the Chinese market now as a portfolio invested, you need to be aware that it isn't the market that is shaping the outcomes

of the companies that you're investing in. Increasingly, it is the government, and the government is shaping it according to political priorities. They're the ones pulling the leavers, They're the ones turning the dials. Now, if you if you if you can get used to that, and if you can, if you think that you understand where the political priorities of the government lie, then good luck. So what does it mean for individuals who want to invest in China?

Should they just think about this in the context of okay, well there is going to be a discount on me buying a d R s of Chinese stocks? Or is this that they have to be prepared for the worst to happen that their equity uh state could actually go to zero? Yeah, you know, if if you look, so what what what are the what are the smart investors

in in in China? Up to? Um? You know, I was reading a speech over the weekend that was made recently by really one of the best and most successful venture capitalists in China, called Eric Lee, and he said, you know, um, I've been reading copies of Tushire. Tushire is that leading theoretical magazine of the Chinese Communist Party, and it's where you find all of Jim Things speeches and essentially he's saying, I have found my investment thesis.

Um in in the thoughts all President jimping, and you should too. That's Bloomberg New Economy editorial director Andy Brown. He came to us from New York City. You're listening to Bloomberg Business Week. Coming up, drama inside Tesla and how the company managed to stave off an early demise. Wall Street Journal reporter Tim Higgins on his new book, Power Play, Tesla, Elon Musk and the Bet of a Century.

This is Bloomberg. This is Bloomberg Business Week with Bloomberg Quick Takes, Tim Stenebac and Paul Sweeney from Bloomberg Radio. There's probably no company out there more polarizing than Tesla.

A new book that just came out aims to tell the story of the company from how it started nearly twenty years ago to almost failing to be coming by far the most valuable car company in the world, joining US now is Tim Higgins, a Wall Street Journal reporter also the author of power Play Tesla Elon Musk in the Bet of the Century, tim uh I listened to some other interviews that you've done, and I heard you say that when you started writing this book, you thought

you were writing the obituary for the company. So what was the turning point when it went from being an obituary to to this book. Yeah, you have to remember it was pretty bleak, right, Elon Musk seemed to be having a meltdown on Twitter every other day. You know, the company was short on cash, as you said, and it just seemed improbable that they could keep the keep

the story going. But one of the big turning points was the third after the third quarter Inen when Elon Musk and tested but surprised the world and came out with a profitable quoter because in large part because they were able to get the models three compact car into customers hands, paying customers hands. It was first it was manufacturing, how to make the car, and then it was delivery, hell to get it into those customers that driveways. They weren't out of the woods then, but it was a

moment that gave new hope. Continued to be problematic, but really it was clear that things had changed for Tesla in during the pandemic when they continued to build cars. Uh, despite great challenges, deliver those cars and turn profit and deliver create the ability to raise a lot of money very cheaply by issuing new shares. That gives them a

work chest to go forward. Tim, be fascinating to learn what kind of access did you get to the folks at Tesla, because when we think of Tesla, we think of just Elon Musk, But obviously there's more to the story than that. Be fascinating to kind of get some thoughts from you about the access you had. Absolutely, that's a question. Everybody wants to know who I talked to. And Uh, it's clear this book was not endorsed by Elon Musk. He probably would not like you to read it. Uh,

Tesla is not cooperative. Um, but the book that I started out to write really was to kind of get at one of the questions or this idea. There's a myth that Tesla success is because Elon Musk was sleeping on the factory floor and and kind of willing it into existence. Without a doubt, there wouldn't be a Tesla

without Elon. But there also wouldn't be a Tesla without the army of men and women who behind the scenes, UH sacrificed a lot over the years to develop these cars, to sell them, and to really put the car on the on the map. So it was you know, shoe leather reporting sourcing, UH, hundreds of interviews, thousands of records to tease out those important anecdotes that really say what the company was doing, why they're making the decisions good and bad, and and you know what were the ramifications

of those is Tesla? You've covered autos for years in Detroit and also in San Francisco. Do you think that Tesla is a car company? It likes to call itself an energy company, right, it likes to call itself an

energy company. But they're making their money UM from the sale of cars and selling UH credits, energy credit regulatory credits to other competitors who are not as successful at selling those lex cars, right, So they are a car company at this point, they have ambitions of becoming more but we are talking about them because they have done something in the auto industry that seemed improbable in two thousands three when they were founded, and now has made

them the world's most valuable automaker. And that is, you know, essentially win the day on the argument that the future of the car is electric. You see General Motors, you see Mercedes, you see Volkswig and all spending billions and billions of dollars in racing to that future. Is Elon Muss as eccentric as he seems, absolutely, um. Absolutely. On one hand, he's incredibly charming, he's funny, he is interesting in a way that you do this not normally come across.

On the other hand, he is exacting and demanding and a self described nano manager. Um. You do not want to cross him. He is a person who will not hold back. Um. If he is unhappy, you will definitely

know about it. Um. And these are the challenges of working from him that Talking to people who have had that experience, it's it's interesting because there are some who feel like it was a like opportunity of a lifetime, and then there are others who felt like maybe they flew a little too close to the Sun. Uh, it was, you know, a painful experience. Um, but you know it is definitely a unique experience. Tim. I I gotta go there.

I gotta ask about this Twitter dust up last week after our own Bloomberg News reporter Mark German tweeted a part of a screenshot from a Daily Mail article They got a copy of your book, and their story was about how Elon Musk once demanded me made the CEO of Tesla during discussions of a potential buy out, and Apple CEO Tim Cook had called Mustard proposed acquiring the electric carmaker. Musk expressed his interest in the idea, but he had one condition. This according to the Daily Mails

write up of your book, telling Cook I'm ceo. Uh. In response to that, Elon Musk said that, Uh, you managed to write a book that was not only false. He said, Cook and I have never spoken or written to each other. There was a point where I requested to meet with Cook to talk about Apple buying Tesla. There were no conditions of acquisition proposed whatsoever. Uh. And he also said Higgins managed to write a book both

false and boring. He included two emojis in there. So to your point about him not not wanting others to to read his book. Um what would you say to Musk's response to this? Absolutely so, as detailed in the book UH, this story of this conversation is what Musk was telling members of his team. And I have talked to UH sources individually and heard this for multiple people. UM. So, either Musk was telling the truth then when he told

this tale, or he's telling the truth now. And in the book I include a line about how Tim Cook has even said that he has never spoken with Musk, and include some skepticism about the veracity of what Musk was claiming. But the whether such a conversation took places

is beside the point. What the message. The clear message that Ellen was giving to his team was that Elon Musk was the CEO of Tesla and that if they were hoping for some White Nights Savior to come in to fix their problems like Apple, that wasn't gonna happen. They needed to figure out the problems that were going on. At that period of time. Tesla was in trouble. This is a period around that when the Model X is coming out in UH production of the mess, cash is

being burnt through and the stock is falling. It's so hard to you know, kind of remember think back to those days to him, because well, you think it's Tesla. Now it's got a seven billion dollar market cap, stocks up over the trailing twelve months. How close do you think, uh did they get in? I don't call it to really going out of business? Well was pretty bleak. Um. I have seen internal figures. They were, they were on

the line there they were. They were running that cash down and they a story of Tesla going back to the early days though the cash has always been their big issue. Bending metal getting cars out takes a lot of capital, and this is part of the reason why there hasn't been up until that point. It really an automotive startup in in many many generations, because most vcs weren't interested in putting money down uh on the idea of a car company that maybe uh ten years later

might have a product. That's what was so unique about Elon Musk was here was a really rich person who had this like belief that electric cars could possibly happen, and he put his fortune behind it. And then on top of that, he was able to convince other investors to continue to put more and more money in the company over the years. I mean, it's been billions of dollars it's taken to get to the company where it

is now. And you know that that's what separates Tesla from other startups that dream big, but you can't can't execute our Tesla's most challenge jing days behind it. I would say that Tesla, after in the ability to raise all that cash at that point was probably and never had never had as good good a footing as it was at that point. Because of having that cash answered that problem. Now it's the question of what are they

going to do. Can they execute on building those new two two new assembly pants to Germany, want to Texas? Can they bring out the cyber truck. Can they continue to get battery costs down? Uh, get down to the level that uh they can make these cars so every day people can buy them, because that's what their mission is. That's what Elon Musk stated, mission is to make electric vehicles ubiquitous, if you will. He wants to make that conversion around the world. And if he's going to do that,

then they have to be way cheaper. Ay Tim Just in the last six or twelve months, we've seen the major automakers around the world really jump in big time into the EV market. I'm thinking Volkswagen, General Motors Ford. It seems like everybody's got an announcement and some new product launches. How do you think Elon Musk and the folks at Tesla view, you know, the competitive environment over

the next five years. Well, it's interesting because early on this was actually the dream was to kind of edge or push the auto industry into getting into evs. That was kind of what they were hoping to show that an electric car was feasible and that people everyday people would want to buy it. Right So, in a lot of ways, if Tesla were to disappear tomorrow, the kind of the initial mission of the company has been accomplished.

That said, it's clear that Elon Musk has uh, you know, more ambitions out there, and clear that he wants to have a lot more sales and one of those challenges he's going to have in coming years, there's going to be so much more competition. That's Tim Higgins, he's a Wall Street Toronto reporter. In his book out now, it's called Power Play Tesla. Elon Musk in the Bet of the Century, A rare look at some fraud moments inside the e V Giant and how it has ultimately become

a global powerhouse. But Paul um, perhaps it's toughest days behind it, but it's still got a long way to go to stave off all that competition. And there's there's new competition coming from the likes of General Motors, Ford, Volkswagen and others. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks for joining us on. Paul Sweeney in for Carol Masser, and I'm Tim Stanivak. Be sure to tune into our Bloomberg Business

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